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

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

|  Delaware                                                       |   | 59-2758596                             |
|----------------------------------------------------------------------|--------|--------------------------------------------------|
|  (State or other jurisdiction of incorporation or organization) |   |   (I.R.S. Employer Identification No.) |
|                                                                 |   |                                             |
|  354 Eisenhower Parkway Livingston, New Jersey                  |   |  07039                                      |
|  (Address of principal executive office)                        |   |  (Zip Code)                                 |

----

----

|                                                                                                                                                                                       |   | June 30     |         |   | December 31 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------|--------------|--------|-------------|--------|
|                                                                                                                                                                                       |   | 2009        |         |   | 2008        |   |
|                                                                                                                                                                                       |   | (Unaudited) |         |   |        |   |
| ASSETS                                                                                                                                                                                     |   |        |         |   |        |   |
| Current Assets:                                                                                                                                                                            |   |        |         |   |        |   |
| Cash and cash equivalents of which $7,706,019 and                                                                                                                                          |   | $           | 9,169,783    |   |        | $      | 12,497,382 |   |
| $12,099,318 is interest bearing                                                                                                                                                            |   |        |         |   |        |   |   |   |
| Accounts receivable, net of allowances for                                                                                                                                                 |   |        | 3,643,181    |   |        |   | 3,562,277 |   |
| doubtful accounts of $178,000 and $100,000                                                                                                                                                 |   |        |         |   |        |   |   |   |
| Inventories                                                                                                                                                                                |   |        | 2,934,195    |   |        |   | 2,377,139 |   |
| Prepaid expenses and other current assets                                                                                                                                                  |   |        | 657,766      |   |        |   | 1,102,525 |   |
| Total current assets                                                                                                                                                                       |   |        | 16,404,925   |   |        |   | 19,539,323 |   |
|                                                                                                                                                                                       |   |        |         |   |        |   |   |   |
| Property and equipment, net                                                                                                                                                                |   |        | 754,692      |   |        |   | 821,857 |   |
| Intangible assets - net                                                                                                                                                                    |   |        | 21,292,696   |   |        |   | 23,815,060 |   |
| Other assets                                                                                                                                                                               |   |        | 1,311,373    |   |        |   | 1,446,249 |   |
|                                                                                                                                                                                       |   |        |         |   |        |   |   |   |
| TOTAL ASSETS                                                                                                                                                                               |   | $           | 39,763,686   |   |        | $      | 45,622,489 |   |
|                                                                                                                                                                                       |   |        |         |   |        |   |   |   |
| LIABILITIES AND SHAREHOLDERS' DEFICIT                                                                                                                                                      |   |        |         |   |        |   |   |   |
| Current Liabilities:                                                                                                                                                                       |   |        |         |   |        |   |   |   |
| Current portion of financing agreements                                                                                                                                                    |   | $           | 150,709      |   |        | $      | 168,034 |   |
| Accounts payable                                                                                                                                                                           |   |        | 2,245,366    |   |        |   | 2,085,463 |   |
| Accrued expenses                                                                                                                                                                           |   |        | 5,536,295    |   |        |   | 4,980,643 |   |
| Total current liabilities                                                                                                                                                                  |   |        | 7,932,370    |   |        |   | 7,234,140 |   |
|                                                                                                                                                                                       |   |        |         |   |        |   |   |   |
| Notes payable                                                                                                                                                                              |   |        | 31,473,485   |   |        |   | 30,074,966 |   |
| Deferred revenue                                                                                                                                                                           |   |        | 279,985      |   |        |   | 305,433 |   |
| Long-term portion of financing agreements                                                                                                                                                  |   |        | 14,119,654   |   |        |   | 13,126,210 |   |
| TOTAL LIABILITIES                                                                                                                                                                          |   |        | 53,805,494   |   |        |   | 50,740,749 |   |
|                                                                                                                                                                                       |   |        |         |   |        |   |   |   |
| COMMITMENTS AND CONTINGENCIES                                                                                                                                                              |   |        |         |   |        |   |   |   |
|  ContingentlyRedeemable Series C Preferred Stock600 and 775 shares issued and outstanding in 2009 and 2008, respectively (liquidation preference of  $600,000 and $775,000) |   |        | 600,000      |   |        |   | 775,000 |   |
|                                                                                                                                                                                       |   |        |         |   |        |   |   |   |
| SHAREHOLDERS' DEFICIT:                                                                                                                                                                     |   |        |         |   |        |   |   |   |
| Preferred stock, $.01 par value; 1,000,000 shares authorized                                                                                                                               |   |        |         |   |        |   |   |   |
| Series B Convertible Preferred Stock, 130 shares issued and outstanding (liquidation preference of $13,000)                                                                                |   |        | 1            |   |        |   | 1 |   |
| Series E Convertible Preferred Stock, 59,000 shares issued and outstanding (liquidation preference of $5,900,000)                                                                          |   |        | 590          |   |        |   | 590 |   |
| Common Stock $.01 par value; 100,000,000 shares                                                                                                                                            |   |        |         |   |        |   |   |   |
| authorized; 54,817,986 and 54,007,579 shares issued in 2009 and 2008, respectively                                                                                                         |   |        | 548,180      |   |        |   | 540,076 |   |
| Capital in excess of par value                                                                                                                                                             |   |        | 230,558,685  |   |        |   | 228,686,942 |   |
| Less cost of 117,535 and 63,644 treasury shares                                                                                                                                            |   |        | (262,237     | )      |        |   | (189,229 | ) |
| Accumulated deficit                                                                                                                                                                        |   |        | (245,683,933 | )      |        |   | (235,109,705 | ) |
| Accumulated other comprehensive income                                                                                                                                                     |   |        | 196,906      |   |        |   | 178,065 |   |
| Shareholders' deficit                                                                                                                                                                      |   |        | (14,641,808  | )      |        |   | (5,893,260 | ) |
| TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT                                                                                                                                                |   | $           | 39,763,686   |   |        | $      | 45,622,489 |   |
|                                                                                                                                                                                       |   |        |         |   |        |   |   |   |

----

|                       |                            |                     |                                            |                                                                                        |                                                                                        | Six Months EndedJune 30,                                    |                                                                                                                      | Three Months EndedJune 30,                                                                                                |
|----------------------------|---------------------------------|--------------------------|-------------------------------------------------|---------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------|-------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------|
|                       |                            |                     |                                            |                                                                                        |                                                                                        |                                                        |                                                                                                                      |                                                                                                                      |   |   |
|                       |                            |                     |                                            |                                                                                        |                                                                                        | 2009                                                        | 2008                                                                                                                      |                                                                                                                      | 2009 | 2008 |
|                       |                            |                     |                                            |                                                                                        |                                                                                        |                                                        |                                                                                                                      |                                                                                                                      |   |   |
| NET REVENUES               |                            |                     |  $     15,744,891 |  $     18,060,556                                             |                                                                                        |  $       8,423,704  |  $       9,147,621                                                                |
|                       |                            |                     |                                            |                                                                                        |                                                                                        |                                                        |                                                                                                                      |                                                                                                                      |   |   |
| COST OF REVENUES           |                            | 4,119,369                | 5,909,906                                       |                                                                                        | 2,339,351                                                                                   | 2,949,809                                                   |
|                       | Gross profit                    |                     |                                            |         11,625,522                                  | 12,150,650                                                                                  |                                                        |          6,084,353                                                           | 6,197,812                                                                                                                 |
|                       |                            |                     |                                            |                                                                                        |                                                                                        |                                                        |                                                                                                                      |                                                                                                                      |   |   |
| OPERATING EXPENSES:        |                            |                     |                                            |                                                                                        |                                                                                        |                                                        |
|                       | Selling and distribution        |                     | 5,902,367                                       | 6,315,612                                                                                   |                                                                                        | 3,109,131                                                   | 3,211,839                                                                                                                 |
|                       | General and administrative      |                     | 5,560,999                                       | 4,549,448                                                                                   |                                                                                        | 3,072,446                                                   | 2,429,537                                                                                                                 |
|                       | Research and development        |                     | 3,947,372                                       | 3,541,763                                                                                   |                                                                                        | 1,701,987                                                   | 1,695,156                                                                                                                 |
|                       | Amortization of licensing right |                     | 2,522,364                                       | 2,522,364                                                                                   |                                                                                        | 1,261,182                                                   | 1,261,182                                                                                                                 |
|                       |                            | Total operating expenses |                                            |         17,933,102                                  | 16,929,187                                                                                  |                                                        |          9,144,746                                                           | 8,597,714                                                                                                                 |
|                       |                            |                     |                                            |                                                                                        |                                                                                        |                                                        |                                                                                                                      |                                                                                                                      |   |   |
|                       |                            | Loss from operations     |                                            |         (6,307,580)                                 | (4,778,537)                                                                                 |                                                        |         (3,060,393)                                                               | (2,399,902)                                                                                                               |
|                       |                            |                     |                                            |                                                                                        |                                                                                        |                                                        |                                                                                                                      |                                                                                                                      |   |   |
| OTHER INCOME (EXPENSES):   |                            |                     |                                            |                                                                                        |                                                                                        |
|                       | Interest income                 |                     |                                            | 28,744                                                                                      | 190,660                                                                                     |                                                        | 9,547                                                                                                                     | 54,339                                                                                                                    |
|                       | Interest expense                |                     |                                            | (4,205,335)                                                                                 | (3,872,681)                                                                                 |                                                        | (2,157,234)                                                                                                               | (1,953,595)                                                                                                               |
|                       | Other, net                      |                     |                                            |                                                                                        | (73,127)                                                                                    | (89,707)                                                    |                                                                                                                      | (32,581)                                                                                                                  | (27,013) |
|                       |                            | Total other expenses     |                                            |         (4,249,718)                                 | (3,771,728)                                                                                 |                                                        |         (2,180,268)                                                               | (1,926,269)                                                                                                               |
|                       |                            |                     |                                            |                                                                                        |                                                                                        |                                                        |                                                                                                                      |                                                                                                                      |   |   |
|                       |                            | Loss before taxes        |                                            |                                                                                        |       (10,557,298)                                            |         (8,550,265) |                                                                                                                      |         (5,240,661)                                                               |         (4,326,171) |
|                       |                            | State income taxes       |                                            |             (16,930)            |             (24,702)            |                                                        |                     - |                     - |
|                       |                            | NET LOSS                 |                                            |                                                                                        |  $   (10,574,228)                                                       |  $     (8,574,967)            |                                                                                                                      |  $     (5,240,661)                                                                          |  $     (4,326,171) |
|                       |                            |                     |                                            |                                                                                        |                                                                                        |                                                        |                                                                                                                      |                                                                                                                      |   |   |
| NET LOSS PER COMMON SHARE: |                            |                     |                                            |                                                                                        |                                                                                        |
|                       | Basic and diluted               |                     |                                            |  $             (0.19) |  $             (0.17) |                                                        |  $             (0.10)                               |  $             (0.08)                               |
|                       |                            |                     |                                            |                                                                                        |                                                                                        |                                                        |                                                                                                                      |                                                                                                                      |   |   |
| WEIGHTED AVERAGE NUMBER OF |                            |                     |                                            |                                                                                        |                                                                                        |
|                       | COMMON SHARES OUTSTANDING:      |                     |                                            |                                                                                        |                                                                                        |                                                        |
|                       | Basic and diluted               |                     |                                            | 54,367,610                                                                                  | 52,083,106                                                                                  |                                                        | 54,437,754                                                                                                                | 52,127,332                                                                                                                |
|                       |                            |                     |                                            |                                                                                        |                                                                                        |                                                        |                                                                                                                      |                                                                                                                      |   |   |

----

|                        |                         | Six Months Ended June 30, |   Three Months Ended June 30, |
|-----------------------------|------------------------------|---------------------------|------------------------------------|
|                        |                         |                      |                               |   |   |   |   |   |   |
|                        |                         |                      | 2009                               |   | 2008 |   | 2009 |   | 2008 |
|                        |                         |                      |                               |   |   |   |   |   |   |
| NET LOSS                    |                         |  $ (10,574,228)      |                               |  $(8,574,967) |   |  $(5,240,661) |   |  $(4,326,171) |
|                        |                         |                      |                               |   |   |   |   |   |   |
| Other comprehensive income: |                         |                      |                               |   |   |   |   |
|                        | Foreign currency translation | 18,841                    |                               | 9,994 |   | 6,208 |   | 89 |
|                        |                         |                      |                               |   |   |   |   |   |   |
| COMPREHENSIVE LOSS          |  $ (10,555,387)         |                      |  $(8,564,973)                 |   |  $(5,234,453) |   |  $(4,326,082) |
|                        |                         |                      |                               |   |   |   |   |   |   |

----

|                                                |   | Six Months Ended June 30, |        |
|-----------------------------------------------------|--------|---------------------------|-------------|
|                                                |   | 2009                      |        |   | 2008 |   |
| CASH FLOWS FROM OPERATING ACTIVITIES:               |   |                      |        |   |   |   |
| Net loss                                            |   | $                         | (10,574,228 | ) |   | $ | (8,574,967 | ) |
| Adjustments to reconcile net loss to net            |   |                      |        |   |   |   |   |   |
| cash used in operating activities-                  |   |                      |        |   |   |   |   |   |
| Depreciation and amortization                       |   |                      | 2,773,421   |   |   |   | 2,756,842 |   |
| Amortization on beneficial conversion features      |   |                      | 801,093     |   |   |   | 698,533 |   |
| Amortization on warrant valuation                   |   |                      | 597,427     |   |   |   | 529,669 |   |
| Provision for doubtful accounts                     |   |                      | -           |   |   |   | 7,130 |   |
| Provision for sales returns                         |   |                      | 577,097     |   |   |   | 958,369 |   |
| Writedown of inventories                            |   |                      | 1,496       |   |   |   | 63,416 |   |
| Stock based compensation                            |   |                      | 972,035     |   |   |   | 718,803 |   |
| Non-cash interest expense on financing agreements   |   |                      | 976,119     |   |   |   | 749,318 |   |
| Loss on disposal of fixed assets                    |   |                      | -           |   |   |   | 2,300 |   |
| Changes in assets and liabilities-                  |   |                      |        |   |   |   |   |   |
| (Increase) decrease in:                             |   |                      |        |   |   |   |   |   |
| Accounts receivable                                 |   |                      | (80,904     | ) |   |   | (488,603 | ) |
| Inventories                                         |   |                      | (558,552    | ) |   |   | (739,268 | ) |
| Prepaid expenses and other current assets           |   |                      | 444,759     |   |   |   | 605,406 |   |
| Other assets                                        |   |                      | (5,617      | ) |   |   | (8,858 | ) |
|  Increase (decrease) in:                       |   |                      |        |   |   |   |   |   |
| Accounts payable                                    |   |                      | 159,903     |   |   |   | 1,020,118 |   |
| Accrued expenses                                    |   |                      | (54,391     | ) |   |   | (1,241,864 | ) |
| Deferred revenue                                    |   |                      | (25,448     | ) |   |   | (358,865 | ) |
| Net cash used in operating activities               |   |                      | (3,995,790  | ) |   |   | (3,302,521 | ) |
|                                                |   |                      |        |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:               |   |                      |        |   |   |   |   |   |
| Purchase of property and equipment                  |   |                      | (43,399     | ) |   |   | (147,809 | ) |
| Net cash used in investing activities               |   |                      | (43,399     | ) |   |   | (147,809 | ) |
|                                                |   |                      |        |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES:               |   |                      |        |   |   |   |   |   |
| Net proceeds from the sale of common stock          |   |                      | 750,000     |   |   |   | - |   |
| Proceeds from exercise of options                   |   |                      | -           |   |   |   | 476,578 |   |
| Payments for purchase of treasury stock             |   |                      | (73,008     | ) |   |   | (118,159 | ) |
| Payments pursuant to financing agreements           |   |                      | -           |   |   |   | (3,540,949 | ) |
| Dividends paid                                      |   |                      | (17,188     | ) |   |   | (28,125 | ) |
| Net cash provided by (used in) financing activities |   |                      | 659,804     |   |   |   | (3,210,655 | ) |
|                                                |   |                      |        |   |   |   |   |   |
|                                                |   |                      |        |   |   |   |   |   |
|                                                |   |                      |        |   |   |   |   |   |

----

|                                    |                                                         |                                         | Six Months Ended June 30,                                               |
|-----------------------------------------|--------------------------------------------------------------|----------------------------------------------|-------------------------------------------------------------------------|
|                                    |                                                         |                                         | 2009                                                                    |   | 2008 |
|                                    |                                                         |                                         |                                                                    |   |   |
| EFFECT OF EXCHANGE RATE CHANGES ON CASH |          51,786 |                                         |            9,994 |
|                                    |                                                         |                                         |                                                                    |   |   |
| NET DECREASE IN CASH                    |     (3,327,599)                          |                                         | (6,650,991)                                                             |
|                                    |                                                         |                                         |                                                                    |   |   |
| CASH, BEGINNING OF PERIOD               | 12,497,382                                                   |                                         |    17,221,811                                            |
|                                    |                                                         |                                         |                                                                    |   |   |
| CASH END OF PERIOD                      |  $  9,169,783                                 |                                         |  $ 10,570,820                                                      |
|                                    |                                                         |                                         |                                                                    |   |   |
| NON-CASH FINANCING ACTIVITIES           |                                                         |                                         |                                                                    |
|                                    |                                                         |                                         |                                                                    |   |   |
|                                    | Conversion of Series C and Series E preferred shares         |  $     175,000 |                                                                    |  $        2,274 |
|                                    |                                                         |                                         |                                                                    |   |   |
| SUPPLEMENTAL INFORMATION                |                                                         |                                         |                                                                    |
|                                    |                                                         |                                         |                                                                    |   |   |
|                                    | Interest paid                                                |  $  1,600,002                 |                                                                    |      1,686,813 |
|                                    |                                                         |                                         |                                                                    |   |   |
|                                    | Taxes paid                                                   |                                         |  $       31,634                 |   |          58,001 |
|                                    |                                                         |                                         |                                                                    |   |   |

----

|                            | Six Months Ended June 30,                                            |
|---------------------------------|----------------------------------------------------------------------|
|                            | 2009                                                                 |   | 2008 |
|                            |                                                                 |   |   |
| Balance at beginning of year    |  $     1,864,316                       |   |  $   1,923,769 |
|                            |                                                                 |   |   |
| Provision:                      |                                                                 |   |   |
| Related to current period sales | 327,097                                                              |   | 308,369 |
| Related to prior period sales   |           250,000  |   | 650,000 |
|                            |           577,097  |   | 958,369 |
|                            |                                                                 |   |   |
| Returns:                        |                                                                 |   |   |
| Related to current period sales |           (11,123) |   |                 - |
| Related to prior period sales   |         (853,696)            |   |        (976,261) |
|                            |         (864,819)            |   |        (976,261) |
|                            |                                                                 |   |   |
| Balance at end of quarter       |  $     1,576,594                       |   |  $   1,905,877 |
|                            |                                                                 |   |   |

----

|           |   | June 30,                     |   | December 31,                       |
|----------------|--------|------------------------------|--------|------------------------------------|
|           |   | 2009                         |   | 2008                               |
| Finished goods |   |  $  1,819,449 |   |  $   1,745,222 |
| Raw materials  |   | 1,114,746                    |   | 631,917                            |
|           |   |                         |   |                               |
|           |   |  $  2,934,195 |   |  $   2,377,139 |
|           |   |                         |   |                               |

|                  |                                                                            | June 30,                                        |                                                          |  December 31,            |
|-----------------------|---------------------------------------------------------------------------------|-------------------------------------------------|---------------------------------------------------------------|-------------------------------|
|                  |                                                                            | 2009                                            |                                                          | 2008                          |
| STRIANT Agreement     |  $     14,270,363                                 |                                            |  $  13,294,244                                 |
| Less: current portion |             150,709 |                                            |          168,034 |
|                  |                                                                            |  $     14,119,654 |                                                          |  $  13,126,210 |
|                  |                                                                            |                                            |                                                          |                          |
|                  |                                                                            |                                            |                                                          |                          |

----

We recorded original issue discounts of $6.3 million to the notes based upon the fair value of warrants granted. Beneficial conversion features totaling $8.5 million have been recorded as a discount to the notes and warrants. These discounts are being amortized at an imputed rate over the five year term of the relatednotes. For the three and six month periods ended June 30, 2009, $0.8 million and $1.5 million, respectively, of amortization related to these discounts were classified as interest expense in our consolidated statements of operations. Unamortized discounts of $8.5 million and $9.9 million have been reflected as a reduction to the face value of the convertible notes in our consolidated balance sheet as of June 30, 2009 and December 31, 2008, respectively. 

----

|                         |                |                                                                                              | Net                |                                                                                              | Identifiable       |
|------------------------------|---------------------|---------------------------------------------------------------------------------------------------|--------------------|---------------------------------------------------------------------------------------------------|--------------------|
|                         |                |                                                                                              | Revenues           |                                                                                              | Assets             |
|                         |                |                                                                                              |               |                                                                                              |               |
| As of and for the six months |                |                                                                                              |               |
| ended June 30, 2009          |                |                                                                                              |               |
|                         | United States       |  $  9,913,896                                                                      |               |  $ 33,205,823                                                                                |
|                         |                |                                                                                              |               |                                                                                              |               |
|                         | Switzerland         |      5,830,995                                                           |               |                 - |
|                         | Other countries     |                 - |               |      6,557,863                                                           |
|                         | Total International |      5,830,995                                                           |               |      6,557,863                                                           |
|                         | Total               |                                                                                              |  $ 15,744,891 |                                                                                              |  $ 39,763,686 |
|                         |                |                                                                                              |               |                                                                                              |               |
| As of and for the six months |                |                                                                                              |               |
| ended June 30, 2008          |                |                                                                                              |               |
|                         | United States       |  $ 11,452,459                                                                                |               |  $ 37,826,069                                                                                |
|                         |                |                                                                                              |               |                                                                                              |               |
|                         | Switzerland         |      6,015,129                                                           |               |                 - |
|                         | Other countries     |         592,968                                           |               |    10,058,037                                                                      |
|                         | Total International |      6,608,097                                                           |               |    10,058,037                                                                      |
|                         | Total               |                                                                                              |  $ 18,060,556 |                                                                                              |  $ 47,884,106 |
|                         |                |                                                                                              |               |                                                                                              |               |

|                   |                                              |                                                                      | Six Months EndedJune 30, | Three Months EndedJune 30,                                    |
|------------------------|---------------------------------------------------|---------------------------------------------------------------------------|--------------------------|---------------------------------------------------------------|
|                   |                                              |                                                                      |                     |                                                          |   |   |   |   |   |
|                   |                                              |                                                                      | 2009                     |                                                          | 2008 |   | 2009 |   | 2008 |
| Net loss               |                                              |  $ (10,574,228)                                                      |                     |  $(8,574,967)                                            |   |  $(5,240,661) |   |  $(4,326,171) |
|                   | Less: Preferred stock dividends                   | (17,188)                                                                  |                     | (28,124)                                                      |   | (7,500) |   | (14,062) |
|                   |                                              |                                                                      |                     |                                                          |   |   |   |   |   |
| Net loss applicable to |                                              |                                                                      |                     |                                                          |   |   |   |
|                   | common stock                                      |  $ (10,591,416)                                                      |                     |  $(8,603,091)                                            |   |  $(5,248,161) |   |  $(4,340,233) |
|                   |                                              |                                                                      |                     |                                                          |   |   |   |   |   |
| Basic and diluted:     |                                              |                                                                      |                     |                                                          |   |   |   |
|                   | Weighted average number of                        |                                                                      |                     |                                                          |   |   |   |   |
|                   |     common shares outstanding |      54,367,610                                  |                     |    52,083,106                                  |   |    54,437,754 |   |    52,127,332 |
|                   |                                              |                                                                      |                     |                                                          |   |   |   |   |   |
|                   | Basic and diluted net loss per common share       |  $          (0.19) |                     |  $        (0.17) |   |  $        (0.10) |   |  $        (0.08) |
|                   |                                              |                                                                      |                     |                                                          |   |   |   |   |   |

----

|                       |   | Six Months Ended June 30,                                                            |
|----------------------------|--------|--------------------------------------------------------------------------------------|
| Stock Based Compensation   |   | 2009                                                                                 |   | 2008 |
|                       |   |                                                                                 |   |   |
| Cost of revenues           |   |  $           70,613      |   |  $          34,432 |
|                       |   |                                                                                 |   |   |
| Selling and distribution   |   |             175,798      |   |            118,249 |
|                       |   |                                                                                 |   |   |
| General and administrative |   |             647,353      |   |            518,492 |
|                       |   |                                                                                 |   |   |
| Research and development   |   |              78,271 |   |              47,631 |
|                       |   |                                                                                 |   |   |
| Total                      |   |  $         972,035                 |   |  $        718,804 |
|                       |   |                                                                                 |   |   |

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|                  |   | Products for Fiscal 2009                                                                                                                                                                                                                                                                                                                                                                                                            |
|-----------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                |
| Progesterone Products |   | -  CRINONE® 8% (progesterone gel) marketed by the Company in the U.S. 
-  CRINONE® 8% sold to Merck Serono for resale outside the U.S. 
-  PROCHIEVE® 8% (progesterone gel) marketed by the Company in the U.S. 
-  PROCHIEVE® 4% sold to Ascend Therapeutics, Inc., for resale in the U.S.                                                                                                                     |
|                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                |
| Other Products        |   | -  STRIANT® (testosterone buccal system) marketed by the Company in the U.S. 
-  STRIANT® sold to Mipharm, S.p.A. for resale in Italy 
-  Replens® Vaginal Moisturizer sold to Lil’ Drug Store Products, Inc (“Lil’ Drug Store”) for resale outside the U.S. 
-  RepHresh® Vaginal Gel sold to Lil’ Drug Store for resale on a worldwide basis 
-  Royalty and licensing revenues |

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partnerships; however, we may not be successful in obtaining the necessary funds on acceptable terms, if at all. 

|                 | Six Months EndedJune 30,                           |
|----------------------|----------------------------------------------------|
|                 |                                               |   |   |
|                 | 2009                                               |   | 2008 |
| Cash flows:          |                                               |   |   |
| Operating activities |  $(3,995,790)                                 |   |  $(3,302,521) |
| Investing activities |        (43,399) |   |       (147,809) |
| Financing activities |        659,804  |   |    (3,210,655) |

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|                    | Six Months EndedJune 30, |
|-------------------------|--------------------------|
|                    |                     |   |
|                    | 2009                     | 2008 |
| Risk free interest rate | 1.72%                    | 2.50% |
| Expected term           | 4.16 years               | 4.75 years |
| Dividend yield          | 0                        | 0 |
| Expected volatility     | 0.927                    | 0.8429 |

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|   | None. |
|--------|-------|

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| (a)   | Exhibits |
|-----------------|----------|

| 4.1         | Form of Warrant. (1)                                                                                                             |
|-------------|----------------------------------------------------------------------------------------------------------------------------------|
| 10.1† | Amended and Restated Employment Agreement by and between Columbia Laboratories, Inc. and Michael McGrane dated March 11, 2009. * |
| 10.2† | Amended and Restated Employment Agreement by and between Columbia Laboratories, Inc. and James Meer dated March 11, 2009. (2)    |
| 10.3† | Separation and Release Agreement by and between Columbia Laboratories, Inc. and James A. Meer effective as of May 18, 2009. (3)  |
| 10.4† | Employment Agreement by and between Columbia Laboratories, Inc. and Lawrence Gyenes, dated July 15, 2009. (4)               |
| 31.1        | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer of the Company.*                                               |
| 31.2        | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer of the Company.*                                               |
| 32.1        | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*         |
| 32.2        | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*         |

|   | * | Filed herewith. |
|--------|---|-----------------|

|   | † | Management contract or compensatory plans or arrangements |
|--------|---------|-----------------------------------------------------------|

|   | (1) | Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed July 24, 2009, Exhibit 4.1. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------|

|   | (2) | Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed May 18, 2009, Exhibit 10.1. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------|

|   | (3) | Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed May 18, 2009, Exhibit 10.2. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------|

|   | (4) | Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed July 16, 2009, Exhibit 10.1. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------|

|   | (5) | Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed July 24, 2009, Exhibit 10.1. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------|

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|   | SIGNATURES |
|--------|------------|

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