**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**




**FORM
      10-QSB**




(Mark
      One)




xQUARTERLY
      REPORT UNDER SECTION
      13 OR 15(d) OF THE SECURITIES EXCHANGE OF 1934




For
      the
      quarterly period ended September 30, 2007




oTRANSITION
      REPORT UNDER SECTION
      13 OR 15(d) OF THE EXCHANGE ACT




For
      the
      transition period from ___________________ to ___________________




Commission
      file number: 333-135970




**Transdel
      Pharmaceuticals, Inc.**


(Exact
      Name of Small Business Issuer in Its Charter)




Delaware
            
            45-0567010(State
                or Other Jurisdiction of Incorporation
              or
                Organization)
            
            (I.R.S.
                Employer Identification No.)4225
                Executive Square, Suite 460
              La
                Jolla, CA
            
            92037(Address
                of Principal Executive Offices)
            
            (Zip
                Code)




(858)
                457-5300(Issuer’s
                Telephone Number)




May
                31 Fiscal Year-End(Former
                Name, Former Address and Former Fiscal Year, if Changed Since Last
                Report)




Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days. Yes x   No o




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




As
      of
      November 2, 2007, there were 13,727,004 shares of the issuer’s common equity
      outstanding.




Transitional
      Small Business Disclosure Format (Check one): Yes oNox









**TRANSDEL
      PHARMACEUTICALS, INC.**


**(A
      Development Stage Company)**


Table
      of Contents




**Page**Part
                I
            FINANCIAL
                INFORMATIONItem
                1.
            Financial
                Statements (Unaudited)Condensed
                Consolidated Balance Sheet – September 30, 2007
            2Condensed
                Consolidated Statements of Operations for the three and nine-month
                periods
                ended September 30, 2007 and 2006
            3Condensed
                Consolidated Statement of Changes in Stockholders’ Equity for the
                nine-month period ended September 30, 2007
            4Condensed
                Consolidated Statements of Cash Flows for the nine-month periods
                ended
                September 30, 2007 and 2006
            5Notes
                to Condensed Consolidated Financial Statements
            6Item
                2.
            Management’s
                Discussion and Analysis or Plan of Operation
            15Item
                3.
            Controls
                and Procedures
            18Part
                II
            OTHER
                INFORMATIONItem
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            18Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            18Item
                6.
            Exhibits
            19




i




**PART
      I**


**FINANCIAL
      INFORMATION**




**Item
      1.Financial Statements.**




**TRANSDEL
      PHARMACEUTICALS, INC.**


**(A
      Development Stage Company)**


**UNAUDITED
      CONDENSED CONSOLIDATED BALANCE SHEET**





**September
                30,****2007****ASSETS**Current
                assets:Cash
            
            $
            4,298,092Prepaid
                consulting fees
            
            
            661,248Prepaid
                expenses and other current assets
            
            
            49,828Total
                assets
            
            $
            5,009,168**LIABILITIES
                AND STOCKHOLDERS’ EQUITY**Current
                liabilities:Accounts
                payable
            
            $
            200,880Accrued
                expenses and payroll liabilities
            
            
            42,128Total
                liabilities
            
            
            243,008Stockholders’
                equity:Preferred
                stock, $0.001 par value; 5,000,000 shares authorized, none
                outstanding
            
            
            -Common
                stock, $0.001 par value; 50,000,000 sharesauthorized,
                13,652,004 shares outstanding
            
            
            13,652Additional
                paid-in capital
            
            
            10,310,278Deficit
                accumulated during the development stage
            
            
            (5,557,770
            )Total
                stockholders’ equity
            
            
            4,766,160Total
                liabilities and stockholders’ equity
            
            $
            5,009,168




2




**TRANSDEL
      PHARMACEUTICALS, INC.**


**(A
      Development Stage Company)**


**UNAUDITED
      CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS**




**Three Months Ended**
                  **September 30,**
                
                **Nine Months Ended**
                  **September 30,**
                
                **For the Period**
                  **From July 24,**
                  **1998 (Inception)
                    Through**
                  **September 30,****2007**
                
                **2006**
                
                **2007**
                
                **2006**
                
                **2007**Operating
                    expenses:Selling,
                    general and administrative
                
                $
                247,891
                
                $
                67,316
                
                $
                499,227
                
                $
                271,748
                
                $
                2,556,164Research
                    and development
                
                
                721,253
                
                
                37,500
                
                
                806,300
                
                
                112,500
                
                
                1,531,300Operating
                    loss
                
                
                969,144
                
                
                104,816
                
                
                1,305,527
                
                
                384,248
                
                
                4,087,464Other
                    income (expense):Interest
                    expense
                
                
                (1,552,903
                )
                
                (5,394
                )
                
                (1,563,504
                )
                
                (9,920
                )
                
                (1,575,755
                )Interest
                    income
                
                
                12,983
                
                
                -
                
                
                14,352
                
                
                -
                
                
                15,535Gain
                    on forgiveness of liabilities
                
                
                -
                
                
                -
                
                
                89,914
                
                
                -
                
                
                89,914Total
                    other income (expense), net
                
                
                (1,539,920
                )
                
                (5,394
                )
                
                (1,459,238
                )
                
                (9,920
                )
                
                (1,470,306
                )Net
                    loss
                
                $
                (2,509,064
                )
                $
                (110,210
                )
                $
                (2,764,765
                )
                $
                (394,168
                )
                $
                (5,557,770
                )Basic
                    and diluted loss per common shares
                
                $
                (0.29
                )
                $
                (0.03
                )
                $
                (0.38
                )
                $
                (0.11
                )Weighted
                    average common shares outstanding
                
                
                8,745,363
                
                
                3,754,076
                
                
                7,204,663
                
                
                3,523,695




3




**TRANSDEL
      PHARMACEUTICALS, INC.**


**(A
      Development Stage Company)**


**UNAUDITED
      CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY**


**FOR
      THE NINE MONTHS ENDED SEPTEMBER 30, 2007**




**Common
                  Stock**
              
              **Additional**
                **Paid-in**
                **Capital**
              
              **Deficit**
                  **Accumulated**
                **During
                  the**
                **Development**
                **Stage**
              
              **Total**
                **Stockholders’**
                **Equity
                  (Deficit)****Shares**
              
              **Amount**Balance
                  as of January 1, 2007
              
              
              3,781,250
              
              $
              3,781
              
              $
              2,383,219
              
              $
              (2,793,005
              )
              $
              (406,005
              )Issuance
                  of common stock for cash
              
              
              3,984,374
              
              
              3,985
              
              
              21,515
              
              
              -
              
              
              25,500Exercise
                  of warrants and stock options
              
              
              39,063
              
              
              39
              
              
              211
              
              
              **-**
              
              
              250Capital
                  contributions
              
              
              **-**
              
              
              **-**
              
              
              105,907
              
              
              **-**
              
              
              105,907Estimated
                  fair value of services contributed by stockholders
              
              
              **-**
              
              
              **-**
              
              
              175,000
              
              
              **-**
              
              
              175,000Forgiveness
                  of notes payable and interest
              
              
              **-**
              
              
              **-**
              
              
              241,701
              
              
              **-**
              
              
              241,701Issuance
                  of restricted stock
              
              
              195,313
              
              
              195
              
              
              (195
              )
              
              **-**
              
              
              -Net
                  proceeds from private placement offering
              
              
              1,996,834
              
              
              1,997
              
              
              3,733,170
              
              
              **-**
              
              
              3,735,167Transdel
                  Pharmaceuticals, Inc. upon merger on September 17, 2007
              
              
              1,849,993
              
              
              1,850
              
              
              (1,850
              )
              
              **-**
              
              
              **-**Issuance
                  of common stock related to conversion of Senior Convertible notes
                  payable
                  and accrued interest
              
              
              1,530,177
              
              
              1,530
              
              
              1,528,647
              
              
              **-**
              
              
              1,530,177Beneficial
                  conversion feature upon conversion of Senior Convertible
                  notes
              
              
              -
              
              
              -
              
              
              1,530,177
              
              
              -
              
              
              1,530,177Issuance
                  of common stock and warrants for consulting services
              
              
              275,000
              
              
              275
              
              
              549,725
              
              
              -
              
              
              550,000Stock-based
                  compensation
              
              
              -
              
              
              -
              
              
              43,051
              
              
              -
              
              
              43,051Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              (2,764,765
              )
              
              (2,764,765
              )Balance
                  as of September 30, 2007
              
              
              13,652,004
              
              $
              13,652
              
              $
              10,310,278
              
              $
              (5,557,770
              )
              $
              4,766,160




4





**TRANSDEL
      PHARMACEUTICALS, INC.**


**(A
      Development Stage Company)**


**UNAUDITED
      CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**





**For
                The Period**
              **From
                July 24,**
              **1998
                (Inception)**
              **Through**
              **September
                30,**
              **2007****Nine
                Months Ended**
              **September
                30,****2007**
            
            **2006****Cash
                from operating activities:**Net
                loss
            
            $
            (2,764,765
            )
            $
            (394,168
            )
            $
            (5,557,770
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Estimated
                fair value of contributed services
            
            
            175,000
            
            
            300,000
            
            
            2,475,000Gain
                on forgiveness of liabilities
            
            
            (89,914
            )
            
            -
            
            
            (89,914
            )Amortization
                of prepaid consulting fees
            
            
            28,752
            
            
            -
            
            
            28,752Non-cash
                interest on notes payable
            
            
            1,563,504
            
            
            9,920
            
            
            1,575,755Stock-based
                compensation
            
            
            43,051
            
            
            -
            
            
            43,051Changes
                in operating assets and liabilities:Prepaid
                consulting costs
            
            
            (140,000
            )
            
            -
            
            
            (140,000
            )Prepaid
                expenses and other current assets
            
            
            (44,132
            )
            
            3,060
            
            
            (49,828
            )Accounts
                payable
            
            
            117,102
            
            
            38,303
            
            
            290,794Accrued
                expenses and payroll liabilities
            
            
            42,128
            
            
            -
            
            
            42,128Net
                cash used in operating activities
            
            
            (1,069,274
            )
            
            (42,885
            )
            
            (1,382,032
            )**Cash
                flows from financing activities:**Proceeds
                from notes payable to stockholders
            
            
            -
            
            
            -
            
            
            226,300Proceeds
                from notes payable
            
            
            1,500,000
            
            
            -
            
            
            1,500,000Capital
                contributions
            
            
            105,907
            
            
            48,600
            
            
            168,707Proceeds
                from purchase of common stock and exercise of warrants and stock
                options
            
            
            25,750
            
            
            2,400
            
            
            49,950Proceeds
                from Private Placement
            
            
            3,735,167
            
            
            -
            
            
            3,735,167Net
                cash provided by financing activities
            
            
            5,366,824
            
            
            51,000
            
            
            5,680,124**Net
                change in cash**
            
            
            4,297,550
            
            
            8,115
            
            
            4,298,092**Cash,
                beginning of period**
            
            
            542
            
            
            5,204
            
            
            -**Cash,
                end of period**
            
            $
            4,298,092
            
            $
            13,319
            
            $
            4,298,092**Supplemental
                disclosure of cash flow information:**Issuance
                of common stock and warrants to consulting firms for prepaid consulting
                fees
            
            $
            550,000
            
            $
            -
            
            $
            550,000Conversion
                of notes payable and accrued interest into common stock
            
            $
            1,530,177
            
            $
            -
            
            $
            1,530,177Forgiveness
                of notes payable and accrued interest to shareholders
            
            $
            241,701
            
            $
            -
            
            $
            241,701




5


**TRANSDEL
      PHARMACEUTICALS, INC.**


**(A
      Development Stage Company)**


**NOTES
      TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS**




**Note
      1.    Business Description**





Transdel
      Pharmaceuticals, Inc. (“Transdel” or the “Company”) is a specialty
      pharmaceutical company focused on the development and commercialization of
      non-invasive topically delivered medications. The Company's lead topical drug,
      Ketotransdel TM, utilizes the Company's innovative proprietary
      Transdel TM cream formulation to facilitate the passage of
      ketoprofen, a non-steroidal anti-inflammatory drug (“NSAID”), through the skin
      barrier to reach targeted underlying tissue where the drug exerts its prolonged
      localized anti-inflammatory and analgesic effect. The Company is also
      investigating other drug candidates and treatments for transdermal delivery
      using the TransdelTM platform technology for products in pain
      management and other therapeutic areas.





**Note
      2. Basis of Presentation**





The
      condensed consolidated financial statements have been prepared in accordance
      with accounting principles generally accepted in the United States of America
      for interim financial statements and with Form 10-QSB and Item 310(b) of
      Regulation S-B of the Securities and Exchange Commission. Accordingly, they
      do
      not contain all the information and footnotes required by accounting principles
      generally accepted in the United States of America for annual financial
      statements. The consolidated financial statements include the accounts of
      Transdel and its wholly owned subsidiary, Transdel Pharmaceuticals Holdings,
      Inc. (formally known as Trans-Pharma Corporation). All significant intercompany
      balances and transactions have been eliminated in consolidation. In the opinion
      of the Company’s management, the accompanying condensed consolidated financial
      statements contain all the adjustments necessary (consisting only of normal
      recurring accruals) to make the financial position of the Company as of
      September 30, 2007, the results of operations for three and nine months
      ended September 30, 2007 and 2006, and cash flows for the nine months
      ended September 30, 2007 and 2006 not misleading. The condensed
      consolidated financial statements should be read in conjunction with the audited
      financial statements for the years ended December 31, 2006 and 2005
      contained in Form 8-K filed on September 21, 2007.





**Note
      3. Merger with Public Company and Reorganization**





On
      September 17, 2007, Transdel entered into an Agreement of Merger and Plan of
      Reorganization (the “Merger Agreement”) by and among Transdel, Transdel
      Pharmaceuticals Holdings, Inc., a privately held Nevada corporation (“Transdel
      Holdings”), and Trans-Pharma Acquisition Corp., a newly formed, wholly owned
      Delaware subsidiary of Transdel (“Acquisition Sub”). Upon closing of the merger
      transaction contemplated under the Merger Agreement (the “Merger”), Acquisition
      Sub merged with and into Transdel Holdings, and Transdel Holdings, as the
      surviving corporation, became a wholly owned subsidiary of
      Transdel.




In
      connection with the merger, 1,849,993 of Transdel common shares remain
      outstanding and all other outstanding shares of Transdel were cancelled. Also,
      at the closing of the Merger, each share of Transdel Holdings common stock
      issued and outstanding immediately prior to the closing of the Merger was
      exchanged for the right to receive 0.15625 of one share of Transdel’s common
      stock. An aggregate of 8,000,000 shares of Transdel’s common stock, which
      includes 195,313 shares of restricted stock which are subject to forfeiture,
      were issued to the holders of Transdel Holdings’ common stock. As a result of
      the transaction, the former owners of Transdel Holdings became the controlling
      stockholders of Transdel. Accordingly, the merger of Transdel Holdings and
      Transdel is a reverse merger that has been accounted for as a recapitalization
      of Transdel Holdings.




6





**TRANSDEL
        PHARMACEUTICALS, INC.**
 **(A
        Development Stage Company)**
 **NOTES
        TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
        STATEMENTS**




**Note
      3.  Merger with Public Company and Reorganization** , **continued**


Effective
        on September 17, 2007, and for all reporting periods thereafter, Transdel’s
        operating activities, including any prior comparative period, will include
        only
        those of Transdel Holdings. All references to shares and per share amounts
        in
        the accompanying condensed consolidated financial statements have been restated
        to reflect the aforementioned share exchange.




**Note
      4.    Summary of Significant Accounting Policies**




*Going
      Concern* .
      The
      accompanying condensed consolidated financial statements have been prepared
      on a
      going-concern basis, which contemplates the realization of assets and the
      satisfaction of liabilities in the normal course of business. The Company has
      incurred recurring operating losses, had negative operating cash flows and
      has
      not recognized any revenues since Inception. In addition, the Company had a
      deficit accumulated during the development stage of $5,557,770 at September
      30,
      2007. These factors, among others, raise substantial doubt about the Company’s
      ability to continue as a going concern.





The
      Company's continuation as a going concern is dependent on its ability to obtain
      additional financing to fund operations, implement its business model, and
      ultimately, to attain profitable operations. The Company intends to raise
      additional financing to fund its operations. However, there is no assurance
      that
      sufficient financing will be available or, if available, on terms that would
      be
      acceptable to the Company.





The
      condensed consolidated financial statements do not include any adjustments
      relating to the recoverability and classification of recorded asset amounts
      or
      the amounts and classification of liabilities that might be necessary should
      the
      Company be unable to continue as a going concern.





*Development
      Stage Enterprise.* The
      Company is a development stage company as defined in Statement of Financial
      Accounting Standards (“SFAS”) No. 7, *Accounting
      and Reporting by Development Stage Enterprises* .
      The
      Company is devoting substantially all of its present efforts to establish a
      new
      business, and its planned principal operations have not yet commenced. All
      losses accumulated since inception have been considered as part of the Company’s
      development stage activities.





*Research
      and Development.* Research
      and development costs are charged to expense when incurred.





*Concentrations
      of Credit Risk.* Financial
      instruments that potentially subject the Company to significant concentration
      of
      credit risk consist primarily of cash and cash equivalents. The Company
      maintains its cash balances at a high-quality institution that is insured by
      the
      Federal Deposit Insurance Corporation (“FDIC”) up to $100,000.





*Fair
      Value of Financial Instruments.* The
      Company has determined the fair value of its financial instruments. The amounts
      reported for prepaid consulting fees, accounts payable and accrued expenses
      approximate the fair value because of their short maturities.




*Revenue
        Recognition.* The Company will recognize revenues in accordance with the
        Securities and Exchange Commission Staff Accounting Bulletin (“SAB”) No. 101,
*Revenue Recognition*, as amended by SAB No. 104. SAB No. 104 requires
        that four basic criteria must be met before revenue can be recognized: (1)
        persuasive evidence of an arrangement exists; (2) delivery has occurred;
        (3) the
        selling price is fixed and determinable; and (4) collectibility is reasonably
        assured. Determination of criteria (3) and (4) will be based on management's
        judgments regarding the fixed nature of the selling prices of the products
        delivered and the collectibility of those amounts. Provisions for discounts
        and
        rebates to customers, estimated returns and allowances, and other adjustments
        will be provided for in the same period the related sales are recorded. The
        Company will defer any revenue for which the product has not been delivered
        or
        for which services have not been rendered or are subject to refund until
        such
        time that the Company and the customer jointly determine that the product
        has
        been delivered or services have been rendered or no refund will be required.




7


**TRANSDEL
          PHARMACEUTICALS, INC.**
 **(A
          Development Stage Company)**
 **NOTES
          TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
          STATEMENTS**




**Note
      4.    Summary of Significant Accounting Policies,
      continued**




As
      of
      September 30, 2007, the Company had not generated any revenues and the Company
      does not anticipate that it will generate any revenues until one or more of
      its
      drug candidates are approved by the FDA and effective sales and marketing
      support are in place. The FDA approval process is highly uncertain and the
      Company cannot estimate when it will generate revenues at this time.





*Stock-Based
      Compensation.* Effective January 1, 2006, the Company adopted Statement of Financial
      Accounting Standards No. 123 (revised 2004), *Share-Based
      Payment* ,
      (‘‘SFAS 123R’’), which is a revision of SFAS No. 123, *Accounting
      for Stock-Based Compensation* .
      SFAS
      123R supersedes APB No. 25, *Accounting
      for Stock Issued to Employees* ,
      and
      amends SFAS No. 95, *Statement
      of Cash Flows* .
      SFAS
      123R requires all share-based payments to employees, including grants of
      employee stock options and restricted stock grants, to be recognized in the
      financial statements based upon their fair values. The Company recorded total
      stock-based compensation of $43,051 and $0 for the nine months ended September
      30, 2007 and 2006, respectively, for options and restricted stock granted
      and vested which is included in operating expenses. The fair value of the
      unvested stock options and restricted stock grants amounted to approximately
      $1,232,000 as of September 30, 2007.




The
      Company's accounting policy for equity instruments issued to consultants and
      vendors in exchange for goods and services follows the provisions of SFAS No.
      123, EITF 96-18, *Accounting
      for Equity Instruments That are Issued to Other Than Employees for Acquiring,
      or
      in Conjunction with Selling, Goods or Services* and EITF
      00-18, *Accounting
      Recognition for Certain Transactions Involving Equity Instruments Granted to
      Other Than Employees.* As
      such,
      the value of the applicable stock-based compensation is periodically remeasured
      and income or expense is recognized during their vesting terms. The
      measurement date for the fair value of the equity instruments issued is
      determined at the earlier of (i) the date at which a commitment for performance
      by the consultant or vendor is reached or (ii) the date at which the consultant
      or vendor's performance is complete. In the case of equity instruments issued
      to
      consultants, the fair value of the equity instrument is recognized over the
      term
      of the consulting agreement. In accordance with EITF 00-18, an asset acquired
      in
      exchange for the issuance of fully vested, nonforfeitable equity instruments
      should not be presented or classified as an offset to equity on the grantor's
      balance sheet once the equity instrument is granted for accounting purposes.
      Accordingly, the Company recorded the fair value of the common stock issued
      for
      future consulting services as prepaid consulting fees in its condensed
      consolidated balance sheet (see Note 6).





*Basic
      and Diluted Loss per Common Share* . In
      accordance with SFAS No. 128, *Earnings
      Per Share* ,
      and SAB
      No. 98, basic net loss per common share is computed by dividing net loss for
      the
      period by the weighted average number of common shares outstanding during the
      period.  Under SFAS No. 128, diluted net loss per share is computed by
      dividing the net loss for the period by the weighted average number of common
      and common equivalent shares, such as stock options and warrants outstanding
      during the period.




8




**TRANSDEL
        PHARMACEUTICALS, INC.**
 **(A
        Development Stage Company)**
 **NOTES
        TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
        STATEMENTS**




**Note
      4.    Summary of Significant Accounting Policies,
      continued**




Basic
      and
      diluted net loss applicable to common stock per share is computed using the
      weighted average number of common shares outstanding during the period. Common
      stock equivalents (prior to application of the treasury stock, if converted
      method) from stock options, warrants and convertible notes were 1,151,708 and
      68,664 for the nine months ended September 30, 2007 and 2006, respectively,
      are
      excluded from the calculation of diluted net loss per share for all periods
      presented because the effect is anti-dilutive.





*Use
      of Estimates.* The
      preparation of financial statements in conformity with Generally Accepted
      Accounting Principles (“GAAP”) requires management to make estimates and
      judgments that affect the reported amounts of assets, liabilities and disclosure
      of contingent assets and liabilities at the date of the financial statements
      and
      reported amounts of revenues and expenses during the reporting periods.
      Significant estimates made by management are, among others, the valuation of
      contributed services, stock options, deferred taxes and stock-based compensation
      issued to non-employees. Actual results could differ from those
      estimates.





**Note
      5. Notes Payable**





In
      August
      2005, the Company issued seven convertible promissory notes in the aggregate
      amount of $226,300 to various stockholders (collectively the “Stockholders’
Notes”). The Stockholders’ Notes bore interest at 4% per annum and were to
      mature on August 25, 2010. In
      connection with the issuance of the Stockholders’ Notes, the Company granted
      warrants that were exercisable into an aggregate 35,359 shares of the Company’s
      common stock. The warrants were determined to have an insignificant fair
      value.





In
      May
      2007, the holders of the Stockholders’ Notes and related warrants forgave the
      amounts due and forfeited the related warrants. In connection with the
      forgiveness, the Company recorded additional paid-in capital of $241,701 equal
      to the value of the Stockholders’ Notes and related accrued interest. Interest
      expense on the Stockholders’ Notes was $3,150, $9,920 and $15,401 for the nine
      months ended September 30, 2007 and 2006 and the period from Inception to
      September 30, 2007, respectively.





In
      May
      and June 2007, the Company issued convertible notes payable to various lenders
      for an aggregate amount of $1,500,000 (collectively, the “2007 Notes”). Each of
      the 2007 Notes included interest at 7% per annum and were to mature on December
      16, 2007 ("Maturity Date"). However, as a result of the Merger and Private
      Placement (see Note 6), the entire outstanding principal amount and accrued
      interest was converted into the Company’s common stock at a conversion price
      equal to $1.00 per share, which resulted in the issuance of 1,530,177 shares.
      Also, the Company recorded a debt discount of $1,530,177, which was amortized
      immediately to interest expense upon the conversion of the 2007 Notes. Excluding
      the debt discount, interest expense on the 2007 Notes was $30,177 for the nine
      months ended September 30, 2007 and the period from Inception to September
      30,
      2007.





**Note
      6. Common Stock and Capital Contributions**




Prior
      to
      the Merger, Transdel Holdings issued 25,700,000 shares of its common stock
      at a
      price of $0.001 per share for proceeds of $25,700, which includes the issuance
      of 200,000 shares upon the exercise of a warrant (see below). These shares
      were
      exchanged for 4,015,624 shares of the Company's common stock upon the closing
      of
      the Merger (see Note 3). Also, prior to the Merger, Transdel Holdings received
      capital contributions of $105,907 from Transdel Holdings' stockholders and
      recorded capital contributions of $175,000 (the estimated fair value of the
      services contributed) in connection with services contributed by stockholders,
      which is recorded respectively in selling, general and administrative and
      research and development expenses in the accompanying statements of
      operations.


9





**TRANSDEL
        PHARMACEUTICALS, INC.**
 **(A
        Development Stage Company)**
 **NOTES
        TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
        STATEMENTS**





**Note
      6.  Common Stock and Capital Contributions, continued**





Concurrent
      with the Merger, the Company sold 1,996,834 shares of common stock for gross
      proceeds of $3,993,667 through a private placement (the “Private Placement”). In
      addition, the investors received warrants to purchase 499,208 shares of common
      stock for a period of five years at a cash and cashless exercise price of $4.00
      and $5.00 per share, respectively.





In
      connection with the Private Placement, the Company incurred placement agent
      fees
      totaling approximately $157,500 ($258,500 in the aggregate, including other
      costs) and issued warrants to purchase up to 33,750 shares of common stock
      for a
      period of three years at cash and cashless exercise price of $4.00 and $5.00
      per
      share, respectively.





In
      September 2007, the Company entered into three, one-year consulting agreements
      with three separate firms to provide services related to investor
      communications. The terms per one of the agreements, among other items, include
      monthly payments of $7,500 plus expenses and for another agreement a
      non-refundable fee of $140,000. Also, in the aggregate, 275,000 shares of common
      stock were issued in accordance with the terms of the agreements along with
      a
      warrant to purchase 18,750 shares of common stock for a period of five years
      at
      a cash and cashless exercise price of $4.00 and $5.00, respectively. The fair
      value of the stock and warrants were valued at $550,000. The estimated costs
      of
      the consulting agreements, including the stock, warrants and non-refundable
      fee
      will be amortized over the one-year terms. For the three and nine months ended
      September 30, 2007, the Company amortized $28,752 which is included as part
      of
      selling, general and administrative expenses.





**Note
      7. Stock Option Plans**




Transdel
      Holdings' 2005
      Stock Plan provided for grant of options to employees, directors and consultants
      of Transdel
      Holdings to
      purchase Transdel
      Holdings' shares,
      as determined by management and the board of directors, at the fair value of
      such shares on the grant date. As of January 1, 2007, there were options to
      purchase 100,000 shares of Transdel Holdings' common stock outstanding at an
      exercise price of $0.001. In August 2007, 50,000 options were exercised for
      the
      issuance of Transdel Holdings' common stock for total proceeds of $50.
      Subsequent to this exercise, the remaining 50,000 options were cancelled. The
      shares of Transdel Holdings issued in relation to the exercise of the stock
      option were exchanged for 7,813 shares of the Company's common stock upon the
      closing of the merger (see Note 3).




On
      September 17, 2007, the Company’s Board of Directors and stockholders adopted
      the 2007 Incentive Stock and Awards Plan (the “Plan”), which provides
      for the issuance of a maximum of an aggregate of 1,500,000 shares of Common
      Stock .
      The
      purpose of the Plan is to provide an incentive to attract and retain directors,
      officers, consultants, advisors and employees whose services are considered
      valuable, to encourage a sense of proprietorship and to stimulate an active
      interest of such persons into the Company’s development and financial success.
      Under the Plan, the Company is authorized to issue incentive stock options
      intended to qualify under Section 422 of the Code, non-qualified stock options
      and restricted stock. The Plan will be administered by the Company’s Board of
      Directors until such time as such authority has been delegated to a committee
      of
      the board of directors.




10




**TRANSDEL
      PHARMACEUTICALS, INC.**


**(A
        Development Stage Company)**
 **NOTES
        TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
        STATEMENTS**


**Note
      7.  Stock Option Plans**,**continued**




Pursuant
      to the terms of the Private Placement, for one year following the initial
      closing of the Private Placement the Company may not issue options to purchase
      shares of common stock at an exercise price below $2.00 per share. In addition, for
      a
      period of 18 months following the initial closing of the Private Placement,
      the
      Company may
      not
      file a registration statement, including, without limitation, a registration
      statement on Form S-8, covering the resale of any shares of common stock issued
      pursuant to an employee benefit plan.




A
      summary
      of the status of the Plan for the nine months ended September 30, 2007 is
      as follows:





Options
                outstanding – Beginning of Period
            
            
            -Granted
            
            
            600,000Exercised
            
            
            -Cancelled
            
            
            -Options
                outstanding – End of Period
            
            
            600,000Options
                exercisable – End of Period
            
            
            -Weighted
                average fair value of the options granted
            
            $
            1.47Weighted
                average remaining contractual life of the outstanding options – End of
                period
            
            
            10.0
                yearsAggregate
                intrinsic value – End of Period
            
            $
            600,000




All
      of
      the options granted to the employees and directors were issued at an exercise
      price of $2.00, the estimated fair market value of the common stock on the
      date
      of issuance. The Company uses the Black-Scholes option pricing model to estimate
      the grant-date fair value of share-based awards under SFAS 123R. The
      Black-Scholes model requires subjective assumptions regarding future stock
      price
      volatility and expected time to exercise, along with assumptions about the
      risk-free interest rate and expected dividends, which affect the estimated
      fair
      values of the Company’s stock-based awards. The expected term of options granted
      was determined in accordance with the simplified approach as defined by SEC
      Staff Accounting Bulletin No. 107, *Share-Based
      Payment* ,
      as the
      Company has very limited historical data on employee exercises and post-vesting
      employment termination behavior. The expected volatility is based on the
      historical volatilities of the common stock of comparable publicly
      traded companies based on the Company’s belief that it currently has limited
      historical data regarding the volatility of its stock price on which to base
      a
      meaningful estimate of expected volatility. The risk-free rate selected to
      value
      any particular grant is based on the U.S. Treasury rate that corresponds to
      the
      expected term of the grant effective as of the date of the grant. The Company
      used 0% as an expected dividend yield assumption. These factors could change
      in
      the future, affecting the determination of stock-based compensation expense
      in
      future periods. Utilizing these assumptions, the fair
      value is determined at the date of grant.




In
      accordance with SFAS 123R, the financial statement effect of forfeitures is
      estimated at the time of grant and revised, if necessary, if the actual effect
      differs from those estimates. As of September 30, 2007, management estimates
      that the effect of forfeitures on the financial statements will be
      insignificant.




As
      of
      September 30, 2007, there was approximately $873,000 of total unrecognized
      compensation expense related to unvested stock-based compensation under the
      Plan. That expense is expected to be recognized over the weighted-average period
      of 2.9 years.




11




**TRANSDEL
        PHARMACEUTICALS, INC.**
 **(A
          Development Stage Company)**
 **NOTES
          TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
          STATEMENTS**


**Note
      7. Stock Option Plans**,**continued**




Furthermore,
      in August 2007, Transdel Holdings issued a restricted stock grant to an
      executive of the Company for 1,250,000 shares of Transdel Holdings' common
      stock. The
      restricted stock grant was exchanged for a restricted stock grant of 195,313
      shares of the Company's common stock upon closing of the Merger (see Note 3). The
      restricted stock grant will vest 100% on March 17, 2009 (18 months subsequent
      to
      the closing of the Merger). Also, all of these shares are subject to forfeiture
      in the event that the executive’s employment is terminated for cause or the
      executive resigns without good reason prior to March 17, 2009. The fair value
      of
      the grant was determined to be approximately $391,000 and will be amortized
      over
      the period of time
      prior to the vesting date. As of September 30, 2007, there was approximately
      $360,000 of total unrecognized compensation expense related to the unvested
      restricted stock grant.





**Note
      8.    Stock Warrants**





On
      February 27, 2007, Transdel Holdings granted a warrant to purchase 200,000
      shares of its common stock in connection with services rendered. The warrant
      was
      determined to have an insignificant fair value. The warrant vested upon grant,
      had an exercise price of $0.001 per share and expired in February 2012. In
      April
      2007, Transdel Holdings issued 200,000 shares of its common stock for proceeds
      of $200 upon exercise of the warrant. The
      shares issued in relation to the exercise of the warrant were exchanged for
      31,250 shares of Transdel common stock upon the closing of the merger (see
      Note
      3).




In
      addition to the warrants issued in conjunction with the Private Placement,
      the
      Company issued a warrant to purchase shares of its common stock to a firm in
      connection with a consulting agreement at an exercise price of $4.00 (or
      cashless exercise price of $5.00). The expiration of the outstanding warrants
      occurs through September 2012 at various periods (see Note 6).





A
      summary
      of the status of the warrants for the period ended September 30, 2007, is
      as follows:





**Number
                of**
              **Shares**
              **Subject
                to**
              **Warrants**
              **Outstanding**
            
            **Weighted-**
              **Average**
              **Exercise**
              **Price**Warrants
                outstanding – Beginning of Period
            
            
            35,359
            
            $
            0.006Granted
            
            
            582,958
            
            
            3.786Exercised
            
            
            (31,250
            )
            
            0.006Expired
            
            
            (35,359
            )
            
            0.006Warrants
                outstanding – End of Period
            
            
            551,708
            
            $
            4.000Weighted
                average remaining contractual life of the outstanding warrants -
                End of
                period
            
            
            4.78
                years





**N** **ote
      9.  Recent Accounting Pronouncements**





The
      following pronouncements have been issued by the Financial Accounting Standards
      Board (“FASB”):





In
      July 2006, the FASB issued FASB Interpretation No. 48, *Accounting
      for Uncertainty in Income Taxes—an interpretation of FASB Statement
      No. 109* (“FIN
      No. 48”), which clarifies the accounting and disclosure for uncertainty in tax
      positions, as defined. FIN No. 48 seeks to reduce the diversity in practice
      associated with certain aspects of the recognition and measurement related
      to
      accounting for income taxes. The Company is subject to the provisions of FIN
      No.
      48 as of January 1, 2007. The Company believes that its income tax filing
      positions and deductions will be sustained on audit and does not anticipate
      any
      adjustments that will result in a material change to its consolidated financial
      position. Therefore, no reserves for uncertain income tax positions have been
      recorded pursuant to FIN No. 48. The cumulative effect, if any, of applying
      FIN No. 48 is to be reported as an adjustment to the opening balance of
      retained earnings in the year of adoption. The Company did not record a
      cumulative effect adjustment related to the adoption of FIN No. 48. Tax
      years since 1992 remain subject to examination by the major tax jurisdictions
      in
      which the Company is subject to tax. The Company’s policy for recording interest
      and penalties associated with income-based tax audits is to record such items
      as
      a component of income taxes.




12




**TRANSDEL
        PHARMACEUTICALS, INC.**
 **(A
          Development Stage Company)**
 **NOTES
          TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
          STATEMENTS**




**Note
      9. Recent Accounting Pronouncements, continued**




In
      September 2006, the FASB issued SFAS No. 157, *Fair
      Value Measurements* .
      SFAS
      No. 157 defines fair value, establishes a framework for measuring fair value
      in
      GAAP and expands disclosures about fair value measurements. This Statement
      applies under other accounting pronouncements that require or permit fair value
      measurements, the FASB having previously concluded in those accounting
      pronouncements that fair value is the relevant measurement attribute.
      Accordingly, this Statement does not require any new fair value measurements.
      SFAS No. 157 is effective for fiscal years beginning after December 15, 2007.
      The Company plans to adopt SFAS No. 157 beginning in the first quarter of 2008.
      The Company is currently evaluating the impact, if any, that adoption of SFAS
      No. 157 will have on its operating income (loss) or net earnings
      (loss).





On
      February 15, 2007, the FASB issued SFAS No. 159, *The
      Fair Value Option for Financial Assets and Financial Liabilities - Including
      an
      Amendment of FASB Statement No. 115.* SFAS No.
      159 permits an entity to choose to measure many financial instruments and
      certain other items at fair value. Most of the provisions in SFAS No. 159 are
      elective; however, the amendment to FASB Statement No. 115, *Accounting
      for Certain* *Investments
      in Debt and Equity Securities* ,
      applies
      to all entities with available-for-sale and trading securities. Some
      requirements apply differently to entities that do not report net income. The
      fair value option established by SFAS No. 159 permits all entities to choose
      to
      measure eligible items at fair value at specified election dates. A business
      entity will report unrealized gains and losses on items for which the fair
      value
      option has been elected in earnings at each subsequent reporting date. SFAS
      No.
      159 is effective as of the beginning of an entity’s first fiscal year that
      begins after November 15, 2007.  Early adoption is permitted as of the
      beginning of the previous fiscal year provided that the entity makes that choice
      in the first 120 days of that fiscal year and also elects to apply the
      provisions of FASB Statement No. 157, *Fair
      Value Measurements* .
      The
      adoption of this pronouncement is not expected to have material effect on the
      Company’s consolidated financial statements *.*





In
      June
      2007, the FASB ratified a consensus opinion reached on EITF Issue No. 07-3, *Accounting
      for Nonrefundable Advance Payments for Goods or Services Received for Use in
      Future Research and Development Activities.* The
      guidance in EITF Issue No. 07-3 requires the Company to defer and capitalize
      nonrefundable advance payments made for goods or services to be used in research
      and development activities until the goods have been delivered or the related
      services have been performed. If the goods are no longer expected to be
      delivered nor the services expected to be performed, the Company would be
      required to expense the related capitalized advance payments. The consensus
      in
      EITF Issue No. 07-3 is effective for fiscal years, and interim periods within
      those fiscal years, beginning after December 15, 2007 and is to be applied
      prospectively to new contracts entered into on or after December 15, 2007.
      Early
      adoption is not permitted. Retrospective application of EITF Issue No. 07-3
      is
      also not permitted. The Company intends to adopt EITF Issue No. 07-3 effective
      January 1, 2008. The impact of applying this consensus will depend on the terms
      of the Company’s future research and development contractual arrangements
      entered into on or after December 15, 2007.





Other
      recent accounting pronouncements issued by the FASB (including the EITF) and
      the
      American Institute of Certified Public Accountants did not or are not believed
      by management to have a material impact on the Company’s present or future
      consolidated financial statements.




13




**TRANSDEL
        PHARMACEUTICALS, INC.**
 **(A
          Development Stage Company)**
 **NOTES
          TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
          STATEMENTS**


**Note
      10.  Commitments and Contingencies**





Indemnities
      and Guarantees





The
      Company has made certain indemnities and guarantees, under which it may be
      required to make payments to a guaranteed or indemnified party, in relation
      to
      certain actions or transactions. The Company indemnifies its directors,
      officers, employees and agents, as permitted under the laws of the State of
      Delaware. The duration of the guarantees and indemnities varies, and is
      generally tied to the life of the agreement. These guarantees and indemnities
      do
      not provide for any limitation of the maximum potential future payments the
      Company could be obligated to make. Historically, the Company has not been
      obligated nor incurred any payments for these obligations and, therefore, no
      liabilities have been recorded for these indemnities and guarantees in the
      accompanying balance sheet.





**Note
      11.  Subsequent Event**





On
      October 10, 2007, the Company sold an additional 75,000 shares of common stock
      for gross proceeds of $150,000 related to the Private Placement. In addition,
      the investors received warrants to purchase 18,750 shares of common stock for
      a
      period of five years at a cash and cashless exercise price of $4.00 and $5.00
      per share, respectively.




14




**Item
      2. Management’s Discussion and Analysis or Plan of
      Operation**




**Overview**




We
      are a
      specialty pharmaceutical company focused on the development and
      commercialization of non-invasive topically delivered medications. Our lead
      topical drug, KetotransdelTM, utilizes our innovative proprietary TransdelTM cream
      formulation to facilitate the passage of ketoprofen, a NSAID, through the skin
      barrier to reach targeted underlying tissues where the drug exerts its prolonged
      localized anti-inflammatory and analgesic effect. We completed a Phase 1/2
      trial
      for treating acute pain and soreness in a delayed onset muscle soreness model
      with KetotransdelTM.




**Liquidity
      and Capital Resources**




Since
      inception through September 30, 2007, we have incurred losses of approximately
      $5.6 million. These losses are primarily due to general and administrative
      and
      research and development expenses. Our operations have been financed through
      capital contributions and the issuance of notes and common stock.




As
      of
      September 30, 2007, we had $4.3 million in cash. On September 17, 2007, pursuant
      to a private offering of our common stock and warrants (the “Private
      Placement”), we raised approximately $3.7 million (net of placement fees and
      other costs aggregating $258,500) through the issuance of common stock and
      detachable redeemable warrants. We expect that our capital resources will permit
      us to meet our operational requirements through the first quarter of 2008.
      This
      expectation is based on our current operating plan, which may change as a result
      of many factors. Therefore, to execute our operating plan through fiscal year
      2008, additional financing will be required and there can be no assurance that
      it will be available on terms favorable to us or at all. If adequate financing
      is not available we may have to delay, postpone or terminate clinical trials
      and
      curtail general and administrative operations. The inability to raise additional
      financing would have a material adverse effect on us.




**Research
      and Development Activities**




Our
      current operating plan is focused on the research and development of our lead
      drug, KetotransdelTM. We expect to file the Investigational New Drug (“IND”)
      application for KetotransdelTM, containing our proposed Phase 3 clinical studies,
      prior to initiating our trials. At the 2004 Pre-IND meeting with the FDA, the
      FDA indicated it is possible that a single Phase 3 clinical trial could be
      designed to address all or most of the issues raised by the FDA relating to
      the
      approval of KetotransdelTM. The expected filing date of the Phase 3 submission to
      the FDA will depend on a variety of factors including but not limited to the
      completion of the manufacturing process for non clinical/clinical supplies,
      and
      potentially the completion of the non clinical studies and the generation of
      data. Issues or problems encountered in any of these areas may result in delays
      in the filing of the IND for the Phase 3 trials. Our goal is to file with the
      FDA for Phase 3 clinical trials in the first quarter of 2008. Based on the
      FDA’s
      review of this filing, the Company anticipates starting Phase 3 clinical trials
      as early as the first half of 2008 for the topical treatment of acute pain.




No
      assurance can be given that the FDA will agree with our proposed clinical trials
      or non-clinical studies. The FDA may require that we conduct additional clinical
      trials and non-clinical studies that we do not presently anticipate conducting
      or to repeat studies that we have already conducted.




15




Upon
      FDA
      approval of KetotransdelTM for treatment of acute pain, we intend to pursue FDA
      approval of KetotransdelTM for other indications including osteoarthritis. We
      believe that the clinical success of KetotransdelTM will facilitate the use of
      the TransdelTM delivery technology in other products. We are also investigating
      other drug candidates and treatments for transdermal delivery using the
      TransdelTM platform technology for products in pain management and other
      therapeutic areas. Furthermore, we are in discussions with potential commercial
      partners for future KetotransdelTM sales and marketing strategies and with
      potential Pharma partners for licensing opportunities related to the TransdelTM
delivery system.




We
      believe that our current staff is sufficient to carry out our business plan
      and
      we do not expect that the number of our employees will change in the near
      future.




**Critical
      Accounting Policies**




*Stock-Based
      Compensation.* Effective January 1, 2006, we adopted Statement of Financial
      Accounting Standards (‘‘SFAS’’) No. 123 (revised 2004), *Share-Based
      Payment* ,
      (‘‘SFAS 123R’’), which is a revision of SFAS No. 123, *Accounting
      for Stock-Based Compensation* .
      SFAS
      123R supersedes APB No. 25, *Accounting
      for Stock Issued to Employees* ,
      and
      amends SFAS No. 95, *Statement
      of Cash Flows* .
      SFAS
      123R requires all share-based payments to employees, including grants of
      employee stock options and restricted stock grants, to be recognized in the
      financial statements based upon their fair values. We use the Black-Scholes
      option pricing model to estimate the grant-date fair value of share-based awards
      under SFAS 123R. Fair value is determined at the date of grant. In accordance
      with SFAS 123R, the financial statement effect of forfeitures is estimated
      at
      the time of grant and revised, if necessary, if the actual effect differs from
      those estimates. As of September 30, 2007, management estimates that the effect
      of forfeitures on the financial statements will be insignificant.




Our
      accounting policy for equity instruments issued to consultants and vendors
      in
      exchange for goods and services follows the provisions of SFAS No. 123, EITF
      96-18, *Accounting
      for Equity Instruments That are Issued to Other Than Employees for Acquiring,
      or
      in Conjunction with Selling, Goods or Services* and EITF
      00-18, *Accounting
      Recognition for Certain Transactions Involving Equity Instruments Granted to
      Other Than Employees.* As
      such,
      the value of the applicable stock-based compensation is periodically remeasured
      and income or expense is recognized during the vesting terms. The measurement
      date for the fair value of the equity instruments issued is determined at the
      earlier of (i) the date at which a commitment for performance by the consultant
      or vendor is reached or (ii) the date at which the consultant or vendor's
      performance is complete. In the case of equity instruments issued to
      consultants, the fair value of the equity instrument is recognized over the
      term
      of the consulting agreement. In accordance with EITF 00-18, an asset acquired
      in
      exchange for the issuance of fully vested, nonforfeitable equity instruments
      should not be presented or classified as an offset to equity on the grantor's
      balance sheet once the equity instrument is granted for accounting purposes.
      Accordingly, we recorded the fair value of the common stock issued for future
      consulting services as prepaid consulting fees in its condensed consolidated
      balance sheet.


**Off-Balance
        Sheet Arrangements**




Since
      our
      inception, except for standard operating leases, we have not engaged in any
      off-balance sheet arrangements, including the use of structured finance, special
      purpose entities or variable interest entities.




16




**Recent
      Accounting Pronouncements**





In
      July 2006, the FASB issued FASB Interpretation No. 48, *Accounting
      for Uncertainty in Income Taxes—an interpretation of FASB Statement
      No. 109* (“FIN
      No. 48”), which clarifies the accounting and disclosure for uncertainty in tax
      positions, as defined. FIN No. 48 seeks to reduce the diversity in practice
      associated with certain aspects of the recognition and measurement related
      to
      accounting for income taxes. The Company is subject to the provisions of FIN
      No.
      48 as of January 1, 2007. The Company believes that its income tax filing
      positions and deductions will be sustained on audit and does not anticipate
      any
      adjustments that will result in a material change to its financial position.
      Therefore, no reserves for uncertain income tax positions have been recorded
      pursuant to FIN No. 48. The cumulative effect, if any, of applying
      FIN No. 48 is to be reported as an adjustment to the opening balance of
      retained earnings in the year of adoption. The Company did not record a
      cumulative effect adjustment related to the adoption of FIN No. 48. Tax
      years since 1992 remain subject to examination by the major tax jurisdictions
      in
      which the Company is subject to tax. The Company’s policy for recording interest
      and penalties associated with income-based tax audits is to record such items
      as
      a component of income taxes.





In
      September 2006, the FASB issued SFAS No. 157, *Fair
      Value Measurements* .
      SFAS
      No. 157 defines fair value, establishes a framework for measuring fair value
      in
      generally accepted accounting principles and expands disclosures about fair
      value measurements. This Statement applies under other accounting pronouncements
      that require or permit fair value measurements, the FASB having previously
      concluded in those accounting pronouncements that fair value is the relevant
      measurement attribute. Accordingly, this Statement does not require any new
      fair
      value measurements. SFAS No. 157 is effective for fiscal years beginning after
      December 15, 2007. The Company plans to adopt SFAS No. 157 beginning in the
      first quarter of 2008. The Company is currently evaluating the impact, if any,
      that adoption of SFAS No. 157 will have on its operating income (loss) or net
      earnings (loss).





On
      February 15, 2007, the FASB issued SFAS No. 159, *The
      Fair Value Option for Financial Assets and Financial Liabilities - Including
      an
      Amendment of FASB Statement No. 115.* SFAS No.
      159 permits an entity to choose to measure many financial instruments and
      certain other items at fair value. Most of the provisions in SFAS No. 159 are
      elective; however, the amendment to FASB Statement No. 115, *Accounting
      for Certain Investments in Debt and Equity Securities* ,
      applies
      to all entities with available-for-sale and trading securities. Some
      requirements apply differently to entities that do not report net income. The
      fair value option established by SFAS No. 159 permits all entities to choose
      to
      measure eligible items at fair value at specified election dates. A business
      entity will report unrealized gains and losses on items for which the fair
      value
      option has been elected in earnings at each subsequent reporting date. SFAS
      No.
      159 is effective as of the beginning of an entity’s first fiscal year that
      begins after November 15, 2007.  Early adoption is permitted as of the
      beginning of the previous fiscal year provided that the entity makes that choice
      in the first 120 days of that fiscal year and also elects to apply the
      provisions of FASB Statement No. 157, *Fair
      Value Measurements* .
      The
      adoption of this pronouncement is not expected to have material effect on the
      Company’s financial statements *.*





In
      June
      2007, the Financial Accounting Standards Board ratified a consensus opinion
      reached by the Emerging Issues Task Force (EITF) on EITF Issue No. 07-3, *Accounting
      for Nonrefundable Advance Payments for Goods or Services Received for Use in
      Future Research and Development Activities.* The
      guidance in EITF Issue 07-3 requires us to defer and capitalize nonrefundable
      advance payments made for goods or services to be used in research and
      development activities until the goods have been delivered or the related
      services have been performed. If the goods are no longer expected to be
      delivered nor the services expected to be performed, we would be required to
      expense the related capitalized advance payments. The consensus in EITF Issue
      07-3 is effective for fiscal years, and interim periods within those fiscal
      years, beginning after December 15, 2007 and is to be applied prospectively
      to
      new contracts entered into on or after December 15, 2007. Early adoption is
      not
      permitted. Retrospective application of EITF Issue 07-3 is also not permitted.
      We intend to adopt EITF Issue 07-3 effective January 1, 2008. The impact of
      applying this consensus will depend on the terms of our future research and
      development contractual arrangements entered into on or after December 15,
      2007.




17




**Item
      3. Controls and Procedures.**




We
      carried out an evaluation, under the supervision and with the participation
      of
      our management, including our chief executive officer and chief financial
      officer, of the effectiveness of the design and operation of our disclosure
      controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under
      the
      Securities Exchange Act of 1934, as amended (the “Exchange Act”). Disclosure
      controls and procedures include, without limitation, controls and procedures
      designed to ensure that information required to be disclosed by an issuer in
      the
      reports that it files or submits under the Exchange Act is accumulated and
      communicated to the issuer’s management, including its principal executive and
      principal financial officers, or persons performing similar functions, as
      appropriate to allow timely decisions regarding required disclosure. Based
      upon
      our evaluation, our chief executive officer and chief financial officer
      concluded that our disclosure controls and procedures are effective, as of
      the
      end of the period covered by this Report (September 30, 2007), in ensuring
      that
      material information that we are required to disclose in reports that we file
      or
      submit under the Exchange Act is recorded, processed, summarized and reported
      within the time periods specified in the Securities and Exchange Commission
      rules and forms.




There
      were no changes in our internal control over financial reporting during the
      nine
      month period ended September 30, 2007 that have materially affected, or are
      reasonably likely to materially affect, our internal control over financial
      reporting.




**PART
      II**


**OTHER
      INFORMATION**




**Item
      2. Unregistered Sales of Equity Securities and Use of
      Proceeds**




Except
      as
      previously included in our Current Reports on Form 8-K filed with the Securities
      and Exchange Commission, we have not sold any equity securities during the
      period covered by this Report that were not registered under the Securities
      Act
      of 1933, as amended, except for the following:




On
      September 17, 2007, we issued an aggregate of 275,000 shares of our common
      stock
      and a warrant to purchase 18,750 shares of our common stock to three firms
      as
      compensation for investor relations services. The issuance of these shares
      was
      exempt from registration under the Securities Act of 1933, as amended, pursuant
      to Section 4(2) thereof. Each firm is an “accredited investor” within the
      meaning of Rule 501(a) under the Securities Act.





On
      October 10, 2007, we sold 75,000 shares of our common stock and warrants to
      purchase 18,750 shares of our common stock to accredited investors for an
      aggregate purchase price of $150,000 pursuant to the Private Placement. The
      issuance of these shares and warrants was exempt from registration under the
      Securities Act of 1933, as amended, pursuant to Section 4(2) thereof. The
      proceeds from the sale of the common stock and warrants will be used for working
      capital and general corporate purposes.




**Item
      4. Submission of Matters to a Vote of Security Holders**




On
      September 10, 2007, our stockholders acting by majority written consent approved
      the adoption of our Amended and Restated Certificate of Incorporation. This
      majority written consent was executed by holders of 5,500,000 shares of our
      common stock, which represented 75% of our outstanding shares of common stock
      then entitled to vote.




18




On
      September 17, 2007, our stockholders, acting by majority written consent,
      approved (i) the merger of Trans-Pharma Acquisition Corp., our wholly
      subsidiary, with and into Transdel Pharmaceuticals Holdings, Inc. (formally
      Trans-Pharma Corporation), a Nevada corporation, and (ii) our 2007 Incentive
      Stock and Awards Plan. This majority written consent was executed by holders
      of
      5,500,000 shares of our common stock, which represented 75% of our outstanding
      shares of common stock then entitled to vote.




**Item
      6. Exhibits**




**Exhibit**
              **Number**
            
            **Description**31.1*
            
            Section
                302 Certification of Principal Executive Officer31.2*
            
            Section
                302 Certification of Principal Financial Officer32.1*
            
            Section
                906 Certification of Principal Executive Officer and Principal Financial
                Officer





*
      Filed
      herewith.




19




**SIGNATURES**




In
      accordance with the requirements of the Exchange Act, the registrant caused
      this
      report to be signed on its behalf by the undersigned, thereunto duly
      authorized.




Transdel
                Pharmaceuticals, Inc.Dated:
                November 14, 2007
            By:
            /s/
                Juliet SinghDr.
                Juliet Singh
              Chief
                Executive Officer




20




**EXHIBIT
      INDEX**




**Exhibit**
              **Number**
            
            **Description**31.1*
            
            Section
                302 Certification of Principal Executive Officer31.2*
            
            Section
                302 Certification of Principal Financial Officer32.1*
            
            Section
                906 Certification of Principal Executive Officer and Principal Financial
                Officer





*Filed
      herewith.