##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
      Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year ended
    December 31, 2006Oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)  OF
    THE SECURITIES EXCHANGE ACT OF 1934   Commission file number
    001-14758
  Questcor Pharmaceuticals,
    Inc.
 (Exact name of registrant as
    specified in its charter)
  California

33-0476164(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)3260 Whipple Road
    Union City, California(Address of principal
    executive offices)

94587(Zip
    Code)   Registrants telephone number, including area code:
 (510) 400-0700
  Securities registered pursuant to Section 12(b) of the
    Act:
   Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, no par value

American Stock Exchange   Securities registered pursuant to Section 12(g) of the
    Act:
 None
 (Title of class)
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
 o o þ
  Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE




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##### 



ANNUAL
    REPORT ON
    FORM 10-K
    FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006
   
  TABLE OF
    CONTENTS
  PagePART IItem 1.


Business


3Item 1A.


Risk
    Factors


11Item 1B.


Unresolved Staff
    Comments


19Item 2.


Properties


19Item 3.


Legal
    Proceedings


20Item 4.


Submission of
    Matters to a Vote of Security Holders


20PART IIItem 5.


Market for
    Registrants Common Equity; Related Shareholder Matters and
    Issuer Purchases of Equity Securities


20Item 6.


Selected
    Consolidated Financial Data


22Item 7.


Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


23Item 7A.


Quantitative and
    Qualitative Disclosures about Market Risk


43Item 8.


Financial
    Statements and Supplementary Data


44Item 9.


Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


44Item 9A.


Controls and
    Procedures


44Item 9B.


Other
    Information


44PART IIIItem 10.


Directors and
    Executive Officers of the Registrant


45Item 11.


Executive
    Compensation


45Item 12.


Security Ownership
    of Certain Beneficial Owners and Management and Related
    Shareholder Matters


45Item 13.


Certain
    Relationships and Related Transactions, and Director
    Independence


45Item 14.


Principal
    Accountant Fees and Services


45PART IVItem 15.


Exhibits and
    Financial Statement Schedules


46Signatures


51EXHIBIT 23.1EXHIBIT 23.2EXHIBIT 31EXHIBIT 32   2




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##### Table of Contents



PART I  Item 1.
    Business    Overview
  ® ® and/or
      
    divested our non-CNS product lines to provide capital to expand
    our business and improve our capital structure,
    improved our capital structure by eliminating our outstanding
    debt and Series B Convertible Preferred Stock,
    expanded our sales organization to effectively cover the
    nationwide audience of physicians who are current and potential
    high prescribers of products that treat CNS disorders,
    acquired Doral, a commercial product indicated for the treatment
    of insomnia,
    filed a supplemental new drug application with the FDA seeking
    approval for Acthar for the treatment of infantile spasms,
    announced a new clinical development program, QSC-001, a unique
    orally disintegrating tablet formulation of hydrocodone
    bitartrate and acetaminophen for the treatment of moderate to
    moderately severe pain, and
    achieved an increase of over 40% in net sales of our lead
    product Acthar in 2006 as compared to 2005.  ® ® ®
   3




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® ® tm
  (510) 400-0700.
 4




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Strategy
      
    Increase sales of Acthar and Doral through targeted promotion.
    We seek to increase sales of Acthar and Doral by promoting to
    the nationwide audience of physicians who are current and
    potential high prescribers of Acthar and Doral through our
    expanded sales organization.
    License, acquire, or co-promote additional commercial products.
    We seek to license, acquire, or co-promote additional commercial
    products that will (i) benefit from increased marketing
    efforts directed at neurologists and other related healthcare
    providers, (ii) leverage our existing sales infrastructure,
    (iii) complement our therapeutic focus on neurology, and
    (iv) ultimately improve our operating results.
    Develop, acquire, or license new or improved formulations of
    prescription products. We seek to develop, acquire or license
    new or improved formulations of prescription products that will
    (i) complement our target therapeutic area and sales
    strategy and (ii) require lower capital investment when
    compared to traditional pre-clinical development programs.    H.P.
    Acthar Gel
       5




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Doral
  and/or
    Product
    Development
   6




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##### Table of Contents



® tm
    tm ® tm tm tm
        Manufacturing
     7




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##### Table of Contents



Divested
    Product Lines
    Sales and
    Marketing
   8




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##### Table of Contents



Beacon
    Pharmaceuticals, Ltd.
    IDIS
    Limited
    Competition
          Risk Factors: If competitors develop and market
    products that are more effective than ours, our commercial
    opportunity will be reduced or eliminated .
  Government
    Regulation
  Marketed
    Pharmaceutical Products
     9




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Drugs
    in Development
    Product
    Liability Insurance
  Risk Factors: If product liability lawsuits are
    successfully brought against us or we become subject to other
    forms of litigation, we may incur substantial liabilities and
    costs and may be required to limit commercialization of our
    products
  Patents
    and Proprietary Rights
       10




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##### Table of Contents



Risk Factors: If we are unable to protect our
    proprietary rights, we may lose our competitive position and
    future revenues
  Employees
    Website
    Address
  Form 10-K, Form 10-Q, Form 8-K,
  Financial
    Information
    Item 1A.
    Risk
    Factors  Risks
    Related to our Business
  We
    have a history of operating losses and may never generate
    sufficient revenue to achieve profitability.
  ®
    
    develop, finance and implement effective promotional strategies
    for our commercial products,
    continue to receive finished product and API from our
    sole-source contract manufacturers on a timely basis and at
    acceptable costs,
    ensure customers compliance with our sales and product
    return policies,
    finance and acquire additional commercial products,
    finance and develop additional commercial products,
    continue to control our operating expenses, and
    finance operations until consistent positive cash flows are
    achieved. 11




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If our
    revenues from sales of Acthar decline or fail to grow, we may
    not have sufficient revenues to fund our
    operations.
    We
    have little or no control over our wholesalers buying
    patterns, which may impact future revenues and returns and may
    result in excess inventory.
  build-ups.
      work-in-process
 12




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If we
    are unable to contract with third party contract manufacturers,
    we may be unable to meet the demand for our products and lose
    potential revenues.
      If our
    third party distributors are unable to distribute our products
    or the costs to distribute our products increase substantially,
    we will lose potential revenues and profits.
      The
    loss of our key management personnel could have an adverse
    impact on future operations.
    We are
    subject to numerous governmental regulations and it can be
    costly to comply with these regulations and to develop compliant
    products and processes.
   13




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
    stall the marketing, selling and distribution of any products
    that we develop,
    impose significant additional costs on us,
    diminish any competitive advantages that we may attain, and
    decrease our ability to generate revenues and profits.          Products
    that we may acquire or develop may not be accepted by the
    market, which may result in lower future revenues as well as a
    decline in our competitive positioning.
      
    the establishment and demonstration of the clinical efficacy and
    safety of the product candidates, 14




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
    their potential advantage over alternative treatment methods and
    competing products,
    reimbursement policies of government and third party
    payors, and
    our ability to market and promote the products effectively.    If
    competitors develop and market products that are more effective
    than ours, our commercial opportunity will be reduced or
    eliminated.
          
    product efficacy and safety,
    the timing and scope of regulatory approvals,
    availability of resources,
    price, and
    patent position, including potentially dominant patent positions
    of others.    If we
    fail to maintain or enter into new contracts related to
    collaborations and in-licensed or acquired technology and
    products, our product development and commercialization could be
    delayed.
   15




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If we
    are unable to protect our proprietary rights, we may lose our
    competitive position and future revenues.
    
    obtain patents for our products and technologies,
    protect trade secrets,
    operate without infringing upon the proprietary rights of
    others, and
    prevent others from infringing on our proprietary rights.     16




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Our
    ability to generate revenues is affected by the availability of
    reimbursement on our products, and our ability to generate
    revenues will be diminished if we fail to obtain an adequate
    level of reimbursement for our products from third party
    payors.
       17




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Our
    business is subject to changing regulation of corporate
    governance and public disclosure that has increased both our
    costs and the risk of noncompliance.
        If
    product liability lawsuits are successfully brought against us
    or we become subject to other forms of litigation, we may incur
    substantial liabilities and costs and may be required to limit
    commercialization of our products.
    Risks
    Related to our Common Stock
  We may
    seek additional funding which would dilute your
    investment.
      
    existing product sales performance,
    successfully implementing our growth strategy,
    achieving better operating efficiencies, 18




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
    successfully subleasing our vacant facility in Hayward,
    California,
    maintaining customer compliance with our policies, and
    obtaining product from our sole-source contract manufacturers.    If our
    officers, directors and largest shareholders choose to act
    together, they could exert significant influence over the
    outcome of a shareholder vote.
    Our
    stock price has a history of volatility, and an investment in
    our stock could decline in value.
    Item 1B.
    Unresolved
    Staff Comments.    Item 2.
    Properties     19




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Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    of Matters to a Vote of Security Holders   PART II  Item 5.
    Market
    for Registrants Common Equity; Related Shareholder Matters
    and Issuer Purchases of Equity Securities  Price
    Range of Common Stock; Holders of Record
    Common StockClosing PriceQuarter Ended

High


LowDecember 31, 2006

$
1.65


$
1.08September 30, 2006


1.89



1.53June 30, 2006


2.45



1.46March 31, 2006


1.65



0.85December 31, 2005


1.23



0.44September 30, 2005


0.66



0.45June 30, 2005


0.75



0.54March 31, 2005


0.61



0.42     Dividends
    Equity
    Compensation Plans
   20




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Stock
    Performance Graph
    Comparison
    of 5 Year Cumulative Total Return*
    Among Questcor Pharmaceuticals, Inc.,
    the Amex Composite Index
    and the Nasdaq Pharmaceutical Index
  
  Cumulative Total Return*12/01

12/02

12/03

12/04

12/05

12/06QUESTCOR PHARMACEUTICALS, INC.


100.00



46.89



35.41



25.36



49.77



70.81AMEX COMPOSITE INDEX


100.00



100.08



144.57



178.46



230.35



262.17NASDAQ PHARMACEUTICAL INDEX


100.00



64.4



92.31



100.78



113.36



115.84   *
    
    $100 invested on
    12/31/01 in
    stock or index-including reinvestment of dividends. Fiscal year
    ending December 31.   21




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Item 6.
    Selected
    Consolidated Financial Data    Years Ended December 31,2006


2005


2004


2003


2002(1)(In thousands, except per share data)Consolidated Statement of
    Operations Data:Net product sales

$
12,788


$
14,162


$
18,404


$
13,655


$
13,819Total revenues


12,788



14,162



18,404



14,063



14,677Total operating costs and expenses


23,631



16,351



18,670



17,397



17,080Loss from operations


(10,843
)


(2,189
)


(266
)


(3,334
)


(2,403
)Gain on sale of product lines






9,642











Net income (loss)


(10,109
)


7,392



(832
)


(3,791
)


(2,785
)Net income (loss) applicable to
    common shareholders


(10,109
)


5,068



(1,508
)


(5,947
)


(2,785
)Net income (loss) per common share
    applicable to common shareholders  basic and diluted

$
(0.18
)

$
0.10


$
(0.03
)

$
(0.14
)

$
(0.07
)Shares used in computing net
    income (loss) per common share applicable to common
    shareholders  basic


56,732



52,477



50,844



41,884



38,407Shares used in computing net
    income (loss) per common share applicable to common
    shareholders  diluted


56,732



53,323



50,844



41,884



38,407   December 31,2006


2005


2004


2003


2002(In thousands)Consolidated Balance Sheet Data:Cash, cash equivalents and
    short-term investments

$
18,425


$
26,577


$
8,729


$
3,220


$
7,506Working capital


17,506



16,121



5,082



4,352



7,018Total assets


29,635



31,348



28,173



22,929



12,766Long-term debt










1,986



3,402



2,908Preferred stock, Series A


5,081



5,081



5,081



5,081



5,081Preferred stock, Series B(2)






7,841



7,578



8,278



Common stock


105,352



90,576



88,436



85,232



77,528Accumulated deficit


(89,256
)


(79,147
)


(84,423
)


(82,915
)


(76,968
)Total shareholders equity


16,097



11,422



11,581



10,578



496     (1)
    
    Effective January 1, 2002, we adopted Statement of
    Financial Accounting Standards (SFAS) No. 141
    Business Combinations and SFAS No. 142,
    Goodwill and Other Intangible Assets.(2)
    
    Series B Convertible Preferred Stock (Series B
    Preferred Stock) was reported at its redemption amount and
    as a current liability as of December 31, 2005. 22




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QUARTERLY
    FINANCIAL INFORMATION (UNAUDITED)
  Quarter Ended12/31/06(1)


09/30/06


06/30/06


03/31/06(In thousands, except per share data)Net product sales

$
3,404


$
4,045


$
3,329


$
2,010Cost of product sales


777



945



652



626Net loss


(3,336
)


(1,521
)


(2,215
)


(3,037
)Net loss applicable to common
    shareholders


(3,336
)


(1,521
)


(2,215
)


(3,037
)Net loss per share applicable to
    common shareholders  basic and diluted


(0.06
)


(0.03
)


(0.04
)


(0.06
)   Quarter Ended12/31/05(2)


09/30/05


06/30/05


03/31/05(In thousands, except per share data)Net product sales

$
1,816


$
3,558


$
4,290


$
4,498Cost of product sales


813



522



1,027



748Gain on sale of product lines


9,642











Net income (loss)


7,114



(54
)


179



153Net income (loss) applicable to
    common shareholders


5,368



(222
)


11



(99
)Net income (loss) per share
    applicable to common shareholders  basic and diluted


0.10



0.00



0.00



0.00     (1)
    
    The decline in net product sales in the fourth quarter of 2006
    was due primarily to wholesalers reducing their purchases of
    Acthar in the fourth quarter of 2006 to reduce inventory levels
    that had increased during the third quarter of 2006. See
    Item 1A Risk Factors: Risks Relating to Our
    Business  We have little or no control over our
    wholesalers buying patterns, which may impact future
    revenues and returns and may result in excess inventoryfor additional discussion.(2)
    
    In October 2005 we divested our non-core product lines, which in
    the fourth quarter of 2005 resulted in a reduction in net
    product sales, the recognition of a gain on the sale of product
    lines and net income. See Item 7 Managements
    Discussion and Analysis of Financial Condition and Results of
    Operationsand the notes to our financial statements
    for further discussion of the sale of our non-core product lines.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations     23




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Overview
  and/or
             24




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Critical
    Accounting Policies and Use of Estimates
    Sales
    Reserves
         25




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##### Table of Contents



December 31,2006


2005(In $000s)Balance, beginning of year

$
1,709


$
1,267Actual returns in current year
    related to sales from prior years


(835
)


(667
)Actual returns in current year
    related to sales from current year






Current provision related to sales
    made in prior years


(194
)


67Current provision related to sales
    made in current year


1,671



1,618Transfer of divested product line
    accruals






(576
)Balance, end of year

$
2,351


$
1,709     product-by-product
 26




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Inventories
    Intangible
    and Long-Lived Assets
  Goodwill and Other
    Intangible Assets
  Share-Based
    Compensation
  Share-Based Payment
  Accounting
    for Stock Issued to Employees, Accounting for
    Stock-Based Compensation Accounting for Stock-Based
    Compensation-Transition and Disclosure
 27




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Lease
    Termination Liability
    Accounting for a Loss on a Sublease, an
    interpretation of FASB 13 and APB Opinion No. 30 79-15, Accounting for the Loss on a Sublease Not Involving the
    Disposal of a Segment.
   28




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Results
    of Operations
  Year
    ended December 31, 2006 compared to year ended
    December 31, 2005:
  Total
    Net Product Sales
  Years EndedDecember 31,



%2006

2005

(Decrease)

Change(In $000s)Net product sales

$
12,788


$
14,162


$
(1,374
)


(10
)%     Net
    product sales by therapeutic area:
  Years EndedDecember 31,


Increase/


%2006


2005


(Decrease)


Change(In $000s)Neurology

$
12,788


$
8,425


$
4,363



52
%Product lines divested in 2005






5,666



(5,666
)


(100
)%Co-promotion agreement terminated
    in 2005






71



(71
)


(100
)%   Neurology
    Net Product Sales
        Cost
    of Product Sales
  Years EndedDecember 31,



%2006

2005

(Decrease)

Change(In $000s)Cost of product sales

$
3,000


$
3,110


$
(110
)


(4
)%    29




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##### Table of Contents



Selling,
    General and Administrative
  Years EndedDecember 31,



%2006

2005

Increase

Change(In $000s)Selling, general and
    administrative expense

$
17,282


$
10,019


$
7,263



72
%     Research
    and Development
  Years EndedDecember 31,



%2006

2005

Increase

Change(In $000s)Research and development

$
3,033


$
2,227


$
806



36
%    30




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##### Table of Contents



Depreciation
    and Amortization
  Years EndedDecember 31,



%2006

2005

(Decrease)

Change(In $000s)Depreciation and amortization

$
316


$
995


$
(679
)


(68
)%       Other
    Income and Expense
  Years EndedDecember 31,


Increase/2006


2005


(Decrease)(In $000s)Non-cash amortization of deemed
    discount on convertible debentures

$



$
(108
)

$
(108
)Interest income


607



271



336Interest expense






(275
)


(275
)Other income, net


127



8



119Rental income, net






243



(243
)Gain on sale of product lines






9,642



(9,642
)        31




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##### Table of Contents



Accounting for the Impairment of
    Long-lived Assets
  Income
    Tax Expense
  Years EndedDecember 31,2006

2005

(Decrease)(In $000s)Income tax expense

$



$
200


$
(200
)     Net
    Income (Loss)
  Years EndedDecember 31,2006

2005

(Decrease)(In $000s)Net income (loss)

$
(10,109
)

$
7,392


$
(17,501
)     Preferred
    Stock Dividends and Distributions
  Years EndedDecember 31,2006


2005


(Decrease)(In $000s)Non-cash deemed dividend related
    to beneficial conversion feature of Series B Preferred Stock

$



$
84


$
(84
)Deemed dividend related to
    redemption of Series B Preferred Stock






1,361



(1,361
)Dividends on Series B
    Preferred Stock






671



(671
)Allocation of undistributed
    earnings to Series A Preferred Stock






208



(208
)      32




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##### Table of Contents



Net
    Income (Loss) Applicable to Common Shareholders
  Years EndedDecember 31,2006

2005

(Decrease)(In $000s)Net income (loss) applicable to
    common shareholders

$
(10,109
)

$
5,068


$
(15,177
)     Year
    Ended December 31, 2005 Compared to the Year Ended
    December 31, 2004:
  Net
    Product Sales
  Years EndedDecember 31,



%2005

2004

(Decrease)

Change(In $000s)Net product sales

$
14,162


$
18,404


$
(4,242
)


(23
)%     Net
    product sales by therapeutic area:
  Years EndedDecember 31,


Increase/


%2005


2004


(Decrease)


Change(In $000s)Neurology

$
8,425


$
8,168


$
257



3
%Gastroenterology


5,084



9,399



(4,315
)


(46
)%Nephrology


653



837



(184
)


(22
)%  33




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##### Table of Contents



Neurology
    Net Product Sales
        Gastroenterology
    Net Product Sales
      Nephrology
    Net Product Sales
   34




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##### Table of Contents



Cost
    of Product Sales
  Years EndedDecember 31,



%2005

2004

(Decrease)

ChangeCost of product sales

$
3,110


$
3,730


$
(620
)


(17
)%       Selling,
    General and Administrative
  Years EndedDecember 31,



%2005

2004

(Decrease)

Change(In $000s)Selling, general and
    administrative expense

$
10,019


$
11,551


$
(1,532
)


(13
)%      35




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##### Table of Contents



Research
    and Development
  Years EndedDecember 31,



%2005

2004

Increase

Change(In $000s)Research and development

$
2,227


$
2,181


$
46



2
%       Depreciation
    and Amortization
  Years EndedDecember 31,



%2005

2004

(Decrease)

Change(In $000s)Depreciation and amortization

$
995


$
1,208


$
(213
)


(18
)%    36




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##### Table of Contents



Other
    Income and Expense
  Years EndedDecember 31,


Increase/2005


2004


(Decrease)(In $000s)Non-cash amortization of deemed
    discount on convertible debentures

$
(108
)

$
(522
)

$
(414
)Interest income


271



78



193Interest expense


(275
)


(420
)


(145
)Other income


8



21



(13
)Rental income, net


243



277



(34
)Gain on sale of product lines


9,642







9,642           Accounting for the Impairment of
    Long-lived Assets
  Income
    Tax Expense
  Years EndedDecember 31,2005

2004

Increase(In $000s)Income tax expense

$
200


$



$
200    37




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##### Table of Contents



Net
    Income (Loss)
  Years EndedDecember 31,2005

2004

Increase(In $000s)Net income (loss)

$
7,392


$
(832
)

$
8,224     Preferred
    Stock Dividends and Distributions
  Years EndedDecember 31,


Increase/2005


2004


(Decrease)(In $000s)Non-cash deemed dividend related
    to beneficial conversion feature of Series B Preferred Stock

$
84


$



$
84Deemed dividend related to
    redemption of Series B Preferred Stock


1,361







1,361Dividends on Series B
    Preferred Stock


671



676



(5
)Allocation of undistributed
    earnings to Series A Preferred Stock


208







208          38




---



##### Table of Contents



Net
    Income (Loss) Applicable to Common Shareholders
  Years EndedDecember 31,2005

2004

Increase(In $000s)Net income (loss) applicable to
    common shareholders

$
5,068


$
(1,508
)

$
6,576     Liquidity
    and Capital Resources
    Year Ended December 31,Liquidity and Capital Resources

2006


2005


2004(In $000s)Cash, cash equivalents and
    short-term investments

$
18,425


$
26,577


$
8,729Working capital


17,506



16,121



5,082Cash provided by/(used in):Operating activities


(9,728
)


1,367



1,758Investing activities


(554
)


16,419



(233
)Financing activities


5,781



(6,077
)


3,984     Operating
    Cash Flows
       39




---



##### Table of Contents



Investing
    Cash Flows
        Financing
    Cash Flows
        Cash and
    Cash Equivalents at December 31, 2006
   40




---



##### Table of Contents



Off
    Balance Sheet Arrangements
    Contractual
    Obligations
  Payments Due by Period1 Year


Greater than


4 to 5


After 5Total


or Less


1 to 3 Years


Years


Years(In $000s)Minimum payments remaining under
    operating leases(1)

$
8,004


$
1,595


$
3,049


$
2,544


$
816Purchase orders and obligations(2)


143



143











Total contractual cash obligations

$
8,147


$
1,738


$
3,049


$
2,544


$
816     (1)
    
    As of December 31, 2006 we leased two buildings with lease
    terms expiring in 2011 and 2012. We have also entered into
    various office equipment leases and automobile leases, the terms
    of which are typically three years. Annual rent expense for all
    of our facilities, equipment and automobile leases for the year
    ended December 31, 2006 was approximately $911,000. We
    lease our headquarters in Union City, California, with
    23,000 square feet of office space under a lease agreement
    that expires in 2011. Annual rent payments for 2007 for this
    facility are $547,000. We also lease a facility in Hayward,
    California under a lease agreement that expires in 2012. We do
    not occupy this facility and are attempting to sublease the
    facility. Our last sublease expired in July 2006. We are
    searching for a new tenant. If we are unable to sublease the
    facility for an amount that would cover our obligations under
    our master lease, it would have a negative impact on us as we
    are obligated to make rent payments of $5.0 million and our
    share of insurance, taxes, and common area maintenance over the
    remaining term of the master lease.(2)
    
    Represents our purchase orders and obligations as of
    December 31, 2006 for which the goods have not yet been
    received or the services have not yet been rendered.  and/or
  Equity
    Transactions
  Significant
    Equity Transactions during the Three Years Ended
    December 31, 2006
     41




---



##### Table of Contents



Cash
    Requirements
        Income
    Taxes
    Recently
    Issued Accounting Standards
  Accounting for Uncertainty in Income Taxes  an
    interpretation of FASB Statement No. 109
 42




---



##### Table of Contents



Accounting for
    Income Taxes.
  Fair Value Measurements
  Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk  Market
    Rate Risk
    Fair ValueDecember 31,2006

2006(In thousands, except interest rates)Cash, cash equivalents and
    short-term investments

$
18,425


$
18,425Average interest rate


4.77
%


   Fair ValueDecember 31,2005

2005(In thousands, except interest rates)Cash, cash equivalents and
    short-term investments

$
26,577


$
26,577Average interest rate


2.43
%


  43




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  QUESTCOR
    PHARMACEUTICALS, INC.
  CONTENTS
  PageReports of
    Independent Registered Public Accounting Firms


52Audited Financial StatementsConsolidated
    Balance Sheets


54Consolidated
    Statements of Operations


55Consolidated
    Statements of Preferred Stock and Shareholders
    Equity


56Consolidated
    Statements of Cash Flows


57Notes to
    Consolidated Financial Statements


58Financial Statement
    Schedules


83   Item 9.
    Changes
    In and Disagreements with Accountants on Accounting and
    Financial Disclosure  Form 8-K, Form 8-K, Regulation S-K.
  Item 9A.
    Controls
    and Procedures    Rule 13a-15(b),
    Item 9B.
    Other
    Information   44




---



##### Table of Contents



PART III  Item 10.
    Directors
    and Executive Officers of the Registrant    Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Shareholder Matters    Number of





Number of SharesShares to be


Weighted-


Remaining Available forIssued Upon


Average Exercise


Future Issuance UnderExercise of


Price of


Equity CompensationOutstanding


Outstanding


Plans (Excluding SharesOptions


Options


Reflected in Column (a))Plan Category

(a)


(b)


(c)Equity compensation plans approved
    by shareholders


8,179,315


$
0.86



6,675,249Equity compensation plans not
    approved by shareholders


N/A



N/A



N/ATotal


8,179,315


$
0.86



6,675,249     Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accountant Fees and Services   45




---



##### Table of Contents



PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules    Financial Statements.
  PageReports of Independent Registered
    Public Accounting Firms


52Consolidated Balance Sheets


54Consolidated Statements of
    Operations


55Consolidated Statements of
    Preferred Stock and Shareholders Equity


56Consolidated Statements of Cash
    Flows


57Notes to Financial Statements


58   Financial Statement Schedules.
    ExhibitNumber

Description1.1(31)

Placement Agency Agreement dated
    December 7, 2006 by and between Questcor Pharmaceuticals,
    Inc. and BMO Capital Markets Corp.1.2(31)

Form of Purchase Agreement.2.1(1)

Merger agreement entered into
    August 4, 1999, by and among Cyprus Pharmaceutical
    Corporation, a California corporation (Parent),
    Cyprus Acquisition Corporation, a Delaware corporation and a
    wholly owned subsidiary of Parent, and RiboGene, Inc., a
    Delaware corporation.2.2(27)

Assignment and Assumption
    Agreement by and between Questcor Pharmaceuticals, Inc. and
    Medpointe Inc., dated as of May 4, 2006.3.1(2)

Amended and Restated Articles of
    Incorporation of the Company.3.2(25)

Certificate of Amendment to the
    Questcor Pharmaceuticals, Inc. Bylaws, dated as of March 2,
    2006.3.3(3)

Certificate of Determination of
    Series B Convertible Preferred Stock of the Company.3.4(4)

Certificate of Determination of
    Series C Junior Participating Preferred Stock of the
    Company.3.5(5)

Bylaws of the Company.4.1(6)

Convertible Debenture between the
    Company and SF Capital Partners Ltd. dated March 15, 2002.4.2(6)

Convertible Debenture between the
    Company and Defiante Farmaceutica Unipessoal Lda dated
    March 15, 2002.10.1(7)

Forms of Incentive Stock Option
    and Non-statutory Stock Option.10.2(8)

1992 Employee Stock Option Plan,
    as amended.10.3(9)

1993 Non-employee Directors
    Equity Incentive Plan, as amended and related form of
    Nonstatutory Stock Option.10.4(10)

2000 Employee Stock Purchase Plan.10.5(11)

Asset Purchase Agreement dated
    July 27, 2001 between the Company and Aventis
    Pharmaceuticals Products, Inc..10.6(11)

First Amendment to Asset Purchase
    Agreement dated January 29, 2002, between the Company and
    Aventis Pharmaceuticals Products, Inc.10.7(12)

Stock Purchase Agreement dated
    July 31, 2001 between Registrant and Sigma-Tau Finance
    Holding S.A.10.8(13)

Warrant dated December 1,
    2001 between the Company and Paolo Cavazza. 46




---



##### Table of Contents



ExhibitNumber

Description10.9(13)

Warrant dated December 1,
    2001 between the Company and Claudio Cavazza.10.10(6)

Securities Purchase Agreement
    between the Company and SF Capital Partners Ltd. dated
    March 15, 2002.10.11(6)

Registration Rights Agreement
    between the Company and SF Capital Partners Ltd. dated
    March 15, 2002.10.12(6)

Warrant between the Company and SF
    Capital Partners Ltd. dated March 15, 2002.10.13(6)

Securities Purchase Agreement
    between the Company and Defiante Farmaceutica Unipessoal Lda
    dated March 15, 2002.10.14(6)

Registration Rights Agreement
    between the Company and Defiante Farmaceutica Unipessoal Lda
    dated March 15, 2002.10.15(6)

Warrant between the Company and
    Defiante Farmaceutica Unipessoal Lda dated March 15, 2002.10.16(3)

Form of Common Stock Purchase
    Warrant dated January 15, 2003 issued by the Company to
    purchasers of Series B Convertible Preferred Stock.10.17(4)

Rights Agreement, dated as of
    February 11, 2003, between the Company and Computershare
    Trust Company, Inc.10.18(3)

Form of Subscription Agreement
    dated as of December 29, 2002 by and between the Company
    and purchasers of Series B Convertible Preferred Stock and
    Common Stock Purchase Warrants.10.19(14)

Letter Agreement dated
    September 2, 2003 between the Company and R. Jerald Beers.10.20(14)

Amendment to Letter Agreement
    dated November 6, 2003 between the Company and R. Jerald
    Beers.10.21(14)

Supply Agreement dated
    April 1, 2003 between the Company and BioVectra, dcl.10.22(15)

Separation Agreement dated
    August 5, 2004 between the Company and Charles J. Casamento.10.23(16)

Secured Promissory Note and
    Security Agreement dated July 31, 2004 between the Company
    and Defiante Farmaceutica Lda.10.24(17)

Letter Agreement between the
    Company and James L. Fares dated February 17, 2005.10.25(18)

Amendment dated March 8, 2005
    to the 8% Convertible Debenture dated March 15, 2002
    issued by Questcor Pharmaceuticals, Inc. in favor of Defiante
    Farmaceutica Lda.10.26(18)

Amendment dated March 10,
    2005 to the 8% Convertible Debenture dated March 15,
    2002 issued by Questcor Pharmaceuticals, Inc. in favor of SF
    Capital Partners Ltd.10.27(19)

2004 Non-Employee Directors
    Equity Incentive Plan.10.28(20)

Letter Agreement between the
    Company and Reinhard Koenig dated September 30, 2004.10.29(20)

Letter Agreement between the
    Company and James L. Fares dated February 18, 2005.10.30(20)

Letter Agreement between the
    Company and Steve Cartt dated March 7, 2005.10.31(20)

Letter Agreement between the
    Company and Steve Cartt dated March 8, 2005.10.32(20)

Letter Agreement between the
    Company and Reinhard Koenig dated February 3, 2004.10.33(20)

Letter Agreement between the
    Company and Barbara J. McKee dated February 9, 2005.10.34(20)

Separation Agreement and Release
    dated March 3, 2005 between the Company and R. Jerald Beers.10.35(20)

Series B Preferred
    Shareholder Agreement and Waiver dated March 29, 2005 by
    and between the Company and all of the holders of the
    outstanding shares of Series B Preferred Stock of the
    Company.10.36(22)

First Amendment, dated as of
    September 9, 2005, to Rights Agreement dated as of
    February 11, 2003, between Questcor Pharmaceuticals, Inc.
    and Computershare Trust Company, Inc.10.37(23)

Offer of Employment Letter
    Agreement between the Company and George Stuart dated
    September 27, 2005.10.38(23)

Change-in-Control
    Letter Agreement between the Company and George Stuart dated
    September 28, 2005.10.39(23)

Severance Letter Agreement between
    the Company and George Stuart dated September 28, 2005.10.40(24)

Asset Purchase Agreement dated
    October 17, 2005 by and between Questcor Pharmaceuticals,
    Inc. and QOL Medical LLC. 47




---



##### Table of Contents



ExhibitNumber

Description10.41(26)

Offer of Employment Letter
    Agreement between the Company and Craig C. Chambliss dated
    March 31, 2005.10.42(26)

Change-in-Control
    Letter Agreement between the Company and Craig C. Chambliss
    dated May 1, 2005.10.43(26)

Severance Letter Agreement between
    the Company and Craig C. Chambliss dated May 4, 2005.10.44(26)

Severance Letter Agreement between
    the Company and David Medeiros dated July 10, 2003.10.45(28)

2006 Equity Incentive Award Plan.10.46(29)

Form of Incentive Stock Option
    Agreement under the 2006 Equity Incentive Award Plan.10.47(29)

Form of Non-Qualified Stock Option
    Agreement under the 2006 Equity Incentive Award Plan.10.48(29)

Form of Restricted Stock Award
    Agreement under the 2006 Equity Incentive Award Plan.10.49(28)

2003 Employee Stock Purchase Plan,
    as amended.10.50(30)

Offer of Employment Letter
    Agreement between the Company and Steven Halladay dated
    October 13, 2006.10.51(30)

Change-in-Control
    Letter Agreement between the Company and Steven Halladay dated
    October 16, 2006.10.52(30)

Severance Letter Agreement between
    the Company and Steven Halladay dated October 16, 2006.10.53(30)

Offer of Employment Letter
    Agreement between the Company and Eric Liebler dated
    August 1, 2006.10.54(30)

Amendment to Offer of Employment
    Letter Agreement between the Company and Eric Liebler dated
    October 13, 2006.10.55(30)

Change-in-Control
    Letter Agreement between the Company and Eric Liebler dated
    August 1, 2006.10.56(30)

Severance Letter Agreement between
    the Company and Eric Liebler dated August 1, 2006.10.57(32)

Amended Change of Control Letter
    Agreement between the Company and James L. Fares dated
    February 13, 2007.10.58(32)

Amended Change of Control Letter
    Agreement between the Company and Stephen L. Cartt dated
    February 13, 2007.10.59(32)

Amended Change of Control Letter
    Agreement between the Company and Eric J. Liebler dated
    February 13, 2007.10.60(32)

Amended Change of Control Letter
    Agreement between the Company and George M. Stuart dated
    February 13, 2007.10.61(32)

Amended Change of Control Letter
    Agreement between the Company and Craig C. Chambliss dated
    February 13, 2007.10.62(32)

Amended Change of Control Letter
    Agreement between the Company and Steven Halladay dated
    February 13, 2007.10.63(32)

Change of Control Letter Agreement
    between the Company and David J. Medeiros dated
    February 13, 2007.16.1(21)

Letter to the Security and
    Exchange Commission from Ernst & Young LLP.23.1*

Consent of Odenburg, Ullakko,
    Muranishi & Co. LLP, Independent Registered Public
    Accounting Firm.23.2*

Consent of Ernst & Young
    LLP, Independent Registered Public Accounting Firm.31*

Certification pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.32*

Certification pursuant to
    Section 906 of the Public Company Accounting Reform and
    Investor Act of 2002.     *
    
    Filed herewith.(1)
    
    Filed as an exhibit to the Companys Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 1999, and
    incorporated herein by reference. 48




---



##### Table of Contents



(2)
    
    Filed as an exhibit to the Companys Registration Statement
    on
    Form S-8,
    Registration Statement
    No. 333-30558,
    filed on February 16, 2000, and incorporated herein by
    reference.(3)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed on January 16, 2003, and incorporated herein by
    reference.(4)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed on February 14, 2003, and incorporated herein by
    reference.(5)
    
    Filed as an exhibit to the Companys Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2002, and incorporated
    herein by reference.(6)
    
    Filed as an exhibit to the Companys Registration Statement
    on
    Form S-3,
    Registration
    No. 333-85160,
    filed on March 28, 2002, and incorporated herein by
    reference.(7)
    
    Filed as an exhibit to the Companys Registration Statement
    on
    Form S-1,
    Registration
    No. 33-51682,
    and incorporated herein by reference.(8)
    
    Filed as an exhibit to the Companys Proxy Statement for
    the 2002 Annual Meeting of Shareholders, filed on March 28,
    2002, and incorporated herein by reference.(9)
    
    Filed as an exhibit to the Companys Registration Statement
    Form S-4,
    Registration Statement
    No. 333-87611,
    filed on September 23, 1999, and incorporated herein by
    reference.(10)
    
    Filed as an exhibit to the Companys Registration Statement
    on
    Form S-8,
    Registration Statement
    No. 333-46990,
    filed on September 29, 2000, and incorporated herein by
    reference.(11)
    
    Filed as an exhibit to the Companys Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2002, and incorporated
    herein by reference.(12)
    
    Filed as an exhibit to the Companys Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2001, and incorporated
    herein by reference.(13)
    
    Filed as an exhibit to the Companys Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2001, and
    incorporated herein by reference.(14)
    
    Filed as an exhibit to the Companys Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2003, and
    incorporated herein by reference.(15)
    
    Filed as an exhibit to the Companys Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2004, and incorporated
    herein by reference.(16)
    
    Filed as an exhibit to the Companys Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2004, and incorporated
    herein by reference.(17)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed on February 23, 2005, and incorporated herein by
    reference.(18)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed on March 14, 2005, and incorporated herein by
    reference.(19)
    
    Filed as an exhibit to the Companys Proxy Statement for
    the 2004 Annual Meeting of Stockholders, filed on March 29,
    2004, and incorporated herein by reference.(20)
    
    Filed as an exhibit to the Companys Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2004, and
    incorporated herein by reference.(21)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed on April 11, 2005, and incorporated herein by
    reference.(22)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed on September 13, 2005, and incorporated herein by
    reference.(23)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed on September 30, 2005, and incorporated herein by
    reference.(24)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed on October 19, 2005, and incorporated herein by
    reference. 49




---



##### Table of Contents



(25)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed on March 2, 2006, and incorporated herein by
    reference.(26)
    
    Filed as an exhibit to the Companys Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2005, and
    incorporated herein by reference.(27)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed on May 10, 2006, and incorporated herein by reference.(28)
    
    Filed as an exhibit to the Companys Proxy Statement for
    the 2006 Annual Meeting of Shareholders, filed on April 10,
    2006, and incorporated herein by reference.(29)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed on May 24, 2006, and incorporated herein by reference.(30)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed on October 18, 2006, and incorporated herein by
    reference.(31)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed on December 8, 2006, and incorporated herein by
    reference.(32)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed on February 15, 2007, and incorporated herein by
    reference.
    
    The Company has requested confidential treatment with respect to
    portions of this exhibit. 50




---



##### Table of Contents



SIGNATURES      By
    /s/  JAMES
    L. FARES   President and Chief Executive Officer
      Signature

Title

Date/s/  JAMES
    L. FARESJames
    L. Fares

President and Chief Executive
    Officer and Director (Principal Executive Officer)

March 29, 2007/s/  GEORGE
    STUARTGeorge
    Stuart

Senior Vice President, Finance and
    Chief Financial Officer (Principal Financial and Accounting
    Officer)

March 29, 2007/s/  ALBERT
    HANSENAlbert
    Hansen

Chairman

March 29, 2007/s/  DON
    M. BAILEYDon
    M. Bailey

Director

March 29, 2007/s/  NEAL
    C. BRADSHERNeal
    C. Bradsher

Director

March 29, 2007/s/  GREGG
    LAPOINTEGregg
    Lapointe

Director

March 29, 2007/s/  VIRGIL
    D. THOMPSONVirgil
    D. Thompson

Director

March 29, 2007/s/  DAVID
    YOUNGDavid
    Young

Director

March 29, 2007  51




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM           Share-Based
    Payment
  ODENBERG,
    ULLAKKO, MURANISHI & CO. LLP
    52




---



##### Table of Contents



REPORT OF
    ERNST & YOUNG LLP, INDEPENDENT REGISTERED
    PUBLIC
 ACCOUNTING FIRM
           
       53




---



##### Table of Contents



QUESTCOR
    PHARMACEUTICALS, INC.
 CONSOLIDATED
    BALANCE SHEETS  December 31,2006


2005(In thousands, except share amounts)ASSETSCurrent assets:Cash and cash equivalents

$
15,937


$
20,438Short-term investments


2,488



6,139Accounts receivable, net of
    allowance for doubtful accounts of $55 and $84 at
    December 31, 2006 and 2005, respectively


1,783



725Inventories


2,965



1,577Prepaid expenses and other current
    assets


811



710Total current assets


23,984



29,589Property and equipment, net


665



655Purchased technology, net


3,965



Goodwill


299



299Deposits and other assets


722



805Total assets

$
29,635


$
31,348LIABILITIES, PREFERRED STOCK
    AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
2,154


$
1,505Income taxes payable






200Accrued compensation


1,019



709Preferred stock, 7,125
    Series B shares at redemption amount at December 31,
    2005






7,841Sales-related reserves


2,784



2,581Other accrued liabilities


521



632Total current liabilities


6,478



13,468Lease termination and deferred
    rent liabilities


1,961



1,350Other non-current liabilities


18



27Commitments and contingencies (see
    Note 10)Preferred stock, no par value,
    7,500,000 shares authorized; 2,155,715 Series A shares
    issued and outstanding at December 31, 2006 and 2005
    (aggregate liquidation preference of $10,000 at
    December 31, 2006 and 2005)


5,081



5,081Shareholders equity:Common stock, no par value,
    105,000,000 shares authorized; 68,740,804 and
    54,461,291 shares issued and outstanding at
    December 31, 2006 and 2005, respectively


105,352



90,576Deferred compensation






(5
)Accumulated deficit


(89,256
)


(79,147
)Accumulated other comprehensive
    income (loss)


1



(2
)Total shareholders equity


16,097



11,422Total liabilities, preferred stock
    and shareholders equity

$
29,635


$
31,348    54




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##### Table of Contents



QUESTCOR
    PHARMACEUTICALS, INC.
 CONSOLIDATED
    STATEMENTS OF OPERATIONS  Years Ended December 31,2006


2005


2004(In thousands, except per share amounts)Net product sales

$
12,788


$
14,162


$
18,404Operating costs and expenses:Cost of product sales (exclusive
    of amortization of purchased technology)


3,000



3,110



3,730Selling, general and administrative


17,282



10,019



11,551Research and development


3,033



2,227



2,181Depreciation and amortization


316



995



1,208Total operating costs and expenses


23,631



16,351



18,670Loss from operations


(10,843
)


(2,189
)


(266
)Other income (expense):Non-cash amortization of deemed
    discount on convertible debentures






(108
)


(522
)Interest income


607



271



78Interest expense






(275
)


(420
)Other income, net


127



8



21Rental income, net






243



277Gain on sale of product lines






9,642



Total other income (expense)


734



9,781



(566
)Net income (loss) before income
    taxes


(10,109
)


7,592



(832
)Income tax expense






200



Net income (loss)


(10,109
)


7,392



(832
)Non-cash deemed dividend related
    to beneficial conversion feature of Series B preferred stock






84



Deemed dividend related to the
    redemption of Series B preferred stock






1,361



Dividends on Series B
    preferred stock






671



676Allocation of undistributed
    earnings to Series A preferred stock






208



Net income (loss) applicable to
    common shareholders

$
(10,109
)

$
5,068


$
(1,508
)Net income (loss) per share
    applicable to common shareholders  basic and diluted

$
(0.18
)

$
0.10


$
(0.03
)Shares used in computing net
    income (loss) per share applicable to common shareholders:Basic


56,732



52,477



50,844Diluted


56,732



53,323



50,844    55




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##### Table of Contents



QUESTCOR
    PHARMACEUTICALS, INC.
 CONSOLIDATED
    STATEMENTS OF PREFERRED STOCK AND SHAREHOLDERS
    EQUITY  AccumulatedPreferred Stock














Other


TotalSeries A


Series B


Common Stock


Deferred


Accumulated


Comprehensive


ShareholdersShares


Amount


Shares


Amount


Shares


Amount


Compensation


Deficit


Gain (Loss)


Equity(In thousands, except shares)Balances at January 1, 2004


2,155,715


$
5,081



9,100


$
8,278



45,387,802


$
85,232


$
(17
)

$
(82,915
)

$



$
10,578Stock compensation for options and
    warrants granted to consultants and employees






















21















21Stock compensation from
    modification of employee stock options






















9















9Amortization of deferred
    compensation


























7











7Issuance of common stock pursuant
    to employee stock purchase plan


















182,267



90















90Issuance of common stock to
    investors, net of issuance costs


















1,000,000



610















610Issuance of common stock upon
    surrender of warrants


















3,878,201



1,755















1,755Issuance of common stock upon
    exercise of stock options


















20,076



15















15Issuance of common stock upon
    conversion of Series B preferred stock










(700
)


(700
)


743,732



700















Issuance of common stock upon
    conversion of accrued dividends for Series B preferred stock


















4,410



4















4Dividends on Series B
    preferred stock






























(676
)






(676
)Net loss and comprehensive loss






























(832
)






(832
)Balances at December 31, 2004


2,155,715



5,081



8,400



7,578



51,216,488



88,436



(10
)


(84,423
)






11,581Stock compensation for options and
    warrants granted to consultants and employees






















29















29Deemed dividend on Series B
    preferred stock






















84







(84
)






Amortization of deferred
    compensation


























5











5Issuance of common stock pursuant
    to employee stock purchase plan


















347,023



151















151Issuance of common stock upon
    cashless exercise of warrant


















42,927



















Issuance of common stock dividend
    to Series B holders in lieu of cash dividend


















1,344,000



671







(671
)






Issuance of common stock upon
    exercise of stock options


















157,735



107















107Issuance of common stock upon
    conversion of Series B preferred stock










(1,275
)


(1,275
)


1,353,118



1,275















Deemed dividend related to the
    redemption of Series B preferred stock














1,538







(177
)






(1,361
)






Series B preferred stock
    redemption amount reclassified to current liability










(7,125
)


(7,841
)






















(7,841
)Comprehensive income (loss):Net unrealized loss on investments


































(2
)


(2
)Net income






























7,392







7,392Total comprehensive income






































7,390Balances at December 31, 2005


2,155,715



5,081











54,461,291



90,576



(5
)


(79,147
)


(2
)


11,422Stock compensation for equity
    incentives and restricted common stock granted to consultants
    and employees


















127,811



1,154















1,154Amortization of deferred
    compensation


























5











5Issuance of common stock pursuant
    to employee stock purchase plan


















513,571



348















348Issuance of common stock upon
    exercise of stock options


















572,191



521















521Issuance of common stock to
    investors, net of issuance costs


















11,400,000



12,741















12,741Issuance of common stock upon
    cashless exercise of warrants


















1,647,440



















Issuance of common stock upon
    exercise of warrants


















18,500



12















12Comprehensive income (loss):Net unrealized gain on investments


































3



3Net loss






























(10,109
)






(10,109
)Total comprehensive loss






































(10,106
)Balances at December 31, 2006


2,155,715


$
5,081






$




68,740,804


$
105,352


$



$
(89,256
)

$
1


$
16,097    56




---



##### Table of Contents



QUESTCOR
    PHARMACEUTICALS, INC.
 CONSOLIDATED
    STATEMENTS OF CASH FLOWS  Years Ended December 31,2006


2005


2004(In thousands)Cash Flows Provided by (Used in)
    Operating ActivitiesNet income (loss)

$
(10,109
)

$
7,392


$
(832
)Adjustments to reconcile net income
    (loss) to net cash provided by (used in) operating activities:Share-based compensation expense


1,154



29



30Amortization of deemed discount on
    convertible debentures






108



522Depreciation and amortization


316



995



1,208Gain on sale of product lines






(9,642
)


Other


5



13



187Changes in operating assets and
    liabilities:Accounts receivable


(1,058
)


1,624



(188
)Inventories


(1,388
)


(34
)


(719
)Prepaid expenses and other current
    assets


(101
)


(418
)


34Accounts payable


649



402



(299
)Income taxes payable


(200
)


200



Accrued compensation


310



(265
)


616Sales-related reserves


203



473



1,101Other accrued liabilities


(111
)


27



128Other non-current liabilities


602



463



(30
)Net cash provided by (used in)
    operating activities


(9,728
)


1,367



1,758Cash Flows Provided by (Used in)
    Investing ActivitiesAcquisition of purchased technology


(4,086
)


(2,000
)


Purchase of short-term investments


(10,136
)


(6,141
)


(1,000
)Proceeds from the sale and
    maturities of short-term investments


13,790







1,000Purchase of property, equipment and
    leasehold improvements


(205
)


(241
)


(220
)Net proceeds from sale of product
    lines






24,794



Proceeds from the sale of equipment






1



2Changes in deposits and other assets


83



6



(15
)Net cash provided by (used in)
    investing activities


(554
)


16,419



(233
)Cash Flows Provided by (Used in)
    Financing ActivitiesIssuance of common stock and
    warrants, net


13,622



258



2,470Payment of preferred stock dividends










(672
)Short-term borrowings






191



516Redemption of Series B
    preferred stock


(7,841
)






Redemption of convertible
    debentures and repayment of note payable






(6,200
)


Proceeds from Defiante note










2,200Repayment of short-term debt and
    capital lease obligations






(326
)


(530
)Net cash provided by (used in)
    financing activities


5,781



(6,077
)


3,984Increase (decrease) in cash and
    cash equivalents


(4,501
)


11,709



5,509Cash and cash equivalents at
    beginning of year


20,438



8,729



3,220Cash and cash equivalents at end of
    year

$
15,937


$
20,438


$
8,729Supplemental Disclosures of Cash
    Flow Information:Cash paid for interest

$



$
275


$
420Cash paid for income taxes

$
193


$



$
Non-Cash Investing and Financing
    Activities:Common stock issued in lieu of
    quarterly cash dividends on Series B preferred stock

$



$
671


$
Common stock issued upon conversion
    of Series B preferred stock and accrued dividends for
    Series B preferred stock

$



$
1,275


$
704Equipment acquired under capital
    lease

$



$



$
44    57




---



##### Table of Contents



QUESTCOR
    PHARMACEUTICALS, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  1.
    Organization
    and Summary of Significant Accounting Policies  Organization
    and Business Activity
  ® ® and/or
  ® ® ®
  ®
         58




---



##### Table of Contents



QUESTCOR
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      Need
    to Raise Additional Capital
    Use of
    Estimates
    Cash
    Equivalents and Short-Term Investments
  Available-for-sale
  Concentration
    of Risk
    December 31,% of Accounts Receivable

2006


2005Wholesaler A


45
%


22
%Wholesaler B


26
%


27
%Wholesaler C


14
%


24
%Other customers


15
%


27
%100
%


100
%   59




---



##### Table of Contents



QUESTCOR
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Years Ended December 31,% of Gross Product Sales

2006


2005


2004Wholesaler A


36
%


35
%


29
%Wholesaler B


28
%


29
%


28
%Wholesaler C


27
%


23
%


24
%Other customers


9
%


13
%


19
%100
%


100
%


100
%     Inventories
  first-in, product-by-product
  Property
    and Equipment
    Useful Livesin YearsLaboratory equipment


5Manufacturing equipment


5-8Office equipment, furniture and
    fixtures


3-5Leasehold improvements


4-10   Intangible
    and Other Long-Lived Assets
    Impairment
    of Long-Lived Assets
   60




---



##### Table of Contents



QUESTCOR
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Revenue
    Recognition
         61




---



##### Table of Contents



QUESTCOR
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
   Shipping
    and Handling Costs
    Research
    and Development
    Net
    Income (Loss) Per Share Applicable to Common
    Shareholders
  Earnings per Share 03-06, Participating Securities and the Two 
    Class Method Under SFAS 128. 03-06
   62




---



##### Table of Contents



QUESTCOR
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Years Ended December 31,2006


2005


2004Net income (loss) applicable to
    common shareholders

$
(10,109
)

$
5,068


$
(1,508
)Shares used in computing net
    income (loss) per share applicable to common shareholders:Basic


56,732



52,477



50,884Effect of dilutive potential
    common shares:Stock options






830



Warrants and placement agent unit
    options






16



Diluted


56,732



53,323



50,884Basic and diluted net income
    (loss) per share applicable to common shareholders

$
(0.18
)

$
0.10


$
(0.03
)         Share-Based
    Compensation
  Share-Based Payment
 63




---



##### Table of Contents



QUESTCOR
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Transition Election Related
    to Accounting for Tax Effects of Share-Based Payment
    Awards
  Accounting for Stock Issued to Employees, Accounting
    for Stock-Based Compensation Accounting for Stock-Based
    Compensation-Transition and Disclosure
 64




---



##### Table of Contents



QUESTCOR
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
     Years EndedDecember 31,2005


2004Net income (loss) applicable to
    common shareholders, as reported

$
5,068


$
(1,508
)Add: Share-based employee
    compensation expense included in reported net income (loss)


5



7Add: Adjustment to share-based
    employee compensation due to forfeitures of unvested options,
    primarily related to officer resignations






488Deduct: Total share-based employee
    compensation expense determined under fair value method for all
    awards


(445
)


(720
)Net income (loss) applicable to
    common shareholders, pro forma

$
4,628


$
(1,733
)Basic and diluted net income
    (loss) per share applicable to common shareholders:As reported

$
0.10


$
(0.03
)Pro forma

$
0.09


$
(0.03
)     EITF 96-18, Accounting for Equity Instruments that are Issued to Other
    than Employees for Acquiring, or in conjunction with Selling
    Goods or Services,
  Comprehensive
    Income (Loss)
  Reporting Comprehensive Income
  Reclassifications
    Segment
    Information
   65




---



##### Table of Contents



QUESTCOR
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
     Years Ended December 31,2006


2005


2004Neurology

$
12,788


$
8,425


$
8,168Gastroenterology






5,084



9,399Nephrology






653



837$
12,788


$
14,162


$
18,404   Recently
    Issued Accounting Standards
  Accounting for Uncertainty in Income Taxes  an
    interpretation of FASB Statement No. 109 Accounting for Income Taxes.
  Fair Value Measurements
  2.
    Sale of
    Nascobal, Ethamolin and Glofil-125 Product Lines   66




---



##### Table of Contents



QUESTCOR
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    3.
    Product
    Development  ® tm
  4.
    Product
    Acquisitions    (Vitamin B-12),
 67




---



##### Table of Contents



QUESTCOR
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    5.
    Investments    Gross


GrossAmortized


Unrealized


EstimatedCost


Gain (Loss)


Fair ValueDecember 31,
    2006Cash equivalents:Money market funds

$
15,423


$



$
15,423Short-term investments:Commercial paper

$
1,987


$
1


$
1,988Corporate bonds


500







500$
2,487


$
1


$
2,488December 31,
    2005Cash equivalents:Money market funds

$
7,706


$



$
7,706Commercial paper


1,996



1



1,997Corporate bonds


6,858



(1
)


6,857$
16,560


$



$
16,560Short-term investments:Commercial paper

$
989


$
1


$
990Corporate bonds


5,152



(3
)


5,149$
6,141


$
(2
)

$
6,139   available-for-sale
 68




---



##### Table of Contents



QUESTCOR
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
   6.
    Inventories    December 31,2006


2005Raw materials

$
2,120


$
1,335Finished goods


1,082



342Less allowance for excess and
    obsolete inventories


(237
)


(100
)$
2,965


$
1,577   7.
    Property
    and Equipment    December 31,2006


2005Laboratory equipment

$
8


$
8Manufacturing equipment


602



515Office equipment, furniture and
    fixtures


1,085



983Leasehold improvements


408



3922,103



1,898Less accumulated depreciation and
    amortization


(1,438
)


(1,243
)$
665


$
655     8.
    Purchased
    Technology and Goodwill    December 31,2006


2005Purchased technology

$
4,086


$
Less accumulated amortization


(121
)


$
3,965


$
    69




---



##### Table of Contents



QUESTCOR
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    December 31,2006


2005Goodwill

$
1,023


$
1,023Less accumulated amortization


(724
)


(724
)$
299


$
299   Goodwill and Other
    Intangible Assets
    9.
    Redemption
    of Convertible Debentures and Repayment of
    Note Payable      10.
    Indemnifications,
    Commitments and Contingencies  Indemnifications
   70




---



##### Table of Contents



QUESTCOR
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
   Employment
    Agreements
  and/or
  Leases
    AutomobileUnion City


Hayward


and Office


OperatingOffice


Office


Equipment


LeasesYear Ending December 31,

Lease


Lease


Leases


Total2007

$
547


$
779


$
269


$
1,5952008


569



808



226



1,6032009


592



839



15



1,4462010


616



870







1,4862011


156



902







1,058Thereafter






816







816$
2,480


$
5,014


$
510


$
8,004   Accounting for a Loss on a Sublease, an interpretation of
    FASB 13 and APB Opinion No. 30 79-15, Accounting for the Loss on a Sublease Not Involving the
    Disposal of a Segment.
 71




---



##### Table of Contents



QUESTCOR
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
          Contingencies
    Commitments
    11.
    Preferred
    Stock and Shareholders Equity  Preferred
    Stock
   72




---



##### Table of Contents



QUESTCOR
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Classification and Measurement of Redeemable
    Securities
  ten-day
   73




---



##### Table of Contents



QUESTCOR
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Common
    Stock
  winding-up
       74




---



##### Table of Contents



QUESTCOR
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
   Warrants
    Outstanding
    Number





ExpirationExercise Price

Outstanding


Date Issued


Date$ 0.94


135,996



1/15/2003



1/15/2008$ 1.26


475,248



6/11/2003



6/11/2008$31.51


2,694



3/12/1997



3/12/2007613,938   Placement
    Agent Unit Options
    Equity
    Incentive Plans and Share-Based Compensation
    Expense
       75




---



##### Table of Contents



QUESTCOR
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
          Year EndedDecember 31, 2006Cost of product sales

$
6Selling, general and administrative


965Research and development


56Total

$
1,027        76




---



##### Table of Contents



QUESTCOR
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Years Ended December 31,2006


2005


2004Expected volatility


90-98
%


60-69
%


42-62
%Weighted average volatility


94
%


64
%


52
%Risk-free interest rate


4.6-5.1
%


3.8-4.4
%


2.8-3.9
%Expected term (in years)


6.25



3.9- 4.0



3.5-4.0Expected dividend yield


0



0



0     Years Ended December 31,2006


2005


2004Expected volatility


70-98
%


63-64
%


42-62
%Weighted average volatility


81
%


63
%


55
%Risk-free interest rate


4.6-5.1
%


3.6-4.0
%


1.2-2.9
%Expected term (in years)


0.25-1.0



0.24-0.25



0.24-1.0Expected dividend yield


0



0



0      77




---



##### Table of Contents



QUESTCOR
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
     Weighted-Weighted-


AverageAverage


RemainingStock


Exercise


Contractual


AggregateOptions


Price


Term


Intrinsic Value(In years)


(In thousands)Outstanding at December 31,
    2003


9,757,502


$
1.27Granted


1,388,240



0.66Exercised


(20,076
)


0.82Forfeited or expired


(5,440,207
)


1.36Outstanding at December 31,
    2004


5,685,459


$
1.03Granted


4,144,000



0.54Exercised


(157,735
)


0.68Forfeited or expired


(3,269,650
)


0.95Outstanding at December 31,
    2005


6,402,074


$
0.76Granted


3,080,750



1.23Exercised


(572,191
)


0.91Forfeited or expired


(731,318
)


1.47Outstanding at December 31,
    2006


8,179,315


$
0.86



8.02


$
5,416Vested and exercisable at
    December 31, 2006


3,051,293


$
0.77



6.75


$
2,337   (in-the-money
    Weighted-AverageRestricted


Grant Date FairStock


ValueNonvested shares at
    December 31, 2005





$
Granted


127,811



1.69Vested






Forfeited or expired






Nonvested shares at
    December 31, 2006


127,811


$
1.69    78




---



##### Table of Contents



QUESTCOR
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
   Reserved
    Shares
    December 31,2006Outstanding stock options


8,179,315Convertible preferred stock issued
    and outstanding


2,155,715Placement agent unit options


127,676Common stock warrants


613,938Future grant under equity
    incentive award plans


5,411,233Future sale under the employee
    stock purchase plan


1,264,01617,751,893   12.
    Income
    Taxes        Years Ended December 31,2006


2005


2004Tax expense (benefit) at federal
    statutory rate


(34.0
)%


34.0
%


(34.0
)%State income taxes, net of federal
    benefit


(5.6
)


6.7



(8.9
)Change in valuation allowance


38.2



(38.0
)


33.9Other


1.4



0.0



9.0Effective tax rate



%


2.7
%



%  79




---



##### Table of Contents



QUESTCOR
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    December 31,2006


2005Deferred tax liabilities:Goodwill and purchased intangibles

$
100


$
(200
)Deferred tax assets:Net operating loss carryforwards

$
37,200


$
33,000Research and development credits


1,500



1,600Capitalized research and
    development expenses






100Acquired research and development


300



900Other, net


1,400



1,100Total deferred tax assets


40,400



36,700Valuation allowance


(40,300
)


(36,900
)Net deferred taxes

$



$
     13.
    Related
    Party Transactions  Sigma-Tau
   80




---



##### Table of Contents



QUESTCOR
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
        14.
    Defined
    Contribution Plan    15.
    Comprehensive
    Income (Loss)  available-for-sale
  Years Ended December 31,2006


2005


2004Net income (loss)

$
(10,109
)

$
7,392


$
(832
)Change in unrealized gains
    (losses) on
    available-for-sale
    securities


3



(2
)


Comprehensive income (loss)

$
(10,106
)

$
7,390


$
(832
)   16.
    Shareholders
    Rights Plan   81




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##### Table of Contents



QUESTCOR
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      17.
    Subsequent
    Event   82




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##### Table of Contents



QUESTCOR
    PHARMACEUTICALS, INC.
 FINANCIAL
    STATEMENT SCHEDULES (ITEM 15(a)(2))  SCHEDULE II
    VALUATION AND QUALIFYING ACCOUNTS
    Years Ended December 31, 2006, 2005 and 2004
  Additions/Balance at


(Deductions)


Deductions


Balance atBeginning


Charged to


and


End ofof Period


Income


Write-Offs


Period(In thousands)Reserves for uncollectible accountsDecember 31, 2006

$
84


$
16


$
45


$
55December 31, 2005

$
40


$
46


$
2


$
84December 31, 2004

$
60


$
(16
)

$
4


$
40Reserves for cash discountsDecember 31, 2006

$
16


$
308


$
292


$
32December 31, 2005

$
42


$
352


$
378


$
16December 31, 2004

$
33


$
371


$
362


$
42Reserves for obsolete and excess
    inventoriesDecember 31, 2006

$
100


$
137


$



$
237December 31, 2005

$
107


$
42


$
49


$
100December 31, 2004

$
341


$
(61
)

$
173


$
107Reserves for sales and product
    return allowancesDecember 31, 2006

$
2,581


$
2,767


$
2,564


$
2,784December 31, 2005

$
1,683


$
3,251


$
2,353


$
2,581December 31, 2004

$
582


$
2,278


$
1,177


$
1,683    83




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##### Table of Contents



EXHIBIT INDEX
  ExhibitNumber

Description1.1(31)

Placement Agency Agreement dated
    December 7, 2006 by and between Questcor Pharmaceuticals,
    Inc. and BMO Capital Markets Corp.1.2(31)

Form of Purchase Agreement.2.1(1)

Merger agreement entered into
    August 4, 1999, by and among Cyprus Pharmaceutical
    Corporation, a California corporation (Parent),
    Cyprus Acquisition Corporation, a Delaware corporation and a
    wholly owned subsidiary of Parent, and RiboGene, Inc., a
    Delaware corporation.2.2(27)

Assignment and Assumption
    Agreement by and between Questcor Pharmaceuticals, Inc. and
    Medpointe Inc., dated as of May 4, 2006.3.1(2)

Amended and Restated Articles of
    Incorporation of the Company.3.2(25)

Certificate of Amendment to the
    Questcor Pharmaceuticals, Inc. Bylaws, dated as of March 2,
    2006.3.3(3)

Certificate of Determination of
    Series B Convertible Preferred Stock of the Company.3.4(4)

Certificate of Determination of
    Series C Junior Participating Preferred Stock of the
    Company.3.5(5)

Bylaws of the Company.4.1(6)

Convertible Debenture between the
    Company and SF Capital Partners Ltd. dated March 15, 2002.4.2(6)

Convertible Debenture between the
    Company and Defiante Farmaceutica Unipessoal Lda dated
    March 15, 2002.10.1(7)

Forms of Incentive Stock Option
    and Non-statutory Stock Option.10.2(8)

1992 Employee Stock Option Plan,
    as amended.10.3(9)

1993 Non-employee Directors
    Equity Incentive Plan, as amended and related form of
    Nonstatutory Stock Option.10.4(10)

2000 Employee Stock Purchase Plan.10.5(11)

Asset Purchase Agreement dated
    July 27, 2001 between the Company and Aventis
    Pharmaceuticals Products, Inc.10.6(11)

First Amendment to Asset Purchase
    Agreement dated January 29, 2002, between the Company and
    Aventis Pharmaceuticals Products, Inc.10.7(12)

Stock Purchase Agreement dated
    July 31, 2001 between Registrant and Sigma-Tau Finance
    Holding S.A.10.8(13)

Warrant dated December 1,
    2001 between the Company and Paolo Cavazza.10.9(13)

Warrant dated December 1,
    2001 between the Company and Claudio Cavazza.10.10(6)

Securities Purchase Agreement
    between the Company and SF Capital Partners Ltd. dated
    March 15, 2002.10.11(6)

Registration Rights Agreement
    between the Company and SF Capital Partners Ltd. dated
    March 15, 2002.10.12(6)

Warrant between the Company and SF
    Capital Partners Ltd. dated March 15, 2002.10.13(6)

Securities Purchase Agreement
    between the Company and Defiante Farmaceutica Unipessoal Lda
    dated March 15, 2002.10.14(6)

Registration Rights Agreement
    between the Company and Defiante Farmaceutica Unipessoal Lda
    dated March 15, 2002.10.15(6)

Warrant between the Company and
    Defiante Farmaceutica Unipessoal Lda dated March 15, 2002.10.16(3)

Form of Common Stock Purchase
    Warrant dated January 15, 2003 issued by the Company to
    purchasers of Series B Convertible Preferred Stock.10.17(4)

Rights Agreement, dated as of
    February 11, 2003, between the Company and Computershare
    Trust Company, Inc.10.18(3)

Form of Subscription Agreement
    dated as of December 29, 2002 by and between the Company
    and purchasers of Series B Convertible Preferred Stock and
    Common Stock Purchase Warrants.10.19(14)

Letter Agreement dated
    September 2, 2003 between the Company and R. Jerald Beers.10.20(14)

Amendment to Letter Agreement
    dated November 6, 2003 between the Company and R. Jerald
    Beers.10.21(14)

Supply Agreement dated
    April 1, 2003 between the Company and BioVectra, dcl.




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##### Table of Contents



ExhibitNumber

Description10.22(15)

Separation Agreement dated
    August 5, 2004 between the Company and Charles J. Casamento.10.23(16)

Secured Promissory Note and
    Security Agreement dated July 31, 2004 between the Company
    and Defiante Farmaceutica Lda.10.24(17)

Letter Agreement between the
    Company and James L. Fares dated February 17, 2005.10.25(18)

Amendment dated March 8, 2005
    to the 8% Convertible Debenture dated March 15, 2002
    issued by Questcor Pharmaceuticals, Inc. in favor of Defiante
    Farmaceutica Lda.10.26(18)

Amendment dated March 10,
    2005 to the 8% Convertible Debenture dated March 15,
    2002 issued by Questcor Pharmaceuticals, Inc. in favor of SF
    Capital Partners Ltd.10.27(19)

2004 Non-Employee Directors
    Equity Incentive Plan.10.28(20)

Letter Agreement between the
    Company and Reinhard Koenig dated September 30, 2004.10.29(20)

Letter Agreement between the
    Company and James L. Fares dated February 18, 2005.10.30(20)

Letter Agreement between the
    Company and Steve Cartt dated March 7, 2005.10.31(20)

Letter Agreement between the
    Company and Steve Cartt dated March 8, 2005.10.32(20)

Letter Agreement between the
    Company and Reinhard Koenig dated February 3, 2004.10.33(20)

Letter Agreement between the
    Company and Barbara J. McKee dated February 9, 2005.10.34(20)

Separation Agreement and Release
    dated March 3, 2005 between the Company and R. Jerald Beers.10.35(20)

Series B Preferred
    Shareholder Agreement and Waiver dated March 29, 2005 by
    and between the Company and all of the holders of the
    outstanding shares of Series B Preferred Stock of the
    Company.10.36(22)

First Amendment, dated as of
    September 9, 2005, to Rights Agreement dated as of
    February 11, 2003, between Questcor Pharmaceuticals, Inc.
    and Computershare Trust Company, Inc.10.37(23)

Offer of Employment Letter
    Agreement between the Company and George Stuart dated
    September 27, 2005.10.38(23)

Change-in-Control
    Letter Agreement between the Company and George Stuart dated
    September 28, 2005.10.39(23)

Severance Letter Agreement between
    the Company and George Stuart dated September 28, 2005.10.40(24)

Asset Purchase Agreement dated
    October 17, 2005 by and between Questcor Pharmaceuticals,
    Inc. and QOL Medical LLC.10.41(26)

Offer of Employment Letter
    Agreement between the Company and Craig C. Chambliss dated
    March 31, 2005.10.42(26)

Change-in-Control
    Letter Agreement between the Company and Craig C. Chambliss
    dated May 1, 2005.10.43(26)

Severance Letter Agreement between
    the Company and Craig C. Chambliss dated May 4, 2005.10.44(26)

Severance Letter Agreement between
    the Company and David Medeiros dated July 10, 2003.10.45(28)

2006 Equity Incentive Award Plan.10.46(29)

Form of Incentive Stock Option
    Agreement under the 2006 Equity Incentive Award Plan.10.47(29)

Form of Non-Qualified Stock Option
    Agreement under the 2006 Equity Incentive Award Plan.10.48(29)

Form of Restricted Stock Award
    Agreement under the 2006 Equity Incentive Award Plan.10.49(28)

2003 Employee Stock Purchase Plan,
    as amended.10.50(30)

Offer of Employment Letter
    Agreement between the Company and Steven Halladay dated
    October 13, 2006.10.51(30)

Change-in-Control
    Letter Agreement between the Company and Steven Halladay dated
    October 16, 2006.10.52(30)

Severance Letter Agreement between
    the Company and Steven Halladay dated October 16, 2006.10.53(30)

Offer of Employment Letter
    Agreement between the Company and Eric Liebler dated
    August 1, 2006.10.54(30)

Amendment to Offer of Employment
    Letter Agreement between the Company and Eric Liebler dated
    October 13, 2006.10.55(30)

Change-in-Control
    Letter Agreement between the Company and Eric Liebler dated
    August 1, 2006.10.56(30)

Severance Letter Agreement between
    the Company and Eric Liebler dated August 1, 2006.




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##### Table of Contents



ExhibitNumber

Description10.57(32)

Amended Change of Control Letter
    Agreement between the Company and James L. Fares dated
    February 13, 2007.10.58(32)

Amended Change of Control Letter
    Agreement between the Company and Stephen L. Cartt dated
    February 13, 2007.10.59(32)

Amended Change of Control Letter
    Agreement between the Company and Eric J. Liebler dated
    February 13, 2007.10.60(32)

Amended Change of Control Letter
    Agreement between the Company and George M. Stuart dated
    February 13, 2007.10.61(32)

Amended Change of Control Letter
    Agreement between the Company and Craig C. Chambliss dated
    February 13, 2007.10.62(32)

Amended Change of Control Letter
    Agreement between the Company and Steven Halladay dated
    February 13, 2007.10.63(32)

Change of Control Letter Agreement
    between the Company and David J. Medeiros dated
    February 13, 2007.16.1(21)

Letter to the Security and
    Exchange Commission from Ernst & Young LLP.23.1*

Consent of Odenburg, Ullakko,
    Muranishi & Co. LLP, Independent Registered Public
    Accounting Firm.23.2*

Consent of Ernst & Young
    LLP, Independent Registered Public Accounting Firm.31*

Certification pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.32*

Certification pursuant to
    Section 906 of the Public Company Accounting Reform and
    Investor Act of 2002.     *
    
    Filed herewith.(1)
    
    Filed as an exhibit to the Companys Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 1999, and
    incorporated herein by reference.(2)
    
    Filed as an exhibit to the Companys Registration Statement
    on
    Form S-8,
    Registration Statement
    No. 333-30558,
    filed on February 16, 2000, and incorporated herein by
    reference.(3)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed on January 16, 2003, and incorporated herein by
    reference.(4)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed on February 14, 2003, and incorporated herein by
    reference.(5)
    
    Filed as an exhibit to the Companys Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2002, and incorporated
    herein by reference.(6)
    
    Filed as an exhibit to the Companys Registration Statement
    on
    Form S-3,
    Registration
    No. 333-85160,
    filed on March 28, 2002, and incorporated herein by
    reference.(7)
    
    Filed as an exhibit to the Companys Registration Statement
    on
    Form S-1,
    Registration
    No. 33-51682,
    and incorporated herein by reference.(8)
    
    Filed as an exhibit to the Companys Proxy Statement for
    the 2002 Annual Meeting of Shareholders, filed on March 28,
    2002, and incorporated herein by reference.(9)
    
    Filed as an exhibit to the Companys Registration Statement
    Form S-4,
    Registration Statement
    No. 333-87611,
    filed on September 23, 1999, and incorporated herein by
    reference.(10)
    
    Filed as an exhibit to the Companys Registration Statement
    on
    Form S-8,
    Registration Statement
    No. 333-46990,
    filed on September 29, 2000, and incorporated herein by
    reference.(11)
    
    Filed as an exhibit to the Companys Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2002, and incorporated
    herein by reference.(12)
    
    Filed as an exhibit to the Companys Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2001, and incorporated
    herein by reference.




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##### Table of Contents



(13)
    
    Filed as an exhibit to the Companys Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2001, and
    incorporated herein by reference.(14)
    
    Filed as an exhibit to the Companys Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2003, and
    incorporated herein by reference.(15)
    
    Filed as an exhibit to the Companys Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2004, and incorporated
    herein by reference.(16)
    
    Filed as an exhibit to the Companys Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2004, and incorporated
    herein by reference.(17)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed on February 23, 2005, and incorporated herein by
    reference.(18)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed on March 14, 2005, and incorporated herein by
    reference.(19)
    
    Filed as an exhibit to the Companys Proxy Statement for
    the 2004 Annual Meeting of Stockholders, filed on March 29,
    2004, and incorporated herein by reference.(20)
    
    Filed as an exhibit to the Companys Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2004, and
    incorporated herein by reference.(21)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed on April 11, 2005, and incorporated herein by
    reference.(22)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed on September 13, 2005, and incorporated herein by
    reference.(23)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed on September 30, 2005, and incorporated herein by
    reference.(24)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed on October 19, 2005, and incorporated herein by
    reference.(25)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed on March 2, 2006, and incorporated herein by
    reference.(26)
    
    Filed as an exhibit to the Companys Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2005, and
    incorporated herein by reference.(27)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed on May 10, 2006, and incorporated herein by reference.(28)
    
    Filed as an exhibit to the Companys Proxy Statement for
    the 2006 Annual Meeting of Shareholders, filed on April 10,
    2006, and incorporated herein by reference.(29)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed on May 24, 2006, and incorporated herein by reference.(30)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed on October 18, 2006, and incorporated herein by
    reference.(31)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed on December 8, 2006, and incorporated herein by
    reference.(32)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed on February 15, 2007, and incorporated herein by
    reference.
    
    The Company has requested confidential treatment with respect to
    portions of this exhibit.