**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**




**FORM
      10-Q**


(Mark
      One)




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




For
      the
      quarterly period ended **March
      31, 2008**




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




For
      the
      transition period from to




Commission
      file number: 000-52998




**Transdel
      Pharmaceuticals, Inc.**


(Exact
      Name of Registrant 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(Registrant’s
                Telephone Number, Including Area Code)(Former
                Name, Former Address and Former Fiscal Year, if Changed Since Last
                Report)




Indicate
      by check mark whether the registrant: (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 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 ** ̈** NO **x**




As
      of May
      14, 2008, 15,545,184 shares of issuer’s common stock, with $0.001 par value per
      share were outstanding.


Indicate
        by check mark whether the registrant is a large accelerated filer, an
        accelerated filer, a non-accelerated filer, or a smaller reporting company.
        See
        the definitions of "large accelerated filer", "accelerated filer" and "smaller
        reporting company" in Rule 12b-2 of the Exchange Act (Check
        One):
  Large
                  accelerated filer o
              Accelerated
                  filer oNon-accelerated
                  filer o
              Smaller
                  reporting company x(Do
                not check if a smaller reporting company)





**TRANSDEL
        PHARMACEUTICALS, INC.**
 **(A
        Development Stage Company)**
  Table
        of Contents
  **Page**Part
                  I
              
              FINANCIAL
                  INFORMATION
              
              2Item
                  1.
              
              Financial
                  Statements
              
              2Condensed
                  Consolidated Balance Sheets – March 31, 2008 (Unaudited) and December
                  31, 2007
              
              2Unaudited
                  Condensed Consolidated Statements of Operations for the three-month
                  periods ended March 31, 2008 and 2007
              
              3Unaudited
                  Condensed Consolidated Statements of Cash Flows for the three-month
                  periods ended March 31, 2008 and 2007
              
              4Notes
                  to the Unaudited Condensed Consolidated Financial Statements
              
              5Item
                  2.
              
              Management’s
                  Discussion and Analysis of Financial Condition and Results of
                  Operations
              
              14Item
                  4T.
              
              Controls
                  and Procedures
              
              16Part
                  II
              
              OTHER
                  INFORMATION
              
              17Item
                  2.
              
              Unregistered
                  Sales of Equity Securities and Use of Proceeds
              
              17Item
                  6.
              
              Exhibits
              
              17
  i
  **PART
        I**
 **FINANCIAL
        INFORMATION**
  **Item
            1.** **Financial
            Statements.**
  **TRANSDEL
        PHARMACEUTICALS, INC.**
 **(A
        Development Stage Company)**
 **CONDENSED
        CONSOLIDATED BALANCE SHEETS**
  **March
                  31,**
              
              **December
                  31,****2008**
              
              **2007****(Unaudited)****ASSETS**Current
                  assets:Cash
              
              $
              3,408,244
              
              $
              3,706,369Prepaid
                  consulting
                  fees
              
              
              298,621
              
              
              488,748Prepaid
                  expenses and other
                  current assets
              
              
              37,378
              
              
              45,604Total
                  assets
              
              $
              3,744,243
              
              $
              4,240,721**LIABILITIES
                  AND STOCKHOLDERS’ EQUITY**Current
                  liabilities:Accounts
                  payable
              
              $
              427,588
              
              $
              696,340Accrued
                  expenses and payroll
                  liabilities
              
              
              43,574
              
              
              53,901Total
                  liabilities
              
              $
              471,162
              
              $
              750,241Stockholders’
                  equity:Preferred
                  stock, $0.001 par value; 5,000,000 shares authorized, none
                  outstanding
              
              
              -
              
              
              -Common
                  stock, $0.001 par value; 50,000,000 sharesauthorized,
                  13,727,004 shares outstanding
              
              
              13,727
              
              
              13,727Additional
                  paid-in capital
              
              
              10,609,620
              
              
              10,554,298Deficit
                  accumulated during the development stage
              
              
              (7,350,266
              )
              
              (7,077,545
              )Total
                  stockholders’ equity
              
              
              3,273,081
              
              
              3,490,480Total
                  liabilities and stockholders’ equity
              
              $
              3,744,243
              
              $
              4,240,721




2




**TRANSDEL
      PHARMACEUTICALS, INC.**


**(A
      Development Stage Company)**


**UNAUDITED
      CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS**





**Three Months EndedMarch 31,**
            
            **For thePeriod FromJuly 24, 1998
                (Inception)ThroughMarch****2008**
            
            **2007**
            
            **31, 2008**Operating
                expenses:Selling,
                general and administrative
            
            $
            447,855
            
            $
            100,221
            
            $
            3,531,436Research
                and development
            
            
            219,100
            
            
            37,500
            
            
            2,776,844Operating
                loss
            
            
            666,955
            
            
            137,721
            
            
            6,308,280Other
                income (expense):Interest
                expense
            
            
            -
            
            
            (2,207
            )
            
            (1,575,755
            )Interest
                income
            
            
            19,234
            
            
            -
            
            
            68,855Gain
                on forgiveness of liabilities
            
            
            -
            
            
            -
            
            
            89,914Gain
                on settlement
            
            
            375,000
            
            
            -
            
            
            375,000Total
                other income (expense), net
            
            
            394,234
            
            
            (2,207
            )
            
            (1,041,986
            )Net
                loss
            
            $
            (272,721
            )
            $
            (139,928
            )
            $
            (7,350,266
            )Basic
                and diluted loss per common share
            
            $
            (0.02
            )
            $
            (0.03
            )Weighted
                average common shares outstanding
            
            
            13,727,004
            
            
            5,034,404




3




**TRANSDEL
      PHARMACEUTICALS, INC.**


**(A
      Development Stage Company)**


**UNAUDITED
      CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**





**For The Period****From July 24,****1998(Inception)****Three Months Ended**
            
            **Through****March 31,**
            
            **March 31,****2008**
            
            **2007**
            
            **2008****Cash
                from operating activities:**Net
                loss
            
            $
            (272,721
            )
            $
            (139,928
            )
            $
            (7,350,266
            )Adjustments
                to reconcile net loss to net cash used in
                operating activities:Estimated
                fair value of contributed services
            
            
            -
            
            
            100,000
            
            
            2,475,000Gain
                on forgiveness of liabilities
            
            
            -
            
            
            -
            
            
            (89,914
            )Amortization
                of prepaid consulting fees
            
            
            137,627
            
            
            -
            
            
            338,879Non-cash
                interest on notes payable
            
            
            -
            
            
            2,207
            
            
            1,575,755Stock-based
                compensation
            
            
            144,051
            
            
            -
            
            
            328,573Changes
                in operating assets and liabilities:Prepaid
                consulting costs
            
            
            -
            
            
            -
            
            
            (140,000
            )Prepaid
                expenses and other current assets
            
            
            8,226
            
            
            1,599
            
            
            (37,378
            )Accounts
                payable
            
            
            (268,752
            )
            
            18,275
            
            
            517,503Accrued
                expenses and payroll liabilities
            
            
            (10,327
            )
            
            -
            
            
            43,573Net
                cash used in operating activities
            
            
            (261,896
            )
            
            (17,847
            )
            
            (2,338,275
            )**Cash
                flows from financing activities:**Proceeds
                from notes payable to stockholders
            
            
            -
            
            
            -
            
            
            226,300Proceeds
                from notes payable
            
            
            -
            
            
            -
            
            
            1,500,000Capital
                contributions
            
            
            -
            
            
            907
            
            
            168,707Proceeds
                from purchase of common stock and exercise of warrants and stock
                options
            
            
            -
            
            
            25,500
            
            
            49,950Net
                (costs) proceeds from Private Placement
            
            
            (36,229
            )
            
            -
            
            
            3,801,562Net
                cash (used in) provided by financing activities
            
            
            (36,229
            )
            
            26,407
            
            
            5,746,519**Net
                change in cash**
            
            
            (298,125
            )
            
            8,560
            
            
            3,408,244**Cash,
                beginning of period**
            
            
            3,706,369
            
            
            542
            
            
            -**Cash,
                end of period**
            
            $
            3,408,244
            
            $
            9,102
            
            $
            3,408,244**Supplemental
                disclosure of cash flow information:**(Revaluation)
                issuance of common stock and warrants to consulting firms for prepaid
                consulting fees
            
            $
            (52,500
            )
            $
            -
            
            $
            497,500Conversion
                of notes payable and accrued interest into common stock
            
            $
            -
            
            $
            -
            
            $
            1,530,177Forgiveness
                of notes payable and accrued interest to shareholders
            
            $
            -
            
            $
            -
            
            $
            241,701Conversion
                of notes payable to shareholders
            
            $
            -
            
            $
            -
            
            $
            196,300




4




**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  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
      Transdel TM platform
      technology for products in pain management and other therapeutic
      areas.





**Note
      2. Basis of Presentation**





The
      Company has prepared the accompanying unaudited condensed consolidated financial
      statements in accordance with United States generally accepted accounting
      principles (“GAAP”) for interim financial information and with the rules and
      regulations of the Securities and Exchange Commission (the “SEC”) related to a
      Quarterly Report on Form 10-Q and Article 8 of Regulation S-X. Accordingly,
      they
      do not include all of the information and disclosures required by GAAP
      for
      annual financial statements.  The
      consolidated financial statements include the accounts of Transdel and its
      wholly owned subsidiary, Transdel Pharmaceuticals Holdings, Inc. (formerly
      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 March
      31, 2008, the results of operations for three months ended March 31, 2008 and
      2007, and cash flows for the three months ended March 31, 2008 and 2007, fairly
      stated. The condensed consolidated financial statements should be read in
      conjunction with the audited financial statements for the year ended
      December 31, 2007 contained in Form 10-KSB filed on March 26, 2008 with
      the
      SEC.





**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.





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.




5




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




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




*Going
      Concern* .
      The
      accompanying unaudited 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 July 24,
      1998 ("Inception"). In addition, the Company had a deficit accumulated
      during the development stage of $7,350,266 at March 31, 2008. These factors
      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
      unaudited 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.





*Cash
      and cash equivalents* .
      Cash
      equivalents consist of highly liquid investments with maturities of three months
      or less from the original purchase date.





*Concentrations
      of Credit Risk.* Financial
      instruments that potentially subject the Company to a concentration of credit
      risk consist primarily of cash and cash equivalents. In order to minimize the
      Company’s risk related to the cash equivalents, they are maintained in a money
      market demand account. Due to the short-term nature of this investment, the
      Company believes that there is no material exposure to interest rate risk.
      The
      Company maintains its cash and cash equivalents at a high-quality institution
      that is insured by the Federal Deposit Insurance Corporation (“FDIC”).





*Fair
      Value of Financial Instruments.* The fair
      values of the Company’s cash and cash equivalents, accounts payable and accrued
      expenses approximate carrying values due to their short maturities.





*Beneficial
      Conversion Feature.* The
      convertible features of the convertible notes provided for a rate of conversion
      that was below market value (see Note 5). Such feature is normally characterized
      as a "beneficial conversion feature" ("BCF"). Pursuant to Emerging Issues Task
      Force Issue (“EITF”) No. 98-5 *Accounting
      For Convertible Securities with Beneficial Conversion Features or Contingently
      Adjustable Conversion Ratio,* and
      EITF
      No. 00-27, *Application
      of EITF Issue No. 98-5 To Certain Convertible Instruments,* the
      relative fair values of the BCFs have been recorded as a discount from the
      face
      amount of the respective debt instrument. The Company recorded the
      corresponding debt discount related to the BCF as interest expense when the
      related instrument was converted into the Company's common stock.




6




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


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





*Revenue
      Recognition.* The
      Company will recognize revenues in accordance with the SEC 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.





As
      of
      March 31, 2008, 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 U.S. Food and
      Drug Administration ("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 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 Accounting Principles Board Opinion (“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 $144,051, $0 and $328,573 for the three months
      ended
      March 31, 2008 and 2007 and for the period from Inception to March 31, 2008,
      respectively, for options and restricted stock granted and vested which is
      included in general and administrative expenses and research and development
      expenses in the amount of $57,774 and $86,277, respectively, for the three
      months ended March 31, 2008 and $121,353 and $207,220, respectively, for the
      period from Inception to March 31, 2008. The fair value of the unvested stock
      options and restricted stock grants amounted to $965,398 as of March 31,
      2008.




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 sheets (see Note 6).





7




**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 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.





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 1,180,458 and
      99,914 for the three months ended March 31, 2008 and 2007, 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 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 and realizability 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 $2,207 and $15,401 for the three months
      ended March 31, 2007 and the period from Inception to March 31, 2008,
      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 period
      from Inception to March 31, 2008.




8




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


**Note
      6. Stockholders’ Equity**


Concurrent
      with the Merger, the Company sold 2,071,834 shares of common stock for gross
      proceeds of $4,143,667 through a private placement (the “Private Placement”). In
      addition, the investors received warrants to purchase 517,958 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 and other related expenses totaling
      $342,105 and issued warrants to purchase up to 33,750 shares of common stock
      for
      a period of three years at a 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 are being amortized over the one-year
      terms.





In
      accordance with EITF 00-18, 100,000 of the 275,000 shares of common stock are
      subject to remeasurement on a periodic basis as the performance condition for
      these shares is not satisfied until the end of the contract term. The
      remeasurement for the 100,000 shares was completed in two stages as follows:
      a)
      In February 2008, the consulting agreement associated with these shares was
      terminated and as a condition of the termination, the firm retained 50,000
      shares and transferred the remaining 50,000 shares to another firm. Therefore,
      since the performance obligation related to the 50,000 shares, retained by
      the
      terminated consulting firm, is complete, they were revalued as of the February
      termination date to $60,000, which was the fair market value of the shares
      on
      the termination date, and b) the remaining 50,000 shares that were transferred
      to the other firm will be utilized for the payment of investor communications
      services to be provided through September 2008. In accordance with the related
      agreement, the Company initially recorded the value of these shares at $100,000,
      which was revalued at March 31, 2008 to $87,500 (the estimated fair market
      value
      based on the closing market price). In the aggregate, the remeasurement of
      the
      50,000 shares earned and the transfer of the remaining 50,000 shares resulted
      in
      a reduction of additional paid in capital of $52,500 ($200,000 original value
      less $147,500 remeasured value). For the three months ended March 31, 2008
      and
      2007 and for the period from Inception through March 31, 2008, the Company
      amortized $137,627, $0 and $338,879, respectively, of prepaid consulting
      fees which is included as part of selling, general and administrative expenses.





**Note
      7. Stock Option Plans**





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 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.




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.




9




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


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




A
      summary
      of the status of the Plan for the three months ended March 31, 2008 is as
      follows:





**Numberof Shares**
            
            **WeightedAverageExercisePrice**Options
                outstanding – Beginning of Period
            
            
            610,000
            
            $
            2.01Granted
            
            
            -
            
            
            -Exercised
              Cancelled
            
            
            -
              -
            
            
            -
              -Options
                outstanding – End of Period
            
            
            610,000
            
            $
            2.01Options
                exercisable – End of Period
            
            
            -Weighted
                average remaining contractual life of the outstanding options – End
                of period
            
            
            9.5
                yearsAggregate
                intrinsic value – End of Period
            
            
            -




All
      options granted to date expire on the ten year anniversary of the issuance
      date
      and vest over one to three years.    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 SAB 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 March 31, 2008, management
      estimates that the effect of forfeitures on the financial statements will be
      insignificant. As of March 31, 2008, there was approximately $729,000 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 2.4 years.





Furthermore,
      in August 2007, the Company issued a restricted stock grant to an executive
      of
      the Company for 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). 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 March 31, 2008, there was
      approximately $236,000 of total unrecognized compensation expense related to
      the
      unvested restricted stock grant. Subsequent to March 31, 2008, the restrictions
      on the restricted stock were waived in connection with the executive’s
      resignation (see Note 11).




10




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




**Note
      8.    Stock Warrants**


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 March 31, 2008, is as
      follows:





**Number ofSharesSubject toWarrants****Outstanding**
            
            **Weighted-AverageExercise****Price**Warrants
                outstanding – Beginning of Period
            
            
            570,458
            
            $
            4.00Granted
            
            
            -
            
            
            -Exercised
            
            
            -
            
            
            -Expired
            
            
            -
            
            
            -Warrants
                outstanding – End of Period
            
            
            570,458
            
            $
            4.00Weighted
                average remaining contractual life of the outstanding warrants – End
                of Period
            
            
            4.35
                years




**Note
      9. Recent Accounting Pronouncements**





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





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.
      The
      Company adopted 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.




In
      December 2007, the FASB issued SFAS No. 141R, " *Business
      Combinations* ."
      SFAS
      No. 141R provides companies with principles and requirements on how an acquirer
      recognizes and measures in its financial statements the identifiable assets
      acquired, liabilities assumed, and any noncontrolling interest in the acquiree
      as well as the recognition and measurement of goodwill acquired in a business
      combination. SFAS No. 141R also requires certain disclosures to enable users
      of
      the financial statements to evaluate the nature and financial effects of the
      business combination. Acquisition costs associated with the business combination
      will generally be expensed as incurred. SFAS No. 141R is effective for business
      combinations occurring in fiscal years beginning after December 15, 2008. Early
      adoption of SFAS No. 141R is not permitted. The Company is currently evaluating
      the impact SFAS No. 141R will have on any future business
      combinations.




11




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


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




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.





**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.




Mediation
      Settlement





On
      February 5, 2008, as a result of mediation, the Company and a previously
      retained law firm reached an agreement related to certain alleged claims the
      Company had against the law firm. Although the law firm did not admit to any
      liability or wrongdoing, they desired to resolve the dispute and therefore,
      agreed to pay the Company $750,000. In exchange for the settlement, the Company,
      the law firm and any other parties involved in the mediation, released and
      waived any future claims against each other, whether known or unknown at the
      time of the settlement. The net amount received by the Company was $375,000
      after fees paid to the Company’s counsel and an executive and director of the
      Company. The fees paid to the executive and director, which were previously
      approved by the Board of Directors, are due to their monetary contributions
      and
      uncompensated time commitment over a period of approximately four years related
      to pursuing this matter and other amounts paid on the Company’s behalf prior to
      the Merger.





**Note
      11. Subsequent Events**





*Restricted
      Stock*





On
      April
      4, 2008, the Company’s Board of Directors waived any restrictions or forfeiture
      conditions on the 195,313 shares of restricted common stock previously granted
      to an executive (see Note 7) in conjunction with the executive’s resignation and
      a separation agreement entered into between the Company and the executive.
      As of
      March 31, 2008, the unamortized value of the restricted stock was $236,000
      which
      will be fully amortized in April 2008 as a result of the waiver of restrictions
      and the executive’s resignation from the Company.




12




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




**Note
      11. Subsequent Events, continued**





*Stock
      Option Grants*





On
      April
      24, 2008, the Company’s Board of Directors granted 600,000 stock options to
      certain executive officers of the Company under the Company’s 2007
      Incentive Stock and Awards Plan. All of the options were granted with an
      exercise price of $2.00 and have a ten year life. Also, the
      options vest one-twelfth per quarter commencing on the first full quarter after
      the initial grant date of April 24, 2008.





Furthermore,
      on April 24, 2008, the Company’s Board of Directors modified the vesting
      provisions of all outstanding stock options previously granted to vest on a
      quarterly basis over the respective vesting period as opposed to on an annual
      basis.





*Consulting
      Agreement*





On
      April
      24, 2008, the Company entered into a one-year consulting agreement with a firm
      to provide the Company with financial advisory services. As compensation for
      the
      services, the Company issued three-year warrants to purchase 5,000 shares of
      the
      Company’s common stock at a cashless price of $2.00 per share.




*2008
        Private Placement*
 
 On
        May
        12, 2008, the Company sold 1,818,180 shares of common stock for gross proceeds
        of $4,000,000 through a private placement to accredited investors. In addition,
        the investors received warrants to purchase 227,272 shares of common stock
        for a
        period of five years at a cash and cashless exercise price of $4.40 and $5.50
        per share, respectively.




13




**Item
      2. Management’s Discussion and Analysis of Financial Condition and
      Results of Operations**




**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 proprietary TransdelTM cream
      formulation to facilitate the passage of ketoprofen, a non-steroidal
      anti-inflammatory drug (“NSAID”), through the skin barrier to reach targeted
      underlying tissues where the drug exerts its prolonged localized
      anti-inflammatory and analgesic effect. A Phase 1/2 clinical trial supported
      the
      safety and efficacy of KetotransdelTM for acute pain and muscle soreness.




**Plan
      of Operations**





For
      the next twelve months, our current operating plan is focused on the development
      of our lead drug, KetotransdelTM. In April 2008, we announced that based on
      the U.S. Food and Drug Administration’s (“FDA”) review of our Phase 3
      submission we can initiate our Phase 3 clinical program for our novel
      topical cream based NSAID, KetotransdelTM. The
      Phase
      3 program will consist of a randomized, double-blind, placebo controlled trial
      to evaluate the efficacy and safety of KetotransdelTM in acute soft tissue
      injuries of the upper and lower extremities over a one week treatment period
      with a one week post-treatment follow-up. The multi-center trial will be
      conducted in approximately 25 - 30 sites, mainly in the United States and
      potentially in Canada, and will enroll approximately 300 patients, randomized
      1:1 ratio KetotransdelTM (active) versus placebo vehicle (identical to active
      without the drug ketoprofen). The primary efficacy endpoint is the difference
      in
      the change of baseline of pain during normal activity between active and placebo
      measured by using the Visual Analogue Scale (VAS), a well known and validated
      instrument for pain measurement. We intend to initiate the Phase 3 program
      in
      the second quarter of 2008. In addition, we will be planning to initiate another
      clinical study, possibly in osteoarthritis patients, to further support our
      registration program for KetotransdelTM in the United States. We would anticipate
      reporting top-line results in the second half of 2009.




If
      and
      when the FDA approves KetotransdelTM for treatment of acute pain, we intend
      to pursue FDA approval of KetotransdelTM for other indications. 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 exploring potential partnerships with U.S. and foreign based companies
      that have sales and marketing infrastructures to support KetotransdelTM in the
      event that the product is approved and commercialized. We are also looking
      to
      out-license our TransdelTM drug delivery technology for the development and
      commercialization of additional innovative drug products. There can be no
      assurance that any of these activities will lead to definitive
      agreements.





We
      believe that our current staff is sufficient to carry out our business plan,
      however, if our operations in the future require it, we will consider the
      employment of additional staff.




**Liquidity
      and Capital Resources**





Since
      July 24, 1998 ("Inception") through March 31, 2008, we have incurred
      losses of approximately $7.4 million. These losses are primarily due to general
      and administrative and research and development expenses. Historically, our
      operations have been financed through capital contributions and debt and equity
      financings.





As
      of
      March 31, 2008, we had $3.4 million in cash. On each of September 17, 2007,
      and
      October 10, 2007, we completed private placements to selected institutional
      and individual investors of our common stock and warrants. In connection
      with the private placements, we raised approximately $3.8 million (net of
      placement agent fees and other costs aggregating $342,105) from the issuance
      of
      2,071,834 shares of common stock and detachable redeemable warrants to purchase
      517,958 shares of our common stock at a cash exercise price of $4.00 per share
      and a cashless exercise price of $5.00 per share. In
      May
      2008, we completed another private placement to accredited investors, where
      we
      raised gross proceeds of $4.0 million from the issuance of 1,818,180 shares
      of
      common stock and detachable warrants to purchase 227,272 shares of our common
      stock at a cash exercise price of $4.40 per share and a cashless exercise price
      of $5.50 per share.





We
      are
      assessing our financing needs for the foreseeable future. In order to
      execute our operating plan over the next twelve months, which includes the
      expected initiation and conduct of the Phase 3 clinical program, additional
      financing, including,
      and without limitation to, equity or debt financing, funding from a
      corporate partnership or licensing arrangement or any similar
      financing, will be required. There can be no assurance that such
      financing will be available on terms favorable to us or at all. If adequate
      financing is not available, we will have to delay, postpone or terminate
      the clinical program and curtail general and administrative operations, which
      would have a material adverse effect on us.




14





**Critical
      Accounting Policies**





We
      rely
      on the use of estimates and make assumptions that impact our financial
      condition and results. These estimates and assumptions are based on historical
      results and trends as well as our forecasts as to how results and trends
      might change in the future. Although we believe that the estimates we
      use are reasonable, actual results could differ from those
      estimates.




We
      believe that the accounting policies described below are critical to
      understanding our business, results of operations and financial condition
      because they involve more significant judgments and estimates used in the
      preparation of our consolidated financial statements. An accounting policy
      is
      deemed to be critical if it requires an accounting estimate to be made based
      on
      assumptions about matters that are highly uncertain at the time the estimate
      is
      made, and any changes in the different estimates that could have been used
      in
      the accounting estimates that are reasonably likely to occur periodically could
      materially impact our consolidated financial statements.




Our most
      critical accounting policies and estimates that may materially impact our
      results of operations include:





*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 Accounting Principles Board 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 March 31, 2008, 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, Emerging
      Issues Task Force (“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 our consolidated
      balance sheet.




15




*Beneficial
      Conversion Feature.* The
      convertible features of the convertible notes provided for a rate of conversion
      that was below market value (see Note 5). Such feature is normally characterized
      as a “beneficial conversion feature” (“BCF”). Pursuant to EITF No. 98-5 *Accounting
      For Convertible Securities with Beneficial Conversion Features or Contingently
      Adjustable Conversion Ratio* and EITF
      No. 00-27, *Application
      of EITF Issue No. 98-5 To Certain Convertible Instruments,* the
      relative fair values of the BCFs have been recorded as a discount from the
      face
      amount of the respective debt instrument. We recorded the corresponding
      debt discount related to the BCF as interest expense, in fiscal year 2007,
      when
      the related instrument was converted into its common stock.




**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.





**Recent
      Accounting Pronouncements**





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 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
      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. We adopted EITF Issue
      No. 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.




In
      December 2007, the FASB issued SFAS No. 141R, *Business
      Combinations* .
      SFAS
      No. 141R provides companies with principles and requirements on how an acquirer
      recognizes and measures in its financial statements the identifiable assets
      acquired, liabilities assumed, and any noncontrolling interest in the acquiree
      as well as the recognition and measurement of goodwill acquired in a business
      combination. SFAS No. 141R also requires certain disclosures to enable users
      of
      the financial statements to evaluate the nature and financial effects of the
      business combination. Acquisition costs associated with the business combination
      will generally be expensed as incurred. SFAS No. 141R is effective for business
      combinations occurring in fiscal years beginning after December 15, 2008. Early
      adoption of SFAS No. 141R is not permitted. We are currently evaluating the
      impact SFAS No. 141R will have on any future business combinations.




**Item
      4T. Controls and Procedures.**




We maintain
      disclosure controls and procedures that are designed to ensure that information
      required to be disclosed in our reports under the Exchange Act is recorded,
      processed, summarized and reported within the time periods specified in the
      Commission’s rules and forms and that such information is accumulated and
      communicated to our management, including our Chief Executive Officer
      and Chief Financial Officer, as appropriate, to allow for timely decisions
      regarding required disclosure. In designing and evaluating the disclosure
      controls and procedures, management recognizes that any controls and procedures,
      no matter how well designed and operated, can provide only reasonable assurance
      of achieving the desired control objectives, and management is required to
      apply
      its judgment in evaluating the cost-benefit relationship of possible controls
      and procedures.




As
      required by Commission Rule 13a-15(b), we carried out an evaluation, under
      the supervision and with the participation of our management, including our
      Chief Executive Officer and the Chief Financial Officer, of the effectiveness
      of
      the design and operation of our disclosure controls and procedures as of
      the end of the quarter covered by this quarterly report on Form 10-Q. Based
      on
      the foregoing, our Chief Executive Officer and Chief Financial Officer
      concluded that our disclosure controls and procedures were effective at the
      reasonable assurance level.




16




There
      has
      been no change in our internal control over financial reporting
      during our most recent fiscal quarter that has materially affected, or is
      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 quarterly report on Form 10-Q that were not
      registered under the Securities Act of 1933, as amended.




**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.




17




**SIGNATURES**




Pursuant
      to the requirements of the Securities Exchange Act of 1934, the Registrant
      has
      duly caused this report to be signed on its behalf by the undersigned, thereunto
      duly authorized.




Transdel
                Pharmaceuticals, Inc.Dated:
                May 15, 2008
            By:
            /s/
                Juliet SinghJuliet
                Singh, Ph.D.
              Chief
                Executive Officer
              (Principal
                Executive Officer)




18




**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.