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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 20-F(Mark One)[   ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIESEXCHANGE ACT OF 1934OR[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEACT OF 1934 
For the fiscal year ended June 30, 2009OR[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934[   ] SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIESEXCHANGE ACT OF 1934Date of Event requiring this shell company reportFor the transition period from ________to ________

Commission file number: 0-51848ALDA Pharmaceuticals Corp.(Exact name of Registrant as specified in its charter)Not applicable(Translation of Companys name into English)Province of British Columbia, Canada(Jurisdiction of incorporation or organization)635 Columbia St. New Westminster, B.C., Canada, V3M 1A7(Address of principal executive offices)Securities registered or to be registered pursuant to Section 12(b) of the Act.

| |                     |                                           | 
| | ------------------- | ----------------------------------------- | 
| | Title of each class | Name of each exchange on which registered | 
| | Not Applicable      | Not Applicable                            | 

Securities registered or to be registered pursuant to Section 12(g) of the Act.

Common Shares Without Par Value 
(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None
(Title of Class)

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Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close of the period covered by the annual report.

51,341,799 common shares

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes [   ] No [ X ]

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Yes [   ] No [ X ]

Indicate by check mark whether the Company (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 Company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [   ] No [ X ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act (check one):

Large accelerated filer [   ]   Accelerated filer [   ]   Non-Accelerated filer [ X ]

Indicate by check mark which financial statement item the Company has elected to follow.

Item 17[ X ] Item 18 [   ]

(APPLICABLE ONLY TO ISSUES INVOLVED IN BANKRUPTCY PROCEEDING DURING THE PAST FIVE YEARS)

Indicate by check mark whether the Company has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes [   ] No [   ]

The information set forth in this Annual Report on Form 20-F is as at June 30, 2009 unless an earlier or later date is indicated.

Financial information is presented in accordance with accounting principles generally accepted in Canada (Canadian GAAP) which are substantially the same as principles applicable in the United States (US GAAP) and practices prescribed by the United States Securities and Exchange Commission (SEC) except as set forth in Note 16 to the accompanying Financial Statements of the Company.

Contact person: Terrance Owen, President & CEO, 635 Columbia Street, New Westminster, BC, V3M 1A7, Phone: 604-521-8300 (Ext. 1), Fax: 604-521-8322, E-mail: terryowen@telus.net.

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FORM 20-F ANNUAL REPORTTABLE OF CONTENTS

|          |                                                                              |     
|--------- | ---------------------------------------------------------------------------- | ----
|Part I    |                                                                              | Page
|Item 1.   | Identity of Directors, Senior Management and Advisors                        | 1   
|Item 2.   | Offer Statistics and Expected Timetable                                      | 3   
|Item 3.   | Key Information                                                              | 3   
|Item 4.   | Information on the Company                                                   | 14  
|Item 5.   | Operating and Financial Review and Prospects                                 | 40  
|Item 6.   | Directors, Senior Management and Employees                                   | 50  
|Item 7.   | Major Shareholders and Related Party Transactions                            | 61  
|Item 8.   | Financial Information                                                        | 63  
|Item 9.   | The Offer and Listing                                                        | 63  
|Item 10.  | Additional Information                                                       | 66  
|Item 11.  | Quantitative and Qualitative Disclosures About Market Risk                   | 76  
|Item 12.  | Description of Securities Other Than Equity Securities                       | 76  
|         
|Part II   |                                                                              |     
|         
|Item 13.  | Defaults, Dividend Arrearages and Delinquencies                              | 76  
|Item 14.  | Material Modifications to the Rights of Security Holders and Use of Proceeds | 76  
|Item 15.  | Controls and Procedures                                                      | 76  
|Item 16.  | Reserved                                                                     | 77  
|Item 16A. | Audit Committee Financial Expert                                             | 77  
|Item 16B. | Code of Ethics                                                               | 78  
|Item 16C. | Principal Accounting Fees and Services                                       | 78  
|Item 16D. | Exemptions from the Listing Standards for Audit Committee                    | 81  
|Item 16E. | Purchases of Equity Securities by the Company and Affiliated Purchasers      | 81  
|         
|Part III  |                                                                              |     
|         
|Item 17.  | Financial Statements                                                         | 79  
|Item 18.  | Financial Statements                                                         | 79  
|Item 19.  | Exhibits                                                                     | 79  

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INTRODUCTION

The Company was incorporated by registration of its Memorandum and Articles under the BC Companies Act on May 30, 2000 under the name Duft Biotech Capital Ltd. On November 13, 2003, the Company acquired the assets of ALDA Pharmaceuticals Inc. (API), a private company founded in 1996.

On November 26, 2003 the Company changed its name to ALDA Pharmaceuticals Corp. (the Company) The Company is still a British Columbia, Canada, company.

Effective August 19, 2005, the authorized share capital of the Company was increased to an unlimited number of common shares without par value. There are no Indentures or Agreements limiting the payment of dividends and there are no conversion rights, special liquidation rights, pre-emptive rights or subscription rights.

BUSINESS OF ALDA PHARMACEUTICALS CORP.

The Company is principally in the business of developing infection control products for industrial and consumer use and for the treatment of topical infections

FINANCIAL AND OTHER INFORMATION

The Companys reporting currency and domestic currency is Canadian Dollars. In this Annual Report, unless otherwise specified, all dollar amounts are expressed in Canadian Dollars (CDN$ or $). The Government of Canada permits a floating exchange rate to determine the value of the Canadian Dollar against the U.S. Dollar (US$). Comparisons of historic exchange rates between the US$ and the CDN$ are contained in Section 3.A.3.

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 20-F contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, principally in ITEM #4, Information on the Company and ITEM #5, Operating and Financial Review of Prospects. These statements may be identified by the use of words like plan, expect, aim, believe, project, anticipate, intend, estimate, will, should, could and similar expressions in connection with any discussion, expectation, or projection of future operating or financial performance, events or trends. In particular, these include statements about the Companys strategy for growth, future performance or results of current sales and production, interest rates, foreign exchange rates, and the outcome of contingencies, such as acquisitions and/or legal proceedings and intellectual property issues.

Forward-looking statements are based on certain assumptions and expectations of future events that are subject to risks and uncertainties. Actual future results and trends may differ materially from historical results or those projected in any such forward-looking statements depending on a variety of factors, including, among other things, the factors discussed in this Annual Report under ITEM #3, Key Information, Risk Factors and factors described in documents that the Company may furnish from time to time to the Securities and Exchange Commission. The Company undertakes no obligation to update publicly or revise any forward-looking statements because of new information.

MEASUREMENT INFORMATION

Canada uses the metric measurement system and all of the measures used by the Company adhere to the standards of the metric system.

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PART I

ITEM 1. IDENTITY OF DIRECTORS SENIOR MANAGEMENT AND ADVISERS

|           |                                
|---------- | -------------------------------
|**1.A.1.** | Directors and senior management

Table No. 1 lists as of June 30, 2009 the names of the Directors of the Company.

|                                    |     |                                
|----------------------------------- | --- | -------------------------------
|Table No. 1                        
|Directors                          
|                                   
|Name and Residential Address        | Age | Date First Elected or Appointed
|                                    |     |                                
|Terrance G. Owen                    | 63  | May 30, 2000                   
|635 Columbia Street                 |     |                                
|New Westminster, BC, Canada V3M 1A7 |     |                                
|                                    |     |                                
|Peter Chen (1)                      | 47  | May 30, 2000                   
|635 Columbia Street                 |     |                                
|New Westminster, BC, Canada V3M 1A7 |     |                                
|                                    |     |                                
|Eugene Hodgson (1)                  | 53  | October 12, 2004               
|1400  601 West Hastings Street     |     |                                
|Vancouver, BC, Canada V6B 5A6       |     |                                
|                                    |     |                                
|Linda Allison (1)                   | 62  | June 30, 2003                  
|3074 Spencer Place                  |     |                                
|West Vancouver, BC, Canada V7V 3C9  |     |                                
|                                    |     |                                
|Ronald Zokol                        | 60  | November 13, 2003              
|470 West Tower 555 West 12thAvenue  |     |                                
|Vancouver, BC, Canada V5Z 3X7       |     |                                
|                                    |     |                                
|William F. McCoy                    | 54  | March 17, 2005                 
|735 Thornapple Drive                |     |                                
|Naperville, IL,. USA 60540          |     |                                
|                                    |     |                                
|(1) Member of Audit Committee       |     |                                
|                                    |     |                                

|           |                  
|---------- | -----------------
|**1.A.2.** | Senior Management

Table No. 2 lists the names of the Senior Management of the Company. The Senior Management serves at the pleasure of the Board of Directors.

|                               |                   |                          
|------------------------------ | ----------------- | -------------------------
|                               | Table No. 2       |                          
|                               | Senior Management |                          
|                              
|Name and Position              | Age               | Date of First Appointment
|                               |                   |                          
|Terrance Owen, President & CEO | 63                | May 30, 2000             
|                               |                   |                          
|Peter Chen, CFO and Secretary  | 47                | May 30, 2000             

Mr. Owens business functions, as President and CEO of the Company, include overall supervision of all officers and consultants, as well as management of research and development, strategic planning, business development, operations, liaison with auditors, accountants, lawyers, regulatory authorities, the financial community and shareholders and reporting to the Board of Directors.

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Mr. Chens business functions, as CFO, include financial statement preparation, accounting, liaising with auditors, accountants, lawyers and regulatory authorities and preparation, payment and organization of the expenses, taxes, and other financial activities of the Company and reporting to the Board of Directors

Mr. Chens business functions, as Corporate Secretary, include attending and being the secretary of all meetings of the Board, shareholders and committees of the Board and entering, or causing to be entered in records kept for that purpose, minutes of all proceedings thereat; gives or causes to be given, as and when instructed, all notices to shareholders, Directors, officers, auditors and members of committees of the Board; is the custodian of the stamp or mechanical device generally used for affixing the corporate seal of the Company and of all books, records and instruments belonging to the Company, except when some other officer or agent has been appointed for that purpose; and in the future can have such other powers and duties as the Board of the chief executive officer may specify. Mr. Chen may delegate all or part of his duties as Corporate Secretary to a nominee or to corporate counsel from time to time.

|         |               
|-------- | --------------
|**1.B.** | Legal Advisors

The legal advisors for the Company are Getz Prince Wells, Barristers & Solicitors, 1810  1111 West Georgia St., Vancouver, B.C. V6E 4M3., Phone 604-605-4293 Fax 604 685-9798. As of October 2, 2007, the Company has retained Stanislaw Ashbaugh LLP, 4400 - 701 Fifth Avenue, Seattle, WA 98104 to provide assistance with matters concerning securities laws in the United States. The firm does not provide other legal services to the Company.

The Companys Bank is the Canadian Imperial Bank of Commerce. Its business address and telephone number are 554 6thStreet, New Westminster, British Columbia Canada V3L 3B5. Tel: (604) 665-7925.

|         |         
|-------- | --------
|**1.C.** | Auditors

On June 30, 2007, the auditors for the Company were Berris Mangan, Chartered Accountants of 1827 West 5thAvenue, Vancouver, British Columbia, Canada, V6J 1P5 (previously known as BME + Partners). On August 31, 2007, the Company changed auditors, due to a decision by Berris Mangan to focus its practice on companies with Canadian reporting responsibilities that are listed on the Toronto Stock Exchange. On the same date the Company appointed HLB Cinnamon Jang Willoughby, Charted Accountants (CJW) of 1827 West 5thAvenue Vancouver, BC, Canada, V6J 1 P5 on an interim basis to conduct the year-end audit for the year ended June 30, 2007. CJW was appointed as the Companys auditor at the Annual General Meeting held on December 12, 2007 and has completed the year end audits for the Company since that date.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

No disclosure necessary.

ITEM 3. KEY INFORMATION

|           |                        
|---------- | -----------------------
|**3.A.1.** | Selected Financial Data

The selected financial data should be read in conjunction with the financial statements and other financial information included elsewhere in the Annual Report.

The Company has not declared any dividends since incorporation and does not anticipate that it will do so in the foreseeable future. The present policy of the Company is to retain all available funds for use in its operations and the expansion of its business.

Table No. 3 is derived from the audited financial statements of the Company, which have been prepared in accordance with generally accepted accounting principles in Canada (Canadian GAAP), which are substantially the same as principles applicable to United States (US GAAP) and practices prescribed by the United States Securities and Exchange Commission (SEC), except the practices described in footnotes to the audited financial statements for the years ended June 30, 2009, 2008 and 2007.

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|                               |               |   |               |   |               |   |               |   |               |  
|------------------------------ | ------------- | - | ------------- | - | ------------- | - | ------------- | - | ------------- | -
|Table No. 3                   
|Selected Financial Data       
|(CDN$)                        
|                               | YearEnded2009 |   | YearEnded2008 |   | YearEnded2007 |   | YearEnded2006 |   | YearEnded2005 |  
|CANADIAN GAAP                  |               |   |               |   |               |   |               |   |               |  
|                               |               |   |               |   |               |   |               |   |               |  
|Revenue                        | 282,261       |   | 249,042       |   | 256,243       |   | 223,586       |   | 239,271       |  
|Net (Loss) for the Year        | 1,183,009     |   | (1,937,735    | ) | (562,090      | ) | (378,301      | ) | (796,301      | )
|Basic Income (Loss) Per Share  | (0.02         | ) | (0.05         | ) | (0.02         | ) | (0.02         | ) | (0.06         | )
|Dividends Per Share            | 0             |   | 0             |   | 0             |   | 0             |   | 0             |  
|Wtg. Avg. Shares (000)         | 49,904,566    |   | 42,605,353    |   | 22,582,026    |   | 17,857,709    |   | 13,663,856    |  
|Period-end Shares              | 51,341,799    |   | 49,511,799    |   | 32,192,404    |   | 20,800,404    |   | 15,784,404    |  
|                              
|Working Capital                | 1,721,192     |   | 2,470,247     |   | 627,730       |   | 33,169        |   | 138,548       |  
|Long-Term Debt                 | 0             |   | 0             |   | 0             |   | 0             |   | 0             |  
|Capital Stock                  | 5,842,389     |   | 5,524,289     |   | 2,658,868     |   | 2,094,770     |   | 1,856,285     |  
|Shareholders Equity (Deficit) | 1,725,883     |   | 2,476,054     |   | 779,898       |   | 157,368       |   | 271,028       |  
|Total Assets                   | 1,782,098     |   | 2,533,975     |   | 854,166       |   | 216,872       |   | 300,893       |  
|                              
|US GAAP                        |               |   |               |   |               |   |               |   |               |  
|Net Loss                       | 1,183,009     |   | (1,937,735    | ) | (562,090      | ) | (378,301      | ) | (796,301      | )
|Loss Per Share                 | (0.02         | ) | (0.05         | ) | (0.02         | ) | (0.02         | ) | (0.06         | )
|Shareholders Equity           | 1,725,883     |   | 2,476,054     |   | 779,898       |   | 157,368       |   | 271,028       |  
|Total Assets                   | 1,782,098     |   | 2,533,975     |   | 854,166       |   | 216,872       |   | 300,893       |  
|                               |               |   |               |   |               |   |               |   |               |  

|           |               
|---------- | --------------
|**3.A.3.** | Exchange Rates

In this Annual Report, unless otherwise specified, all dollar amounts are expressed in Canadian Dollars (CDN$). The Government of Canada permits a floating exchange rate to determine the value of the Canadian Dollar against the U.S. Dollar (US$).

Table No. 4 sets forth the exchange rates for the Canadian Dollar at the end of five most recent fiscal years ended June 30, 2009, the average rates for the period and the range of high and low rates for the period. The data for each month during the most recent six months is also provided.

For purposes of this table, the rate of exchange means the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York.

The table sets forth the number of US Dollars required under that formula to buy one Canadian Dollar. For example, where the number 0.8704 is quoted in the upper left hand number in the table, it means that it took on average in February 2006, 87.04 cents US to purchase one Canadian dollar. For all periods presented, the Canadian dollar has been worth less than one US dollar.

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|                                  |         |        |        |       
|--------------------------------- | ------- | ------ | ------ | ------
|Table No. 4                      
|U.S. Dollar/Canadian Dollar      
|                                 
|Period                            | Average | Low    | High   | Close 
|November 2009                     | 0.9430  | 0.9282 | 0.9560 | 0.9457
|October 2009                      | 0.9472  | 0.9221 | 0.9716 | 0.9282
|September 2009                    | 0.9244  | 0.9038 | 0.9422 | 0.9327
|August 2009                       | 0.9193  | 0.9026 | 0.9358 | 0.9118
|July 2009                         | 0.8911  | 0.8580 | 0.9268 | 0.9268
|June 2009                         | 0.8877  | 0.8602 | 0.9236 | 0.8602
|                                 
|Three Months Ended June 30, 2009  | 0.8571  | 0.7910 | 0.9236 | 0.8602
|Three Months Ended March 31, 2009 | 0.8028  | 0.7692 | 0.8458 | 0.7935
|                                 
|Fiscal Year Ended June 30, 2009   | 0.8575  | 0.7692 | 0.9984 | 0.8602
|Fiscal Year Ended June 30, 2008   | 0.9897  | 0.9298 | 1.0905 | 0.9817
|Fiscal Year Ended June 30, 2007   | 0.8831  | 0.8437 | 0.9452 | 0.9404
|Fiscal Year Ended June 30, 2006   | 0.8602  | 0.8044 | 0.9099 | 0.8969
|Fiscal Year Ended June 30, 2005   | 0.8002  | 0.7492 | 0.8493 | 0.8159
|                                  |         |        |        |       

|         |                                    
|-------- | -----------------------------------
|**3.B.** | **Capitalization and Indebtedness**

Table No. 5 sets forth the capitalization and indebtedness of the Company as of June 30, 2009. During the year ended June 30, 2009, no warrants were exercised by the holders. Subsequent to June 30, 2009, 1,380,000 warrants were exercised by the holders at an exercise price range of $0.45 per unit for gross proceeds of $621,000 and 1,365,000 warrants priced at $0.45 expired.

During the year ended June 30, 2009, the Company granted 550,000 options priced at $0.20 and 1,600,000 options priced at $0.25 to certain directors, consultants and employees of the Company. During the year ended June 30, 2009, 1,830,000 options were exercised at an exercise price range of $0.10 to $0.12 per option for total gross proceeds of $209,000, of which $113,000 had not been received and remained outstanding as at June 30, 2009. Subsequent to June 30, 2009, no options were exercised by the option holders and the Company granted incentive stock options to certain directors, senior officers, employees and consultants to purchase an aggregate of 750,000 common shares at an exercise price of $0.55 and a term of five years, expiring on October 15, 2014.

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|                                     |   |            |  
|------------------------------------ | - | ---------- | -
|Table No. 5                         
|Capitalization and Indebtedness     
|As of June 30, 2009                 
|                                    
|                                    
|SHAREHOLDERS EQUITY                
|                                    
|Common shares issued and outstanding |   | 51,341,799 |  
|Share Capital                        | $ | 5,842,389  |  
|Subscriptions Receivables            | $ | (113,000   | )
|Contributed Surplus-Warrants         | $ | 447,532    |  
|Contributed Surplus  Options        | $ | 1,273,497  |  
|Retained Earnings (deficit)          | $ | (5,724,535 | )
|Net Shareholders Equity             | $ | 1,782,098  |  
|                                    
|TOTAL CAPITALIZATION                 |   |            |  
|Stock Options Outstanding (1):       |   | 5,120,000  |  
|Warrants Outstanding (2):            |   | 3,472,500  |  
|Capital Leases:                      |   | None       |  
|Guaranteed Debt                      |   | None       |  
|Secured Debt:                        |   | None       |  

|(1) | See Table 11 for exercise prices and terms of these options.                                                                                                                                                                
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) | Of the 3,472,500 warrants outstanding, 742,500 warrants were exercisable at a price of $0.36 per warrant until August 13, 2009; 2,730,000 warrants were exercisable at a price of $0.45 per warrant until November 22, 2009.
|   

|     |                                          
|---- | -----------------------------------------
|3.C. | Reasons for the Offer and Use of Proceeds

No disclosure necessary.

|     |             
|---- | ------------
|3.D. | Risk Factors

Risks pertaining to the Company:

The Company's limited operating history makes it difficult to evaluate the Companys current business and forecast future results.The Company was started as a Capital Pool Company, has been operating its current business since November, 2003 and has had limited revenues during this time. Since its inception, the Company has experienced significant operating losses each year. These losses are due to substantial expenditures on intellectual property protection, product development and product testing of commercial and consumer infection control products. The Company has also been engaged in a program of pre-clinical testing for registration of a number of therapeutic products with Health Canada and the FDA. This testing is costly and time consuming and the Company does not have sufficient funds to undertake all of the testing that is required to satisfy the requirements of these regulatory agencies. Accordingly, the Company requires outside funding to complete these tests. As funds are raised, they will be invested in the testing and the Company will continue to accumulate losses that are proportional to the funds raised and spent on testing. In addition, the Company has recently launched a number of consumer and commercial products, described above and is in the process of establishing new sales and distribution agreements. It will take some time to determine what effect, if any, theserecent activities will have on the Companys revenues and profits. These past events and future plans make predictions of future periods difficult.

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The Company has no significant source of operating cash flow and failure to generate revenues in the future could cause the Company to go out of business.Based upon current plans to introduce its products into new markets in Canada and internationally, pursue additional patent applications and regulatory approvals for the T36®technology, develop new products, maintain the Companys public listing on the TSX-Venture Exchange and support the continued registration of its securities in the US, the Company expects to incur operating losses in future periods. These losses will occur because there are continuing expenses associated with the marketing and production of the Companys products, research and development, intellectual property protection, testing and registration of therapeutic products, legal and accounting fees, the maintenance of its public listing and other expenses associated with running an operating business. Even if the Company becomes operationally profitable from the introduction and sale of new products, the Company plans to invest heavily in pre-clinical testing, clinical trials and registration of its therapeutic products and will need to raise significant amounts of new funding to complete these activities. Also, the Company may not be successful in generating significant revenues from therapeutic products in the future. Failure to generate more revenues could cause the Company to contract or go out of business.

If the Company raises further funds through equity issuances, the price of its securities could decrease due to the dilution caused by the sale of additional shares.Additional funds raised by the Company through the issuance of equity or convertible debt securities will cause the Companys current shareholders to experience dilution and possibly lower the trading price of its shares. Such securities may grant rights, preferences or privileges senior to those of the Companys common shareholders. The Company is not profitable and will not be profitable for the foreseeable future under its current development plan. The Company plans to issue further equity to raise funds as necessary to continue operations and fund its program of research and development, patent protection and regulatory approvals. As a result, an indeterminate amount of dilution of the Companys capital stock will occur.

The Company has issued a limited number of shares out of its authorized capital of an unlimited number of common shares, which could be dilutive and negatively affect the share price.Having an unlimited number of authorized but unissued common shares could allow the Companys Directors and Officers to issue a large number of shares without shareholder approval, leading to significant dilution of current shareholders and possible lowering of the share price.

The Company could enter into debt obligations and not have the funds to repay these obligations.The Company does not have any contractual restrictions on its ability to incur debt and, accordingly, the Company could incur significant amounts of indebtedness to finance its operations. Any such indebtedness could contain covenants, which would restrict the Companys operations. The Company might not be able to repay indebtedness.

The Company has a history of generating limited revenues and the continuing failure to generate further revenues could cause the Company to cease operations.The Company has no history of pre-tax profit and in the previous three years has had only limited annual revenues for each of the years it has been operating. The Company sustained operating losses for each of its fiscal years and has sustained significant accumulated operating losses. The continued operation of the Company will be dependent upon its ability to generate operating revenues and to procure additional financing. The Company may not be successful in generating revenues or raising capital in the future. Failure to generate revenues or raise capital could cause the Company to cease operations. The auditors reports to the shareholders are expressed in accordance with Canadian reporting standards, which do not require a reference to conditions and events that cast substantial doubt on the Company's ability to continue as a going concern when these are adequately disclosed in the financial statements. In the United States, reporting standards for auditors require the addition of an explanatory paragraph when the financial statements are affected by conditions and events that cast substantial doubt on the Company's ability to continue as a going concern. Had the Companys financial statements been audited by US auditors, the Company may have received a going concern qualification. A going concern qualification, or the existence of a basis for such a qualification, could negatively affect the Companys ability to raise capital.

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As the Company is a Canadian company, it may be difficult for U.S. shareholders of the Company to effect service on the Company or to realize on judgments obtained in the United States.The Company is a Canadian corporation. A majority of its directors and officers are residents of Canada and a significant part of its assets are, or will be, located outside of the United States. As a result, it may be difficult for shareholders resident in the United States to effect service within the United States upon the Company, directors, officers or experts who are not residents of the United States, or to realize in the United States judgments of courts of the United States predicated upon civil liability of any of the Company, directors or officers under the United States federal securities laws. If a judgment is obtained in the U.S. courts based on civil liability provisions of the U.S. federal securities laws against the Company or its directors or officers, it will be difficult to enforce the judgment in the Canadian courts against the Company and any of the Companys non-U.S. resident executive officers or directors. Accordingly, United States shareholders may be forced to bring actions against the Company and its respective directors and officers under Canadian law and in Canadian courts in order to enforce any claims that they may have against the Company or its directors and officers. Nevertheless, it may be difficult for United States shareholders to bring an original action in the Canadian courts to enforce liabilities based on the U.S. federal securities laws against the Company and any of the Companys non-U.S. resident executive officers or directors.

The Companys future performance is dependent on key personnel. The loss of the services of any of the Companys executives or Board of Directors could have a material adverse effect on the Company.The Companys performance is substantially dependent on the performance and continued efforts of the Companys executives and its Board of Directors. Dr. Terrance G. Owen is the President, Chief Executive Officer and a Director. Peter Chen is the Secretary, Chief Financial Office and a Director. Dr. Linda Allison, Dr. Ronald Zokol, Dr. William F. McCoy and Eugene Hodgson are independent Directors. Dr. Allison, Mr. Chen and Mr. Hodgson are members of the Audit Committee. The loss of the services of any of the Companys executives or Board of Directors could have a material adverse effect on the Companys business, results of operations and financial condition. There is no assurance that key personnel can be replaced with people with similar qualifications within a reasonable period of time. The Company currently does not carry any key person insurance on any of the executives or members of the board of directors. The only contracts in place with any of the employees, officers or directors of the Company are with Terrance Owen and Peter Chen. The Company currently has Directors and Officers insurance in place. However, if for any reason, the Company cannot maintain such insurance, it is possible that some or all of the Directors may resign. If any or all Directors resign, there is no assurance that new Directors can be found to replace any directors who resign.

The Company has not declared any dividends since its inception in 2000 and has no present intention of paying any cash dividends on its common shares in the foreseeable future.The Company has not declared any dividends since its inception in 2000, and has no present intention of paying any cash dividends on its common shares in the foreseeable future. The payment by the Company of dividends, if any, in the future, rests in the discretion of the Company's Board of Directors and will depend, among other things, upon the Company's earnings, its capital requirements and financial condition, as well as other relevant factors.

The Companys future performance is dependent on key suppliers and manufacturers and a loss of any suppliers or manufacturers could have a material adverse effect on the Company by reducing or eliminating the ability of the Company to manufacture or sell its products.The Company does not have agreements in place with any of its key suppliers for raw materials, other supplies or manufacturing. If any of the Companys suppliers or manufacturers were to go out of business or were unable to procure the raw materials or other supplies required by the Company to manufacture its products, the Company would have to find other suppliers or manufacturers. There is no guarantee that the Company would be able to find other suppliers or manufacturers. If the Company could not find other suppliers or manufacturers, production of the Companys products would be delayed for an indefinite period of time and such delays would lead to delayed revenues or reduced revenues or both.

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There is no assurance that the patent applications filed for theT36®technology or for other products will be approved, and failure to obtain such approvals could leave the Company with no protection for its intellectual property and reduced sales.Patent protection of the T36®technology is very important to the Companys current and future products because the T36®Disinfectant technology is the basis for most of its products. Although patents have been allowed in the United States, China and Australia, there is also no assurance that these patents will not be challenged or that future patent applications will be successful. A lack of patent protection would significantly alter the competitive environment and possibly allow competitors to infringe on the technology of the Companys business. Reduced revenues and lack of future products could result from such infringement.

There is no assurance that the Company will be able to secure the funds needed for future development, and failure to secure such funds could lead to a lack of opportunities for growth.Many of the Companys products require very costly laboratory testing to establish toxicity, efficacy and analytical methods and clinical trials to establish effectiveness and safety on human subjects. This testing is required in order to obtain required regulatory approvals from Health Canada, the EPA and FDA in the US and the EMA in the EU. A lack of funds would impair the ability of the Company to complete such tests. A lack of funds would also impair the Companys ability to establish marketing and sales plans once the products have been approved for sale. If adequate financing is not available when required, the Company may be required to delay, scale back or eliminate various activities and may be unable to continue in operation. The Company may seek such additional financing through debt or equity offerings, but there can be no assurance that such financing will be available on terms acceptable to the Company or at all. Any equity offering will result in dilution to the ownership interests of the Companys shareholders and may result in dilution to the value of such interests.

There is no assurance that research and development being conducted by the Company to create new products will be successful.The Company is conducting research and development on new products, but the outcomes of research and development are never certain. For example, there is no assurance that any new products will be developed or that any new products that do result will have a competitive advantage or market acceptance, will not be superseded by the new products of competitors, will not infringe on the patents of other companies or that other companies will not develop products that infringe on patents obtained by the Company for its new products. The Company has completed the formulations for new products but still needs to conduct the toxicity and efficacy tests and establish the analytical methods required to obtain regulatory approvals from Health Canada, the EPA and FDA in the US and the EMA in the EU.

The Company and the Companys products have limited brand awareness which limits the ability of the Company to gain credibility from prospective customers and to sell its products into new markets.Market knowledge of the Companys name is limited. The Company will need to devote considerable resources to educate new markets about the products the Company offers. In establishing new markets, the Company will be competing with companies that are potentially already entrenched in such markets or may be better funded than the Company. The ability of the Company to raise brand awareness will depend on its ability to raise the money required to undertake such an intensive marketing effort. As noted elsewhere, there is no assurance that the Company can raise funds required for such an investment in marketing.

The Company has limited sales and marketing experience and can provide no assurance that the Company can keep its current customers or gain new ones.The Company has limited experience in marketing and selling its products and the Company has only three sales and marketing people. The most senior sales person was hired in May, 2009. None of the sales people have had prior experience with the type of products sold or being developed by the Company. The Company will have to expend substantial funds to promote and develop its products. The Companys success in this regard will depend on the quality of its products and its ability to develop and implement an effective sales and marketing strategy. Current plans call for the expenditure of significant funds over the next 18 months for marketing activities. Failure to achieve the marketing objectives will have a material adverse effect on the Company and on its results of operations and financial condition.

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Conflicts of interest may exist for Directors and Officers which may inhibit their ability to act in the best interests of the Company and its shareholders leading to possible impairment of the Companys ability to achieve its business objectives.The directors and officers of the Company will not be devoting all of their time to the affairs of the Company. The directors and officers of the Company are directors and officers of other companies. The directors and officers of the Company will be required by law to act in the best interests of the Company. They will have the same obligations to the other companies in respect of which they act as directors and officers. Discharge by the directors and officers of their obligations to the Company may result in a breach of their obligations to the other companies and, in certain circumstances, this could expose the Company to liability to those companies. Similarly, discharge by the directors and officers of their obligations to the other companies could result in a breach of their obligation to act in the best interests of the Company. Such conflicting legal obligations may expose the Company to liability to others and impair its ability to achieve its business objectives. Terrance Owen has been the Secretary of Bi-optic Ventures Inc., an inactive company listed on the TSX-Venture Exchange, since September, 2002 and a Director of this same company since September, 2006. As a non-management Officer and Director of Bi-Optic Ventures Inc., Terrance Owen spends up to two hours per month on the business of Bi-Optic Ventures Inc. Terrance Owen controls a company, Duft Enterprises Corp., that owns the building in which the Company is located and the Company pays rent to Duft Enterprises Corp. Peter Chen is not a Director or Officer of any other company. Neither Peter Chen nor Terrance Owen is a Director or Officer of any companies that compete with or provide services that are similar to those of the Company.

Management of the Company can, through their stock ownership in the Company, influence all matters requiring approval by the Companys shareholders.At the time of this report, management of the Company, collectively own approximately 3% of the Company's issued and outstanding common shares at that date. These shareholders, if acting together, could significantly influence all matters requiring approval by the Company's shareholders, including the election of directors and the approval of mergers or other business combination transactions. Management may not make decisions that will maximize shareholder value and may make decisions that will contribute to or cause the entrenchment of management.

The value and transferability of the Company shares may be adversely impacted by the limited trading market for the Companys common shares.No assurance can be given that a market for the Companys common shares will be quoted on an exchange in the U.S. or on the NASD's Over the Counter Bulletin Board. The Companys common shares may be subject to illiquidity and investors may not be able to sell their shares in a timely manner.

The value and transferability of the Company shares may be adversely impacted by the penny stock rules.The sale or transfer of the Company common shares by shareholders in the United States may be subject to the so-called "penny stock rules." Under Rule 15g-9 of the Exchange Act, a broker or dealer may not sell a "penny stock" (as defined in Rule 3a51-1) or effect the purchase of a penny stock by any person unless:

|(a) | Such sale or purchase is exempt from Rule 15g-9;                                                                                                                                                                                                                                                          
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|(b) | Prior to the transaction the broker or dealer has (1) approved the person's account for transaction in penny stocks in accordance with Rule 15g-9, and (2) received from the person a written agreement to the transaction setting forth the identity and quantity of the penny stock to be purchased; and
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|(c) | The purchaser has been provided an appropriate disclosure statement as to penny stock investment.                                                                                                                                                                                                         

The SEC adopted regulations generally define a penny stock to be any equity security other than a security excluded from such definition by Rule 3a51-1. Such exemptions include, but are not limited to (1) an equity security issued by an issuer that has (i) net tangible assets of at least $2,000,000, if such issuer has been in continuous operations for at least three years, (ii) net tangible assets of at least $5,000,000, if such issuer has been in continuous operation for less than three years, or (iii) average revenue of at least $6,000,000 for the preceding three years; (2) except for purposes of Section 7(b) of the Exchange Act and Rule 419, any security that has a price of $5.00 or more; and (3) a security that is authorized or approved for authorization upon notice of issuance for quotation on the NASDAQ Stock Market, Inc.'s Automated Quotation System. It is likely that the Companys common shares, assuming a market were to develop in the US, will be subject to the regulations on penny stocks. Consequently, the market liquidity for the common shares may be adversely affected by such regulations limiting the ability of broker/dealers to sell the Companys common shares and the ability of shareholders to sell their securities in the secondary market in the US Moreover, the Company shares may only be sold or transferred by the Company shareholders in those jurisdictions in the US in which an exemption for such "secondary trading" exists or in which the shares may have been registered.

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There is no guarantee that there is a market for the Companys common shares in the United States.

Although the Companys common shares were added to the OTC Bulletin Board System on April 20, 2009 under the symbol APCSF, trading of the companys shares is very limited. The Company cannot guarantee that there will be a market for the Companys common shares in the United States or that there will any significant amount trading in the companys shares for the foreseeable future. Although the company was accepted by a market maker, Pennaluna & Company, located in Coeur d'Alene, ID, there is no guarantee that a market will develop for the companys shares.

Risks Pertaining to the Industry

Registration of products may not occur in a timely manner which could lead to delays in product introductions, reduced revenue expectations and extra costs to conduct further tests to satisfy regulatory agencies.Government agencies, such as the EPA and the Food and Drug Administration (FDA) in the United States and Health Products and Food Branch in Canada, need to provide approvals of the Companys products prior to any sales of these products. To obtain such approvals, the Company must submit extensive amounts of information on the efficacy, toxicology, carcinogenicity, mutagenecity and other testing of the products that it is trying to register. After all of the information is provided, the agencies can request supplemental information and further testing. Once all of the requirement for documentation is satisfied, the agencies can take an indeterminate amount of time to provide approvals for the Company to market its products. Significant delays could lead to slower revenue growth than anticipated. In addition, regulatory delays can allow time for competitors to devise strategies to prevent or reduce market penetration. There is no assurance that government agencies will accept for registration any of the Companys products.

There is a risk that the Companys intellectual property infringes upon the rights of other companies, which could lead to reduced revenues, reduced margins due to sanctions against the Company, outright withdrawal or prohibition of products or trademarks from the market and significant costs for legal defense against infringement claims, re-branding of products and revised marketing materials.The Company is unaware of any infringement claims being made against the Company or its products or processes at the time of writing. In the future, there can be no assurances that third parties will not assert infringement claims in the future or require the Company to obtain a license for the intellectual property rights of such third parties. There can be no assurance that such a license, if required, will be available on reasonable terms or at all. If the Company does not obtain such a license, it could encounter delays in the introduction of products or could find that the development, manufacture or sale of products requiring such a license could be prohibited.

There is a risk that earlier inventions may exist that invalidate the Companys patent applications so that the Company may not be able to sell any infringing products.Since patent applications are maintained in secrecy for a period of time after filing, and since publication of discoveries in the scientific or patent literature often lags behind actual discoveries, the Company cannot be certain that it was the first creator of inventions covered by pending patent applications, or that it was the first to file patent applications for such inventions. The Company might have to participate in interference proceedings in U.S., Canadian or patent offices in other jurisdictions to determine priority of invention, at substantial cost, particularly if such actions are required overseas. There can be no assurance that the Companys patents, if issued, would be held valid or enforceable by a court. The Company has patents issued in the United States, China and Australia and patent applications filed in the European Union and Canada. These patent applications seek intellectual property protection for the basic formulation of the T36®formulation, the method for making it and certain therapeutic uses of the formulation.

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Risk Factors (continued)

There may be limited ability to defend the patents if and when they are issued, leading to loss of sales that might otherwise be realized if the Company was in a position to defend its patents.Litigation among pharmaceutical companies can be intense and costly. The Company might not have the financial ability to defend its patents, if issued, against larger industry players. Litigation may be necessary to enforce patents issued or assigned to the Company, or to determine the scope and validity of a third party's proprietary rights. Additionally, there can be no assurances that the Company would prevail in any such action. An adverse outcome in litigation or as part of an interference or other proceeding in a court or patent office could subject the Company to significant liabilities, require disputed rights to be licensed from other parties or require the Company to cease using certain technology or products, any of which could have a material adverse effect on the Companys business.

The market for disinfectant products is competitive and well established with a number of large, multinational, widely recognized companies with significant financial and marketing resources selling, and possibly developing, similar products.Competitors are already well established in the market for disinfectant and antiseptic products and products for the treatment of topical infections. The introduction of new products into these existing markets could be met with aggressive marketing, price cutting and distribution impediments by competitors. To obtain market share, the Companys business must penetrate a market with established competitors and obtain sufficient recognition to be able to displace the existing products. Substantial funds will have to be spent on marketing and education to achieve these objectives. Competitors may be developing new technologies and new products that will offer significant improvements over existing products, including those offered by the Company. There can be no assurance that others will not independently develop similar products, duplicate any of the Companys products or, if patents are issued to the Company, design around such patents. There can be no assurance that a competitor's technology or product would be found to infringe the Companys patents. In the disinfectant market, key competitors include Germiphene Corporation, Virox Technologies, Inc., JohnsonDiversey Inc., Advanced Sterilization Products, Reckitt Benckiser and Metrex Research Corporation. All of these companies are well established and sell disinfection products into the same markets served by the Company. In the therapeutic markets being targeted by the Company, a number of large competitors, such as Johnson and Johnson, Cardinal Health, Reckitt Benckiser and Ortho Pharmaceutical are well established. Such large and aggressive competitors can deploy their significant resources to prevent a new competitor, such as the Company, from securing market share.

The Companys T36®Disinfectant is composed of various chemicals that may pose risks due to flammability and possible health risks.One of the main components of T36®Disinfectant, T36®Antiseptic Hand Sanitizer and T36®Disinfectant Cleaner CONCENTATE is ethanol, which is flammable and has a flash point (the minimum temperature at which the liquid produces a sufficient concentration of vapour above it that it forms an ignitable mixture with air) of 13oC. Water, which is part of the T36®formulation, raises the flash point to 24oC. The transport and storage of T36®products can pose a fire hazard if shipped or stored in sufficient quantities. The Company uses an independent warehousing company to store and ship T36®Disinfectant. The warehouse is fully equipped with fire suppression equipment according to the relevant regulations established by the municipal, provincial and federal governments. T36®products are shipped by ground only in cases of 4 bottles holding 4 litres each or in smaller quantities per case. In these quantities, T36®Disinfectant is not classified as a Dangerous Good under Sections 1.15, 1.16 and 1.17 of the Transportation of Dangerous Goods Act administered by Transport Canada. As a result, no special regulations apply to the shipping of T36®Disinfectant by ground within Canada. There is no guarantee that special shipping regulations will not be applied to shipments of T36®Disinfectant in the future or in other jurisdictions, such as the United States.

Risk Factors (continued)

Two potentially toxic components of T36®Disinfectant are present in low concentrations compared to their LD50levels (the amount of the substance that kills 50% of the test population of experimental animals when administered as a single dose). O-phenylphenol (OPP) in pure crystalline form is considered to be a possible carcinogen and eye contact can cause severe irritation or burns with possible eye damage (Concentration in T36®Disinfectant = 2,800 ppm, oral LD50= 2,480 mg/kg in rats) For some individuals, o-phenylphenol can also irritate the skin. Benzalkonium chloride (BZK) supplied as a 50% solution in water, has been reported to cause allergic reactions and the swelling of the mucosa when used as nose sprays on a continuous, long-term basis by sensitive users (Concentration in T36®Disinfectant = 2,000 ppm, oral LD50= 300 mg/kg in rats). The Company does not directly handle, store, use or dispose of OPP or BZK in pure form but only in their highly diluted form in T36®Disinfectant. Further, because the denatured alcohol that contains Bitrex to prepare T36®Disinfectant, the consumption of significant amounts of T36®Disinfectant is not possible. Therefore, it is unlikely that anyone can be poisoned or otherwise harmed through the proper use of T36®Disinfectant as instructed by the Company.

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Toxicology studies conducted for the company by Product Safety Labs (PSL), located in Dayton, New Jersey, have confirmed that T36®Disinfectant has no harmful effects on animals except as reported below by PSL:

- Acute inhalation (rat): LC50> 2020 mg/m3. Difficulty breathing, irregular respiration, lethargy and discharge from nose and eyes reported.
- Acute oral (rat): LD50> 5000 mg/kg. Lethargy and hunched posture reported.
- Acute dermal (rat): LD50> 2000 mg/kg. No systemic effects observed.
- Effects not observed but possible based on individual ingredients may include: ataxia, loss of coordination, drowsiness, intoxication, nausea and vomiting.

However, T36®Disinfectant is classified as a moderate eye irritant. Although T36®Disinfectant is not measurably toxic if used as directed by the Company, it is possible that regulations against these chemicals may become more restrictive and affect the ability of the Company to market its products in certain jurisdictions without additional warning labels. The chemicals present in T36®are biodegradable with sufficient time and do not pose a long-term threat to the environment. However, given the attention that any chemicals may attract from environmental groups, it is possible that negative publicity about these chemicals could affect the ability of the Company to market its products in certain jurisdictions. There are persuasive arguments and credible scientific evidence available to support the safety of T36®Disinfectant, but such an educational effort on the part of the Company would require funds to be spent and would affect the profitability of the Company.

The Company has a limited number of customers and is dependent on a few key accounts to maintain its current levels of sales.

The key customers for which sales account for more than 10% of total revenues during the period being reported on are:

- Esthetics Plus, Inc.: A distributor to the beauty market with a contract that renews on an annual basis. Either party can terminate the contract on 60 days notice or with 30 days notice for any breach of the contract if the breach is not rectified within the 30 day notice period,
- Sinclair Dental Limited:A distributor to the dental market and a customer of both API and the Company for 8 years,
- The Stevens Company Limited: A distributor to the scientific and medical markets and a customer of both API and the Company for 8 years, and
- VWR International: A distributor to the laboratory market and customer of API and the Company for 8 years.
- Product Distribution Centre: A distributor that is owned by the provincial government of BC, supplies the provinces public sector consumers within BC and a customer of the Company and API for 8 years.

The Company currently sells its T36®Disinfectant, the T36®Disinfectant Wipes, T36®Antiseptic Hand Sanitizer Gel and Wipes, and T36®Disinfectant Cleaner CONCENTRATE through these distributors. The current sales through these distributors would be disrupted if any of these distributors stopped representing the Company. The result would be a reduction in the Companys revenues until new distributors could be found. It is possible that new distributors could not be found and the Company would have to try to sell its products directly to the end users, leading to a significant increase in marketing and sales costs even if the sales levels could be regained.

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ITEM 4. INFORMATION ON THE COMPANY

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|4.A. | History and Development of the Company

Capital Pool Company

The Company was incorporated by registration of its Memorandum and Articles under the BC Companies Act on May 30, 2000 under the name Duft Biotech Capital Ltd. and was classified as a Capital Pool Company (CPC) on the TSX Venture Exchange. Under the policies of the TSX Venture Exchange, the principal business of a CPC is to identify and evaluate opportunities for acquisition. The completion of such an acquisition is referred to as a Qualifying Transaction. A CPC does not carry on any business other than the identification and evaluation of assets or businesses in connection with potential Qualifying Transactions, does not have business operations or assets other than seed capital and has no written or oral agreements for the acquisition of an asset or business at the time of formation.

A Qualifying Transaction, pursuant to the policies of the TSX Venture Exchange, is a transaction whereby a capital pool company:

|(a) | Issues or proposes to issue, in consideration for the acquisition of significant assets or businesses, common shares or securities convertible, exchangeable or exercisable into common shares, which, if fully converted, exchanged or exercised would represent more than 25 percent of its common shares issued and outstanding immediately prior to the issuance;
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|(b) | Enters into an arrangement, amalgamation, merger or reorganization with another issuer with significant assets, whereby the ratio of securities which are distributed to the security holders of the capital pool company and the other issuer results in the security holders of the other issuer acquiring control of the resulting entity; or                     
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|(c) | Otherwise acquires significant assets other than cash.                                                                                                                                                                                                                                                                                                               
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Qualifying Transaction

On November 13, 2003, the Company completed its Qualifying Transaction, which was the acquisition of the assets of API, a private company founded in 1996 and since renamed 513947 BC Ltd. (513947). The transaction was approved by the TSX Venture Exchange as a valid Qualifying Transaction.

To support the acquisition of API as its Qualifying Transaction, the Company had an independent valuation of API conducted. From the valuation, direct development costs were estimated to be $378,000 as follows.

|                                                                    |   |         | 
|------------------------------------------------------------------- | - | ------- | 
|Intellectual property development (patent application & trademarks) | $ | 31,584  | 
|Marketing materials development                                     | $ | 38,756  | 
|Product development                                                 | $ | 237,668 | 
|Regulatory approval                                                 | $ | 69,788  | 
|Total direct developmental costs (rounded up)                       | $ | 378,000 | 

These direct development costs were discounted by 20% to $302,400. Estimated administrative costs of $45,000 and unpaid salaries of $192,551 were added to the discounted direct development costs to arrive at a total value of $539,951. This value was rounded up to $540,000 and $15,000 worth of inventories of completed T36®Disinfectant and raw materials brought the total to $550,000.

The Company purchased these assets of API with 3,711,263 shares of the Company plus forgiveness of loans and accrued interest of $57,747.40 advanced to API by the Company prior to completion of the Qualifying Transaction. The Company purchased only the assets and not the liabilities of API except for the trademark litigation undertaken by JohnsonDiversey Inc. against API. This litigation was subsequently settled and is discussed elsewhere. As a result of the asset purchase, API became the registered owner of the shares of the Company. The Company also acquired the intellectual property and $17,500 worth of inventory from API. The intellectual property consisted of one patent application, #PCT/CA2002/001284, A wide spectrum disinfectant, filed on August 20, 2002 under the Patent Cooperation Treaty (PCT), described in more detail below. two Drug Identification Numbers (DINs, i.e.,02245056 for T36®Disinfectant under its previous name, Spritz and 02231344 for the same product renamed, Viralex and subsequently renamed to T36®Disinfectant), provided to the Company by Health Canada and the pending trademarks for Viralex, T36 and a logo displayed with the name, ALDA Pharmaceuticals. (described under Trademarks in Section 4.B. Business Overview), customer lists and contacts, products under development (also described in 4.B. Business Overview), marketing materials, technical bulletins, and instructions for customers and technical studies.

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Agreements that still remain in effect as a result of the asset purchase are the appended Voting Agreement and the Non-Competition Agreement.

Voting Agreement (Exhibit 3.)

The parties to the Voting Agreement, dated November 13, 2003 and established as a condition of completing the Qualifying Transaction, are API, Allan Shapiro (Shapiro), Michael Wilby (Wilby), the Company, Terrance Owen (Owen), Peter Chen (Chen) and Bruce Schmidt (Schmidt).

Under the terms of the agreement, API, Shapiro and Wilby will vote their shares of the Company in favour of the number of directors of the Company not to exceed six directors with one director being independent of API and the election of Owen, Chen and Schmidt as directors of the Company provided they have been nominated by the Company for election to the Board of the Company;

Until termination of this Agreement, the Company will nominate Owen, Chen and Schmidt for election to the Board at each Meeting provided each person consents to continuing as a director of the Company, is not then prohibited by law from serving as a director of the Company and that each nomination and election is acceptable to the TSX Venture Exchange and all other applicable securities regulatory authorities.

Subject to restrictions imposed under applicable securities legislation, API, Shapiro or Wilby may sell shares of the Company through a stock exchange. If any of them proposes to sell in excess of 200,000 shares of the Company in an off-market transaction they will require the purchaser to agree to be bound by the terms of the Voting Agreement.

If a take-over bid or other offer is made to shareholders of the Company by an arms-length third party for all or a portion of the shares of The Company, API, Shapiro and Wilby will be free to tender to such bid or offer any shares owned by them and will not be required to comply with the selling restrictions described above.

The Voting Agreement will terminate with respect to Wilby, at the earlier of:

- such time as API, Shapiro and Wilby collectively cease to hold, directly or indirectly, less than 10% of the issued voting shares of The Company;
- such time as Wilby ceases to hold directly or indirectly, or control at least 5% of the issued voting shares of The Company; and
- 5 years from the date of the execution and delivery of this Agreement.

The Voting Agreement will not terminate with respect to API and Shapiro, except with the consent of the TSX Venture Exchange. As of June 30, 2008, the Voting Agreement was no longer in effect for Wilby since his personal shareholdings were below 5% of the issued voting shares of the Company.

On November 1, 2004, the Voting Agreement was amended. The parties to the Amendment are API, Shapiro, Wilby, the Company, Owen, Chen and Schmidt.

The Amendment was entered into because of the name changes undertaken by the Company and API after completion of the Qualifying Transaction and the resignation of Schmidt as a director of the Company. The Amendment also changed references to Owen, Chen and Schmidt to Owen Nominee, Chen Nominee and Schmidt Nominee, respectively, so that, if any one of Owen, Chen or Schmidt does not consent to being nominated as a director of APC, another person acceptable to the TSX Venture Exchange and to the other nominees would become a party to the Voting Agreement. On October 4, 2004, Eugene Hodgson was appointed as a director and became the Schmidt nominee on completion of the Amendment.

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Non-Competition Agreement (Exhibit 4.i.)

The parties to the Non-Competition Agreement, dated November 13, 2003 and established as a condition of completing the Qualifying Transaction, are API, Shapiro and the Company.

Under the terms of the Agreement, API and Shapiro agree that neither Shapiro nor API will compete with the Company in any way. In the case of API, the Agreement expired after one year on November 13, 2004. In the case of Shapiro, the Agreement stays in place while Shapiro provides services for the Company in any capacity and for a period of one year after his services for the Company come to an end. Competition, as defined in the Agreement, includes, but is not limited to, the solicitation of customers or the sale of any products or services that are in any way similar to those offered by the Company or inducement of any employees of the Company to leave the Company. Shapiro agrees that any breach of the agreement by him could cause irreparable harm to the Company and that the Company can take any action that it deems necessary to end the breach and be compensated for the breach.

Change of Business.

As a consequence of completing the Qualifying Transaction, The Company entered into the business of developing and marketing disinfectant products.

On November 26, 2003 the Company changed its name to ALDA Pharmaceuticals Corp. The Company is still registered in British Columbia, Canada only.

The head office of the Company is located at 635 Columbia Street, New Westminster, British Columbia, Canada, V3M 1A7. The Companys telephone number is (604) 521-8300. The contact person is: Mr. Terrance Owen, President and CEO or Mr. Peter Chen, CFO and Secretary. The Companys common shares have been listed for trading on the TSX Venture Exchange since July, 2001.

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Financings

The Company has financed its operations since inception through funds raised in a series of private placements of common shares:

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|Fiscal Year | Nature of Share Issuance                                              | Number of Shares | Amount ($)    
|Fiscal 2001 | Private Placement @ $0.085                                            | 1,176,475        | $ 100,000.38  
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|Fiscal 2002 | Canadian Prospectus Offering (IPO) @$0.17                             | 1,200,000        | $ 204,000.00  
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|Fiscal 2003 | Brokers Warrant Shares on Canadian Prospectus Offering (IPO) @ $0.17 | 150,000          | $ 25,500.00   
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|Fiscal 2004 | Private Placement @ $0.15                                             | 346,666          | $ 52,000.00   
|            | Private Placement @ $0.20                                             | 6,200,000        | $ 1,240,000.00
|           
|Fiscal 2005 | Private Placement @ $0.10                                             | 3,000,000        | $ 300,000.00  
|           
|Fiscal 2006 | Private Placement @$0.05                                              | 3,916,000        | $ 195,800.00  
|            | Private placement @ $0.05                                             | 1,100,000        | $ 55,000.00   
|           
|Fiscal 2007 | Private placement @ $0.05                                             | 1,430,000        | $ 71,500.00   
|            | Private placement @ $0.10                                             | 8,000,000        | $ 800,000.00  
|           
|Fiscal 2008 | Private placement @ $0.12                                             | 2,000,000        | $ 240,000.00  
|            | Private placement @ $0.15                                             | 3,500,000        | $ 525,000.00  
|            |                                                                       |                  |               
|Fiscal 2009 | N/A                                                                   | N/A              | N/A           

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|----------------------
|4.B. Business Overview

The Company was established in order to develop and commercialize disinfectant products. The Company has called the disinfectant technology T36®Disinfectant. T36®Disinfectant is a mixture of ethanol, o-phenylphenol, benzalkonium chloride and other ingredients (including lemon fragrance and water). All of these component chemicals are biodegradable.

The Company is attempting to patent or secure proprietary protection for the specific combination of these products although the ingredients are all common chemical compounds.

During its first five years, Companys primary focus was on product development. In April, 2009, the Company completed a line of products that included T36®Disinfectant, T36®Antiseptic Hand Sanitizer and T36®Disinfectant Cleaner CONCENTRATE.

T36®Disinfectant

The Companys first product, a surface disinfectant called Viralex and subsequently renamed T36®Disinfectant, was launched in September of 2001. T36®Disinfectants Health Canada Drug Identification Number (DIN) is 02231344. It is being sold primarily to (i) First Responder organizations including ambulance, fire fighters and police forces in Canada, (ii) dental clinics, and (iii) beauty and hair care salons and spas. Based on the efficacy and toxicology studies described below, T36®Disinfectant has been approved by Health Canada for use on any hard, inanimate non-porous surfaces. This includes, but is not limited to, counter tops, cutting boards, sinks, tubs, walls, floors, windows, mirrors, scissors, nail clippers and other equipment used in beauty salons and spas, dental mirrors and other equipment in dental offices, and equipment used by firefighters, police and paramedics. T36®Disinfectant is also approved by the Canadian Food Inspection Agency (CFIA) for use in restaurants and other facilities where food is prepared.

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Efficacy studies on T36®

Efficacy studies refer to proving a drug's effectiveness (in this case as a disinfectant) in producing a desired result (bactericide, virucide, fungicide or tuberculocide). In studies conducted by independent laboratories in Canada and the United States, T36®Disinfectant has demonstrated efficacy against bacteria, fungi and viruses. The types of surfaces tested were hard, non-porous surfaces unless otherwise noted.

|1. | An efficacy study, dated February 10, 1997, was conducted by BC Research Inc. (Vancouver, Canada) under the supervision of Dr. Ernie Lee. The organisms tested were four strains of bacteria (Staphylococcus epidermis, Pseudomonas aeruginosa, Serratia marcescens, and Mycobacterium tuberculosis)one strain of yeast (Candida albicans), spores from one strain of fungus (Aspergillus fumigatus)and two strains of viruses (Herpes Simplex Virus- 1 and Poliovirus-1)in compliance with test standards accepted by Health Canadas Therapeutic Product Directorate.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
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|   | Twenty five replicates of each organism at low levels, ranging from 38 to 177 cfus/ml (colony forming units/ml) were dried on microscope cover slips and exposed to T36®Disinfectant for varying times. The studies demonstrated that T36®Disinfectant was 100% effective against all five organisms after 10 minutes or longer contact times. At shorter contact times, the kill rate for all 5 organisms ranged from 95.5% to 97.2% after a 1 minute exposure and 98.7 and 99.0% after a 5 minute exposure.                                                         
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|2. | An efficacy study, dated June 6, 1997, was conducted by Dr. Richard Stokes of the University of British Columbia in conjunction with the British Columbia Childrens Hospital. Twenty replicates of Mycobacterium tuberculosisat approximately 107cfus/ml were dried on microscope cover slips and exposed to T36®Disinfectant for varying times.                                                                                                                                                                                                                     
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|   | The of log studies10= 6.59) demonstrated after a 10-minute that the kill exposure. rate was The 99.99997% requirement (a for reduction a disinfectant of log10to = be 6.46) designated and 99.99998% as Tuberculocidal (a reduction by Health Canada is a log10reduction of 6.0 or greater.                                                                                                                                                                                                                                                                          
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|3. | Efficacy studies were conducted by Viromed Biosafety Laboratories of Minneapolis, Minnesota, and completed on February 23, 2000. The organisms tested were Staphylococcus aureus, Pseumomonas aeruginosa, Salmonella choleraesuis, Human Immunodeficiency Virus Type I, Herpes simplexVirus Type 1, Trichophyton mentagrophytesand PoliovirusType 1, in compliance with test standards accepted by the Environmental Protection Agency (EPA) of the United States.                                                                                                   
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- For each of the bacteria, Staphylococcus aureus, Pseumomonas aeruginosa, Salmonella choleraesuis, 180 replicates at 6.1 x106cfu/ml (log10= 6.79), 1.9 x 106cfu/ml (log10= 6.28) and 1.7 x 104cfu/ml (log10= 4.23), respectively, were dried on microscope slides and exposed to T36®Disinfectant for 3 minutes. For both Staphylococcus aureusand Pseumomonas aeruginosa, growth was observed on only 1 replicate out of 180. For Salmonella choleraesuis, none of the 180 replicates showed any growth. These results met the requirement that no more than 1 replicate out of 60 can show growth and T36®Disinfectant was deemed to demonstrate efficacy against all three bacteria.
- For Human Immunodeficiency Virus Type I, six replicates at 1.77 x105cfu/ml (log10= 5.25), were dried on the bottom of Petri dishes. After being exposed to T36®Disinfectant for 3 minutes, none of the replicates showed any viral activity and T36®Disinfectant was deemed to demonstrate efficacy against HIV.
- For Herpes simplexVirus Type 1, six replicates at 5.6 x106cfu/ml (log10= 6.25), were dried on the bottom of Petri dishes, After being exposed to T36®Disinfectant for 3 minutes, none of the replicates showed any viral activity and T36®Disinfectant was deemed to demonstrate efficacy against the Herpes virus.

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- For PoliovirusType 1, six replicates at 5.6 x105cfu/ml (log10= 5.75), were dried on the bottom of Petri dishes. After being exposed to T36®Disinfectant for 3 minutes, none of the replicates showed any viral activity and T36®Disinfectant was deemed to demonstrate efficacy against the Polio virus.
- For the fungus, Trichophyton mentagrophytes,twenty replicates at 4.6 x104cfu/ml (log10= 4.66), were dried on microscope slides. After being exposed to T36®Disinfectant for 3 minutes, none of the replicates showed any viral activity and T36®Disinfectant was deemed to demonstrate efficacy against Trichophyton mentagrophytes.

The above studies demonstrated that T36®Disinfectant was effective in inactivating polio viruses within 3 minutes and tuberculosis mycobacteria within 5 minutes. Polio and tuberculosis are benchmark micro-organisms because they are among the most difficult to kill with disinfectant products. Efficacy against polio and tuberculosis demonstrates a high level of disinfection capability. In order to make a virucidal claim and a tuberculocidal claim, a disinfectant product must demonstrate its ability to destroy the poliomyelitis type 1 virus, and Mycobacterium bovisor tuberculosis mycobacteria within a specified time. This is mandated in Canada by the Canadian General Standards Board, Assessment of Efficacy of Antimicrobial Agents for Use on Environmental Surfaces and Medical Devices, CAN/CGSB -2.161-97, p.4, and the Therapeutic Products Programme Guidelines on Disinfectant Drugs, 1999 Edition, Appendix II on page 23.

In all of the testing described above, controls were used to validate the testing protocols. A positive test result required complete inactivation of the tested viruses and complete efficacy against the fungi and bacteria as required by the U.S. EPA for disinfectant label claims. The results from BCRI demonstrated efficacy in excess of Log104.0 (i.e. 10,000 times reduction in micro-organisms) in compliance of the standards required in Canada. The tuberculocidal studies demonstrated results in excess of Log106.0 (1,000,000 times reduction in micro-organisms).

|Toxicology studies on T36®
|--------------------------

Toxicology is the study of the adverse effects of chemical, physical or biological agents on living organisms and the ecosystem, including the prevention and amelioration of such adverse effects. The toxicology studies listed below were conducted in the United States by Product Safety Labs in East Brunswick, New Jersey, USA and completed in November, 1999.

- Acute Oral Toxicity Study in Rats - This test determines the amount of a substance that kills 50% of the test population of experimental animals when administered as a single dose. Five thousand milligrams of T36® Disinfectant per kilogram of bodyweight was administered orally to ten healthy rats. The animals were observed for mortality, signs of gross toxicity, and behavioral changes at least once daily for 14 days. Bodyweights were recorded prior to administration and again on Days 7 and 14. Necropsies were performed on all animals at terminal sacrifice.
All animals survived and gained weight during the study. Following administration, most animals exhibited piloerection (erection of the hair), hunched posture and/or were hypoactive. Apart from one female that exhibited reduced fecal volume between Days 0 and 5, all affected animals recovered from the above symptoms. Based on the results of this study, the single dose acute oral LD50of T36®Disinfectant is greater than 5,000 mg/kg of bodyweight
- Primary Skin Irritation Study in Rabbits - This test determines the potential for a substance to produce irritation after a single topical application. Five-tenths of a milliliter of T36®Disinfectant was applied to the skin of three healthy rabbits for 4 hours. Following exposure, dermal irritation was evaluated and no dermal irritation was noted at any dose site during the study. Based on the results of this study, T36®Disinfectant is classified as non-irritating to the skin.
- Primary Eye Irritation Study in Rabbits - This test determines the potential for a substance to produce irritation from a single dose to the eye. One-tenth of a milliliter of T36®Disinfectant was placed into the right eye of six healthy rabbits. The treated eyes of three rabbits were rinsed with physiological saline after instillation. The eyes of the remaining three rabbits were not rinsed. The left eye remained untreated and served as a control. Ocular irritation was evaluated and, based on the results of this study, T36®Disinfectant is classified as moderately irritating to the unrinsed eye and severely irritating to the rinsed eye.

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- Acute Inhalation Toxicity Study in Rats - This test determines the potential for a substance to produce toxicity from a single exposure via the inhalation route. Ten healthy rats were exposed to T36®Disinfectant vapours in a closed chamber at a concentration 2.02 mg/L for 4 hours. The animals were observed for mortality, signs of gross toxicity, and behavioral changes at least once daily for 14 days thereafter. Bodyweights were recorded prior to exposure and again on Days 7 and 14. All animals survived exposure to the test atmosphere and gained bodyweight over the 14- day observation period. During the exposure, the rats exhibited ocular and nasal discharge, shortness of breath, irregular respiration, shallow respiration, hunched posture and hypoactivity. With the exception of ocular and nasal discharge and shallow respiration, similar clinical signs persisted in all animals upon removal from the exposure chamber. Some animals also developed noisy breathing, reduced fecal volume and/or a prone posture, but all rats recovered from these symptoms by Day 11 and appeared active and healthy for the remainder of the study. Necropsy findings at terminal sacrifice were unremarkable. Based on the results of this study, the single exposure acute inhalation LC50of T36®Disinfectant is greater than 2.02 mg/L.
- Acute Dermal Toxicity Study in Rats - This test determines the health hazards likely to arise from a short-term exposure to a substance from a single topical application to the skin. Two thousand milligrams per kilogram of bodyweight of T36®Disinfectant was applied to the skin of ten healthy rats for 24 hours. The animals were observed for mortality, signs of gross toxicity, and behavioral changes at least once daily for 14 days. Bodyweights were recorded prior to application and again on Days 7 and 14. Necropsies were performed on all animals at terminal sacrifice. All animals survived, gained weight and appeared active and healthy. There were no signs of gross toxicity, adverse pharmacologic effects or abnormal behavior. Gross necropsy findings at terminal sacrifice were unremarkable. Based on the results of this study, the single dose acute dermal LD50 of T36®Disinfectant is greater than 2,000 mg/kg of bodyweight.
- Dermal Sensitization Study in Guinea Pigs - This test determines the potential for a substance to produce sensitization after repeated topical applications. T36®Disinfectant was topically applied to twenty healthy test guinea pigs, once each week for a three week induction period. Twenty-seven days after the first induction dose, a challenge dose of T36®Disinfectant at its highest non-irritating concentration (100%) was applied to a new site on each guinea pig. Ten untreated animals were maintained under the same environmental conditions and treated with T36® Disinfectant at challenge only. Approximately 24 and 48 hours after each induction and challenge dose, the animals were scored for erythema (redness of the skin). Based on the results of this study, T36®Disinfectant is not considered to be a contact sensitizer.

The efficacy and toxicology studies described above, although completed some time ago, are still valuable assets of the Company because they are being used to support further regulatory approvals of the T36®formulation. For example, the studies were incorporated into the pre-IND package that was presented to the FDA on July 15, 2008 and into the pre-CTA (pre-Clinical Trial Application) that was presented to Health Canada on July 22, 2009. These studies are also included in the IND submission, described below, that was presented to the FDA on September 8, 2009 and may also be included in a CTA for Health Canada.

There were no p-values nor other estimates of statistical significance employed in the studies because such measurements are not required by Health Canada or the EPA and, therefore, are not part of the standard protocols. There were no further requirements for the Company to undertake further studies to sell T36®Disinfectant in Canada. The studies described above were conducted according to the requirements of the EPA. EPA registration of T36®has not been pursued to date and it is uncertain if EPA registration for T36®will be pursued in the future. However, if the Company does decide to pursue EPA registration in the future, the following requirements apply.

Disinfectant products are classified by the EPA as pesticides under the authority of the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA). Federal law requires that, before selling or distributing a disinfectant in the United States, a registration, or license, must be obtained from the Environmental Protection Agency (EPA). The process of registering a pesticide is a scientific, legal, and administrative procedure through which EPA examines the ingredients of the disinfectant, how it is to be used, the amount, frequency, and timing of its use, storage and disposal practices and potential human health and environmental effects associated with use of the product. In order to accomplish this, potential registrants must generate scientific data necessary to address concerns pertaining to the identity, composition, potential adverse effects and environmental fate of each disinfectant. These data allow the EPA to evaluate whether a pesticide has the potential to cause harmful effects to non-target organisms and the environment including humans, wildlife, plants and surface water or ground water.

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The tests required for EPA approval of a disinfectant are described above in the sections above entitled Efficacy studies and Toxicology studies. These tests adhere to the standards established by the AOAC (Association of Analytical Communities) International, an organization that provides over 3,000 analytical methods in its publication Official Methods of Analysis of the AOAC International. For disinfectants, such as T36®Disinfectant, the AOAC standards that apply include the AOAC Use-Dilution Method, the AOAC Germicidal Spray Products Test, the AOAC Fungicidal Test and the AOAC Tuberculocidal Activity Method. Storage and stability studies and proof that the manufacturing process is reliable must also be provided to the EPA.

After completion, the efficacy and toxicology studies are submitted to the EPA according to specific templates that are provided by the EPA and available on the website of the EPA. These templates ensure that the testing results are submitted in standard formats to facilitate the review of the information by the EPA.

A disinfectant can only be used legally according to the directions on the labeling accompanying it at the time of sale. Accordingly, the content of product labels is also subjected to review and must be approved by the EPA to ensure full and accurate disclosure of such matters as the concentrations of ingredients, instructions for use, precautions, any hazards to health or the environment, treatments for exposure, disposal instructions, manufacturer and the registrant. Most states also conduct a review of the disinfectant label to ensure that it complies with federal labeling requirements and any additional state restrictions of use.

Once all of the tests and the label for a product have been approved by the EPA a "registration" or license that permits a disinfectants manufacture, distribution, sale, and use is granted. A manufacturer must have an EPA Establishment License because the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) requires that production of disinfectants be conducted in a registered Pesticide-Producing Establishment. In this case, Production" includes formulation, packaging, repackaging, and re-labeling. Production in an unregistered establishment is a violation of the law. The EPA assigns a unique number to each establishment that produces any pesticide or device. Each company must submit EPA Form 3540-8 to request an establishment number. FIFRA requires that each producing establishment must place its EPA establishment number on the label or immediate container of each disinfectant, device or active ingredient produced.

After a disinfectant is registered by the EPA, the Company, its manufacturers, distributors and independent testing facilities must maintain full and complete records for review by the EPA if an inspection is required. These records include such matters as information on manufacturing, quality control of ingredients and finished goods, inventory, shipping, receiving and disposal.

Other products

The Company is also in various stages of development of other products described below. Unless otherwise indicated, the Company has not determined, for any of these proposed products, when or if manufacturing will be started, revenues will be realized, any further testing will be conducted or registrations will be pursued in any jurisdiction outside Canada. If any further testing or registrations are undertaken, it is not known how much time or funding such testing would require or how long it will take the regulatory bodies to approve the products for marketing by the Company or if the regulatory bodies will approve the products at all. There are active competitors that are already well established in the markets selected by the Company. Delays may allow even more competition to develop comparable products, which will make market penetration more difficult which would, in turn, lead to reduced revenues.

- T36®Disinfectant Spray and Wipes: An application was filed with Health Canada to allow T36®Disinfectant to be sold under the name T36 DisinfexTM. This new name was approved on September 10, 2009 under the original DIN 02231344. In addition to the original 480 ml and 4 litre packaging sizes, the formulation is now being manufactured and marketed as a personal disinfectant packaged in 60 ml personal-sized liquid spray bottles and as wipes in canisters. All of the T36®Disinfectant products may be marketed under the new name.

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- T36 DisinfexTMDisinfectant Cleaner Wipes: This product has been recognized by Health Canada as being able to kill bacteria, fungi and viruses on hard surfaces within 10 minutes (compared to the 3 to 5 minute time for T36® Disinfectant). It has also passed internal company efficacy and cleaning testing. This product is intended for use in hospitals, cruise lines, airlines and consumer applications that dont require a disinfectant product that is as fast acting as T36®Disinfectant, but need a more economical product that also cleans surfaces. The Health Canada DIN for this product is 02272989. On July 17, 2008, the Company received DIN 02314134 for this same product but renamed to T36 DisinfexTMDisinfectant Cleaner. This product may be sold as wipes contained in the same canisters as T36®Disinfectant.
- T36®Disinfectant Cleaner CONCENTRATE: Testing has been completed this product and it is registered with Health Canada (DIN 02278820). This product is now being shipped to distributors in Canada as reported by the Company in a news release dated November 17, 2008.
- T36®Hand Sanitizer: On November 25, 2009, Health Canada granted Natural Product Number (NPN) 80014930 for a 62% ethanol hand sanitizer. This product may be manufactured to satisfy the requirements of any government contracts that require strict adherence to the requirement for 62% ethanol. Although the Company has offered T36® Antiseptic Hand Sanitizer as a competitively priced and superior alternative, certain contracting agencies have not embraced any deviation from the Request for Proposals (RFP).
- T36®Antiseptic Hand Sanitizer Gel, Spray and Wipes: In October, 2007, the Company applied to Health Canada for a DIN for a new Antiseptic Hand Sanitizer Gel. DIN 02314320 was issued by Health Canada on July 22, 2008 as announced by the Company in a news release dated July 23, 2008. The new DIN allowed the Company to sell its first product for human use. This product consists of 0.15% BZK in 70% ethanol and, unlike standard 62% ethanol hand sanitizers, has been demonstrated in testing conducted by ATS Labs in Eagan, MN to be effective against Norwalk- like viruses as announced by the Company in a news release dated January 30, 2009. In the testing, Feline Calicivirus was grown to a log10titer of 6.5 and exposed to the product for up to 5 minutes. After 5 minutes, the Companys product reduced the viral titer by 98.2%. The 62% ethanol product had no effect in the same time period. The product also kills the H1N1 influenza virus within 15 seconds in testing conducted by Bioscience Laboratories, Inc. in Bozeman, MT as announced by the Company in a news release dated August 7, 2009. In this testing, H1N1 Virus (Swine-like H1N1 Influenza A virus Strain A/California/04/2009) was grown to a log10titer of 6.75 and exposed to
4.75, the Companys was achieved product in for 15 up seconds. to 1 minute. On January The maximum 6, 2009, measurable DIN 02321424 kill rate was of or issued 99.994%, by Health a log10reduction Canada for of T36®Antiseptic Hand Sanitizer in liquid form. This new product complements the T36®Antiseptic Hand Sanitizer Gel and allows the formulation to be manufactured and sold as a spray. On January 19, 2009, DIN 02321947 was issued by Health Canada for T36®Antiseptic Hand Sanitizer Wipes which would incorporate the liquid Antiseptic Hand Sanitizer into wipes contained in canisters and possibly in individual sachets. At the time of this report, T36® Antiseptic Hand Sanitizer is being sold as a gel in 60 ml squeeze bottle, 240 ml pump bottle and 900 ml and 1,200 ml bags that are used in automatic dispensers. Automatic dispensers are now located at Vancouver International Airport (YVR), General Motors Place, the Richmond Olympic Oval, Grouse Mountain Resorts, the municipalities of New Westminster and Richmond, VANOC (Vancouver Organizing Committee for the 2010 Olympic and Paralympic Winter Games) headquarters and the Whistler Conference Centre. T36®The Wipe Antiseptic Hand Sanitizer is also being sold in canisters of 160 wipes.
- T36®Medicated Hand Cleanser: DIN 02322501 was issued for this product on February 3, 2009. The formulation contains 1% Triclosan. There are no definitive plans to market this product but it may be offered to medical and consumer markets as a supplement to the Companys other products at some time.
- T36®Anti-viral Soap: The Company has developed a proprietary anti-viral, anti-bacterial soap. Preliminary testing of this product at BC Research, Inc. was conducted under the supervision of Dr. Ernie Lee. The soap was tested against three strains of test bacteria (Staphylococcus epidermis, Pseudomonas aeruginosa and Serratia marcescens) and one strain of viruses (Herpes Simplex Virus type 1) at various concentrations at various contact times ranging from 1 minute to 10 minutes. In these tests, all bacteria were killed by the soap diluted up to 500 times within 1 minute. A substantial bacterial population reduction was found even when the bacteria were exposed to higher soap dilutions of 1/1000. In addition to bactericidal effectiveness, preliminary results indicated that the soap inactivated Herpes simplex, although an exact endpoint could not be determined due to toxicity of the soap towards the cultured cells used to propagate the virus. Further testing would have to be conducted to determine virucidal activity. For Health Canada or FDA registration, additional testing, including human trials would be required. If the Company decides not to fund these activities, a licensing arrangement may be appropriate.

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Product development (continued)

- T36®Microbicide Gel: This product has been formulated and now requires testing for efficacy and toxicity. It was developed as a personal lubricant to prevent the transmission of sexually transmitted infections (STIs). The testing required to attain FDA approval of this product would be beyond the financial capabilities of the Company.
Therefore, the Company intends to undertake some initial testing on its own after a suitable delivery system has been identified and the rights to that delivery system acquired. If initial testing is successful, it is most likely that the Company will need to identify a licensee or joint venture partner working in the area of STI prevention that can undertake further testing and market development.
- T36®Skin antiseptic and first-aid ointment: The Company is planning on providing the T36®formulation in liquid form with a biological dye in a suitable delivery system for use as pre-operative and pre-injection antiseptic in hospitals and clinics and in gel and spray form, without biological dye, as a first-aid ointment for use on cuts and scrapes to prevent infections. These applications of the T36®formulations must be tested for their ability to kill microorganisms on the skin of humans and in cuts and scrapes according to the requirements of the FDA, Health Canada and the European Medicines Agency. The Company has completed FDA-approved preliminary in-vitro(in glass) efficacy studies against viruses, fungi and bacteria described in the section below titled, Testing required for Therapeutic Applications. The FDA has approved further testing for single application uses such as one would expect with a surgical antiseptic and first aid treatment. Protocols for subsequent testing have been submitted to the FDA for approval. If approved, the T36®formulation can be submitted to additional in-vitroefficacy tests including Time Kill, Minimal Inhibitory Concentration (MIC), 21-Day Cumulative Irritation Patch Test (Irritation Test) and Adsorption and Distribution (AD) studies. However, for the T36®formulation to be registered as a skin antiseptic, it is required to demonstrate a 6 hour residual effect. The Company is now examining the best testing methods for determining if this criterion can be met before committing to the testing described above. If the 6 hour residual test is successful, further testing may be warranted. If the 6 hour residual test is not successful, the use of T36®as a surgical antiseptic will likely be abandoned. If all of the pre-clinical tests are completed successfully, it is possible that the FDA will allow the Company to undertake Phase I human trials, also discussed below. Once the human clinical trials are completed, the results must be submitted to the regulatory agencies for the tested products to be approved for marketing by the Company.
- T36®Hand hygiene products: The Company is planning on providing the T36®formulation in the form of a gel, spray and wipes for hospital use as a hand sanitizer in nursing stations, patient rooms, hallways, washrooms, etc. and for sale to consumers through retail outlets. After any further required tests, including the MIC, Time Kill and AD and 21 Day Irritation studies, are completed for the T36®Skin antiseptic and first-aid ointment as discussed in the preceding paragraph, additional studies are required to establish the efficacy and safety when used repeatedly over a period of time as one would expect with hand hygiene products. After submission of the IND these studies are described below and will include at least the In-vitroDermal Test, a Pilot Clinical Evaluation, Full Pre-operative Clinical Evaluation and the Insult Patch Test. Once these tests were successfully completed, human clinical trials may be approved by the FDA.
T36®Topical infection treatment: The body normally hosts a variety of microorganisms, including bacteria and fungi. Some of these are useful to the body. Others may multiply rapidly and form infections. Approximately sixty percent of microbial infections are systemic, meaning that the infections are spread throughout the body, leaving 40% of microbial infections that are topical, i.e., occur on the surface of the body. Topical fungal infections include mold- like fungi that cause athlete's foot, jock itch and ringworm, and yeast-like fungi that can cause diaper rash, oral thrush, cutaneous candidiasis and some cases of genital rashes. Bacterial infections, such as Staphylococcuscan also infect the skin, particularly if a patient has a preceding skin condition, such as eczema. The Companys T36® formulation can be used to treat such topical infections and anecdotal evidence has shown that it can be used to treat such conditions as athletes foot and toenail infections. As in the case of the T36®Hand hygiene products described in the preceding paragraph, the In-vitroDermal Test, a Pilot Clinical Evaluation, Full Pre-operative Clinical Evaluation and the Insult Patch Test must be conducted to simulate the proposed application. After these tests are completed, the FDA may permit human trials to begin.

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- Vulvovaginal infections (VVIs): Current treatments available for VVIs focus mainly on yeast infections which cause only 23% to 33% of VVIs (Schwiertz et al., 2006. Throwing the dice for the diagnosis of vaginal complaints?
Ann Clin Microbiol Antimicrob. 5:4 and Ferris D.G., Dekle C, Litaker M.S.J. 1996. Women's use of over-the counter antifungal medications for gynecologic symptoms.Fam Pract. 42(6):595-600). T36®VVI Treatment is effective against all fungal and bacterial VVIs regardless of the species or combinations of species causing the infection. The Company plans to undertake the testing required for this product when sufficient financing has been has been secured.
- Anti-inflammatory, antiseptic therapeutics: The Company developed a prototype product that contains 2% hydrocortisone in a T36®gel for use on topical infections and, in particular, inflamed infections. Preliminary studies with the formulation, under the direction of a physician, quickly resolved a number of skin infections, such as chronic eczema with secondary Staphylococcusinfections and fungal infections, such as athletes foot and diaper rash. A second formulation contained 0.1% betamethasone, a moderately potent glucocorticoid steroidwith anti- inflammatoryand immunosuppressiveproperties. Unlike other drugs with these effects, betamethasone does not cause water retention. The Company is planning on conducting tests against Athletes Foot with the new formulation.
As discussed above, a PCT patent application has been filed with CIPO to cover the composition, method of preparation and use of T36®formulations that also contain steroids, anesthetics or analgesics.

|Testing for of the T36®formulation for therapeutic indications
|--------------------------------------------------------------

There is competition in all of the therapeutic markets that the Company has targeted. However, the T36®formulation is not expected to be expensive to manufacture and can be used in a broad variety of infection-control products. Toxicology and efficacy studies have already demonstrated that the T36®formulation is not toxic and is effective at killing all bacteria, viruses and fungi. The intended applications are topical, except for the vulvovaginitis treatment, so that registration is expected to be faster and less expensive than for drugs that are taken internally. Rather than disrupting metabolic pathways, the T36®formulation consists of four anti-microbial ingredients in relatively low concentrations that act synergistically to disrupt the physical structure of the infectious agents. This approach prevents microbial resistance from developing. None of the active ingredients are known to have any significant side effects on humans.

The Company has competed preliminary studies that may satisfy the registration requirements of Health Canada, the US Food and Drug Administration (FDA) and the European Medicines Agency (EMeA) for the targeted applications. Bioscience Laboratories, Inc. (BSI) located in Bozeman, Montana, evaluated the efficacy of the T36®formulation against bacteria, mycobacteria, viruses and fungi. Details of the testing are reported below. One of the tests done by BSI demonstrated that the T36®formulation was completely effective against Methicillin-Resistant Staphylococcus aureus(MRSA) within one minute. First discovered in 1961 in the UK, MRSA is now found worldwide and is able to survive treatment with a number of antibiotics, including penicillin, methicillin, and cephalosporins. Often referred to in the press as a superbug, MRSA is especially troublesome in hospital-acquired infectionsbut is increasingly found outside of medical facilities. The finding was considered significant because MRSA has also shown resistance against some disinfectant products. In subsequent testing done up to the date of this report, the T36®formulation demonstrated complete efficacy in the following tests conducted at BSI.

- Six species of bacteria were completely killed after 30 seconds of exposure, including VRE (Vancomycin-Resistant Enterococcus), MRSA (Methicillin-Resistant Staphylococcus aureus) and MDR (Multi-Drug Resistant) Enterococcus faecium. These three species of bacteria are critical concerns in hospitals, nursing homes and other medical facilities based on their resistance to many antibiotics and other treatments. The clinical testing was completed according to the standards required by the FDA in the US, Health Canada and the European Medicines Agency, which included exposure of the bacteria to T36®for periods ranging from 30 seconds to 30 minutes. In other tests that were conducted for internal purposes, Staphylococcus aureusand Pseudomonas aeruginosawere completely killed by T36®with 15 seconds.

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- The fungus, Candida albicans,was completely killed after 5 minutes exposure,again, the shortest time required by the FDA, Health Canada and the European Medicines Agency. C. albicansis a major cause of yeast infections which account for one-third of all vulvovaginal infections (VVIs). Bacteria are a second major cause of VVIs and combinations of bacteria and fungi cause most of the remaining cases. The effectiveness that T36®has demonstrated against both fungi and bacteria provides important evidence that ALDAs T36®VVI Treatment will provide an effective means to treat all types of VVIs. A second fungus, Aspergillus niger, was completely killed within 15 minutes, also well within the 60 minute kill time required by the US, EU and Canadian regulatory agencies. A. niger is a causative agent for upper respiratory infections.
- Two mycobacteria, Mycobacterium aviumand Mycobacterium terraewere completely killed by the T36® formulation within 5 minutes, also the shortest time required by the FDA, Health Canada and the European Medicines Agency (EMA). Mycobacteria are among the most difficult bacteria to kill and are used as benchmark organisms to test the effectiveness of anti-microbial formulations.
- Two species of fungi responsible for athletes foot, Trichophyton mentagrophytesand Trichophyton rubrumwere completely killed by the T36®formulation within 5 minutes, also the shortest time required by the FDA, Health Canada and the EMA. The Company intends to pursue registration of the T36®formulation containing anti- inflammatory compounds for use against athletes foot which is relatively easy to test, represents a large market and will allow physicians to prescribe the product off-label for other topical infections once it has been approved. In other tests that were conducted for internal purposes, Trichophyton mentagrophyteswas completely killed by T36® with 15 seconds.
- Ten different types of viruses were killed completely by the T36®formulation. Of these, 5 types were killed within the minimum 30-second time required by the FDA, including Herpes Types I and II and Influenza B. The remaining 5 types, including Polio and Hepatitis A, the hardiest viruses, were killed within 1 to 3 minutes.

Having completed all five preliminary clinical tests representatives of the Company attended a pre-IND (pre-Investigational New Drug) meeting with the FDA on July 15, 2008 to determine what further testing is required by the Company to satisfy the requirements of the FDA to allow human trials. The conclusion provided by the FDA was that the information submitted by the Company was satisfactory to allow single-use testing of T36®on humans after certain additional non-human testing was completed. By single-use applications, the FDA means use as a pre-surgical and pre-injection skin antiseptic that is swabbed on to the skin once. The tests required before human trials are allowed are Time kill Evaluation, MIC (Minimum Inhibitory Concentration) Evaluation and Percutaneous Absorption and Cutaneous Disposition through human skin as described below. Protocols for theses tests, described below were prepared and submitted to the FDA for approval.

- Time Kill Evaluation  In these tests, dozens of different species of infectious micro-organisms are exposed to each of the active ingredients of a test substance and the complete test substance formula for periods of time ranging from 15 seconds to 30 minutes to determine the time required for each ingredient of a test substance and the complete test substance formulation to completely kill the selected species. The objectives of the testing are to determine the effective exposure times required for the test substance to be effective and if the individual ingredients have an additive, subtractive or synergistic effect.
- MIC (Minimum Inhibitory Concentration) Evaluation  Each ingredient of a test substance, the complete test substance formula and a known antiseptic product are tested against hundreds of micro-organisms in suspension tests.
The objectives of the tests are to quantify the minimum concentration that is required for each of the test substances to have a measurable effect on the tested species, compare those results to the known antiseptic product and determine if the individual ingredients have an additive, subtractive or synergistic effect. This protocol has been approved by the FDA with minor modifications.
- Percutaneous Absorption and Cutaneous Disposition (AD studies)- Fresh human skin samples are incubated for 24 hours with the epidermal surface exposed to each ingredient of a test substance and the complete test substance formula in a flow-through diffusion cells. The amount of each test article absorbed across the skin into the receptor fluid is determined by liquid chromatography and tandem mass spectrometry. Disposition of each of the test substances in the various skin layers is also determined using the same methods. These tests evaluate the rate and amount of each test substance absorbed across viable human skin after in vitroexposure and the disposition of each test substance in layers (stratum corneum, epidermis, and dermis) of viable human skin.

As of the date of this report, the MIC and Time Kill protocols have been approved by the FDA with minor modifications that are acceptable to the Company. The protocols for the AD studies have not been reviewed as of the date of this report.

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Product development (continued)

Update on product registrations in the US

On September 8, 2009, IND #102,487 was submitted to the FDA. On September 24, 2009, the FDA advised the Company that a 21-Day Cumulative Irritation Patch Test (Irritation Test) would also be required and requested that the Company submit a protocol for such a study. The objective of this test is to assess the irritation caused by topical products and chemicals over 21 days of continuous exposure to the skin. The test substance is incorporated into patches that remain on the skin for a period of time and are replaced from time to time to maintain continuous exposure to the skin.

The budget for all of the testing that may be required has not yet been established and it is not known how long the testing may take. After the results, if the testing is successful, are reported to the FDA, permission may be granted to undertake human trials of T36®applied to the skin a single time. At this time, it is not known if the FDA will approve the remaining protocols as submitted or require changes to the protocols. If changes are required, it is not known how long it will take for the Company to submit modified protocols and if the modified protocols will be accepted by the FDA. It is not known how many revisions of the protocols will be required by the FDA. It is not known if the requirements of the FDA will change or not while the Company attempts to have its protocols approved. If the protocols are approved, it is not certain when or even if the Company will proceed with the testing after the protocols have been approved by the FDA.

For additional indications that require repeated applications, such as a hand sanitizer or athletes foot treatment, additional tests may include, but not necessarily be limited to the following tests.

- Pilot Clinical Evaluation - This study evaluates the antimicrobial efficacy of a disinfectant in two different applications when used as patient preoperative skin preparation on 10 subjects. A disinfectant must achieve a log10 microbial reduction of 3 or greater on skin of the groin and a log10microbial reduction of 2 or greater on skin of the abdomen at ten minutes post-application. The objective of the testing is to obtain a preliminary evaluation of the efficacy of the test substance when used on humans.
- Full pre-operative clinical evaluation - The study evaluates the immediate and persistent antimicrobial properties of a disinfectant when used as a preoperative skin preparation. A known active control, e.g., 4% chlorhexidine, and a placebo, e.g., sterile saline, are also evaluated. All treatments are assessed for their potential to cause skin irritation.
One-hundred subjects are screened in order to obtain at least forty subjects having sufficient number of resident bacterial flora to permit evaluation of the efficacy of the test products. The objective of this test is to further evaluate the efficacy of a test substance when used on humans.

Update on product registrations in the US

- Pharmacokinetics describes how the body affects a specific drug after administration and examines the extent and rate of Absorption, Distribution, Metabolism and Excretion, commonly referred to as the ADME scheme.
Absorption is the process of a substance entering the body. Distribution is the dispersion or dissemination of substances throughout the fluids and tissues of the body. Metabolism is the irreversible transformation of parent compounds into daughter metabolites. Excretion is the elimination of the substances from the body. In rare cases, some drugs irreversibly accumulate in a tissue in the body. The pharmacokinetic properties of drugs may be affected by elements such as the site of administration and the concentration in which the drug is administered. These may affect the absorption rate. The objective of the ADME studies are to determine if the test substance or any of its components are absorbed and if any absorbed components are metabolized into harmful chemicals that may or may not accumulate in the body. Depending on the results obtained from the Percutaneous Absorption and Cutaneous Disposition tests described above, if the T36®or its components are not absorbed by the skin, the pharmacokinetics tests may not have to be conducted for repeated application of T36®to the skin.
- Insult patch test  The objective of this test is to evaluate the effect, if any, of prolonged and repeated exposure of the skin to the test substance. The Induction Phase of this study incorporates the test substance into a series of patches that are applied to the skin of 50 subjects repeatedly for periods of time and then removed. After a rest period, new patches are applied. This process is repeated over a period of time with a number of new patches and after completion of this phase, the reaction of the skin is evaluated. The Challenge Phase takes place some time after application of the final induction patch. Challenge patches are applied to previously untested sites, adjacent to the original induction patch sites. The reaction of the skin is evaluated 24 to 48 hours after application and the subjects are asked to report any delayed reactions which might occur after the final challenge patch reading.

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The protocols for these tests will have to be submitted to the FDA for evaluation and, if approved, the testing may be permitted to take place. If successful testing is reported to the FDA, permission may be granted to undertake human trials for the indications requiring repeated or prolonged exposure to T36®. At this time, it is not known if the Company will proceed with these tests and if the Company does decide to proceed with the preparation of the protocols, if FDA will approve the protocols as submitted or require changes to the protocols. If changes are required, it is not known how long it will take for the Company to submit modified protocols and if the modified protocols will be accepted by the FDA. It is not known how many revisions of the protocols will be required by the FDA. It is not known if the requirements of the FDA will change or not while the Company attempts to have its protocols approved. If the protocols are approved, it is not certain when or even if the Company will proceed with the testing after the protocols have been approved by the FDA.

When permitted, human trials are normally conducted in 3 phases, with a detailed protocol for each phase provided to the FDA for approval to proceed. At the end of each phase, the results are analyzed and submitted to the FDA and, if acceptable, the trial continues to the next phase:

- Phase I Clinical Trials: This is the first stage of testing of a new therapeutic in human subjects, normally with a small group (20-60) of healthy volunteers. The objective is to assess the safety and tolerability of the product as a therapeutic, as well as to determine the effects of various doses of the product. For externally administered agents, the testing is simpler than for injected or internally administered agents. However, Phase 1 trials can require up to 2 years to complete, including analysis of the collected data, preparation of the Phase I report for submission to the FDA and the time until a response is received. If these results of Phase I are accepted by the FDA, then the clinical trial can proceed to Phase II.
- Phase II Clinical Trials: This second phase tests the therapeutic on a larger group and evaluates both the required dose (i.e. different quantities of the therapeutic) and efficacy (i.e. how well the therapeutic works for the specified indication). Phase II trials can take up to 3 years. However, some trials can combine Phase I and Phase II, which can reduce the total time required.
- Phase III Clinical Trials: This third phase of clinical trial depends on the indications for which the therapeutic is being tested. For most agents Phase III trials are a randomized, controlled, multi-center trial with large patient groups (often more than 300), with the objective of confirming that the therapeutic is as effective or more effective than the current gold standard for the same application. Phase III trials can take up to 5 years or more to complete. If the results of the Phase III trial are approved by the FDA, then product is approved for marketing for the specific indications that were tested.

The three phases of clinical trials can require a number of years to complete. The total time required is dependant on the nature of the therapeutic product, the condition being treated, the design of the protocols, the time to recruit patients and the review process conducted by the FDA. The registration time for products taken internally can take much longer than for topical agents. The costs of a complete clinical trial can be significant, depending on the intended application. The Company may not conduct any clinical trials itself, but may enter into strategic alliances or licensing agreements with larger companies, which can support the costs of such trials.

Update on product registrations in Canada

In Canada, as required in the US, pre-clinical testing and clinical trials must also be completed to achieve registration of therapeutic products. However, a set of testing protocols referred to as EN Standards guide the processes for registration of therapeutic products in Europe. In Canada, either the EN standards or testing that meets the requirements of the FDA are generally accepted by Health Canada. The objective of the Company is to undertake testing that will satisfy all three major jurisdictions. There are minor differences that lead to increased costs, but management has decided that it is more economical to absorb these costs initially rather than conduct separate testing for each jurisdiction.

On July 22, 2009, the Companys representatives attended a pre-Clinical Trial Application (CTA) meeting with Health Canada in Ottawa. The purpose of this Pre-CTA meeting was to determine what further actions were required by the Company before human clinical trials would be allowed by Health Canada for use of the T36®formulation as a pre-surgical skin antiseptic, surgical hand wash, healthcare personnel and hand wash, antiseptic hand sanitizer and antifungal topical treatment. From this meeting and after subsequent discussions with Health Canada and the Companys regulatory consultants, PharmEng Technology, the minutes of the meeting were completed and submitted to Health Canada on September 29, 2009. The material recommendations that resulted from the pre-CTA meeting were as follows.

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- A study of genotoxicity, the degree to which something causes damage to or mutations of DNA would likely be required. The Ames test uses bacteria to assess genotoxicity but a negative result does not mean that the substance is not genotoxic since the bacteria are not a perfect model for humans. More definitive genotoxicity assessments use mammalian cell cultures to determine gene mutations, change in chromosome structure and number, and other gene toxicities.
- Assessment of photosensitivity, defined as the effect on humans when exposed to light after applying the product, would be required. For example,24 to 48 hours after a material that is suspected of causing photosensitivity is pasted on the skin, the site is exposed to UV rays. If reddening or swelling occurs within 24 hours, the substance is considered to cause photosensitivity.
- Studies on reproductive toxicology, the effects of chemicals on the reproductive and neuroendocrine systems, and also the embryo, foetus, neonate and prepubertal mammal, would be required prior to Phase III clinical trials being conducted. Reproductive toxicology tests are generally conducted with mice, rats or rabbits to assess the effects or a product on fertility, embryonic development, fetal toxicity, perinatal and postnatal development including maternal functioning. A full program in rats will cover 63 days before mating and may extend over two generations with continuous treatment of all animals up to the weaning of the final litters.
- Since the T36®formulation is intended to be used on a daily basis as a hand wash and hand sanitizer the potential for toxicity due to repeated applications of the product also needs to be addressed. However, this requirement may be fulfilled by the 21 Day Irritation Test described above.
- ADME studies on the full T36®formulation for both intact and abraded skin would be required to determine if there is any interaction between the ingredients that may lead to enhanced absorption. However, if there is no adsorption into the blood stream, it is possible that the requirement for metabolism and excretion studies may be waived. Again, these tests will also be competed for the FDA registration and the same results can likely be submitted to Health Canada.
- The affect of the residual components of the T36®formulation on surgical gloves will need to be assessed to determine if the there is any deterioration of surgical gloves.

Update on product registrations in Canada

Concerning the registration of the T36®formulation as a skin antiseptic, a 6 hour residual effect is required. The Company is now examining the best testing methods for determining if this criterion can be met before committing to the testing described above. If the 6 hour residual test is successful, further testing may be warranted. If the 6 hour residual test is not successful, registration of T36®as a surgical antiseptic may not proceed.

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Update on product registrations in other jurisdictions

In other parts of the world, FDA or EMA testing may be accepted for registration applications. If the company decides to register other products in China, it is likely that the required testing will have to be repeated in China unless there is harmonization of the requirements in the meantime. In the Peoples Republic of China (China), the Company must have its products tested for toxicology and efficacy at the Centers for Disease Control (CDC). The Chinese CDC should not be confused with the CDC in Atlanta, Georgia, although both organizations share the same name. Upon completion of successful testing at the CDC, products can be registered for sale within China.

The Company does not keep separate records of the cost of the development and registration for each product for a number of reasons. First, much of the development had already been done on the products before the Company acquired the assets of API in November, 2003 and API did not keep such records. Second, the Companys expenditures after completing the acquisition of the assets of API have mostly involved registration, intellectual property protection and some testing. These expenses are recorded in separate categories from research and development in the financial statements but are not segregated for each product. Third, the level of expenditures by the Company would be relatively small if they were allocated to individual products and would not be considered to be material if expenditures on each product were considered on their own. Finally, the cost of accounting for such a variety of expenditures on such a number of products is not considered to be financially justified.

Limited information has been provided on the estimated time of completion for individual products and for the estimated time of material net cash inflows for a number of reasons. Testing in the US for applications to the FDA or the EPA, in Canada for Health Canada and in Europe for the European Medicines Agency, is dependent on financing to support these tasks. The timing of financing and even the availability of financing is uncertain, which mean that completion dates and the time required to achieve material net cash flows are also uncertain. Even when the financing is available to complete testing and prepare the required submissions to the regulatory bodies, the time taken by the regulatory agencies to review the submissions is unpredictable.

Further, the regulatory agencies may identify deficiencies in the submission and request more documentation or possibly even more testing before providing an approval for a product, if such approval is granted at all. Since the timing to secure product registration and market approval is uncertain and delays can lead to the entrenchment of competitors and make the penetration of markets more difficult, even more uncertainty is added to the estimates of time required to time to arrive at material net cash flows. For these reasons, the Company believes that it is more prudent to not project the times or costs of market approval for individual products.

Plan Of Operations

Anticipated Changes to Facilities/Employees

Changes to facilities or personnel anticipated in fiscal 2010 are as follows. On July 15, 2009, the Company entered into a Letter of Intent with VANOC as the exclusive Official Supplier of hand sanitizer and disinfectant cleaning products for the games. As a result of this agreement, the Company will likely hire temporary workers to service the needs of VANOC for products during the period leading up to and during the games. On February 23, 2009, the Company entered into a non-binding Letter of Intent to purchase all of the business and undertakings of a pharmaceutical manufacturing firm. On June 23, 2009, the Company issued a news releases stating that the Company was not going to proceed with the proposed acquisition. As a result, the Company will continue to contract out its manufacturing.

United States vs. Foreign Sales/Assets

All of the Companys assets are located in Canada.

All of the Companys sales to date have been in Canada.

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Material Effects of Government Regulations

At this time, the Companys sales are primarily in Canada and, as a result, government regulations in Canada affect the Company most significantly. However, the Company hopes to commence sales in the United States, China, Europe and other jurisdictions in the future and, as a result, we have summarized the government regulations in these markets that may affect the Company in the future. The Companys products and future planned products can be categorized either as disinfectant products or therapeutic products, depending on the intended use. A summary is provided on the government regulations for both of these product categories.

|1. | Canada:In order to market and sell a disinfectant, which is classified as a drug in Canada, the product must be approved by Health Canada, a federal government department responsible for the oversight of drugs and certain other medical products. The Therapeutics Product Directorate (TPD) is the department of Health Canada that issues the DIN (Drug Identification Number) for registered products. A company can apply for a DIN by submitting the appropriate fee, a draft label and, in most cases, copies of completed efficacy and safety studies to support the claims made on the label. The descriptions of the tests required for Health Canada approval of a disinfectant are described above in the sections entitled Efficacy studies and Toxicology studies. The TPD generally takes up to 12 months or more for review and completion prior to the issuance of a DIN. However, if further documentation or studies are required, the time taken to obtain approval for a new product can be longer.
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T36®Disinfectant has received approval from Health Canada as a disinfectant, disinfectant cleaner, sanitizer and deodorizer. The DIN for T36 Disinfectant is 02231344, which permits its sale in Canada for these applications. T36®Disinfectant has also been approved in Canada by the Canadian Food Inspection Agency for use in Registered Establishments, which include meat processing plants, restaurants, breweries, wineries and other commercial food processing establishments.

Production facilities that manufacture an approved product must have an Establishment License that verifies its adherence to Good Manufacturing Practices (GMP) as set out by a division of Health Canada. Norwood Packaging Ltd. (Norwood) and Cosmaceutical Research Lab, Inc, which produce the Companys products, have an Establishment Licenses. The Companys agreement with Norwood, dated September 29, 2005 (Exhibit 4.b.) was terminated by mutual agreement on June 18, 2008 (Exhibit 4.l).

United States:In order to market and sell a disinfectant in the US, the product must be approved by either the US Food & Drug Administration (FDA) or the US Environmental Protection Agency (EPA), depending on the intended use. The Company cannot say when, or even if, any submissions to the EPA or the FDA will be completed. The Company cannot predict the timing of FDA or EPA approval, or even if such approval can be obtained.

EPA

Disinfectant products, such as hard surface disinfectants, are regulated by the EPA. The procedures and tests required for EPA approval of a disinfectant are described above in the sections entitled Efficacy studies and Toxicology studies  in the section entitled T36®Disinfectant under 4.B.Company Development.

FDA

Any products with therapeutic claims or intended for use on humans are regulated by the FDA. It is illegal to market and sell therapeutic products in the United States without FDA registration. At this time, the Company has completed certain pre-clinical testing to satisfy FDA requirements for registration of T36®as a skin antiseptic. Protocols for the next round of testing have been submitted to the FDA for review. If these protocols are approved, the Company intends to proceed with this proposed testing and, ultimately, to obtain to registration of its therapeutic products with the FDA. The testing that has been done and that the Company intends to conduct is detailed above in the sections entitled Testing for therapeutic indications in the section titled, 4.B.Company Development.

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|2. | China:In the Peoples Republic of China (China), the Company must have its products tested for toxicology and efficacy at the Centers for Disease Control (CDC). The CDC should not be confused with the CDC in Atlanta, Georgia, although both organizations share the same name. The studies required by the CDC include the following tests.
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- Kill tests against Staphylococcus aureus, Escherichia coli and Pseudomonas aeruginosa In a suspension test, the disinfectant must provide a log10reduction in bacterial population of 5.0 or more within a test time designated by the supplier of the disinfectant. A suspension test involves adding the bacteria to the disinfectant, usually at a ratio of 0.1 to 2 parts bacterial suspension to 9.9 to 8 parts disinfectant, respectively.
- Field disinfecting test on general hard surfaces  General bacterial counts are first determined on table surfaces and the window frame surfaces, maintained at 19 to21 oC, by taking sample swabs and culturing the bacteria.
The same surfaces are then wiped with the disinfectant and sampled after a test time designated by the supplier of the disinfectant. The disinfectant must provide a average log10reduction in bacterial population of 2.0 or more in this test.
- Metal corrosion test - Metal plates made of stainless steel, carbon steel, copper and aluminum are immersed continuously for 72 hors in the disinfectant. The corrosion rate, measured in millimeters per annum, is then determined for each metal.
- Acute oral toxicity test - Four dosage groups receive 1,000, 2,150, 4,640, and 10,000 mg/kg of disinfectant administered orally with 10 animals in each group and comprised of half females and half males. After exposure to the disinfectant, the general conditions, symptoms of toxicity, and deaths of animals are observed over a period of 2 weeks. After the tests are finished, all animals are dissected and gross pathological changes of animals are recorded. Acute toxicities are measured in terms of the LD50, the dose at which 50% of the animals die.
- Bone marrow erythrocyte micronucleus test - Rats are given a dose of 500, 2,000, and 5,000 mg/kg of disinfectant by gastric lavage. Each group consists of 5 females and 5 males. Thirty hours later, the rats are given a second dose that is identical to the first. Six hours later, the rats are killed and dissected. Bone marrow from the sternum is removed, smeared on microscope slides, stained and examined for signs of chromosomal mutations.
- Skin irritation test - Twenty-four hours before testing, a 3 cm x 3 cm area beside both sides of spinal cords on the backs of three New Zealand rabbits is shaved. On the next day, a testing area of 2.5 cm x 2.5 cm on the shaved skin on the left side is marked and 0.5 ml of disinfectant is smeared evenly on the test area, covered by 2 to 4 layers of gauze the same size as the test area and one layer of cellophane which is a little bigger than testing area for each animal. The test area is directly exposed to the disinfectant in this way for 4 hours. The shaved area on the right side is exposed to saline as a negative control using the same procedure. After the 4 hour exposure, the dressings are removed and shaved areas are washed using warm water to remove any residual saline or disinfectant. After 1, 24, and 48 hrs the level of skin irritation is observed and recorded.

Upon completion of successful testing at the CDC, products can be registered for sale within China.

On May 25, 2007, an Agreement with Fuzhou Xinmei Biotech Co. Ltd. (Fuzhou), which allowed manufacturing and marketing in Fujian province in China (Exhibit 4.c.), was transferred to He-Yi She Ye Limited (He-Yi) and expanded to cover marketing in all of China (Exhibit 4.g.).On August 31, 2006, He-Yi received its certificate of approval from the Fujian Centre of Disease Control for T36®Disinfectant after passing all of the required tests. This certificate allowed He-Yi to apply to the Chinese National Centre for Health Inspection and Supervision for approval to manufacture T36®Disinfectant for sale in China and for export. The registration of T36®Disinfectant in China was expanded beyond disinfection of inanimate objects, such as hospital equipment and instruments, to also allow external use on humans, including use as a first-aid antiseptic and hand sanitizer. Approval for the manufacturing of T36®Disinfectant was obtained from the Ministry of Health in The Peoples Republic of China. On April 19, 2007, a manufacturing certificate (Certificate of Approval (Health ID. No. 0109) was granted to He-Yi for a period of four years from April 19, 2007 to April 18, 2011 and is renewable by filing an application for renewal 6 months before the expiry date.

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On May 29, 2008 the Company announced that He-Yi had completed its manufacturing facility and had shipped it first products within China. At this time, the Company cannot guarantee that He-Yi will be able to obtain approvals to market the Companys products in other provinces of China or that He-Yi will be able to sell any of the Companys products at all in China or elsewhere.

Seasonality

The only seasonality observed with respect to T36®Disinfectant marketing is that sales slow down in the summer and during the Christmas period due to a general business slowdown as a result of customers being on holidays. Now that the Company is selling into consumer markets, it is unknown if this seasonality will be reduced or amplified. There is a higher than usual demand for the Companys products at this time due to the H1N1 pandemic and a general shortage of hand sanitizers on the market at the time of writing. If the Companys sales increase as a result of this, there is no guarantee that the same sales levels will be maintained in the future as concern over H1N1 wanes and competitors increase their ability to supply products that are similar to those of the Company. Also, it is not known if travelers will purchase the Companys products during the summer season. If such consumers do enter the market, seasonality of sales may be mitigated during that time but there is no certainty that this will occur.

Dependency upon Patents/Licenses/Contracts/Processes

If the Company is able to further commercialize and increase sales of its T36®products, the Company may be dependent on patent and trademark protection to protect future potential revenues and growth. There is no guarantee that the Companys patents or trademarks do not infringe on another companys patents or trademarks or that the Companys patents or trademarks will be upheld if challenged. If the Companys patents or trademarks are found to be in violation of the patents or trademarks of another company, there is no guarantee that the Company will be able to obtain a license at an acceptable price or at all from the successful challenger to be continue to sell products. Also, if the Company is unable to defend its patents, it is possible that new or existing competitors will enter the markets the Company is pursuing. The Company may be required to enter into contracts with other agencies to provide, as examples but not limited to, manufacturing, sales and marketing activities. There is no guarantee that either the Company or the other agencies will be able to fulfill their obligations. If the Company or the other parties fail to meet their requirements under the terms of the contracts, it is possible that the Company may not be able to find suitable providers that are able or willing to meet its needs in the future. If the Company cannot live up to its obligations under such agreements, it is possible that the reputation of the Company will be damaged to the extent that it will not be able to supply its customers. The Company is dependent on certain processes that are, in turn, dependent on a stable and reliable supply of equipment and materials. If, for any reason, the equipment or materials required for the Company to operate are not available, it is possible that the Company may not be able to manufacture its products. Any of the adverse events described above could cause the Company to lose revenues or go out of business.

Patents and patent applications

The Company is attempting to patent or secure proprietary protection for the specific combination and manufacturing of the T36®formulation although the ingredients are all common chemical compounds.

The Patent Cooperation Treaty (PCT) is an international patent law treaty established in 1970. It provides a unified procedure for filing patent applications to protect inventions in each of its Contracting States, which includes each jurisdiction specified below. A patent application filed under the PCT is called an international application or PCT application. A single filing of an international application is made with a Receiving Office (RO) in one language. It then results in a search being performed by an International Searching Authority (ISA), accompanied with a written opinion regarding the patentability of the invention which is the subject of the application. Optionally, this is followed by a preliminary examination, performed by an International Preliminary Examining Authority (IPEA). The PCT does not lead to the grant of an "international patent", which does not exist, but rather, national patent examinations that are handled by each relevant national or regional authority. For example, in Canada, the US, China, Australia and Singapore, there are national patent offices whereas, in Europe, the European Patent Office handles the national phase for its member states.

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Patents (continued)

API filed patent application #PCT/CA2002/001284, A wide spectrum disinfectant, on August 20, 2002. All rights to the patent application were transferred from API to the Company on completion of the Qualifying Transaction on November 13, 2003. A summary of subsequent events in each jurisdiction is presented below.

Canada

On February 18, 2005 the Canadian Intellectual Property Office (CIPO) received the PCT patent application and assigned it Patent Application Number 2,495,938. On August 17, 2007, the Company filed a Request for Examination with CIPO. On September 24, 2007 the Company filed a Voluntary Amendment to the patent application filed with CIPO. The proposed amendments expanded the claims to include a number of therapeutic applications of the T36®formulation, including its use in cosmetics and in a microbicidal gel to prevent the transmission of sexually transmitted infections (STIs). On October 4, 2007, the Company was notified that CIPO had acknowledged a request by the Company to examine the patent application. Since the process of examination can take two years, for a fee of $500, the Company requested an Expedited Examination on November 7, 2007 to reduce the response time to approximately three months. On April 8, 2008, CIPO provided an Office Action in which a number of questions were posed to the Company. Many of the same questions had already been posed by the Examiner for the EPO and the Company was advised that a response was required by October 8, 2009. On the advice of the Companys patent lawyers, the Company decided to temporarily abandon the Canadian patent application to defer costs and the abandonment was deemed effective by CIPO on October 8, 2008. However, the patent application was reinstated and a response to the Office Action was submitted to CIPO prior to the revised deadline of October 8, 2009. On November 16, 2009, CIPO issued a Notice of Reinstatement to the Company.

European Union

On March 30, 2005 the PCT application was accepted for national examination by the European Patent Office (EPO) which assigned it Patent Application Number 02754054.1-2113. The countries covered by the European patent application are Austria, Belgium, Bulgaria, Switzerland, Cyprus, the Czech Republic, Germany, Denmark, Estonia, Spain, Finland, France, Great Britain (the UK), Greece, Ireland, Italy, Liechtenstein, Luxembourg, Monaco, Netherlands, Portugal, Sweden, the Slovak Republic and Turkey. On May 18, 2005, the bibliographic data of the above-noted application was published in the European Patent Bulletin, under Publication No. 1530485. The resulting effect of such publication is that any possible infringer is deemed to have knowledge of the patent application without the Company having to formally inform them of this applications existence. On October 18, 2006 the EPO provided the Company with an Office Action requesting further information on the patent application. The Company responded to the questions and received a second Office Action, dated September 5, 2007 from the EPO. This second Office Action requested that the Company provide certain additional information and to conduct certain experiments to support the claims that were made in the application. The Company completed both the literature research and the laboratory studies and, on December 19, 2008, submitted the response to the second Office Action to the EPO. A third Office Action, dated August 13, 2009, was provided to the Company by the EPO and a response from the Company is required by December 13, 2009 unless an extension is sought and granted.

China

On June 25, 2005 the Company was notified that the PCT application was accepted for national examination by the Patent Office of the Peoples Republic of China (Chinese Patent Office) and assigned Patent Application Number 02829642.7. On August 11, 2005, the Chinese Patent Office accepted a Request for Substantive Examination from the Company. The application was published in the Chinese Patent Gazette on October 19, 2005, under Publication No. CN1684711A and entered into Substantive Examination. On February 5, 2006, the Company filed a Voluntary Amendment to the original patent application to correct certain minor errors in the original application. On June 2, 2006, the Chinese Patent Office provided an Office Action which requested certain additional amendments to the patent application. On December 18, 2006, the Company filed its response to the Office Action. The Company was notified by the Chinese Patent Office that the Chinese patent had been allowed, effective June 8, 2007. Amendments to the original patent application were then drafted by the Company.

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As in the case of the amendments prepared for CIPO, the proposed amendments to the Chinese patent expand the original claims to include a number of therapeutic applications of the T36®formulation, including its use in cosmetics and in a microbicidal gel to prevent the transmission of sexually transmitted infections (STIs). On October 10, 2007, the Company was advised that the amended claims had been submitted to the Chinese Patent Office. On January 30, 2008 the Chinese Patent office assigned Chinese Divisional Patent Application No. 200710142798.3 to the new application which was published in the Chinese Patent Gazette, under Publication No. CN101112624A. At the time of this report, no further developments have occurred with this Chinese patent application. On February 6, 2008, the Company announced that Certificate of Invention Patent Number ZL02829642.7 had been issued by the State Intellectual Property Office of the Peoples Republic of China. The patent provides protection for the composition and production methods for ALDAs T36®formulation until August 20, 2022.

United States

US Patent #7,338,927
On February 18, 2005, the US Patent and Trademark Office (USPTO) received the PCT patent application and assigned it Patent Application Number 10/525,110. The patent application was published by the USPTO on December 22, 2005, under Publication Number US 2005/0282727. On July 27, 2006, the Company received that first Office Action from the USPTO which required clarification or modification of certain claims made in the patent application. The Company was required to respond to the Office Action by October 27, 2006 and did so on October 26, 2006 with amendments to the claims that required clarification or modification. On February 7, 2007 the USPTO provided the Company with a Notice of Allowance for the US patent with all claims made by the Company accepted by the USPTO. A Notice of Allowance is not a grant of a patent and is subject to withdrawal by the USPTO or on petition by the Company. The Company then filed certain minor, voluntary amendments to the patent application and a second Notice of Allowance, dated June 8, 2007 was provided by the USPTO. On February 15, 2008, the Company was advised that a Notice of Allowance had been received from the USPTO projecting that the US patent would be issued on March 4, 2008. As scheduled, U.S. Patent Number 7,338,927 was issued on that date and provides protection for the composition and production methods for ALDA's T36®formulation until August 20, 2022. The patent can be viewed on the website of the USPTO.

U.S. patent #7,560,422
Amendments to the original patent application were drafted by the Company and submitted to the USPTO as a U.S. Continuation Patent Application in December, 2007. The amendments to the US patent expanded the original claims to include a number of therapeutic applications of the T36®formulation, including its use in cosmetics and in a microbicidal gel to prevent the transmission of sexually transmitted infections (STIs). On July 14, 2009, the USPTO issued U.S. Patent Number 7,560,422.

Patents (continued)

The new patent is a continuation of US Patent Number 7,338,927 that was issued on March 4, 2008 and provides further protection for ALDA's T36®formulation until August 20, 2022. The new patent includes claims to additional aspects of the T36®formulation, including the use of T36®as a component of a personal lubricant, in a method of preventing or reducing the transmission of a sexually transmitted diseases including Herpes, Chlamydiaand HIV and for use in sanitizers and cleansers in creams, ointments and wipes.

Singapore

The Company has decided to abandon the patent application in Singapore because the cost is relatively high for the small market represented. With the granting of the Chinese patent, a patent in Singapore was deemed to be unnecessary.

Australia

On March 15, 2005 the PCT application was accepted for national examination by the Australian patent office on March 15, 2005 and assigned with Patent Application Number 2002322916. On October 24, 2006, the Australian patent office provided the Company with a Direction to Request Examination. Under Australian Patent law, such examination must be requested within five years of the filing date or within six months of receiving a direction from the Australian Patent Office, whichever is sooner. On October 10, 2007 the Company announced that the Australian Patent Office had accepted the patent application with no objections. On December 4, 2007, a divisional application was filed at the Australian Patent Office.

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As in the case of the amendments prepared for the Chinese Patent Office, CIPO and the USPTO, the divisional application provides amendments to the Australian patent that expand the original claims to include a number of therapeutic applications of the T36®formulation, including its use in cosmetics and in a microbicidal gel to prevent the transmission of sexually transmitted infections (STIs). A response from the Australian Patent Office, concerning this application is still pending. On February 22, 2008, the Company announced that Australian Patent Number 2002322916 has been issued by the Australia Patent Office. The patent provides protection for the composition and production methods for ALDAs T36®formulation until August 20, 2022. On March 3, 2008, the Company was notified that the divisional application had been assigned Serial No. 2007237333 with an official filing date of August 20, 2002. Examination of the application was requested by the Company on June 3, 2008. On September 3, 2009 the Australian Patent Office issued a Notice of Acceptance for the new patent. At the time of writing, the Company has no assurance that the new Australian patent be granted at all and, if it is granted, the Company cannot estimate when it will be granted or what claims will be allowed and protected, if any.

The subject matter of all of these patents that are issued or pending is the composition of T36®formulation which contains five active ingredients, four of which are in relatively low concentrations that act synergistically to disrupt the physical structure of all types of micro-organisms. The pending patents also provide for the method of manufacturing T36®Disinfectant.

PCT application for anti-inflammatory, antiseptic therapeutic formulation

On March 20, 2008 the Company filed a comprehensive new patent application, International Application No. PCT/CA2008/000536, Antiseptic Compositions for the Treatment of Infections, with CIPO under the Patent Cooperation Treaty (PCT). The new PCT application seeks protection for the composition and preparation of T36®formulations that also contain steroids, anesthetics or analgesics for use on topical infections and, in particular, inflamed infections. Typically, infections with associated inflammation are treated with separate antiseptic and anti-inflammatory preparations. The new T36®formulations combine these properties into a single treatment, making the prescription process easier for the physician and the application easier for the patient.

In preliminary studies, under the direction of a physician, T36®formulations containing anti-inflammatory steroids quickly resolved a number of skin infections, some of which had resisted all other treatments. Examples include chronic eczema with secondary Staphylococcus infections and fungal infections, such as athletes foot, Tinea versicolor.

Patents (continued)

On January 13, 2009, the Company was notified by its patent lawyers that an International Search Report (ISR) and Written Opinion was issued by the International Searching Authority (ISA) on December 18, 2008. As part of the PCT patent process, the ISA performs a search of prior art to identify any relevant art that may impact the patentability of a PCT application. Generally, prior art consists of everything which has been made available to the public anywhere in the world, for example, by means of a written disclosure (including drawings and other illustrations). The prior art is relevant if it is capable of being of assistance in determining whether an invention, as claimed, is new and involves an inventive step and was made available to the public before the international filing date. The ISA then issues a preliminary and non-binding Written Opinion. This Written Opinion is an assessment by an Examiner on whether or not a patent application conforms with respect to certain requirements for patentability. As disclosed above, references cited in the Search Report and Written Opinion were submitted to the USPTO on January 5, 2009 in an Information Disclosure Statement (IDS) relating to the new US CPA.

The claims made in this particular PCT application were purposefully very broad. Accordingly, the examiner for ISA found a number of patents and other literature that, in the opinion of the examiner, represented prior art. At this time, the Company does not need to take any action if National Examination of the PCT application is requested by September 20, 2010. The Company intends to request the National Examination before this deadline. Then, as the National Examiners provide their responses to the PCT application, the Company can respond by arguing against the opinions of the Examiners, or amending the claims.

At the time of writing, the Company has no assurance that any patents that have not yet been granted will be granted at all and, if any patents are granted, the Company cannot estimate when the patents will be granted or what claims will be allowed and protected, if any.

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Trademarks:

The Company successfully trademarked T36 in Canada on April 22, 2004 and in the United States on November 2, 2004. The trademark in the United States is a Principal Register mark. The Principal Register of the US Patent and Trademark Office (USPTO) conveys the important substantive rights that most people associate with federal registration and, as a result, it is the preferred method of federal trademark protection. Probably the most important benefit of placing a mark on the Principal Register is that anybody who later initiates use of the same or a confusingly similar trademark may be presumed by the courts to be a "willful infringer" and therefore liable for damages.

The Company also successfully trademarked the Companys logo in Canada on July 16, 2004 and in the United States on January 18, 2005, also as a Principal Register mark.

On October 31, 2007, the Company filed Canadian Trademark Application #1,370,040 to register the name ICEN for use with antiseptic preparations, personal disinfectant sprays, disinfectants for household, commercial and institutional use, disinfectant wipes and disinfectant cleaning preparations for household, commercial and institutional use. On April 30, 2009, CIPO provided an Approval Notice and on June 24, 2009, advertised the proposed trademark in the Trademarks Journal. Since no challenges were raised during the two month opposition period, the trademark has been allowed and is expected to proceed to registration. On November 2, 2009 the Company filed a Declaration of Use and paid the required fees. It is not known if the trademark will be used but the Company may choose to use it in the future.

Trademarks (continued)

On March 3, 2008, CIPO accepted applications filed by the Company to register T36 Disinfex (File No. 1385140) and T36 Safe-T-Cide (File No. 1385134) as trademarks in Canada. Both trademarks were advertised in the Trade-marks Journal on November 12, 2008. For a period of two months after a trademark is advertised in this manner, opposition to the proposed trademark can be filed. Although the Companys management conducts due diligence before attempting to register any trademarks in order to avoid infringement on any existing trademarks or trademarks for which applications have been submitted, there is no guarantee that trademarks will be issued or that trademarks will not infringe on the trademarks of other companies or that other companies will not take action against the Company for trademark infringement. Within the two month period after November 12, 2008, Triosyn Holdings Inc. (Triosyn) filed a statement of opposition to the proposed trademark, T36 Disinfex. On February 6, 2009, the Company was advised that the Trademarks Office had granted Triosyn an extension to April 12, 2009 to file a formal Statement of Opposition. On May 22, 2009, the Company was advised that Triosyn had not filed a Statement of Opposition and that CIPO had provided a Notice of Allowance for the trademark T36 Disinfex. Upon filing of an executed Declaration of Use and payment of the prescribed registration fee, the trademark will proceed to registration. At the time of writing, there is no further information on the registration of the trademark.

Impairment of intellectual property

The Company purchased substantially all of the assets and undertakings of API, principally comprised of certain intellectual property rights of API related to T36®Disinfectant developed by API including certain drug identification numbers, trademark and patent applications, inventory, capital assets, the shares of ALDA Institute For Preventative Health Care Inc., a non-competition agreement, certain contracts and inventory. The value placed on these assets was $555,000. Details on how this value was obtained is discussed in more detail in the section above titled 4.A. History and Development of the Company. In the financial statements, the intangible assets balance represents the carrying amount for the intellectual property and these assets were determined to have an indefinite life.

An impairment loss of $179,000 was charged against earnings for fiscal 2004 and an impairment loss of $245,000 was charged against earnings for fiscal 2005. This impairment loss was considered necessary due to sales of the T36®Disinfectant being lower than the $540,000 valuation could support and also because the Company's progress towards securing legal protections for its proprietary product and development of a market for its product were significantly slower than had been anticipated at the time of the purchase of the business assets. At June 30, 2005, the carrying cost of the intangible assets was written down to the estimated net recoverable amount of $116,000.

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The carrying amount of Intangible Assets was determined as follows:

|                                |   |          |  
|------------------------------- | - | -------- | -
|Original purchase cost (Note 9) | $ | 540,000  |  
|Impairment loss in 2004         |   | (179,000 | )
|Balance at June 30, 2004        |   | 361,000  |  
|Impairment loss in 2005         |   | (245,000 | )
|Balance at June 30, 2005        |   | 116,000  |  
|Balance at June 30, 2006        | $ | 116,000  |  

Effective July 1, 2006, the Company changed its estimate of the useful life of the intangible assets from an infinite life to a finite of 20 years. The impact of this change in estimate was to increase amortization by $5,800 for the year ended June 30, 2008.

|                                   |   |         |  
|---------------------------------- | - | ------- | -
|Opening balance as at July 1, 2006 | $ | 116,000 |  
|Accumulated amortization           |   | ( 5,800 | )
|Balance as at June 30, 2007        | $ | 110,200 |  

Effective June 30, 2008, the remaining balance of $110,200 was written off entirely so that the remaining balance of intangible assets is zero.

Sources/Availability of Raw Materials and Production

T36®is comprised of ethanol, o-phenyl phenol, benzalkonium chloride and other ingredients, including lemon fragrance and water. All of these chemical raw materials are commonly produced in industrialized countries by a number of manufacturers and are generally considered safe to transport. However, they have a low value to weight ratio which means it is likely cheaper to source raw materials from local producers than shipping raw materials from other markets. As a result, the Company does not believe that it is vulnerable to raw materials shortages or to loss of access to supply from any one producer but cannot guarantee that supplies will always be available in the quantities or quality required or that its manufacturers will always be able to meet its needs in a timely manner or at all.

The Company had entered into a production contract with Norwood Packaging Ltd. (see Exhibit 4.b.) but this agreement was terminated by mutual agreement on June 18, 2008 (Exhibit 4.l). The Company does not anticipate entering into other production contracts in the foreseeable future.

The Company does not have production facilities as of June 30, 2009 but had entered into a non-binding Letter of Intent to purchase a pharmaceutical manufacturing company as disclosed in a news release issued by the Company on February 23, 2009. The Company cancelled this agreement on June 23, 2009.

Principal markets and Potential Product Markets

Up to the year ended June 30, 2009, the Companys sales have principally been to First Responder organizations, including ambulance, fire fighters and police forces in Canada, dental clinics and personal services establishments including hair salons and spas.

There are no reliable market estimates of the size of the disinfectant or disinfectant cleaner market in these particular segments.

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At the time of this report, the Company is now selling T36®Antiseptic Hand Sanitizer, T36®The Wipe Antiseptic Hand Sanitizer, T36®Disinfectant, T36®Disinfectant Wipes to retail pharmacies, such as London Drugs and Shoppers Drug Mart and grocery chains such as Marketplace IGA and T&T Supermarkets. T36®Disinfectant Cleaner CONCENTRATE is being sold to commercial customers such as Acklands-Grainger Inc. In addition, the Company is investigating the sale of its products in other countries. However, as detailed in Item 4.B., Material Effects of Government Regulation, the Companys products must first receive regulatory approval in any new sales jurisdiction and obtaining this approval can be costly and time consuming. There is no guarantee that the Company will be able to obtain such approval and it is not possible to predict how long such approvals would take if granted.

There is no reliable estimate of the size of the Canadian market for disinfectant products or products similar to those of the Company. Also, no reliable estimates are available for the US or overseas markets.

Disinfectant Products are a very broad category of products and, where estimates are available of market size, the data appears to include many products dissimilar to those offered by the Company and often includes consumer products (e.g. widely marketed consumer brand name hand soaps). As well, particularly in the market niches where the Companys sales have been to date (as described above), there are a number of private company producers of disinfectant products whose sales figures are not publicly available. Public companies do not generally break down sales numbers in sufficient detail to allow the Company to be able to determine any reliable market information. No industry trade organization exists which could provide estimates of disinfectant sales, in the product categories being pursued be the Company, for Canada or the United States.

Marketing, Distribution and Sales Channels

The Company does not directly market its products to end users except for some first responders such as the Royal Canadian Mounted Police (RCMP). The Companys marketing, distribution and sales method has been to market its products to wholesalers of similar products who then market the products to end consumers. Recently, the Company has also been selling its products to retail outlets, as discussed above. In May, 2009, the Company hired an Account Executive and in September, 2009, two Account Managers to provide sales and marketing assistance to distributors.

The wholesale industry for disinfectants, cleaners, cleaning and hospital supplies and similar consumer products is fragmented into a large number of wholesalers. As a result, no competitor of the Company exercises significant control over distribution or the markets except that a hand sanitizer, Purell, distributed by Johnson & Johnson Consumer Products Company Division, a division of Johnson & Johnson Consumer Companies Inc. (J&J), is well-established in the market and well known to consumers. J&J is a large company with significant resources and has the ability to compete very vigorously to maintain its dominant market share of the hand sanitizer market. It is very possible that the Company may not be able to compete effectively against J&J and may not be able to maintain a stable share or any share of the market for hand sanitizers. With other products such as T36®Disinfectant and T36®Disinfectant Cleaner CONCENTRATE , the Company must convince each new wholesaler that it approaches to carry the T36®products, often in place of other existing products, and also to make the Companys products available to the wholesalers customers.

The Companys products and name are not immediately recognizable to end consumers and, as a result, wholesalers have to make some additional effort to generate sales, as compared to the effort associated with a product familiar to end consumers. This difficulty, which all new companies face in marketing their products, is probably the greatest challenge for the Company (i.e. how to get end consumers to recognize and request its products from wholesalers), given the Companys limited budget for incentives or advertising.

The Company markets it products to wholesalers through three inside sales and marketing representatives, trade shows, lectures to end users and product promotional materials and flyers.

The current key accounts are described below. Except as noted, there are no contracts or oral agreements in place. Customers and distributors place orders for products from the Company, the shipper receives instructions from the Company and the shipper sends the products from its warehouse via carriers specified by the Company or the customer. All product shipments are generally made FOB from the Companys shipper and title passes to the customer upon the Companys or customers carrier taking delivery of the product from the shipper. The Company may prepay all costs of transportation and insurance and the customer reimburses the Company for such expenses. The payment terms for products delivered to the customer by the Company are net cash in Canadian currency within 30 days.

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|1. | Shoppers Drug Mart Corporation (Shoppers) started selling the Companys T36®Antiseptic Hand Sanitizer on November 26, 2009. Shoppers operate over 1,170 Shoppers Drug Mart and Pharmaprix stores across Canada and provides national distribution of the Companys products to consumers.                                                                                                                                                                                                                                                                                 
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|2. | London Drugs Limited entered into a Vendor Agreement with the Company and started selling T36®Antiseptic Hand Sanitizer and T36®Disinfectant in October, 2009. London Drugs operates 70 stores in the four Western provinces of Canada.                                                                                                                                                                                                                                                                                                                                     
|  
|3. | Acklands-Grainger Inc. (AGI) entered into a Supplier Agreement with the Company in October, 2009 and will distribute the Companys products across Canada. AGI is Canadas largest distributor of industrial, safety and fastener products with a comprehensive catalogue, 160 branches and 5 distribution centres across the country.                                                                                                                                                                                                                                    
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|   | Acklands-Grainger is the Official Supplier of the Vancouver 2010 Olympic Winter Games, Vancouver 2010 Paralympic Winter Games, the Canadian Olympic Committee, the 2010 Canadian Olympic Team and the 2012 Canadian Olympic Team for industrial safety and material handling supplies.                                                                                                                                                                                                                                                                                      
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|4. | On July 15, 2009, VANOC entered into a letter of intent to establish the Company as the Official Supplier of the Vancouver 2010 Olympic Winter Games, Vancouver 2010 Paralympic Winter Games, the Canadian Olympic Committee, the 2010 Canadian Olympic Team and the 2012 Canadian Olympic Team for antiseptic hand sanitizer, disinfectant and disinfectant cleaning products. Under the terms of the letter of intent, VANOC, the Canadian Olympic Committee and the 2010 and 2012 Canadian Olympic Teams will purchase products from the Company until December 31, 2012.
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|5. | Esthetics Plus, Inc. (EP) is a distributor to the beauty market and entered into an agreement with the Company dated February 1, 2005 (Exhibit 4.h.). EP has exclusive distribution rights in the beauty industry across Canada, except that the agreement is not exclusive within the province of BC. The material terms of the agreement between the Company and EP are described below under Item 10.C. Material Contracts.                                                                                                                                          
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|6. | Sinclair Dental Limited is a distributor to the dental market and, as of the date of this report, has been a customer of the Company for over 5 years.                                                                                                                                                                                                                                                                                                                                                                                                                      
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|7. | Product Distribution Centre (PDC) is a Crown Corporation of the Province of British Columbia, Canada, a distributor to the first responder market and, as of the date of this report, has been a customer of the Company for over 5 years.                                                                                                                                                                                                                                                                                                                                
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|8. | The Stevens Company Limited is a distributor to the scientific and medical markets and, as of the date of this report, has been a customer of the Company for over 5 years.                                                                                                                                                                                                                                                                                                                                                                                                 
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|9. | VWR International is a distributor to the laboratory market and, as of the date of this report, has been a customer of the Company for over 5 years.                                                                                                                                                                                                                                                                                                                                                                                                                        

The current sales plans would be disrupted if any of these distributors stopped representing the Company. The result would be a reduction in the Companys revenues until new distributors could be found. It is possible that new distributors might not be found and the Company would have to try to sell its products directly to the end users, leading to a significant increase in marketing and sales costs, even if the sales levels could be regained.

|         |                       
|-------- | ----------------------
|**4.C.** | Organization structure

The Company is not part of a group and has only one wholly owned subsidiary, Sirona Therapeutics Corp. (Sirona), formerly the ALDA Institute for Preventative Health Care Inc., a Company incorporated in British Columbia.

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On January 12, 2005, the Company entered into a license agreement with Sirona. Under this agreement, the Company can choose to transfer the rights to certain therapeutic applications of its T36®Disinfectant to Sirona if financing is directed into Sirona rather then into the Company. The Company will retain ownership of the technologies if Sirona undertakes any financing and completes the patenting and registration of any therapeutic products developed and based on the T36®Disinfectant. At the present time, Sirona is an inactive company, but is in a position to become active if Sirona secures investment funding in the future. If such an investment is not made directly into Sirona, it will remain inactive or may undertake unrelated business activities.

|     |                              
|---- | -----------------------------
|4.D. | Property, Plant and Equipment

The Company has executive offices at 635 Columbia Street, New Westminster, British Columbia, V3M 1A7 which consists of 2,358 square feet. The Company leases its offices on a month-by-month basis at CDN$3,191per month (see Exhibit 4.n. for the lease agreement).

The Company uses outside manufacturers for its production needs. On February 23, 2009, the Company announced in a news release that the Company had entered into a non-binding Letter of Intent to acquire a pharmaceutical manufacturing company. On June 23, 2009 the Company announced that it was not going to proceed with the acquisition.

Item 4A Unresolved Staff Comments

No disclosure necessary.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

This discussion should be read in conjunction with the audited financial statements of the Company and related notes included therein.

|     |                                 
|---- | --------------------------------
|5.A. | Operating Results of the Company

Overview

Over the course of the Companys operating history, the Company has successfully secured the required government and regulatory approvals to market and sell T36®Disinfectant, Disinfectant Wipes, T36®Antiseptic Hand Sanitizer Gel and wipes and T36®Disinfectant Cleaner CONCENTATE in Canada resulting in the sales described below. To date, all of the Companys sales have been solely in Canada which, while a developed industrial economy, is not a particularly large market relative to economies such as the United States, China or the European Union (EU). To achieve profitability and increase sales substantially, the Company must first secure government and regulatory approval of its products in markets outside of Canada or achieve greater penetration of Canadian markets with its existing products. Although sales in Canada have been relatively consistent over the Companys operating history, the Company has not yet secured the required government and regulatory approvals for the sales of its products outside of Canada. Each government or regulatory jurisdiction tends to require efficacy studies or safety studies of differing content or quality. The regulatory approval process to date has been costly both in terms of working capital and in terms of management time and attention.

The Company has been actively marketing its T36®products since the acquisition of API was completed. In general, the Companys sales show little significant variation from year to year. The 13% and 10% increases in sales for the year ended June 30, 2009 compared to the 2008 and 2007 fiscal year, respectively, was largely the result of an increase in distributor prices, some increase in volumes and the timing of shipping and invoicing.

The cost of sales increased as a percentage of sales during the 2009 fiscal year due to higher costs for raw materials, supplies and handling fees due to more products being stored and shipped by a third-party warehousing company. As noted above, the Company continues to operate overall with a significant loss from operations. This reflects, to a great extent, the costs associated with pre-clinical trials, the work being done to register its products for sale in jurisdictions other than Canada and ongoing administrative, management and intellectual property protection costs. To generate a net profit, the Company believes that it must register its products for sale in another major market, such as the United States or the EU or achieve significant increases in sales of its products within Canada. However, even if the Company becomes operationally profitable from the introduction and sale of new products or sales in other countries, the Company plans to continue investing heavily in clinical testing and registration of its therapeutic products in Canada, the EU and the US through Health Canada, the EMA and the FDA, respectively, and in intellectual property protection. This will lead to continuing and unpredictable losses for the foreseeable future that will closely parallel the funds that are invested in these activities.

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To accomplish these goals, the Company will need to raise significant amounts of new funding and the expenses associated with these activities will affect the ability of the Company to show a profit until they are completed. It is not known when these activities will be completed and there is no guarantee that they will be completed. Further, the issuance of new shares to fund these activities will lead to the dilution of existing shareholders.

Trend information

There are no general market trends or other factors which the Company believes materially affect its business prospects other than small seasonal dips in sales observed during the summer months and over Christmas and into the New Year. However, the Companys existing customers and the general public are becoming more aware of T36®products due to the publicity generated by the continuing spread of antibiotic-resistant bacteria and the current H1N1 pandemic. A pandemic is defined as infection that is spreading widely in at least two of the six World Health Organization (WHO) regions. In early June, 2009, Swine-like H1N1 Influenza A virus Strain A/California/04/2009, now referred to as pH1N1, had reached all six WHO regions with nearly 30,000 confirmed cases reported in 74 countries. On June 11, 2009, the WHO raised its global pandemic alert level to Level Six, the highest level possible, for the first time since 1968.This action by the WHO has contributed to this awareness and a perception that there is a growing need or demand for products similar to those the Company produces. This has resulted in growth in the market for disinfectant products and, in particular, consumer products which are effective against infectious microorganisms. No reliable quantification of the growth in sales such products have experienced is available and no growth or future growth can be predicted. The Company cannot predict if its revenues will increase as new products based on the T36®formulation are launched. As of the date of reporting, the Company has 5 products on the market: T36®Disinfectant, T36®Antiseptic Hand Sanitizer Gel, T36®Disinfectant Cleaner Concentrate, T36®Disinfectant Wipes and T36® The Wipe Antiseptic Hand Sanitizer. T36 DisinfexTMDisinfectant Cleaner Wipes and T36®Antiseptic Hand Sanitizer Liquid may also be introduced to the market at some time in the future.

SalesAs a result from the sale of T36®Disinfectant and T36®Hand Sanitizer through its distributors to the first responders, dental and beauty markets, the Company recorded sales of $282,261 for the year ended June 30, 2009 compared to $249,042 and $256,243 for the 2008 and 2007 fiscal years, respectively. Any differences in sales revenue were partly due to the timing differences in ordering and, as anticipated, sales were slower in the summer and over the Christmas period. No significant quarterly variation in sales occurred and no new major competitors have appeared in the market nor have any withdrawn from the market.

The Company relies heavily on its current distributors to sell T36®products to end users. For the year ended June 30, 2009, sales to four major customers totaled $174,490 and accounted for 64% of the total sales. For the year ended June 30, 2008, sales to these four customers totaled $137,954 and accounted for 55% of the total sales. In 2007, total sales to these same customers were $162,837 and accounted for 66% of the total sales. Clearly, these customers are important to the Company and the loss of any or all of these customers would have a significant and negative effect on the Company.

The selection of products offered by the Company can now be used for personal hygiene, disinfecting instruments and countertops and for janitorial services. The first introduction of the newer products to the market occurred during the Companys attendance at the 142nd Annual Spring Meeting (ASM) of the Ontario Dental Association (ODA) on April 30 and May 1, 2009. The Company cannot predict if the new products, described above, will be accepted by the market. If not, the Company can be expected to show losses in the future.

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Cost of Sales
For the for the year ended June 30, 2009, 2008 and 2007, the cost of sales incurred was $224,687, $157,234 and 165,920, representing 80%, 63% and 65%, , of total sales, respectively. Cost of sales includes the direct costs of the inventory sold during the period plus warehousing costs, shipping and handling charges. The higher cost of sales during the year ended June 30, 2009, was primarily due to an increase in cost of raw materials, particularly ethanol, and greater transportation, warehousing and handling costs due to the termination of the agreement with Norwood Packaging which had been storing the Companys inventory as part of their contribution to the agreement. As a result, the Company returned to a third party warehousing provider to store and ship all of its inventory. Higher distributor prices which may help to mitigate the increase in cost of production, transportation and storage costs, came into effect on February 15, 2009.

Gross ProfitFor the year ended June 30, 2009, 2008 and 2007, the Company recorded a gross profit of $57,574 and $91,808 and $90,323, respectively. Gross profit declined in the fiscal year ended June 30, 2009 due to increases in the cost of production, transportation and warehousing as described above in the preceding paragraph, Cost of Sales.

Advertising and PromotionThere was no material difference in advertising and promotion costs over the years ended June 30, 2007 to 2009. Promotion consisted of the distribution of products and literature to current and potential distributors and customers.

ConferenceConference costs were higher in the year ended June 30, 2009 than the preceding two years due to attendance by company representatives at the 142nd Annual Spring Meeting (ASM) of the Ontario Dental Association (ODA) on April 30 and May 1, 2009 and other trade shows. At the ODA conference, the new products developed by the Company were introduced to the dental market.

ConsultingConsulting fees for the year ended June 30, 2009, 2008 and 2007 were $567,144, $1,004,660 and 308,600, respectively. The substantial increase in consulting fees during the 2008 fiscal year was largely due to non-cash stock-based compensation expenses of $605,068 which resulted from the grant of options to senior officers and other consultants to the Company. Fewer options were granted during the 2009 fiscal year leading to lower non-cash stock-based compensation expense of $138,284 for consultants. During the 2007 fiscal year, $83,600 non-cash stock-based compensation was recognized. Details of the non-cash stock-based compensation provided by the Company for the fiscal year ended June 30, 2009 are provided in Note 7(b)(x) of the accompanying financial statements. In addition to the non-cash stock-based compensation provided to consultants, $324,000 was paid to executives of the Company in remuneration for their services to the Company. Information on related party transactions is provided in Note 12 of the interim consolidated financial statements. In addition, the consulting fees included fees paid to third party consultants to carry out ongoing projects including branding, marketing, and product development.

Due diligenceA due diligence fee of $10,000 related to the proposed acquisition of a pharmaceutical manufacturing facility was paid to the target company during the fiscal year ended June 30, 2008. On February 23, 2009, the Company entered into a non-binding Letter of Intent to purchase all of the business and undertakings of the target company. On June 23, 2009, the Company issued a news releases stating that the Company was not going to proceed with the proposed acquisition.

Dues and Filing FeesIn the 2009, 2008 and 2007 fiscal years, dues and filing fees were $31,794, $44,626 and $24,570, respectively. In the fiscal year ended June 30, 2008, these fees were higher than for the preceding and following years due to fees paid to the TSX-V, the British Columbia Securities Commission (BCSC) and the securities commissions of other provinces for the completion of the private placements and the granting of options to directors, officers, employees and consultants. Also, the Company was required by the BCSC to revise and re-file its quarterly reports for the fiscal year ended June 30, 2007 and the quarters ended September 30 and December 31, 2007 which led to higher than usual filing fees.

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Investor RelationsInvestor relations activities amounted to $132,103 $124,065, and $65,039 for the year ended June 30, 2009, 2008 and 2007, respectively. Freeform Communications, Inc. (Freeform) was paid a total of $48,000, $46,649 and $38,300 for their services to the Company for the year ended June 30, 2009, 2008 and 2007, respectively. Included in this category for the year ended June 30, 2009, 2008 and 2007 was non-cash stock-based compensation of $73,859 $53,707 and $2,000, respectively, for various options granted to Freeform and fees of $9,954 and $13,709 paid to Marketwire for the dissemination of news releases. In the 2007 fiscal year, no stock options were granted to Freeform and Marketwire was paid $6,739.

Legal and Accounting FeesLegal and accounting fees totaled $72,537, $89,723 and $53,697 for the year ended June 30, 2009, 2008 and 2007, respectively. The greater amount of legal and accounting fees during the 2008 fiscal year was partly due to the ongoing foreign securities registration which was assisted by Stanislaw Ashbaugh LLP and completed in April, 2009. Legal fees incurred in the periods also consisted of advice received from Getz Prince Wells on general legal matters, attending to preparation of required and revised documentation to the TSX Venture Exchange and the securities commissions, reviewing Form 20-F documents for the registration of the Companys securities in the United States, the preparation of documentation required for private placements and option grants and attending to the closing of the private placements. Accounting fees consisted of consultation fees, auditing of the Companys annual financial statements and undertaking due diligence on the target company that was being considered for acquisition.

Product Registration and Development CostsTotal costs incurred in this category for the year ended June 30, 2009, 2008 and 2007 were $189,566, $375,807 and zero, respectively. The expenses related to research and development activities, which do not meet generally accepted criteria for deferral, are expensed as incurred. However, during 2007 fiscal year, no expenses were included in this category because the auditors elected to capitalize the intellectual property costs with an amortization period of 20 years rather than treating these costs as current expenses. Then, for the fiscal year ended June 30, 2008, the original practice was re-adopted and these costs were expensed so that the financial reporting is consistent with the Companys focus on R&D. Also, during the 2008 fiscal year these costs were higher because the Company elected to write off the remaining $110,200 in development costs and intellectual property that was acquired in the original Qualifying Transaction that remained on the balance sheet in 2007. The Company will now expense these costs in the future to be consistent with past and standard accounting practices. Costs in this category include continuation of the US patent application, ongoing registration of T36 Disinfex as a trademark in Canada, testing fees paid to BioScience Laboratories, Inc. to undertake clinical testing for the T36®therapeutic applications, and fees paid to regulatory consultants in Canada and US to pursue the registration of the Companys therapeutics products.

Wages and BenefitsWages and benefits were $209,946, $302,439 and $116,633 for the year ended June 30, 2009, 2008 and 2007, respectively. Costs in this category include the wages paid for accounting and administrative assistance and to sales and marketing staff. An Account Executive was hired in May, 2009 and two Account Managers were hired since then to promote T36®products so wage costs are expected to increase. Non-cash stock-based compensation expenses of $124,695, $244,790, and $62,500 were recognized in wages and benefits for the year ended June 30, 2009, 2008 and 2007, respectively. Cash-based wage costs for the fiscal years 2007 to 2009 were $54,133, $57,648 and $85,251 respectively. The increase in the 2009 fiscal year compared to the previous two years was due to incentive raises, bonuses paid to staff and the hiring of additional staff.

Loss from OperationsThe Company continued to have losses from operations of $1,183,009, $1,937,735 and $562,090 for the year ended June 30, 2009, 2008 and 2007, respectively. The Company observed higher losses in the 2008 fiscal year largely due to non-cash stock-based compensation expenses of $903,565 being recognized in the statement of operations. In comparison, there was $148,100 of non-cash stock-based compensation expenses in the 2007 fiscal year and $336,838 in the 2009 fiscal year. The details of non-cash stock-based compensation are disclosed in Note 7(b)(x) and in the Consolidated Statements of Cash Flows in the interim consolidated financial statements.

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During the year ended June 30, 2009, the Company granted 550,000 options priced at $0.20 and 1,600,000 options priced at $0.25 to certain directors, consultants and employees. Including various granted options that were vested during the quarters, non-cash stock based compensation of $336,838 is recognized in the statement of operations during the year ended June 30, 2009. Sales are not yet sufficient to cover all of the expenditures of the Company. Product registration and development costs remain higher than revenues due to the employment of independent consultants to assist with satisfying the requirements of the FDA, EMA and Health Canada, to evaluate the potential applications and development of the Companys T36®technology and to determine the regulatory pathways to commercialization.

Management is currently investing in the marketing of T36®Antiseptic Hand Sanitizer and T36®The Wipe Antiseptic Hand Sanitizer, T36 DisinfexTM(formerly known as T36®Disinfectant) and T36 Disinfex Wipes and T36®Disinfectant Cleaner CONCENTRATE. Marketing new products that are unknown to the selected markets is expected to be very expensive and will lead to increased losses for an indeterminate amount of time before revenues and profits grow enough to offset these new expenditures. In addition, the pursuit of the new therapeutics products requires the Company to invest continuously in product development, clinical trials, product registrations and intellectual property protection. As a result, further losses are anticipated for the foreseeable future.

Interest IncomeInterest income earned from bank deposits for the year ended June 30, 2009, 2008 and 2007 was $76,181, $38,740 and $0, respectively. The increase was due to an increase in cash position upon the closing of various private placements and the exercising of options and warrants from the holders in 2008 fiscal year.

Loss and Comprehensive Loss for the YearThe loss and comprehensive loss for the year ended June 30, 2009, 2008 and 2007 were $1,183,009 and $1,937,735 and 562,090, respectively. A significant portion of the overall loss for the 2009, 2008 and 2007 fiscal years were non-cash, stock based compensation expenses of $336,838, $903,565 and $148,100, respectively. Losses for the 2008 fiscal year were higher than losses for the 2009 and 2007 fiscal years. As discussed above, this was largely due to the non-cash, stock based compensation expenses being much higher during the 2008 fiscal year. In addition, intangible assets of $104,400 and patent costs of $86,238 were written off to zero during the 2008 fiscal year and included in the $375,807 expensed for Product Registration and Development. In comparison, there was no such write-down in the 2009 fiscal year and $5,800 in the 2007 fiscal year. When these non-cash expenses are deducted from the loss for the year, it is seen that the cash-based losses for the 2009 and 2008 fiscal years are $846,171 and $843,532, respectively and are virtually identical for the two years. Overall expenses increased significantly during the 2008 and 2009 fiscal years compared to the 2007 fiscal year because a number of private placements were closed after the end of the 2007 fiscal year. These financings provided the Company with the funds that were needed to accelerate the development, testing and registration of its products. As a result, the Company moved forward with extensive testing of its T36®formulation for registration of its products for therapeutic uses in Canada and the US. The results will be used to support applications in Canada, the US and Europe to test for the anti-microbial effectiveness of the formulations in human clinical trials. Intellectual property protection was also advanced. In general, expenditures in almost all categories increased to promote the Company and its products including consulting, legal fees, product registration and development, marketing and travel.

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|1.6 | LIQUIDITY

Although the Company generates some revenues from the sale of its lead product, T36®Disinfectant, sales are mainly occurring in Canada and the Company continues to absorb significant losses The Company has also established a plan for the development, testing, registration and marketing of therapeutic applications of the T36®formulation. The Company is also evaluating the registration of its existing products in jurisdictions other than Canada. Management has been and continues to evaluate the possibility of acquiring technologies that are complementary to T36®technology and launching similar types of product lines in the near future. The Company will need to undertake further financing in order to complete any such acquisitions and to pursue its other plans. These financings will lead to the dilution of current shareholders of the Company.

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|1.7 | CAPITAL RESOURCES

During the year ended June 30, 2009, 1,830,000 options were exercised by the holders at an exercise price range of $0.10 -$0.12 for total gross proceeds of $209,000. No warrants were exercised during the period. On October 31, 2008, the Company granted 550,000 options to acquire the Companys common shares at an exercise price of $0.20 per option to certain directors, consultants, officers and employees. On June 5, 2009, the Company granted 1,600,000 options to acquire the Companys common shares at an exercise price of $0.25 per option to certain directors, consultants, officers and employees.

As at June 30, 2009, the Company had 51,341,799 outstanding common shares and a total of 3,472,500 outstanding warrants exercisable at an exercise price range of $0.36 to $0.45 before the date of expiration. The outstanding stock options as at March 31, 2009 were 5,120,000 (4,895,925 options were exercisable) at an exercise price range of $0.20 to $0.80 per option. Upon the exercise of outstanding warrants and exercisable options, the Company will have fully diluted outstanding common shares of 59,934,299

At the time of this report, the Company has sufficient working capital to pursue its development plans and to fund its operations. However, there can be no guarantee that the Company will derive any proceeds from the exercise of outstanding warrants and options. There is no assurance that additional funding will be made available to the Company to fulfill its business objectives. In addition, there can be no assurance that the Company will be able to obtain adequate financing in the future to fulfill its business objectives or that the terms of such financing will be favourable. Many of the Companys products still require further development, laboratory testing and human testing in order to obtain required regulatory approvals. A lack of funds will impair the ability of the Company to complete such tests. A lack of funds will also impair the Companys ability to establish marketing and sales plans once the products have been approved for sale. If adequate financing is not available when required, the Company may be required to delay, scale back or eliminate various activities and may be unable to continue in operation. The Company may seek such additional financing through debt or equity offerings, which might alter the capital structure of the Company, but there can be no assurance that such financing will be available on terms acceptable to the Company or at all. Any equity offering will result in dilution to the ownership interests of the Companys shareholders and may result in dilution to the value of such interests.

Critical Accounting Policies

The preparation of the financial statements in conformity with Canadian GAAP requires management to make estimates and assumptions that affect the amounts reported of assets and liabilities, the disclosure of contingent assets and liabilities at the date of financial statements and the amounts of revenues and expenses for the reporting period. The areas of estimation are the stock-based compensation, estimated useful lives of depreciable assets, and intellectual property. The Company believes that the estimates and assumptions upon which it relies are reasonable and are based on information available to the Company at the time that estimates and assumptions are made. Actual results could differ from those estimates. For details on accounting policies, please refer to the Notes to the audited financial statements.

Recent Accounting Pronouncements

Effective July 1, 2001, the Company adopted the new recommendations of the Canadian Institute of Chartered Accountants Accounting Handbook Section 3870, Stock-based Compensation and Other Stock-based Payments (CICA 3870). During the year ended June 30, 2004, CICA 3870 was amended to require the use of the fair value-based method to account for stock Options granted to employees. In accordance with the revised recommendations, the Company has prospectively applied the fair value-based method to all stock Options granted to employees on or after July 1, 2003, whereby compensation cost is measured at fair value at the date of grant and is expensed over the vesting period.

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Effective July 1, 2003, the Company adopted the recommendations of the Canadian Institute of Chartered Accountants Handbook, Section 3063, Impairment of long-lived assets (CICA 3063). The new recommendations were applied prospectively to all long-lived assets held for use by the Company after July 1, 2003.

The financial statements include a note providing reconciliation to United States Generally Accepted Accounting Standards (GAAS).

Patent application and development costs include all expenditures attributable to efforts by the Company to develop, and bring to commercial production a new product as well as to acquire legal protections for its proprietary products, such as trademarks and patents. Such amounts are charged as an expense in the period incurred except in circumstances where the market and technical feasibility of the product have been established, and recovery of patent application and development costs can reasonably be regarded as assured and future values can be realized, in which case such costs are capitalized. In the latter case, patent application and development costs are amortized on a systematic basis over the patent life of 20 years. The carrying amounts of intangible assets which are determined to have a finite useful life are amortized on a systematic basis over the useful life of 20 years. At this time, no patent costs or intangible assets are capitalized.

The Company adopted the following new accounting standards issued by the Canadian Institute of Chartered Accountants (CICA) relating to comprehensive income, recognition, measurement, disclosure and presentation of financial instruments and hedges. These new accounting standards are applied prospectively beginning July 1, 2007. Adoption of these standards had no impact on the consolidated financial statements for the year ended June 30, 2009.

Section 1530  Comprehensive Income  This section established standards for reporting and presentation of a statement of comprehensive income. Comprehensive income includes net earnings and other comprehensive income. Other comprehensive income is defined as the change in equity from transactions and other events from non owner sources. Other comprehensive income includes holding gains and losses on certain derivative instruments that are classified as available-for-sale, and gains or losses due to the change in foreign currency relating to self-sustaining foreign operations, all of which are not recognized in net earnings until realized.

Section 3251  Equity  In addition to Section 1530 (Comprehensive Income), this section establishes standards for the presentation of equity and changes in equity during the reporting period.

Section 3855  Financial Instruments  Recognition and Measurement  In June 2009, the CICA amended Handbook Section 3855, "Financial Instruments - Recognition and Measurement, to clarify the application of the effective interest method after a debt instrument has been impaired. The Section has also been amended to clarify when an embedded prepayment option is separated from its host instrument for accounting purposes. The amendments apply to interim and annual financial statements relating to fiscal years beginning on or after May 1, 2009 for the amendments relating to the effective interest method and January 1, 2011 for the amendment relating to embedded prepayment options. The Company is currently evaluating the impact of the amendments.

Financial instruments have been classified as held-to-maturity, available-for-sale, held for trading, loans and receivables, or other financial liabilities. Financial assets that are held to maturity, other than those held for trading, are measured at amortized cost. Available-for-sale instruments are measured at fair value with unrealized gains and losses recognized in other comprehensive income until realized, at which time realized gains and losses will be recognized in net income. Held for trading instruments are measured at fair value with unrealized gains and losses recognized in the results of operations in the period in which they arise. Loans and receivables are measured at amortized cost using the effective interest method. Any gains or losses on the realization of loans and receivables are included in earnings. Financial liabilities that are not classified as held to maturity are classified as other financial liabilities, and are carried at amortized costs using the effective interest method. Any gains and losses on realization of other financial liabilities are included in earnings. Any transaction costs incurred to acquire financial instruments will be included in earnings.

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The Companys financial instruments consist of cash and equivalents, accounts receivable, prepaid expenses and others, subscriptions receivable, and accounts payable and accrued liabilities. The fair value of these instruments approximates the carrying amounts due to the immediate or short-term maturity of these financial instruments. The Company has made the following classifications:

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| | Cash and equivalents                     |  | Held for trading            | 
| | Accounts receivable                      |  | Loans and receivable        | 
| | Prepaids expenses and others             |  | Loans and receivable        | 
| | Subscriptions receivable                 |  | Loans and receivable        | 
| | Accounts payable and accrued liabilities |  | Other financial liabilities | 

Section 3861  Financial Instruments  Disclosure and Presentation  This section establishes standards for presentation of financial instruments and non-financial derivates and identifies the information that should be disclosed about them. This section establishes standards for presentation of financial instruments and identifies the information which should be disclosed about them. Under the new standards, policies followed for years prior to the effective date are generally not reversed, and therefore the comparative figures have not been restated.

Section 3862  Financial Instruments  Disclosures and Section 3863  Financial Instruments  Presentation  These sections revised and enhance the disclosure requirements while carrying forward its presentation requirements. These new sections will place increased emphasis on disclosures about the nature and extent of risks associated with both recognized and unrecognized financial instruments, how the entity manages the risks, and the exposure to liquidity, currency and other price risks.

It is managements opinion that the Company is not exposed to significant interest, currency, credit, and liquidity risk arising from these financial instruments. The Company has transactions dominated in US dollars but exposure to currency risk is immaterial. The Company mitigates its exposure to credit risk by maintaining its primary operating accounts with chartered bank in Canada and constantly monitoring credit standing of counterparties. The Company manages its liquidity risk through the management of its capital as described in note 14. The Company does not use financial derivatives.

Section 3865  Hedges  This section establishes standards for the Company that chooses to designate qualifying transactions as hedges for accounting purposes. This section builds on Accounting Guideline AcG-13, Hedging Relationships, and Section 1650, Foreign Currency Translation. The Company does not use hedge accounting and has no hedging relationships.

Section 1535- Capital Disclosures  This section establishes standards for disclosing information about an entitys capital and how it is managed. It requires the disclosure of the entitys objectives, policies and processes for managing capital as well as summary quantitative data on the elements included in the management of capital.

Section 3031  Inventories  This section establishes standards for measuring the inventories. The new standards require that the inventories shall be measured at the lower of cost and the net realizable value. This section provides guidelines on the determination of cost and its subsequent recognition as an expense, including any write-down to net realizable value and reversal of a previous write-down when the value of inventories is evidently increased due to the change in economic circumstances. The use of last-in, first-out method (LIFO) in measuring inventories is not recommended. This section applies to interim and annual financial statements for fiscal years beginning on or after January 1, 2008. The Company is evaluating the effect of adopting this new standard.

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Section 3064 Goodwill and Intangible Assets In February 2008, the CICA issued Handbook Section 3064, Goodwill and Intangible Assets, effective for interim and annual periods beginning on or after Oct 1, 2008. Section 3064, which replaces Section 3062, Goodwill and Other Intangible Assets, and Section 3450, Research and Development Costs, establishes standards for the recognition, measurement and disclosure of goodwill and intangible assets. The provisions relating the definition and initial recognition of intangible assets, including internally generated intangible assets, are equivalent to the corresponding provisions of International Financial Reporting Standards (IFRS) IAS 38, Intangible Assets. This new standard is effective for the Companys interim and annual financial statements commencing July 1, 2009. The Company is assessing the impact of the new standard on its financial statements.

As announced by the Canadian Accounting Standards Board (AcSB), the financial reporting requirements for Canadian companies will be changed to the use of International Financial Reporting Standards (IFRS), replacing Canadas own GAAP. The changeover date for publicly-listed companies is 2011. The Company has begun reviewing its plan for adopting IFRS for 2011. At this time, the Company has not yet determined the financial reporting impact due to the change in new reporting standards.

In January 2009, the CICA issued Section 1582, Business Combinations, which replaces former guidance on business combinations. Section 1582 establishes principles and requirements of the acquisition method for business combination and related disclosures. The Section applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2011 with earlier adoption permitted. The Company is currently evaluating the impact of this standard on its financial statements.

In January 2009, the CICA issued Handbook Section 1601, Consolidated Financial Statements, which replaces the existing standard. This Section carries forward existing Canadian guidance for preparing consolidated financial statements other than non-controlling interests. The Section is effective for interim and annual financial statements beginning on January 1, 2011 and earlier adoption is permitted. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements.

In January 2009, the CICA issued Section 1602, Non-controlling Interests, which replaces existing guidance. Section 1602 provides guidance on accounting for a non-controlling interest in a subsidiary in consolidated financial statements subsequent to a business combination. These standards are effective on or after the beginning of the first annual reporting period on or after January 1, 2011 with earlier adoption permitted. As of June 30, 2009 the Company has no non-controlling interests, and accordingly there is no currently expected impact as a result of the standard.

In June 2009, the CICA amended Handbook Section 3855, "Financial Instruments - Recognition and Measurement, to clarify the application of the effective interest method after a debt instrument has been impaired. The Section has also been amended to clarify when an embedded prepayment option is separated from its host instrument for accounting purposes. The amendments apply to interim and annual financial statements relating to fiscal years beginning on or after May 1, 2009 for the amendments relating to the effective interest method and January 1, 2011 for the amendment relating to embedded prepayment options. The Company is currently evaluating the impact of the amendments.

As announced by the Canadian Accounting Standards Board (AcSB), the financial reporting requirements for Canadian companies will be changed to the use of International Financial Reporting Standards (IFRS), replacing Canadas own GAAP. The changeover date for publicly-listed companies is 2011. The Company has begun reviewing the IFRS for 2011. At this time, the Company has not yet determined the financial reporting impact due to the change of new reporting standards.

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|5.C. | Research and development, patents and licenses etc.

The Company could spend up to $1 Million on clinical testing and patenting of its products in Fiscal 2010 in total. Some of these funds may, it is anticipated, be expended in conducting pre-clinical studies and having regulatory consultants prepare submissions to the FDA and the EPA. Because it is impossible to predict if the EPA or FDA will request further studies or reviews of the Companys products, or what cost such studies or reviews would incur, it is not possible to say if this budget will suffice to allow completion of the submissions on the Companys behalf.

The Company may also spend up to $2 Million on marketing activities during fiscal 2010 to promote its products to it targeted markets and to support the retail chains that are now carrying T36®products.

The Company anticipates that continuing patent protection will also require an indeterminate amount of capital during fiscal 2010.

The Company does not presently have sufficient working capital to fund all of the activities described above and will need to undertake further financings to secure the funds required. If such finds are not available under terms acceptable to the Company it is possible that no further funds will be raised and these activities will have to be curtailed accordingly. If the Company is unable to raise all or even any of the funds required for these activities, it is possible that sales will decline and that product development and intellectual property protection will not proceed as planned. Delays in product development and patenting could have an adverse effect on the future of the Company by delaying product introductions and allowing competitors to gain market share at the expense of the Company.

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|5.D. | Trend information

There are no markets or other trends, other than as disclosed below, which the Company believes materially affect its business prospects.

The Companys existing customers and the general public are becoming more aware of disinfectant products, largely due to the H1N1 pandemic. The continuing spread of antibiotic resistant bacteria is contributing to this awareness and a perception that there is a growing need or demand for products similar to those the Company produces.

This has resulted in growth in the market for disinfectant products, in particular consumer products which include hand sanitizers and antibacterial soaps and lotions. No reliable quantification of the growth these product sales have experienced is available and no growth or future growth can be reliably predicted.

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|5.E. | Off-balance sheet arrangements

The Company does not have any off-balance sheet arrangements.

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|5.F. | Tabular disclosure of contractual obligations

The Company does not have any long-term debt obligations, capital (finance) lease obligations, operating lease obligations, purchase obligations or other long-term liabilities reflected on the Companys balance sheet.

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|5.G. | Safe Harbor

This Annual Report on Form 20-F contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, principally in ITEM #4, Information on the Company and ITEM #5. These statements may be identified by the use of words like plan, expect, aim, believe, project, anticipate, intend, estimate, will, should, could and similar expressions in connection with any discussion, expectation, or projection of future operating or financial performance, events or trends. In particular, these include statements about the Companys strategy for growth, future performance or results of current sales and production, interest rates, foreign exchange rates, and the outcome of contingencies, such as acquisitions and/or legal proceedings and intellectual property issues.

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Forward-looking statements are based on certain assumptions and expectations of future events that are subject to risks and uncertainties. Actual future results and trends may differ materially from historical results or those projected in any such forward-looking statements depending on a variety of factors, including, among other things, the factors discussed in this Annual Report under ITEM #3, Key Information, Risk Factors and factors described in documents that the Company may furnish from time to time to the Securities and Exchange Commission. The Company undertakes no obligation to update publicly or revise any forward-looking statements because of new information.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. Directors and Senior Management

The following table sets forth certain information as of June 30, 2009 about the Companys current directors and senior management. There have been no subsequent changes to the Companys current directors and senior management:

Table No. 6: 
Directors and Senior Management:

|               |          |                             |                                                           |                       
|-------------- | -------- | --------------------------- | --------------------------------------------------------- | ----------------------
|Name           | Age      | Position                    | Other Reporting Companies in Canada 
or the United States
|Company        | Position
|Terrance Owen  | 63       | President, CEO and Director | Bi-optic Ventures Inc.                                    | Secretary and Director
|Peter Chen     | 47       | Secretary, CFO and Director | None                                                      | n/a                   
|Eugene Hodgson | 53       | Director                    | Timmins Gold Corp.                                        | Director
Director     
|Linda Allison  | 62       | Director                    | None                                                      | n/a                   
|Ronald Zokol   | 60       | Director                    | None                                                      | n/a                   
|William McCoy  | 54       | Director                    | None                                                      | n/a                   

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| | o | Terrance Owen  President, CEO and Director:B.Sc. (Honours), University of Victoria, 1968; M.Sc., Biology, UNB, 1970; Ph.D., UBC, 1974, M.Sc., SFU, 1991; President, CEO, Director and co-founder of the Company since2000; President of Helix Biotech ULC, a laboratory providing DNA testing services for paternity, immigration and forensic cases, 1980 2002; President, Helix BioPharma Corp., a biopharmaceutical company focused on drug delivery, drug discovery, drug development, drug distribution and drug licensing, 1995 to 1998; Secretary of Bi-optic Ventures Inc. a company listed on the TSX Venture Exchange since September, 2002 and a Director of Bi-Optic Ventures Inc. since September, 2006.                                                                        
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| | o | Peter Chen  Secretary, CFO and Director:Diploma in Accounting, Douglas College, 1993; self-employed financial consultant, 1993 to 2003; CFO, Prospect Point Exploration & Management Services Ltd., a private company providing mineral exploration consulting services, 2000 to 2003; President of Canadian Mineral Exploration Managing Consultants Inc., a private company providing mineral exploration services to publicly listed companies that have projects in Africa and South East Asia, 1997 to 2000 and CFO. 1994 to 2000; Director of the Douglas College Foundation, 2004 to 2007; co-founder of the Company and CFO since its inception in May, 2000.                                                                                                                        
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| | o | Eugene Hodgson  Director:Bachelor of Arts, University of Calgary, 1978; Director, Corporate Development, Intrawest Corporation, 1990 to 1996; President, E.A. Hodgson & Associates, a private management consulting firm, since 1996; currently, Vice President, Western Region, Corpfinance International Limited., a firm that provides specialized term financing to mid-sized and large companies; Director, Timmins Gold Corp., a publicly-traded companies; previously CFO and Director, Sea Breeze Power Inc.; co-founder of the "Families for School Seismic Safety" in B.C.; Member of the Advisory Committee to the Independent Power Producers of B.C.; former Director, Vancouver Board of Trade and current Area Commissioner, Pacific Spirit Area for the Boy Scouts of Canada.
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| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | o | Linda Allison - Director:BSc (Honours), Simon Fraser University; MSc; University of London; Diploma of Imperial College (DIC), Imperial College of Science and Technology, London, 1972; PhD, Simon Fraser University, 1978 in neurophysiology, molecular biology and biophysics; President, Groberman Computer Engineering Ltd., a computer technology company developing custom systems for scientific and industrial applications, 1980 to 1995; President, Snowdon & Associates Management Consultants Ltd., a management consulting company that provides professional services to medical device, biotechnology, pharmaceutical, and high technology companies, since 1985; Corporate finance in two investment banking and brokerage firms assisting financing of biomedical and high technology companies in North America and Europe, 1992 to 1998; President & CEO, Ondine Biopharma Corp., a biomedical company developing photo-activated drugs, 1998 to 2001; President & CEO, Genesis Bioventures Inc., a biomedical holding company that invested in companies developing novel diagnostics and therapeutics in the areas of cancer and neurological disorders, 2000 to 2001; President & CEO and Director, MDX Medical Inc., a biomedical company developing medical imaging technologies for the improved diagnosis and treatment of cancer, 2003 to 2005 and Member, ForeFront Committee of the Alberta Heritage Foundation for Medical Research since 2006.
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| | o | Ron Zokol  Director:Director, ALDA Pharmaceuticals Corp. since, 2003; has practiced and lectured in the fields of dental surgery and prosthodontics for the last 30 years; Director of the Pacific Institute for Implant Dentistry and a Diplomat of the American Board of Oral Implantology; President of the Vancouver and District Dental Society in 1986; currently is an internationally recognized lecturer in his field and teaches advanced reconstructive dentistry and provides expertise on infection control.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
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| | o | William McCoy  Director:Director, ALDA Pharmaceuticals Corp. since March, 2005; Chief Technology Officer, Phigenics, LLC, a life sciences technology company based in Chicago, Illinois since 2005; Chairman, American Society of Heating, Refrigerating and Air-conditioning Engineers (ASHRAE) Environmental Health Committee, 2008 to 2009; received the Intellectual Property Law Association "Inventor of the Year" award, 2001; received Medal for Outstanding Contribution to Management and Science from Intl. Water Assoc., Berlin 2001; author of full length book,"Preventing Legionellosis", 2005; holds 28 patents in microbial diagnostics, control, and manufacturing of industrial antimicrobials.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
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The Directors have served in their respective capacities since their election and/or appointment and will serve until the next Annual General Meeting or until a successor is duly elected, unless the office is vacated in accordance with the Articles/By-Laws of the Company.

The senior management serves at the pleasure of the Board of Directors.

No Director and/or member of senior management had been the subject of any order, judgment, or decree of any governmental agency or administrator or of any court or competent jurisdiction, revoking or suspending for cause any license, permit or other authority of such person or of any corporation of which he is a Director and/or member of senior management, to engage in the securities business or in the sale of a particular security or temporarily or permanently restraining or enjoining any such person or any corporation of which he is an officer or director from engaging in or continuing any conduct/practice/employment in connection with the purchase or sale of securities, or convicting such person of any felony or misdemeanor involving a security or any aspect of the securities business or of theft or of any felony.

There are no family relationships between any two or more Directors or members of senior management.

There are no arrangements or understandings with major shareholders, customers, suppliers or others, pursuant to which any person referred to above was selected as a Director or member of senior management.

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|---- | ------------
|6.B. | Compensation

Cash Compensation

Total compensation accrued and/or paid (directly and/or indirectly) to all Directors/Senior Management during the year ended June 30, 2009 and previous years are detailed in Table No. 7 below:

Table No. 7Annual Compensation of Senior Management

|                            |      |                     |                        |                                |                                           |                                                  |                    |                            
|--------------------------- | ---- | ------------------- | ---------------------- | ------------------------------ | ----------------------------------------- | ------------------------------------------------ | ------------------ | ---------------------------
|                            |      | Annual Compensation | Long Term Compensation |                               
|                           
|                            |      |                     |                        |                                | Awards                                    | Payouts                                          |                   
|                           
|Name and Principal Position | Year | Salary
($)          | Bonus
($)              | Other Annual Compen-sation
($) | Securities Under Option/SAR's Granted
(#) | Shares/Units Subject to Resale  Restrictions
($) | LTIP Pay-outs 
($) | All Other Compen-sation
($)
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|Terrance G.                 | 2009 | Nil                 | Nil                    | $ 180,000                      | 350,000                                   | Nil                                              | Nil                | Nil                        
|Owen, Chief                 | 2008 | Nil                 | Nil                    | $ 150,000                      | 400,000                                   | Nil                                              | Nil                | Nil                        
|Executive                   | 2007 | Nil                 | Nil                    | $ 60,000                       | 550,000                                   | Nil                                              | Nil                | Nil                        
|Officer (1)                 | 2006 | Nil                 | Nil                    | $ 60,000                       | Nil                                       | Nil                                              | Nil                | Nil                        
|                           
|Peter Chen,                 | 2009 | Nil                 | Nil                    | $ 144,000                      | 350,000                                   | Nil                                              | Nil                | Nil                        
|Chief                       | 2008 | Nil                 | Nil                    | $ 120,000                      | 400,000                                   | Nil                                              | Nil                | Nil                        
|Financial                   | 2007 | Nil                 | Nil                    | $ 60,000                       | 550,000                                   | Nil                                              | Nil                | Nil                        
|Officer (2)                 | 2006 | Nil                 | Nil                    | $ 60,000                       | Nil                                       | Nil                                              | Nil                | Nil                        
|                            |      |                     |                        |                                |                                           |                                                  |                    |                            

|    |                                                                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Consulting/management fees (other annual compensation of $180,000, $150,000, $60,000 and $60,000 in 2009, 2008, 2007 and 2006, respectively) were paid to a management consulting company owned by Terrance Owen;
|    |                                                                                                                                                                                                                    
|(2) | Consulting/management fees (other annual compensation of $144,000, $120,000, 60,000 and $60,000 in 2009, 2008, 2007 and 2006, respectively) were paid to a management consulting company owned by Peter Chen.     

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Table No. 8 
Stock Option Grants to directors and officers in Fiscal 2008 Ended June 30, 2008 and 
Fiscal 2009 Ended June 30, 2009

|               |                          |                                         |                        |            |                 |                                                              
|-------------- | ------------------------ | --------------------------------------- | ---------------------- | ---------- | --------------- | -------------------------------------------------------------
|Name           | Number of OptionsGranted | % Of TotalOptions Granted inFiscal Year | ExercisePrice perShare | Grant Date | Expiration Date | Mkt. Value ofSecuritiesUnderlyingOptions on Date of Grant (1)
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|Terrance Owen  | 200,000                  | 6.73                                    | $0.50                  | 12/07/2007 | 12/07/2010      | $52,505                                                      
|               | 200,000                  | 6.73                                    | $0.80                  | 05/02/2008 | 05/02/2011      | $93,187                                                      
|               | 100,000                  | 4.65                                    | $0.20                  | 10/31/2008 | 10/31/2013      | $8,862                                                       
|               | 250,000                  | 11.63                                   | $0.25                  | 06/04/2009 | 06/04/2014      | $32,044                                                      
|               |                          |                                         |                        |            |                 |                                                              
|Peter Chen     | 200,000                  | 6.73                                    | $0.50                  | 12/07/2007 | 12/07/2010      | $52,505                                                      
|               | 200,000                  | 6.73                                    | $0.80                  | 05/02/2008 | 05/02/2011      | $93,187                                                      
|               | 100,000                  | 4.65                                    | $0.20                  | 10/31/2008 | 10/31/2013      | $8,862                                                       
|               | 250,000                  | 11.63                                   | $0.25                  | 06/04/2009 | 06/04/2014      | $32,044                                                      
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|Linda Allison  | 100,000                  | 3.37                                    | $0.50                  | 12/07/2007 | 12/07/2010      | $26,252                                                      
|               | 50,000                   | 1.68                                    | $0.80                  | 05/02/2008 | 05/02/2011      | $23,297                                                      
|               | 50,000                   | 2.33                                    | $0.20                  | 10/31/2008 | 10/31/2013      | $4,431                                                       
|               | 150,000                  | 6.98                                    | $0.25                  | 06/04/2009 | 06/04/2014      | $19,226                                                      
|               |                          |                                         |                        |            |                 |                                                              
|William McCoy  | 50,000                   | 1.68                                    | $0.50                  | 12/07/2007 | 12/07/2010      | $13,126                                                      
|               | 50,000                   | 1.68                                    | $0.80                  | 05/02/2008 | 05/02/2011      | $23,297                                                      
|               | 50,000                   | 2.33                                    | $0.20                  | 10/31/2008 | 10/31/2013      | $4,431                                                       
|               | 150,000                  | 6.98                                    | $0.25                  | 06/04/2009 | 06/04/2014      | $19,226                                                      
|               |                          |                                         |                        |            |                 |                                                              
|Eugene Hodgson | 50,000                   | 1.68                                    | $0.50                  | 12/07/2007 | 12/07/2010      | $13,126                                                      
|               | 50,000                   | 1.68                                    | $0.80                  | 05/02/2008 | 05/02/2011      | $23,297                                                      
|               | 50,000                   | 2.33                                    | $0.20                  | 10/31/2008 | 10/31/2013      | $4,431                                                       
|               | 150,000                  | 6.98                                    | $0.25                  | 06/04/2009 | 06/04/2014      | $19,226                                                      
|               |                          |                                         |                        |            |                 |                                                              
|Ron Zokol      | 100,000                  | 3.37                                    | $0.50                  | 12/07/2007 | 12/07/2010      | $26,252                                                      
|               | 50,000                   | 1.68                                    | $0.80                  | 05/02/2008 | 05/02/2011      | $23,297                                                      
|               | 50,000                   | 2.33                                    | $0.20                  | 10/31/2008 | 10/31/2013      | $4,431                                                       
|               | 150,000                  | 6.98                                    | $0.25                  | 06/04/2009 | 06/04/2014      | $19,226                                                      

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|(1)See Notes 7.(b)(i) to 7.(b)(vii) of the accompanying financial statements for the year ended June 30, 2009.

The following table gives certain information concerning stock option exercises during Fiscal 2009 by the Companys Senior Management and Directors. It also gives information concerning stock option values.

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Table No. 9Aggregated Stock Options Exercises in Fiscal 2009 
Fiscal Year-end Unexercised Stock Options 
Fiscal Year-end Stock Option Values 
Senior Management/Directors



|Name           | Number ofSharesAcquired onExercise | AggregateValueRealized | Value of Unexercised In-the-Money Options atFiscal Year-EndExercisable/Unexercisable
|-------------- | ---------------------------------- | ---------------------- | ------------------------------------------------------------------------------------
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|Terrance Owen  | 300,000                            | $75,000                | $0/$0                                                                               
|William McCoy  | 250,000                            | $10,500                | $0/$0                                                                               
|Peter Chen     | 300,000                            | $75,000                | $0/$0                                                                               
|Ron Zokol      | 200,000                            | $44,000                | $0/$0                                                                               
|Linda Allison  | 200,000                            | $50,000                | $0/$0                                                                               
|Eugene Hodgson | 0                                  | $0                     | $0/$0                                                                               

Director Compensation:The Company has no formal plan for compensating its Directors for their service in their capacity as Directors. Directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of the Board of Directors. The Board of Directors may award special remuneration to any Director undertaking any special services on behalf of the Company other than services ordinarily required of a Director. Other than indicated below no Director received any compensation for his services as a Director, including committee participation and/or special assignments.

Stock Options: The Company may grant stock options to Directors, Senior Management and employees. Refer to ITEM #6.E., "Share Ownership" and Table No. 8 for information about stock option grants. During the fiscal year ended June 30, 2009, a total of 2,150,000 stock options were granted and 1,830,000 were exercised. Table 8 excludes 650,000 share purchase options granted to non-officer and non-director employees, which were granted on October 31, 2008 and June 4, 2009 at an exercise price of $0.20 to $0.25, respectively, and have a term of 5 years from the date of grant. During the fiscal year ended June 30, 2008, a total of 2,970,000 stock options were granted and 650,000 were exercised. Table 8 excludes 1,670,000 share purchase options granted to non-officer and non-director employees during the fiscal year ended June 30, 2008. These options were granted on December 7, 2007 and May 2, 2008 at an exercise price of $0.50 and $0.80, respectively, and have a term of 3 years from the date of grant.

Change of Control Remuneration: On June 1, 2008, the Company established agreements to provide remuneration received by the President & CEO, Terrance Owen, and the CFO, Peter Chen, and their respective consulting companies in Fiscal 2008 to compensate such officers in the event of termination of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of control, where the value of such compensation exceeds US$60,000 per Senior Management (filed with the 2008 Form 20-F as Exhibits 4.j and 4.k).

Other Compensation:No Senior Manager or Director received other compensation in excess of the lesser of US$25,000 or 10% of such officer's cash compensation, and all Senior Managers or Directors as a group did not receive other compensation which exceeded US$25,000 times the number of persons in the group or 10% of the compensation.

Bonus/Profit Sharing/Non-Cash Compensation:Except for the stock option program discussed in ITEM #6.E., the Company had no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to the Company's Directors or Senior Management.

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Pension/Retirement Benefits:No funds were set aside or accrued by the Company during Fiscal 2009 to provide pension, retirement or similar benefits for Directors or Senior Management.

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|6.C. | Board Practices

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|6.C.1. | Terms of Office.

Refer to ITEM 6.A.1.

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|6.C.2. | Directors Service Contracts.

Employment agreements (filed with the 2008 Form 20-F as Exhibits 4.j and 4.k) dated June 1, 2008 were entered into with Terrance Owen and Peter Chen (the Officers) who provide their services to the Company through their respective holding companies, 503213 BC Ltd. and 612480 BC Ltd., respectively The material terms of these contracts are as follows.

The Company retains the Officers as independent consultants. The Company will not be required to make contributions for employment insurance, Canada Pension, workers compensation or other similar levies in respect of the fee for services to be paid to the Officers. The Officers agree to pay all required contributions and deductions for income taxes, workers compensation and employment insurance and shall indemnify and save the Company harmless from and against all claims, actions, losses, expenses, costs or damages which the Company or its officers, employees or agents may suffer as a result of the Consultants non-compliance with this requirement.

The Officers agree to provide sufficient time and attention to the business and affairs of the Company, to advise and counsel the Board and to channel to the Company all knowledge, business and customer contacts and any other information that could concern or be in any way beneficial to the Company. All information communicated to the Company will be the property of the Company. The Officers acknowledge that each is a person in a special relationship, as that expression is defined in the securities laws of various provinces of Canada, and may receive material information concerning the business and affairs of the Company that has not been generally disclosed, and covenant and agree that they will not purchase or sell any securities of the Company until such information has been generally disclosed. The Company is aware that the Officers may provide services to certain other companies from time to time as disclosed above. The Officers agree that they will not provide services to any other companies without the written approval of the Company.

The Company will pay a consulting fee in the amount of (Cdn)$15,000.00 per month to the holding company of Terrance Owen and (Cdn)$12,000.00 per month to the holding company of Peter Chen plus applicable GST. The fees payable will be reviewed annually, and may be adjusted by the Company in consultation with the Officers to reflect general economic conditions, changes in the duties provided under this Agreement or performance by the Officers. The Officers are entitled to participate in the Companys incentive stock option plan (Exhibit 4.m).The Company will reimburse the Officers for all reasonable travelling and other out-of-pocket expenses incurred in connection with services provided to the Company. The Officers will be entitled to participate in any benefit programs established by the Company. To date, no such plans are in place.

Inventions of any type made by the Officers become the sole property of the Company which will hold all intellectual property rights for such inventions. If the Company chooses to patent, copyright, trademark or otherwise protect the inventions, the Officers will assign their rights to the Company. The Officers will treat all information of the company as confidential except any information that is presently in the public domain, any information that subsequently becomes part of the public domain, any information obtained by the Officers from a third party with a valid right to disclose it or any information that was independently developed by the Officers or was in their possession prior to receipt from the Company.

The Officers agree that they shall not engage in any activity that is contrary to or detracts from the performance of the business of the Company, will not receive and personal benefit from any party having business with the Company without the approval of the Board and, during the term of the agreement and for a period of one year afterwards, will not compete with the Company or solicit customers or employees of the Company

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The Officers may terminate this Agreement by giving thirty (30) days written notice to the Company. The Company may waive such notice and, if it does so, this Agreement will cease on the date the Company waives such notice. The Company may terminate this Agreement without notice or payment in lieu of notice for breach of the agreement. The Company may terminate this Agreement at its sole discretion and for any reason upon giving the Consultant written notice of termination provided that the Company pays, in lieu of notice, twelve (12) months fee severance. The Company may terminate this Agreement without notice or payment in lieu of notice upon a change of control of the holding company of the Officer or the death or permanent disability of the Officer. Upon termination of this Agreement, the Consultant will promptly return all property. This Agreement may be subject to the acceptance by TSX Venture Exchange and a refusal to do so shall not constitute a default of the Company.

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|6.C.3. | Board of Director Committees.

The Company has an Audit Committee, which is governed by an Audit Committee Charter (filed as Exhibit 11 with the amended 2007 Form 20-F filed on December 3, 2008.), recommends to the Board of Directors the engagement of the independent auditors of the Company and reviews with the independent auditors the scope and results of the Companys audits, the Companys internal accounting controls, and the professional services furnished by the independent auditors to the Company. The current members of the Audit Committee are: Peter Chen (the Companys CFO), Eugene Hodgson (non-management Director) and Linda Allison (non-management Director). The Audit Committee met four times during the year ended June 30, 2009 to discuss and approve the Companys audited and quarterly financial statements. The Audit Committee also met subsequent to the Companys last Annual General Meeting of shareholders.

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|6.D. | Employees

As of June 30, 2009 and as of the date of filing of this Annual Report, the Company had 2 full-time employees. The Senior Accountant provides accounting services, administrative assistance and inside sales support. The Account Executive is responsible for introducing the Companys products to prospective customers and supporting the requirements of existing customers. Two Officers (President & CEO, Terrance Owen and CFO, Peter Chen), employed full-time through contracts with their respective companies. The Company does not have any part-time employees. The Company retains independent consultants to assist with marketing, investor relations and regulatory matters, as required.

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|6.E. | Share Ownership

Table No. 10 lists, as of June 30, 2009, Directors and Senior Management who beneficially own the Company's voting securities, consisting solely of common shares, and the amount of the Company's voting securities owned by the Directors and Senior Management as a group.

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Table No. 10Shareholdings of Directors and Senior Management

|              |                            |                                         |                     |                                                           
|------------- | -------------------------- | --------------------------------------- | ------------------- | ----------------------------------------------------------
|Title ofClass | Name of Beneficial Owner   | Amount and NatureofBeneficial Ownership | Percent of Class(1) | Options andWarrantsexercisable in 60days from June 30,2009
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|              |                            |                                         |                     |                                                           
|Common        | Terrance Owen (2)          | 1,370,000                               | 2.67%               | 500,000                                                   
|              |                            |                                         |                     |                                                           
|Common        | Linda Allison              | 545,000                                 | 1.06%               | 200,000                                                   
|              |                            |                                         |                     |                                                           
|Common        | Peter Chen                 | 437,500                                 | 0.85%               | 500,000                                                   
|              |                            |                                         |                     |                                                           
|Common        | Eugene Hodgson             | 50,000                                  | 0.10%               | 150,000                                                   
|              |                            |                                         |                     |                                                           
|Common        | Ronald Zokol               | 405,748                                 | 0.79%               | 200,000                                                   
|              |                            |                                         |                     |                                                           
|Common        | William McCoy              | 50,000                                  | 0.10%               | 150,000                                                   
|              |                            |                                         |                     |                                                           
|              | Total Directors/Management | 2,858,248                               | 5.57%               | 3,275,00                                                  

|    |                                                    
|--- | ---------------------------------------------------
|(1) | Based on 51,341,799 outstanding as of June 30, 2009

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Stock Options:The terms of incentive options grantable by the Company are done in accordance with the rules and policies of the TSX Venture Exchange and the British Columbia Securities Commission, including the number of common shares under option, the exercise price and expiry date of such options and any amendments thereto. The Company adopted a formal written stock option plan (the "Plan") on December 13, 2005. (A copy of the Companys Stock Option Plan was filed with the 2005 Form 20-F as Exhibit 4.e.) At every Annual General Meeting of the Company, the Plan is presented to and voted on by the shareholders of the Company. If approved, the terms and conditions of the Plan remain in force for the subsequent year. The Stock Option Plan was amended and passed by a majority of shareholders at the Annual General Meeting held on December 11, 2009. A copy of the amended Stock Option Plan is provided as Exhibit 4.m. It will remain in effect until the next Annual General Meeting of Shareholders.

Such terms and conditions, including the pricing of the options, expiry and the eligibility of personnel for such stock options, are described below. The terms of the original Stock Option Plan and the major changes in the Stock Option Plan as amended in 2009 the 2009 Plan are described below and provided as Exhibit 4.m.

The principal purposes of the Companys stock option program are to (a) assist the Company in attracting, retaining, and motivating directors, officers and employees of the Company and, (b) to closely align the personal interests of such directors, officers and employees with the interests of the Company and its shareholders.

The Plan provides that stock options may be granted to service providers for the Company. The term service providers means:

|(a) | Any full or part-time employee or Officer, or insider of the Company or any of its subsidiaries;                                                                                               
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|    |                                                                                                                                                                                                
|(b) | Any other person employed by a company or individual providing management services to the Company;                                                                                             
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|(c) | Any other person or company engaged to provide ongoing consulting services for the Company or any entity controlled by the Company or                                                          
|    |                                                                                                                                                                                                
|(d) | Any individual engaged to provide services that promote the purchase or sale of the issued securities (any person in (a), (b), (c) or (d) hereinafter referred to as an Eligible Person); and

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|(e) | Any registered retirement savings plan established by such Eligible Person, or any corporation controlled by such Eligible Person, the issued and outstanding voting shares of which are, and will continue to be, beneficially owned, directly or indirectly, by such Eligible Person and/or spouse, children and/or grandchildren of such Eligible Person.
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For stock options to Employees, Consultants or Management Company Employees, the Company must represent that the optionee is a bona fide Employee, Consultant or Management Company Employee as the case may be. The terms insider Controlled and subsidiary shall have the meanings ascribed thereto in the Securities Act (Ontario) from time to time. Subject to the foregoing, the board of directors or Committee, as applicable, shall have full and final authority to determine the persons who are to be granted options under the Plan and the number of shares subject to each option.

The Plan shall be administered by the board of directors of the Company or a committee established by the board of directors for that purpose. Subject to approval of the granting of options by the board of directors or Committee, as applicable, the Company shall grant options under the Plan.

The Plan provides that the aggregate number of shares of the Company, which may be issued and sold under the Plan, will not exceed 10% of the issued shares of the Company. The Company shall not, upon the exercise of any option, be required to issue or deliver any shares prior to (a) the admission of such shares to listing on any stock exchange on which the Companys shares may them be listed, and (b) the completion of such registration or other qualification of such shares under any law, rules or regulation as the Company shall determine to be necessary or advisable. If any shares cannot be issued to any optionee for whatever reason, the obligation of the Company to issue such shares shall terminate and any option exercise price paid to the Company shall be returned to the optionee.

If a stock option expires or otherwise terminates for any reason without having been exercised in full, the number of common shares reserved for issuance under that expired or terminated stock option shall again be available for the purposes of the Plan. Any stock option outstanding when the Plan is terminated will remain in effect until it is exercised or it expires. The Plan provides that it is solely within the discretion of the Board to determine who should receive stock options and in what amounts, subject to the following conditions:

|(a) | Options will be non-assignable and non-transferable except that they will be exercisable by the personal representative of the option holder in the event of the option holders death;                                                                                                   
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                           
|(b) | Under the revised 2009 Plan, options may be exercisable for a maximum of ten years from grant date rather than five years;                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                           
|(c) | Under the revised 2009 Plan, options to acquire more than 5% of the issued shares of the Company may be granted to any one individual in any 12-month period the approval of the disinterested shareholders of the Company;                                                               
|    |                                                                                                                                                                                                                                                                                           
|(d) | Options to acquire no more than 2% of the issued shares of the Company may be granted to any one consultant in any 12-month period;                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                           
|(e) | Options to acquire no more than an aggregate of 2% of the issued shares of the Company may be granted to an employee conducting investor relations activities (as defined in TSX Venture Exchange Policy 1.1), in any 12 month period;                                                    
|    |                                                                                                                                                                                                                                                                                           
|(f) | Options to acquire no more than 10% of the issued shares of the Company may be granted to any insiders in any 12- month period;                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                           
|(g) | Under the revised 2009 Plan, options held by an option holder who is a director, employee, consultant or management company employee are no longer required to expire within 90 days after the option holder ceases to be a director, employee, consultant or management company employee;
|    |                                                                                                                                                                                                                                                                                           
|(h) | Under the revised 2009 Plan, options held by an option holder who is engaged in investor relations activities are no longer required expire within 30 days after the option holder ceases to be employed by the Company to provide investor relations activities; and                     
|    |                                                                                                                                                                                                                                                                                           
|(i) | In the event of an option holders death, the option holders personal representative may exercise any portion of the option holders vested outstanding options for a period of one year following the option holders death.                                                            

---

The Plan provides that other terms and conditions may be attached to a particular stock option, such terms and conditions to be referred to in a schedule attached to the option certificate. Stock options granted to directors, senior officers, employees or consultants will vest when granted unless otherwise determined by the Board on a case by case basis, other than stock options granted to consultants performing investor relations activities, which will vest in stages over 12 months with no more than one-fourth of the options vesting in any three month period.

The price at which an option holder may purchase a common share upon the exercise of a stock option will be as set forth in the option certificate issued in respect of such option and in any event will not be less than the discounted market price of the Companys common shares as of the date of the grant of the stock option (the Award Date). The market price of the Companys common shares for a particular Award Date will typically be the closing trading price of the Companys common shares on the day immediately preceding the Award Date, or otherwise in accordance with the terms of the Plan. Where there is no such closing price or trade on the prior trading day market price shall mean the average of the most recent bid and ask of the shares of the Company on any stock exchange on which the shares are listed or dealing network on which the shares of the Company trade.

In no case will a stock option be exercisable at a price less than the minimum prescribed by each of the organized trading facilities or the applicable regulatory authorities that would apply to the award of the stock option in question.

Common shares will not be issued pursuant to stock options granted under the Plan until they have been fully paid for by the option holder. The Company will not provide financial assistance or loans to option holders to assist them in exercising their stock options.

The names and titles of the Directors/Executive Officers/Employees of the Company to whom outstanding stock options have been granted and the number of common shares subject to such options is set forth in Table No. 11 as of June 30, 2009, as well as the number of options granted to them. There are outstanding stock options granted to consultants, scientific advisors and investor relations.

---

Table No. 11Stock Options Outstanding

|                      |                         |                         |            |                
|--------------------- | ----------------------- | ----------------------- | ---------- | ---------------
|Directors andOfficers | Number ofOptionsGranted | Exercise Priceper Share | Grant Date | Expiration Date
|
|
|Terrance Owen         | 200,000                 | $0.50                   | 12/7/2007  | 12/07/2010     
|                      | 200,000                 | $0.80                   | 05/02/2008 | 05/02/2011     
|                      | 100,000                 | $0.20                   | 10/31/2008 | 10/31/2013     
|                      | 250,000                 | $0.25                   | 06/04/2009 | 06/04/2014     
|                     
|Peter Chen            | 200,000                 | $0.50                   | 12/7/2007  | 12/07/2010     
|                      | 200,000                 | $0.80                   | 05/02/2008 | 05/02/2011     
|                      | 100,000                 | $0.20                   | 10/31/2008 | 10/31/2013     
|                      | 250,000                 | $0.25                   | 06/04/2009 | 06/04/2014     
|                     
|Linda Allison         | 100,000                 | $0.50                   | 12/7/2007  | 12/07/2010     
|                      | 50,000                  | $0.80                   | 05/02/2008 | 05/02/2011     
|                      | 50,000                  | $0.20                   | 10/31/2008 | 10/31/2013     
|                      | 150,000                 | $0.25                   | 06/04/2009 | 06/04/2014     
|                     
|Eugene Hodgson        | 50,000                  | $0.50                   | 12/7/2007  | 12/07/2010     
|                      | 50,000                  | $0.80                   | 05/02/2008 | 05/02/2011     
|                      | 50,000                  | $0.20                   | 10/31/2008 | 10/31/2013     
|                      | 150,000                 | $0.25                   | 06/04/2009 | 06/04/2014     
|                     
|William F. McCoy      | 50,000                  | $0.50                   | 12/7/2007  | 12/07/2010     
|                      | 50,000                  | $0.80                   | 05/02/2008 | 05/02/2011     
|                      | 50,000                  | $0.20                   | 10/31/2008 | 10/31/2013     
|                      | 150,000                 | $0.25                   | 06/04/2009 | 06/04/2014     
|                     
|Ron Zokol             | 100,000                 | $0.50                   | 12/7/2007  | 12/07/2010     
|                      | 50,000                  | $0.80                   | 05/02/2008 | 05/02/2011     
|                      | 50,000                  | $0.20                   | 10/31/2008 | 10/31/2013     
|                      | 150,000                 | $0.25                   | 06/04/2009 | 06/04/2014     
|                     
|TOTAL                 | 2,800,000               |                         |            |                

---

Table No. 11 (contd)Stock Options Outstanding

|                                                                          |                                 |                          |                                            |                                            
|------------------------------------------------------------------------- | ------------------------------- | ------------------------ | ------------------------------------------ | -------------------------------------------
|Employees and Others                                                      | Number of
Options
Granted       | Exercise Price
per Share | Grant Date                                 | Expiration Date                            
|Allan Shapiro                                                             | 200,000
100,000
100,000
150,000 | $0.50
$0.80
$0.20
$0.25  | 12/7/2007
05/02/2008
10/31/2008
06/04/2009 | 12/07/2010
05/02/2011
10/31/2013
06/04/2014
|Eric Lam                                                                  | 100,000
100,000
50,000
200,000  | $0.50
$0.80
$0.20
$0.25  | 12/7/2007
05/02/2008
10/31/2008
06/04/2009 | 12/07/2010
05/02/2011
10/31/2013
06/04/2014
|Robert Lewis                                                              | 250,000                         | $0.50                    | 12/7/2007                                  | 12/07/2010                                 
|Brain Conway                                                              | 60,000                          | $0.50                    | 12/7/2007                                  | 12/07/2010                                 
|Mike Wilby                                                                | 60,000                          | $0.50                    | 12/7/2007                                  | 12/07/2010                                 
|Freeform Communications                                                   | 300,000
100,000
150,000         | $0.50
$0.80
$0.25        | 12/7/2007
05/02/2008
06/04/2009            | 12/07/2010
05/02/2011
06/04/2014           
|John Mooney                                                               | 150,000                         | $0.50                    | 12/7/2007                                  | 12/07/2010                                 
|Ping Liu                                                                  | 250,000                         | $0.80                    | 05/02/2008                                 | 05/02/2011                                 
|Total consultants, scientific advisors, employees  and
investor relations | 2,320,000                       |                          |                                            |                                            
|Total Outstanding                                                         | 5,120,000                       |                          |                                            |                                            

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

|     |                   
|---- | ------------------
|7.A. | Major Shareholders

As of June 30, 2009, all shareholders have the same voting rights attached thereto as all other common shares of the Company except that, under the terms of the Voting Agreement described above and attached as Exhibit 3 to the amended 2007 Form 20-F filed on December 3, 2008. Only Allan Shapiro has restrictions on the voting rights of his shares. As of June 30, 2009, no shareholder held more than 5% of the Issued and Outstanding Common Shares.

|     |                                                                                 |                                                                                                             |                                            
|---- | ------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------- | -------------------------------------------
|Name | Number of Common
Shares, Warrants and Options (exercisable within 60 days) Held | Percentage of Common
Shares Held (calculated as a percentage of issued and outstanding on June 30, 2009 (1) | Options and warrants exercisable in 60 days
|N/A  | N/A                                                                             | N/A                                                                                                         | N/A                                        

|                                         
|-----------------------------------------
|(1)Based on 51,341,799 shares outstanding

---

|         |                                                                     
|-------- | --------------------------------------------------------------------
|7.A.1.a. | Holdings By Major Shareholders. Refer to ITEM #6.E and Table No. 10.

|         |                                                     
|-------- | ----------------------------------------------------
|7.A.1.b. | Significant Changes in Major Shareholders Holdings.

---No Disclosure Required---

|         |                         
|-------- | ------------------------
|7.A.1.c. | Different Voting Rights.

The Companys major shareholders do not have different voting rights except as described in the Voting Agreement (Exhibit 3 filed with the amended 2007 Form 20-F on December 3, 2008) which is summarized in Section 4.A., History and Development of the Company.

|       |                          
|------ | -------------------------
|7.A.2. | Canadian Share Ownership.

On June 30, 2009, the Companys shareholders list showed 51,341,799 common shares outstanding and 28 registered shareholders. The Company has researched the indirect holding by depository institutions and other financial institutions estimates that there are: 25 holders of record resident in Canada, holding 51,319,950 common shares; 1 holder of record resident in the USA, holding 1,500 common shares; and, 2 holders of record resident elsewhere holding 20,439 common shares.

|       |                       
|------ | ----------------------
|7.A.3. | Control of the Company

The Company is a publicly owned Canadian corporation, the shares of which are owned primarily by Canadian residents and other foreign residents. The Company is not controlled by any foreign government or other person(s) except as described in ITEM #4.A., History and Growth of the Company, and ITEM #6.E., Share Ownership.

|       |                                          
|------ | -----------------------------------------
|7.A.4. | Change of Control of Company Arrangements

---No Disclosure Necessary---

|     |                           
|---- | --------------------------
|7.B. | Related Party Transactions

During the year ended June 30, 2009, the Company paid consulting fees of $329,208 (2008: 288,813; 2007: $120,000) to companies controlled by Terrance Owen, President, CEO & Director, Peter Chen, CFO & Director, and Linda Allison, Director of the Company.

Effective June 1, 2008, the Company entered into consulting agreements with the management of the Company (filed as Exhibits, 4.j and 4.k with the 2008 Form 20-F on March 27, 2009.).

During the year ended June 30, 2009, the Company paid rent of $26,230 (2008: 24,737; 2007: $28,371) to a company controlled by Terrance Owen, President & CEO and a director of the Company.

During the year ended June 30, 2009, the company recorded stock based compensation expenses of $176,441 (2008: 562,427; 2007: $131,500) to directors and companies controlled by a director of the Company.

During the year ended June 30, 2009, the Company recorded a note receivable of $113,000, of which $66,000 was owing by directors of the Company.

The Company entered into an agreement with Phigenics, LLC on July 21, 2005 (see 10.C. Material Contracts for a summary of the agreement and Exhibit 4.a. for details of the agreement). William McCoy, a Director of the Company, is the Chief Technical Officer of Phigenics. This agreement is still in effect but will not become effective until such time as the Company pursues the registration of products with the EPA in the US.

Accounting Fees

For the annual statements dated June 30, 2009 and 2008, the Company paid accounting fees of $29,010and $33,010, respectively, to HLB Cinnamon Jang Willoughby, Charted Accountants. During the year ended June 30, 2007, the Company paid accounting fees of $25,000 to HLB Cinnamon Jang Willoughby, Chartered Accountants, and $2,950 to Berris Mangan, Charted Accountants who were the auditors prior to the appoint of HLB Cinnamon Jang Willoughby as auditors.

---

Indirect Payments
---No Disclosure Required---

Shareholder Loans
---No Disclosure Required---

Amounts Owing to Senior Management/Directors

There is no money owing to members of senior management or members of the Board of Directors.

There have been no transactions since June 30, 2005, or proposed transactions, which have materially affected or will materially affect the Company in which any director, executive officer, or beneficial holder of more than 5% of the outstanding common shares, or any of their respective relatives, spouses, associates or affiliates has had or will have any direct or material indirect interest.

|     |                                 
|---- | --------------------------------
|7.C. | Interests of Experts and Counsel

---No Disclosure Required---

ITEM 8. FINANCIAL INFORMATION

|     |                                                        
|---- | -------------------------------------------------------
|8.A. | Consolidated Statements and Other Financial Information

The Company's financial statements are stated in Canadian Dollars (CDN$) and are prepared in accordance with Canadian Generally Accepted Accounting Principles (GAAP), the application of which, in the case of the Company, conforms in all material respects for the periods presented with United States GAAP, except as discussed in footnotes to the financial statements.

The financial statements as required under ITEM #17 are attached hereto and found immediately following the text of this Annual Report. These include audited financial statements for the fiscal years ended June 30, 2009, 2008 and 2007 prepared by the auditor, HLB Cinnamon Jang Willoughby, Charted Accountants

|       |                              
|------ | -----------------------------
|8.A.7. | Legal/Arbitration Proceedings

The Directors and the management of the Company do not know of any material, active or pending, legal proceedings against them; nor is the Company involved as a plaintiff in any material proceeding or pending litigation.

|     |                    
|---- | -------------------
|8.B. | Significant Changes

----No Disclosure Required----

ITEM 9. THE OFFER AND LISTING

|     |                                 
|---- | --------------------------------
|9.A. | Common Share Trading Information

The Company's common shares trade on the TSX Venture Exchange in Toronto, Ontario, Canada, under the symbol "APH". The Company applied for listing on the TSX Venture Exchange and began trading on the TSX Venture Exchange on July 31, 2001 under its former name, Duft Biotech Capital Ltd. and under its former symbol, DUF.

Table No. 12 lists the high, low and closing period average sales prices on the TSX Venture Exchange for the last six months, last ten fiscal quarters, and last five fiscal years.

---

Table No. 12TSX Venture Exchange 
Common Shares Trading Activity

|                                |       |       |        
|------------------------------- | ----- | ----- | -------
|Sale - Canadian Dollars        
|Period Average                  | High  | Low   | Closing
|Month ended 11/30/09            | 0.74  | 0.52  | 0.59   
|                                |       |       |        
|Month ended 10/31/09            | 0.65  | 0.36  | 0.61   
|                                |       |       |        
|Month ended 09/30/09            | 0.46  | 0.31  | 0.38   
|                                |       |       |        
|Month ended 08/31/09            | 0.37  | 0.28  | 0.31   
|                                |       |       |        
|Month ended 07/31/09            | 0.40  | 0.16  | 0.30   
|                                |       |       |        
|Month Ended 06/30/09            | 0.32  | 0.15  | 0.17   
|                               
|Fiscal Year Ended 06/30/2009    | 0.48  | 0.06  | 0.17   
|                                |       |       |        
|Fiscal Year Ended 06/30/2008    | 1.57  | 0.14  | 0.42   
|                                |       |       |        
|Fiscal Year Ended 06/30/2007    | 0.155 | 0.145 | 0.15   
|                                |       |       |        
|Fiscal Year Ended 06/30/2006    | 0.075 | 0.075 | 0.075  
|                                |       |       |        
|Fiscal Year Ended 06/30/2005    | 0.18  | 0.06  | 0.07   
|                               
|Fiscal Quarter Ended 09/30/2009 | 0.46  | 0.16  | 0.38   
|                                |       |       |        
|Fiscal Quarter Ended 06/30/2009 | 0.48  | 0.15  | 0.17   
|                                |       |       |        
|Fiscal Quarter Ended 03/31/2009 | 0.29  | 0.11  | 0.24   
|                                |       |       |        
|Fiscal Quarter Ended 12/31/2008 | 0.24  | 0.06  | 0.09   
|                                |       |       |        
|Fiscal Quarter Ended 09/30/2008 | 0.48  | 0.18  | 0.20   
|                                |       |       |        
|Fiscal Quarter Ended 06/30/2008 | 1.13  | 0.38  | 0.42   
|                                |       |       |        
|Fiscal Quarter Ended 03/31/2008 | 1.57  | 0.30  | 0.71   
|                                |       |       |        
|Fiscal Quarter Ended 12/31/2007 | 0.57  | 0.18  | 0.42   
|                                |       |       |        
|Fiscal Quarter Ended 09/30/2007 | 0.32  | 0.14  | 0.18   

---

|       |                         
|------ | ------------------------
|9.A.5. | Common Share Description

Registrar/Common Shares Outstanding/Shareholders

Effective August 19, 2005, the authorized share capital of the Company was increased to an unlimited number of common shares without par value due to changes in the British Columbia Company Act which permitted this action.

There are no Indentures or Agreements limiting the payment of dividends and there are no conversion rights, special liquidation rights, pre-emptive rights or subscription rights.

Computershare Trust Company of Canada (located at 3rd Floor, 510 Burrard Street, Vancouver, British Columbia Canada V6C 3B9) is the registrar and transfer agent for the common shares.

Stock Options

Refer to ITEM 6.E., Table No. 9 (Aggregate Option Exercises) and Table No. 11 (Stock Options Outstanding) for additional information regarding the Companys stock options.

Table No. 13 lists, as of June 30, 2009, share purchase warrants (options to purchase common shares) outstanding, the date the share purchase warrants were issued, the exercise price, and the expiration date of the share purchase warrants. These warrants were issued in conjunction with private placements of the Companys securities and all holders of the Companys warrants are resident in Canada.

Table No. 13Share Purchase Warrants Outstanding

|                          |                                                   |                                                  |               |                                          
|------------------------- | ------------------------------------------------- | ------------------------------------------------ | ------------- | -----------------------------------------
|Effective Date ofIssuance | Number of SharePurchase WarrantsOriginally Issued | Number of SharePurchaseWarrants StillOutstanding | ExercisePrice | Expiration Date of SharePurchase Warrants
|
|
|
|                         
|August 13, 2007           | 2,000,000(1)                                      | 742,500                                          | $0.36         | Until August 13, 2009                    
|                         
|November 22, 2007         | 3,500,000(2)                                      | 2,730,000                                        | $0.45         | Until November 22, 2009                  
|                          |                                                   |                                                  |               |                                          

|(1) | Issued pursuant to a private placement which closed in August 13, 2007. Exercisable period of the warrants to August 13, 2008 at the exercise price of $0.24 per share and, thereafter at a price of $0.36 until August 13, 2009.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                  
|(2) | Issued pursuant to a private placement which closed in November 22, 2007. Exercisable at a price of $0.30 per share until November 22, 2008 and, thereafter at a price of $0.45 until November 22, 2009.                         

---

|       |                 
|------ | ----------------
|9.A.6. | Differing Rights

---No Disclosure Necessary---

|         |                            
|-------- | ---------------------------
|9.A.7.a. | Subscription Warrants/Right

---No Disclosure Necessary---

|         |                                
|-------- | -------------------------------
|9.A.7.b. | Convertible Securities/Warrants

---No Disclosure Necessary---

---

|     |                           
|---- | --------------------------
|9.C. | Stock Exchanges Identified

The common shares trade on the TSX Venture Exchange headquartered in Toronto, Ontario.

Refer to ITEM #9.A.4 for trading information and history. At this time, the Company is not seeking a listing on any other stock exchange except that a listing on a US exchange will be sought once this filing is completed and the Company is accepted for trading on a US exchange.

ITEM 10. ADDITIONAL INFORMATION

|      |              
|----- | -------------
|10.A. | Share Capital

|        |                           
|------- | --------------------------
|10.A.1. | Authorized/Issued Capital.

Effective August 19, 2005, the authorized share capital of the Company was increased to an unlimited number of common shares without par value due to changes in the British Columbia Company Act which permitted this action.

At June 30, 2009, there were an unlimited number of common shares authorized and 51,341,799 common shares issued and outstanding.

At June 30, 2008, there were an unlimited number of common shares authorized and there were 49,511,799 common shares issued and outstanding.

At June 30, 2007, there were an unlimited number of common shares authorized and there were 32,192,404 common shares issued and outstanding.

At June 30, 2006, there were an unlimited number of common shares authorized and there were 20,800,404 common shares issued and outstanding.

As of June 30, 2005, there were 100,000,000 common shares authorized and15,784,404 common shares issued. 
As of June 30, 2004, there were 100,000,000 common shares authorized and12,784,404 common shares issued. 
As of June 30, 2003, there were 100,000,000 common shares authorized and 2,451,475 common shares issued. 
As of June 30, 2002, there were 100,000,000 common shares authorized and2,376,475 common shares issued. 
As of June 30, 2001, there were 100,000,000 common shares authorized and1,176,475 common shares issued. 
During the last five years, less than 1% of the capital has been paid for with assets other than cash.

|        |                                 
|------- | --------------------------------
|10.A.2. | Shares Not Representing Capital.

---No Disclosure Necessary---

|        |                        
|------- | -----------------------
|10.A.3. | Shares Held By Company.

---No Disclosure Necessary---

|        |                                      
|------- | -------------------------------------
|10.A.4. | Stock Options/Share Purchase Warrants

|        |                                      
|------- | -------------------------------------
|10.A.5. | Stock Options/Share Purchase Warrants

---

---Refer to Table No. 11 and Table No. 13.--- Check tables for correct reference

|        |                         
|------- | ------------------------
|10.A.6. | History of Share Capital

The Company has financed its operations through funds raised in public and private placements of common shares and warrants and from revenues from the sale of its products:

|            |                                                                       |                  |              
|----------- | --------------------------------------------------------------------- | ---------------- | -------------
|Fiscal Year | Nature of Share Issuance                                              | Number of Shares | Amount ($)   
|Fiscal 2001 | Private Placement @ $0.085                                            | 1,176,475        | $100,000.38  
|           
|Fiscal 2002 | Canadian Prospectus Offering (IPO) @$0.17                             | 1,200,000        | $204,000.00  
|            |                                                                       |                  |              
|Fiscal 2003 | Brokers Warrant Shares on Canadian Prospectus Offering (IPO) @ $0.17 | 150,000          | $25,500.00   
|           
|Fiscal 2004 | Private Placement @ $0.15                                             | 346,666          | $52,000.00   
|            | Private Placement @ $0.20                                             | 6,200,000        | $1,240,000.00
|           
|Fiscal 2005 | Private Placement @ $0.10                                             | 3,000,000        | $300,000.00  
|           
|Fiscal 2006 | Private Placement @$0.05                                              | 3,916,000        | $195,800     
|            | Private Placement @$0.05                                              | 1,100,000        | $55,000      
|           
|Fiscal 2007 | Private Placement @$0.05                                              | 1,430,000        | $71,500      
|            | Private Placement @$0.10                                              | 8,000,000        | $800,000     
|           
|Fiscal 2008 | Private placement @ $0.12                                             | 2,000,000        | $240,000     
|            | Private placement @ $0.15                                             | 3,500,000        | $525,000     

|        |                                     
|------- | ------------------------------------
|10.A.7. | Resolutions/Authorizations/Approvals

---No Disclosure Necessary---

|      |                                       
|----- | --------------------------------------
|10.B. | Memorandum and Articles of Association

The Companys corporate constituting documents comprising the Notice of Articles and Articles are registered with the British Columbia Registrar of Companies under Incorporation No. BC0607937. A copy of the Articles was filed as an Exhibit 1 with the Companys initial registration statement on Form 20-F.

The following is a summary of certain provisions of the Company's Notice of Articles and Articles and certain provisions of the British Columbia Business Corporations Act (the BCA), applicable to the Company:

Objects and Purposes

The Articles do not specify objects or purposes. Under both the BCA, a British Columbia corporation generally has all the legal powers of a natural person. British Columbia corporations may not undertake certain limited business activities such as operating as a trust company or railroad without alterations to its form of articles and specific government consent.

---

Share Capital

The authorized capital of the Company consists of an unlimited number of common shares without par value. All of the common shares must be fully paid and are not subject to any future call or assessment. All of the common shares of the Company rank equally as to voting rights, participation in a distribution of the assets of the Company on a liquidation, dissolution or winding-up of the Company and the entitlement to dividends. The holders of the common shares are entitled to receive notice of all shareholder meetings and to attend and vote at such meetings. Shareholders are not entitled to cumulative voting. Each common share carries with it the right to one vote. The common shares do not have preemptive or conversion rights. In addition, there are no sinking fund or redemption provisions applicable to the common shares or any provisions discriminating against any existing or prospective holders of such securities as a result of a shareholder owning a substantial number of shares.

Share Certificates

Under the Articles, a shareholder is entitled to a share certificate representing the number of shares of the Company held or a written acknowledgement of the shareholders right to obtain such a share certificate.

No Limitation on Foreign Ownership

There are no limitations under the Companys Articles or in the BCA on the right of persons who are not citizens of Canada to hold or vote common shares.

Dividends

Dividends may be declared by the Board out of available assets and are paid rateably to holders of common shares. No dividend may be paid if the Company is, or would thereby become, insolvent.

Voting Rights

Each of the Companys common share is entitled to one vote on matters to which common shares ordinarily vote including the annual election of directors, appointment of auditors and approval of corporate changes. There are no cumulative voting rights applicable to the Company.

Borrowing Powers

The Company, if authorized by the directors, may: (a) borrow money in the manner and amount, on the security, from the sources and on the terms and conditions that they consider appropriate; (b) issue bonds, debentures and other debt obligations either outright or as security for any liability or obligation of the Company or any other person and at such discounts or premiums and on such other terms as they consider appropriate; (c) guarantee the repayment of money by any other person or the performance of any obligation of any other person; and (d)mortgage, charge, whether by way of specific or floating charge, grant a security interest in, or give other security on, the whole or any part of the present and future assets and undertaking of the Company.

Indemnity Provisions

Under the Articles and the BCA, the Company is now permitted (and is, in some circumstances, required) to indemnify a past or present director or officer of the Company or an associated corporation without obtaining prior court approval in respect of an eligible proceeding. An eligible proceeding includes any legal proceeding relating to the activities of the individual as a director or officer of the Company. However, under the BCA, the Company will be prohibited from paying an indemnity if: (a) the party did not act honestly and in good faith with a view to the best interests of the Company; (b) the proceeding was not a civil proceeding and the party did not have reasonable grounds for believing that his or her conduct was lawful; and (c) the proceeding is brought against the party by the Company or an associated corporation.

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Directors  Number and Qualification

The Companys Articles do not specify a maximum number of directors. The minimum under British Columbia law for a public company is three. The number of directors shall be the number of directors fixed by the directors annually or the number that are actually elected at a general shareholders meeting under the

Existing Articles. The number of directors is determined, annually, by shareholders at the annual shareholders meeting and all directors are elected at that time. Under the Articles the directors are entitled between successive annual general meetings to appoint one or more additional directors but not more than one-third of the number of directors fixed at a shareholders or actually elected at the preceding annual shareholders meeting. Directors automatically retire at the commencement of each annual meeting but may be re-elected thereat.

Directors must be of the age of majority (18), and meet eligibility criteria including being mentally competent, not an undischarged bankrupt, no fraud related convictions in the previous five years. There are residency requirements and there is no mandatory retirement age either under the Articles or under the BCA. Directors need not own any shares of the Company in order to qualify as directors.

Directors - Powers and Limitations

Directors must manage or supervise the management of the business and affairs of the Company and have the authority to exercise all such powers which are not required to be exercised by the shareholders as governed by the BCA. Directors may, by resolution, create and appoint an executive committee consisting of the director or directors that they deem appropriate. This executive committee has, during the intervals between meetings of the Board, all of the directors powers, except the power to fill vacancies in the Board, the power to remove a Director, the power to change the membership of, or fill vacancies in, any committee of the Board and any such other powers as may be set out in the resolution or any subsequent directors resolution. Directors may also by resolution appoint one or more committees other than the executive committee. These committees may be delegated any of the directors powers except the power to fill vacancies on the board of directors, the power to remove a director, the power to change the membership or fill vacancies on any committee of the directors, and the power to appoint or remove officers appointed by the directors.

Under the BCA, directors are obligated to abstain from voting on matters in which they may be financially interested after disclosing in writing such interest. Directors compensation is not a matter on which they must abstain. Directors borrowing powers are not generally restricted where the borrowing is in the Companys best interests, but the directors may not authorize the Company to provide financial assistance for any reason where the Company is insolvent or the providing of the guarantee would render it insolvent.

Amendment of Articles and Notice of Articles; Special Transactions

The Articles provide that the general authority required to amend all provisions of the Companys Articles and the Notice of Articles relating to the authorized share structure is a resolution of the directors and the attachment of special rights and restrictions thereto, including any changes therein, an ordinary resolution. If the amendment prejudices or interferes with the rights or special rights attached to any class of issued shares, by the provisions of the BCA, the consent of the holders of that class of shares by a special separate resolution is also required.

Certain corporate changes or proposed transactions including amalgamation with another company, sale of substantially all of the Companys assets, re-domiciling out of the jurisdiction of British Columbia, creation of new classes of shares not only require the consent of the holders of common shares by a special separate resolution but generally also give rise to a dissent right which is the right to be paid the fair value of the stockholders shares in cash if the required special resolution is actually passed and the Company elects to proceed with the matter notwithstanding receipt of dissent notices. A notice of a shareholders meeting at which such a change or proposed transaction is intended to be considered must include a prominent notice of the dissent right. Dissent provisions are governed by the BCA and not by the Articles of the Company.

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Under the Articles, a special separate resolution requires a majority of three-quarters of the votes cast.

Shareholders Meetings

In addition to reflecting the present notice and other provisions of the BCA relating to shareholders meetings, the Articles provide that shareholders meetings may be held at such place as is determined by the directors. Shareholders meetings are governed by the Articles of the Company but many important protections and procedures are contained within the BCA and the Securities Act (British Columbia) and the Securities Act (Alberta) and the respective regulations and rules thereto and the policy statements, notices and blanket orders of the respective commissions of each of British Columbia and Alberta, together with the national policy statements, and national instruments applied by the such commissions (collectively, Applicable Canadian Securities Law). The Articles provide that the Company will hold an annual shareholders meeting, will provide at least 21 days notice and will provide for certain procedural matters and rules of order with respect to conduct of the meeting. The BCA and Applicable Canadian Securities Law superimpose requirements that generally provide that shareholders meetings require not less than a 60 day notice period from initial public notice and that the Company makes a thorough advanced search of intermediary and brokerage registered shareholdings to facilitate communication with beneficial shareholders so that meeting proxy and information materials can be sent via the brokerages to unregistered but beneficial shareholders. The form and content of information circulars and proxies and like matters are governed by Applicable Canadian Securities Law and includes the specifies relating to disclosure requirements for the proxy materials and various corporate actions, background information on the nominees for election for director, executive compensation paid in the previous year and full details of any unusual matters or related party transactions. The Company must hold an annual shareholders meeting open to all shareholders for personal attendance or by proxy at each shareholders determination. The meeting must be held within 13 months of the previous annual shareholders meeting and must present audited statements which are dated no more than six months prior to such meeting.

Change in Control

The Company has not implemented any shareholders rights or other poison pill protection against possible take-overs. The Company does not have any agreements which are triggered by a take-over or other change of control. There are no provisions in its articles triggered by or affected by a change in outstanding shares which gives rise to a change in control. There are no provisions in the Companys material agreements giving special rights to any person on a change in control.

Insider Share Ownership Reporting

The Articles of the Company do not require disclosure of share ownership. Share ownership of director nominees must be reported annually in proxy materials sent to the Companys shareholders. There are no requirements under the BCA to report ownership of shares of the Company but Applicable Canadian Securities Law requires disclosure of trading by insiders (generally officers, directors and holders of 10% of voting shares) within 10 days of the trade. Controlling shareholders (generally those in excess of 20% of outstanding shares) must provide seven days advance notice of share sales.

Applicable Canadian Securities Law

Applicable Canadian Securities Law governs matters typically pertaining to public companies such as continuous quarterly financial reporting, immediate disclosure of material changes, insider trade reporting, take-over protections to ensure fair and equal treatment of all shareholders, exemption and resale rules pertaining to non-prospectus securities issuances as well as civil liability for certain misrepresentations, disciplinary, appeal and discretionary ruling matters. All of the Companys shareholders regardless of residence have equal rights under this legislation except as provided for in the Voting Agreement (Exhibit 3.a.).

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|**10.C.** | Material Contracts

Linns (Exhibit 4.f.)

The Company assigned a five year licensing and distribution agreement with Linns Corporation Sdn Bhd (Linns) (see Exhibit 4.f.) with an effective date of August 1, 2004. The Territory is defined as Brunei, Cambodia, Indonesia, Japan, Laos, Malaysia, Myanmar, Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam, subject to Linns submitting the required applications required for regulatory approval of T36®Disinfectant in each part of the Territory. As of July 31, 2009, the five year term of the agreement was reached so the agreement is no longer in effect.

Esthetics Plus (Exhibit 4.h.)

The material terms of the Agreement between the Company and Esthetics Plus (EP), dated February 1st, 2005, are as follows. The Company appointed EP as its exclusive distributor to the beauty industry throughout all the provinces and territories within Canada except for the province of British Columbia, in which the distributorship is non-exclusive (the Territory). The initial term is three years. Thereafter, the Agreement is automatically renewed on each anniversary date for another year unless either party provides the other with written notice, not later than one hundred twenty (120) days prior to the expiration of the term still in effect, of its desire to end the Agreement upon the expiration of the term. In the event that the Company chooses to terminate the Agreement at any time, other than for cause, the Company will repurchase, within thirty days, all unsold Products in EPs inventory sold to EP by the Company in the previous six months period at EPS original cost from the Company, plus 10% of the value of the last 6 months product purchased to compensate EP for efforts promoting the Company Products in the Territory, financing costs and inventory warehousing. The agreement is still in effect and in good standing.

EP shall use its best efforts to promote the sale of the products, refrain from the sale or distribution of any competing products, stay within the Territory, unless agreed to by the Company in writing; actively prospect the Territory, undertake marketing activities such as exhibitions, conventions, advertising, training and teaching, supply the Company with all market information, comply with all legal requirements relating to the storage, promotion and sale of the products, refrain from using the Companys name or trademarks except as needed to identify EP as a distributor of the Company and respect the confidential nature of the Companys intellectual property and technical information.

The Company shall promptly deliver products to EP, refrain from selling any products to the beauty industry in the Territory, refer to EP all leads, prospects, and potential purchasers in the beauty industry, provide EP with reasonable quantities of marketing materials, provide training in the use and application of the Companys products, provide suitably qualified representatives to assist in the marketing of the products and warranty the products that are purchased by EP.

The Company and EP indemnify each other against harm caused to either one by the actions of the other.

All product shipments are made FOB from the Companys or EPs shipper and title passes to EP upon the Companys or EPs carrier taking delivery of the product from the shipper. The Company may prepay all costs of transportation and insurance and EP reimburses the Company for such expenses.

Starting on February 1, 2007, EP has agreed to minimum sales levels of 144 cases of products per quarter in Year 1, 180 cases per quarter in Year 2 and 216 cases per quarter in Year 3. Details on the amount of products per case are disclosed in Exhibit 4.h.

The payment terms for products delivered to EP by the Company are net cash in Canadian currency within 35 days with interest at a rate of 2% per month charged on late payments.

The exclusivity of the Agreement may be terminated EP fails to pay the Company according to the terms of the agreement and fails to correct the default within 30 days of receiving written notice from the Company that the exclusivity will be terminated or if EP fails to meet the minimum sales obligations.

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The Company may terminate the exclusivity of this agreement if EP fails to pay for orders from the Company according to the terms of this agreement, upon giving EP at least 30 days written notice of the failure and its intention to terminate the exclusivity. If EP cures the failure within thirty (30) days after receiving such notice, then EP's exclusivity shall not terminate. In the event EP's exclusivity terminates in accordance with the provisions above and as long as EP is not in default of any other provision of this Agreement, then this Agreement shall continue in full effect except that EP's rights shall not be exclusive within the Territory. The Company may terminate the exclusivity of this agreement if EP fails to meet the minimum sales goals, upon giving EP at least 30 days written notice of failure and its intention to terminate exclusivity. IF EP cures the failure within 30 days after receiving such notice, then EPs exclusivity shall not terminate.

This Agreement may be terminated by either party if the other is in default in the performance of any material obligation under the Agreement and fails to cures any such default within 30 days after receiving notice of the default or immediately upon either partys cessation of business, dissolution, insolvency, bankruptcy, general assignment for the benefit of creditors, or filing of any petition in bankruptcy or for relief under the provisions of applicable bankruptcy laws.

Phigenics (Exhibit 4.a.):

On August 9, 2005 the Company signed an agreement appointing Phigenics, LLC to manage the registration of its products with the EPA Registration and assist with U.S. sales. Dr. William F. McCoy, Director is the Chief Technical Officer of Phigenics LLC.

Under the terms of the agreement, Phigenics LLC will provide a contribution in kind of up to $33,000 at a mutually agreeable per diem rate.

The Company will: provide up to $32,000 (US) for registration fees and pay royalties to Phigenics LLC ranging from 7% in the first year to 1% in the 6thand 7thyears and a finders fee of 5% of sales to new clients for the first year after the first sale and 3% for the next year. Neither the term nor the termination provisions of the agreement are defined. The agreement will become active only if the Company decides to pursue registration of any of its products with the EPA in the US.

Norwood: (Exhibits 4.b. and 4.l)

On October 4, 2005 the Company signed a manufacturing agreement with Norwood Packaging Ltd. of Surrey British Columbia, Canada to manufacture its T36®Disinfectant antibacterial product (Exhibit 4.b). On June 18, 2008, both the Company and Norwood agreed to waive the 90 day notice period required in the agreement and to terminate the agreement. (Exhibit 4.l) For future orders, if the Company uses the services of Norwood, the Company will provide Norwood with purchase orders and pay Norwood according to the standard payment terms that Norwood provides to its other customers. The Company has also started to use other manufacturers.

He-Yi (Exhibit 4.g.)

On May 25, 2007, the Agreement with Fuzhou Xinmei Biotech Co. Ltd. (Fuzhou), which allowed manufacturing and marketing in Fujian province in China (Exhibit 4.c.), was transferred to He-Yi She Ye Limited (He-Yi) and expanded to cover marketing in all of China (Exhibit 4.g.).

The agreement with He-Yi provides that:

| |  | the Company will:
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| |  |                  
| |  |                  
| |  |                  
| |  |                  
| |  |                  
| |  | He-Yi will:      
| |  |                  
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| |  |                                                                                                           
| |  | ----------------------------------------------------------------------------------------------------------
| |  |                                                                                                           
| |  | provide quarterly reports on the progress of the approvals to the Company with extensions to be granted by
| |  |                                                                                                           
| |  | the Company if He-Yi is employing its best efforts to achieve registrations                               
| |  |                                                                                                           
| |  | provide a manufacturing facility according to the specifications provided by the Company                  
| |  |                                                                                                           
| |  | distribute the Companys products in China, subject to the Companys approval of each distributorship and 
| |  |                                                                                                           
| |  | sell its products to the Company as requested by the Company and                                          
| |  |                                                                                                           
| |  | ship products to customers of the Company located in other countries.                                     

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The Agreement is effective until April 18, 2011 (the Initial Term). Upon expiration of the Initial Term, the Agreement may be renewed periods of time equal to the renewal times for the Certificate of Approval provided that the Company and He-Yi have each met all of their obligations.

Six months after production starts and for period of three years, the Company and He-Yi will establish minimum sales levels and, thereafter, after each new distributorship is established.

He-Yi will pay the Company royalties based on the gross revenues received by He-Yi for all of the Companys products sold in China equal to 5% during Years 1 and 2, 8% during Year 3 and 6% after the sales achieved in Year 2 are doubled and 10% for sales outside of China.

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|**10.D.** | Exchange Controls

Canada has no system of exchange controls. There are no Canadian restrictions on the repatriation of capital or earnings of a Canadian public company to non-resident investors. There are no laws in Canada or exchange restrictions affecting the remittance of dividends, profits, interest, royalties and other payments to non-resident holders of the Companys securities, except as discussed in ITEM 10, Taxation" below.

Restrictions on Share Ownership by Non-Canadians: There are no limitations under the laws of Canada or in the organizing documents of the Company on the right of foreigners to hold or vote securities of the Company, except that the Investment Canada Act may require review and approval by the Minister of Industry (Canada) of certain acquisitions of "control" of the Company by a "non-Canadian". The threshold for acquisitions of control is generally defined as being one-third or more of the voting shares of the Company. "Non-Canadian" generally means an individual who is not a Canadian citizen, or a corporation, partnership, trust or joint venture that is ultimately controlled by non-Canadians. If a non-Canadian (for example, a US resident acquirer) were to acquire such a control position, they would not be required to do any filings or provide any notices to the Ministry of Industry (Canada) unless notified first by that Ministry that their acquisition of control was under review.

Canada has, as does the United States, competition laws designed to promote competition in industry and markets. The Competition Act (Canada) provides Canadas federal government with the power to review or prevent business transactions, such as acquiring a controlling interest in a company similar to the Company , if it is found that the acquisition of control would reduce competition in a given market or industry. Since the market that the Company competes in is extremely competitive, no single company, including the Company, seems to have significant market power. Acquisition of the Company, therefore, would not lead to reduced competition.

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|**10.E.** | Taxation

Canadian Federal Income Tax Considerations:

The following is a brief summary of some of the principal Canadian federal income tax consequences to a holder of common shares of the Company (a "U.S. Holder") who deals at arm's length with the Company, holds the shares as capital property and who, for the purposes of the Income Tax Act (Canada) (the "Act") and the Canada  United States Income Tax Convention (the "Treaty"), is at all relevant times resident in the United States, is not and is not deemed to be resident in Canada and does not use or hold and is not deemed to use or hold the shares in carrying on a business in Canada. Special rules, which are not discussed below, may apply to a U.S. Holder that is an insurer that carries on business in Canada and elsewhere.

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Under the Act and the Treaty, a U.S. Holder of common shares will generally be subject to a 5% withholding tax on dividends paid or credited or deemed by the Act to have been paid or credited on such shares. The withholding tax rate is 5% where the U.S. Holder is a corporation that beneficially owns at least 10% of the voting shares of the Company and the dividends may be exempt from such withholding in the case of some U.S. Holders such as qualifying pension funds and charities.

In general, a U.S. Holder will not be subject to Canadian income tax on capital gains arising on the disposition of shares of the Company unless (i) at any time in the five-year period immediately preceding the disposition, 25% or more of the shares of any class or series of the capital stock of the Company was owned by (or was under option of or subject to an interest of) the U.S. holder or persons with whom the U.S. holder did not deal at arm's length, and (ii) the value of the common shares of the Company at the time of the disposition derives principally from real property (as defined in the Treaty) situated in Canada. For this purpose, the Treaty defines real property situated in Canada to include rights to explore for or exploit mineral deposits and other natural resources situated in Canada, rights to amounts computed by reference to the amount or value of production from such resources, certain other rights in respect of natural resources situated in Canada and shares of a corporation the value of whose shares is derived principally from real property situated in Canada.

The US Internal Revenue Code provides special anti-deferral rules regarding certain distributions received by US persons with respect to, and sales and other dispositions (including pledges) of stock of, a passive foreign investment company. A foreign corporation, such as the Company, will be treated as a passive foreign investment company if 75% or more of its gross income is passive income for a taxable year or if the average percentage of its assets (by value) that produce, or are held for the production of, passive income is at least 50% for a taxable year. The Company believes that it was not a passive foreign investment company for the taxable year ended December 31, 2009 and, furthermore, expects to conduct its affairs in such a manner so that it will not meet the criteria to be considered passive foreign investment company in the foreseeable future.

Dividends:

A Holder will be subject to Canadian withholding tax ("Part XIII Tax") equal to 25%, or such lower rate as may be available under an applicable tax treaty, of the gross amount of any dividend paid or deemed to be paid on common shares. Under the Canada-U.S. Income Tax Convention (1980) as amended by the Protocols signed on 6/14/1983, 3/28/1984, 3/17/1995, and 7/29/1997 (the "Treaty"), the rate of Part XIII Tax applicable to a dividend on common shares paid to a Holder who is a resident of the United States and who is the beneficial owner of the dividend, is 5%. If the Holder is a company that owns at least 10% of the voting stock of the Company paying the dividend, and, in all other cases, the tax rate is 15% of the gross amount of the dividend. The Company will be required to withhold the applicable amount of Part XIII Tax from each dividend so paid and remit the withheld amount directly to the Receiver General for Canada for the account of the Holder.

Disposition of Common Shares:

A Holder who disposes of a common share, including by deemed disposition on death, will not normally be subject to Canadian tax on any capital gain (or capital loss) thereby realized unless the common share constituted "taxable Canadian property" as defined by the Tax Act. Generally, a common share of a public corporation will not constitute taxable Canadian property of a Holder if the share is listed on a prescribed stock exchange unless the Holder or persons with whom the Holder did not deal at arm's length alone or together held or held options to acquire, at any time within the five years preceding the disposition, 25% or more of the shares of any class of the capital stock of the Company. The Canadian Venture Exchange is a prescribed stock exchange under the Tax Act. A Holder who is a resident of the United States and realizes a capital gain on a disposition of a common share that was taxable Canadian property will nevertheless, by virtue of the Treaty, generally be exempt from Canadian tax thereon unless:

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|(a) | More than 50% of the value of the common shares is derived from, or from an interest in, Canadian real estate, including Canadian mineral resource properties,                                                                                                                                                  
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|(b) | The common share formed part of the business property of a permanent establishment that the Holder has or had in Canada within the 12 month period preceding the disposition, or                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                 
|(c) | The Holder is an individual who (i) was a resident of Canada at any time during the 10 years immediately preceding the disposition, and for a total of 120 months during any period of 20 consecutive years, preceding the disposition, and (ii) owned the common share when he ceased to be resident in Canada.

A Holder who is subject to Canadian tax in respect of a capital gain realized on a disposition of a common share must include three quarters of the capital gain (taxable capital gain) in computing the Holder's taxable income earned in Canada. The Holder may, subject to certain limitations, deduct three-quarters of any capital loss (allowable capital loss) arising on a disposition of taxable Canadian property from taxable capital gains realized in the year of disposition in respect to taxable Canadian property and, to the extent not so deductible, from such taxable capital gains realized in any of the three preceding years or any subsequent year.

United States Taxation:

For federal income tax purposes, an individual who is a citizen or resident of the United States or a domestic corporation ("U.S. Taxpayer") will recognize a gain or loss on the sale of the Company's common shares equal to the difference between the proceeds from such sale and the adjusted tax basis of the common shares. The gain or loss will be a capital gain or capital loss if the Company's common shares are a capital asset in U.S. Taxpayer's hands.

For federal income tax purposes, a U.S. Taxpayer will be required to include in gross income dividends received on the Company's common shares. A U.S. Taxpayer who pays Canadian tax on a dividend on common shares will be entitled, subject to certain limitations, to a credit (or alternatively, a deduction) against federal income tax liability. A domestic corporation that owns at least 10% of the voting shares should consult its tax advisor as to applicability of the deemed paid foreign tax credit with respect to dividends paid on the Company's common shares.

Under a number of circumstances, United States Investor acquiring shares of the Company may be required to file an information return with the Internal Revenue Service Center where they are required to file their tax returns with a duplicate copy to the Internal Revenue Service Center, Philadelphia, PA 19255. In particular, any United States Investor who becomes the owner, directly or indirectly, of 10% or more of the shares of the Company will be required to file such a return. Other filing requirements may apply, and United States Investors should consult their own tax advisors concerning these requirements.

The US Internal Revenue Code provides special anti-deferral rules regarding certain distributions received by US persons with respect to, and sales and other dispositions (including pledges) of stock of, a passive foreign investment company. A foreign corporation, such as the Company, will be treated as a passive foreign investment company if 75% or more of its gross income is passive income for a taxable year or if the average percentage of its assets (by value) that produce, or are held for the production of, passive income is at least 50% for a taxable year. The Company believes that it was not a passive foreign investment company for the taxable year ended December 31, 2009 and, furthermore, expects to conduct its affairs in such a manner so that it will not meet the criteria to be considered passive foreign investment company in the foreseeable future.

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|**10.F.** | Dividends and Paying Agents

The Company has not declared any dividends on its common shares for the last five years and does not anticipate that it will do so in the foreseeable future. The present policy of the Company is to retain future earnings for use in its operations and the expansion of its business.

Notwithstanding the aforementioned: the Company is unaware of any dividend restrictions; has no specific procedure for the setting of the date of dividend entitlement; but might expect to set a record date for stock ownership to determine entitlement; has no specific procedures for non-resident holders to claim dividends, but might expect to mail their dividends in the same manner as resident holders. The Company has not nominated any financial institutions to be the potential paying agents for dividends in the United States.

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|**10.G.** | Statement by Experts

The Companys auditor for its financial statements for fiscal year ended 2009 was HLB Cinnamon Jang Willoughby, Chartered Accountants. Their audit report for Fiscal 2009/2008 is included with the related financial statements in this Annual Report with their consent attached hereto as an exhibit.

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|**10.H.** | Document on Display

--- No Disclosure Necessary ---

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

--- No Disclosure Necessary ---

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

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|12.A. | Debt Securities

--- No Disclosure Necessary ---

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|12.B. | Warrants and Rights

--- No Disclosure Necessary ---

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|12.C. | Other Securities

--- No Disclosure Necessary ---

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|12.D. | American Depository Shares

-- No Disclosure Necessary ---

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

--- No Disclosure Necessary ---

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

--- No Disclosure Necessary ---

ITEM 15. CONTROLS AND PROCEDURES

The Company carried out an evaluation, under the supervision and with the participation of the Companys management, including the Companys President, of the effectiveness of the design and operation of the Companys disclosure controls and procedures (as defined in the Exchange Act Rule 13a-15(e)) as of the end of the period covered by this report. Based upon that evaluation, the President concluded that the Companys disclosure controls and procedures are effective in timely alerting them to material information relating to the Company required to be included in the Companys periodic SEC filings, and that information is recorded, processed, summarized and reported as and when required.

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There was no significant change in the Companys internal control over financial reporting that occurred during the Companys most recently completed fiscal year ended June 30, 2009 that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting. Nor were there any significant deficiencies or material weaknesses in the Company's internal controls requiring corrective actions.

ITEM 16. RESERVED

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERTS

Linda Allison, Eugene Hodgson and Peter Chen are members of the Companys Audit Committee. Linda Allison and Eugene Hodgson are considered independent and financially literate, as those terms are defined in applicable securities legislation.

Dr. Allison received a BSc (Honours) from Simon Fraser University, Vancouver, BC, Canada in 1969, a MSc from the University of London, UK and a Diploma of Imperial College (DIC) from the Imperial College of Science and Technology, London, UK in 1972. She received her PhD from Simon Fraser University in 1978 based on research in the areas of neurophysiology, molecular biology and biophysics. From 1980 to 1995, she was President of Groberman Computer Engineering Ltd., a computer technology company developing custom systems for scientific and industrial applications. In 1985, she founded Snowdon & Associates Management Consultants Ltd., a management consulting company that provides professional services to medical device, biotechnology, pharmaceutical, and high technology companies. From 1992 to 1998, Dr. Allison worked in the corporate finance departments of two investment banking and brokerage firms, during which time she assisted the financing of biomedical and high technology companies in both North America and Europe. From 1998 to 2001, she was President & CEO of Ondine Biopharma Corp., a biomedical company developing photo-activated drugs. From 2000 to 2001, she was the President & CEO of Genesis Bioventures Inc., a biomedical holding company that invested in companies developing novel diagnostics and therapeutics in the areas of cancer and neurological disorders. From 2003 to 2005, she served as President & CEO and a Director of MDX Medical Inc., a biomedical company developing medical imaging technologies for the improved diagnosis and treatment of cancer. From 2006 to present, she has been on the ForeFront Committee of the Alberta Heritage Foundation for Medical Research.

Eugene Hodgson received a Bachelor of Arts degree from the University of Calgary in 1978. He was Director of Corporate Development for Intrawest Corporation from 1990 till 1996 and has been the President of E.A. Hodgson & Associates, a private management consulting firm, since 1996. He currently serves as a Vice President Western Region of Corpfinance International Limited., a firm that provides specialized term financing to mid-sized and large companies and is a Director of Timmins Gold Corp., a publicly-traded company. Mr. Hodgson was previously a CFO and Director of Sea Breeze Power Inc. He is a co-founder of the "Families for School Seismic Safety" in B.C. and a past Director of the Independent Power Producers of B.C. He is a former Director of the Vancouver Board of Trade and current Area Commissioner of the Pacific Spirit Area for the Boy Scouts of Canada.

Peter Chen is considered to be an audit committee financial expert. Mr. Chen obtained a Diploma in Accounting from Douglas College in 1993. On graduation, he became a self-employed financial consultant. From November 2000 to October 2003, Mr. Chen was the Chief Financial Officer of Prospect Point Exploration & Management Services Ltd., a private company that provides mineral exploration consulting services. He was the President of Canadian Mineral Exploration Managing Consultants Inc., a private company that provides mineral exploration services to publicly listed companies that have projects in Africa and South East Asia, from January 1997 to January 2000 and Chief Financial Officer from February 1994 to January 2000. Mr. Chen was a director of the Douglas College Foundation from 2004 to 2007. Mr. Chen is a founder of the Company, has been its CFO since its inception in May, 2000 and began working with the Company full time in that capacity in November, 2003

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ITEM 16B. CODE OF ETHICS

The company has not adopted a formal code of ethics because, as a TSX Venture Exchange issuer, the Company is only required have an audit committee. The audit committee is composed of a majority of independent members as discussed above under the heading Item 16.B. Audit Committee Financial Experts.

In lieu of a code of ethics, the Company has adopted the following methodology with respect to corporate governance.

The management of ALDA is responsible for establishing and maintaining disclosure controls and procedures for information relating to the Company, including its consolidated subsidiaries. The Companys management is also responsible for establishing and maintaining adequate internal control over financial reporting.

ALDAs Board of Directors facilitates its exercise of independent supervision over management by ensuring that the Board is composed of a majority of independent directors. The Board, at present, is composed of six directors, all of which are considered to be independent except for Mr. Owen and Mr. Chen who are also senior officers. In determining whether a director is independent, the Board considers, for example, whether the director has a relationship, which could, or could be perceived to, interfere with the director's ability to objectively assess the performance of management.

The Board monitors the ethical conduct of ALDA and its management and ensures that it complies with applicable legal and regulatory requirements, such as those of relevant securities commissions and stock exchanges. The Board has found that the fiduciary duties placed on individual directors by the Companys governing corporate legislation and the common law, as well as the restrictions placed by applicable corporate legislation on the individual directors participation in decisions of the Board in which the director has an interest, have been sufficient to ensure that the Board operates independently of management and in the best interests of the Company.

The Board is specifically responsible for approving long-term strategic plans and annual operating plans and budgets recommended by management. Board consideration and approval is also required for all material contracts, business transactions and all debt and equity financing proposals. The independent directors on the Board are also responsible for approving senior executive compensation and retirement plans.

The Board delegates to management, through the offices of President and Chief Executive Officer and Chief Financial Officer, responsibility for meeting defined corporate objectives, implementing approved strategic and operating plans, carrying on the Companys business in the ordinary course, managing the Companys cash flow, evaluating new business opportunities, recruiting staff and complying with applicable regulatory requirements. The Board also looks to management to furnish recommendations respecting corporate objectives, long-term strategic plans and annual operating plans.

Given the relatively static composition of the Board of Directors and the Companys management over the last several years, the Board has not appointed a corporate governance committee and these functions are currently performed by the Board as a whole.

ITEM 16C. PRINCIPAL ACCOUNTING FEES AND SERVICES

External Auditor Service Fees

The following table sets out the aggregate fees billed by HLB Cinnamon Jang Willoughby, Chartered Accountants in 2007, 2008 and 2009.

|     |                |                       |             |                  
|---- | -------------- | --------------------- | ----------- | -----------------
|Year | Audit Fees     | Audit Related Fees(1) | Tax Fees(2) | All Other Fees(3)
|2009 | $25,000  (86%) | $Nil  (0%)            | Nil (0%)    | $4,010(14%)      
|2008 | $25,000  (76%) | $Nil  (0%)            | Nil (0%)    | $8,010(24%)      
|2007 | $25,000  (91%) | $2,480  (9%)          | Nil (0%)    | Nil  (0%)        

|                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1)Related to assurance and related services that are reasonably related to the performance of the audit and review of the Companys financial statements and not included in the amounts noted under Audit Fees. (2)Related to fees billed by the Companys external auditor for professional services rendered for tax compliance, tax advice and tax planning. (3)Related to other accounting services that is excluded from the Audit Fees.

---

Pre-Approval Policies and Procedures

The Audit Committee has adopted an Audit Committee Charter (Exhibit 11) governing the provision of audit and non-audit services by the external auditor. This charter requires the Audit Committee to:

|1. | recommend to the Board of Directors the external auditor to be nominated by the Board of Directors and the compensation of the external auditor (see 4.1.(a) and (b), Exhibit 11) and
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                      
|2. | to pre-approve all non-audit services provided by the external auditor (see 4.1.(n), Exhibit 11).                                                                                    

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

---Not applicable---

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE COMPANY/AFFILIATED PURCHASERS

---Not Applicable---

PART III

ITEM 17. FINANCIAL STATEMENTS

The Company's financial statements are stated in Canadian Dollars (CDN$) and are prepared in accordance with Canadian Generally Accepted Accounting Principles (GAAP), the application of which, in the case of the Company, conforms in all material respects for the periods presented with United States GAAP, except as discussed in footnotes to the financial statements.

The financial statements as required under ITEM #17 are attached hereto and found immediately following the text of this Annual Report. The audit report of HLB Cinnamon Jang Willoughby, Charted Accountants, is included herein immediately preceding the audited financial statements.

Audited Financial Statements

-- see exhibits

ITEM 18. FINANCIAL STATEMENTS

The Company has elected to provide financial statements pursuant to ITEM #17.

ITEM 19. EXHIBITS

The financial statements thereto as required under ITEM #17 are attached hereto and found immediately following the text of this Annual Report. The report of the Companys independent auditors for the audited financial statements are included herein immediately preceding the audited financial statements.

|(A) | Financial information
|--- | ---------------------
|    | (i)                  
|    |                      
|    |                      

---

| |  | 3. | Consolidated Statements of Operations and Deficit for the fiscal years ending June 30, 2009, 2008 and 2007.
| |  | -- | -----------------------------------------------------------------------------------------------------------
| |  | 4. | Consolidated Statements of Cash Flows for the fiscal years ending June 30, 2009, 2008 and 2007.            
| |  | 5. | Notes to Consolidated Financial Statements.                                                                
| |  | 6. | Management Discussion and Analysis dated October 21, 2009                                                  

|(B) | Index to Exhibits:                                                                                                                                                                                                                  
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                     
|1.  | Certificate of Incorporation, Certificates of Name Change, Articles of Incorporation, previously with the 2005 Form 20-F as Exhibit 1.                                                                                              
|    |                                                                                                                                                                                                                                     
|2.  | Instruments defining the rights of holders of the securities being registered                                                                                                                                                       
|    | -                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                     
|3.  | Voting Trust Agreement- dated November 13, 2003 between API, Allan Shapiro and Michael and an amendment to the agreement dated November 1, 2004, previously filed as Exhibit 3 the amended 2007 Form 20-F filed on December 3, 2008.

|4. | Material Contracts                     
|-- | ---------------------------------------
|   | a.                                     
|   | b.                                     
|   | c.                                     
|   | d.                                     
|   | e.                                     
|   | f.                                     
|   | g.                                     
|   | h.                                     
|   | i.                                     
|   | j.                                     
|   | k.                                     
|   | l.                                     
|   | m.                                     
|   | n.                                     
|5. | List of Foreign Patents                
|6. | Calculation of earnings per share  N/A

---

|7.   | Explanation of calculation of ratios  N/A                                                                                                                                
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|8.   | List of Subsidiaries  N/A (the Company has only one subsidiary, Sirona Therapeutics Corp.)                                                                               
|9.   | Statement pursuant to the instructions to Item 8.A.4, regarding the financial statements filed in registration statements for initial public offerings of securities  N/A
|10.  | Documents pertaining to the Change of Auditors - previously filed as Exhibit 10 with the amended 2007 Form 20-F filed on February 17, 2009.                               
|11.  | Audit Committee Charter - previously filed as Exhibit 11 with the amended 2007 Form 20-F filed on December 3, 2008.                                                       
|99.1 | Certification of Chief Executive Officer pursuant to Section 302 of SarbanesOxley Act of 2002                                                                            
|99.2 | Certification of Chief Financial Officer pursuant to Section 302 of SarbanesOxley Act of 2002                                                                            
|99.3 | Certification of Chief Executive Officer pursuant to Section 906 of SarbanesOxley Act of 2002                                                                            
|99.4 | Certification of Chief Financial Officer pursuant to Section 906 of SarbanesOxley Act of 2002                                                                            

---

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F A and that it has duly caused and authorized the undersigned to sign this registration report on its behalf.

| |        |                   |                       |                            | 
| | ------ | ----------------- | --------------------- | -------------------------- | 
| | Dated: | December 31, 2009 |                       | ALDA PHARMACEUTICALS CORP. | 
| |        |                   |                       |                           
| |        |                   | By: /s/ Terrance Owen |                           
| |        |                   | Terrance Owen,        |                           
| |        |                   | President and CEO     |                           

---

|                                                                |                          
|--------------------------------------------------------------- | -------------------------
|                                                                | ALDAPharmaceuticals Corp.
|635 Columbia Street, New Westminster, British Columbia, V3M 1A7
|Telephone: 604-521-8300; Facsimile: 604-521-8322               

CONSOLIDATEDFINANCIAL STATEMENTS

For the years endedJune 30, 2009 and 2008

---

|                           
|---------------------------
|ALDAPHARMACEUTICALS CORP.  
|CONSOLIDATED BALANCE SHEETS
|AS AT JUNE 30              

|                                                                 |   |            |   |   |            |  
|---------------------------------------------------------------- | - | ---------- | - | - | ---------- | -
|EXPRESSED IN CANADIAN DOLLARS                                    |   | 2009       |   |   | 2008       |  
|ASSETS                                                          
|Current Assets                                                   |   |            |   |   |            |  
|Cash and Equivalents                                             | $ | 25,977     |   | $ | 341,050    |  
|Short Term Investments (Note 4)                                  |   | 1,584,929  |   |   | 2,105,318  |  
|Accounts Receivable                                              |   | 53,469     |   |   | 43,166     |  
|Inventory (Note 5)                                               |   | 61,834     |   |   | 10,443     |  
|Prepaid Expenses and Others                                      |   | 51,198     |   |   | 28,191     |  
|                                                                 |   | 1,777,407  |   |   | 2,528,168  |  
|Furniture and Equipment(Note 6)                                  |   | 4,691      |   |   | 5,807      |  
|                                                                 | $ | 1,782,098  |   | $ | 2,533,975  |  
|                                                                
|LIABILITIES                                                     
|Current Liabilities                                              |   |            |   |   |            |  
|Accounts Payable and Accrued Liabilities                         | $ | 56,215     |   | $ | 57,921     |  
|                                                                
|SHAREHOLDERS DEFICIT                                           
|Share Capital(Note 7(a))                                         |   | 5,842,389  |   |   | 5,524,289  |  
|Subscriptions Receivables(Note 8)                                |   | (113,000   | ) |   | -          |  
|Contributed Surplus  Warrants (Note 7(d))                       |   | 447,532    |   |   | 447,532    |  
|Contributed Surplus  Options(Note 7(e))                         |   | 1,273,497  |   |   | 1,045,759  |  
|Deficit                                                          |   | (5,724,535 | ) |   | (4,541,526 | )
|                                                                 |   | 1,725,883  |   |   | 2,476,054  |  
|                                                                 | $ | 1,782,098  |   | $ | 2,533,975  |  
|                                                                
|Commitments (Note 10)                                           
|Subsequent events (Note 15)                                     
|*See accompanying notes to the consolidated financial statements |   |            |   |   |            |  

On Behalf of the Board of Directors

| |                 |          |  |              |          | 
| | --------------- | -------- |  | ------------ | -------- | 
| | Terrance Owen | Director |  | Peter Chen | Director | 

---

|                                   
|-----------------------------------
|ALDAPHARMACEUTICALS CORP.          
|CONSOLIDATED STATEMENTS OF LOSS AND
|COMPREHENSIVE LOSS AND DEFICIT     
|FOR THE YEARS ENDED JUNE 30        

|                                                                        |   |            |   |   |            |   |   |            |  
|----------------------------------------------------------------------- | - | ---------- | - | - | ---------- | - | - | ---------- | -
|EXPRESSED IN CANADIAN DOLLARS                                           |   | 2009       |   |   | 2008       |   |   | 2007       |  
|Sales (Note 9)                                                          | $ | 282,261    |   | $ | 249,042    |   |   | 256,243    |  
|                                                                       
|Cost of Sales                                                           |   | (224,687   | ) |   | (157,234   | ) |   | (165,920   | )
|                                                                       
|Gross Profit                                                            |   | 57,574     |   |   | 91,808     |   |   | 90,323     |  
|                                                                       
|Interest Income                                                         |   | 76,181     |   |   | 38,740     |   |   | -          |  
|                                                                       
|General & Administration Expenses                                       |   |            |   |   |            |   |   |            |  
|Advertising and Promotion                                               |   | 16,144     |   |   | 21,603     |   |   | 12,766     |  
|Amortization  Furniture and Equipment                                  |   | 1,955      |   |   | 2,095      |   |   | 8350       |  
| Patent Application and Development Costs                              |   | -          |   |   | 4,791      |   |   | 2131       |  
| Intangible Assets                                                     |   | -          |   |   | 5,800      |   |   | 5,800      |  
|Conference                                                              |   | 10,563     |   |   | 1,891      |   |   | 20         |  
|Consulting and Management Fees (Note 7(b) for stock-based compensation) |   | 567,144    |   |   | 1,004,660  |   |   | 308,600    |  
|Due Diligence                                                           |   | -          |   |   | 10,000     |   |   | 24,570     |  
|Dues and Filing Fees                                                    |   | 31,794     |   |   | 44,626     |   |   | -          |  
|Interest and Bank Charges                                               |   | 2,018      |   |   | 2,344      |   |   | 2,714      |  
|Investor Relations                                                      |   | 132,103    |   |   | 124,065    |   |   | 65,039     |  
|Legal and Accounting                                                    |   | 72,537     |   |   | 89,723     |   |   | 53,697     |  
|Office and Miscellaneous                                                |   | 47,940     |   |   | 35,797     |   |   | 24,008     |  
|Product Registration & Development                                      |   | 189,556    |   |   | 375,807    |   |   | -          |  
|Rent                                                                    |   | 26,320     |   |   | 24,737     |   |   | 28,370     |  
|Travel                                                                  |   | 8,744      |   |   | 17,905     |   |   | 10,259     |  
|Wages and Benefits                                                      |   | 209,946    |   |   | 302,439    |   |   | 116,633    |  
|                                                                       
|Total General & Administration Expenses                                 |   | 1,316,764  |   |   | 2,068,283  |   |   | (572,635   | )
|Net Gain on Legal Settlement (Note 17)                                  |   | -          |   |   | -          |   |   | 10,545     |  
|Loss and Comprehensive Loss for the Year                                |   | (1,183,009 | ) |   | (1,937,735 | ) |   | (562,090   | )
|                                                                        |   |            |   |   |            |   |   |            |  
|Deficit, Beginning of Year                                              |   | (4,541,526 | ) |   | (2,603,791 | ) |   | (2,041,701 | )
|                                                                       
|Deficit, End of Year                                                    | $ | (5,724,535 | ) | $ | (4,541,526 | ) | $ | (2,603,791 | )
|                                                                        |   |            |   |   |            |   |   |            |  
|Basic Loss Per Share                                                    |   | 0.02       |   |   | 0.05       |   |   | 0.02       |  
|Diluted Loss Per Share                                                  |   | 0.02       |   |   | 0.05       |   |   | 0.02       |  
|Weighted Average of Shares Outstanding                                  |   | 49,904,566 |   |   | 42,605,353 |   |   | 22,582,026 |  
|*See accompanying notes to the consolidated financial statements        |   |            |   |   |            |   |   |            |  

---

|                                     
|-------------------------------------
|ALDAPHARMACEUTICALS CORP.            
|CONSOLIDATED STATEMENTS OF CASH FLOWS
|FOR THE YEARS ENDED JUNE 30          

|                                                                 |   |            |   |            |            |   |          |          |  
|---------------------------------------------------------------- | - | ---------- | - | ---------- | ---------- | - | -------- | -------- | -
|EXPRESSED IN CANADIAN DOLLARS                                    |   | 2009       |   |            | 2008       |   |          | 2007     |  
|                                                                
|Operating Activities:                                            |   |            |   |            |            |   |          |          |  
|Loss and Comprehensive Loss for the Year                         | $ | (1,183,009 | ) | $          | (1,937,735 | ) | $        | (562,090 | )
|Items Not Involving Cash                                         |   |            |   |            |            |   |          |          |  
|Amortization  Furniture and Equipment                           |   | 1,955      |   |            | 2,095      |   |          | 8,350    |  
| Patent Application and Development Costs                       |   | -          |   |            | 4,791      |   |          | 2,131    |  
| Intangible Assets                                              |   | -          |   |            | 5,800      |   |          | 5,800    |  
|Stock-Based Compensation                                         |   | 336,838    |   |            | 903,565    |   |          | 148,100  |  
|Impairment Loss  Patent Application and Development Costs       |   | -          |   |            | 86,238     |   |          | -        |  
| Intangible Assets                                              |   | -          |   |            | 104,400    |   |          | -        |  
|                                                                 |   | (844,216   | ) | (830,846   | )          |   | (397,709 | )       
|                                                                
|Changes in Non-Cash Working Capital Items                        |   |            |   |            |            |   |          |          |  
|Decrease/ (Increase) in Accounts Receivable                      |   | (10,303    | ) |            | (18,269    | ) |          | 4,159    |  
|Decrease/ (Increase) in Inventory                                |   | (51,391    | ) |            | 9,473      |   |          | 11,364   |  
|Decrease/ (Increase) in Prepaid Expenses and Others              |   | (23,007    | ) |            | (20,733    | ) |          | (3,601   | )
|(Decrease)/ Increase in Accounts Payable and Accrued Liabilities |   | (1,706     | ) |            | (16,347    | ) |          | 14,764   |  
|                                                                 |   | (930,623   | ) |            | (876,722   | ) |          | (371,023 | )
|                                                                
|Investing Activities:                                            |   |            |   |            |            |   |          |          |  
|Patent Application and Development Costs                         |   | -          |   |            | (50,543    | ) |          | (42,617  | )
|Purchase of Furniture and Equipment                              |   | 839        | ) |            | (6,419     | ) |          | ( 1,633  | )
|Decrease/ (Increase) in Short Term Investments                   |   | 520,389    |   | (2,105,318 | )          |   | -        |         
|                                                                 |   | (519,550   | ) | (2,162,280 | )          |   | (44,250  | )       
|                                                                
|Financing Activities:                                            |   |            |   |            |            |   |          |          |  
|Net Proceeds on Issuance of Shares                               |   | -          |   | 1,038,725  |            |   | 546,720  |         
|Net Proceeds on Exercise of Warrants and Options                 |   | 96,000     |   | 1,985,200  |            |   | 196,200  |         
|                                                                 |   | 96,000     |   | 3,023,925  |            |   | 742,920  |         
|                                                                
|Increase/ (Decrease) in Cash and Equivalents                     |   | (315,073   | ) |            | (15,077    | ) |          | 327,647  |  
|                                                                
|Cash and Equivalents, Beginning of Year                          |   | 341,050    |   |            | 356,127    |   |          | 28,480   |  
|                                                                
|Cash and Equivalents, End of Year                                | $ | 25,977     |   | $          | 341,050    |   | $        | 356,127  |  
|*See accompanying notes to the consolidated financial statements |   |            |   |            |            |   |          |          |  
|                                                                
|Supplementary cash flow information (Note 13)                    |   |            |   |            |            |   |          |          |  

---

|                                              
|----------------------------------------------
|ALDAPHARMACEUTICALS CORP.                     
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|FOR THE YEARS ENDED JUNE 30, 2009 AND 2008    
|                                              

|   |                                       
|-- | --------------------------------------
|1. | NATURE OF OPERATIONS AND GOING CONCERN

ALDA Pharmaceuticals Corp. (the Company) was incorporated under the Company Act of British Columbia on May 30, 2000 and was classified as a Capital Pool Company as defined by the policies of the TSX Venture Exchange (the Exchange). The Company completed its required Qualifying Transaction on November 13, 2003, at which point it ceased to be a Capital Pool Company, and its shares resumed trading on the Exchange effective November 19, 2003.

The Companys main business activity is the development, production and marketing of infection control agent products, principally a product marketed as T36®. Effective November 26, 2003, the name of the Company was changed from Duft Biotech Capital Ltd. to ALDA Pharmaceuticals Corp.

These consolidated financial statements have been prepared on a going concern basis which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. During the years ended June 30, 2009, and 2008, the Company experienced operating losses and negative operating cash flows, operations of the Company having been funded by the issuance of share capital. Continued operations are dependent on the Companys ability to complete public equity financing or generate profitable operations in the future.

| |                 |            |        |            |  
| | --------------- | ---------- | ------ | ---------- | -
| |                 | 2009$      | 2008
$
| |                
| | Deficit         | (5,724,535 | )      | (4,541,526 | )
| | Working capital | 1,721,192  |        | 2,470,247  |  

|2. | SIGNIFICANT ACCOUNTING POLICIES
|-- | -------------------------------
|   |                                
|   | a)                             
|   |                                
|   |                                
|   |                                
|   | b)                             
|   |                                
|   |                                
|   |                                
|   | c)                             
|   |                                
|   |                                
|   |                                
|   | d)                             
|   |                                
|   |                                

---

|                                              
|----------------------------------------------
|ALDAPHARMACEUTICALS CORP.                     
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|FOR THE YEARS ENDED JUNE 30, 2009 AND 2008    
|                                              

|   |                                            
|-- | -------------------------------------------
|2. | SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

| | e) | Furniture and equipment                                                                       
| | -- | ----------------------------------------------------------------------------------------------
| |    |                                                                                               
| |    | Furniture and equipment is recorded at cost and is amortized using the following annual rates:
| |    |                                                                                               

| |                        |                   | 
| | ---------------------- | ----------------- | 
| | Furniture and fixtures | 20% Straight line | 
| | Computer equipment     | 30% Straight line | 
| | Computer software      | 30% Straight line | 

For the year of acquisition, the rate is one-half of the above.

| | f) | Impairment of long-lived assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | The Company reviews for impairment of long-lived assets, including patent application and development costs, intangible assets, and furniture and equipment, on an annual basis or whenever circumstances indicate that the carrying amount of an asset may not be recoverable from expected future cash flows. The assessment of recoverability is made based on projected undiscounted future net cash flows that are directly associated with the assets use and eventual disposition. The amount of the impairment loss, if any, measured as the amount by which the carrying amount of the asset exceeds its fair value, which measured by discounted cash flows when quoted market prices are not available.                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | g) | Patent application and development costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | Patent application and development costs include expenditures attributable to efforts by the Company research and develop and bring to commercial production a new product, as well as to acquire legal protections for its proprietary products, such as trademarks and patents. Research costs are expensed in the period in which they are incurred. Development costs are charged as an expense in the period incurred except in circumstances where the market and technical feasibility of the product have been established, recovery of these costs can reasonably be regarded as assured, and future values can be realized, in which case such costs are capitalized. In the latter case, patent application and development costs are amortized on a systematic basis over the patent life of 20 years.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | h) | Intangible assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | The carrying values of intangible assets which are determined to have a finite useful life are amortized on systematic basis over the useful life of 20 years. Intangible assets are subject to an impairment test on an annual basis, based on a comparison of the fair value of the intangible asset to its carrying value. The carrying value is adjusted for impairment as necessary and any excess of the carrying amount over the fair value of the intangible asset is charged to earnings in the period occurred.                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

| | i) | Revenue recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | The revenue of the Company is primarily derived from the sale of the Companys T36®product. Revenue is recognized at the time of shipment, at which point risks and rewards over ownership and title of transfer have passed to the customer. At the point of sale, the Company assesses whether collection of the amount billed to the customer is reasonably assured. If collection of the amount is not reasonably assured, the Company defers recognizing revenue until such point as collection is reasonably assured, usually upon receipt of payment. If the customer is not known to the Company, payment in advance is required and the revenue is recognized when the products are shipped. Revenue is recognized net of any expected sales return. Under the Companys current policy, returns of products are not allowed unless damaged products or the wrong products have been shipped by the Company.

---

|                                              
|----------------------------------------------
|ALDAPHARMACEUTICALS CORP.                     
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|FOR THE YEARS ENDED JUNE 30, 2009 AND 2008    
|                                              

|   |                                            
|-- | -------------------------------------------
|2. | SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

| | j) | Income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |    | Income taxes are recorded using the asset and liability method whereby future tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss carry forwards. Future tax assets and liabilities are measured using enacted or substantively enacted tax rates expected to apply when the asset is realized or the liability settled. The effect on future tax assets and liabilities of a change in tax rates is recognized in income in the year that substantive enactment or enactment occurs. To the extent that the Company does not consider it more likely than not that a future tax asset or portion thereof will be recovered, a valuation allowance is recorded.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | k) | Stock-based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |    | The Company applies the fair value method of accounting for stock options. Under this method, fair value of options granted is determined using the Black-Scholes option pricing model and is recorded as stock- based compensation expense over the awards vesting period, with an offsetting amount recorded to contributed surplus. The amount is transferred from contributed surplus to share capital upon exercise of the option.                                                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | l) | Share purchase warrants                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |    | The Company applies the fair value method of accounting for share purchase warrants. Under this method, proceeds received on issuance of units consisting of shares and warrants are allocated between contributed surplus and share capital based on their relative fair values, whereby the fair value of warrants is determined using the Black-Scholes option pricing model. The value of the warrants is transferred from contributed surplus to share capital upon exercise of the warrant.                                                                                                                                                                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | m) | Basis and diluted loss per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |    | Loss per share is calculated based on the weighted average number of common shares outstanding during the reported period. Basic loss per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding in the year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |    | The Company uses the treasury stock method to compute the dilutive effect of options, warrants and similar instruments. Under this method, the dilutive effect on loss per share is recognized on the use of the proceeds that could be obtained upon exercise of options, warrants and similar instruments. It assumes that the proceeds would be used to purchase common shares at the average market price during the year.                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | n) | Measurement uncertainty                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |    | The preparation of these consolidated financial statements in accordance with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and the reported amount of revenues and expenses during the period. Areas requiring significant management estimates include stock based compensation expense, valuation of share purchase warrants, and valuation of accounts receivables. Actual results could differ from these estimates.                                                                                                                                                                                                                                                                                                          
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | o) | Foreign Exchange                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |    | Assets and liabilities in U.S. dollars have been converted into Canadian dollars using the rate of exchange prevailing at June 30, 2009.Revenue and expenses were translated at the rate of exchange prevailing when the transactions were settled.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

---

|                                              
|----------------------------------------------
|ALDAPHARMACEUTICALS CORP.                     
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|FOR THE YEARS ENDED JUNE 30, 2009 AND 2008    
|                                              

|   |                                            
|-- | -------------------------------------------
|2. | SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Comprehensive income

Section 1530  Comprehensive Income  This section established standards for reporting and presentation of a statement of comprehensive income. Comprehensive income includes net earnings and other comprehensive income. Other comprehensive income is defined as the change in equity from transactions and other events from non owner sources. Other comprehensive income includes holding gains and losses on certain derivative instruments that are classified as available-for-sale, and gains or losses due to the change in foreign currency relating to self-sustaining foreign operations, all of which are not recognized in net earnings until realized.

Section 3251  Equity  In addition to Section 1530 (Comprehensive Income), this section establishes standards for the presentation of equity and changes in equity during the reporting period.

| | p) | Financial Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | Section 3855  Financial Instruments  Recognition and Measurement  This section established standards for recognizing and measuring financial instruments in the balance sheets and specifying how unrealized or realized gains and losses are to be presented during the reporting period. In accordance with the new accounting standard, all financial assets and financial liabilities are measured at fair value on initial recognition except for certain related party transactions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | Financial instruments have been classified as held-to-maturity, available-for-sale, held for trading, loans and receivables, or other financial liabilities. Financial assets that are held to maturity, other than those held for trading, are measured at amortized cost. Available-for-sale instruments are measured at fair value with unrealized gains and losses recognized in other comprehensive income until realized, at which time realized gains and losses will be recognized in net income. Held for trading instruments are measured at fair value with unrealized gains and losses recognized in the results of operations in the period in which they arise. Loans and receivables are measured at amortized cost using the effective interest method. Any gains or losses on the realization of loans and receivables are included in earnings. Financial liabilities that are not classified as held to maturity are classified as other financial liabilities, and are carried at amortized costs using the effective interest method. Any gains and losses on realization of other financial liabilities are included in earnings. Any transaction costs incurred to acquire financial instruments will be included in earnings.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | The Companys financial instruments consist of cash and equivalents, accounts receivable, prepaids and accounts payable and accrued liabilities. The fair value of these instruments approximates the carrying amounts due to the immediate or short-term maturity of these financial instruments. The Company has made the following classifications:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

| |                                          |                             | 
| | ---------------------------------------- | --------------------------- | 
| |                                          |                             | 
| | Cash and equivalents                     | Held for trading            | 
| | Short term investments                   | Held for trading            | 
| | Accounts receivable                      | Loans and receivables       | 
| | Accounts payable and accrued liabilities | Other financial liabilities | 

| | q) | Financial Instruments Disclosures and Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    | Section 3862  Financial Instruments  Disclosures and Section 3863  Financial Instruments  Presentation - These sections revised and enhance the disclosure requirements while carrying forward its presentation requirements. These new sections will place increased emphasis on disclosures about the nature and extent of risks associated with both recognized and unrecognized financial instruments, how the entity manages the risks, and the exposure to liquidity, currency and other price risks.

---

|                                              
|----------------------------------------------
|ALDAPHARMACEUTICALS CORP.                     
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|FOR THE YEARS ENDED JUNE 30, 2009 AND 2008    
|                                              

|2. | SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|-- | -------------------------------------------

It is managements opinion that the Company is not exposed to significant interest, currency, credit, and liquidity risk arising from these financial instruments. The Company has transactions denominated in US dollars but exposure to currency risk is immaterial. The Company mitigates its exposure to credit risk by maintaining its primary operating accounts with chartered banks in Canada and constantly monitoring the credit standing of counterparties. The Company manages its liquidity risk through the management of its capital as described in note 13. The Company does not use financial derivatives.

| | r) | Hedges                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |    | Section 3865  Hedges  This section establishes standards for the Company that chooses to designate qualifying transactions as hedges for accounting purposes. This section builds on Accounting Guideline AcG-13, Hedging Relationships, and Section 1650, Foreign Currency Translation. The Company does not use hedge accounting and has no hedging relationships.                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | s) | Capital disclosures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |    | Section 1535, Capital Disclosures  This section establishes standards for disclosing information about an entitys capital and how it is managed. It requires the disclosure of the entitys objectives, policies and processes for managing capital as well as summary quantitative data on the elements included in the management of capital. Please refer to note 13 for the companys capital disclosures note.                                                                                                                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | t) | Inventory                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |    | Section 3031  Inventories  This section establishes standards for measuring the inventories. The new standards require that the inventories shall be measured at the lower of cost and the net realizable value. This section provides guidelines on the determination of cost and its subsequent recognition as an expense, including any write-down to net realizable value and reversal of a previous write-down when the value of inventories is evidently increased due to the change in economic circumstances. The use of last-in, first-out method (LIFO) in measuring inventories is not recommended. This section applies to the companys annual financial statements for its fiscal year beginning July 1, 2008. The adoption of this new section has not materially impacted the financial statements.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

|3. | RECENT ACCOUNTING PRONOUNCEMENTS
|-- | --------------------------------

In February 2008, the CICA issued Handbook Section 3064, Goodwill and Intangible Assets, effective for interim and annual periods beginning on or after Oct 1, 2008. Section 3064, which replaces Section 3062, Goodwill and Other Intangible Assets, and Section 3450, Research and Development Costs, establishes standards for the recognition, measurement and disclosure of goodwill and intangible assets. The provisions relating the definition and initial recognition of intangible assets, including internally generated intangible assets, are equivalent to the corresponding provisions of International Financial Reporting Standards (IFRS) IAS 38, Intangible Assets. This new standard is effective for the Companys interim and annual financial statements commencing July 1, 2009. The Company is assessing the impact of the new standard on its financial statements.

As announced by the Canadian Accounting Standards Board (AcSB), the financial reporting requirements for Canadian companies will be changed to the use of International Financial Reporting Standards (IFRS), replacing Canadas own GAAP. The changeover date for publicly-listed companies is 2011. The Company has begun reviewing its plan for adopting IFRS for 2011. At this time, the Company has not yet determined the financial reporting impact due to the change in new reporting standards.

---

|                                              
|----------------------------------------------
|ALDAPHARMACEUTICALS CORP.                     
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|FOR THE YEARS ENDED JUNE 30, 2009 AND 2008    
|                                              

|   |                                            
|-- | -------------------------------------------
|2. | SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

In January 2009, the CICA issued Section 1582, Business Combinations, which replaces former guidance on business combinations. Section 1582 establishes principles and requirements of the acquisition method for business combination and related disclosures. The Section applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2011 with earlier adoption permitted. The Company is currently evaluating the impact of this standard on its financial statements.

In January 2009, the CICA issued Handbook Section 1601, Consolidated Financial Statements, which replaces the existing standard. This Section carries forward existing Canadian guidance for preparing consolidated financial statements other than non-controlling interests. The Section is effective for interim and annual financial statements beginning on January 1, 2011 and earlier adoption is permitted. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements.

In January 2009, the CICA issued Section 1602, Non-controlling Interests, which replaces existing guidance. Section 1602 provides guidance on accounting for a non-controlling interest in a subsidiary in consolidated financial statements subsequent to a business combination. These standards are effective on or after the beginning of the first annual reporting period on or after January 1, 2011 with earlier adoption permitted. As of June 30, 2009 the Company has no non-controlling interests, and accordingly there is no currently expected impact as a result of the standard.

In June 2009, the CICA amended Handbook Section 3855, "Financial Instruments - Recognition and Measurement, to clarify the application of the effective interest method after a debt instrument has been impaired. The Section has also been amended to clarify when an embedded prepayment option is separated from its host instrument for accounting purposes. The amendments apply to interim and annual financial statements relating to fiscal years beginning on or after May 1, 2009 for the amendments relating to the effective interest method and January 1, 2011 for the amendment relating to embedded prepayment options. The Company is currently evaluating the impact of the amendments.

|   |                       
|-- | ----------------------
|4. | SHORT TERM INVESTMENTS

Short term investments consists of highly liquid investments held in the Companys investment account, having maturity of 12 months or less and are readily convertible to cash.

|   |          
|-- | ---------
|5. | INVENTORY

Inventory consists of the following:

| |                |   |        |  |   |        | 
| | -------------- | - | ------ |  | - | ------ | 
| |                |   | 2009   |  |   | 2008   | 
| | Finished goods | $ | 25,607 |  | $ | 8,392  | 
| | Raw materials  |   | 36,227 |  |   | 2,051  | 
| |                | $ | 61,834 |  | $ | 10,443 | 

---

|                                              
|----------------------------------------------
|ALDAPHARMACEUTICALS CORP.                     
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|FOR THE YEARS ENDED JUNE 30, 2009 AND 2008    
|                                              

|   |                                              
|-- | ---------------------------------------------
|3. | RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED):

|   |                        
|-- | -----------------------
|6. | FURNITURE AND EQUIPMENT

Furniture and equipment consist of the following:

| |                        |   |        |  |   |                          |  |   |          |  |   |          | 
| | ---------------------- | - | ------ |  | - | ------------------------ |  | - | -------- |  | - | -------- | 
| |                        |   | Cost   |  |   | Accumulated
Amortization |  |   | 2009
Net |  |   | 2008
Net | 
| |                        |   |        |  |   |                          |  |   |         
| | Furniture and Fixtures | $ | 7,683  |  | $ | 7,683                    |  | $ | -        |  | $ | -        | 
| | Computer Equipment     |   | 31,374 |  |   | 26,683                   |  |   | 4,691    |  |   | 5,807    | 
| |                        | $ | 39,057 |  | $ | 34,366                   |  | $ | 4,691    |  | $ | 5,807    | 

|7. | SHAREHOLDERS EQUITY
|-- | --------------------
|   |                     
|   | a)                  
|   |                     
|   |                     
|   |                     
|   |                     
|   |                     
|   |                     

| |                          |                  |  |   |               |   |   |                              |   |   |                             |  
| | ------------------------ | ---------------- |  | - | ------------- | - | - | ---------------------------- | - | - | --------------------------- | -
| |                          | Number
of Shares |  |   | Share
Capital |   |   | Contributed
Surplus
Warrants |   |   | Contributed
Surplus
Options |  
| |                          |                  |  |   |               |   |   |                             
| |                          |                  |  |   |               |   |   |                             
| |                         
| | Balance, July 1, 2006    | 20,800,404       |  | $ | 1,969,562     |   | $ | 163,413                      |   | $ | 41,094                      |  
| | Issued during the year   |                  |  |   |               |   |   |                              |   |   |                             |  
| | Private Placement        | 9,430,000        |  |   | 467,480       |   |   | 404,020                      |   |   | -                           |  
| | Finders Fees            | -                |  |   | ( 6,180       | ) |   | -                            |   |   | -                           |  
| | Warrant Exercised        | 1,062,000        |  |   | 120,006       |   |   | (13,806                      | ) |   | -                           |  
| | Options Exercised        | 900,000          |  |   | 108,000       |   |   | -                            |   |   | (18,000                     | )
| | Options cancelled        | -                |  |   | -             |   |   | -                            |   |   | (3,000                      | )
| | Stock-based compensation | -                |  |   | -             |   |   | -                            |   |   | 151,000                     |  
| |                         
| | Balance, June 30, 2007   | 32,192,404       |  | $ | 2,658,868     |   | $ | 553,627                      |   | $ | 171,194                     |  
| | Issued during the year:  |                  |  |   |               |   |   |                              |   |   |                             |  
| | For cash                 |                  |  |   |               |   |   |                              |   |   |                             |  
| | Private placements       | 5,500,000        |  |   | 485,945       |   |   | 279,052                      |   |   | -                           |  
| | Exercise of warrants     | 11,086,500       |  |   | 2,303,349     |   |   | (385,147                     | ) |   | -                           |  
| | Exercise of options      | 650,000          |  |   | 96,000        |   |   | -                            |   |   | (29,000                     | )
| | Share issuance costs     | -                |  |   | (13,573       | ) |   | -                            |   |   | -                           |  
| | Finders fees            | 82,895           |  |   | (6,300        | ) |   | -                            |   |   | -                           |  
| | Stock-based compensation | -                |  |   | -             |   |   | -                            |   |   | 903,565                     |  
| |                         
| | Balance, June 30, 2008   | 49,511,799       |  | $ | 5,524,289     |   | $ | 447,532                      |   | $ | 1,045,759                   |  
| | Issued during the year:  |                  |  |   |               |   |   |                              |   |   |                             |  
| | For cash                 |                  |  |   |               |   |   |                              |   |   |                             |  
| | Exercise of options      | 1,830,000        |  |   | 318,100       |   |   | -                            |   |   | ( 109,100                   | )
| | Stock-based compensation | -                |  |   | -             |   |   | -                            |   |   | 336,838                     |  
| |                         
| | Balance, June 30, 2009   | 51,341,799       |  | $ | 5,842,389     |   | $ | 447,532                      |   | $ | 1,273,497                   |  

---

|                                              
|----------------------------------------------
|ALDAPHARMACEUTICALS CORP.                     
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|FOR THE YEARS ENDED JUNE 30, 2009 AND 2008    
|                                              

| | i) | On September 13, 2006, the Company completed a private placement of 1,430,000 units of the Company at a price of $0.05 per unit for gross proceeds of $71,500. Each unit consists of one common share of the Company and one share purchase warrant, each warrant entitling the holder to purchase one common share at a price of $0.10 per share for a period of 12 months following the closing date.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                        

|   |                                 
|-- | --------------------------------
|7. | SHAREHOLDERS EQUITY (CONTINUED)

| | ii)  | On June 7, 2007, the Company completed a private placement of 8,000,000 units of the Company at a price of $0.10 per unit for gross proceeds of $800,000. Each unit consists of one common share of the Company and one share purchase warrant. Each warrant entitles the holder to acquire one additional common share at a price of $0.20 per share until June 7, 2008 and, thereafter at a price of $0.30 per share until June 7, 2009. Finders fees in the amount of $6,180 were charged against the share capital in connection with the private placement.                                                                                                                                                                                                 
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | iii) | During the year ended June 30, 2007, 900,000 options and 1,062,000 warrants were exercised by the holders at a price of $0.10 per unit for gross proceeds of $196,200. Option values of $18,000 previously recorded in contributed surplus for options were credited to share capital.                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | iv)  | On August 14, 2007, the Company completed a private placement of 2,000,000 units of the Company at a price of $0.12 per unit for gross proceeds of $240,000. Each unit consists of one common share of the Company and one share purchase warrant. Each warrant entitles the holder to acquire one additional common share at a price of $0.24 per share until August 13, 2008 and, thereafter at a price of $0.36 per share until August 13, 2009. Finders fees and legal fees in the amount of $13,920 were charged against share capital in connection with the private placement. Warrants were valued at $90,108.                                                                                                                                           
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | v)   | On November 22, 2007, the Company completed a private placement of 3,500,000 units of the Company at a price of $0.15 per unit for gross proceeds of $525,000. Each unit consists of one common share of the Company and one share purchase warrant. Each warrant entitles the holder to acquire one additional common share at a price of $0.30 per share until November 22, 2008 and, thereafter at a price of $0.45 per share until November 22, 2009. 5% finders fee in the amount of $15,750 was to satisfied by the delivery of 82,895 common shares of the Company at a deemed price per share of $0.19. Legal fees in the amount of $5,953 were charged against share capital in connection with the private placement. Warrants were valued at $188,943.
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | vi)  | During the year ended June 30, 2008, 650,000 options and 11,086,500 warrants were exercised by the holders at an exercise price range of $0.10 to $0.11 per option for total gross proceeds of $67,000 and at an exercise price range of $0.10 to $0.30 per warrant for total gross proceeds of 1,918,200. Options value  of $29,000 and warrants value of $385,147 previously recorded in contributed surplus for options and warrants were credited to share capital, respectively.                                                                                                                                                                                                                                                                             

---

|                                              
|----------------------------------------------
|ALDAPHARMACEUTICALS CORP.                     
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|FOR THE YEARS ENDED JUNE 30, 2009 AND 2008    
|                                              

| | vii) | During the year ended June 30, 2009, 1,830,000 options were exercised by the holders at an exercise price range of $0.10 to $0.12 per option for total gross proceeds of $209,000, $113,000 of which had not been received and remained outstanding as at June 30, 2009. Options value of $109,100 previously recorded in contributed surplus for options were credited to share capital.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                          

| |    |              
| | -- | -------------
| | b) | Stock options

The Company has adopted an incentive share purchase option plan under the rules of the TSX Venture Exchange pursuant to which it is authorized to grant options to executive officers, directors, employees and consultants, enabling them to acquire up to 10% of the issued and outstanding common shares of the Company. The options can be granted for a maximum term of 5 years and generally vest either immediately or in specified increments of 25%. No individual may hold options to purchase common shares of the Company exceeding 5% of the total number of common shares outstanding from time to time. Pursuant to the policies of the TSX Venture Exchange, shares issued on exercise of options are restricted from trading during the four month period subsequent to the date of grant.

A summary of the Companys stock options and changes during each year is presented below:

| |                                    |                 |                              |   |                  |                                 |                          |                                 |                          |           |   |   |      |  |  |            |   |   |      | 
| | ---------------------------------- | --------------- | ---------------------------- | - | ---------------- | ------------------------------- | ------------------------ | ------------------------------- | ------------------------ | --------- | - | - | ---- |  |  | ---------- | - | - | ---- | 
| |                                    |                 | Year EndedJune 30, 2009      |   |                  |                                 | Year Ended June 30, 2008 |                                 | Year Ended June 30, 2007
|
| |                                    | Number ofShares | WeightedAverageExercisePrice |   | Number of Shares | Weighted Average Exercise Price | Number of Shares         | Weighted Average Exercise Price
|
|
|
| | Outstanding, beginning of the year |                 | 4,800,000                    |   | $                | 0.42                            |                          |                                 |                          | 2,480,000 |   | $ | 0.11 |  |  | 537,647    |   | $ | 0.19 | 
| | Granted during year                |                 |                              |   |                  |                                 |                          |                                 |                          |           |   |   |      |  |  |            |   |   |      | 
| | -consulting/officers               |                 | 900,000                      |   |                  | 0.24                            |                          |                                 |                          | 1,870,000 |   |   | 0.62 |  |  | 2,130,000  |   |   | 0.10 | 
| |                                    |                
| | -directors                         |                 | 800,000                      |   |                  | 0.24                            |                          |                                 |                          | 500,000   |   |   | 0.62 |  |  | 1,050,000  |   |   | 0.11 | 
| | -employees                         |                 | 250,000                      |   |                  | 0.24                            |                          |                                 |                          | 200,000   |   |   | 0.65 |  |  | 350,000    |   |   | 0.10 | 
| | -investor relations                |                 | 200,000                      |   |                  | 0.24                            |                          |                                 |                          | 400,000   |   |   | 0.58 |  |  | -          |   |   | -    | 
| | Exercised during year              |                 | (1,830,000                   | ) |                  | 0.12                            |                          |                                 |                          | ( 650,000 | ) |   | 0.10 |  |  | (1,587,647 | ) |   | 0.13 | 
| |                                    |                
| | Outstanding, end of year           |                 | 5,120,000                    |   | $                | 0.45                            |                          |                                 |                          | 4,800,000 |   | $ | 0.42 |  |  | 2,480,000  |   | $ | 0.11 | 

The following table summarizes information about stock options outstanding at June 30, 2009:

| |                  |                |                  |                    |               
| | ---------------- | -------------- | ---------------- | ------------------ | --------------
| | Number of
Shares | Exercise
Price | Expiry
Date      | Number
Exercisable | Exercise
Price
|
| | 550,000          | $ 0.20         | October 31, 2013 | 525,000            | $ 0.20        
| | 1,600,000        | $ 0.25         | June 4, 2014     | 1,450,000          | $ 0.25        
| | 1,820,000        | $ 0.50         | December 7, 2010 | 1,767,925          | $ 0.50        
| | 1,150,000        | $ 0.80         | May 2, 2011      | 1,150,000          | $ 0.80        
| | 5,120,000        | $ 0.45         |                  | 4,895,925          | $ 0.46        

| | (i) | During the year ended June 30, 2007, the Company granted options to acquire 730,000 common shares of the Company to certain consultants and scientific advisors for their services provided to the Company. These options have an exercise price of $0.10 per share. 430,000 of these options have an exercisable period of two years from the date of grant; the remaining 300,000 options have an exercisable period of five years from the date of grant. 530,000 options vested immediately.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|                                              
|----------------------------------------------
|ALDAPHARMACEUTICALS CORP.                     
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|FOR THE YEARS ENDED JUNE 30, 2009 AND 2008    
|                                              

|7. | SHAREHOLDERS EQUITY (CONTINUED)
|-- | --------------------------------

The remaining options are subject to other performance criteria. The options to acquire 430,000 common shares of the Company have an estimated fair value of $0.02 per share ($8,600) and the options to acquire 300,000 common shares of the Company have an estimated fair value of $0.04 per share ($12,000). $12,600 was recognized.

| | (ii)  | During the year ended June 30, 2007, the Company granted options to acquire 1,150,000 common shares of the Company to employees, directors and senior officers. The options have an exercise price of $0.10 with an exercisable term of two years from the date of the grant. All options vested immediately with an estimated fair value of $0.02 per share resulting in $23,000 in stock based compensation expense being recognized.                                                                                                                                         
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (iii) | During the year ended June 30, 2007, options granted to an employee to acquire 150,000 common shares of the Company were cancelled due to the employees departure. The related expense of $3,000 ($0.02 per share), previously booked in wages and benefits in the Statement of Operations, was reversed and charged against the contributed surplus.                                                                                                                                                                                                                          
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (iv)  | During the year ended June 30, 2007, the Company granted options to acquire 500,000 common shares of the Company to employees and directors. The options have an exercise price of $0.11 with an exercisable term of two years from the date of the grant. All options vested immediately with an estimated fair value of $0.07 per share resulting in $35,000 in stock based compensation expense being recognized.                                                                                                                                                            
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (v)   | During the year ended June 30, 2007, the Company granted options to acquire 1,150,000 common shares of the Company to directors, consultants and officers. The options have an exercise price of $0.12 with and exercisable term of two years from the date of grant. All options vested immediately with an estimated fair value of $0.07 per share resulting in $80,500 in stock based compensation expense being recognized.                                                                                                                                                 
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (vi)  | On December 12, 2007, the Company granted options to acquire 1,820,000 common shares of the Company to directors, consultants, officers, employees and investor relations. The options have an exercise price of $0.50 with an exercisable term of three years expiring December 7, 2010. 1,270,000 options vested immediately with an estimated fair value of $0.26 per share resulting $333,404 in stock based compensation expense being recognized. 550,000 options shall be vested in equal quarterly installments over a period of 12 to 24 months from the date of grant.
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (vii) | On May 2, 2008, the Company granted options to acquire 1,150,000 common shares of the Company to directors, consultants, officers, employees and investor relations. The options have an exercise price of  $0.80 with an exercisable term of three years expiring May 2, 2011. 1,050,000 options vested immediately with an estimated fair value of $0.47 per share resulting $489,234 in stock based compensation expense being recognized. 100,000 options shall be vested in equal quarterly installments  over a period of 12 months from the date of grant.               

---

|                                              
|----------------------------------------------
|ALDAPHARMACEUTICALS CORP.                     
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|FOR THE YEARS ENDED JUNE 30, 2009 AND 2008    
|                                              

|   |                                 
|-- | --------------------------------
|7. | SHAREHOLDERS EQUITY (CONTINUED)

| | (viii) | On October 31, 2008, the Company granted options to acquire 550,000 common shares of the Company to directors, consultants, officers, employees and investor relations. The options have an exercise price of $0.20 with an exercisable term of five years expiring on October 31, 2013. 550,000 options vested immediately with an estimated fair value of $0.09 per share resulting $48,743 in stock based compensation expense being recognized. 50,000 options shall be vested in equal quarterly installments over a period of 12 months from the date of grant.
| | ------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (ix)   | On June 5, 2009, the Company granted options to acquire 1,600,000 common shares of the Company to directors, consultants, officers, employees and investor relations. The options have an exercise of $0.25 with an exercisable term of five years expiring on June 4, 2014. 1,450,000 options vested immediately with an estimate fair value of $0.13 per share resulting $185,853 in stock based compensation expense being recognized. 150,000 options shall be vested in equal quarterly installments over a period of 12 months from the date of grant.         
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (x)    | During the year ended June 30, 2009, 1,830,000 options were exercised by the holders at an exercise price range of $0.10 - $0.12 for total gross proceeds of $209,000. Options value of $109,100 previously recorded in contributed surplus for options were credited to share capital.                                                                                                                                                                                                                                                                              

Stock-based compensation expense is presented in the Statement of Operations and Deficit as follows:

| |                                |   |         |  |   |         |  |   |         | 
| | ------------------------------ | - | ------- |  | - | ------- |  | - | ------- | 
| |                                |   | 2009    |  |   | 2008    |  |   | 2007    | 
| | Consulting/Officers            | $ | 138,284 |  | $ | 605,068 |  | $ | 83,600  | 
| | Investor Relations             |   | 73,859  |  |   | 53,707  |  |   | 2,000   | 
| | Wages and Benefits             |   | 124,695 |  |   | 244,790 |  |   | 62,500  | 
| | Total Stock-Based Compensation | $ | 336,838 |  | $ | 903,565 |  | $ | 148,100 | 

---

|                                              
|----------------------------------------------
|ALDAPHARMACEUTICALS CORP.                     
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|FOR THE YEARS ENDED JUNE 30, 2009 AND 2008    
|                                              

|   |                                 
|-- | --------------------------------
|7. | SHAREHOLDERS EQUITY (CONTINUED)

The fair value of each option was estimated as at the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:

| |                              |                |              |           
| | ---------------------------- | -------------- | ------------ | ----------
| |                              | 2009           | 2008         | 2007      
| | Dividend yield               | 0%             | 0%           | 0%        
| | Expected volatility          | 116.8 - 119.9% | 112.3-116.8% | 128.90%   
| | Risk free interest rate      | 1.20  2.22%   | 2.78-3.70%   | 4.19%     
| | Expected average option term | 2 years        | 2 years      | 2.25 years

| |    |         
| | -- | --------
| | c) | Warrants

The Company has issued warrants entitling the holders to acquire common shares of the Company.

A summary of changes in unexercised warrants is presented below:

| |                            |                  |                  |                  |                      |                      |                      |             
| | -------------------------- | ---------------- | ---------------- | ---------------- | -------------------- | -------------------- | -------------------- | ------------
| |                            | Warrants @ $0.20 | Warrants @ $0.10 | Warrants @ $0.10 | Warrants @ $0.30 (1) | Warrants @ $0.36 (2) | Warrants @ $0.45 (3) | Total       
| | Outstanding, July 1, 2006  | 3,220,500        | 5,016,000        | -                | -                    | -                    | -                    | 8,236,500   
| | Granted during Period      | -                | 1,430,000        | -                | 8,000,000            |                      | -                    | 9,430,000   
| | Warrants extended          | -                | -                | 3,916,000        | -                    |                      |                      | 3,916,000   
| | Warrant exercised          | -                | (80,000)         | (982,000)        | -                    | -                    | -                    | (1,062,000) 
| |                           
| | Expired during Period      | (3,220,500)      | (4,936,000)      |                  | -                    |                      |                      | (8,156,500) 
| | Outstanding, June 30, 2007 | -                | 1,430,000        | 2,934,000        | 8,000,000            | -                    | -                    | 12,364,000  
| | Granted during Period      | -                | -                | -                | -                    | 2,000,000            | 3,500,000            | 5,500,000   
| | Warrant exercised          | -                | (1,330,000)      | (2,934,000)      | (4,795,000)          | (1,257,500)          | (770,000)            | (11,086,000)
| |                           
| | Expired during Period      | -                | ( 100,000)       | -                | -                    | -                    | -                    | (100,000)   
| | Outstanding, June 30, 2008 |                  |                  | -                | 3,205,000            | 742,500              | 2,730,000            | 6,677,500   
| | Expired during Year        | -                | -                | -                | (3,205,000)          | -                    | -                    | (3,205,000) 
| | Outstanding, June 30, 2009 | -                | -                | -                | -                    | 742,500              | 2,730,000            | 3,472,500   

| | (1) | Exercisable at a price of $0.30 per share until June 7, 2009, granted pursuant to private placement.     
| | --- | ---------------------------------------------------------------------------------------------------------
| | (2) | Exercisable at a price of $0.36 per share until August 13, 2009, granted pursuant to private placement.  
| | (3) | Exercisable at a price of $0.45 per share until November 22, 2009, granted pursuant to private placement.

---

|                                              
|----------------------------------------------
|ALDAPHARMACEUTICALS CORP.                     
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|FOR THE YEARS ENDED JUNE 30, 2009 AND 2008    
|                                              

|   |                                 
|-- | --------------------------------
|7. | SHAREHOLDERS EQUITY (CONTINUED)

The fair value of each warrant was estimated as at the date of grant using the Black-Scholes pricing model with the following weighted-average assumptions:

| |                              |      |                |           
| | ---------------------------- | ---- | -------------- | ----------
| |                              | 2009 | 2008           | 2007      
| | Dividend yield               | -    | 0%             | 0%        
| | Expected volatility          | -    | 112.72-129.97% | 128.10%   
| | Risk free interest rate      | -    | 3.54-4.41%     | 4.20%     
| | Expected average option term | -    | 2 years        | 1.85 years

| |    |                                
| | -- | -------------------------------
| | d) | Contributed surplus - Warrants:

There was no activity affecting the contributed surplus for the year ended June 30, 2009. Contributed surplus attributed to the issuance of warrants, and activity during the 2008 year, are summarized as follows:

| |                                |   |         |   |          |   |   |         |  
| | ------------------------------ | - | ------- | - | -------- | - | - | ------- | -
| |                                |   | 2009    |   | 2008     |   |   | 2007    |  
| | Balance, beginning of year     | $ | 447,532 | $ | 553,627  |   | $ | 163,413 |  
| | Private Placement (Note 7 (a)) |   | -       |   | 279,052  |   |   | 404,020 |  
| | Warrant Exercised (Note 7 (a)) |   | -       |   | (385,147 | ) |   | (13,806 | )
| | Balance, end of year           | $ | 447,532 | $ | 447,532  |   | $ | 553,627 |  

| |    |                               
| | -- | ------------------------------
| | e) | Contributed surplus - Options:

Contributed surplus attributed to the granting of stock options, and activity during the 2009 and 2008 years, are summarized as follows:

| |                                      |   |           |   |   |           |   |   |         |  
| | ------------------------------------ | - | --------- | - | - | --------- | - | - | ------- | -
| |                                      |   | 2009      |   |   | 2008      |   |   | 2007    |  
| | Balance, beginning of year           | $ | 1,045,759 |   | $ | 171,194   |   | $ | 41,094  |  
| | Options issued to employees          |   | 30,066    |   |   | 72,846    |   |   | 12,000  |  
| | Options issued to directors          |   | 94,629    |   |   | 171,944   |   |   | 53,500  |  
| | Options issued to consultants        |   | 138,284   |   |   | 605,068   |   |   | 85,600  |  
| | Options issued to investor relations |   | 73,859    |   |   | 53,707    |   |   | -       |  
| | Options forfeited / cancelled        |   | -         |   |   | -         |   |   | (3,000  | )
| | Options exercised                    |   | ( 109,100 | ) |   | (29,000   | ) |   | (18,000 | )
| | Balance, end of year                 | $ | 1,273,497 |   | $ | 1,045,759 |   | $ | 171,194 |  

|   |                         
|-- | ------------------------
|8. | SUBSCRIPTIONS RECEIVABLE

Subscriptions receivable bears interest at prime plus 2% per annum, and is payable by June 30, 2009.

|   |                
|-- | ---------------
|9. | MAJOR CUSTOMERS

| | a) | For the year ended June 30, 2009, revenue from four major customers accounted for 64% of total revenues (2008: 55% from four customers). Revenue from these customers totaled $174,490 (2008: $137,954)
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|                                              
|----------------------------------------------
|ALDAPHARMACEUTICALS CORP.                     
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|FOR THE YEARS ENDED JUNE 30, 2009 AND 2008    
|                                              

|10. | COMMITMENTS 
|--- | ------------
|    |             
|    | a)          
|    |             
|    | b)          
|    |             
|11. | INCOME TAXES
|    |             
|    |             

| |       |          
| | ----- | ---------
| |       | Year     
| | 2009  | 76,818   
| | 2010  | 60,915   
| | 2014  | 603,255  
| | 2015  | 582,793  
| | 2026  | 463,528  
| | 2027  | 458,538  
| | 2028  | 893,646  
| | 2029  | 859,482  
| | Total | 3,998,975

| |      | The potential future income tax benefit which may arise from claiming these losses has not been reflected in these financial statements, as the Companys ability to realize the benefit is uncertain.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                       
| | (ii) | Following is a reconciliation of the expected income tax benefit from the loss for each year based on the applicable statutory income tax rate, to the actual amount:                                 

| |                                                          |  |          |   |  |       |   |   |          |   |  |       |  
| | -------------------------------------------------------- |  | -------- | - |  | ----- | - | - | -------- | - |  | ----- | -
| |                                                          |  | 2009     |   |  | 2008  |  
| | Loss at statutory rate                                   |  | 363,775  |   |  | 30.75 | % | $ | 635,771  |   |  | 32.81 | %
| | Effect of reduction in tax rates                         |  | (56,989  | ) |  |       |   |   | ( 75,960 | ) |  |       |  
| | Stock based compensation not deductible for tax purposes |  | (103,578 | ) |  |       |   |   | (296,460 | ) |  |       |  
| | Tax benefit from share issuance costs not recognized     |  | 5,517    |   |  |       |   |   | 6,520    |   |  |       |  
| | Other non-deductible expenses                            |  | (11,261  | ) |  |       |   |   | ( 1,105  | ) |  |       |  
| | Increase in allowance for uncertain realization          |  | (197,465 | ) |  |       |   |   | (268,766 | ) |  |       |  
| | Increase in tax asset per financial Statements           |  | -        |   |  |       |   | $ | -        |   |  |       |  

The income tax effects of losses carried forward and of cumulative temporary differences that give rise to a future tax asset are summarized as follows:

---

|                                              
|----------------------------------------------
|ALDAPHARMACEUTICALS CORP.                     
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|FOR THE YEARS ENDED JUNE 30, 2009 AND 2008    
|                                              

|11. | INCOME TAXES (CONTINUED)
|--- | ------------------------
|    |                         

| |                                                          |   |            |   |   |             |  
| | -------------------------------------------------------- | - | ---------- | - | - | ----------- | -
| |                                                          |   | 2009       |   |   | 2008        |  
| | Tax losses carried forward                               |   | 1,199,692  |   | $ | 993,366     |  
| | Temporary differences  intangible assets                |   | 62,748     |   |   | 65,886      |  
| | Temporary differences  property and equipment           |   | 8,702      |   |   | 8,521       |  
| | Temporary differences  financing costs                  |   | 5,058      |   |   | 10,962      |  
| | Net tax asset before allowance for uncertain realization |   | 1,276,200  |   |   | 1,078,735   |  
| | Allowance for uncertain realization                      |   | (1,276,200 | ) |   | ( 1,078,735 | )
| | Tax asset per financial statement                        | $ | -          |   | $ | -           |  

|12. | RELATED PARTY TRANSACTIONS                                                                                                                                                                                                      
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                 
|    | a)                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                 
|    | b)                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                 
|    | c)                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                 
|    | d)                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                 
|    | These transactions were measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties. All related party transactions were in the normal course of business operations.
|    |                                                                                                                                                                                                                                 
|13. | STATEMENTS OF CASH FLOWS  SUPPLEMENTARY INFORMATION                                                                                                                                                                            
|    |                                                                                                                                                                                                                                 
|    | a)                                                                                                                                                                                                                              

| |                                             |   |        |  |   |        |  |   |       | 
| | ------------------------------------------- | - | ------ |  | - | ------ |  | - | ----- | 
| |                                             |   | 2009   |  |   | 2008   |  |   | 2007  | 
| | Cash received during the year from interest | $ | 76,181 |  | $ | 38,740 |  | $ |       | 
| | Cash paid during the year for interest      | $ | 0      |  | $ | 0      |  | $ | 1,324 | 
| | Cash paid during the year for income taxes  | $ | 0      |  | $ | 0      |  | $ | 0     | 

---

|                                              
|----------------------------------------------
|ALDAPHARMACEUTICALS CORP.                     
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|FOR THE YEARS ENDED JUNE 30, 2009 AND 2008    
|                                              

|13. | STATEMENTS OF CASH FLOWS  SUPPLEMENTARY INFORMATION (CONTINUED)
|--- | ----------------------------------------------------------------
|    |                                                                 
|    | b)                                                              
|    |                                                                 
|    |                                                                 
|    |                                                                 
|    | c)                                                              
|    |                                                                 
|    |                                                                 
|    |                                                                 
|    |                                                                 
|    |                                                                 
|    | d)                                                              
|    |                                                                 
|    |                                                                 
|    |                                                                 

|14. | CAPITAL DISCLOSURES
|--- | -------------------

The Companys objectives when managing capital is to maintain sufficient cash resources to support its research and development activities, pre-clinical trial program, intellectual property protection and expansion on its T36®technology. The Company includes shareholders equity and cash and its equivalent in the definition of capital. The Company does not have any debt obligation other than trade accounts payable. The availability of capital is solely through the issuance of the Companys common shares. The Company will not issue additional equity until such time when funds are needed and the market conditions become favorable to the Company. There are no assurances that funds will be made available to the Company when required. The Company makes every effort to safeguard its capital and minimize its dilution to its shareholders.

The Company is not subject to any externally imposed capital requirements.

|    |                  
|--- | -----------------
|15. | SUBSEQUENT EVENTS

| | a) | Subsequent to the year ended June 30, 2009, 742,500 warrants at an exercise price of $0.36 per warrant expired unexercised.                                                                                                                                                                                                                                                                                                                                                                                                            
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | b) | The Company closed a private placement for total gross proceeds of $1.5 million. A total of six million units of the Company were issued at a price of 25 cents per unit. Each unit consists of one common share of the Company and one non-transferable share purchase warrant entitling the holder to acquire one additional common of the Company at a price of 40 cents per common share for a period of 12 months from the date of the issuance of the purchase warrant with a forced exercise provision attached to each warrant.

---

|                                              
|----------------------------------------------
|ALDAPHARMACEUTICALS CORP.                     
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|FOR THE YEARS ENDED JUNE 30, 2009 AND 2008    
|                                              

|    |                              
|--- | -----------------------------
|15. | SUBSEQUENT EVENTS (CONTINUED)

| | c) | On July 15, 2009, ALDA Pharmaceuticals Corp. named Official Supplier for the 2010 Winter Games. ALDA has exclusive rights as an Official Supplier in the Hand Sanitizer and Disinfectant Cleaning Products product category for the 2010 Winter Games and rights to associate with the Canadian Olympic Team competing at the Vancouver 2010 Olympic Winter Games and the London 2012 Olympic Games.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                     

|16. | SEGMENTED INFORMATION
|--- | ---------------------

The Companys assets as well as sales are all located and have occurred all in Canada.

|17. | GAIN ON LEGAL SETTLEMENT
|--- | ------------------------

During the 2005 year, the Company commenced legal action against a competitor with respect to certain alleged defamatory statements made by the competitor. This claim was settled effective July 12, 2006, by an agreement under which the Company was to receive an amount of $15,000 from the competitor. The proceeds of the settlement, net of associated legal costs in the amount of $4,455, have been recognized in the Statement of Operations and Deficit for the period ended June 30, 2007.

|18. | FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
|--- | ---------------------------------------------------

The Companys financial instruments include cash, accounts receivable, share subscriptions receivable and accounts payable and accrued liabilities. The carrying values of these financial instruments approximate their fair values due to their relatively short periods to maturity. The Companys risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to market conditions and the Companys activities. The Company has exposure to credit risk, liquidity risk and market risk as a result of its use of financial instruments.

This note presents information about the Companys exposure to each of the above risks and the Companys objectives, policies and processes for measuring and managing these risks. Further quantitative disclosures are included throughout these financial statements. The Board of Directors has overall responsibility for the establishment and oversight of the Companys risk management framework. The Board has implemented and monitors compliance with risk management policies.

| | a) | Credit risk                                                                                                                                                                                                                                                                                                        
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                    
| |    | Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises primarily from the Companys cash and cash equivalents, trade receivables, and GST input tax credits.                                        
| |    |                                                                                                                                                                                                                                                                                                                    
| |    | The Companys cash and cash equivalents are held through a large Canadian financial institution. Cash equivalents are composed of financial instruments issued by Canadian banks with high investment-grade ratings. The Company does not have financial assets that are invested in asset backed commercial paper.

---

|                                              
|----------------------------------------------
|ALDAPHARMACEUTICALS CORP.                     
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|FOR THE YEARS ENDED JUNE 30, 2009 AND 2008    
|                                              

|18. | FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONTINUED)
|--- | ---------------------------------------------------------------

The Company performs ongoing credit evaluations of its trade receivables, but does not require collateral. The Company establishes an allowance for doubtful accounts based on the credit risk applicable to particular customers and historical data.

The Company monitors the concentration of exposure and where possible, if necessary, takes steps to limit exposures to any one counterparty. The Company views credit risk on cash deposits, trade receivables, and GST input tax credits as minimal.

| | b) | Liquidity risk                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    | Liquidity risk is the risk that the Company will incur difficulties meeting its financial obligations as they are due. The Companys approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions without incurring unacceptable losses or risking harm to the Companys reputation. See Note 1 for working capital balances.            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    | The Company monitors its spending plans, repayment obligations and cash resources and takes actions with the objective of ensuring that there is sufficient capital in order to meet short-term business requirements. To facilitate its expenditure program, the Company raises funds primarily through public equity financing. The Company anticipates it will have adequate liquidity to fund its financial liabilities through future equity contributions.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    | As at June 30, 2009, the Companys financial liabilities were comprised of accounts payable and accrued liabilities which have a maturity of less than one year.                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

| | c) | Market risk                                                                                                                                                                                                              
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                          
| |    | Market risk for the Company consists of currency risk, and interest rate risk. The objective of market risk management is to manage and control market risk exposures within acceptable limits, while maximizing returns.
| |    |                                                                                                                                                                                                                          

| | i)  | Currency risk                                                                                                                                                                                                                                                                                                                                                                                
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                              
| |     | Foreign currency exchange rate risk is the risk that the fair value or future cash flows will fluctuate as a result of changes in foreign exchange rates. As all of the Companys purchases and sales are denominated in Canadian dollars, and has no significant cash balances denominated in foreign currencies, the Company is not exposed to foreign currency exchange risk at this time.
| |     |                                                                                                                                                                                                                                                                                                                                                                                              
| | ii) | Interest rate risk                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                              
| |     | Interest rate risk is the risk that fair values or future cash flows will fluctuate as a result of changes in market interest rates.                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                              
| |     | In respect of financial assets, the Companys policy is to invest cash at floating interest rates and cash reserves are to be maintained in cash equivalents in order to maintain liquidity, while achieving a satisfactory return for shareholders. Fluctuations in interest rates impact marginally on the value of cash and equivalents.                                                  

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|                                              
|----------------------------------------------
|ALDAPHARMACEUTICALS CORP.                     
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|FOR THE YEARS ENDED JUNE 30, 2009 AND 2008    
|                                              

|18. | FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONTINUED)
|--- | ---------------------------------------------------------------

The Company is not exposed to interest rate risk on its short term liabilities, and does not have any long-term liabilities.

|19. | UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
|--- | ------------------------------------------------------

These financial statements have been prepared in accordance with Canadian generally accepted accounting principles in Canada (Canadian GAAP) which are substantially the same as principles applicable in the United States (US GAAP) and practices prescribed by the United States Securities and Exchange Commission (SEC), except for the following:

| | a) | Comprehensive income:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    | Statement of Financial Accounting Standards No. 130 requires the reporting of Comprehensive Income. Comprehensive income includes net income plus other comprehensive income. Other comprehensive income includes all changes in equity of a company during the period arising from non-owner sources. The Company did not have any other comprehensive income during the years ended June 30, 2009 and 2008.                                                                                           
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | b) | Product development costs:                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    | Under Canadian GAAP, product development costs are charged as an expense in the period incurred except in circumstances where the market and feasibility of the product have been established, and recovery of development costs can reasonably be regarded as assured, in which case such costs are capitalized. US GAAP requires that these expenditures be expense in the year incurred. The Company has not capitalized any product development costs during the years ended June 30, 2009 and 2008.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

| | c) | Recent United States Accounting Pronouncements:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | Selected recent pronouncements issued by the Financial Accounting Standards Board (FASB) are summarized below. None of these changes are expected to have a material impact on the financial statements of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | In December 2007, the FASB issued SFAS 141 (revised 2007), Business Combinations (SFAS 141R). SFAS 141R significantly changes the accounting for business combinations in a number of areas including the treatment of contingent consideration, preacquisition contingencies, transaction costs, in-process research and development, and restructuring costs. In addition, under SFAS 141R, changes in an acquired entity's deferred tax assets and uncertain tax positions after the measurement period will impact income tax expense. SFAS 141R is effective for fiscal periods beginning after December 15, 2008. We will adopt SFAS 141R on July 1, 2009. This standard will change our accounting treatment for business combinations on a prospective basis.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | In December 2007, the FASB issued SFAS 141 (revised 2007), Business Combinations (SFAS 141R). SFAS 141R significantly changes the accounting for business combinations in a number of areas including the treatment of contingent                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

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|                                              
|----------------------------------------------
|ALDAPHARMACEUTICALS CORP.                     
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|FOR THE YEARS ENDED JUNE 30, 2009 AND 2008    
|                                              

|19. | UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
|--- | ------------------------------------------------------

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities (SFAS 161). SFAS 161 amends and expands the disclosure requirements of SFAS 133, Accounting for Derivative Instruments and Hedging Activities. It requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. This statement is effective for financial statements issued for fiscal periods beginning after November 15, 2008. Accordingly, the Company will adopt SFAS 161 on July, 2009. Adoption of this standard is not expected to have a material impact on the Companys financial position, results of operations or cash flows.

In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles (SFAS 162). This statement identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of non-governmental entities that are presented in accordance with GAAP. With the issuance of this statement, the FASB concluded that the GAAP hierarchy should be directed toward the entity and not its auditor, and reside in the accounting literature established by the FASB as opposed to the American Institute of Certified Public Accountants (AICPA) Statement on Auditing Standards

No. 169, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. This statement is effective 60 days following the SECs approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. The Company has evaluated the new statement and has determined that it will not have a significant impact on the determination or reporting of the Companys financial results.

In May 2008, the FASB issued SFAS No. 163, "Accounting for Financial Guarantee Insurance Contracts - an interpretation of FASB Statement No. 60." SFAS 163 requires that an insurance enterprise recognize a claim liability prior to an event of default (insured event) when there is evidence that credit deterioration has occurred in an insured financial obligation. This Statement also clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement to be used to account for premium revenue and claim liabilities. Those clarifications will increase comparability in financial reporting of financial guarantee insurance contracts by insurance enterprises. This Statement requires expanded disclosures about financial guarantee insurance contracts. The accounting and disclosure requirements of the Statement will improve the quality of information provided to users of financial statements. SFAS 163 will be effective for financial statements issued for fiscal years beginning after December 15, 2008. We will adopt SFAS 163 on July, 2009. The Company does not expect the adoption of SFAS 163 will have a material impact on its financial condition or results of operation.

In May 2009, the FASB issued SFAS No. 165, "Subsequent Events," which establishes general standards for accounting for and disclosure of events that occur after the balance sheet date but before the financial statements are issued or are available to be issued. The pronouncement requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for that date, whether that date represents the date the financial statements were issued or were available to be issued. SFAS 165 is effective with interim and annual financial periods ending after June 15, 2009. We will adopt SFAS 160 on July, 2009. Management has evaluated the impact of the adoption of SFAS 165 and it has had no impact the Company's results of operations, financial position or cash flows.

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|                                              
|----------------------------------------------
|ALDAPHARMACEUTICALS CORP.                     
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|FOR THE YEARS ENDED JUNE 30, 2009 AND 2008    
|                                              

|    |                                                                   
|--- | ------------------------------------------------------------------
|19. | UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED)

In June 2009, the FASB issued SFAS No. 166, Accounting for Transfers of Financial Assetsan amendment of FASB Statement (SFAS 166). SFAS No. 166 is intended to establish standards of financial reporting for the transfer of assets and transferred assets to improve the relevance, representational faithfulness, and comparability. SFAS 166 was established to clarify derecognition of assets under FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. SFAS No. 166 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2009. We will adopt SFAS 166 on July 1, 2009. The Company has determined that the adoption of SFAS No. 166 will have no impact on its consolidated financial statements.

In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No. 46(R) (SFAS No. 167). SFAS No. 167 eliminates the exception to consolidate a qualifying special-purpose entity, changes the approach to determining the primary beneficiary of a variable interest entity and requires companies to more frequently re-assess whether they must consolidate variable interest entities. Under the new guidance, the primary beneficiary of a variable interest entity is identified qualitatively as the enterprise that has both (a) the power to direct the activities of a variable interest entity that most significantly impact the entitys economic performance, and (b) the obligation to absorb losses of the entity that could potentially be significant to the variable interest entity or the right to receive benefits from the entity that could potentially be significant to the variable interest entity. SFAS No. 167 becomes effective for the Companys fiscal 2011 year-end and interim reporting periods thereafter. The Company does not expect SFAS No. 167 to have a material impact on its financial statements.

In July 2009, the FASB issued SFAS No. 168, "FASB Accounting Standards Codification" ("SFAS 168"), as the single source of authoritative nongovernmental U.S. generally accepted accounting principles (GAAP). The Codification is effective for interim and annual periods ending after September 15, 2009. All existing accounting standards are superseded as described in SFAS 168. All other accounting literature not included in the Codification is non-authoritative. Management is currently evaluating the impact of the adoption of SFAS 168 but does not expect the adoption of SFAS 168 to impact the Company's results of operations, financial position or cash flows.

In May 2008, the FASB issued FSP No. APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement) (FSP 14-1). FSP 14-1 applies to convertible debt instruments that, by their stated terms, may be settled in cash (or other assets) upon conversion, including partial cash settlement, unless the embedded conversion option is required to be separately accounted for as a derivative under FASB Statement No. 133. Convertible debt instruments within the scope of FSP 14-1 are not addressed by the existing APB 14. FSP 14-1 would require that the liability and equity components of convertible debt instruments within the scope of FSP 14-1 be separately accounted for in a manner that reflects the entitys nonconvertible debt borrowing rate. This will require an allocation of the convertible debt proceeds between the liability component and the embedded conversion option (i.e., the equity component). The difference between the principal amount of the debt and the amount of the proceeds allocated to the liability component would be reported as a debt discount and subsequently amortized to earnings over the instruments expected life using the effective interest method. FSP APB 14-1 is effective for the Companys fiscal year beginning July 1, 2009 and will be applied retrospectively to all periods presented. Adoption of this standard is not expected to have a material impact on the Companys financial position, results of operations or cash flows.

|    |                    
|--- | -------------------
|20. | COMPARATIVE FIGURES

Certain comparative figures have been reclassified to conform to the presentation adopted in the current year.

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|                                                                    |                            | 
|------------------------------------------------------------------- | -------------------------- | 
|                                                                    | ALDA Pharmaceuticals Corp.
|635 Columbia Street, New Westminster, British Columbia, **V3M 1A7**
|Telephone: 604-521-8300; **Facsimile: 604-521-8322**               

Form 51-102F1

Managements Discussion & Analysis

For the year ended

June 30, 2009

October 28, 2009

The statements contained in this report that are not purely historical are forward-looking statements. Forward looking statements include statements regarding our expectations, hopes, intentions or strategies regarding the future. Forward looking statements include: statements regarding future products or products or product development; statements regarding future selling, general and administrative costs and research and development spending; and our product development strategy; statements regarding future capital expenditures and financing requirements; and similar forward looking statements. It is important to note that our actual results could differ materially from those in such forward-looking statements.

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|                                           
|-------------------------------------------
|ALDA PHARMACEUTICALS CORP.                 
|MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
|FOR THE YEAR ENDED JUNE 30, 2009           

|    |     
|--- | ----
|1.1 | DATE

This Management Discussion and Analysis (MD&A) is dated October 28, 2009 and should be read in conjunction with the consolidated financial statements of ALDA Pharmaceuticals Corp. (ALDA or the Company) for the year ended June 30, 2009. All financial information is expressed in Canadian dollars and is prepared in accordance with Canadian generally accepted accounting principles (GAAP).

The financial statements have been prepared on a going concern basis, according to Section 1400 of the Canadian Institute of Chartered Accountants (CICA), which assumes the realization of assets and settlement of liabilities in the normal course of the business. The Company has yet to achieve a level of revenues adequate to achieve profitability. The application of the going concern assumption is dependent on managements ability to successfully execute its business plan, to secure sufficient financing, and to develop profitable operations. Management of the Company believes that it will succeed in meeting those objectives, allowing the continued operation of the Company. Additional equity or debt-based financing is required to continue the Companys operations and pursue therapeutic developments.

|    |                    
|--- | -------------------
|1.2 | OVERALL PERFORMANCE

On November 13, 2003, ALDA Pharmaceuticals Corp., formerly Duft Biotech Capital Ltd., completed the acquisition of the assets of 513947 BC Ltd., formerly ALDA Pharmaceuticals Inc., (the Qualifying Transaction) and a $1.2 Million financing arranged by Canaccord Capital Corporation (the Financing). ALDA trades on the TSX Venture Exchange in Vancouver, Canada under the symbol APH and on the OTC BB under the symbol APCSF.

ALDA has developed a patented infection control formulation, referred to as T36®, a mixture of ethanol, o-phenylphenol, benzalkonium chloride and other ingredients (including lemon fragrance and water). All of these component chemicals are bio-degradable.

Manufacturing and sales agreements

CanadaThe Company has no manufacturing agreements in place. On February 23, 2009, the Company entered into a non-binding Letter of Intent to purchase all of the business and undertakings of a pharmaceutical manufacturing firm. On June 23, 2009, the Company issued a news releases stating that the Company was not going to proceed with the proposed acquisition.

An agreement between Group 270 Sales and Marketing Inc. (Group 270) and ALDA was established on November 17, 2006. On June 15, 2009, the Company provided Group 270 with 60 days notice that the Company was terminating the agreement as of August 15, 2009. Accordingly, the agreement ended on August 15, 2009.

ChinaOn October 6, 2004, ALDA entered into an agreement with Fuzhou Xinmei Biotech Co. Ltd. (Fuzhou) to manufacture and distribute ALDAs products in Fujian province in China. On August 31, 2006, an agent acting on behalf of Fuzhou (the Agent), received a Certificate of Approval from the Fujian Centre of Disease Control for T36®Disinfectant after the product passed all of the required tests. The registration of T36®Disinfectant in China was expanded beyond disinfection of inanimate objects, such as hospital equipment and instruments, to also allow external use on humans, including use as a first-aid antiseptic and hand sanitizer. The Certificate of Approval allowed the Agent to apply to the Chinese National Centre for Health Inspection and Supervision for approval to manufacture T36®Disinfectant for sale in China and for export. On April 19, 2007, a manufacturing certificate (Certificate of Approval (Health ID. No. 0109) was granted to the Agent in China for a period of four years from April 19, 2007 to April 18, 2011 and is renewable by filing an application for renewal 6 months before the expiry date.

In May 25, 2007, Fuzhous agent in China established a new company, He-Yi She Ye Limited (He-Yi) and the agreement with Fuzhou was transferred to He-Yi and expanded to cover marketing in all of China. He-Yi has the right to distribute ALDAs products in China subject to ALDAs approval of each distributorship, and has established a manufacturing facility for production of the T36®formulation.

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|                                           
|-------------------------------------------
|ALDA PHARMACEUTICALS CORP.                 
|MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
|FOR THE YEAR ENDED JUNE 30, 2009           

Manufacturing and sales agreements (continued)

ChinaThe Agreement with He-Yi is effective until April 18, 2011 (the Initial Term). Upon expiration of the Initial Term, the Agreement may be renewed for additional periods, (the Renewals) provided that ALDA and He-Yi have each met all of their obligations under the Agreement and provided that He-Yi is able to obtain renewals of the Certificate of Approval (Health ID. No. 0109) that has been granted by the Ministry of Health of the Peoples Republic of China and expires on April 18, 2011. Any renewals will reflect current market conditions in the territory served by He-Yi at the time the Renewals are granted and the time periods of any Renewals will be the same as the corresponding time periods of the renewals of the Certificate

For the first 3 years after production is started by He-Yi and within 6 months after production is started by He-Yi, ALDA and He-Yi are to establish minimum sales levels and, thereafter, after each new distributorship is established. He-Yi will pay ALDA a royalty, based on the gross revenues received by He-Yi for all of ALDAs products sold in China according to the agreement that is provided as Exhibit 4g accompanying the 1stamendment to the 2007 Form 20-F that was filed on EDGAR on December 3, 2008.

ALDA, at ALDAs discretion, will have the right to buy product from He-Yi. At the request of ALDA and with the authorization of ALDA, He-Yi agrees to direct ship ALDAs products for ALDA, at ALDAs expense, to anywhere in the world.

As of the date of this report, the agreement is in good standing. On April 8, 2008, the Company announced that He-Yi had secured four contracts for the distribution of T36®Disinfectant in China. Evergreen Health Care committed to minimum sales of 1 million RMB in Hong Kong and Macau for a period of one year. According to information provided to the Company, the minimum sales levels were not met by Evergreen Health Care. Jin Wei Kai Medical Technology Limited and Jin Qin Scientific Development Ltd. committed to 4.8 Million RMB each over three years in northern China (Beijing) and central China (Wu Hang), respectively, and Wondfo Biotech Co. Ltd. to 3 million RMB in southern China (Guang Zhou) over three years. The total sales potential of all four contracts was estimated to be 13.6 Million RMB or nearly CDN $2 million at the current exchange rate. The Company will realize a royalty as described above on any sales achieved by He-Yi.

United StatesThere are no sales or manufacturing agreements in place in the United States.

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|                                           
|-------------------------------------------
|ALDA PHARMACEUTICALS CORP.                 
|MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
|FOR THE YEAR ENDED JUNE 30, 2009           

Patents

The Company is attempting to patent or secure proprietary protection for the specific combination and manufacturing of the T36®formulation although the ingredients are all common chemical compounds.

The Patent Cooperation Treaty (PCT) is an international patent law treatyestablished in 1970. It provides a unified procedure for filing patent applicationsto protect inventionsin each of its Contracting States, which includes each jurisdiction specified below. A patent application filed under the PCT is called an international application or PCT application. A single filing of an international application is made with a Receiving Office (RO) in one language. It then results in a searchbeing performed by an International Searching Authority (ISA), accompanied with a written opinion regarding the patentabilityof the invention which is the subject of the application. Optionally, this is followed by a preliminary examination, performed by an International Preliminary Examining Authority (IPEA). The PCT does not lead to the grant of an "international patent", which does not exist, but rather, national patent examinations that are handled by each relevant national or regional authority. For example, in Canada, the US, China, Australia and Singapore, there are national patent offices whereas, in Europe, the European Patent Office handles the national phase for its member states.

API filed patent application #PCT/CA2002/001284, A wide spectrum disinfectant, on August 20, 2002. All rights to the patent application were transferred from API to the Company on completion of the Qualifying Transaction on November 13, 2003. A summary of subsequent events in each jurisdiction is presented below.

CanadaOn February 18, 2005 the Canadian Intellectual Property Office (CIPO) received the PCT patent application and assigned it Patent Application Number 2,495,938. On August 17, 2007, the Company filed a Request for Examination with CIPO. On September 24, 2007 the Company filed a Voluntary Amendment to the patent application filed with CIPO. The proposed amendments expanded the claims to include a number of therapeutic applications of the T36®formulation, including its use in cosmetics and in a microbicidal gel to prevent the transmission of sexually transmitted infections (STIs). On October 4, 2007, the Company was notified that CIPO had acknowledged a request by the Company to examine the patent application. Since the process of examination can take two years, for a fee of $500, the Company requested an Expedited Examination on November 7, 2007 to reduce the response time to approximately three months. On April 8, 2008, CIPO provided an Office Action in which a number of questions were posed to the Company. Many of the same questions had already been posed by the Examiner for the EPO and the Company was advised that a response was required by October 8, 2009. On the advice of the Companys patent lawyers, the Company decided to temporarily abandon the Canadian patent application to defer costs and the abandonment was deemed effective by CIPO on October 8, 2008. However, the patent application was reinstated and a response to the Office Action was submitted to CIPO prior to the revised deadline of October 8, 2009.

European UnionOn March 30, 2005 the PCT application was accepted for national examination by the European Patent Office (EPO) which assigned it Patent Application Number 02754054.1-2113. The countries covered by the European patent application are Austria, Belgium, Bulgaria, Switzerland, Cyprus, the Czech Republic, Germany, Denmark, Estonia, Spain, Finland, France, Great Britain (the UK), Greece, Ireland, Italy, Liechtenstein, Luxembourg, Monaco, Netherlands, Portugal, Sweden, the Slovak Republic and Turkey. On May 18, 2005, the bibliographic data of the above-noted application was published in the European Patent Bulletin, under Publication No. 1530485. The resulting effect of such publication is that any possible infringer is deemed to have knowledge of the patent application without the Company having to formally inform them of this applications existence. On October 18, 2006 the EPO provided the Company with an Office Action requesting further information on the patent application. The Company responded to the questions and received a second Office Action, dated September 5, 2007 from the EPO. This second Office Action requested that the Company provide certain additional information and to conduct certain experiments to support the claims that were made in the application. The Company completed both the literature research and the laboratory studies and, on December 19, 2008, submitted the response to the second Office Action to the EPO. A third Office Action, dated August 13, 2009, was provided to the Company by the EPO and a response from the Company is required by December 13, 2009.

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|                                           
|-------------------------------------------
|ALDA PHARMACEUTICALS CORP.                 
|MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
|FOR THE YEAR ENDED JUNE 30, 2009           

Patents (continued)

ChinaOn June 25, 2005 the Company was notified that the PCT application was accepted for national examination by the Patent Office of the Peoples Republic of China (Chinese Patent Office) and assigned Patent Application Number 02829642.7. On August 11, 2005, the Chinese Patent Office accepted a Request for Substantive Examination from the Company. The application was published in the Chinese Patent Gazette on October 19, 2005, under Publication No. CN1684711A and entered into Substantive Examination. On February 5, 2006, the Company filed a Voluntary Amendment to the original patent application to correct certain minor errors in the original application. On June 2, 2006, the Chinese Patent Office provided an Office Action which requested certain additional amendments to the patent application. On December 18, 2006, the Company filed its response to the Office Action. The Company was notified by the Chinese Patent Office that the Chinese patent had been allowed, effective June 8, 2007. Amendments to the original patent application were then drafted by the Company. As in the case of the amendments prepared for CIPO, the proposed amendments to the Chinese patent expand the original claims to include a number of therapeutic applications of the T36®formulation, including its use in cosmetics and in a microbicidal gel to prevent the transmission of sexually transmitted infections (STIs). On October 10, 2007, the Company was advised that the amended claims had been submitted to the Chinese Patent Office. On January 30, 2008 the Chinese Patent office assigned Chinese Divisional Patent Application No. 200710142798.3 to the new application which was published in the Chinese Patent Gazette, under Publication No. CN101112624A. At the time of this report, no further developments have occurred with this Chinese patent application. On February 6, 2008, the Company announced that Certificate of Invention Patent Number ZL02829642.7 had been issued by the State Intellectual Property Office of the Peoples Republic of China. The patent provides protection for the composition and production methods for ALDAs T36®formulation until August 20, 2022.

United StatesUS Patent #7,338,927On February 18, 2005, the US Patent and Trademark Office (USPTO) received the PCT patent application and assigned it Patent Application Number 10/525,110. The patent application was published by the USPTO on December 22, 2005, under Publication Number US 2005/0282727. On July 27, 2006, the Company received that first Office Action from the USPTO which required clarification or modification of certain claims made in the patent application. The Company was required to respond to the Office Action by October 27, 2006 and did so on October 26, 2006 with amendments to the claims that required clarification or modification. On February 7, 2007 the USPTO provided the Company with a Notice of Allowance for the US patent with all claims made by the Company accepted by the USPTO. A Notice of Allowance is not a grant of a patent and is subject to withdrawal by the USPTO or on petition by the Company. The Company then filed certain minor, voluntary amendments to the patent application and a second Notice of Allowance, dated June 8, 2007 was provided by the USPTO. On February 15, 2008, the Company was advised that a Notice of Allowance had been received from the USPTO projecting that the US patent would be issued on March 4, 2008. As scheduled, U.S. Patent Number 7,338,927 was issued on that date and provides protection for the composition and production methods for ALDA's T36®formulation until August 20, 2022. The patent can be viewed on the website of the USPTO.

U.S. patent #7,560,422Amendments to the original patent application were drafted by the Company and submitted to the USPTO as a U.S. Continuation Patent Application in December, 2007. The amendments to the US patent expanded the original claims to include a number of therapeutic applications of the T36®formulation, including its use in cosmetics and in a microbicidal gel to prevent the transmission of sexually transmitted infections (STIs). On July 14, 2009, the USPTO issued U.S. Patent Number 7,560,422. The new patent is a continuation of US Patent Number 7,338,927 that was issued on March 4, 2008 and provides further protection for ALDA's T36®formulation until August 20, 2022. The new patent includes claims to additional aspects of the T36®formulation, including the use of T36®as a component of a personal lubricant, in a method of preventing or reducing the transmission of a sexually transmitted diseases including Herpes, Chlamydiaand HIV and for use in sanitizers and cleansers in creams, ointments and wipes.

SingaporeThe Company has decided to abandon the patent application in Singapore because the cost is relatively high for the small market represented. With the granting of the Chinese patent, other patents in Asia were deemed to be unnecessary.

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|                                           
|-------------------------------------------
|ALDA PHARMACEUTICALS CORP.                 
|MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
|FOR THE YEAR ENDED JUNE 30, 2009           

Patents (continued)

AustraliaOn March 15, 2005 the PCT application was accepted for national examination by the Australian patent office on March 15, 2005 and assigned with Patent Application Number 2002322916. On October 24, 2006, the Australian patent office provided the Company with a Direction to Request Examination. Under Australian Patent law, such examination must be requested within five years of the filing date or within six months of receiving a direction from the Australian Patent Office, whichever is sooner. On October 10, 2007 the Company announced that the Australian Patent Office had accepted the patent application with no objections. On December 4, 2007, a divisional application was filed at the Australian Patent Office. As in the case of the amendments prepared for the Chinese Patent Office, CIPO and the USPTO, the divisional application provides amendments to the Australian patent that expand the original claims to include a number of therapeutic applications of the T36®formulation, including its use in cosmetics and in a microbicidal gel to prevent the transmission of sexually transmitted infections (STIs). A response from the Australian Patent Office, concerning this application is still pending. On February 22, 2008, the Company announced that Australian Patent Number 2002322916 has been issued by the Australia Patent Office. The patent provides protection for the composition and production methods for ALDAs T36®formulation until August 20, 2022. On March 3, 2008, the Company was notified that the divisional application had been assigned Serial No. 2007237333 with an official filing date of August 20, 2002. Examination of the application was requested by the Company on June 3, 2008. On September 3, 2009 the Australian Patent Office issued a Notice of Acceptance for the new patent. At the time of writing, the Company has no assurance that the new Australian patent be granted at all and, if it is granted, the Company cannot estimate when it will be granted or what claims will be allowed and protected, if any.

PCT application for anti-inflammatory, antiseptic therapeutic formulation

On March 20, 2008 the Company filed a comprehensive new patent application, International Application No. PCT/CA2008/000536, Antiseptic Compositions for the Treatment of Infections, with CIPO under the Patent Cooperation Treaty (PCT). The new PCT application seeks protection for the composition and preparation of T36®formulations that also contain steroids, anesthetics or analgesics for use on topical infections and, in particular, inflamed infections. Typically, infections with associated inflammation are treated with separate antiseptic and anti-inflammatory preparations. The new T36®formulations combine these properties into a single treatment, making the prescription process easier for the physician and the application easier for the patient.

In preliminary studies, under the direction of a physician, T36®formulations containing anti-inflammatory steroids quickly resolved a number of skin infections, some of which had resisted all other treatments. Examples include chronic eczema with secondary Staphylococcus infections and fungal infections, such as athletes foot, Tinea versicolor.

On January 13, 2009, the Company was notified by its patent lawyers that an International Search Report (ISR) and Written Opinion was issued by the International Searching Authority (ISA) on December 18, 2008. As part of the PCT patent process, the ISA performs a search of prior art to identify any relevant art that may impact the patentability of a PCT application. Generally, prior art consists of everything which has been made available to the public anywhere in the world, for example, by means of a written disclosure (including drawings and other illustrations). The prior art is relevant if it is capable of being of assistance in determining whether an invention, as claimed, is new and involves an inventive step and was made available to the public before the international filing date. The ISA then issues a preliminary and non-binding Written Opinion. This Written Opinion is an assessment by an Examiner on whether or not a patent application conforms with respect to certain requirements for patentability. As disclosed above, references cited in the Search Report and Written Opinion were submitted to the USPTO on January 5, 2009 in an Information Disclosure Statement (IDS) relating to the new US CPA.

The claims made in this particular PCT application were purposefully very broad. Accordingly, the examiner for ISA found a number of patents and other literature that, in the opinion of the examiner, represented prior art. At this time, the Company does not need to take any action if National Examination of the PCT application is requested by September 20, 2010. The Company intends to request the National Examination before this deadline. Then, as the National Examiners provide their responses to the PCT application, the Company can respond by arguing against the opinions of the Examiners, or amending the claims.

At the time of writing, the Company has no assurance that any patents that have not yet been granted will be granted at all and, if any patents are granted, the Company cannot estimate when the patents will be granted or what claims will be allowed and protected, if any.

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|ALDA PHARMACEUTICALS CORP.                 
|MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
|FOR THE YEAR ENDED JUNE 30, 2009           

Trademarks

The Company successfully trademarked T36 in Canada on April 22, 2004 and in the United States on November 2, 2004. The trademark in the United States is a Principal Register mark. The Principal Register of the US Patent and Trademark Office (USPTO) conveys the important substantive rights that most people associate with federal registration and, as a result, it is the preferred method of federal trademark protection. Probably the most important benefit of placing a mark on the Principal Register is that anybody who later initiates use of the same or a confusingly similar trademark may be presumed by the courts to be a "willful infringer" and therefore liable for damages.

The Company also successfully trademarked the Companys logo in Canada on July 16, 2004 and in the United States on January 18, 2005, also as a Principal Register mark. On March 3, 2008, CIPO accepted applications filed by the Company to register T36 Disinfex (File No. 1385140) and T36 Safe-T-Cide (File No. 1385134) as trademarks in Canada. Both trademarks were advertised in the Trade-marks Journal on November 12, 2008. For a period of two months after a trademark is advertised in this manner, opposition to the proposed trademark can be filed. Although the Companys management conducts due diligence before attempting to register any trademarks in order to avoid infringement on any existing trademarks or trademarks for which applications have been submitted, there is no guarantee that trademarks will be issued or that trademarks will not infringe on the trademarks of other companies or that other companies will not take action against the Company for trademark infringement. Within the two month period after November 12, 2008, Triosyn Holdings Inc. (Triosyn) filed a statement of opposition to the proposed trademark, T36 Disinfex. On February 6, 2009, the Company was advised that the Trademarks Office had granted Triosyn an extension to April 12, 2009 to file a formal Statement of Opposition. On May 22, 2009, the Company was advised that Triosyn had not filed a Statement of Opposition and that the CIPO had provided a Notice of Allowance for the trademark T36 Disinfex. Upon filing of an executed Declaration of Use and payment of the prescribed registration fee, the trademark will proceed to registration. At the time of writing, there is no further information on the registration of the trademark.

Product development

During its first five years, the Companys primary focus has been on product development. The Companys first product, a surface disinfectant called Viralex and subsequently renamed T36®Disinfectant, was launched in September of 2001. It is being sold primarily to (i) First Responder organizations including ambulance, fire fighters and police forces in Canada, (ii) dental clinics, and (iii) beauty and hair care salons and spas. T36®Disinfectant has been approved by Health Canada for use on any hard, inanimate non-porous surfaces. This includes, but is not limited to, counter tops, cutting boards, sinks, tubs, walls, floors, windows, mirrors, scissors, nail clippers and other equipment used in beauty salons and spas, dental mirrors and other equipment in dental offices, and equipment used by firefighters, police and paramedics. T36®Disinfectant is also approved by the Canadian Food Inspection Agency (CFIA) for use in restaurants and other facilities where food is prepared.

Efficacy studies - T36®Disinfectant

Efficacy studies refer to proving a drug's effectiveness (in this case as a disinfectant) in producing a desired result (bactericide, virucide, fungicide or tuberculocide). In studies conducted by independent laboratories in Canada and the United States, T36®Disinfectant has demonstrated efficacy against bacteria, fungi and viruses. The types of surfaces tested were hard non-porous surfaces unless otherwise noted.

1.An efficacy study, dated February 10, 1997, was conducted by British Columbia Research Inc. (Vancouver, Canada) under the supervision of Dr. Ernie Lee. The organisms tested were four strains of bacteria (Staphylococcus epidermis, Pseudomonas aeruginosa, Serratia marcescens, and Mycobacterium tuberculosis)one strain of yeast (Candida albicans), spores from one strain of fungus (Aspergillus fumigatus)and two strains of viruses (Herpes Simplex Virus-1 and Poliovirus-1)in compliance with test standards accepted by Health Canadas Therapeutic Product Directorate Twenty five replicates of each organism at low levels, ranging from 38 to 177 cfus/ml (colony forming units/ml) were dried on microscope cover slips and exposed to

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|ALDA PHARMACEUTICALS CORP.                 
|MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
|FOR THE YEAR ENDED JUNE 30, 2009           

Product development (continued)

T36®Disinfectant for varying times. The studies demonstrated that no growth occurred for any of the replicates. It was concluded that T36®Disinfectant was 100% effective against all five organisms after 10 minutes or longer contact times. At shorter contact times, the kill rate for all 5 organisms ranged from 95.5% to 97.2% after a 1 minute exposure and 98.7 and 99.0% after a 5 minute exposure.

|2. | An efficacy study, dated June 6, 1997, was conducted by Dr. Richard Stokes of the University of British Columbia in conjunction with the British Columbia Childrens Hospital. Twenty replicates of Mycobacterium tuberculosisat approximately 107cfus/ml were dried on microscope cover slips and exposed to T36®Disinfectant for varying times. The studies demonstrated that the kill rate was 99.99997% (a reduction of log10= 6.46) and 99.99998% (a reduction of log10= 6.59) after a 10 minute exposure. The requirement for a disinfectant to be designated as Tuberculocidal by Health Canada is a log10reduction of 6.0 or greater.
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|3. | Efficacy studies were conducted by Viromed Biosafety Laboratories of Minneapolis, Minnesota, completed on February 23, 2000. The organisms tested were Staphylococcus aureus, Pseumomonas aeruginosa, Salmonella choleraesuis, Human Immunodeficiency Virus Type I, Herpes simplexVirus Type 1, Trichophyton mentagrophytesand PoliovirusType 1, in compliance with test standards accepted by the Environmental Protection Agency (EPA) of the United States.                                                                                                                                                                                
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- For each of the bacteria, Staphylococcus aureus, Pseumomonas aeruginosa, Salmonella choleraesuis, 180 replicates at 6.1 x106cfu/ml (log10= 6.79), 1.9 x 106cfu/ml (log10= 6.28) and 1.7 x 104cfu/ml (log10= 4.23), respectively, were dried on microscope slides and exposed to T36®Disinfectant for 3 minutes. For both Staphylococcus aureusand Pseumomonas aeruginosa, growth was observed on only 1 replicate out of 180. For Salmonella choleraesuis, none of the 180 replicates showed any growth. These results met the requirement that no more than 1 replicate out of 60 can show growth and T36® Disinfectant was deemed to demonstrate efficacy against all three bacteria.
- For Human Immunodeficiency Virus Type I, six replicates at 1.77 x105cfu/ml (log10= 5.25), were dried on the bottom of Petri dishes. After being exposed to T36®Disinfectant for 3 minutes, none of the replicates showed any viral activity and T36®Disinfectant was deemed to demonstrate efficacy against HIV.
- For Herpes simplexVirus Type 1, six replicates at 5.6 x106cfu/ml (log10= 6.25), were dried on the bottom of Petri dishes, After being exposed to T36®Disinfectant for 3 minutes, none of the replicates showed any viral activity and T36®Disinfectant was deemed to demonstrate efficacy against the Herpes virus.
- For PoliovirusType 1, six replicates at 5.6 x105cfu/ml (log10= 5.75), were dried on the bottom of Petri dishes. After being exposed to T36®Disinfectant for 3 minutes, none of the replicates showed any viral activity and T36®Disinfectant was deemed to demonstrate efficacy against the Polio virus.
- For the fungus, Trichophyton mentagrophytes,twenty replicates at 4.6 x104cfu/ml (log10= 4.66), were dried on microscope slides. After being exposed to T36®Disinfectant for 3 minutes, none of the replicates showed any viral activity and T36®Disinfectant was deemed to demonstrate efficacy against Trichophyton mentagrophytes.

The above studies demonstrated that T36®Disinfectant was effective in inactivating polio viruses within 3 minutes and tuberculosis mycobacteria within 5 minutes. Polio and tuberculosis are benchmark micro-organisms because they are among the most difficult to kill with disinfectant products. Efficacy against polio and tuberculosis demonstrates a high level of disinfection capability. In order to make a virucidal claim and a tuberculocidal claim, a disinfectant product must demonstrate its ability to destroy the poliomyelitis type 1 virus, and Mycobacterium bovis or tuberculosis mycobacteria within a specified time. This is mandated in Canada by the Canadian General Standards Board, Assessment of Efficacy of Antimicrobial Agents for Use on Environmental Surfaces and Medical Devices, CAN/CGSB -2.161-97, p.4, and the Therapeutic Products Programme Guidelines on Disinfectant Drugs, 1999 Edition, Appendix II on page 23.

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|ALDA PHARMACEUTICALS CORP.                 
|MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
|FOR THE YEAR ENDED JUNE 30, 2009           

Product development (continued)

In all of the testing described above, controls were used to validate the testing protocols. A positive test result required complete inactivation of the tested viruses and complete efficacy against the fungi and bacteria as required by the U.S. EPA for disinfectant label claims. The results from BCRI demonstrated efficacy in excess of Log10 4.0 (i.e. 10,000 times reduction in micro-organisms) in compliance of the standards required in Canada. The tuberculocidal studies demonstrated results in excess of Log106.0 (1,000,000 times reduction in micro-organisms).

Toxicology studies

Toxicology is the study of the adverse effects of chemical, physical or biological agents on living organisms and the ecosystem, including the prevention and amelioration of such adverse effects. The toxicology studies listed below were conducted with T36®Disinfectant in the United States by Product Safety Labs in East Brunswick, New Jersey, USA and completed in November, 1999.

- Acute Oral Toxicity Study in Rats - This test determines the amount of a substance that kills 50% of the test population of experimental animals when administered as a single dose. Five thousand milligrams of T36® Disinfectant per kilogram of bodyweight was administered orally to ten healthy rats. The animals were observed for mortality, signs of gross toxicity, and behavioral changes at least once daily for 14 days. Bodyweights were recorded prior to administration and again on Days 7 and 14. Necropsies were performed on all animals at terminal sacrifice. All animals survived and gained weight during the study. Following administration, most animals exhibited piloerection (erection of the hair), hunched posture and/or were hypoactive. Apart from one female that exhibited reduced fecal volume between Days 0 and 5, all affected animals recovered from the above symptoms. Based on the results of this study, the single dose acute oral LD50of T36®Disinfectant is greater than 5,000 mg/kg of bodyweight
- Primary Skin Irritation Study in Rabbits - This test determines the potential for a substance to produce irritation after a single topical application. Five-tenths of a milliliter of T36®Disinfectant was applied to the skin of three healthy rabbits for 4 hours. Following exposure, dermal irritation was evaluated and no dermal irritation was noted at any dose site during the study. Based on the results of this study, T36®Disinfectant is classified as non- irritating to the skin.
- Primary Eye Irritation Study in Rabbits - This test determines the potential for a substance to produce irritation from a single dose to the eye. One-tenth of a milliliter of T36®Disinfectant was placed into the right eye of six healthy rabbits. The treated eyes of three rabbits were rinsed with physiological saline after instillation. The eyes of the remaining three rabbits were not rinsed. The left eye remained untreated and served as a control.
Ocular irritation was evaluated and, based on the results of this study. T36®Disinfectant is classified as moderately irritating to the unrinsed eye and severely irritating to the rinsed eye.
- Acute Inhalation Toxicity Study in Rats - This test determines the potential for a substance to produce toxicity from a single exposure via the inhalation route. Ten healthy rats were exposed to T36®Disinfectant vapours at a closed chamber at a concentration 2.02 mg/L for 4 hours. The animals were observed for mortality, signs of gross toxicity, and behavioral changes at least once daily for 14 days thereafter. Bodyweights were recorded prior to exposure and again on Days 7 and 14. All animals survived exposure to the test atmosphere and gained bodyweight over the 14-day observation period. During the exposure, the rats Exhibited ocular and nasal discharge, shortness of breath, irregular respiration, shallow respiration, hunched posture and hypoactivity.
With the exception of ocular and nasal discharge and shallow respiration, similar clinical signs persisted in all animals upon removal from the exposure chamber. Some animals also developed noisy breathing, reduced fecal volume and/or a prone posture, but all rats recovered from these symptoms by Day 11 and appeared active and healthy for the remainder of the study. Necropsy findings at terminal sacrifice were unremarkable. Based on the results of this study, the single exposure acute inhalation LC50of T36®Disinfectant is greater than 2.02 mg/L.
- Acute Dermal Toxicity Study in Rats - This test determines the health hazards likely to arise from a short-term exposure to a substance from a single topical application to the skin. Two thousand milligrams per kilogram of bodyweight of T36®Disinfectant was applied to the skin of ten healthy rats for 24 hours. The animals were observed for mortality, signs of gross toxicity, and behavioral changes at least once daily for 14 days.
Bodyweights were recorded prior to application and again on Days 7 and 14. Necropsies were performed on all animals at terminal sacrifice. All animals survived, gained weight and appeared active and healthy. There were no signs of gross toxicity, adverse pharmacologic effects or abnormal behavior. Gross necropsy findings at

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|ALDA PHARMACEUTICALS CORP.                 
|MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
|FOR THE YEAR ENDED JUNE 30, 2009           

Product development (continued)

- terminal sacrifice were unremarkable. Based on the results of this study, the single dose acute dermal LD50 of T36®Disinfectant is greater than 2,000 mg/kg of bodyweight.
- Dermal Sensitization Study in Guinea Pigs - This test determines the potential for a substance to produce sensitization after repeated topical applications. T36®Disinfectant was topically applied to twenty healthy test guinea pigs, once each week for a three week induction period. Twenty-seven days after the first induction dose, a challenge dose of T36®Disinfectant at its highest non-irritating concentration (100%) was applied to a new site on each guinea pig. Ten untreated animals were maintained under the same environmental conditions and treated with T36®Disinfectant at challenge only. Approximately 24 and 48 hours after each induction and challenge dose, the animals were scored for erythema (redness of the skin). Based on the results of this study, T36®Disinfectant is not considered to be a contact sensitizer.

The efficacy and toxicology studies described above, although completed some time ago, are still valuable assets of the Company because they are being used to support further regulatory approvals of the T36®formulation. For example, the studies were incorporated into the pre-IND package that was presented to the FDA in July, 2008 and are being included in the IND submission, described below, that is being prepared for the FDA.

The Company is also in various stages of development of other products describe below. Unless otherwise indicated, the Company has not determined, for any of these proposed products, when or if manufacturing will be started, revenues will be realized, any further testing will be conducted or registrations will be pursued in any jurisdiction outside Canada. If any further testing or registrations are undertaken, it is not known how much time or funding such testing would require or how long it will take the regulatory bodies to approve the products for marketing by the Company or if the regulatory bodies will approve the products at all. There are active competitors that are already well established in the markets selected by the Company. Delays may allow even more competition to develop comparable products, which will make market penetration more difficult which would, in turn, lead to reduced revenues.

T36 DisinfexTMSpray and Wipes: An application was filed with Health Canada to allow T36®Disinfectant to be sold under the name T36 DisinfexTM. This name change was approved on September 10, 2009 under the original DIN 02231344. This is the original T36®formulation that is now being manufactured and marketed as a personal disinfectant packaged in small personal-sized liquid spray bottles and as wipes in canisters. The original packaging sizes will also be marketed under the new name.

- T36 DisinfexTMDisinfectant Cleaner Wipes: This product has been recognized by Health Canada as being able to kill bacteria, fungi and viruses on hard surfaces within 10 minutes (compared to the 3 to 5 minute time for T36®Disinfectant). It has also passed internal company efficacy and cleaning testing. This product is intended for use in hospitals, cruise lines, airlines and consumer applications that dont require a disinfectant product that is as fast acting as T36®Disinfectant, but need a more economical product that also cleans surfaces. The Health Canada DIN for this product is 02272989. On July 17, 2008, the Company received DIN 02314134 for this same product but renamed to T36 DisinfexTMDisinfectant Cleaner. This product will be sold as wipes contained in the same canisters as T36®Disinfectant.
- T36®Disinfectant Cleaner CONCENTRATE: Testing has been completed this product and it is registered with Health Canada (DIN 02278820). This product is now being shipped to distributors in Canada as reported by the Company in a news release dated November 17, 2008.
- T36®Hand Sanitizer: In February 2006, the Company started marketing a generic 62% ethanol hand sanitizer (Health Canada DIN 02247771) under its own name through its current distributors to existing customers. This product has been discontinued now that the Companys own T36®Antiseptic Hand Sanitizer, described below, is being marketed.

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|ALDA PHARMACEUTICALS CORP.                 
|MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
|FOR THE YEAR ENDED JUNE 30, 2009           

Product development (continued)

- T36®Antiseptic Hand Sanitizer Gel, Spray and Wipes: In October, 2007, the Company applied to Health Canada for a DIN for a new Antiseptic Hand Sanitizer Gel. DIN 02314320 was issued by Health Canada on July 22, 2008 as announced by the Company in a news release dated July 23, 2008. The new DIN allows the Company to sell its first product for human use. This product consists of 0.15% BZK in 70% ethanol and, unlike standard 62% ethanol hand sanitizers, has been demonstrated in testing conducted by ATS Labs in Eagan, MN to be effective against Norwalk-like viruses as announced by the Company in a news release dated January 30, 2009. In the testing, Feline Calicivirus was grown to a log10titer of 6.5 and exposed to the product for up to 5 minutes. After 5 minutes, the Companys product reduced the viral titer by 98.2%. The 62% ethanol product had no effect in the same time period. The product also kills the H1N1 influenza virus within 15 seconds in testing conducted by Bioscience Labortories, Inc. in Bozeman, MT as announced by the Company in a news release dated August 7, 2009. In this testing H1N1 Virus (Swine-like H1N1 Influenza A virus Strain A/California/04/2009) was grown to a log10titer of 6.75 and exposed to the Companys product for up to 1 minutes. The maximum measurable kill rate of or 99.994%, a log10reduction of 4.75, was achieved in 15 seconds. On January 6, 2009, DIN 02321424 was issued by Health Canada for T36®Antiseptic Hand Sanitizer in liquid form. This new product complements the T36®Antiseptic Hand Sanitizer Gel and allows the formulation to be manufactured and sold as a spray. On January 19, 2009, DIN 02321947 was issued by Health Canada for T36®Antiseptic Hand Sanitizer Wipes which will incorporate the liquid Antiseptic Hand Sanitizer into wipes contained in canisters and individual sachets.
- T36®Medicated Hand Cleanser: DIN 02322501 was issued for this product on February 3, 2009. The formulation contains 1% Triclosan. There are no definitve plans to market this product but it may be offered to medical and consumer markets as a supplement to the Companys other products at some time.
- T36®Anti-viral Soap: The Company has developed a proprietary anti-viral, anti-bacterial soap. Preliminary testing of this product at BC Research, Inc. was conducted under the supervision of Dr. Ernie Lee. The soap was tested against three strains of test bacteria (Staphylococcus epidermis, Pseudomonas aeruginosa and Serratia marcescens) and one strain of viruses (Herpes Simplex Virus type 1) at various concentrations at various contact times ranging from 1 minute to 10 minutes. In these tests, all bacteria were killed by the soap diluted up to 500 times within 1 minute. A substantial bacterial population reduction was found even when the bacteria were exposed to higher soap dilutions of 1/1000. In addition to bactericidal effectiveness, preliminary results indicated that the soap inactivated Herpes simplex, although an exact endpoint could not be determined due to toxicity of the soap towards the cultured cells used to propagate the virus. Further testing would have to be conducted to determine virucidal activity. For Health Canada or FDA registration, additional testing, including human trials would be required. If the Company decides not to fund these activities, a licensing arrangement may be appropriate.
- T36®Microbicide Gel: This product has been formulated and now requires testing for efficacy and toxicity. It was developed as a personal lubricant to prevent the transmission of sexually transmitted infections (STIs). The testing required to attain FDA approval of this product would be beyond the financial capabilities of the Company. Therefore, the Company intends to undertake some initial testing on its own after a suitable delivery system has been identified and the rights to that delivery system acquired. If initial testing is successful, it is most likely that the Company will need to identify a licensee or joint venture partner working in the area of STI prevention that can undertake further testing and market development.

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|ALDA PHARMACEUTICALS CORP.                 
|MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
|FOR THE YEAR ENDED JUNE 30, 2009           

Product development (continued)

- T36®Skin antiseptic and first-aid ointment: The Company is planning on providing the T36®formulation in liquid form with a biological dye in a suitable delivery system for use as pre-operative and pre-injection antiseptic in hospitals and clinics and in gel and spray form, without biological dye, as a first-aid ointment for use on cuts and scrapes to prevent infections. These applications of the T36®formulations must be tested for their ability to kill microorganisms on the skin of humans and in cuts and scrapes according to the requirements of the FDA, Health Canada and the European Medicines Agency. The Company has completed FDA-approved preliminary in-vitro(in glass) efficacy studies against viruses, fungi and bacteria described in the section below titled, Testing required for Therapeutic Applications. The FDA has approved further testing for single application uses such as one would expect with a surgical antiseptic and first aid treatment. Protocols for subsequent testing have been submitted to the FDA for approval. If approved, the T36®formulation can be submitted to additional in-vitroefficacy tests including Time Kill, Minimal Inhibitory Concentration (MIC) and Adsorption and Distribution (AD) studies. Once this next round of testing is completed, it is possible that the FDA will allow the Company to undertake Phase I human trials, also discussed below. Once the human clinical trials are completed, the results must be submitted to the regulatory agencies for the tested products to be approved for marketing by the Company.
- T36®Hand hygiene products: The Company is planning on providing the T36®formulation in the form of a gel, spray and wipes, for hospital use as a hand sanitizer in nursing stations, patient rooms, hallways, washrooms, etc. and for sale to consumers through retail outlets. After any further required tests, including the MIC, Time Kill and AD studies, are completed for the T36®Skin antiseptic and first-aid ointment as discussed in the preceding paragraph, additional studies are required to establish the efficacy and safety when used repeatedly over a period of time as one would expect with hand hygiene products. After submission of the IND these studies are described below and will include at least the In-vitroDermal Test, a Pilot Clinical Evaluation, Full Pre-operative Clinical Evaluation and the Insult Patch Test. Once these tests were successfully completed, human clinical trials may be approved by the FDA.

- T36®Topical infection treatment: The body normally hosts a variety of microorganisms, including bacteria and fungi. Some of these are useful to the body. Others may multiply rapidly and form infections. Approximately sixty percent of microbial infections are systemic, meaning that the infections are spread throughout the body, leaving 40% of microbial infections that are topical, i.e., occur on the surface of the body. Topical fungal infections include mold-like fungi that cause athlete's foot, jock itch and ringworm, and yeast-like fungi that can cause diaper rash, oral thrush, cutaneous candidiasis and some cases of genital rashes. Bacterial infections, such as Staphylococcuscan also infect the skin, particularly if a patient has a preceding skin condition, such as eczema. The Companys T36®formulation can be used to treat such topical infections and anecdotal evidence has shown that it can be used to treat such conditions as athletes foot and toenail infections. As in the case of the T36®Hand hygiene products described in the preceding paragraph, the In-vitroDermal Test, a Pilot Clinical Evaluation, Full Pre-operative Clinical Evaluation and the Insult Patch Test must be conducted to simulate the proposed application. After these tests are completed, the FDA may permit human trials to begin.

- Vulvovaginal infections (VVIs): Current treatments available for VVIs focus mainly on yeast infections which cause only 23% to 33% of VVIs (Schwiertz et al., 2006. Throwing the dice for the diagnosis of vaginal complaints?Ann Clin Microbiol Antimicrob. 5:4 and Ferris D.G., Dekle C, Litaker M.S.J. 1996. Women's use of over-the counter antifungal medications for gynecologic symptoms.Fam Pract. 42(6):595-600). T36®VVI Treatment is effective against all fungal and bacterial VVIs regardless of the species or combinations of species causing the infection. The Company plans to undertake the testing required for this product when sufficient financing has been has been secured.
- Anti-inflammatory, antiseptic therapeutics: The Company developed a prototype product that contains 2% hydrocortisone in a T36®gel for use on topical infections and, in particular, inflamed infections. Preliminary studies with the formulation, under the direction of a physician, quickly resolved a number of skin infections, such as chronic eczema with secondary Staphylococcusinfections and fungal infections, such as athletes foot and diaper rash. A second formulation contained 0.1% betamethasone, a moderately potent glucocorticoid steroidwith anti-inflammatoryand immunosuppressiveproperties. Unlike other drugs with these effects, betamethasone does not cause water retention. The Company is planning on conducting tests against Athletes Foot with the new formulation. As discussed above, a PCT patent application has been filed with CIPO to cover

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|ALDA PHARMACEUTICALS CORP.                 
|MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
|FOR THE YEAR ENDED JUNE 30, 2009           

Product development (continued)

the composition, method of preparation and use of T36®formulations that also contain steroids, anesthetics or analgesics.

Testing for of the T36®formulation for therapeutic indications

There is competition in all of the therapeutic markets that the Company has targeted. However, the T36®formulation is not expected to be expensive to manufacture and can be used in a broad variety of infection-control products. Toxicology and efficacy studies have already demonstrated that the T36®formulation is not toxic and is effective at killing all bacteria, viruses and fungi. The intended applications are topical, except for the vulvovaginitis treatment, so that registration is expected to be faster and less expensive than for drugs that are taken internally. Rather than disrupting metabolic pathways, the T36®formulation consists of four anti-microbial ingredients in relatively low concentrations that act synergistically to disrupt the physical structure of the infectious agents. This approach prevents microbial resistance from developing. None of the active ingredients are known to have any significant side effects on humans.

The Company has competed preliminary studies that will satisfy the registration requirements of Health Canada, the US Food and Drug Administration (FDA) and the European Medicines Agency (EMeA) for the targeted applications with the assistance of Dr. John S. Hibbard who is evaluating the potential applications and development of the Companys T36®technology and the regulatory pathways to commercialization in the US. Dr. Hibbard is in continuing discussions with the FDA to establish the requirements of the FDA for the testing of the T36®formulation and to evaluate the common and the unique requirements of the US, Canadian and European regulatory agencies. Dr Hibbard also reviewed the qualifications and proposals of a number of testing laboratories to establish their suitability to conduct the work required by the Company. As a result of his analysis, Bioscience Laboratories, Inc. (BSI) located in Bozeman, Montana, was selected to provide the required efficacy testing. BSI has been providing antimicrobial product testing and result interpretation for various industries, including healthcare, pharmaceutical, personal care and consumer products for over 16 years. On September 27, 2007, the Company announced that initial clinical trials of its T36®formulation for use as a skin antiseptic, a hygienic hand rub, a pre-surgical hand wash and a pre-injection scrub had been started. As of the date of this report, testing designed by BSI to evaluate the efficacy of the T36®formulation against bacteria, mycobacteria, viruses and fungi has been completed. Details of the testing are reported below. On completion, the data from the tests, along with existing and new toxicology information, will be used to support applications in Canada and Europe to test the anti-microbial effectiveness of the formulations with human volunteers. Additional non-human testing will be required before the Company can request human trials in the US. On successful completion of human trials, the Company will be able to pursue the registration and marketing of its products. One of the first tests done by BSI demonstrated that the T36®formulation was completely effective against Methicillin-Resistant Staphylococcus aureus(MRSA) within one minute. First discovered in 1961 in the UK, MRSA is now found worldwide and is able to survive treatment with a number of antibiotics, including penicillin, methicillin, and cephalosporins. Often referred to in the press as a superbug, MRSA is especially troublesome in hospital-acquired infectionsbut is increasingly found outside of medical facilities. The finding was considered significant because MRSA has also shown resistance against some disinfectant products. In subsequent testing done up to the date of this report, the T36®formulation demonstrated complete efficacy in the following tests conducted at BSI.

- Six species of bacteria were completely killed after 30 seconds of exposure, including VRE (Vancomycin- Resistant Enterococcus), MRSA (Methicillin-Resistant Staphylococcus aureus) and MDR (Multi-Drug Resistant) Enterococcus faecium. These three species of bacteria are critical concerns in hospitals, nursing homes and other medical facilities based on their resistance to many antibiotics and other treatments. The clinical testing was completed according to the standards required by the FDA in the US, Health Canada and the European Medicines Agency, which included exposure of the bacteria to T36®for periods ranging from 30 seconds to 30 minutes. In other tests that were conducted for internal purposes, Staphylococcus aureusand Pseudomonas aeruginosawere completely killed by T36®with 15 seconds.

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|ALDA PHARMACEUTICALS CORP.                 
|MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
|FOR THE YEAR ENDED JUNE 30, 2009           

Product development (continued)

- The fungus, Candida albicans,was completely killed after 5 minutes exposure,again, the shortest time required by the FDA, Health Canada and the European Medicines Agency. C. albicansis a major cause of yeast infections which account for one-third of all vulvovaginal infections (VVIs). Bacteria are a second major cause of VVIs and combinations of bacteria and fungi cause most of the remaining cases. The effectiveness that T36®has demonstrated against both fungi and bacteria provides important evidence that ALDAs T36®VVI Treatment will provide an effective means to treat all types of VVIs. A second fungus, Aspergillus niger, was completely killed within 15 minutes, also well within the 60 minute kill time required by the US, EU and Canadian regulatory agencies. A. nigeris a causative agent for upper respiratory infections.
- Two mycobacteria, Mycobacterium aviumand Mycobacterium terraewere completely killed by the T36® formulation within 5 minutes, also the shortest time required by the FDA, Health Canada and the European Medicines Agency (EMA). Mycobacteria are among the most difficult bacteria to kill and are used as benchmark organisms to test the effectiveness of anti-microbial formulations.
- Two species of fungi responsible for athletes foot, Trichophyton mentagrophytesand Trichophyton rubrum were completely killed by the T36®formulation within 5 minutes, also the shortest time required by the FDA, Health Canada and the EMA. The Company intends to pursue registration of the T36®formulation containing anti-inflammatory compounds for use against athletes foot which is relatively easy to test, represents a large market and will allow physicians to prescribe the product off-label for other topical infections once it has been approved. In other tests that were conducted for internal purposes, Trichophyton mentagrophyteswas completely killed by T36®with 15 seconds.
- Ten different types of viruses were killed completely by the T36®formulation. Of these, 5 types were killed within the minimum 30-second time required by the FDA, including Herpes Types I and II and Influenza B. The remaining 5 types, including Polio and Hepatitis A, the hardiest viruses, were killed within 1 to 3 minutes.

Having completed all five preliminary clinical tests, Terrance Owen, President of the Company, and Dr. Hibbard attended a pre-IND (pre-Investigational New Drug) meeting with the FDA on July 15, 2008. Dr. Hibbard prepared an information package for the pre-IND meeting for the FDA by including all of the efficacy and toxicology testing results obtained by ALDA since 1996. The purpose of the pre-IND meeting was to determine what further testing, if any, is required by the Company to satisfy the requirements of the FDA to allow human trials. The conclusion provided by the FDA was that the information submitted by the Company was satisfactory to allow single-use testing of T36®on humans after further non-human testing was completed. By single-use applications, the FDA means use as a pre-surgical and pre-injection skin antiseptic that is swabbed on to the skin once. The tests required before human trials are allowed are Time kill Evaluation, MIC (Minimum Inhibitory Concentration) Evaluation and Percutaneous Absorption and Cutaneous Disposition through human skin as described below. Protocols for theses tests, described below have been prepared and submitted to the FDA for approval.

- Time Kill Evaluation  In these tests, dozens of different species of infectious micro-organisms are exposed to each of the active ingredients of a test substance and the complete test substance formula for periods of time ranging from 15 seconds to 30 minutes to determine the time required for each ingredient of a test substance and the complete test substance formulation to completely kill the selected species. The objectives of the testing are to determine the effective exposure times required for the test substance to be effective and if the individual ingredients have an additive, subtractive or synergistic effect.
- MIC (Minimum Inhibitory Concentration) Evaluation  Each ingredient of a test substance, the complete test substance formula and a known antiseptic product are tested against hundreds of micro-organisms in suspension tests. The objectives of the tests are to quantify the minimum concentration that is required for each of the test substances to have a measurable effect on the tested species, compare those results to the known antiseptic product and determine if the individual ingredients have an additive, subtractive or synergistic effect. This protocol has been approved by the FDA with minor modifications.

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|ALDA PHARMACEUTICALS CORP.                 
|MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
|FOR THE YEAR ENDED JUNE 30, 2009           

Product development (continued)

- Percutaneous Absorption and Cutaneous Disposition (AD studies)- Fresh human skin samples are incubated for 24 hours with the epidermal surface exposed to each ingredient of a test substance and the complete test substance formula in a flow-through diffusion cells. The amount of each test article absorbed across the skin into the receptor fluid is determined by liquid chromatography and tandem mass spectrometry. Disposition of each of the test substances in the various skin layers is also determined using the same methods. These tests evaluate the rate and amount of each test substance absorbed across viable human skin after in vitroexposure and the disposition of each test substance in layers (stratum corneum, epidermis, and dermis) of viable human skin.

As of the date of this report, the MIC and Time Kill protocols have been approved by the FDA with minor modifications that are acceptable to the Company. The protocols for the AD studies have not been reviewed as of the date of this report.

On September 8, 2009, IND #102,487 was submitted to the FDA. On September 24, 2009, the FDA advised the Company that a 21-Day Cumulative Irritation Patch Test (Irritation Test) would also be required and requested that the Company submit a protocol for such a study. The objective of this test is to assesses the irritation caused by topical products and chemicals over 21 days of continuous exposure of the skin. The test substance is incorporated into patches that remain on the skin for a period of time and are replaced from time to time to maintain continuous exposure to the skin.

The budget for all of the testing that may be required has not yet been established and it is not known how long the testing may take. After the results, if the testing is successful, are reported to the FDA, permission may be granted to undertake human trials of T36®applied to the skin a single time. At this time, it is not known if the FDA will approve the remaining protocols as submitted or require changes to the protocols. If changes are required, it is not known how long it will take for the Company to submit modified protocols and if the modified protocols will be accepted by the FDA. It is not known how many revisions of the protocols will be required by the FDA. It is not known if the requirements of the FDA will change or not while the Company attempts to have its protocols approved. If the protocols are approved, it is not certain when or even if the Company will proceed with the testing after the protocols have been approved by the FDA.

For additional indications that require repeated applications, such as a hand sanitizer or athletes foot treatment, additional tests may include, but not necessarily be limited to the following tests.

- Pilot Clinical Evaluation - This study evaluates the antimicrobial efficacy of a disinfectant in two different applications when used as patient preoperative skin preparation on 10 subjects. A disinfectant must achieve a log10microbial reduction of 3 or greater on skin of the groin and a log10microbial reduction of 2 or greater on skin of the abdomen at ten minutes post-application. The objective of the testing is to obtain an preliminary evaluation of the efficacy of the test substance when used on humans.
- Full pre-operative clinical evaluation - The study evaluates the immediate and persistent antimicrobial properties of a disinfectant when used as a preoperative skin preparation. A known active control, e.g., 4% chlorhexidine, and a placebo, e.g., sterile saline, are also evaluated. All treatments are assessed for their potential to cause skin irritation. One-hundred subjects are screened in order to obtain at least forty subjects having sufficient number of resident bacterial flora to permit evaluation of the efficacy of the test products. The objective of this test is to further evaluate the efficacy of a test substance when used on humans.

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|ALDA PHARMACEUTICALS CORP.                 
|MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
|FOR THE YEAR ENDED JUNE 30, 2009           

Product development (continued)

- Pharmacokinetics describes how the body affects a specific drug after administration and examines the extent and rate of Absorption, Distribution, Metabolism and Excretion, commonly referred to as the ADME scheme. Absorption is the process of a substance entering the body. Distribution is the dispersion or dissemination of substances throughout the fluids and tissues of the body. Metabolism is the irreversible transformation of parent compounds into daughter metabolites. Excretion is the elimination of the substances from the body. In rare cases, some drugs irreversibly accumulate in a tissue in the body. The pharmacokinetic properties of drugs may be affected by elements such as the site of administration and the concentration in which the drug is administered. These may affect the absorption rate. The objective of the ADME studies are to determine if the test substance or any of its components are absorbed and if any absorbed components are metabolized into harmful chemicals that may or may not accumulate in the body. Depending on the results obtained from the Percutaneous Absorption and Cutaneous Disposition tests described above, if the T36®or its components are not absorbed by the skin, the pharmacokinetics tests may not have to be conducted for repeated application of T36®to the skin.
- Insult patch test  The objective of this test is to evaluate the effect, if any, of prolonged and repeated exposure of the skin to the test substance. The Induction Phase of this study incorporates the test substance into a series of patches that are applied to the skin of 50 subjects repeatedly for periods of time and then removed. After a rest period, new patches are applied. This process is repeated over a period of time with a number of new patches and after completion of this phase, the reaction of the skin is evaluated. The Challenge Phase takes place some time after application of the final induction patch. Challenge patches are applied to previously untested sites, adjacent to the original induction patch sites. The reaction of the skin is evaluated 24 to 48 hours after application and the subjects are asked to report any delayed reactions which might occur after the final challenge patch reading.

The protocols for these tests will have to be submitted to the FDA for evaluation and, if approved, the testing may be permitted to take place. If successful testing is reported to the FDA, permission may be granted to undertake human trials for the indications requiring repeated or prolonged exposure to T36®. At this time, it is not known if the Company will proceed with these tests and if the Company does decide to proceed with the preparation of the protocols, if FDA will approve the protocols as submitted or require changes to the protocols. If changes are required, it is not known how long it will take for the Company to submit modified protocols and if the modified protocols will be accepted by the FDA. It is not known how many revisions of the protocols will be required by the FDA. It is not known if the requirements of the FDA will change or not while the Company attempts to have its protocols approved. If the protocols are approved, it is not certain when or even if the Company will proceed with the testing after the protocols have been approved by the FDA.

When permitted, human trials are normally conducted in 3 phases, with a detailed protocol for each phase provided to the FDA for approval to proceed. At the end of each phase, the results are analyzed and submitted to the FDA and, if acceptable, the trial continues to the next phase:

- Phase I Clinical Trials: This is the first stage of testing of a new therapeutic in human subjects, normally with a small group (20-60) of healthy volunteers. The objective is to assess the safety and tolerability of the product as a therapeutic, as well as to determine the effects of various doses of the product. For externally administered agents, the testing is simpler than for injected or internally administered agents. However, Phase 1 trials can require up to 2 years to complete, including analysis of the collected data, preparation of the Phase I report for submission to the FDA and the time until a response is received. If these results of Phase I are accepted by the FDA, then the clinical trial can proceed to Phase II.
- Phase II Clinical Trials: This second phase tests the therapeutic on a larger group and evaluates both the required dose (i.e. different quantities of the therapeutic) and efficacy (i.e. how well the therapeutic works for the specified indication). Phase II trials can take up to 3 years. However, some trials can combine Phase I and Phase II, which can reduce the total time required.

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|-------------------------------------------
|ALDA PHARMACEUTICALS CORP.                 
|MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
|FOR THE YEAR ENDED JUNE 30, 2009           

Product development (continued)

- Phase III Clinical Trials: This third phase of clinical trial depends on the indications for which the therapeutic is being tested. For most agents Phase III trials are a randomized, controlled, multi-center trial with large patient groups (often more than 300), with the objective of confirming that the therapeutic is as effective or more effective than the current gold standard for the same application. Phase III trials can take up to 5 years or more to complete. If the results of the Phase III trial are approved by the FDA, then product is approved for marketing for the specific indications that were tested.

The three phases of clinical trials can require a number of years to complete. The total time required is dependant on the nature of the therapeutic product, the condition being treated, the design of the protocols, the time to recruit patients and the review process conducted by the FDA. The registration time for products taken internally can take much longer than for topical agents. The costs of a complete clinical trial can be significant, depending on the intended application. The Company may not conduct any clinical trials itself, but may enter into strategic alliances or licensing agreements with larger companies, which can support the costs of such trials.

In Canada and Europe, similar procedures must be followed but there may not be a requirement for Time Kill, MIC or Adsorption and Distribution studies for the skin antiseptic for the approval of human trials. Similarly, the subsequent tests required by the FDA for repeated or prolonged exposure to T36®may not be required for human trials in Canada. However, this will not be known until a Clinical Trial Application (CTA) is submitted to Health Canada and a response is received from Health Canada. A CTA is provided to Health Canada to seek permission to undertake human trials or to determine what further testing may be required before human trials can begin.

A set of standards referred to as EN Standards guide the processes for registration of therapeutic products in Europe. EN or FDA standards are generally accepted by Health Canada. The objective is to undertake testing that will satisfy all three major jurisdictions. There are minor differences that lead to increased costs, but management has decided that it is more economical to absorb these costs initially rather than conduct separate testing for each jurisdiction.

The Company has nearly completed the preparation of a CTA for Health Canada for the use of T36®as a skin antiseptic. A similar proposal will be made to the EMA in due course.

In other parts of the world, FDA or EMA testing is generally accepted for registration applications. If the company decides to register the products in China, it is likely that the testing will have to be repeated in China unless there is harmonization of the requirements in the meantime. In the Peoples Republic of China (China), the Company must have its products tested for toxicology and efficacy at the Centers for Disease Control (CDC). The Chinese CDC should not be confused with the CDC in Atlanta, Georgia, although both organizations share the same name. Upon completion of successful testing at the CDC, products can be registered for sale within China.

Foreign registration of securities

On April 20, 2009 the Companys common shares were added to the OTC Bulletin Board System under the symbol APCSF. At this time, the trading of the companys shares is very limited. The Company cannot guarantee that there will be a market for the Companys common shares in the United States or that there will any significant amount trading in the companys shares for the foreseeable future. Although the company has market maker, Pennaluna & Company, located in Coeur d'Alene, ID, there is no guarantee that a market will develop for the companys shares.

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|ALDA PHARMACEUTICALS CORP.                 
|MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
|FOR THE YEAR ENDED JUNE 30, 2009           

Risk Factors

Risks pertaining to the Company:

The Company's limited operating history makes it difficult to evaluate the Companys current business and forecast future results.The Company was started as a Capital Pool Company, has been operating its current business since November, 2003 and has had limited revenues during this time. Since its inception, the Company has experienced significant operating losses each year. These losses are due to substantial expenditures on intellectual property protection, product development and product testing of commercial and consumer infection control products. The Company has also been engaged in a program of pre-clinical testing for registration of a number of therapeutic products with Health Canada and the FDA. This testing is costly and time consuming and the Company does not have sufficient funds to undertake all of the testing that is required to satisfy the requirements of these regulatory agencies. Accordingly, the Company requires outside funding to complete these tests. As funds are raised, they will be invested in the testing and the Company will continue to accumulate losses that are proportional to the funds raised and spent on testing. In addition, the Company has recently launched a number of consumer and commercial products, described above and is in the process of establishing new sales and distribution agreements. It will take some time to determine what effect, if any, these recent activities will have on the Companys revenues and profits. These past events and future plans make predictions of future periods difficult.

The Company has no significant source of operating cash flow and failure to generate revenues in the future could cause the Company to go out of business.Based upon current plans to introduce its products into new markets in Canada and internationally, pursue additional patent applications and regulatory approvals for the T36®technology, develop new products, maintain the Companys public listing on the TSX-Venture Exchange and support the continued registration of its securities in the US, the Company expects to incur operating losses in future periods. These losses will occur because there are continuing expenses associated with the marketing and production of the Companys products, research and development, intellectual property protection, testing and registration of therapeutic products, legal and accounting fees, the maintenance of its public listing and other expenses associated with running an operating business. Even if the Company becomes operationally profitable from the introduction and sale of new products, the Company plans to invest heavily in pre-clinical testing, clinical trials and registration of its therapeutic products and will need to raise significant amounts of new funding to complete these activities. Also, the Company may not be successful in generating significant revenues from therapeutic products in the future. Failure to generate more revenues could cause the Company to contract or go out of business.

If the Company raises further funds through equity issuances, the price of its securities could decrease due to the dilution caused by the sale of additional shares.Additional funds raised by the Company through the issuance of equity or convertible debt securities will cause the Companys current shareholders to experience dilution and possibly lower the trading price of its shares. Such securities may grant rights, preferences or privileges senior to those of the Companys common shareholders. The Company is not profitable and will not be profitable for the foreseeable future under its current development plan. The Company plans to issue further equity to raise funds as necessary to continue operations and fund its program of research and development, patent protection and regulatory approvals. As a result, an indeterminate amount of dilution of the Companys capital stock will occur.

The Company has issued a limited number of shares out of its authorized capital of an unlimited number of common shares, which could be dilutive and negatively affect the share price.Having an unlimited number of authorized but unissued common shares could allow the Companys Directors and Officers to issue a large number of shares without shareholder approval, leading to significant dilution of current shareholders and possible lowering of the share price.

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|ALDA PHARMACEUTICALS CORP.                 
|MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
|FOR THE YEAR ENDED JUNE 30, 2009           

Risk Factors (continued)

The Company could enter into debt obligations and not have the funds to repay these obligations.The Company does not have any contractual restrictions on its ability to incur debt and, accordingly, the Company could incur significant amounts of indebtedness to finance its operations. Any such indebtedness could contain covenants, which would restrict the Companys operations. The Company might not be able to repay indebtedness.

The Company has a history of generating limited revenues and the continuing failure to generate further revenues could cause the Company to cease operations.The Company has no history of pre-tax profit and in the previous three years has had only limited annual revenues for each of the years it has been operating. The Company sustained operating losses for each of its fiscal years and has sustained significant accumulated operating losses. The continued operation of the Company will be dependent upon its ability to generate operating revenues and to procure additional financing. The Company may not be successful in generating revenues or raising capital in the future. Failure to generate revenues or raise capital could cause the Company to cease operations. The auditors reports to the shareholders are expressed in accordance with Canadian reporting standards, which do not require a reference to conditions and events that cast substantial doubt on the Company's ability to continue as a going concern when these are adequately disclosed in the financial statements. In the United States, reporting standards for auditors require the addition of an explanatory paragraph when the financial statements are affected by conditions and events that cast substantial doubt on the Company's ability to continue as a going concern. Had the Companys financial statements been audited by US auditors, the Company may have received a going concern qualification. A going concern qualification, or the existence of a basis for such a qualification, could negatively affect the Companys ability to raise capital.

The Companys future performance is dependent on key personnel. The loss of the services of any of the Companys executives or Board of Directors could have a material adverse effect on the Company.The Companys performance is substantially dependent on the performance and continued efforts of the Companys executives and its Board of Directors. Dr. Terrance G. Owen is the President, Chief Executive Officer and a Director. Peter Chen is the Secretary, Chief Financial Office and a Director. Dr. Linda Allison, Dr. Ronald Zokol, Dr. William F. McCoy and Eugene Hodgson are independent Directors. Dr. Allison, Mr. Chen and Mr. Hodgson are members of the Audit Committee. The loss of the services of any of the Companys executives or Board of Directors could have a material adverse effect on the Companys business, results of operations and financial condition. There is no assurance that key personnel can be replaced with people with similar qualifications within a reasonable period of time. The Company currently does not carry any key person insurance on any of the executives or members of the board of directors. The only contracts in place with any of the employees, officers or directors of the Company are with Terrance Owen and Peter Chen. The Company currently has Directors and Officers insurance in place. However, if for any reason, the Company cannot maintain such insurance, it is possible that some or all of the Directors may resign. If any or all Directors resign, there is no assurance that new Directors can be found to replace any directors who resign.

The Company has not declared any dividends since its inception in 2000 and has no present intention of paying any cash dividends on its common shares in the foreseeable future.The Company has not declared any dividends since its inception in 2000, and has no present intention of paying any cash dividends on its common shares in the foreseeable future. The payment by the Company of dividends, if any, in the future, rests in the discretion of the Company's Board of Directors and will depend, among other things, upon the Company's earnings, its capital requirements and financial condition, as well as other relevant factors.

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|-------------------------------------------
|ALDA PHARMACEUTICALS CORP.                 
|MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
|FOR THE YEAR ENDED JUNE 30, 2009           

Risk Factors (continued)

The Companys future performance is dependent on key suppliers and manufacturers and a loss of any suppliers or manufacturers could have a material adverse effect on the Company by reducing or eliminating the ability of the Company to manufacture or sell its products.The Company does not have agreements in place with any of its key suppliers for raw materials, other supplies or manufacturing. If any of the Companys suppliers or manufacturers were to go out of business or were unable to procure the raw materials or other supplies required by the Company to manufacture its products, the Company would have to find other suppliers or manufacturers. There is no guarantee that the Company would be able to find other suppliers or manufacturers. If the Company could not find other suppliers or manufacturers, production of the Companys products would be delayed for an indefinite period of time and such delays would lead to delayed revenues or reduced revenues or both.

There is no assurance that the patent applications filed for theT36®technology or for other products will be approved, and failure to obtain such approvals could leave the Company with no protection for its intellectual property and reduced sales.Patent protection of the T36®technology is very important to the Companys current and future products because the T36®Disinfectant technology is the basis for most of its products. Although patents have been allowed in the United States, China and Australia, there is also no assurance that these patents will not be challenged or that future patent applications will be successful. A lack of patent protection would significantly alter the competitive environment and possibly allow competitors to infringe on the technology of the Companys business. Reduced revenues and lack of future products could result from such infringement.

There is no assurance that the Company will be able to secure the funds needed for future development, and failure to secure such funds could lead to a lack of opportunities for growth.Many of the Companys products require very costly laboratory testing to establish toxicity, efficacy and analytical methods and clinical trials to establish effectiveness and safety on human subjects. This testing is required in order to obtain required regulatory approvals from Health Canada, the EPA and FDA in the US and the EMA in the EU. A lack of funds would impair the ability of the Company to complete such tests. A lack of funds would also impair the Companys ability to establish marketing and sales plans once the products have been approved for sale. If adequate financing is not available when required, the Company may be required to delay, scale back or eliminate various activities and may be unable to continue in operation. The Company may seek such additional financing through debt or equity offerings, but there can be no assurance that such financing will be available on terms acceptable to the Company or at all. Any equity offering will result in dilution to the ownership interests of the Companys shareholders and may result in dilution to the value of such interests.

There is no assurance that research and development being conducted by the Company to create new products will be successful.The Company is conducting research and development on new products, but the outcomes of research and development are never certain. For example, there is no assurance that any new products will be developed or that any new products that do result will have a competitive advantage or market acceptance, will not be superseded by the new products of competitors, will not infringe on the patents of other companies or that other companies will not develop products that infringe on patents obtained by the Company for its new products. The Company has completed the formulations for new products but still needs to conduct the toxicity and efficacy tests and establish the analytical methods required to obtain regulatory approvals from Health Canada, the EPA and FDA in the US and the EMA in the EU.

The Company and the Companys products have limited brand awareness which limits the ability of the Company to gain credibility from prospective customers and to sell its products into new markets.Market knowledge of the Companys name is limited. The Company will need to devote considerable resources to educate new markets about the products the Company offers. In establishing new markets, the Company will be competing with companies that are potentially already entrenched in such markets or may be better funded than the Company. The ability of the Company to raise brand awareness will depend on its ability to raise the money required to undertake such an intensive marketing effort. As noted elsewhere, there is no assurance that the Company can raise funds required for such an investment in marketing.

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|-------------------------------------------
|ALDA PHARMACEUTICALS CORP.                 
|MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
|FOR THE YEAR ENDED JUNE 30, 2009           

Risk Factors (continued)

The Company has limited sales and marketing experience and can provide no assurance that the Company can keep its current customers or gain new ones.The Company has limited experience in marketing and selling its products and the Company has only three sales and marketing people. The most senior sales person was hired in May, 2009. None of the sales people have had prior experience with the type of products sold or being developed by the Company. The Company will have to expend substantial funds to promote and develop its products. The Companys success in this regard will depend on the quality of its products and its ability to develop and implement an effective sales and marketing strategy. Current plans call for the expenditure of significant funds over the next 18 months for marketing activities. Failure to achieve the marketing objectives will have a material adverse effect on the Company and on its results of operations and financial condition.

Conflicts of interest may exist for Directors and Officers which may inhibit their ability to act in the best interests of the Company and its shareholders leading to possible impairment of the Companys ability to achieve its business objectives.The directors and officers of the Company will not be devoting all of their time to the affairs of the Company. The directors and officers of the Company are directors and officers of other companies. The directors and officers of the Company will be required by law to act in the best interests of the Company. They will have the same obligations to the other companies in respect of which they act as directors and officers. Discharge by the directors and officers of their obligations to the Company may result in a breach of their obligations to the other companies and, in certain circumstances, this could expose the Company to liability to those companies. Similarly, discharge by the directors and officers of their obligations to the other companies could result in a breach of their obligation to act in the best interests of the Company. Such conflicting legal obligations may expose the Company to liability to others and impair its ability to achieve its business objectives. Terrance Owen has been the Secretary of Bi-optic Ventures Inc., an inactive company listed on the TSX-Venture Exchange, since September, 2002 and a Director of this same company since September, 2006. As a non-management Officer and Director of Bi-Optic Ventures Inc., Terrance Owen spends up to two hours per month on the business of Bi-Optic Ventures Inc. Terrance Owen controls a company, Duft Enterprises Corp., that owns the building in which the Company is located and the Company pays rent to Duft Enterprises Corp. Peter Chen is not a Director or Officer of any other company. Neither Peter Chen nor Terrance Owen is a Director or Officer of any companies that compete with or provide services that are similar to those of the Company.

Management of the Company can, through their stock ownership in the Company, influence all matters requiring approval by the Companys shareholders.Management of the Company as at June 30, 2009, collectively own approximately 3% of the Company's issued and outstanding common shares at that date. These shareholders, if acting together, could significantly influence all matters requiring approval by the Company's shareholders, including the election of directors and the approval of mergers or other business combination transactions. Management may not make decisions that will maximize shareholder value and may make decisions that will contribute to or cause the entrenchment of management.

Risks Pertaining to the Industry:

Registration of products may not occur in a timely manner which could lead to delays in product introductions, reduced revenue expectations and extra costs to conduct further tests to satisfy regulatory agencies.Government agencies, such as the EPA and the Food and Drug Administration (FDA) in the United States and Health Products and Food Branch in Canada, need to provide approvals of the Companys products prior to any sales of these products. To obtain such approvals, the Company must submit extensive amounts of information on the efficacy, toxicology, carcinogenicity, mutagenecity and other testing of the products that it is trying to register. After all of the information is provided, the agencies can request supplemental information and further testing. Once all of the requirement for documentation is satisfied, the agencies can take an indeterminate amount of time to provide approvals for the Company to market its products. Significant delays could lead to slower revenue growth than anticipated. In addition, regulatory delays can allow time for competitors to devise strategies to prevent or reduce market penetration. There is no assurance that government agencies will accept for registration any of the Companys products.

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|-------------------------------------------
|ALDA PHARMACEUTICALS CORP.                 
|MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
|FOR THE YEAR ENDED JUNE 30, 2009           

Risk Factors (continued)

There is a risk that the Companys intellectual property infringes upon the rights of other companies, which could lead to reduced revenues, reduced margins due to sanctions against the Company, outright withdrawal or prohibition of products or trademarks from the market and significant costs for legal defense against infringement claims, re-branding of products and revised marketing materials.The Company is unaware of any infringement claims being made against the Company or its products or processes at the time of writing. In the future, there can be no assurances that third parties will not assert infringement claims in the future or require the Company to obtain a license for the intellectual property rights of such third parties. There can be no assurance that such a license, if required, will be available on reasonable terms or at all. If the Company does not obtain such a license, it could encounter delays in the introduction of products or could find that the development, manufacture or sale of products requiring such a license could be prohibited.

There is a risk that earlier inventions may exist that invalidate the Companys patent applications so that the Company may not be able to sell any infringing products.Since patent applications are maintained in secrecy for a period of time after filing, and since publication of discoveries in the scientific or patent literature often lags behind actual discoveries, the Company cannot be certain that it was the first creator of inventions covered by pending patent applications, or that it was the first to file patent applications for such inventions. The Company might have to participate in interference proceedings in U.S., Canadian or patent offices in other jurisdictions to determine priority of invention, at substantial cost, particularly if such actions are required overseas. There can be no assurance that the Companys patents, if issued, would be held valid or enforceable by a court. The Company has patents issued in the United States, China and Australia and patent applications filed in the European Union and Canada. These patent applications seek intellectual property protection for the basic formulation of the T36®formulation, the method for making it and certain therapeutic uses of the formulation.

There may be limited ability to defend the patents if and when they are issued, leading to loss of sales that might otherwise be realized if the Company was in a position to defend its patents.Litigation among pharmaceutical companies can be intense and costly. The Company might not have the financial ability to defend its patents, if issued, against larger industry players. Litigation may be necessary to enforce patents issued or assigned to the Company, or to determine the scope and validity of a third party's proprietary rights. Additionally, there can be no assurances that the Company would prevail in any such action. An adverse outcome in litigation or as part of an interference or other proceeding in a court or patent office could subject the Company to significant liabilities, require disputed rights to be licensed from other parties or require the Company to cease using certain technology or products, any of which could have a material adverse effect on the Companys business.

The market for disinfectant products is competitive and well established with a number of large, multinational, widely recognized companies with significant financial and marketing resources selling, and possibly developing, similar products.Competitors are already well established in the market for disinfectant and antiseptic products and products for the treatment of topical infections. The introduction of new products into these existing markets could be met with aggressive marketing, price cutting and distribution impediments by competitors. To obtain market share, the Companys business must penetrate a market with established competitors and obtain sufficient recognition to be able to displace the existing products. Substantial funds will have to be spent on marketing and education to achieve these objectives. Competitors may be developing new technologies and new products that will offer significant improvements over existing products, including those offered by the Company. There can be no assurance that others will not independently develop similar products, duplicate any of the Companys products or, if patents are issued to the Company, design around such patents. There can be no assurance that a competitor's technology or product would be found to infringe the Companys patents. In the disinfectant market, key competitors include Germiphene Corporation, Virox Technologies, Inc., JohnsonDiversey Inc., Advanced Sterilization Products, Reckitt Benckiser and Metrex Research Corporation. All of these companies are well established and sell disinfection products into the same markets served by the Company. In the therapeutic markets being targeted by the Company, a number of large competitors, such as Johnson and Johnson, Cardinal Health, Reckitt Benckiser and Ortho Pharmaceutical are well established. Such large and aggressive competitors can deploy their significant resources to prevent a new competitor, such as the Company, from securing market share.

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|-------------------------------------------
|ALDA PHARMACEUTICALS CORP.                 
|MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
|FOR THE YEAR ENDED JUNE 30, 2009           

Risk Factors (continued)

The Companys T36®Disinfectant is composed of various chemicals that may pose risks due to flammability and possible health risks.One of the main components of T36®Disinfectant, T36®Antiseptic Hand Sanitizer and T36®Disinfectant Cleaner CONCENTATE is ethanol, which is flammable and has a flash point (the minimum temperature at which the liquid produces a sufficient concentration of vapour above it that it forms an ignitable mixture with air) of 13oC. Water, which is part of the T36®formulation, raises the flash point to 24oC. The transport and storage of T36®products can pose a fire hazard if shipped or stored in sufficient quantities. The Company uses an independent warehousing company to store and ship T36®Disinfectant. The warehouse is fully equipped with fire suppression equipment according to the relevant regulations established by the municipal, provincial and federal governments. T36®products are shipped by ground only in cases of 4 bottles holding 4 litres each or in smaller quantities per case. In these quantities, T36®Disinfectant is not classified as a Dangerous Good under Sections 1.15, 1.16 and 1.17 of the Transportation of Dangerous Goods Act administered by Transport Canada. As a result, no special regulations apply to the shipping of T36®Disinfectant by ground within Canada. There is no guarantee that special shipping regulations will not be applied to shipments of T36®Disinfectant in the future or in other jurisdictions, such as the United States.

Two potentially toxic components of T36®Disinfectant are present in low concentrations compared to their LD50levels (the amount of the substance that kills 50% of the test population of experimental animals when administered as a single dose). O-phenylphenol (OPP) in pure crystalline form is considered to be a possible carcinogen and eye contact can cause severe irritation or burns with possible eye damage (Concentration in T36®Disinfectant = 2,800 ppm, oral LD50= 2,480 mg/kg in rats) For some individuals, o-phenylphenol can also irritate the skin. Benzalkonium chloride (BZK) supplied as a 50% solution in water, has been reported to cause allergic reactions and the swelling of the mucosa when used as nose sprays on a continuous, long-term basis by sensitive users (Concentration in T36®Disinfectant = 2,000 ppm, oral LD50= 300 mg/kg in rats). The Company does not directly handle, store, use or dispose of OPP or BZK in pure form but only in their highly diluted form in T36®Disinfectant. Further, because the denatured alcohol that contains Bitrex to prepare T36®Disinfectant, the consumption of significant amounts of T36®Disinfectant is not possible. Therefore, it is unlikely that anyone can be poisoned or otherwise harmed through the proper use of T36®Disinfectant as instructed by the Company.

Toxicology studies conducted for the company by Product Safety Labs (PSL), located in Dayton, New Jersey, have confirmed that T36®Disinfectant has no harmful effects on animals except as reported below by PSL:

- Acute inhalation (rat): LC50> 2020 mg/m3. Difficulty breathing, irregular respiration, lethargy and discharge from nose and eyes reported.
- Acute oral (rat): LD50> 5000 mg/kg. Lethargy and hunched posture reported.
- Acute dermal (rat): LD50> 2000 mg/kg. No systemic effects observed.
- Effects not observed but possible based on individual ingredients may include: ataxia, loss of coordination, drowsiness, intoxication, nausea and vomiting.

However, T36®Disinfectant is classified as a moderate eye irritant. Although T36®Disinfectant is not measurably toxic if used as directed by the Company, it is possible that regulations against these chemicals may become more restrictive and affect the ability of the Company to market its products in certain jurisdictions without additional warning labels. The chemicals present in T36®are biodegradable with sufficient time and do not pose a long-term threat to the environment. However, given the attention that any chemicals may attract from environmental groups, it is possible that negative publicity about these chemicals could affect the ability of the company to market its products in certain jurisdictions. There are persuasive arguments and credible scientific evidence available to support the safety of T36®Disinfectant, but such an educational effort on the part of the Company would require funds to be spent and would affect the profitability of the Company.

Risk Factors (continued)

The Company has a limited number of customers and is dependent on a few key accounts to maintain its current levels of sales.The key customers for which sales account for more than 10% of total revenues during the period being reported on are:

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|                                           
|-------------------------------------------
|ALDA PHARMACEUTICALS CORP.                 
|MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
|FOR THE YEAR ENDED JUNE 30, 2009           

- Esthetics Plus, Inc.: A distributor to the beauty market with a contract that renews on an annual basis. Either party can terminate the contract on 60 days notice or with 30 days notice for any breach of the contract if the breach is not rectified within the 30 day notice period,
- Sinclair Dental Limited:A distributor to the dental market and a customer of both API and the Company for 8 years,
- The Stevens Company Limited: A distributor to the scientific and medical markets and a customer of both API and the Company for 8 years, and
- VWR International: A distributor to the laboratory market and customer of API and the Company for 8 years.
- Product Distribution Centre: A distributor that is owned by the provincial government of BC, supplies the provinces public sector consumers within BC and a customer of the Company and API for 8 years.

The Company currently sells its T36®Disinfectant, the T36®Disinfectant Wipes, T36®Antiseptic Hand Sanitizer Gel and Wipes, and T36®Disinfectant Cleaner CONCENTRATE through these distributors. The current sales through these distributors would be disrupted if any of these distributors stopped representing the Company. The result would be a reduction in the Companys revenues until new distributors could be found. It is possible that new distributors could not be found and the Company would have to try to sell its products directly to the end users, leading to a significant increase in marketing and sales costs even if the sales levels could be regained.

|    |                               
|--- | ------------------------------
|1.3 | SELECTED FINANCIAL INFORMATION

|                                  |                |                |               
|--------------------------------- | -------------- | -------------- | --------------
|For the twelve month period ended | June 30, 2009  | June 30, 2008  | June 30, 2007 
|Revenue                           | $      282,261 | $      249,042 | $      256,243
|Loss & Comprehensive Loss         | 1,183,009      | 1,937,735      | 562,090       
|Basic and Diluted Loss Per Share  | 0.02           | 0.05           | 0.02          
|Patent Application                | -              | -              | 40,486        
|Total Assets                      | 1,782,098      | 2,533,975      | 854,166       
|Long-Term Liabilities             | -              | -              | -             

During the year ended June 30, 2009, 1,830,000 options were exercised by the holders at an exercise price range of $0.10 - $0.12 for total gross proceeds of $209,000. No warrants were exercised during the same period. As of June 30, 2009, the Company had cash and short-term investments totaling of $1,610,906 for use as working capital and for general and administrative purposes. The current assets were $1,777,407, with 90% of the current assets attributable to cash and short-term investments while current liabilities were $56,215. Inventories increased from $10,443 as of June 30, 2008 to $61,834 as of June 30, 2009. The increase is due to finished goods and raw materials being stored by the Company rather than by Norwood Packaging as was the case during the 2008 and 2007 fiscal years.

Revenues for the last three fiscal years were generated primarily from the sale of T36®Disinfectant to the dental, beauty and first responder markets. The Companys annual sales were not significantly different from year-to-year from 2007 to 2009. Expenditures exceeded revenues and resulted in net losses of $1,183,009, $1,937,735 and $562,090 from operations for the years ended June 30, 2009, 2008 and 2007, respectively. During the year ended June 30, 2009, the Company granted 550,000 options priced at $0.20 and 1,600,000 options priced at $0.25 to certain directors, consultants and employees resulting $234,596 in non-cash stock-based compensation being recognized during the period.

Over the three fiscal years of 2007 to 2009, the year ended June 30, 2008 shows the highest expenditures and losses. This was due to higher general and administrative expenses resulting from the commencement of services provided by independent consultants to assist with regulatory submissions to the FDA and Health Canada and the development of the Companys new line of T36®products. There were also greater amounts of stock-based compensation recorded in 2008 compared to 2007 and 2009 as disclosed above.

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|                                           
|-------------------------------------------
|ALDA PHARMACEUTICALS CORP.                 
|MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
|FOR THE YEAR ENDED JUNE 30, 2009           

|    |                                           
|--- | ------------------------------------------
|1.3 | SELECTED FINANCIAL INFORMATION (continued)

Overview

Over the course of the Companys operating history, the Company has successfully secured the required government and regulatory approvals to market and sell T36®Disinfectant, Disinfectant Wipes, T36®Antiseptic Hand Sanitizer Gel and wipes and T36®Disinfectant Cleaner CONCENTATE in Canada resulting in the sales described in Results of Operations below. To date, all of the Companys sales have been solely in Canada which, while a developed industrial economy, is not a particularly large market relative to economies such as the United States, China or the European Union (EU). To achieve profitability and increase sales substantially, the Company must first secure government and regulatory approval of its products in markets outside of Canada or achieve sales of for additional products, other than T36®Disinfectant within Canada. Although sales in Canada have been relatively consistent over the Companys operating history, the Company has not yet secured the required government and regulatory approvals for the sales of its products outside of Canada. Each government or regulatory jurisdiction tends to require efficacy studies or safety studies of differing content or quality. The regulatory approval process to date has been costly both in terms of working capital and in terms of management time and attention.

The Company has been actively marketing its T36®products since the acquisition of API was completed. In general, the Companys sales show little significant variation from year to year. The 13% and 10% increases in sales for the year ended June 30, 2009 compared to the 2008 and 2007 fiscal year, respectively, was largely the result of an increase in distributor prices and increased volumes.

The cost of sales increased as a percentage of sales during the 2009 fiscal year due to increases in the cost of raw materials and supplies and storage fees due to more products being stored off-site with a third-party warehousing company. As noted above, the Company continues to operate overall with a significant loss from operations. This reflects, to a great extent, the costs associated with pre-clinical trials, the work being done to register its products for sale in jurisdictions other than Canada and ongoing administrative, management and intellectual property protection costs. To generate a net profit, the Company believes that it must register its products for sale in another major market, such as the United States or the EU or achieve significant increases in sales of its products within Canada. However, even if the Company becomes operationally profitable from the introduction and sale of new products, the Company plans to continue investing heavily in clinical testing and registration of its therapeutic products in Canada, the EU and the US through Health Canada, the EMA and the FDA, respectively and in intellectual property protection. This will lead to continuing and unpredictable losses for the foreseeable future that will closely parallel the funds that are invested in these activities.

To accomplish these goals, the Company will need to raise significant amounts of new funding and the expenses associated with these activities will affect the ability of the Company to show a profit until they are completed. Further, the issuance of new shares to fund these activities will lead to the dilution of existing shareholders.

Trend information

There are no general market trends or other factors which the Company believes materially affect its business prospects other than small seasonal dips in sales observed during the summer months and over Christmas and into the New Year. However, the Companys existing customers and the general public are becoming more aware of T36®products due to the publicity generated by the continuing spread of antibiotic-resistant bacteria and the current H1N1 pandemic, defined as infection that is spreading widely in at least two of the six World Health Organization (WHO) regions. In early June, 2009, Swine-like H1N1 Influenza A virus Strain A/California/04/2009, now referred to as pH1N1, had reached all six WHO regions with nearly 30,000 confirmed cases reported in 74 countries. On June 11, 2009, the WHO raised its global pandemic alert level to Level Six, the highest level possible, for the first time since 1968.This action by the WHO has contributed to this awareness and a perception that there is a growing need or demand for products similar to those the Company produces. This has resulted in growth in the market for disinfectant products, in particular, consumer products which are effective against infectious microorganisms. No reliable quantification of the growth in sales such products have experienced is available and no growth or future growth can be predicted. The Company cannot predict if its revenues will increase as new products based on the T36®formulation are launched. As of the date of reporting, the Company has 5 products on the market: T36®Disinfectant, T36®Antiseptic Hand Sanitizer Gel, T36®Disinfectant Cleaner Concentrate, T36®Disinfectant Wipes and T36® The Wipe Antiseptic Hand Sanitizer. T36 DisinfexTMDisinfectant Cleaner Wipes and T36®Antiseptic Hand Sanitizer Liquid may also be introduced to the market at some time in the future.

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|-------------------------------------------
|ALDA PHARMACEUTICALS CORP.                 
|MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
|FOR THE YEAR ENDED JUNE 30, 2009           

|    |                      
|--- | ---------------------
|1.4 | RESULTS OF OPERATIONS

Sales

As a result from the sale of T36®Disinfectant and T36®Hand Sanitizer through its distributors to the first responders, dental and beauty markets, the Company recorded sales of $282,261 for the year ended June 30, 2009 compared to $249,042 and $256,243 for the 2008 and 2007 fiscal years, respectively. Any differences in sales revenue were partly due to the timing differences in ordering and, as anticipated, sales were slower in the summer and over the Christmas period. No significant quarterly variation in sales occurred and no new major competitors have appeared in the market nor have any withdrawn from the market.

The Company relies heavily on its current distributors to sell T36®products to end users. For the year ended June 30, 2009, sales to four major customers totaled $174,490 and accounted for 64% of the total sales For the year ended June 30, 2008, sales to these four customers totaled $137,954 and accounted for 55% of the total sales. In 2007, total sales to these same customers were $162,837 and accounted for 66% of the total sales. Clearly, these customers are important to the Company and the loss of any or all of these customers would have a significant and negative effect on the Company.

The selection of products offered by the Company can now be used for personal hygiene, disinfecting instruments and countertops and for janitorial services. The first introduction of the newer products to the market occurred during the Companys attendance at the 142nd Annual Spring Meeting (ASM) of the Ontario Dental Association (ODA) on April 30 and May 1, 2009. The Company cannot predict if the new products, described above, will be accepted by the market. If not, the Company can be expected to show losses in the future.

Cost of Sales

For the for the year ended June 30, 2009, 2008 and 2007, the cost of sales incurred was $224,687, $157,234 and 165,920, representing 80%, 63% and 65%, , of total sales, respectively. Cost of sales includes the direct costs of the inventory sold during the period plus warehousing costs, shipping and handling charges. The higher cost of sales during the year ended June 30, 2009, was primarily due to an increase in cost of raw materials, particularly ethanol, and greater transportation, warehousing and handling costs due to the termination of the agreement with Norwood Packaging which had been storing the Companys inventory as part of their contribution to the agreement. As a result, the Company returned to a third party warehousing provider to store and ship all of its inventory. Higher distributor prices which may help to mitigate the increase in cost of production, transportation and storage costs, came into effect on February 15, 2009.

Gross Profit

For the year ended June 30, 2009, 2008 and 2007, the Company recorded a gross profit of $57,574 and $91,808 and 90,323, respectively. Gross profit declined in the fiscal year ended June 30, 2009 due to increases in the cost of production, transportation and warehousing as described above in the preceding paragraph, Cost of Sales.

Advertising and Promotion

There was no material difference in advertising and promotion costs over the years ended June 30, 2007 to 2009. Promotion consisted of the distribution of products and literature to current and potential distributors and customers.

Conference

Conference costs were higher in the year ended June 30, 2009 than the preceding two years due to attendance by company representatives at the 142nd Annual Spring Meeting (ASM) of the Ontario Dental Association (ODA) on April 30 and May 1, 2009 and other trade shows. At this conference, the new products developed by the Company were introduced to the dental market.

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|                                           
|-------------------------------------------
|ALDA PHARMACEUTICALS CORP.                 
|MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
|FOR THE YEAR ENDED JUNE 30, 2009           

|    |                                  
|--- | ---------------------------------
|1.4 | RESULTS OF OPERATIONS (continued)

Consulting

Consulting fees for the year ended June 30, 2009, 2008 and 2007 were $567,144, $1,004,660 and 308,600, respectively. The substantial increase in consulting fees during the 2008 fiscal year was largely due to non-cash stock-based compensation expenses of $605,068 which resulted from the grant of options to senior officers and other consultants to the Company. Fewer options were granted during the 2009 fiscal year leading to lower non-cash stock-based compensation expense of $138,284 for consultants. During the 2007 fiscal year, $83,600 non-cash stock-based compensation was recognized. Details of the non-cash stock-based compensation provided by the Company for the fiscal year ended June 30, 2009 are provided in Note 7(b)(x) of the accompanying financial statements. In addition to the non-cash stock-based compensation provided to consultants, $324,000 was paid to executives of the Company in remuneration for their services to the Company. Information on related party transactions is provided in Note 11 of the interim consolidated financial statements. In addition, the consulting fees included fees paid to third party consultants to carry out ongoing projects including branding, marketing, and product development.

Due Diligence

A due diligence fee of $10,000 related to the proposed acquisition of a pharmaceutical manufacturing facility was paid to the target company during the fiscal year ended June 30, 2008. On February 23, 2009, the Company entered into a non-binding Letter of Intent to purchase all of the business and undertakings of the target company. On June 23, 2009, the Company issued a news releases stating that the Company was not going to proceed with the proposed acquisition.

Investor Relations

Investor relations activities amounted to $132,103 $124,065, and $65,039 for the year ended June 30, 2009, 2008 and 2007, respectively. Freeform Communications, Inc. (Freeform) was paid a total of $48,000, $46,649 and $38,300 for their services to the Company for the year ended June 30, 2009, 2008 and 2007, respectively. Included in this category for the year ended June 30, 2009, 2008 and 2007 was non-cash stock-based compensation of $73,859 $53,707 and $2,000, respectively, for various options granted to Freeform and fees of $9,954 and $13,709 paid to Marketwire for the dissemination of news releases. In the 2007 fiscal year, no stock options were granted to Freeform. Marketwire was paid $6,739 in the 2007 fiscal year.

Legal and Accounting Fees

Legal and accounting fees totaled $72,537, $89,723 and $53,697 for the year ended June 30, 2009, 2008 and 2007, respectively. The greater amount of legal and accounting fees during the 2008 fiscal year was partly due to the ongoing foreign securities registration which was assisted by Stanislaw Ashbaugh LLP and completed in April, 2009. Legal fees incurred in the periods also consisted of advising the Company on general legal matters, attending to preparation of required and revised documentation to the TSX Venture Exchange and the securities commissions, reviewing Form 20-F documents for the registration of the Companys securities in the United States, the preparation of documentation required for private placements and option grants and attending to the closing of the private placements. Accounting fees consisted of consultation fees, auditing of the Companys annual financial statements and undertaking due diligence on the target company that was being considered for acquisition.

Product Registration and Development Costs

Total costs incurred in this category for the year ended June 30, 2009, 2008 and 2007 were $189,566, $375,807 and zero, respectively. The expenses related to research and development activities, which do not meet generally accepted criteria for deferral, are expensed as incurred. However, during 2007 fiscal year, no expenses were included in this category because the auditors elected to capitalize the intellectual property costs with an amortization period of 20 years rather than treating these costs as an expense. Then, for the fiscal year ended June 30, 2008, the original practice was re-adopted and these costs were expensed so that the financial reporting is consistent with the Companys focus on R&D. Also, during the 2008 fiscal year these costs were higher because the Company elected to write off the remaining $110,200 in development costs and intellectual property that was acquired in the original Qualifying Transaction that remained on the balance sheet in 2007. The Company will now expense these costs in the future to be consistent with past and standard accounting practices. Costs in this category include continuation of the US patent application, ongoing registration of T36 Disinfex as a trademark in Canada, testing fees paid to BioScience Laboratories, Inc. to undertake clinical testing for the T36®therapeutic applications, and fees paid to regulatory consultants in Canada and US to pursue the registration of the Companys therapeutics products.

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|                                           
|-------------------------------------------
|ALDA PHARMACEUTICALS CORP.                 
|MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
|FOR THE YEAR ENDED JUNE 30, 2009           

|    |                                  
|--- | ---------------------------------
|1.4 | RESULTS OF OPERATIONS (continued)

Wages and Benefits

Wages and benefits were $209,946, $302,439 and $116,633 for the year ended June 30, 2009, 2008 and 2007, respectively. Costs in this category include the wages paid to accounting and administrative assistance and to sales and marketing staff. An Account Executive was hired in May, 2009 and two Account Managers were hired since then to promote T36®products so wage costs will increase. Non-cash stock-based compensation expenses of $124,695, $244,790, and $62,500 were recognized in wages and benefits for the year ended June 30, 2009, 2008 and 2007, respectively. Cash-based wage costs for the fiscal years 2007 to 2009 were $54,133, $57,648 and $85,251 respectively. The increase in the 2009 fiscal year compared to the previous two years was due to incentive raises, bonuses paid to staff and the hiring of additional staff.

Loss from Operations

The Company continued to have loss from operations of $1,183,009, $1,937,735 and $562,090 for the year ended June 30, 2009, 2008 and 2007, respectively. The Company observed higher losses in the 2008 fiscal year largely due to a total of non-cash stock-based compensation expenses of $903,565 being recognized in the statement of operations. In comparison, there was $148,100 of non-cash stock-based compensation expenses in the 2007 fiscal year and $336,838 in the 2009 fiscal year. The details of non-cash stock-based compensation are disclosed in Note 7(b)(x) and in the Consolidated Statements of Cash Flows in the interim consolidated financial statements. During the year ended June 30, 2009, the Company granted 550,000 options priced at $0.20 and 1,600,000 options priced at $0.25 to certain directors, consultants and employees. Including various granted options that were vested during the quarters, non-cash stock based compensation of $336,838 is recognized in the statement of operations during the year ended June 30, 2009. Sales are not yet sufficient to cover all of the expenditures of the Company. Product registration and development costs remain higher than revenues due to the employment of independent consultants to assist with satisfying the requirements of the FDA, EMA and Health Canada, to evaluate the potential applications and development of the Companys T36®technology and to determine the regulatory pathways to commercialization.

Management is currently investing in the marketing of T36®Antiseptic Hand Sanitizer and T36®The Wipe Antiseptic Hand Sanitizer, T36 DisinfexTM(formerly known as T36®Disinfectant) and T36 Disinfex Wipes and T36®Disinfectant Cleaner CONCENTRATE. Marketing new products that are unknown to the selected markets is expected to be very expensive and will lead to increased losses for an indeterminate amount of time before revenues and profits grow enough to offset these new expenditures. In addition, the pursuit of the new therapeutics products requires the Company to invest continuously in product development, clinical trials, product registrations and intellectual property protection. As a result, further losses are anticipated for the foreseeable future.

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|                                           
|-------------------------------------------
|ALDA PHARMACEUTICALS CORP.                 
|MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
|FOR THE YEAR ENDED JUNE 30, 2009           

|    |                                  
|--- | ---------------------------------
|1.4 | RESULTS OF OPERATIONS (continued)

Other Incomes

Gains on bank deposits for the year ended June 30, 2009, 2008 and 2007 were $76,181 and $38,740 and zero, respectively. Interest has been paid on cash deposits that were realized from private placements and the exercise of warrants and options.

Loss and Comprehensive Loss for the Year

The loss and comprehensive loss for the year ended June 30, 2009, 2008 and 2007 were $1,183,009 and $1,937,735 and 562,090, respectively. A significant portion of the overall loss for the 2009, 2008 and 2007 fiscal years were non-cash, stock based compensation expenses of $336,838, $903,565 and $148,100, respectively. Losses for the 2008 fiscal year were higher than losses for the 2009 and 2007 fiscal years. As discussed above, this was largely due to the non-cash, stock based compensation expenses being much higher during the 2008 fiscal year. In addition, intangible assets of $104,400 and patent costs of $86,238 were expensed during the 2008 fiscal year and included in the $375,807 expensed for Product Registration and Development. In comparison, there was no such write-down in the 2009 fiscal year and $5,800 in the 2007 fiscal year. When these non-cash expenses are deducted from the loss for the year, it is seen that the cash-based losses for the 2009 and 2008 fiscal years are $846,171 and $843,532, respectively and are virtually identical for the two years. Overall expenses increased significantly during the 2008 and 2009 fiscal years compared to the 2007 fiscal year because a number of private placements were closed after the end of the 2007 fiscal year. These financings provided the Company with the funds that were needed to accelerate the development, testing and registration of its products. As a result, the Company moved forward with extensive testing of its T36®formulation for registration of its products for therapeutic uses in Canada and the US. The results will be used to support applications in Canada, the US and Europe to test for the anti-microbial effectiveness of the formulations in human clinical trials. Intellectual property protection was also advanced. In general, expenditures in almost all categories increased to promote the Company and its products including consulting, legal fees, product registration and development, marketing and travel.

Use of Proceeds

The net proceeds received from the closing of recent private placements are being used for working capital and for general and administrative purposes.

|    |                             
|--- | ----------------------------
|1.5 | SUMMARY OF QUARTERLY RESULTS

|             |           |           |           |           |           |           |           |           |        
|------------ | --------- | --------- | --------- | --------- | --------- | --------- | --------- | --------- | -------
|Period Ended | Jun/09    | Mar/09    | Dec /08   | Sept/08   | Jun/08    | Mar/08    | Dec/07    | Sept/07   | Jun/07 
|Revenue      | 84,038    | 87,752    | 54,811    | 55,660    | 73,359    | 66,848    | 53,298    | 55,537    | 61,433 
|Net Loss     | 417,332   | 219,012   | 282,801   | 263,864   | 931,597   | 310,891   | 564,163   | 131,084   | 280,581
|Loss/Share   | 0.01      | 0.00      | 0.01      | 0.01      | 0.02      | 0.01      | 0.01      | 0.01      | 0.00   
|Total Assets | 1,782,098 | 1,945,383 | 2,153,766 | 2,342,449 | 2,533,975 | 2,696,062 | 1,946,087 | 1,255,681 | 854,166

As new distributor prices came into effect on February 15, 2009, the Company observed an increase in sales. However, the Companys sales have shown no other significant variation from quarter to quarter. Any differences are attributable to the timing of ordering and invoicing and some seasonality as described above. The Company observed that the cost of production and storage fees increased during the 2009 fiscal year, as described above, resulting in an increase in cost of goods. Operating expenses vary from quarter to quarter depending on the activities taking place such as registering T36®products in major markets, pursuing clinical trials, seeking expert advice on product regulatory issues, re-branding and advertising current and new lines of products and seeking registration of the Companys securities in the US. Comparatively, greater losses were incurred during the 2008 fiscal year due to the non-cash stock-based compensation expenses resulting from granting of the Companys stock options and from the write-down of intangible assets and patenting costs.

As at June 30, 2009, the Company had cash and equivalents of $25,977 and short-term investments that are readily convertible to cash of $1,584,929, representing 90% of the total assets while accounts payable and accruals were $56,215.

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|                                           
|-------------------------------------------
|ALDA PHARMACEUTICALS CORP.                 
|MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
|FOR THE YEAR ENDED JUNE 30, 2009           

|    |          
|--- | ---------
|1.6 | LIQUIDITY

Although the Company generates some revenues from the sale of its lead product, T36®Disinfectant, sales are mainly occurring in Canada. The Company has also established a plan for the development, testing, registration and marketing of therapeutic applications of the T36®formulation. Management has been and continues to evaluate the possibility of acquiring technologies that are complementary to T36®technology and launching similar types of product lines in the near future. The Company will need to undertake further financing in order to complete this acquisition and to pursue its other plans. These financings will lead to the dilution of current shareholders of the Company.

|    |                  
|--- | -----------------
|1.7 | CAPITAL RESOURCES

During the year ended June 30, 2009, 1,830,000 options were exercised by the holders at an exercise price range of $0.10 - $0.12 for total gross proceeds of $209,000. No warrants were exercised during the period. On October 31, 2008, the Company granted 550,000 options to acquire the Companys common shares at an exercise price of $0.20 per option to certain directors, consultants, officers and employees. On June 5, 2009, the Company granted 1,600,000 options to acquire the Companys common shares at an exercise price of $0.25 per option to certain directors, consultants, officers and employees.

As at June 30, 2009, the Company had 51,341,799 outstanding common shares and a total of 3,472,500 outstanding warrants exercisable at an exercise price range of $0.36 to $0.45 before the date of expiration. The outstanding stock options as at March 31, 2009 were 5,120,000 (4,895,925 options were exercisable) at an exercise price range of $0.20 to $0.80 per option. Upon the exercise of outstanding warrants and exercisable options, the Company will have fully diluted outstanding common shares of 59,934,299

At the time of this report, the Company has sufficient working capital to pursue its development plans and to fund its operations. However, there can be no guarantee that the Company will derive any proceeds from the exercise of outstanding warrants and options. There is no assurance that additional funding will be made available to the Company to fulfill its business objectives. In addition, there can be no assurance that the Company will be able to obtain adequate financing in the future to fulfill its business objectives or that the terms of such financing will be favourable. Many of the Companys products still require further development, laboratory testing and human testing in order to obtain required regulatory approvals. A lack of funds will impair the ability of the Company to complete such tests. A lack of funds will also impair the Companys ability to establish marketing and sales plans once the products have been approved for sale. If adequate financing is not available when required, the Company may be required to delay, scale back or eliminate various activities and may be unable to continue in operation. The Company may seek such additional financing through debt or equity offerings, which might alter the capital structure of the Company, but there can be no assurance that such financing will be available on terms acceptable to the Company or at all. Any equity offering will result in dilution to the ownership interests of the Companys shareholders and may result in dilution to the value of such interests.

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|                                           
|-------------------------------------------
|ALDA PHARMACEUTICALS CORP.                 
|MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
|FOR THE YEAR ENDED JUNE 30, 2009           

|    |                           
|--- | --------------------------
|1.8 | COMMITMENTS AND AGREEMENTS

| | a) | Effective January 1, 2006, the Company entered into an agreement to lease its office premises over a period of one year. After the first year, a holding over provision is instituted in which the landlord accepts rent from the Company, the new tenancy is a month to month tenancy, subject to the terms and covenants of the lease which are applicable to a month to month tenancy, except that:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   
| |    | (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |   
| |    | (2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |   
| |    | (3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |   
| | b) | The Agreement with Fuzhou Xinmei Biotech Co. Ltd. (Fuzhou), which allowed manufacturing and marketing in Fujian province in China, was transferred to He-Yi She Ye Limited (He-Yi) and expanded to cover marketing in all of China. Prior to that transfer of rights, the agent for Fuzhou secured a Certificate of Approval, on August 31, 2006, from the Fujian Centre of Disease Control for T36®Disinfectant after passing all of the required tests. This certificate allowed the agent for Fuzhou to apply to the Chinese National Centre for Health Inspection and Supervision for approval to manufacture T36®Disinfectant for sale in China and for export. The registration of T36®Disinfectant in China was expanded beyond disinfection of inanimate objects, such as hospital equipment and instruments, to also allow external use on humans, including use as a first-aid antiseptic and hand sanitizer. He-Yi has provided a fully equipped manufacturing facility according to the specifications provided by ALDA, to produce the ALDA products. He-Yi will have the right to distribute ALDAs products in China subject to ALDAs approval of each distributorship.
| |   
| | c) | As announced in a news release issued on July 15, 2009, the Company entered into a corporate sponsorship agreement (the Agreement) with the Vancouver Organizing Committee for the 2010 Olympic and Paralympic Winter Games (VANOC). Under the terms of the Agreement, the Company has the exclusive rights to be the Official Supplier in the Hand Sanitizer and Disinfectant Cleaning Products category for the 2010 Winter Games and rights to associate with the Canadian Olympic Team competing at the Vancouver 2010 Olympic Winter Games and the London 2012 Olympic Games.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |   

|    |                               
|--- | ------------------------------
|1.9 | OFF-BALANCE SHEET ARRANGEMENTS

The Company is not aware of any off-balance sheet transactions requiring disclosure.

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|                                           
|-------------------------------------------
|ALDA PHARMACEUTICALS CORP.                 
|MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
|FOR THE YEAR ENDED JUNE 30, 2009           

|     |                                  
|---- | ---------------------------------
|1.10 | TRANSACTIONS WITH RELATED PARTIES

| | a) | During the year ended June 30, 2009, the Company paid consulting fees of $329,208 (2008: $288,813, 2007: $120,000) to companies controlled by directors of the Company.                                  
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   
| | b) | During the year ended June 30, 2009, the Company paid rent of $26,320 (2008: $24,737, 2007: $28,371) to a company controlled by a director of the Company.                                               
| |   
| | c) | Effective June 1, 2008, the Company entered into consulting agreements with the Terrance Owen, President & CEO and Peter Chen, CFO of the Company.                                                       
| |   
| | d) | During the year ended June 30, 2009, the Company recorded a note receivable of $113,000, of which $66,000 was owing by directors of the Company.                                                         
| |   
| | e) | During the year ended June 30, 2009, the company recorded stock based compensation expense of $176,441 (2008: $562,427, 2007: 83,600) to directors and companies controlled by a director of the Company.
| |   

These transactions were measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties. All related party transactions were in the normal course of business operations.

|     |                            
|---- | ---------------------------
|1.11 | FOURTH QUARTER EVENTS, 2009

As a result of new pricing that came into effect on February 15, 2009, the Company observed an increase in revenues during the three month period ended June 30, 2009. There was also an increase in the quantity of products sold during the quarter as compared to the sales recorded in previous 7 quarters. However, there can be no assurance that these increased levels will be maintained. Also in the past, changes in revenues have occurred as a result of the timing of orders and the timing of invoicing. The Company observed that the cost of sales had increased and gross profit was reduced due to an increase in cost of production and storage fees during the year ended June 30, 2009.

The Company continued to work with the FDA consultant, Dr. J.S. Hibbard, on an IND submission which was submitted to the FDA on September 8, 2009. As discussed above, the FDA has responded to this submission and advised the Company what testing is required before human trials can begin.

On May 20, 2009, the Company submitted a request for a pre-CTA meeting and on June 15, 2009, submitted the pre-CTA package to Health Canada. A meeting was then scheduled with Health Canada on July 22, 2009 to discuss the pre-CTA application. As a result of this meeting, direction on the additional information that is required by Health Canada prior to registration of the T36®formula for human use was provided. The significant information required includes data on the absorption, distribution, metabolism and excretion (ADME) of each of the active ingredients in T36®. For the separate ingredients in T36®, is was suggested that a literature search may be satisfactory but ADME studies would be required with the full T36®formulation with both intact and abraded skin to determine if there is any interaction between the ingredients that may lead to enhanced absorption. Genotoxicity, photosensitivity and reproductive toxicology studies would likely be required at some point during the registration process. The potential for toxicity due to repeated applications of the product would also need to be addressed but the 21 day Irritation Test, described above, may satisfy this requirement. The Company continues to work with PharmEng Technologies Inc. and Dr. Hibbard to devise a regulatory plan that will satisfy the requirement of Canada, the US and the EU.

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|                                           
|-------------------------------------------
|ALDA PHARMACEUTICALS CORP.                 
|MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
|FOR THE YEAR ENDED JUNE 30, 2009           

|     |                                        
|---- | ---------------------------------------
|1.11 | FOURTH QUARTER EVENTS, 2009 (continued)

The SEC accepted the Companys Form 20-F and the outstanding 2008 Form 20-F and the Form 6-Ks for the quarters ended September 30, 2008 and December 31, 2008 were all filed by March 27, 2009. The Companys shares were permitted to trade on the OTC BB on April 20, 2009 under the symbol APCSF. On February 23, 2009 the Company entered into a non-binding agreement to purchase a pharmaceutical manufacturing facility for $6 Million in cash and 2 Million shares. On June 23, 2009, the company announced that the proposed acquisition would not be proceeding. On April 30 and May 1, 2009, the Company presented its product line at the 142ndAnnual Spring Meeting (ASM) of the Ontario Dental Association (ODA). On May 26, 2009, the Company announced that a new trademark T36 Disinfex, had been approved by the Canadian Intellectual Property Office. It is anticipated that the existing product, T36®Disinfectant, will be labeled with this new name.

There were no significant adjustments except that certain comparative figures have been reclassified to conform to the presentation adopted for the year ended June 30, 2009.

|     |                      
|---- | ---------------------
|1.12 | PROPOSED TRANSACTIONS

The Company is not aware of any proposed transactions requiring disclosure.

|     |                              
|---- | -----------------------------
|1.13 | CRITICAL ACCOUNTING ESTIMATES

The preparation of the financial statements in conformity with Canadian GAAP requires management to make estimates and assumptions that affect the amounts reported of assets and liabilities, the disclosure of contingent assets and liabilities at the date of financial statements and the amounts of revenues and expenses for the reporting period. The areas of estimation are the stock-based compensation, estimated useful lives of depreciable assets, and intellectual property. The Company believes that the estimates and assumptions upon which it relies are reasonable and are based on information available to the Company at the time that estimates and assumptions are made. Actual results could differ from those estimates.

|      |                               
|----- | ------------------------------
|1.14a | CHANGES IN ACCOUNTING POLICIES

Adoption of new accounting standards

Effective July 1, 2001, the Company adopted the new recommendations of the Canadian Institute of Chartered Accountants Accounting Handbook Section 3870, Stock-based Compensation and Other Stock-based Payments (CICA 3870). During the year ended June 30, 2004, CICA 3870 was amended to require the use of the fair value-based method to account for stock Options granted to employees. In accordance with the revised recommendations, the Company has prospectively applied the fair value-based method to all stock Options granted to employees on or after July 1, 2003, whereby compensation cost is measured at fair value at the date of grant and is expensed over the vesting period.

Effective July 1, 2003, the Company adopted the recommendations of the Canadian Institute of Chartered Accountants Handbook, Section 3063, Impairment of long-lived assets (CICA 3063). The new recommendations were applied prospectively to all long-lived assets held for use by the Company after July 1, 2003.

The financial statements include a note providing reconciliation to United States Generally Accepted Accounting Standards (GAAS).

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|                                           
|-------------------------------------------
|ALDA PHARMACEUTICALS CORP.                 
|MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
|FOR THE YEAR ENDED JUNE 30, 2009           

|      |                                           
|----- | ------------------------------------------
|1.14a | CHANGES IN ACCOUNTING POLICIES (continued)

Patent application and development costs include all expenditures attributable to efforts by the Company to develop, and bring to commercial production a new product as well as to acquire legal protections for its proprietary products, such as trademarks and patents. Such amounts are charged as an expense in the period incurred except in circumstances where the market and technical feasibility of the product have been established, and recovery of patent application and development costs can reasonably be regarded as assured and future values can be realized, in which case such costs are capitalized. In the latter case, patent application and development costs are amortized on a systematic basis over the patent life of 20 years. The carrying amounts of intangible assets which are determined to have a finite useful life are amortized on a systematic basis over the useful life of 20 years. At this time, no patent costs or intangible assets are capitalized.

The Company adopted the following new accounting standards issued by the Canadian Institute of Chartered Accountants (CICA) relating to comprehensive income, recognition, measurement, disclosure and presentation of financial instruments and hedges. These new accounting standards are applied prospectively beginning July 1, 2007. Adoption of these standards had no impact on the consolidated financial statements for the for the year ended June 30, 2009.

Section 1530  Comprehensive Income  This section established standards for reporting and presentation of a statement of comprehensive income. Comprehensive income includes net earnings and other comprehensive income. Other comprehensive income is defined as the change in equity from transactions and other events from non owner sources. Other comprehensive income includes holding gains and losses on certain derivative instruments that are classified as available-for-sale, and gains or losses due to the change in foreign currency relating to self-sustaining foreign operations, all of which are not recognized in net earnings until realized.

Section 3251  Equity  In addition to Section 1530 (Comprehensive Income), this section establishes standards for the presentation of equity and changes in equity during the reporting period.

Section 3855  Financial Instruments  Recognition and Measurement  In June 2009, the CICA amended Handbook Section 3855, "Financial Instruments - Recognition and Measurement, to clarify the application of the effective interest method after a debt instrument has been impaired. The Section has also been amended to clarify when an embedded prepayment option is separated from its host instrument for accounting purposes. The amendments apply to interim and annual financial statements relating to fiscal years beginning on or after May 1, 2009 for the amendments relating to the effective interest method and January 1, 2011 for the amendment relating to embedded prepayment options. The Company is currently evaluating the impact of the amendments.

Financial instruments have been classified as held-to-maturity, available-for-sale, held for trading, loans and receivables, or other financial liabilities. Financial assets that are held to maturity, other than those held for trading, are measured at amortized cost. Available-for-sale instruments are measured at fair value with unrealized gains and losses recognized in other comprehensive income until realized, at which time realized gains and losses will be recognized in net income. Held for trading instruments are measured at fair value with unrealized gains and losses recognized in the results of operations in the period in which they arise. Loans and receivables are measured at amortized cost using the effective interest method. Any gains or losses on the realization of loans and receivables are included in earnings. Financial liabilities that are not classified as held to maturity are classified as other financial liabilities, and are carried at amortized costs using the effective interest method. Any gains and losses on realization of other financial liabilities are included in earnings. Any transaction costs incurred to acquire financial instruments will be included in earnings.

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|                                           
|-------------------------------------------
|ALDA PHARMACEUTICALS CORP.                 
|MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
|FOR THE YEAR ENDED JUNE 30, 2009           

|      |                                           
|----- | ------------------------------------------
|1.14a | CHANGES IN ACCOUNTING POLICIES (continued)

The Companys financial instruments consist of cash and equivalents, accounts receivable, prepaid expenses and others, subscriptions receivable, and accounts payable and accrued liabilities. The fair value of these instruments approximates the carrying amounts due to the immediate or short-term maturity of these financial instruments. The Company has made the following classifications:

| |                                          |  |                             | 
| | ---------------------------------------- |  | --------------------------- | 
| | Cash and equivalents                     |  | Held for trading            | 
| | Accounts receivable                      |  | Loans and receivable        | 
| | Prepaids expenses and others             |  | Loans and receivable        | 
| | Subscriptions receivable                 |  | Loans and receivable        | 
| | Accounts payable and accrued liabilities |  | Other financial liabilities | 

Section 3861  Financial Instruments  Disclosure and Presentation  This section establishes standards for presentation of financial instruments and non-financial derivates and identifies the information that should be disclosed about them. This section establishes standards for presentation of financial instruments and identifies the information which should be disclosed about them. Under the new standards, policies followed for years prior to the effective date are generally not reversed, and therefore the comparative figures have not been restated.

Section 3862  Financial Instruments  Disclosures and Section 3863  Financial Instruments  Presentation  These sections revised and enhance the disclosure requirements while carrying forward its presentation requirements. These new sections will place increased emphasis on disclosures about the nature and extent of risks associated with both recognized and unrecognized financial instruments, how the entity manages the risks, and the exposure to liquidity, currency and other price risks.

It is managements opinion that the Company is not exposed to significant interest, currency, credit, and liquidity risk arising from these financial instruments. The Company has transactions dominated in US dollars but exposure to currency risk is immaterial. The Company mitigates its exposure to credit risk by maintaining its primary operating accounts with chartered bank in Canada and constantly monitoring credit standing of counterparties. The Company manages its liquidity risk through the management of its capital as described in note 14. The Company does not use financial derivatives.

Section 3865  Hedges  This section establishes standards for the Company that chooses to designate qualifying transactions as hedges for accounting purposes. This section builds on Accounting Guideline AcG-13, Hedging Relationships, and Section 1650, Foreign Currency Translation. The Company does not use hedge accounting and has no hedging relationships.

Section 1535- Capital Disclosures  This section establishes standards for disclosing information about an entitys capital and how it is managed. It requires the disclosure of the entitys objectives, policies and processes for managing capital as well as summary quantitative data on the elements included in the management of capital.

Section 3031  Inventories  This section establishes standards for measuring the inventories. The new standards require that the inventories shall be measured at the lower of cost and the net realizable value. This section provides guidelines on the determination of cost and its subsequent recognition as an expense, including any write-down to net realizable value and reversal of a previous write-down when the value of inventories is evidently increased due to the change in economic circumstances. The use of last-in, first-out method (LIFO) in measuring inventories is not recommended. This section applies to interim and annual financial statements for fiscal years beginning on or after January 1, 2008. The Company is evaluating the effect of adopting this new standard.

Section 3064 Goodwill and Intangible Assets In February 2008, the CICA issued Handbook Section 3064, Goodwill and Intangible Assets, effective for interim and annual periods beginning on or after Oct 1, 2008. Section 3064, which replaces Section 3062, Goodwill and Other Intangible Assets, and Section 3450, Research and

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|-------------------------------------------
|ALDA PHARMACEUTICALS CORP.                 
|MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
|FOR THE YEAR ENDED JUNE 30, 2009           

|      |                                           
|----- | ------------------------------------------
|1.14a | CHANGES IN ACCOUNTING POLICIES (continued)

Development Costs, establishes standards for the recognition, measurement and disclosure of goodwill and intangible assets. The provisions relating the definition and initial recognition of intangible assets, including internally generated intangible assets, are equivalent to the corresponding provisions of International Financial Reporting Standards (IFRS) IAS 38, Intangible Assets. This new standard is effective for the Companys interim and annual financial statements commencing July 1, 2009. The Company is assessing the impact of the new standard on its financial statements..

|      |                                 
|----- | --------------------------------
|1.14b | RECENT ACCOUNTING PRONOUNCEMENTS

In February 2008, the CICA issued Handbook Section 3064, Goodwill and Intangible Assets, effective for interim and annual periods beginning on or after Oct 1, 2008. Section 3064, which replaces Section 3062, Goodwill and Other Intangible Assets, and Section 3450, Research and Development Costs, establishes standards for the recognition, measurement and disclosure of goodwill and intangible assets. The provisions relating the definition and initial recognition of intangible assets, including internally generated intangible assets, are equivalent to the corresponding provisions of International Financial Reporting Standards (IFRS) IAS 38, Intangible Assets. This new standard is effective for the Companys interim and annual financial statements commencing July 1, 2009. The Company is assessing the impact of the new standard on its financial statements.

As announced by the Canadian Accounting Standards Board (AcSB), the financial reporting requirements for Canadian companies will be changed to the use of International Financial Reporting Standards (IFRS), replacing Canadas own GAAP. The changeover date for publicly-listed companies is 2011. The Company has begun reviewing its plan for adopting IFRS for 2011. At this time, the Company has not yet determined the financial reporting impact due to the change in new reporting standards.

In January 2009, the CICA issued Section 1582, Business Combinations, which replaces former guidance on business combinations. Section 1582 establishes principles and requirements of the acquisition method for business combination and related disclosures. The Section applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2011 with earlier adoption permitted. The Company is currently evaluating the impact of this standard on its financial statements.

In January 2009, the CICA issued Handbook Section 1601, Consolidated Financial Statements, which replaces the existing standard. This Section carries forward existing Canadian guidance for preparing consolidated financial statements other than non-controlling interests. The Section is effective for interim and annual financial statements beginning on January 1, 2011 and earlier adoption is permitted. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements.

In January 2009, the CICA issued Section 1602, Non-controlling Interests, which replaces existing guidance. Section 1602 provides guidance on accounting for a non-controlling interest in a subsidiary in consolidated financial statements subsequent to a business combination. These standards are effective on or after the beginning of the first annual reporting period on or after January 1, 2011 with earlier adoption permitted. As of June 30, 2009 the Company has no non-controlling interests, and accordingly there is no currently expected impact as a result of the standard.

In June 2009, the CICA amended Handbook Section 3855, "Financial Instruments - Recognition and Measurement, to clarify the application of the effective interest method after a debt instrument has been impaired. The Section has also been amended to clarify when an embedded prepayment option is separated from its host instrument for accounting purposes. The amendments apply to interim and annual financial statements relating to fiscal years beginning on or after May 1, 2009 for the amendments relating to the effective interest method and January 1, 2011 for the amendment relating to embedded prepayment options. The Company is currently evaluating the impact of the amendments.

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|                                           
|-------------------------------------------
|ALDA PHARMACEUTICALS CORP.                 
|MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
|FOR THE YEAR ENDED JUNE 30, 2009           

|      |                                      
|----- | -------------------------------------
|1.14c | FUTURE CHANGES IN ACCOUNTING POLICIES

As announced by the Canadian Accounting Standards Board (AcSB), the financial reporting requirements for Canadian companies will be changed to the use of International Financial Reporting Standards (IFRS), replacing Canadas own GAAP. The changeover date for publicly-listed companies is 2011. The Company has begun reviewing the IFRS for 2011. At this time, the Company has not yet determined the financial reporting impact due to the change of new reporting standards.

|     |                      
|---- | ---------------------
|1.15 | FINANCIAL INSTRUMENTS

The Companys financial instruments include cash, accounts receivable, share subscriptions receivable and accounts payable and accrued liabilities. The carrying values of these financial instruments approximate their fair values due to their relatively short periods to maturity. The Companys risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to market conditions and the Companys activities. The Company has exposure to credit risk, liquidity risk and market risk as a result of its use of financial instruments.

This note presents information about the Companys exposure to each of the above risks and the Companys objectives, policies and processes for measuring and managing these risks. Further quantitative disclosures are included throughout these financial statements. The Board of Directors has overall responsibility for the establishment and oversight of the Companys risk management framework. The Board has implemented and monitors compliance with risk management policies.

a) Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises primarily from the Companys cash and cash equivalents, trade receivables, and GST input tax credits.

The Companys cash and cash equivalents and short-term investments are held through a large Canadian financial institution. Cash equivalents are composed of financial instruments issued by Canadian banks with high investment-grade ratings. The Company does not have financial assets that are invested in asset backed commercial paper.

The Company performs ongoing credit evaluations of its trade receivables, but does not require collateral. The Company establishes an allowance for doubtful accounts based on the credit risk applicable to particular customers and historical data.

The Company monitors the concentration of exposure and where possible, if necessary, takes steps to limit exposures to any one counterparty. The Company views credit risk on cash deposits, trade receivables, and GST input tax credits as minimal.

b) Liquidity risk
Liquidity risk is the risk that the Company will incur difficulties meeting its financial obligations as they are due. The Companys approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions without incurring unacceptable losses or risking harm to the Companys reputation. See Note 1 for working capital balances.

The Company monitors its spending plans, repayment obligations and cash resources and takes actions with the objective of ensuring that there is sufficient capital in order to meet short-term business requirements. To facilitate its expenditure program, the Company raises funds primarily through public equity financing. The Company anticipates it will have adequate liquidity to fund its financial liabilities through future equity contributions.

As at June 30, 2009, the Companys financial liabilities were comprised of accounts payable and accrued liabilities which have a maturity of less than one year.

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|                                           
|-------------------------------------------
|ALDA PHARMACEUTICALS CORP.                 
|MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
|FOR THE YEAR ENDED JUNE 30, 2009           

|     |                                  
|---- | ---------------------------------
|1.15 | FINANCIAL INSTRUMENTS (continued)

c) Market risk
Market risk for the Company consists of currency risk, and interest rate risk. The objective of market risk management is to manage and control market risk exposures within acceptable limits, while maximizing returns.

i) Currency risk
Foreign currency exchange rate risk is the risk that the fair value or future cash flows will fluctuate as a result of changes in foreign exchange rates. As all of the Companys purchases and sales are denominated in Canadian dollars, and has no significant cash balances denominated in foreign currencies, the Company is not exposed to foreign currency exchange risk at this time.

ii) Interest rate risk
Interest rate risk is the risk that fair values or future cash flows will fluctuate as a result of changes in market interest rates.

In respect of financial assets, the Companys policy is to invest cash at floating interest rates and cash reserves are to be maintained in cash equivalents in order to maintain liquidity, while achieving a satisfactory return for shareholders. Fluctuations in interest rates impact marginally on the value of cash and equivalents.

The Company is not exposed to interest rate risk on its short term liabilities, and does not have any long-term liabilities.

|     |                       
|---- | ----------------------
|1.16 | OTHER MD&A REQUIRMENTS

|    |                       
|--- | ----------------------
|(a) | Additional Information

Additional information relating to the Company can be found on the Canadian Securities Administrators System for Electronic Document Analysis and Retrieval (SEDAR) database at www.sedar.com.

Additional relevant disclosure, such as expensed research and development costs, general and administration expenses, material costs, whether capitalized, deferred or expensed are disclosed in the accompanying financial statements for the for the year ended June 30, 2009 as allowed in NI 51-102, Section 5.3 (3).

|    |                                     
|--- | ------------------------------------
|(b) | Disclosure of Outstanding Share Data

The following table summarizes the Companys outstanding share capital as at:

|                                                                                                                                                                                                                                                       |                                   |                                          
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | --------------------------------- | -----------------------------------------
|Security in Number                                                                                                                                                                                                                                     | June 30, 2009                     | The reporting date
      October 28, 2009
|                                                                                                                                                                                                                                                       |                                   |                                          
|Each class and series of voting or equity securities for which there are securities outstanding:
      Common Shares                                                                                                                                   | 51,341,799                        | 57,341,799                               
|Each class and series of securities for which there are securities outstanding if the securities are convertible into, or exercisable or exchangeable for, voting or equity securities
      Stock Options
      Warrants
      Convertible Debentures | 4,895,925
      3,472,500
      - | 5,498,000
      9,472,500
      -        
|Each class and series of voting or equity securities that are issuable on the conversion, exercise or exchange of outstanding securities above
      Common Shares
      Fully diluted                                                                 | 8,368,425
      59,710,224        | 14,970,500
      72,312,299              

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|ALDA PHARMACEUTICALS CORP.                 
|MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
|FOR THE YEAR ENDED JUNE 30, 2009           

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|1.16 | OTHER MD&A REQUIRMENTS (continued)

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|(c) | Disclosure Controls and Procedures

The management of ALDA is responsible for establishing and maintaining disclosure controls and procedures for the Company and has designed such disclosure controls and procedures, or caused them to be designed under ALDA managements supervision, to provide reasonable assurance that material information relating to the Company, including its consolidated subsidiaries, is made known to ALDA management by others within those entities particularly during the period covered by this MD&A.

ALDA management has evaluated the effectiveness of the Companys disclosure controls and procedures for the period covered by this MD&A and based on that evaluation, the management has concluded that the disclosure controls and procedures are effective.

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|(d) | Internal Control Over Financial Reporting

The Companys management is responsible for establishing and maintaining adequate internal control over financial reporting. Management has considered the effectiveness of design of the Companys internal controls and procedures over financial reporting and has noted weaknesses in internal controls over financial reporting such as a lack of segregation of duties because of limited staff members.

Management intends to initiate steps to remedy the noted shortcomings over the next fiscal year by carrying out a management assessment of the weaknesses with a view to improving areas where weaknesses exist and implementing procedures aimed at minimizing the risk of material error in its financial reporting.

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|1.17 | SUBSEQUENT EVENTS

On July 15, 2009 the Company announced that it had entered into a corporate sponsorship agreement (the Agreement) with the Vancouver Organizing Committee for the 2010 Olympic and Paralympic Winter Games (VANOC). Under the terms of the Agreement, the Company has the exclusive rights to be the Official Supplier in the Hand Sanitizer and Disinfectant Cleaning Products category for the 2010 Winter Games and rights to associate with the Canadian Olympic Team competing at the Vancouver 2010 Olympic Winter Games and the London 2012 Olympic Games.

On September 16, 2009, the Company announced that a private placement, originally announced in a news release dated July 17, 2009, was closed. A total of 6,000,000 Units of the Company were issued at a price of $0.25 per Unit for gross proceeds of $1,500,000. Each Unit consists of one common share of ALDA and one non-transferable share purchase warrant entitling the holder to acquire one additional common share of ALDA at a price of $0.40 per common share for a period of twelve (12) months from the date of the issuance of the purchase warrant with a forced exercise provision attached to each warrant commencing on the day following the expiry of any applicable hold period on the underlying Common Share, stating that if, for ten consecutive trading days, the closing price of the listed shares of the Company exceeds $0.80 then the exercise period of the warrants will be reduced to a period of 10 days following such trading days. Net proceeds from the offering will be used for working capital. All securities issued with respect to the private placement are subjected to a hold period expiring on January 17, 2010 in accordance with the policies of the TSX Venture Exchange and applicable Canadian securities laws. The Company paid finders' fees of 5% of the gross proceeds of $686,750.00 to certain eligible finders by the payment of $34,337.50.

On October 16, 2009 the Company announced that it had granted incentive stock options to certain directors, senior officers, employees and consultants to purchase an aggregate of 750,000 common shares at an exercise price of $0.55 and a term of five years, expiring on October 15, 2014. The options and shares issuable upon exercise, if any, will be subject to a four-month hold period from the date of grant in accordance with TSX Venture Exchange policy. The grant was pursuant to the Company's Rolling Stock Option Plan, which was re-affirmed by the shareholders of the Company at an Annual General Meeting held on December 12, 2008 and subsequently accepted by the Exchange. The total number of options outstanding after this grant will be 5,620,000.

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