----

----

----

----

| DELAWARE                                                            |                                                        | 41-1505029                                   |
|---------------------------------------------------------------------|-------------------------------------------------------------|----------------------------------------------|
| (State      or other jurisdiction of incorporation or organization) |                                                        | (I.R.S.      Employer Identification Number) |
|                                                                |                                                        |                                         |
| 850      Bear Tavern Road, Suite 201Ewing,      NJ                  |                                                        | 08628                                        |
| (Address      of principal executive offices)                       |                                                        | (Zip      Code)                              |
|                                                                | (609)      538-8200                                         |                                         |
|                                                                | (Issuer’s      telephone number, including area code) |                                         |

----

----

----

----

INDEX 

Report of Independent Registered Public Accounting Firm                     2

BalanceSheets as of December 31, 2007 and 2006                      3

Statementsof Operations for the years ended December 31, 2007 and 2006           4

Statements of Changes in Shareholders’ Equity (Deficiency) forthe years ended

  December31, 2007 and 2006                                          5

Statementsof Cash Flows for the years ended December 31, 2007 and2006                         6

Notesto FinancialStatements                                                                                                        7

----

REPORT

----

DOR

|                                                                                                                                                         |   |   | 2007              |    |   |   |   |   | 2006              |    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------------|---------|--------|--------|--------|--------|-------------------|---------|
| AssetsCurrent      assets:                                                                                                                                   |   |   |              |    |   |   |   |   |              |    |
|         Cash                                                                                                         |   | $      | 2,220,128         |    |   |   |   | $      | 119,636           |    |
|         Grants      receivable                                                                                       |   |   | 97,845            |    |   |   |   |   | 89,933            |    |
|         Prepaid      expenses                                                                                        |   |   | 119,178           |    |   |   |   |   | 94,470            |    |
| Total      current assets                                                                                                                                    |   |   | 2,437,151         |    |   |   |   |   | 304,039           |    |
|                                                                                                                                                         |   |   |              |    |   |   |   |   |              |    |
| Office      and laboratory equipment, net                                                                                                                    |   |   | 25,941            |    |   |   |   |   | 29,692            |    |
| Intangible      assets, net                                                                                                                                  |   |   | 1,320,787         |    |   |   |   |   | 1,073,239         |    |
| Total      assets                                                                                                                                            |   | $      | 3,783,879         |    |   |   |   | $      | 1,406,970         |    |
|                                                                                                                                                         |   |   |              |    |   |   |   |   |              |    |
| Liabilities and shareholders’ equity      (deficiency)                                                                                                 |   |   |              |    |   |   |   |   |              |    |
| Current      liabilities:                                                                                                                                    |   |   |              |    |   |   |   |   |              |    |
|         Accounts      payable                                                                                        |   | $      | 847,610           |    |   |   |   | $      | 2,112,479         |    |
|         Accrued      compensation                                                                                    |   |   | 345,903           |    |   |   |   |   | 402,947           |    |
|  Total      current liabilities                                                                                                                         |   |   | 1,193,513         |    |   |   |   |   | 2,515,426         |    |
|                                                                                                                                                         |   |   |              |    |   |   |   |   |              |    |
| Shareholders’      equity (deficiency):                                                                                                                |   |   |              |    |   |   |   |   |              |    |
|         Common      stock, $.001 par value. Authorized 250,000,000                                                   |   |   |              |    |   |   |   |   |              |    |
|              shares;      94,996,547 and 68,855,794, respectively issued and    outstanding |   |   | 94,996            |    |   |   |   |   |  68,855      |    |
|         Additional      paid-in capital                                                                              |   |   | 101,391,090       |    |   |   |   |   |  91,553,766  |    |
|         Accumulated      deficit                                                                                     |   |   | (      98,895,720 |  ) |   |   |   |   | (      92,731,077 | )  |
|                                                                                                                                                         |   |   |              |    |   |   |   |   |              |    |
| Total      shareholders’ equity (deficiency)                                                                                                           |   |   | 2,590,366         |    |   |   |   |   | (      1,108,456  | )  |
|                                                                                                                                                         |   |   |              |    |   |   |   |   |              |    |
| Total      liabilities and shareholders’ equity (deficiency)                                                                                           |   | $      | 3,783,879         |    |   |   |   |   |  1,406,970   |    |
|                                                                                                                                                         |   |   |              |    |   |   |   |   |              |    |

----

DOR 

|                                                                               |   |    | 2007         |    |    | 2006             |          |
|------------------------------------------------------------------------------------|--------|---------|------------------------------------------------------|---------|---------|------------------|--------------------|
|                                                                               |   |    |                                                 |    |    |             |               |
| Revenues                                                                           |   | $       | 1,258,017                                            |    | $       | 2,313,020        |               |
| Cost      of revenues                                                              |   |    | (      943,385                                       | )       |    | (      1,965,074 | )                  |
|            Gross profit                                   |   |    | 314,632                                              |    |    | 347,946          |               |
|                                                                               |   |    |                                                 |    |    |             |               |
| Operating      expenses:                                                           |   |    |                                                 |    |    |             |               |
|        Research and development                                               |   |    | 3,099,944                                            |    |    | 3,638,493        |               |
|        General and administrative                                             |   |    |  2,864,370                                      |    |    |  2,553,700  |               |
|        Stock based compensation research and development                 |   |    |  230,668                                        |    |    |  219,895    |               |
|        Stock based compensation general and administrative               |   |    |  446,733                                        |    |    |  337,287    |               |
|        In-process research and development                                    |   |    | -                                                    |    |    | 981,819          |               |
|        Impairment of intangible assets                                        |   |    | -                                                    |    |    | 816,300          |               |
|            Total operating expenses                       |   |    | 6,641,715                                            |    |    | 8,547,494        |               |
|                                                                               |   |    |                                                 |    |    |             |               |
| Loss      from operations                                                          |   |    | (      6,327,083                                     | )       |    | (      8,199,548 | )                  |
|                                                                               |   |    |                                                 |    |    |             |               |
| Other      income (expense):                                                       |   |    |                                                 |    |    |             |               |
|        Interest income                                                        |   |    | 164,847                                              |    |    | 41,510           |               |
|        Interest (expense)                                                     |   |    |  (      1,020                                   | )  |    | (      5,308     | )             |
|        Other (expense)                                                   |   |    | (      1,387                                         | )  |    | -                |               |
|            Total other income (expense)                   |   |    | 162,440                                              |    |    | 36,202           |               |
|                                                                               |   |    |                                                 |    |    |             |               |
| Net      loss                                                                      |   |  $ | (      6,164,643                                     | )       |  $ | (      8,163,346 | )                  |
|                                                                               |   |    |                                                 |    |    |             |               |
| BasicnBasic      and diluted net loss per share                               |   | $       | (      0.07                                          | )       | $       | (      0.13      | )                  |
|                                                                               |   |    |                                                 |    |    |             |               |
| Basic  Basic      and diluted weighted average common shares outstanding |   |    | 90,687,677                                           |    |    | 63,759,092       |               |

----

DOR 

|                                                                   |   | Common      Stock | Additional      Paid-In capital | AccumulatedDeficit |
|------------------------------------------------------------------------|--------|-------------------|---------------------------------|--------------------|
|                                                                   |   |              | Shares                          |               |   | Par      Value |   |   |   |   |   |   |   |
|                                                                   |   |              |                            |               |   |   |   |   |   |   |   |   |   |
| Balance,January      1, 2006                                           |   |              | 50,612,504                      |               |   | $50,612 |   |   | $86,045,192 |   |   | (      $84,567,731 | ) |
|                                                                   |   |              |                            |               |   |   |   |   |   |   |   |   |   |
| Issuance      of common stock                                          |   |              | 13,429,504                      |               |   | 13,430 |   |   | 3,521,570 |   |   | - |   |
|                                                                   |   |              |                            |               |   |   |   |   |   |   |   |   |   |
| Issuance      of common stock for exercise of options                  |   |              | 504,100                         |               |   | 504 |   |   | 112,816 |   |   | - |   |
|                                                                   |   |              |                            |               |   |   |   |   |   |   |   |   |   |
| Issuance      of common stock to vendors                               |   |              | 506,942                    |               |   | 507  |   |   | 134,171  |   |   | -  |   |
|                                                                   |   |              |                            |               |   |   |   |   |   |   |   |   |   |
| Issuance      of warrants to vendors                                   |   |              | -                          |               |   | -  |   |   | 121,965  |   |   | -  |   |
|                                                                   |   |              |                            |               |   |   |   |   |   |   |   |   |   |
| Issuance      of common stock for an equity commitment fee             |   |              | 512,500                    |               |   | 512  |   |   | (      512  | )  |   | -  |   |
|                                                                   |   |              |                            |               |   |   |   |   |   |   |   |   |   |
| Issuance      of common stock to employees                        |   |              | 222,061                    |               |   | 222  |   |   | 82,632 |   |   | -  |   |
|                                                                   |   |              |                            |               |   |   |   |   |   |   |   |   |   |
| Issuance      of common stock to minority shareholders            |   |              | 3,068,183                  |               |   | 3,068  |   |   | 978,750  |   |   | -  |   |
|                                                                   |   |              |                            |               |   |   |   |   |   |   |   |   |   |
| Stock      option expense                                              |   |              | -                               |               |   | - |   |   | 557,182 |   |   | - |   |
|                                                                   |   |              |                            |               |   |   |   |   |   |   |   |   |   |
| Net      loss                                                          |   |              | -                               |               |   | - |   |   | - |   |   | (      8,163,346 | ) |
|                                                                   |   |              |                            |               |   |   |   |   |   |   |   |   |   |
| Balance,December      31, 2006                                         |   |              | 68,855,794                      |               |   | 68,855 |   |   | 91,553,766 |   |   | (      92,731,077 | ) |
|                                                                   |   |              |                            |               |   |   |   |   |   |   |   |   |   |
| Issuance      of common stock                                          |   |              | 15,745,891                      |               |   | 15,746 |   |   | 6,219,658 |   |   | - |   |
|                                                                   |   |              |                            |               |   |   |   |   |   |   |   |   |   |
| Issuance      of common stock for exercise of options and warrants     |   |              | 8,195,487                       |               |   | 8,195 |   |   | 2,128,088 |   |   | - |   |
|                                                                   |   |              |                            |               |   |   |   |   |   |   |   |   |   |
| Issuance      of common stock to vendors                               |   |              | 829,821                         |               |   | 830 |   |   | 329,670 |   |   | - |   |
|                                                                   |   |              |                            |               |   |   |   |   |   |   |   |   |   |
| Issuance      of stock to investors by contract as dilution protection |   |              | 995,947                         |               |   | 996 |   |   | 307,747 |   |   | - |   |
|                                                                   |   |              |                            |               |   |   |   |   |   |   |   |   |   |
| Issuance      of common stock to employees                             |   |              | 373,607                         |               |   | 374 |   |   | 84,759 |   |   | - |   |
|                                                                   |   |              |                            |               |   |   |   |   |   |   |   |   |   |
| Stock      option expense                                              |   |              | -                               |               |   | - |   |   | 677,401 |   |   | - |   |
|                                                                   |   |              |                            |               |   |   |   |   |   |   |   |   |   |
| Net      loss                                                          |   |              | -                               |               |   | - |   |   | - |   |   | (      6,164,643 | ) |
|                                                                   |   |              |                            |               |   |   |   |   |   |   |   |   |   |
| Balance,December      31, 2007                                         |   |              | 94,996,547                      |               |   | $94,996 |   |   | $101,391,090 |   |   | (      $98,895,720 | ) |
|                                                                   |   |              |                            |               |   |   |   |   |   |   |   |   |   |

----

DOR 

|                                                                                      |   | 2007          |                | 2006    |    |
|-------------------------------------------------------------------------------------------|--------|---------------|---------------------|---------|---------|
| Operating      activities                                                                 |   |          |                |    |    |   |   |
|         Net loss                                                                |   | $             | (      6,164,643    | )       | $       | (      8,163,346 | ) |
|                                                                                      |   |          |                |    |    |   |   |
| Adjustments      to reconcile net loss to net cash used by operating      activities:     |   |          |                |    |    |   |   |
|          Amortization and depreciation                                     |   |          | 119,565             |    |    | 137,044 |   |
|          Non-cash stock compensation                                       |   |          | 1,401,777           |    |    | 896,680 |   |
|          Non-cash stock purchase of in-process research and    development |   |          | -                   |    |    | 981,819 |   |
|          Impairment expense for intangibles                                |   |          | -                   |    |    | 816,300 |   |
|                                                                                      |   |          |                |    |    |   |   |
| Change      in operating assets and liabilities:                                          |   |          |                |    |    |   |   |
|          Grants receivable                                                 |   |          | (      7,912        | )  |    | 474,397 |   |
|          Prepaid expenses                                                  |   |          |  (      24,708 | )  |    | 44,324 |   |
|          Accounts payable                                                  |   |          | (      1,264,868    | )  |    | 476,605 |   |
|          Accrued compensation                                              |   |          | (57,044             | )  |    | 254,347 |   |
|          Accrued royalties                                                 |   |          | -                   |    |    | (      60,000 | )  |
| Total      adjustments                                                                    |   |          | 166,810             |    |    | 4,021,516 |   |
|                                                                                      |   |          |                |    |    |   |   |
|          Net cash used by operating activities                             |   |          | (      5,997,833    | )       |    | (      4,141,830 | ) |
|                                                                                      |   |          |                |    |    |   |   |
| Investing      activities:                                                                |   |          |                |    |    |   |   |
|  Purchases      of office and laboratory equipment                                   |   |          | (      7,170        | )       |    | (      2,552 | ) |
|  Acquisition      of intangible assets                                               |   |          | (      356,192      | )       |    | (      206,004 | ) |
|          Net cash used by investing activities                             |   |          | (      363,362      | )       |    | (      208,556 | ) |
|                                                                                      |   |          |                |    |    |   |   |
| Financing      activities:                                                                |   |          |                |    |    |   |   |
|  Net      proceeds from issuance of common stock                                     |   |          | 6,235,404           |    |    | 3,535,000 |   |
|  Proceeds      from exercise of warrants                                             |   |          | 1,592,263           |    |    | - |   |
|  Proceeds      from exercise of stock options                                        |   |          | 634,020             |    |    | 113,320 |   |
|          Net cash provided by financing activities                         |   |          | 8,461,687           |    |    | 3,648,320 |   |
|                                                                                      |   |          |                |    |    |   |   |
| Net      increase (decrease) in cash and cash equivalents                                 |   |          | 2,100,492           |    |    | (      702,066 | ) |
|          Cash and cash equivalents at beginning of period                  |   |          | 119,636             |    |    | 821,702 |   |
|          Cash and cash equivalents at end of period                        |   | $             | 2,220,128           |    | $       | 119,636 |   |
|                                                                                      |   |          |                |    |    |   |   |
| Supplemental      disclosure of cash flow:                                                |   |          |                |    |    |   |   |
|          Cash paid for interest                                            |   | $             | 1,020               |    | $       | 3,170 |   |
| Non-cash      transactions:                                                               |   |          |                |    |    |   |   |
|          Non-cash payment to an institutional investor                     |   |        $ | -                   |    | $  | 220,374 |   |

----

DOR 

----

----

----

| ·   | The      Company secured a new $8,000,000 equity line from Fusion Capital and the      Company expects that the registration statement supporting this facility      will become effective by April2008. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The      Company will manage its expenditures very closely and proceed with      Clinical programs with the use of the equity  facility. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The      Company plans to continue seeking grant funds and responding to requests      for proposals from governmentalsources. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------|

| ·   | The      Company will utilize Named Patient Sales (Compassionate Use programs)      wherever possible in countries outside the United States to generate      revenues from orBec®.       The Company already has letters of intent for Named Patient programs in      place in South Korea, Australia, New Zealand and South Africa and expects      to receive modest revenues from these programs in the second half of      2008. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The      Company is exploring outlicensing opportunities for orBec®      and for its BioDefense programs both in the US and  Europe. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The      Company has engaged Investment Bankers to assist  in exploring      mergers and acquisitionsopportunities. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------|

----

|           |          2007           |   |   |                                              | 2006    |   |
|--------------------------------------------------------|------------------------------------------------------------|--------|--------|---------------------------------------------------|------------------------|--------|
|                                                   |                                                       |   |   |                                              |                   |
| Office      equipment                                  | $     125,328                     |   |   | $     117,660            |                   |
| Laboratory      equipment                              |    23,212                                   |   |   |    23,212                          |                   |
| Total                                                  |    148,540                                  |   |   |    140,872                         |                   |
| Accumulated      depreciation                          | ( 122,599                                             | )      |   | ( 111,180                                    | )                      |
|                                                   | $            25,941          |   |   | $            29,692 |                   |

|                         | Weighted      Average Amortization period      (years) |   Cost                 |   |  AccumulatedAmortization               |   |   Net Book Value             |
|------------------------------|--------------------------------------------------------|----------------------------------|--------|---------------------------------------------|--------|----------------------------------------|
| December      31, 2007       |                                                   |                             |   |                                        |   |                                   |
| Licenses                     | 12.7                                                   | $         462,234 |   | $   115,681                  |   | $         346,553       |
| Patents                      | 9.7                                                    |    1,633,490      |   |    659,256                   |   |    974,234              |
| Total                        | 10.4                                                   | $      2,095,724                 |   | $        774,937                  |   | $      1,320,787                       |
|  December      31, 2006 |                                                   |                             |   |                                        |   |                                   |
| Licenses                     | 13.7                                                   | $         462,234 |   | $           88,443 |   | $     373,791 |
| Patents                      | 8.8                                                    |    1,277,157      |   |    577,709                   |   |    699,448              |
| Total                        | 10.1                                                   | $      1,739,391                 |   | $         666,152            |   | $      1,073,239                       |

| Year | Amortization Amount                   |
|------|---------------------------------------|
| 2008 | $   125,000            |
| 2009 |      126,000 |
| 2010 |      127,000 |
| 2011 |      128,000 |
| 2012 |      129,000 |

----

----

|                                                 | 2007                                           | 2006   |   |
|------------------------------------------------------|------------------------------------------------|--------|--------|
|                                                 |                                           |   |   |   |   |
| Shares      available for grant at beginning of year | 3,236,032                                      |   |   | 7,000,000 |   |
| Increase      in shares available                    | 10,000,000                                     |   |   | - |   |
| Options      granted                                 | ( 3,375,000                               | )      |   | ( 4,360,000 | ) |
| Options      forfeited or expired                    | 1,140,000                                      |   |   | 1,325,000 |   |
| Common      stock payment for services               | ( 388,071                                 | )      |   | ( 728,968 | ) |
| Shares      available for grant at end of year       |       10,612,961 |   |   |       3,236,032 |   |

|                              |   Options | Weighted      AverageOptions Exercise Price |   |
|-----------------------------------|---------------------|---------------------------------------------|--------|
| Balance      at January 1, 2006   | 10,014,339          |                                        |   |          $   0.59 |   |   |
|   Granted               | 4,360,000           |                                        |   | 0.30 |   |   |
|   Forfeited             | ( 2,230,900    | )                                           |   | 0.83 |   |   |
|   Exercised             | ( 504,100      | )                                           |   | 0.22 |   |   |
| Balance      at December 31, 2006 | 11,639,339          |                                        |   | 0.59 |   |   |
|   Granted               | 3,375,000           |                                        |   | 0.46 |   |   |
|   Forfeited             | ( 2,927,300    | )                                           |   | 0.73 |   |   |
|   Exercised             | ( 1,737,200    | )                                           |   | 0.36 |   |   |
| Balance      at December 31, 2007 | 10,349,839          |                                        |   | $   0.44 |   |   |

| PriceRange  |   | Weighted      Average RemainingContractual Life in Years |   | Outstanding Options |   | Exercisable      Options |   |
|-------------|--------|----------------------------------------------------------|--------|--------------------------|--------|--------------------------|--------|
| $0.20-$0.50 |   | 8.12                                                     |   | 9,020,000                |   | 5,884,756                |   |
| $0.51-$1.00 |   | 2.69                                                     |   | 962,839                  |   | 962,839                  |   |
| $1.01-$6.00 |   | 3.17                                                     |   | 367,000                  |   | 367,000                  |   |
| Total       |   | 7.53                                                     |   | 10,349,839               |   | 7,214,595                |   |

----

|                              | Warrants         | Weighted      AverageWarrant Exercise Price |   |
|-----------------------------------|------------------|---------------------------------------------|--------|
| Balance      at January 1, 2006   | 22,167,118       |                                        |   |          $   0.92 |   |   |
|   Granted               | 14,961,672       |                                        |   | 0.25 |   |   |
| Balance      at December 31, 2006 | 37,128,790       |                                        |   | 0.65 |   |   |
|   Granted               | 560,106          |                                        |   | 0.59 |   |   |
|   Expired               | (      2,178,909 |  )                                     |   | 1.90 |   |   |
|   Exercised             | (      6,458,287 |  )                                |   | 0.25 |   |   |
| Balance      at December 31, 2007 | 29,051,700       |                                        |   | $   0.70 |   |   |

| PriceRange   |   | Weighted      Average RemainingContractual Life in Years |   | Outstanding Warrants |   | Exercisable      Warrants |   |
|--------------|--------|----------------------------------------------------------|--------|---------------------------|--------|---------------------------|--------|
| $0.24-$0.50  |   | 1.23                                                     |   | 8,503,386                 |   | 8,503,386                 |   |
| $0.505-$1.00 |   | 1.67                                                     |   | 18,328,622                |   | 18,328,622                |   |
| $1.01-$2.00  |   | 0.29                                                     |   | 2,012,622                 |   | 2,012,622                 |   |
| $8.11        |   | 0.86                                                     |   | 207,070                   |   | 207,070                   |   |
| Total        |   | 1.44                                                     |   | 29,051,700                |   | 29,051,700                |   |

----

|                                                                |                                            2007 |    |                                                                                                                                               |    |                    2006 |   |   |   |
|---------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------|---------|------------------------------------------------------------------------------------------|--------|--------|--------|
| Deferred tax assets:                                                |                                                                                                                                                                                                                                     |    |                                                                                                                                               |    |                                                                                     |   |   |   |
| Net      operating loss carry forwards                              | $      25,000,000                                                                                                                                                                                                                        |    | $25,000,000                                                                                                                                   |    |                                                                                     |   |
| Orphan      drug and research and development credit carry forwards | 2,000,000                                                                                                                                                                                                                                |    | 3,000,000                                                                                                                                          |    |                                                                                     |   |
| Other                                                               | 3,000,000                                                                                                                                                                                                                                |    | 3,000,000                                                                                                                                          |    |                                                                                     |   |
| Total                                                               |   30,000,000                                                                                                                                                                                                                   |    |   31,000,000                                                                                                                             |    |                                                                                     |   |
| Valuation      allowance                                            | ( 30,000,000                                                                                                                                                                                                                        |  ) | ( 31,000,000                                                                                                                                  |  ) |                                                                                     |   |
| Net      deferred tax assets                                        |              $                       -                                             |    |        $                 - |    |                                                                                     |   |

| 2008 | $        910,000 |
|------|----------------------------------------------------------|
| 2009 | 1,330,000                                                |
| 2010 | 1,410,000                                                |
| 2011 | 870,000                                                  |
| 2012 | 3,870,000                                                |

|                                                                                                                    |            2007                                   |   |              2006                       |
|-------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------|
|                                                                                                                    |                                                                                                     |   |                                                                                                     |
| Income      tax loss at federal statutory rate                                                                     |                      (34.00)% |   |                      (34.00)% |
| State      taxes, net of federal benefit                                                                           |               (4.29)               |   |               (3.63)               |
| Permanent      differences, principally purchased     in-process      research and development |              -                          |   |              3.30                       |
|  Valuation      allowance                                                                                     |                    38.29                |   |               34.33                |
| Provision      for income taxes (benefit)                                                                          |               -      %             |   |                -      %       |

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|                                       |   | December      31, |                             |
|--------------------------------------------|--------|-------------------|----------------------------------|
|                                       |   | 2007              |                             | 2006 |   |
| Net      Revenues                          |   |              |                             |   |   |   |   |
| BioDefense                                 |   | $                 | 1,258,017                        |   | $ | 2,173,128 |   |
| BioTherapeutics                            |   |              | -                                |   |   | 139,892 |   |
|        Total                          |   | $                 | 1,258,017                        |   | $ | 2,313,020 |   |
|                                       |   |              |                             |   |   |   |   |
| Loss      from Operations                  |   |              |                             |   |   |   |   |
| BioDefense                                 |   | $                 | (    109,698 | ) | $ | (      1,973,732 | ) |
| BioTherapeutics                            |   |              | (      2,748,764                 | ) |   | (      5,061,664 | ) |
| Corporate                                  |   |              | (      3,468,620                 | ) |   | (      1,164,152 | ) |
|        Total                          |   | $                 | (      6,327,082                 | ) | $ | (      8,199,548 | ) |
|                                       |   |              |                             |   |   |   |   |
| Identifiable      Assets                   |   |              |                             |   |   |   |   |
| BioDefense                                 |   | $                 | 896,383                          |   | $ | 849,295 |   |
| BioTherapeutics                            |   |              | 552,248                          |   |   | 343,876 |   |
| Corporate                                  |   |              | 2,335,248                        |   |   | 213,799 |   |
|        Total                          |   | $                 | 3,783,879                        |   | $ | 1,406,970 |   |
|                                       |   |              |                             |   |   |   |   |
| Amortization      and Depreciation Expense |   |              |                             |   |   |   |   |
| BioDefense                                 |   | $                 | 90,185                           |   | $ | 103,855 |   |
| BioTherapeutics                            |   |              | 24,312                           |   |   | 24,395 |   |
| Corporate                                  |   |              | 5,068                            |   |   | 8,794 |   |
|        Total                          |   | $                 | 119,565                          |   | $ | 137,044 |   |
|                                       |   |              |                             |   |   |   |   |
| Interest      Income                  |   |              |                             |   |   |   |   |
| Corporate                             |   |  $           | 164,847                     |   |  $ | 41,510  |   |
|         Total                    |   |  $           | 164,847                     |   |  $ | 41,510  |   |
|                                       |   |              |                             |   |   |   |   |
| Stock      Option Compensation             |   |              |                             |   |   |   |   |
| BioDefense                                 |   |  $           | 69,591                      |   |  $ | 98,937 |   |
| BioTherapeutic                        |   |              | 161,077                     |   |   |  120,958 |   |
| Corporate                             |   |              | 446,733                     |   |   |  337,287 |   |
|         Total               |   |  $           | 677,401                     |   |  $ | 557,182  |   |
|                                       |   |              |                             |   |   |   |   |

| Signature                                                                                                                                                                                                                                                                                                                                                                                                 |   | Title                                                                                          |   | Date                            |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------|--------|---------------------------------|
|  /s/      Christopher J.      Schaber                                                      Christopher      J. Schaber |   |  Director,      President and Chief Executive Officer (Principal Executive      Officer)  |   |  April 24,      2008       |
|  /s/ Evan Myrianthopoulos                                                      Evan      Myrianthopoulos               |   |  Director,      Chief Financial Officer (Principal Financial and Accounting      Officer) |   |  April 24,      2008       |
|  /s/      James      S.      Kuo                                           James      S. Kuo                                                                                  |   |  Chairman      of the Board                                                               |   |  April 25,      2008       |
|  /s/ Cyrille      F. Buhrman                                           Cyrille      F. Buhrman                                                                                |   |  Director                                                                                 |   |  April 27,      2008       |
|  /s/ James      ClavijoJames Clavijo                                                                                                                                                                                                                                                                                                                                                                 |   |  Controller,      Treasurer, and Corporate Secretary                                      |   |        April 24,      2008 |

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| Exhibit      No. |   | Description                                                                                                            |
|------------------|--------|------------------------------------------------------------------------------------------------------------------------|
|             |   |                                                                                                                   |
| 31.1        |   | Certification      of the Chief Executive Officer pursuant to Section 302 of the      Sarbanes Oxley Act of 2002. |
| 31.2   |   | Certification      of the Chief Financial Officer pursuant to Section 302 of the Sarbanes      Oxley Act of 2002.      |
| 32.1   |   | Certification      of the Chief Executive Officer pursuant to Section 906 of the Sarbanes      Oxley Act of 2002.      |
| 32.2        |   | Certification      of the Chief Financial Officer pursuant to Section 906 of the Sarbanes      Oxley Act of 2002.      |

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