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Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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<SEC-DOCUMENT>0000318306-07-000048.txt : 20070814
<SEC-HEADER>0000318306-07-000048.hdr.sgml : 20070814
<ACCEPTANCE-DATETIME>20070814164924
ACCESSION NUMBER:		0000318306-07-000048
CONFORMED SUBMISSION TYPE:	10QSB
PUBLIC DOCUMENT COUNT:		8
CONFORMED PERIOD OF REPORT:	20070814
FILED AS OF DATE:		20070814
DATE AS OF CHANGE:		20070814

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ACCESS PHARMACEUTICALS INC
		CENTRAL INDEX KEY:			0000318306
		STANDARD INDUSTRIAL CLASSIFICATION:	PHARMACEUTICAL PREPARATIONS [2834]
		IRS NUMBER:				830221517
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10QSB
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-15771
		FILM NUMBER:		071056159

	BUSINESS ADDRESS:	
		STREET 1:		2600 N STEMMONS FRWY
		STREET 2:		STE 176
		CITY:			DALLAS
		STATE:			TX
		ZIP:			75207
		BUSINESS PHONE:		2149055100

	MAIL ADDRESS:	
		STREET 1:		2600 N STEMMONS FRWY
		STREET 2:		STE 176
		CITY:			DALLAS
		STATE:			TX
		ZIP:			75207

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	CHEMEX PHARMACEUTICALS INC
		DATE OF NAME CHANGE:	19920703

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	CHEMEX CORP/WY
		DATE OF NAME CHANGE:	19831102
</SEC-HEADER>
<DOCUMENT>
<TYPE>10QSB
<SEQUENCE>1
<FILENAME>a2007_2q-10q2.htm
<DESCRIPTION>FORM 10QSB
<TEXT>
<html>

  <head>
    <title>Unassociated Document</title>
<!-- Licensed to: Access Pharmaceuticals, Inc.-->
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</head>
  <body bgcolor="#ffffff" style="MARGIN: 12%; TEXT-INDENT: 0pt">
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font id="TAB1" style="MARGIN-LEFT: 36pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>UNITED
        STATES</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font id="TAB1" style="MARGIN-LEFT: 36pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>SECURITIES
        AND EXCHANGE COMMISSION</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font id="TAB1" style="MARGIN-LEFT: 36pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>Washington,
        DC 20549</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font id="TAB1" style="MARGIN-LEFT: 36pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>FORM
        10-QSB</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">(Mark
        One)</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt;" face="Wingdings">x</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">
        QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
        OF
        1934</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">For
        the
        transition period from ____ to ____</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt;" face="Wingdings">&#168;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">
        TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
        OF
        1934</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">For
        the
        quarterly period ended June 30, 2007</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
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        file number </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>0-9314</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 18pt; FONT-FAMILY: Times New Roman;"><strong><u>ACCESS
        PHARMACEUTICALS, INC.</u></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">(Exact
        Name of Small Business Issuer as Specified in Its Charter)</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br>&#160;</div>
      <div align="center">
        <table bgcolor="white" cellpadding="0" cellspacing="0" width="100%">

            <tr bgcolor="white">
              <td width="50%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;<strong><u>Delaware
</u></strong></div>
              </td>
              <td width="50%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;<strong><u>83-0221517&#160;<font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">&#160;</font></u><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">&#160;</font></strong></div>
              </td>
            </tr>
            <tr bgcolor="white">
              <td width="50%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman;">&#160;(State
                  or Other Jurisdiction</font></div>
              </td>
              <td width="50%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;<font size="2">(I.R.S.&#160;Employer
                  Identification
                  No.)</font></div>
              </td>
            </tr>
            <tr bgcolor="white">
              <td width="50%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;of
                  Incorporation or Organization)</div>
              </td>
              <td width="50%">&#160;</td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 234pt;"></font>&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong><u>2600
        Stemmons Frwy, Suite 176, Dallas, TX 75207 </u></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">(Address
        of Principal Executive Offices)</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><u>(214)
        905-5100</u></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Issuer&#8217;s
        Telephone Number, Including Area Code</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Check
        whether the issuer (1) filed all reports required to be filed by Section
        13 or
        15(d) of the Exchange Act during the past 12 months (or for such shorter
        period
        that the registrant was required to file such reports), and (2) has been
        subject
        to such filing requirements for the past 90 days.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt;"></font><font id="TAB1" style="MARGIN-LEFT: 36pt;"></font><font id="TAB1" style="MARGIN-LEFT: 36pt;"></font><font id="TAB1" style="MARGIN-LEFT: 36pt;"></font><font id="TAB1" style="MARGIN-LEFT: 36pt;"></font><font id="TAB1" style="MARGIN-LEFT: 36pt;"></font><font id="TAB1" style="MARGIN-LEFT: 36pt;"></font><font id="TAB1" style="MARGIN-LEFT: 36pt;"></font><font id="TAB1" style="MARGIN-LEFT: 36pt;"></font><font id="TAB1" style="MARGIN-LEFT: 36pt;"></font><font id="TAB1" style="MARGIN-LEFT: 36pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Yes
        </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><u>X
        </u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 21pt;">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 21pt;">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">No
        ___</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act).</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt;"></font><font id="TAB1" style="MARGIN-LEFT: 36pt;"></font><font id="TAB1" style="MARGIN-LEFT: 36pt;"></font><font id="TAB1" style="MARGIN-LEFT: 36pt;"></font><font id="TAB1" style="MARGIN-LEFT: 36pt;"></font><font id="TAB1" style="MARGIN-LEFT: 36pt;"></font><font id="TAB1" style="MARGIN-LEFT: 36pt;"></font><font id="TAB1" style="MARGIN-LEFT: 36pt;"></font><font id="TAB1" style="MARGIN-LEFT: 36pt;"></font><font id="TAB1" style="MARGIN-LEFT: 36pt;"></font><font id="TAB1" style="MARGIN-LEFT: 36pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Yes
        </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><u>&#160;</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 21pt;">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 21pt;">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 21pt;">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">No
        </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><u>X
        </u></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 21pt;">&#160;</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">State
        the
        number of shares outstanding of each the issuer's classes of common equity
        as of
        the latest practicable date. As of August 14, 2007 there were 3,566,394 shares
        of common stock issued and outstanding.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 63pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Transitional
        Small Business Disclosure Format (Check One): </font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 21pt;">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 21pt;">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 21pt;">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 21pt;">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Yes
        </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><u>&#160;</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 21pt;">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 21pt;">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 21pt;">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">No
        </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><u>X</u></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 21pt;">&#160;</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 234pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Total
        No.&#160;of Pages&#160;&#160;<u>29</u></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 36pt;">&#160;</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div style="WIDTH: 100%" align="left">
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
          </div>
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
          </div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
          <div style="WIDTH: 100%" align="left">
          </div>
        </div>
      </div><br><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: -31.5pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>ACCESS
        PHARMACEUTICALS, INC.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: -31.5pt" align="center"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: -31.5pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong><u>INDEX</u></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: -31.5pt" align="left"><br></div>
      <div align="center">
        <table bgcolor="white" cellpadding="0" cellspacing="0" width="100%">

            <tr bgcolor="white">
              <td width="3%" style="BORDER-BOTTOM: #ffffff solid">&#160;</td>
              <td width="8%" style="BORDER-BOTTOM: #ffffff solid">&#160;</td>
              <td width="5%" style="BORDER-BOTTOM: #ffffff solid">&#160;</td>
              <td width="35%" style="BORDER-BOTTOM: #ffffff solid">&#160;</td>
              <td width="5%" style="BORDER-BOTTOM: black 2px solid">&#160;Page No. </td>
              <td width="2%" style="BORDER-BOTTOM: #ffffff solid">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td colspan="4" width="51%">&#160;&#160;PART I - FINANCIAL INFORMATION</td>
              <td width="5%">&#160;</td>
              <td width="2%">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td width="3%">&#160;</td>
              <td width="8%">&#160;</td>
              <td width="5%">&#160;</td>
              <td width="35%">&#160;</td>
              <td width="5%">&#160;</td>
              <td width="2%">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td width="3%">&#160;</td>
              <td width="8%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;<font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Item
                  1. </font></div>
              </td>
              <td width="5%">&#160;</td>
              <td width="35%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Condensed
                  Consolidated Financial Statements:</font></div>
              </td>
              <td width="5%">&#160;</td>
              <td width="2%">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td width="3%">&#160;</td>
              <td width="8%">&#160;</td>
              <td width="5%">&#160;</td>
              <td width="35%">&#160;</td>
              <td width="5%">&#160;</td>
              <td width="2%">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td width="3%">&#160;</td>
              <td width="8%">&#160;</td>
              <td width="5%">&#160;</td>
              <td width="35%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Condensed
                  Consolidated Balance Sheets at</font></div>
              </td>
              <td width="5%">&#160;</td>
              <td width="2%">&#160;</td>
            </tr>
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              <td width="8%">&#160;</td>
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              <td width="8%">&#160;</td>
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              <td width="35%">&#160;</td>
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              <td width="2%">&#160;</td>
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              <td width="3%">&#160;</td>
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            <tr bgcolor="white">
              <td width="3%">&#160;</td>
              <td width="8%">&#160;</td>
              <td width="5%">&#160;</td>
              <td width="35%">&#160;</td>
              <td width="5%">&#160;</td>
              <td width="2%">&#160;</td>
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              <td width="3%">&#160;</td>
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              <td width="8%">&#160;</td>
              <td width="5%">&#160;</td>
              <td width="35%">&#160;</td>
              <td width="5%">&#160;</td>
              <td width="2%">&#160;</td>
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              <td width="8%">&#160;</td>
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              <td width="3%">&#160;</td>
              <td width="8%">&#160;</td>
              <td width="5%">&#160;</td>
              <td width="35%">&#160;</td>
              <td width="5%">&#160;</td>
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              <td colspan="4" width="51%">&#160;<font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">PART
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              <td width="2%">&#160;</td>
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            <tr bgcolor="white">
              <td width="3%">&#160;</td>
              <td width="8%">&#160;</td>
              <td width="5%">&#160;</td>
              <td width="35%">&#160;</td>
              <td width="5%">&#160;</td>
              <td width="2%">&#160;</td>
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            <tr bgcolor="white">
              <td width="3%">&#160;</td>
              <td width="8%">
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                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;21</div>
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              <td width="2%">&#160;</td>
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            <tr bgcolor="white">
              <td width="3%">&#160;</td>
              <td width="8%">&#160;</td>
              <td width="5%">&#160;</td>
              <td width="35%">&#160;</td>
              <td width="5%">&#160;</td>
              <td width="2%">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td width="3%">&#160;</td>
              <td width="8%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;Item
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              <td width="35%">Unregistered Sales of Equity Securities and Use of
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              <td width="5%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;21</div>
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              <td width="2%">&#160;</td>
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            <tr bgcolor="white">
              <td width="3%">&#160;</td>
              <td width="8%">&#160;</td>
              <td width="5%">&#160;</td>
              <td width="35%">&#160;</td>
              <td width="5%">&#160;</td>
              <td width="2%">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td width="3%">&#160;</td>
              <td width="8%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;Item
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              <td width="35%">Defaults Upon Senior Securities<font id="TAB2" style="COLOR: black; LETTER-SPACING: 36pt;">&#160;</font></td>
              <td width="5%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;21</div>
              </td>
              <td width="2%">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td width="3%">&#160;</td>
              <td width="8%">&#160;</td>
              <td width="5%">&#160;</td>
              <td width="35%">&#160;</td>
              <td width="5%">&#160;</td>
              <td width="2%">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td width="3%">&#160;</td>
              <td width="8%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;Item
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              </td>
              <td width="5%">&#160;</td>
              <td width="35%">Submission of Matters to a Vote of Security Holders<font id="TAB2" style="COLOR: black; LETTER-SPACING: 36pt;">&#160;</font></td>
              <td width="5%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;21</div>
              </td>
              <td width="2%">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td width="3%">&#160;</td>
              <td width="8%">&#160;</td>
              <td width="5%">&#160;</td>
              <td width="35%">&#160;</td>
              <td width="5%">&#160;</td>
              <td width="2%">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td width="3%">&#160;</td>
              <td width="8%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;Item
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              <td width="5%">&#160;</td>
              <td width="35%">Other Information<font id="TAB2" style="COLOR: black; LETTER-SPACING: 36pt;">&#160;</font></td>
              <td width="5%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;22</div>
              </td>
              <td width="2%">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td width="3%">&#160;</td>
              <td width="8%">&#160;</td>
              <td width="5%">&#160;</td>
              <td width="35%">&#160;</td>
              <td width="5%">&#160;</td>
              <td width="2%">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td width="3%">&#160;</td>
              <td width="8%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;Item
                  6.</div>
              </td>
              <td width="5%">&#160;</td>
              <td width="35%">Exhibits<font id="TAB2" style="COLOR: black; LETTER-SPACING: 36pt;">&#160;</font></td>
              <td width="5%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;22</div>
              </td>
              <td width="2%">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td width="3%">&#160;</td>
              <td width="8%">&#160;</td>
              <td width="5%">&#160;</td>
              <td width="35%">&#160;</td>
              <td width="5%">&#160;</td>
              <td width="2%">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td colspan="4" width="51%">&#160;SIGNATURES</td>
              <td width="5%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;23</div>
              </td>
              <td width="2%">&#160;</td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: -31.5pt" align="left">
      </div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman;">1</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div style="WIDTH: 100%" align="left">
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
          </div>
        </div>
      </div><br><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>PART
        I -FINANCIAL INFORMATION</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><em>This
        Quarterly Report (including the information incorporated by reference) contains
        forward-looking statements within the meaning of Section 27A of the Securities
        Act of 1933, as amended, and Section 21E of the Securities Exchange Act of
        1934,
        as amended, that involve risks and uncertainties including, but not limited
        to
        the uncertainties associated with research and development activities, clinical
        trials, our ability to raise capital, the timing of and our ability to achieve
        regulatory approvals, dependence on others to market our licensed products,
        collaborations, future cash flow, the timing and receipt of licensing and
        milestone revenues, the future success of our marketed products and products
        in
        development, our sales projections, our ability to close the Somanta merger
        and,
        if it closes, our ability to integrate Somanta&#8217;s business with ours, the sales
        projections of our licensing partners, our ability to achieve licensing
        milestones and other risks described below as well as those discussed elsewhere
        in this Quarterly Report, documents incorporated by reference and other
        documents and reports that we file periodically with the Securities and Exchange
        Commission. These statements include, without limitation, statements relating
        to
        our ability to continue as a going concern, anticipated product approvals
        and
        timing thereof, product opportunities, clinical trials and U.S. Food and
        Drug
        Administration (&#8220;FDA&#8221;) applications, as well as our drug development strategy,
        our clinical development organization, expectations regarding our rate of
        technological developments and competition, our plan not to establish an
        internal marketing organization, our expectations regarding minimizing
        development risk and developing and introducing technology, the size of our
        targeted markets, the terms of future licensing arrangements, our ability
        to
        secure additional financing for our operations and our expected cash burn
        rate.
        These statements relate to future events or our future financial performance.
        In
        some cases, you can identify forward-looking statements by terminology such
        as
&#8220;may,&#8221; &#8220;will,&#8221; &#8220;should,&#8221; &#8220;expects,&#8221; &#8220;plans,&#8221; &#8220;could,&#8221; &#8220;anticipates,&#8221; &#8220;believes,&#8221;
&#8220;estimates,&#8221; &#8220;predicts,&#8221; &#8220;potential&#8221; or &#8220;continue&#8221; or the negative of such terms
        or other comparable terminology. These statements are only predictions and
        involve known and unknown risks, uncertainties and other factors, including
        the
        risks outlined under &#8220;Risk Factors,&#8221; that may cause our or our industry&#8217;s actual
        results, levels of activity, performance or achievements to be materially
        different from any future results, levels or activity, performance or
        achievements expressed or implied by such forward-looking
        statements.</em></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><em>Although
        we believe that the expectations reflected in the forward-looking statements
        are
        reasonable, we cannot guarantee future results, levels of activity, performance
        or achievements. We are under no duty to update any of the forward-looking
        statements after the date of filing this Form 10-QSB to conform such statements
        to actual results.</em></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>ITEM
        1</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 21pt;">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>FINANCIAL
        STATEMENTS</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">The
        response to this Item is submitted as a separate section of this
        report.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 63pt; TEXT-INDENT: -63pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>ITEM
        2</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 21pt;">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>MANAGEMENT'S
        DISCUSSION AND ANALYSIS OR PLAN OF OPERATION</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 63pt; TEXT-INDENT: -63pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>OVERVIEW</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Access
        Pharmaceuticals, Inc. (&#8220;Access&#8221; or the &#8220;Company&#8221;) is a Delaware corporation. We
        are an emerging biopharmaceutical company developing products for use in
        the
        treatment of cancer, the supportive care of cancer, and other disease states.
        Our product for the management of oral mucositis, MuGard&#8482;, has received
        marketing clearance by the FDA as a device. Our lead clinical development
        program for the drug candidate ProLindac&#8482; (formerly known as AP5346) is in Phase
        II clinical testing. Access also has advanced drug delivery technologies
        including Cobalamin&#8482;-mediated oral drug delivery and targeted
        delivery.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman;">2</font></div>
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        </div>
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          </div>
        </div>
        <div>&#160;</div>
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        with our subsidiaries, we have proprietary patents or rights to one technology
        approved for marketing and three drug delivery technology
        platforms:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">&#8226;&#160;&#160;&#160;&#160;&#160;
        MuGard (mucoadhesive liquid technology),</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">&#8226;&#160;&#160;&#160;&#160;&#160;
        synthetic polymer targeted delivery,</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">&#8226;&#160;&#160;&#160;&#160;&#160;
        Cobalamin-mediated oral delivery, </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">&#8226;&#160;&#160;&#160;&#160;&#160;
        Cobalamin-mediated targeted delivery.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>Products</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">We
        have
        used our drug delivery technologies to develop the following products and
        product candidates:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>ACCESS
        PRODUCT PORTFOLIO</strong></font></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">

            <tr>
              <td align="left" valign="bottom" width="21%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>Compound</strong></font></div>
              </td>
              <td valign="bottom" width="1%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              </td>
              <td valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>Originator</strong></font></div>
              </td>
              <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              </td>
              <td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>Technology</strong></font></div>
              </td>
              <td valign="bottom" width="1%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              </td>
              <td valign="bottom" width="18%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>Indication</strong></font></div>
              </td>
              <td valign="bottom" width="1%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              </td>
              <td valign="bottom" width="12%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>FDA
                  Filing</strong></font></div>
              </td>
              <td valign="bottom" width="1%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              </td>
              <td valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>Clinical</strong></font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>Stage
                  (1)</strong></font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="21%">&#160;</td>
              <td align="left" valign="bottom" width="1%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </td>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </td>
              <td align="left" valign="bottom" width="1%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </td>
              <td align="left" valign="top" width="10%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </td>
              <td align="left" valign="bottom" width="1%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </td>
              <td align="left" valign="top" width="18%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </td>
              <td align="left" valign="bottom" width="1%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </td>
              <td align="left" valign="top" width="12%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </td>
              <td align="left" valign="bottom" width="1%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </td>
              <td align="left" valign="top" width="9%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="21%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">MuGard&#8482;</font></div>
              </td>
              <td align="left" valign="bottom" width="1%">&#160;</td>
              <td valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Access</font></div>
              </td>
              <td align="left" valign="bottom" width="1%">&#160;</td>
              <td valign="top" width="10%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Mucoadhesive</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">liquid</font></div>
              </td>
              <td align="left" valign="bottom" width="1%">&#160;</td>
              <td valign="top" width="18%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Mucositis</font></div>
              </td>
              <td valign="bottom" width="1%">&#160;</td>
              <td valign="top" width="12%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">510(k)</font></div>
              </td>
              <td valign="bottom" width="1%">&#160;</td>
              <td valign="top" width="9%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Marketing
                  clearance</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="21%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">ProLindac</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><sup>TM</sup></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">
                  (Polymer</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Platinate,
                  AP5346) (2)</font></div>
              </td>
              <td align="left" valign="bottom" width="1%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </td>
              <td valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Access
                  - U London</font></div>
              </td>
              <td align="left" valign="bottom" width="1%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </td>
              <td valign="top" width="10%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Synthetic</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">polymer</font></div>
              </td>
              <td align="left" valign="bottom" width="1%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </td>
              <td valign="top" width="18%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Cancer</font></div>
              </td>
              <td valign="bottom" width="1%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              </td>
              <td valign="top" width="12%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Clinical
                  Development(3)</font></div>
              </td>
              <td valign="bottom" width="1%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              </td>
              <td valign="top" width="9%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Phase
                  II</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="21%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Oral
                  Insulin</font></div>
              </td>
              <td align="left" valign="bottom" width="1%">&#160;</td>
              <td valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Access</font></div>
              </td>
              <td align="left" valign="bottom" width="1%">&#160;</td>
              <td valign="top" width="10%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Cobalamin</font></div>
              </td>
              <td align="left" valign="bottom" width="1%">&#160;</td>
              <td valign="top" width="18%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Diabetes</font></div>
              </td>
              <td valign="bottom" width="1%">&#160;</td>
              <td valign="top" width="12%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Research</font></div>
              </td>
              <td valign="bottom" width="1%">&#160;</td>
              <td valign="top" width="9%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Pre-Clinical</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="21%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Oral
                  Delivery System</font></div>
              </td>
              <td align="left" valign="bottom" width="1%">&#160;</td>
              <td valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Access</font></div>
              </td>
              <td align="left" valign="bottom" width="1%">&#160;</td>
              <td valign="top" width="10%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Cobalamin</font></div>
              </td>
              <td align="left" valign="bottom" width="1%">&#160;</td>
              <td valign="top" width="18%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Various</font></div>
              </td>
              <td valign="bottom" width="1%">&#160;</td>
              <td valign="top" width="12%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Research</font></div>
              </td>
              <td valign="bottom" width="1%">&#160;</td>
              <td valign="top" width="9%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Pre-Clinical</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="21%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Cobalamin-Targeted
                  Therapeutics</font></div>
              </td>
              <td align="left" valign="bottom" width="1%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </td>
              <td valign="middle" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Access</font></div>
              </td>
              <td align="left" valign="middle" width="1%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </td>
              <td valign="middle" width="10%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Cobalamin</font></div>
              </td>
              <td align="left" valign="middle" width="1%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </td>
              <td valign="middle" width="18%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Anti-tumor</font></div>
              </td>
              <td valign="middle" width="1%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              </td>
              <td valign="middle" width="12%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Research</font></div>
              </td>
              <td valign="middle" width="1%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              </td>
              <td valign="middle" width="9%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Pre-Clinical</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">(1)&#160;&#160;
        For more information, see &#8220;Form 10-KSB, Government Regulation&#8221; for description
        of clinical stages.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">(2)&#160;&#160;
        Licensed from the School of Pharmacy, The University of London. Subject to
        a 1%
        royalty and milestone payments on sales.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">(3)&#160;&#160;
        Clinical study being conducted in Europe.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>Approved
        Products</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><u>MuGard&#8482;
        - Mucoadhesive Liquid Technology (MLT)</u></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Mucositis
        is a debilitating condition involving extensive inflammation of mouth tissue
        that affects annually an estimated 400,000 cancer patients in the United
        States
        undergoing chemotherapy and radiation treatment. Any treatment that would
        accelerate healing and/or diminish the rate of appearance of mucositis would
        have a significant beneficial impact on the quality of life of these patients
        and may allow for more aggressive chemotherapy. We believe the potential
        addressable market for a mucositis product could be over $1 billion
        world-wide.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Access&#8217;
        MuGard is a viscous polymer solution which provides a coating for the oral
        cavity. MuGard is dispensed in a ready to use form. A multi-site, randomized
        clinical study was performed in the United States testing MuGard and MuGard
        containing an anti-inflammatory drug to determine the effect of these products
        on the prevention and treatment of mucositis. The data from this trial indicated
        that the patients using MuGard displayed a lower incidence of mucositis than
        is
        typically seen in the studied population with no additional benefit from
        the
        drug.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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          </div>
        </div>
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          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman;">3</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
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          </div>
        </div>
        <div>&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">The
        data
        were retrospectively compared with two historical patient databases to evaluate
        the potential advantages MuGard may represent in the prevention, treatment
        and
        management of mucositis. The patient evaluation was conducted using the oral
        mucositis assessment scale, which qualifies the disease severity on a scale
        of
        0-5. Key highlights of the comparison with the historical patient databases
        are
        as follows:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">&#8226;&#160;&#160;&#160;&#160;&#160;
        the average severity of the disease was reduced by approximately
        40%;</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">&#8226;&#160;&#160;&#160;&#160;&#160;
        the maximum intensity of the mucositis was approximately 35% lower;
        and</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">&#8226;&#160;&#160;&#160;&#160;&#160;
        the median peak intensity was approximately 50% lower.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">These
        data confirmed the fact that MuGard could represent an important advancement
        in
        the management and prevention of mucositis. On September 20, 2006, we announced
        that we had submitted a Premarket Notification 510(k) application to the
        United
        States Food and Drug Administration (FDA) announcing the Company&#8217;s intent to
        market MuGard. On December 13, 2006, we announced that we had received marketing
        clearance for MuGard from FDA for the indication of the management of oral
        wounds including mucositis, aphthous ulcers and traumatic ulcers.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Access
        is
        currently seeking marketing partners to market MuGard&#8482; in the United States and
        in other territories worldwide. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>Products
        in Development Status</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><u>ProLindac&#8482;
        (Polymer Platinate, AP5346) DACH Platinum</u></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Chemotherapy,
        surgery and radiation are the major components in the clinical management
        of
        cancer patients. Chemotherapy serves as the primary therapy for some solid
        tumors and metastases and is increasingly used as an adjunct to radiation
        and
        surgery to improve their effectiveness. For chemotherapeutic agents to be
        effective in treating cancer patients, however, the agent must reach the
        target
        cells in effective quantities with minimal toxicity in normal
        tissues.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">The
        current optimal strategy for chemotherapy involves exposing patients to the
        most
        intensive cytotoxic regimens they can tolerate and clinicians attempt to
        design
        a combination of chemotherapeutic drugs, a dosing schedule and a method of
        administration to increase the probability that cancerous cells will be
        destroyed while minimizing the harm to healthy cells. Notwithstanding
        clinicians&#8217; efforts, most current chemotherapeutic drugs have significant
        shortcomings that limit the efficacy of chemotherapy. For example, certain
        cancers are inherently unresponsive to chemotherapeutic agents. Alternatively,
        other cancers may initially respond, but subgroups of cancer cells acquire
        resistance to the drug during the course of therapy and the resistant cells
        may
        survive and cause a relapse. Serious toxicity, including bone marrow
        suppression, renal toxicity, neuropathy, or irreversible cardiotoxicity,
        are
        some of the limitations of current anti-cancer drugs that can prevent their
        administration in curative doses.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Oxaliplatin,
        a formulation of DACH platinum, is a chemotherapeutic which was initially
        approved in France and in Europe in 1999 for the treatment of colorectal
        cancer.
        It is now also being marketed in the United States and is generating worldwide
        sales in excess of $2 billion annually. Carboplatin and Cisplatin, two other
        approved platinum chemotherapy drugs, are not indicated for the treatment
        of
        metastatic colorectal cancer. Oxaliplatin, in combination with 5-flurouracil
        and
        folinic acid (known as the FOLFOX regime) is indicated for the first-line
        treatment of metastatic colorectal cancer in Europe and the U.S. The colorectal
        cancer market is a significant opportunity as there are over 940,000 reported
        new cases annually worldwide, increasing at a rate of approximately three
        percent per year, and 500,000 deaths.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
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          </div>
        </div>
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          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman;">4</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
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          </div>
        </div>
        <div>&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Currently,
        platinum compounds are one of the largest selling categories of chemotherapeutic
        agents, with annual sales in excess of $3</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">.0
        billion. As is the case with all chemotherapeutic drugs, the use of such
        compounds is associated with serious systemic side effects. The drug development
        goal therefore is to enhance delivery of the active drug to the tumor and
        minimize the amount of active drug affecting normal organs in the
        body.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Utilizing
        a biocompatible water-soluble polymer HPMA as a drug carrier, Access&#8217; drug
        candidate ProLindac, links DACH platinum to a polymer in a manner which permits
        the selective release of active drug to the tumor by several mechanisms,
        including taking advantage of the differential pH in tumor tissue compared
        to
        healthy tissue. The polymer also capitalizes on the biological differences
        in
        the permeability of blood vessels at tumor sites versus normal tissue. In
        this
        way, tumor selective delivery and platinum release is achieved. The ability
        of
        ProLindac to inhibit tumor growth has been evaluated in more than ten
        preclinical models. Compared with the marketed product oxaliplatin, ProLindac
        showed either marked superiority or superiority in most of these models.
        Preclinical studies of the delivery of platinum to tumors in an animal model
        have shown that, compared with oxaliplatin at equitoxic doses, ProLindac
        delivers in excess of 16 times more platinum to the tumor. An analysis of
        tumor
        DNA, which is the main target for anti-cancer platinum agents, has shown
        that
        ProLindac</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><sup>&#160;</sup></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">delivers
        approximately 14 times more platinum to tumor DNA than oxaliplatin. Results
        from
        preclinical efficacy studies conducted in the B16 and other tumor models
        have
        also shown that ProLindac is superior to oxaliplatin in inhibiting the growth
        of
        tumors. An extensive preclinical package has been developed supporting the
        development of ProLindac.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">In
        2005
        we completed a Phase I multi-center clinical study conducted in Europe, which
        enrolled 26 patients. The study was reported at the AACR-NCI-EORTC conference
        in
        Philadelphia in November 2005.&#160; The European trial was designed to identify
        the maximum tolerated dose, dose limiting toxicities, the pharmacokinetics
        of
        the platinum in plasma and the possible anti-tumor activity of ProLindac.
        The
        open-label, non-randomized, dose-escalation Phase I study was performed at
        two
        European centers. ProLindac was administered as an intravenous infusion over
        one
        hour, once a week on days 1, 8 and 15 of each 28-day cycle to patients with
        solid progressive tumors. We obtained results in 26 patients with a broad
        cross-section of tumor types, with doses ranging from 80-1,280 mg
        Pt/m</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><sup>2</sup></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Of
        the 26
        patients, 10 were not evaluable for tumor response, principally due to
        withdrawal from the study prior to completing the required cycle. Of the
        16
        evaluable patients, 2 demonstrated a partial response, 1 experienced a partial
        response based on a biomarker and 4 experienced stable disease. One of the
        patients who attained a partial response had a melanoma with lung metastasis;
        a
        CT scan revealed a tumor decrease of greater than 50%. The other patient
        who
        responded had ovarian cancer; she had a reduction in lymph node metastasis
        and
        remission of a liver metastasis. The patient who experienced a partial response
        based on a biomarker was an ovarian cancer patient for whom CA-125 levels
        returned to normal. Also of note, a patient with cisplatin resistant cervical
        cancer showed a short lasting significant reduction in lung metastasis after 3
        doses. However, due to toxicity, the patient could not be retreated to determine
        whether the partial response could be maintained.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">We
        have
        commenced a European Phase I/II ProLindac trial in ovarian cancer patients
        who
        have relapsed after first line platinum therapy. The primary aim of the study
        is
        to determine the response rate of ProLindac monotherapy in this patient
        population. The response rates for other platinum compounds in this indication
        are well known, and will be used for comparison. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">We
        have
        submitted an IND application to the US Food and Drug Administration, and
        have
        received clearance from the agency to proceed with a Phase I/II clinical
        study
        of ProLindac in combination with fluorouracil and leucovorin. The study is
        designed to evaluate the safety of ProLindac in combination with two standard
        drugs used to treat colorectal cancer and to establish a safe dose for further
        clinical studies of this combination in colorectal cancer. We are currently
        evaluating whether clinical development of ProLindac in this indication might
        proceed more rapidly by utilizing an alternative clinical strategy and/or
        conducting studies in the US and/or elsewhere in the world.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
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          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman;">5</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
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          </div>
        </div>
        <div>&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>RECENT
        EVENTS</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">On
        July
        25, 2007, Access and SCO Capital Partners LLC and affiliates (&#8220;SCO&#8221;) agreed to
        extend the maturity date of an aggregate principal amount of $6,000,000 of
        7.5%
        convertible notes to September 6, 2007 from July 26, 2007. On April 30, 2007,
        Access and SCO and affiliates agreed to amend an Investor Rights Agreement
        to
        extend the required filing date of a registration statement to the earlier
        of
        the filing of a future registration statement in connection with a qualified
        financing or August 31, 2007.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">On
        July
        25, 2007, Access and Oracle Partners LP and affiliates (&#8220;Oracle&#8221;) agreed to
        extend the maturity date of an aggregate principal amount of $4,015,000 of
        7.7%
        convertible notes to September 7, 2007 from July 27, 2007.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">SCO,
        Oracle and their affiliates have extended the due dates of the convertible
        notes
        several times. If market conditions are right, we would like SCO, Oracle
        and
        their affiliates to convert the notes to equity. We cannot predict whether
        market conditions will be right for conversion and we do not know if SCO,
        Oracle
        and their affiliates will convert or extend the maturity date of the notes
        in
        the future.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">On
        April
        26, 2007 we entered into a Note Purchase Agreement with Somanta Pharmaceuticals,
        Inc. in order for Access to loan Somanta amounts to keep certain of their
        licenses and vendors current. As of June 30, 2007 we have loaned Somanta
        $205,000.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">On
        April
        19, 2007 we announced we had entered into an agreement to acquire Somanta
        Pharmaceuticals, Inc. Pursuant to the terms of the merger agreement, upon
        consummation of the acquisition, Somanta&#8217;s preferred and common shareholders
        would receive an aggregate of 1.5 million shares of Access&#8217; common shares which
        would represent approximately 13% of the combined company assuming the
        conversion of Access&#8217; existing convertible debt ($10.0 million senior
        convertible debt owned by SCO and Oracle) under existing terms of conversion.
        The Somanta stockholder&#8217;s meeting to vote on the proposed merger is scheduled
        for August 17, 2007. The closing of the transaction is subject to numerous
        conditions including receipt of necessary approvals including approval of
        Somanta shareholders. There can be no assurance that the transaction will
        be
        consummated or if consummated that it will be on the terms described
        herein.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>LIQUIDITY
        AND CAPITAL RESOURCES</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">We
        have
        funded our operations primarily through private sales of common stock and
        convertible notes and our principal source of liquidity is cash and cash
        equivalents. Contract research payments, licensing fees and milestone payments
        from corporate alliances and mergers have also provided funding for operations.
        </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">As
        of
        June 30, 2007 our cash and cash equivalents and short-term investments were
        $1,900,000 and our net cash burn rate for the six months ending June 30,
        2007
        was approximately $460,000 per month. Our working capital deficit was
        $11,010,000. Our working capital at June 30, 2007 represented a decrease
        of
        $5,228,000 as compared to our working capital deficit as of December 31,
        2006 of
        $5,782,000. Our working capital is negative reflecting approximately $10.9
        million of debt that is a current liability at June 30, 2007 and $1,217,000
        of
        accrued interest payments accrued at June 30, 2007.</font></div>
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        <div>&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">As
        of
        June 30, 2007, the Company did not have enough capital to achieve its long-term
        goals. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">We
        do not
        have sufficient funds to repay our convertible notes at their maturity. We
        may
        not be able to restructure the convertible notes or obtain additional financing
        to repay them on terms acceptable to us, if at all. If we raise additional
        funds
        by selling equity securities, the relative equity ownership of our existing
        investors would be diluted and the new investors could obtain terms more
        favorable than previous investors. A failure to restructure our convertible
        notes or obtain additional funding to repay the convertible notes and support
        our working capital and operating requirements, could cause us to be in default
        of our convertible notes and prevent us from making expenditures that are
        needed
        to allow us to maintain our operations. A failure to restructure our existing
        convertible notes or obtain necessary additional capital in the future could
        jeopardize our operations.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">We
        have
        generally incurred negative cash flows from operations since inception, and
        have
        expended, and expect to continue to expend in the future, substantial funds
        to
        complete our planned product development efforts. </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Since
        inception, our expenses have significantly exceeded revenues, resulting in
        an
        accumulated deficit as of June 30, 2007 of $83,908,000. </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">We
        expect
        that our capital resources will be adequate to fund our current level of
        operations for just over four months, excluding any obligation to repay the
        convertible notes and the debt service on the convertible notes, which at
        this
        time we do not have the ability to pay</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong><em>.</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>&#160;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">We
        cannot
        assure you</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>&#160;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">that
        we
        will ever be able to generate significant product revenue or achieve or sustain
        profitability. We currently do not have the cash resources to repay our debt
        obligations due in September 2007. We plan to satisfy our obligations under
        the
        notes either through conversion of the notes into equity or through the sale
        of
        equity. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">All
        shares and per share information reflect a one for five reverse stock split
        effected June 5, 2006.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><u>SCO
        Capital Partners LLC - Notes and Warrants</u></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">On
        December 6, 2006, we entered into a secured note and warrant purchase agreement
        pursuant to which we sold and issued an aggregate of $500,000 of 7.5%
        convertible notes now due September 6, 2007 and warrants to purchase 386,364
        shares of our common stock. Net proceeds to Access were $450,000. The notes
        and
        warrants were sold in a private placement to a group of accredited investors
        led
        by SCO and affiliates. Each noteholder received a warrant to purchase a number
        of shares of common stock of Access equal to 75% of the total number shares
        of
        Access common stock into which such holder's note is convertible. Each warrant
        has an exercise price of $1.32 per share and is exercisable at any time prior
        to
        December 6, 2012.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">On
        October 24, 2006, we entered into a secured note and warrant purchase agreement
        pursuant to which we sold and issued an aggregate of $500,000 of 7.5%
        convertible notes now due September 6, 2007 and warrants to purchase 386,364
        shares of our common stock. Net proceeds to Access were $450,000. The notes
        and
        warrants were sold in a private placement to a group of accredited investors
        led
        by SCO and affiliates. Each noteholder received a warrant to purchase a number
        of shares of common stock of Access equal to 75% of the total number shares
        of
        Access common stock into which such holder's note is convertible. Each warrant
        has an exercise price of $1.32 per share and is exercisable at any time prior
        to
        October 24, 2012.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">On
        February 16, 2006, we entered into a secured note and warrant purchase agreement
        pursuant to which we sold and issued an aggregate of $5,000,000 of 7.5%
        convertible notes now due September 6, 2007 and warrants to purchase an
        aggregate of 3,863,634 shares of our common stock. Net proceeds to Access
        were
        $4.5 million after offering costs of approximately $500,000, which are being
        amortized to interest expense over the term of the debt. The notes and warrants
        were sold in a private placement to a group of accredited investors led by
        SCO
        and its affiliates. Each noteholder received a warrant to purchase a number
        of
        shares of common stock of Access equal to 75% of the total number shares
        of
        Access common stock into which such holder's note is convertible. Each warrant
        has an exercise price of $1.32 per share and is exercisable at any time prior
        to
        February 16, 2012.</font></div>
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        <div>&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">All
        the
        secured notes mature on September 6, 2007, are convertible into Access common
        stock at a fixed conversion rate of $1.10 per share, bear interest of 7.5%
        per
        annum and are secured by the assets of Access. Each note may be converted
        at the
        option of the noteholder or Access under certain circumstances as set forth
        in
        the notes. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">In
        the
        event SCO and its affiliates were to convert all of their notes and exercise
        all
        of their warrants, it would own approximately 74.1% of the voting securities
        of
        Access. Access may be required to pay in cash, up to 2% per month, as defined,
        as liquidated damages for failure to file and keep effective a registration
        statement timely as required by investor rights agreements.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">In
        connection with the sale and issuance of notes and warrants, Access entered
        into
        an investors rights agreement whereby it granted SCO the right to designate
        two
        individuals to serve on the Board of Directors of Access while the notes
        are
        outstanding, and also granted registration rights with respect to the shares
        of
        common stock of Access underlying the notes and warrants. SCO designated
        Jeffrey
        B. Davis and Mark J. Alvino to the Board of Directors, and on March 13, 2006
        Messrs, Davis and Alvino were appointed to the Board of Directors.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><u>Uluru,
        Inc. - Sale of Oral/Topical Care Assets</u></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">On
        December 8, 2006 we amended our 2005 Asset Sale Agreement with Uluru, Inc.
        Access received from Uluru an upfront payment of $4.9 million at the time
        of the
        amendment, received an additional $350,000 on April 9, 2007 and in the future
        could receive potential milestones of up to $4.8 million based on Uluru sales.
        The amendment agreement included the anniversary payment due October 12,
        2006,
        the early payment of the two year anniversary payment, and a payment in
        satisfaction of certain future milestones. Access also transferred to Uluru
        certain patent applications that Access had previously licensed to Uluru
        under
        the 2005 License Agreement. Under a new agreement, Access has acquired a
        license
        from Uluru to utilize the nanoparticle aggregate technology contained in
        the
        transferred patent applications for subcutaneous, intramuscular,
        intra-peritoneal and intra-tumoral drug delivery. Additionally, one future
        milestone was increased by $125,000.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><u>Other
        Convertible Notes</u></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Holders
        of $4 million worth of 7.7% convertible notes (Oracle Partners LP and related
        funds) have amended their notes to a new maturity date, initially to April
        28
        (and subsequently to September 7, 2007), with the conversion price being
        reduced
        from $27.50 per share to $5.00 per share. In addition, Access may cause a
        mandatory conversion of the notes into common stock if the common stock trades
        at a price of at least 1.5 times the conversion price for a minimum number
        of
        trading days. There is also a provision to allow for a minimum price for
        conversion in the event of a change of control of the Company. This modification
        resulted in us recording additional debt discount of $2.1 million, which
        was
        accreted to interest expense. At June 30, 2007, there was no debt discount
        remaining.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Another
        noteholder, holding $5.5 million worth of 7.7% convertible notes has amended
        their note to a new maturity date, September 13, 2010 and elected to have
        the
        2005 and 2006 interest of $880,000 to be paid on September 13, 2007 or earlier
        if the Company receives $5.0 million of new funds. The delayed interest will
        earn interest at a rate of 10.0%.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Since
        our
        inception, we have devoted our resources primarily to fund our research and
        development programs. We have been unprofitable since inception and to date
        have
        received limited revenues from the sale of products. We cannot assure you
        that
        we will be able to generate sufficient product revenues to attain profitability
        on a sustained basis or at all. We expect to incur losses for the next several
        years as we continue to invest in product research and development, preclinical
        studies, clinical trials and regulatory compliance. As of June 30, 2007,
        our
        accumulated deficit was $83,908,000.</font></div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>SECOND
        QUARTER 2007 COMPARED TO SECOND QUARTER 2006</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Total
        research spending for the second quarter of 2007 was $523,000, as compared
        to
        $634,000 for the same period in 2006, a decrease of $111,000. The decrease
        in
        expenses was primarily due to lower costs for product manufacturing for
        ProLindac ($168,000). Product manufacturing was completed early in 2006 which
        we
        believe is adequate to supply drug product for our current ovarian cancer
        trial.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">The
        decrease in research spending is partially offset by: </font></div>
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            <td align="right" style="WIDTH: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt;" face="Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">higher
                salary and related cost due to the hiring of additional scientific
                staff
                ($41,000); and</font></div>
            </td>
          </tr>

      </table>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt;" face="Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">other
                net increases ($16,000).</font></div>
            </td>
          </tr>

      </table>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Total
        general and administrative expenses were $1,113,000 for the second quarter
        of
        2007, an increase of $450,000 as compared to the same period in 2006. The
        increase in spending was due primarily to the following: </font></div>
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            <td align="right" style="WIDTH: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt;" face="Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">higher
                salary related expenses due to stock option expenses
                ($305,000);</font></div>
            </td>
          </tr>

      </table>
      <table cellpadding="0" cellspacing="0" id="list" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt;" face="Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">higher
                investor relations expenses ($87,000) due to our increased investor
                relations efforts;</font></div>
            </td>
          </tr>

      </table>
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          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt;" face="Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">higher
                legal expenses ($60,000); and</font></div>
            </td>
          </tr>

      </table>
      <table cellpadding="0" cellspacing="0" id="list" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt;" face="Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">other
                net increases ($48,000).</font></div>
            </td>
          </tr>

      </table>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">The
        increase in general and administrative spending is partially offset by lower
        salary and related expenses in 2007 mainly due to work performed by our former
        chairman of the board in 2006 ($50,000) that was not performed in
        2007.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Depreciation
        and amortization was $74,000 for the second quarter of 2007 as compared to
        $77,000 for the same period in 2006 reflecting a decrease of $3,000. The
        decrease in depreciation and amortization was due to assets becoming fully
        depreciated.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Total
        operating expenses in the second quarter of 2007 were $1,710,000 as compared
        to
        total operating expenses of $1,374,000 for the same period in 2006, an increase
        of $336,000.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Interest
        and miscellaneous income was $25,000 for the second quarter of 2007 as compared
        to $100,000 for the same period in 2006, a decrease of $75,000. The decrease
        in
        interest income was due to accretion of the receivable due from Uluru that
        was
        recorded in 2006.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Interest
        and other expense was $424,000 for the second quarter of 2007 as compared
        to
        $1,969,000 the same period in 2006, a decrease of $1,545,000. The decrease
        in
        interest and other expense was due to amortization of the discount on the
        Oracle
        convertible notes and the amortization of the SCO notes recognized in
        2006.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">In
        2006
        there was an unrealized loss on fair value of warrants of $88,000 due to
        the
        warrants issued to SCO and affiliates. We changed our accounting for the
        warrants in the fourth quarter of 2006 and there is no unrealized losses
        or
        gains in 2007.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Net
        loss
        in the second quarter of 2007 was $2,109,000, or a $0.60 basic and diluted
        loss
        per common share, compared with a loss of $3,331,000, or a $0.94 basic and
        diluted loss per common share for the same period in 2006, a decrease of
        $1,222,000.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman;">9</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
        <div>&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>SIX
        MONTHS ENDED JUNE 30, 2007 COMPARED TO SIX MONTHS ENDED JUNE 30,
        2006</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Total
        research spending for the first six months of 2007, was $936,000, as compared
        to
        $1,390,000 for the same period in 2006, a decrease of $454,000. The decrease
        in
        expenses was </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">primarily
        due to </font></div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt;" face="Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">lower
                costs for product manufacturing for ProLindac ($412,000). Product
                manufacturing was completed early in 2006 which we believe is adequate
                to
                supply drug product for our current ovarian cancer
                trial;</font></div>
            </td>
          </tr>

      </table>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt;" face="Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">lower
                costs of clinical trials for ProLindac</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">
                ($118,000). We incurred start-up costs for the clinical trial in
                early
                2006; and</font></div>
            </td>
          </tr>

      </table>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt;" face="Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">other
                net decreases ($14,000).</font></div>
            </td>
          </tr>

      </table>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">The
        decrease in research spending is partially offset by higher salary and related
        cost due to the hiring of additional scientific staff ($90,000).</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Total
        general and administrative expenses were $2,252,000 for the first six months
        of
        2007, an increase of $923,000 as compared to the same period in 2006. The
        increase in general and administrative expenses was due primarily to the
        following:</font></div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt;" face="Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">higher
                salary related expenses due mainly to stock option expenses
                ($532,000);</font></div>
            </td>
          </tr>

      </table>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt;" face="Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">higher
                investor relations expenses ($220,000) due to our increased investor
                relations efforts;</font></div>
            </td>
          </tr>

      </table>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt;" face="Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">higher
                franchise taxes ($50,000);</font></div>
            </td>
          </tr>

      </table>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt;" face="Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">higher
                patent expenses ($45,000); </font></div>
            </td>
          </tr>

      </table>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt;" face="Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">higher
                legal expenses ($40,000); and</font></div>
            </td>
          </tr>

      </table>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt;" face="Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">other
                net increases ($36,000).</font></div>
            </td>
          </tr>

      </table>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Depreciation
        and amortization was $149,000 for the first six months of 2007 as compared
        to
        $154,000 for the same period in 2006 reflecting a decrease of $5,000.
</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">The
        decrease in depreciation and amortization was due to assets becoming fully
        depreciated.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Interest
        and miscellaneous income was $60,000 for the first six months of 2007 as
        compared to $192,000 for the same period in 2006, a decrease of $132,000.
        </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">The
        decrease in interest income was due to accretion of the receivable due from
        Uluru that was recorded in 2006. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Interest
        and other expense was $2,959,000 for the first six months of 2007 as compared
        to
        $3,268,000 for the same period in 2006, a decrease of $309,000.</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">The
        decrease in interest and other expense was due to amortization of the discount
        on the Oracle convertible notes and the amortization of the SCO notes recognized
        in 2006.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">In
        2006
        there was an unrealized loss on fair value of warrants of $2,238,000 due
        to the
        warrants issued to SCO and affiliates. We changed our accounting for the
        warrants in the fourth quarter of 2006 and there is no unrealized losses
        or
        gains in 2007.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Net
        loss
        in the first six months of 2007 was $6,236,000, or a $1.76 basic and diluted
        loss per common share, compared with a loss of $8,187,000, or a $2.32 basic
        and
        diluted loss per common share for the same period in 2005, a decrease of
        $1,951,000.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>Recent
        Accounting Pronouncements </strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">We
        adopted FIN 48 as of the beginning of our 2007 fiscal year. See Notes to
        Condensed Consolidated Financial Statements. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">In
        September 2006, the FASB issued SFAS 157, </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><em>Fair
        Value Measurements </em></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">(SFAS
        157)</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><em>,</em></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">
        which
        defines fair value, establishes a framework for measuring fair value, and
        expands disclosures about fair value measurements. The provisions of SFAS
        157
        are effective as of the beginning of our 2008 fiscal year. We are currently
        evaluating the impact of adopting SFAS 157 on our financial statements.
</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman;">10</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
        <div>&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">In
        February 2007, the FASB issued SFAS 159, </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><em>The
        Fair Value Option for Financial Assets and Financial Liabilities Including
        an
        amendment of FASB Statement No.&#160;115 </em></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">(SFAS
        159)</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><em>,</em></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">
        which
        permits entities to choose to measure many financial instruments and certain
        other items at fair value. The provisions of SFAS 159 are effective as of
        the
        beginning of our 2008 fiscal year. We are currently evaluating the impact
        of
        adopting SFAS 159 on our financial statements. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>ITEM
        3</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 21pt;">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>CONTROLS
        AND PROCEDURES</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><u>Evaluation
        of disclosure controls and procedures. </u></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Our
        disclosure controls and procedures are designed to ensure that information
        required to be disclosed by us in the reports we file or submit under the
        Securities Exchange Act of 1934, as amended, is recorded, processed, summarized
        and reported within the time periods specified in the Securities and Exchange
        Commission&#8217;s rules and forms. An evaluation was performed under the supervision
        and with the participation of our management, including our Chief Executive
        Officer and Chief Financial Officer, of the effectiveness of the design and
        operation of our disclosure controls and procedures (as defined in
        Rule&#160;13a&#160;&#8212; 15(e) under the Securities Exchange Act of 1934) as of the
        end of the period covered by this quarterly report. Based on this evaluation,
        our management, including our Chief Executive Officer and our Chief Financial
        Officer, concluded that, as of March 31, 2007 our disclosure controls and
        procedures were effective to ensure that information required to be disclosed
        by
        us in the reports we file or submit under the Securities Exchange Act of
        1934,
        as amended, is recorded, processed, summarized and reported within the time
        periods specified in the Securities and Exchange Commission&#8217;s rules and
        forms.</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">&#160;</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><u>Changes
        in Internal Control over Financial Reporting</u></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">For
        the
        quarter ended March 31, 2007, there have been no changes in our internal
        control
        over financial reporting (as defined in Rule&#160;13a-15(f) under the Securities
        Exchange Act of 1934) that have materially affected, or are reasonably likely
        to
        materially affect, our internal control over financial reporting. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>RISK
        FACTORS</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">The
        risk
        factors set forth below, other than the first risk factor set forth below
        were
        previously discussed in our Form 10-KSB for the fiscal year ended December
        31,
        2006. There have not been any material changes from the risk factors previously
        disclosed in our Form 10-KSB, other than such risk factor. These risk factors
        are not the only ones facing the Company. Additional risks and uncertainties
        not
        currently deemed to be material may also materially or adversely affect our
        financial condition and/or operating results.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>Although
        Access and Somanta expect that the merger will result in benefits to the
        combined company, the combined company may not realize those benefits because
        of
        integration and other challenges. </strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Access&#8217;
        ability to realize the anticipated benefits of the merger will depend, in
        part,
        on the ability of Access to integrate the business of Somanta with the business
        of Access. The combination of two independent companies is a complex, costly
        and
        time-consuming process. This process may disrupt the business of either or
        both
        of the companies, and may not result in the full benefits expected by Access
        and
        Somanta. The difficulties of combining the operations of the companies include,
        among others: </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt;">11</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">&#160;&#160;</font></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">

            <tr>
              <td align="justify" valign="middle" width="3%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              </td>
              <td align="justify" valign="top" width="3%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">&#8226;</font></div>
              </td>
              <td align="justify" valign="top" width="1%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              </td>
              <td align="justify" valign="top" width="77%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">unanticipated
                  issues in integrating information, communications and other systems;
                  </font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">

            <tr>
              <td align="justify" valign="middle" width="3%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              </td>
              <td align="justify" valign="top" width="3%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">&#8226;</font></div>
              </td>
              <td align="justify" valign="top" width="1%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              </td>
              <td align="justify" valign="top" width="77%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">retaining
                  key employees; </font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">

            <tr>
              <td align="justify" valign="middle" width="3%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              </td>
              <td align="justify" valign="top" width="3%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">&#8226;</font></div>
              </td>
              <td align="justify" valign="top" width="1%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              </td>
              <td align="justify" valign="top" width="77%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">consolidating
                  corporate and administrative infrastructures;
</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">

            <tr>
              <td align="justify" valign="middle" width="3%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              </td>
              <td align="justify" valign="top" width="3%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">&#8226;</font></div>
              </td>
              <td align="justify" valign="top" width="1%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              </td>
              <td align="justify" valign="top" width="77%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">the
                  diversion of management&#8217;s attention from ongoing business concerns; and
                  </font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">

            <tr>
              <td align="justify" valign="middle" width="3%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              </td>
              <td align="justify" valign="top" width="3%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">&#8226;</font></div>
              </td>
              <td align="justify" valign="top" width="1%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              </td>
              <td align="justify" valign="top" width="77%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">coordinating
                  geographically separate organizations.
</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">We
        cannot
        assure you that the combination of Somanta with Access will result in the
        realization of the full benefits anticipated from the merger. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>Without
        obtaining adequate capital funding, we may not be able to continue as a going
        concern.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">The
        report of our independent registered public accounting firm for the fiscal
        year
        ended December 31, 2006 contained a fourth explanatory paragraph to reflect
        its
        significant doubt about our ability to continue a going concern as a result
        of
        our history of losses and our liquidity position, as discussed herein and
        in
        this Form 10-QSB. If we are unable to obtain adequate capital funding in
        the
        future, we may not be able to continue as a going concern, which would have
        an
        adverse effect on our business and operations, and investors&#8217; investment in us
        may decline.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>We
        have experienced a history of losses, we expect to incur future losses and
        we
        may be unable to obtain necessary additional capital to fund operations in
        the
        future.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">We
        have
        recorded minimal revenue to date and we have incurred a cumulative operating
        loss of approximately $6.2 million through June 30, 2007. Net losses for
        the
        years ended 2006, 2005 and 2004 were $12,874,000, $1,700,000 and $10,238,000,
        respectively. Our losses have resulted principally from costs incurred in
        research and development activities related to our efforts to develop clinical
        drug candidates and from the associated administrative costs. We expect to
        incur
        additional operating losses over the next several years. We also expect
        cumulative losses to increase if we expand research and development efforts
        and
        preclinical and clinical trials. Our net cash burn rate for the six months
        ended
        June 30, 2007 was approximately $460,000 per month. We project our net cash
        burn
        rate for the next four months to be approximately $450,000 per month. Capital
        expenditures are forecasted to be minor for the next four months. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">We
        require substantial capital for our development programs and operating expenses,
        to pursue regulatory clearances and to prosecute and defend our intellectual
        property rights. We believe that our existing capital resources, interest
        income, product sales, royalties and revenue from possible licensing agreements
        and collaborative agreements will be sufficient to fund our currently expected
        operating expenses and capital requirements for six months (other than debt
        and
        interest obligations including the approximately </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">$6.0
        million of Senior Convertible notes due September 6, 2007 plus accrued interest;
        and approximately </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">$4.0
        million of convertible notes which are required to be repaid September 7,
        2007
        plus accrued interest; and capitalized interest of $880,000 due September
        13,
        2007). We will need to raise substantial additional capital to support our
        ongoing operations and debt obligations.</font></div>
      <div>&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">If
        we do
        raise additional funds by issuing equity securities, further dilution to
        existing stockholders would result and future investors may be granted rights
        superior to those of existing stockholders. If adequate funds are not available
        to us through additional equity offerings, we may be required to delay, reduce
        the scope of or eliminate one or more of our research and development programs
        or to obtain funds by entering into arrangements with collaborative partners
        or
        others that require us to issue additional equity securities or to relinquish
        rights to certain technologies or drug candidates that we would not otherwise
        issue or relinquish in order to continue independent operations. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman;">12</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
        <div>&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>We
        do not have operating revenue and we may never attain
        profitability.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">To
        date,
        we have funded our operations primarily through private sales of common stock
        and convertible notes. Contract research payments and licensing fees from
        corporate alliances and mergers have also provided funding for our operations.
        </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Our
        ability to achieve significant revenue or profitability depends upon our
        ability
        to successfully complete the development of drug candidates, to develop and
        obtain patent protection and regulatory approvals for our drug candidates
        and to
        manufacture and commercialize the resulting drugs. We sold our only revenue
        producing assets to Uluru, Inc. in October 2005. We are not expecting any
        revenues in the short-term from our other assets. Furthermore, we may not
        be
        able to ever successfully identify, develop, commercialize, patent, manufacture,
        obtain required regulatory approvals and market any additional products.
        Moreover, even if we do identify, develop, commercialize, patent, manufacture,
        and obtain required regulatory approvals to market additional products, we
        may
        not generate revenues or royalties from commercial sales of these products
        for a
        significant number of years, if at all. Therefore, our proposed operations
        are
        subject to all the risks inherent in the establishment of a new business
        enterprise. In the next few years, our revenues may be limited to minimal
        product sales and royalties, any amounts that we receive under strategic
        partnerships and research or drug development collaborations that we may
        establish and, as a result, we may be unable to achieve or maintain
        profitability in the future or to achieve significant revenues in order to
        fund
        our operations. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>We
        may not be able to pay our debt and other obligations and our assets may
        be
        seized as a result.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">We
        may
        not generate the cash flow required to pay our liabilities as they become
        due.
        Our outstanding debt includes $6.0 million of Senior Convertible notes due
        September 6, 2007, and approximately $4.0 million of our Convertible
        Subordinated Notes due September 7, 2007 and $5.5 million is due in September
        2010. We also have capitalized interest of $880,000 plus interest due the
        Company otherwise it will be due September 13, 2007.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">If
        our
        cash flow is inadequate to meet these obligations, we will default on the
        notes.
        Any default on the notes could allow our note holders to foreclose upon our
        assets or force us into bankruptcy. </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">We
        may be
        unable to repay or repurchase or restructure the convertible subordinated
        notes
        due in September 2007 and September 2010 and be forced into
        bankruptcy.</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">In
        the
        event of a default, the holders of our secured convertible notes have the
        right
        to foreclose on substantially all of our assets, which could force us to
        curtail
        or cease our business operations.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">The
        holders of our convertible notes may require us to repurchase or prepay all
        of
        the outstanding convertible notes under certain circumstances. We may not
        have
        sufficient cash reserves to repurchase the convertible notes at such time,
        which
        would cause an event of default under the convertible notes and may force
        us to
        declare bankruptcy.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>We
        may not successfully commercialize our drug candidates.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Our
        drug
        candidates are subject to the risks of failure inherent in the development
        of
        pharmaceutical products based on new technologies and our failure to develop
        safe, commercially viable drugs would severely limit our ability to become
        profitable or to achieve significant revenues. We may be unable to successfully
        commercialize our drug candidates because:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: -3.6pt" align="justify"><br></div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt;" face="Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">some
                or all of our drug candidates may be found to be unsafe or ineffective
                or
                otherwise fail to meet applicable regulatory standards or receive
                necessary regulatory clearances;</font></div>
            </td>
          </tr>

      </table>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt;" face="Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">our
                drug candidates, if safe and effective, may be too difficult to develop
                into commercially viable drugs;</font></div>
            </td>
          </tr>

      </table>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt;" face="Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">it
                may be difficult to manufacture or market our drug candidates on
                a large
                scale;</font></div>
            </td>
          </tr>

      </table>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt;" face="Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">proprietary
                rights of third parties may preclude us from marketing our drug
                candidates; and</font></div>
            </td>
          </tr>

      </table>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt;" face="Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">third
                parties may market superior or equivalent
                drugs.</font></div>
            </td>
          </tr>

      </table>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman;">13</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
        <div>&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>The
        success of our research and development activities, upon which we primarily
        focus, is uncertain.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Our
        primary focus is on our research and development activities and the
        commercialization of compounds covered by proprietary biopharmaceutical patents
        and patent applications. Research and development activities, by their nature,
        preclude definitive statements as to the time required and costs involved
        in
        reaching certain objectives. Actual research and development costs, therefore,
        could exceed budgeted amounts and estimated time frames may require extension.
        Cost overruns, unanticipated regulatory delays or demands, unexpected adverse
        side effects or insufficient therapeutic efficacy will prevent or substantially
        slow our research and development effort and our business could ultimately
        suffer. We anticipate that we will remain principally engaged in research
        and
        development activities for an indeterminate, but substantial, period of
        time.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>We
        may be unable to successfully develop, market, or commercialize our products
        or
        our product candidates without establishing new relationships and maintaining
        current relationships.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Our
        strategy for the research, development and commercialization of our potential
        pharmaceutical products may require us to enter into various arrangements
        with
        corporate and academic collaborators, licensors, licensees and others, in
        addition to our existing relationships with other parties. Specifically,
        we may
        seek to joint venture, sublicense or enter other marketing arrangements with
        parties that have an established marketing capability or we may choose to
        pursue
        the commercialization of such products on our own. We may, however, be unable
        to
        establish such additional collaborative arrangements, license agreements,
        or
        marketing agreements as we may deem necessary to develop, commercialize and
        market our potential pharmaceutical products on acceptable terms. Furthermore,
        if we maintain and establish arrangements or relationships with third parties,
        our business may depend upon the successful performance by these third parties
        of their responsibilities under those arrangements and relationships.
</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Our
        ability to successfully commercialize, and market our product candidates
        could
        be limited if a number of these existing relationships were
        terminated.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Furthermore,
        our strategy with respect to our polymer platinate program is to enter into
        a
        licensing agreement with a pharmaceutical company pursuant to which the further
        costs of developing a product would be shared with our licensing partner.
        Although we have had discussions with potential licensing partners with respect
        to our polymer platinate program, to date we have not entered into any licensing
        arrangement. We may be unable to execute our licensing strategy for polymer
        platinate.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: -3.6pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>We
        may be unable to successfully manufacture our products and our product
        candidates in clinical quantities or for commercial purposes without the
        assistance of contract manufacturers, which may be difficult for us to obtain
        and maintain.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">We
        have
        limited experience in the manufacture of pharmaceutical products in clinical
        quantities or for commercial purposes and we may not be able to manufacture
        any
        new pharmaceutical products that we may develop. As a result, we have
        established, and in the future intend to establish arrangements with contract
        manufacturers to supply sufficient quantities of products to conduct clinical
        trials and for the manufacture, packaging, labeling and distribution of finished
        pharmaceutical products if any of our potential products are approved for
        commercialization. If we are unable to contract for a sufficient supply of
        our
        potential pharmaceutical products on acceptable terms, our preclinical and
        human
        clinical testing schedule may be delayed, resulting in the delay of our clinical
        programs and submission of product candidates for regulatory approval, which
        could cause our business to suffer. Our business could suffer if there are
        delays or difficulties in establishing relationships with manufacturers to
        produce, package, label and distribute our finished pharmaceutical or other
        medical products, if any, market introduction and subsequent sales of such
        products. Moreover, contract manufacturers that we may use must adhere to
        current Good Manufacturing Practices, as required by the FDA. In this regard,
        the FDA will not issue a pre-market approval or product and establishment
        licenses, where applicable, to a manufacturing facility for the products
        until
        the manufacturing facility passes a pre-approval plant inspection. If we
        are
        unable to obtain or retain third party manufacturing on commercially acceptable
        terms, we may not be able to commercialize our products as planned. Our
        potential dependence upon third parties for the manufacture of our products
        may
        adversely affect our ability to generate profits or acceptable profit margins
        and our ability to develop and deliver such products on a timely and competitive
        basis. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman;">14</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
        <div>&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">ProLindac
        is manufactured by third parties for our Phase II clinical trials. Manufacturing
        is ongoing for the current clinical trials. Certain manufacturing steps are
        conducted by the Company to enable significant cost savings to be
        realized.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>We
        are subject to extensive governmental regulation which increases our cost
        of
        doing business and may affect our ability to commercialize any new products
        that
        we may develop.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">The
        FDA
        and comparable agencies in foreign countries impose substantial requirements
        upon the introduction of pharmaceutical products through lengthy and detailed
        laboratory, preclinical and clinical testing procedures and other costly
        and
        time-consuming procedures to establish their safety and efficacy. All of
        our
        drugs and drug candidates require receipt and maintenance of governmental
        approvals for commercialization. Preclinical and clinical trials and
        manufacturing of our drug candidates will be subject to the rigorous testing
        and
        approval processes of the FDA and corresponding foreign regulatory authorities.
        Satisfaction of these requirements typically takes a significant number of
        years
        and can vary substantially based upon the type, complexity and novelty of
        the
        product. The status of our principal products is as follows:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 54pt"><font style="DISPLAY: inline; FONT-SIZE: 7pt;" face="Symbol"><font style="DISPLAY: inline; FONT-SIZE: 12pt;" face="Symbol, serif">&#183;&#160;&#160;</font></font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">A
                mucoadhesive liquid technology product, MuGard, has received marketing
                approval by the FDA. </font></div>
            </td>
          </tr>

      </table>
      <table cellpadding="0" cellspacing="0" id="list" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 54pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font face="Symbol">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
                &#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">ProLindac
                is currently in a Phase II trial in Europe and a Phase II trial in
                the
                US.</font></div>
            </td>
          </tr>

      </table>
      <table cellpadding="0" cellspacing="0" id="list" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 54pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 12pt;" face="Symbol, serif">&#183;
                <strong>&#160;</strong></font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">ProLindac
                has been approved for an additional Phase I trial in the US by the
                FDA.</font></div>
            </td>
          </tr>

      </table>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 54pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt;" face="Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Cobalamin
                mediated delivery technology is currently in the pre-clinical
                phase.</font></div>
            </td>
          </tr>

      </table>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 54pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt;" face="Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">We
                also have other products in the preclinical
                phase.</font></div>
            </td>
          </tr>

      </table>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Due
        to
        the time consuming and uncertain nature of the drug candidate development
        process and the governmental approval process described above, we cannot
        assure
        you when we, independently or with our collaborative partners, might submit
        a
        New Drug Application, for FDA or other regulatory review.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Government
        regulation also affects the manufacturing and marketing of pharmaceutical
        products. Government regulations may delay marketing of our potential drugs
        for
        a considerable or indefinite period of time, impose costly procedural
        requirements upon our activities and furnish a competitive advantage to larger
        companies or companies more experienced in regulatory affairs. Delays in
        obtaining governmental regulatory approval could adversely affect our marketing
        as well as our ability to generate significant revenues from commercial sales.
        Our drug candidates may not receive FDA or other regulatory approvals on
        a
        timely basis or at all. Moreover, if regulatory approval of a drug candidate
        is
        granted, such approval may impose limitations on the indicated use for which
        such drug may be marketed. Even if we obtain initial regulatory approvals
        for
        our drug candidates, Access, our drugs and our manufacturing facilities would
        be
        subject to continual review and periodic inspection, and later discovery
        of
        previously unknown problems with a drug, manufacturer or facility may result
        in
        restrictions on the marketing or manufacture of such drug, including withdrawal
        of the drug from the market. The FDA and other regulatory authorities
        stringently apply regulatory standards and failure to comply with regulatory
        standards can, among other things, result in fines, denial or withdrawal
        of
        regulatory approvals, product recalls or seizures, operating restrictions
        and
        criminal prosecution.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman;">15</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
        <div>&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>The
        uncertainty associated with preclinical and clinical testing may affect our
        ability to successfully commercialize new products.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Before
        we
        can obtain regulatory approvals for the commercial sale of any of our potential
        drugs, the drug candidates will be subject to extensive preclinical and clinical
        trials to demonstrate their safety and efficacy in humans. Preclinical or
        clinical trials of any of our future drug candidates may not demonstrate
        the
        safety and efficacy of such drug candidates at all or to the extent necessary
        to
        obtain regulatory approvals. In this regard, for example, adverse side effects
        can occur during the clinical testing of a new drug on humans which may delay
        ultimate FDA approval or even lead us to terminate our efforts to develop
        the
        drug for commercial use. Companies in the biotechnology industry have suffered
        significant setbacks in advanced clinical trials, even after demonstrating
        promising results in earlier trials. In particular, polymer platinate has
        taken
        longer to progress through clinical trials than originally planned. This
        extra
        time has not been related to concerns of the formulations but rather due
        to the
        lengthy regulatory process. The failure to adequately demonstrate the safety
        and
        efficacy of a drug candidate under development could delay or prevent regulatory
        approval of the drug candidate. A delay or failure to receive regulatory
        approval for any of our drug candidates could prevent us from successfully
        commercializing such candidates and we could incur substantial additional
        expenses in our attempts to further develop such candidates and obtain future
        regulatory approval. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>We
        may incur substantial product liability expenses due to the use or misuse
        of our
        products for which we may be unable to obtain insurance
        coverage.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Our
        business exposes us to potential liability risks that are inherent in the
        testing, manufacturing and marketing of pharmaceutical products. These risks
        will expand with respect to our drug candidates, if any, that receive regulatory
        approval for commercial sale and we may face substantial liability for damages
        in the event of adverse side effects or product defects identified with any
        of
        our products that are used in clinical tests or marketed to the public. We
        generally procure product liability insurance for drug candidates that are
        undergoing human clinical trials. Product liability insurance for the
        biotechnology industry is generally expensive, if available at all, and as
        a
        result, we may be unable to obtain insurance coverage at acceptable costs
        or in
        a sufficient amount in the future, if at all. We may be unable to satisfy
        any
        claims for which we may be held liable as a result of the use or misuse of
        products which we have developed, manufactured or sold and any such product
        liability claim could adversely affect our business, operating results or
        financial condition.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>We
        may incur significant liabilities if we fail to comply with stringent
        environmental regulations or if we did not comply with these regulations
        in the
        past.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Our
        research and development processes involve the controlled use of hazardous
        materials. We are subject to a variety of federal, state and local governmental
        laws and regulations related to the use, manufacture, storage, handling and
        disposal of such material and certain waste products. Although we believe
        that
        our activities and our safety procedures for storing, using, handling and
        disposing of such materials comply with the standards prescribed by such
        laws
        and regulations, the risk of accidental contamination or injury from these
        materials cannot be completely eliminated. In the event of such accident,
        we
        could be held liable for any damages that result and any such liability could
        exceed our resources. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
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          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman;">16</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
        <div>&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>Intense
        competition may limit our ability to successfully develop and market commercial
        products.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">The
        biotechnology and pharmaceutical industries are intensely competitive and
        subject to rapid and significant technological change. Our competitors in
        the
        United States and elsewhere are numerous and include, among others, major
        multinational pharmaceutical and chemical companies, specialized biotechnology
        firms and universities and other research institutions.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">The
        following products may compete with polymer platinate:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">&#8226;&#160;&#160;&#160;&#160;&#160;
        Cisplatin, marketed by Bristol-Myers Squibb, the originator of the drug,
        and
        several generic manufacturers;</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">&#8226;&#160;&#160;&#160;&#160;&#160;
        Carboplatin, marketed by Bristol-Myers Squibb in the US; and</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">&#8226;&#160;&#160;&#160;&#160;&#160;
        Oxaliplatin, marketed exclusively by Sanofi-Aventis</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">The
        following companies are working on therapies and formulations that may be
        competitive with our polymer platinate:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

            <tr valign="top" style="LINE-HEIGHT: 1.25;">
              <td align="left" style="WIDTH: 27pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">&#8226;</font></td>
              <td align="left">
                <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Antigenics
                  and Regulon are developing liposomal platinum
                  formulations;</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

            <tr valign="top" style="LINE-HEIGHT: 1.25;">
              <td align="left" style="WIDTH: 27pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">&#8226;</font></td>
              <td align="left">
                <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Spectrum
                  Pharmaceuticals and GPC Biotech are developing oral platinum
                  formulations;</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

            <tr valign="top" style="LINE-HEIGHT: 1.25;">
              <td align="left" style="WIDTH: 27pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">&#8226;</font></td>
              <td align="left">
                <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Poniard
                  Pharmaceuticals is developing both iv and oral platinum
                  formulations;</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

            <tr valign="top" style="LINE-HEIGHT: 1.25;">
              <td align="left" style="WIDTH: 27pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">&#8226;</font></td>
              <td align="left">
                <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Nanocarrier
                  and Debio are developing micellar nanoparticle platinum formulations;
                  and</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

            <tr valign="top" style="LINE-HEIGHT: 1.25;">
              <td align="left" style="WIDTH: 27pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">&#8226;</font></td>
              <td align="left">
                <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">American
                  Pharmaceutical Partners, Cell Therapeutics, Daiichi, and Enzon
                  are
                  developing alternate drugs in combination with polymers and other
                  drug
                  delivery systems</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">.</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Companies
        working on therapies and formulations that may be competitive with our vitamin
        mediated drug delivery system are Bristol-Myers Squibb, Centocor (acquired
        by
        Johnson &amp; Johnson), Endocyte, GlaxoSmithKline, Imclone and Xoma which are
        developing targeted monoclonal antibody therapy.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Amgen,
        Carrington Laboratories, CuraGen Corporation, Cytogen Corporation, Endo
        Pharmaceuticals, , MGI Pharma, Nuvelo, Inc. and OSI Pharmaceuticals are
        developing products to treat mucositis that may compete with our mucoadhesive
        liquid technology and/or our MuGard mucositis treatment product.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">BioDelivery
        Sciences International, Biovail Corporation, Cellgate, CIMA Labs, Inc., Cytogen
        Corporation, Depomed Inc., Emisphere Technologies, Inc., Eurand, Flamel
        Technologies, Nobex and Xenoport are developing products which compete with
        our
        oral drug delivery system.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Many
        of
        these competitors have and employ greater financial and other resources,
        including larger research and development, marketing and manufacturing
        organizations. As a result, our competitors may successfully develop
        technologies and drugs that are more effective or less costly than any that
        we
        are developing or which would render our technology and future products obsolete
        and noncompetitive.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">In
        addition, some of our competitors have greater experience than we do in
        conducting preclinical and clinical trials and obtaining FDA and other
        regulatory approvals. Accordingly, our competitors may succeed in obtaining
        FDA
        or other regulatory approvals for drug candidates more rapidly than we do.
        Companies that complete clinical trials, obtain required regulatory agency
        approvals and commence commercial sale of their drugs before their competitors
        may achieve a significant competitive advantage. Drugs resulting from our
        research and development efforts or from our joint efforts with collaborative
        partners therefore may not be commercially competitive with our competitors'
        existing products or products under development.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman;">17</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
        <div>&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>Our
        ability to successfully develop and commercialize our drug candidates will
        substantially depend upon the availability of reimbursement funds for the
        costs
        of the resulting drugs and related treatments.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">The
        successful commercialization of, and the interest of potential collaborative
        partners to invest in the development of our drug candidates, may depend
        substantially upon reimbursement of the costs of the resulting drugs and
        related
        treatments at acceptable levels from government authorities, private health
        insurers and other organizations, including health maintenance organizations,
        or
        HMOs. Limited reimbursement for the cost of any drugs that we develop may
        reduce
        the demand for, or price of such drugs, which would hamper our ability to
        obtain
        collaborative partners to commercialize our drugs, or to obtain a sufficient
        financial return on our own manufacture and commercialization of any future
        drugs.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>The
        market may not accept any pharmaceutical products that we successfully
        develop.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">The
        drugs
        that we are attempting to develop may compete with a number of well-established
        drugs manufactured and marketed by major pharmaceutical companies. The degree
        of
        market acceptance of any drugs developed by us will depend on a number of
        factors, including the establishment and demonstration of the clinical efficacy
        and safety of our drug candidates, the potential advantage of our drug
        candidates over existing therapies and the reimbursement policies of government
        and third-party payers. Physicians, patients or the medical community in
        general
        may not accept or use any drugs that we may develop independently or with
        our
        collaborative partners and if they do not, our business could
        suffer.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>Trends
        toward managed health care and downward price pressures on medical products
        and
        services may limit our ability to profitably sell any drugs that we may
        develop.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Lower
        prices for pharmaceutical products may result from:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

            <tr valign="top" style="LINE-HEIGHT: 1.25;">
              <td align="left" style="WIDTH: 27pt"><font style="FONT-FAMILY: Times New Roman;">&#8226;</font></td>
              <td align="left">
                <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">third-party
                  payers' increasing challenges to the prices charged for medical
                  products
                  and services;</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

            <tr valign="top" style="LINE-HEIGHT: 1.25;">
              <td align="left" style="WIDTH: 27pt"><font style="FONT-FAMILY: Times New Roman;">&#8226;</font></td>
              <td align="left">
                <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">the
                  trend toward managed health care in the United States and the concurrent
                  growth of HMOs and similar organizations that can control or significantly
                  influence the purchase of healthcare services and products;
                  and</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

            <tr valign="top" style="LINE-HEIGHT: 1.25;">
              <td align="left" style="WIDTH: 27pt"><font style="FONT-FAMILY: Times New Roman;">&#8226;</font></td>
              <td align="left">
                <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">legislative
                  proposals to reform healthcare or reduce government insurance
                  programs.</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">The
        cost
        containment measures that healthcare providers are instituting, including
        practice protocols and guidelines and clinical pathways, and the effect of
        any
        healthcare reform, could limit our ability to profitably sell any drugs that
        we
        may successfully develop. Moreover, any future legislation or regulation,
        if
        any, relating to the healthcare industry or third-party coverage and
        reimbursement, may cause our business to suffer.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>We
        may not be successful in protecting our intellectual property and proprietary
        rights.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Our
        success depends, in part, on our ability to obtain U.S. and foreign patent
        protection for our drug candidates and processes, preserve our trade secrets
        and
        operate our business without infringing the proprietary rights of third parties.
        Legal standards relating to the validity of patents covering pharmaceutical
        and
        biotechnological inventions and the scope of claims made under such patents
        are
        still developing and there is no consistent policy regarding the breadth
        of
        claims allowed in biotechnology patents. The patent position of a biotechnology
        firm is highly uncertain and involves complex legal and factual questions.
        We
        cannot assure you that any existing or future patents issued to, or licensed
        by,
        us will not subsequently be challenged, infringed upon, invalidated or
        circumvented by others. As a result, although we, together with our
        subsidiaries, are either the owner or licensee to 12 U.S. patents and to
        10 U.S.
        patent applications now pending, and 4 European patents and 12 European patent
        applications, we cannot assure you that any additional patents will issue
        from
        any of the patent applications owned by, or licensed to, us. Furthermore,
        any
        rights that we may have under issued patents may not provide us with significant
        protection against competitive products or otherwise be commercially viable.
        </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman;">18</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
        <div>&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Our
        patents for the following technologies expire in the years and during the
        date
        ranges indicated below:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 63pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt;" face="Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Mucoadhesive
                technology in 2021,</font></div>
            </td>
          </tr>

      </table>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 63pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt;" face="Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">ProLindac
                in 2021,</font></div>
            </td>
          </tr>

      </table>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 63pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt;" face="Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Cobalamin
                mediated technology between 2007 and 2019</font></div>
            </td>
          </tr>

      </table>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">In
        addition to issued patents, we have a number of pending patent applications.
        If
        issued, the patents underlying theses applications could extend the patent
        life
        of our technologies beyond the dates listed above.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Patents
        may have been granted to third parties or may be granted covering products
        or
        processes that are necessary or useful to the development of our drug
        candidates. If our drug candidates or processes are found to infringe upon
        the
        patents or otherwise impermissibly utilize the intellectual property of others,
        our development, manufacture and sale of such drug candidates could be severely
        restricted or prohibited. In such event, we may be required to obtain licenses
        from third parties to utilize the patents or proprietary rights of others.
        We
        cannot assure you that we will be able to obtain such licenses on acceptable
        terms, if at all. If we become involved in litigation regarding our intellectual
        property rights or the intellectual property rights of others, the potential
        cost of such litigation, regardless of the strength of our legal position,
        and
        the potential damages that we could be required to pay could be
        substantial.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>Our
        business could suffer if we lose the services of, or fail to attract, key
        personnel</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>.
        </strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">We
        are
        highly dependent upon the efforts of our senior management and scientific
        team,
        including our President and Chief Executive Officer, Stephen R. Seiler. The
        loss
        of the services of one or more of these individuals could delay or prevent
        the
        achievement of our research, development, marketing, or product
        commercialization objectives. While we have employment agreements with Stephen
        R. Seiler, David P. Nowotnik, PhD our Senior Vice President Research and
        Development, and Stephen B. Thompson, our Vice President and Chief Financial
        Officer, their employment may be terminated by them or us at any time. Mr.
        Seiler&#8217;s, Dr. Nowotnik's and Mr. Thompson&#8217;s agreements expire within one year
        and are extendable each year on the anniversary date. We do not have employment
        contracts with our other key personnel. We do not maintain any "key-man"
        insurance policies on any of our key employees and we do not intend to obtain
        such insurance. In addition, due to the specialized scientific nature of
        our
        business, we are highly dependent upon our ability to attract and retain
        qualified scientific and technical personnel. In view of the stage of our
        development and our research and development programs, we have restricted
        our
        hiring to research scientists and a small administrative staff and we have
        made
        only limited investments in manufacturing, production, sales or regulatory
        compliance resources. There is intense competition among major pharmaceutical
        and chemical companies, specialized biotechnology firms and universities
        and
        other research institutions for qualified personnel in the areas of our
        activities, however, and we may be unsuccessful in attracting and retaining
        these personnel.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>An
        investment in our common stock may be less attractive because it is not traded
        on a recognized public market.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Our
        common stock has traded on the OTC Bulletin Board, or OTCBB since June 5,
        2006.
        From February 1, 2006 until June 5, 2006 we traded on the &#8220;Pink Sheets&#8221; after
        our common stock was de-listed from trading on AMEX. The OTCBB and Pink Sheets
        are viewed by most investors as a less desirable, and less liquid, marketplace.
        As a result, an investor may find it more difficult to purchase, dispose
        of or
        obtain accurate quotations as to the value of our common stock.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
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        <div>&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Our
        common stock is subject to Rules 15g-1 through 15g-9 under the Exchange Act,
        which imposes certain sales practice requirements on broker-dealers who sell
        our
        common stock to persons other than established customers and "accredited
        investors" (as defined in Rule 501(c) of the Securities Act). For transactions
        covered by this rule, a broker-dealer must make a special suitability
        determination for the purchaser and have received the purchaser's written
        consent to the transaction prior to the sale. This rule adversely affects
        the
        ability of broker-dealers to sell our common stock and purchasers of our
        common
        stock to sell their shares of our common stock.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Additionally,
        our common stock is subject to SEC regulations applicable to "penny stock."
        Penny stock includes any non-NASDAQ equity security that has a market price
        of
        less than $5.00 per share, subject to certain exceptions. The regulations
        require that prior to any non-exempt buy/sell transaction in a penny stock,
        a
        disclosure schedule proscribed by the SEC relating to the penny stock market
        must be delivered by a broker-dealer to the purchaser of such penny stock.
        This
        disclosure must include the amount of commissions payable to both the
        broker-dealer and the registered representative and current price quotations
        for
        our common stock. The regulations also require that monthly statements be
        sent
        to holders of penny stock that disclose recent price information for the
        penny
        stock and information of the limited market for penny stocks. These requirements
        adversely affect the market liquidity of our common stock.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>Ownership
        of our shares is concentrated in the hands of a few investors which could
        limit
        the ability of our other stockholders to influence the direction of the
        company.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">As
        calculated by the SEC rules of beneficial ownership, SCO Capital Partners
        LLC
        and affiliates, Larry N. Feinberg (Oracle Partners LP, Oracle Institutional
        Partners LP and Oracle Investment Management Inc.), and Jeffrey B. Davis
        each
        beneficially owned approximately 73.9%, 26.2%, and 14.8%, respectively, of
        our
        common stock as of June 30, 2007. </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Accordingly,
        they collectively may have the ability to significantly influence or determine
        the election of all of our directors or the outcome of most corporate actions
        requiring stockholder approval. They may exercise this ability in a manner
        that
        advances their best interests and not necessarily those of our other
        stockholders.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Provisions
        of our charter documents could discourage an acquisition of our company that
        would benefit our stockholders </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">and
        may
        have the effect of entrenching, and making it difficult to remove,
        management</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Provisions
        of our Certificate of Incorporation, By-laws and Stockholders Rights Plan
        may
        make it more difficult for a third party to acquire control of the Company,
        even
        if a change in control would benefit our stockholders. In particular, shares
        of
        our preferred stock may be issued in the future without further stockholder
        approval and upon such terms and conditions, and having such rights, privileges
        and preferences, as our Board of Directors may determine, including, for
        example, rights to convert into our common stock. The rights of the holders
        of
        our common stock will be subject to, and may be adversely affected by, the
        rights of the holders of any of our preferred stock that may be issued in
        the
        future. The issuance of our preferred stock, while providing desirable
        flexibility in connection with possible acquisitions and other corporate
        purposes, could have the effect of making it more difficult for a third party
        to
        acquire control of us. This could limit the price that certain investors
        might
        be willing to pay in the future for shares of our common stock and discourage
        these investors from acquiring a majority of our common stock. Further, the
        existence of these corporate governance provisions could have the effect
        of
        entrenching management and making it more difficult to change our
        management.</font></div>
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        <div>&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>Substantial
        sales of our common stock could lower our stock price.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">The
        market price for our common stock could drop as a result of sales of a large
        number of our presently outstanding shares or</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>&#160;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">shares
        that we may issue or be obligated to issue in the future</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">.
        All of
        the 3,566,394 shares of our common stock that are outstanding as of August
        13,
        2007, are unrestricted and freely tradable or tradable pursuant to a resale
        registration statement or under Rule 144 of the Securities Act or are covered
        by
        a registration rights agreement.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>Failure
        to achieve and maintain effective internal controls could have a material
        adverse effect on our business. </strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Effective
        internal controls are necessary for us to provide reliable financial reports.
        If
        we cannot provide reliable financial reports, our operating results could
        be
        harmed. All internal control systems, no matter how well designed, have inherent
        limitations. Therefore, even those systems determined to be effective can
        provide only reasonable assurance with respect to financial statement
        preparation and presentation. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">While
        we
        continue to evaluate and improve our internal controls, we cannot be certain
        that these measures will ensure that we implement and maintain adequate controls
        over our financial processes and reporting in the future. Any failure to
        implement required new or improved controls, or difficulties encountered
        in
        their implementation, could harm our operating results or cause us to fail
        to
        meet our reporting obligations. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Failure
        to achieve and maintain an effective internal control environment could cause
        investors to lose confidence in our reported financial information, which
        could
        have a material adverse effect on our stock price.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>PART
        II -- OTHER INFORMATION</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 63pt; TEXT-INDENT: -63pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>ITEM
        1</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 21pt;">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>LEGAL
        PROCEEDINGS</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 63pt; TEXT-INDENT: -63pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 63pt; TEXT-INDENT: -63pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">None</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 63pt; TEXT-INDENT: -63pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 63pt; TEXT-INDENT: -63pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>ITEM
        2</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 21pt;">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>UNREGISTERED
        SALES OF EQUITY SECURITIES AND USE OF PROCEEDS</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">None
        </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 63pt; TEXT-INDENT: -63pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>ITEM
        3</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 21pt;">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>DEFAULTS
        UPON SENIOR SECURITIES</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 63pt; TEXT-INDENT: -63pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">None</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 63pt; TEXT-INDENT: -63pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 63pt; TEXT-INDENT: -63pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>ITEM
        4</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 21pt;">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>SUBMISSION
        OF MATTERS TO A VOTE OF SECURITY HOLDERS</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">&#160;</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">The
        annual meeting of stockholders was held on May 17, 2007 in New York, N.Y.
        At
        that meeting the following matters were submitted to a vote of the stockholders
        of record. The proposals were approved by the stockholders, as
        follows:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 63pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt;" face="Wingdings 2">&#8212;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">
        Two
        directors were re-elected for three years terms with the following
        votes:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Mark
        J.
        Ahn; 2,651,938- For; and 16,108-Withheld Authority</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Mark
        J.
        Alvino; - 2,654,708- For; and 13,338- Withheld Authority</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">The
        terms
        of office as a director of Access of each of Jeffrey B. Davis, Esteban Cvitkovic
        MD, Stephen B. Howell MD, David P. Luci, Rosemary Mazanet MD PhD, John J.
        Meakem, Jr., and Stephen R. Seiler continued after the meeting.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
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        <div>&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 40.5pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt;" face="Wingdings 2">&#8212;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">
        A
        proposal to amend our 2005 Equity Incentive Plan, to increase the number
        of
        shares authorized for issuance was approved with 514,574- For; 124,744- Against;
        21,034- Abstain; and 1,874,837- Broker Non-votes.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt;" face="Wingdings 2">&#8212;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">
        A
        proposal to ratify the appointment of Whitley Penn LLP as independent certified
        public accounts for the Company for the fiscal year ending December 31, 2007
        was
        approved with 2,643,818- For; 2,370- Against; and 21,858- Abstain.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 63pt; TEXT-INDENT: -63pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>ITEM
        5</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 21pt;">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>OTHER
        INFORMATION</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 63pt; TEXT-INDENT: -63pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">None</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>ITEM
          6 <font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>EXHIBITS</strong></font></strong></font></div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 63pt; TEXT-INDENT: -63pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 126pt; TEXT-INDENT: -126pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Exhibits:
        </font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 22.5pt;">&#160;</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

            <tr valign="top" style="LINE-HEIGHT: 1.25;">
              <td style="WIDTH: 36pt">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">2.2</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Agreement
                  and Plan of Merger, by and among Access Pharmaceuticals, Inc.,
                  Somanta
                  Acquisition Corporation, Somanta Pharmaceuticals, Inc., Somanta
                  Incorporated and Somanta Limited, dated April 18, 2007. (Incorporated
                  by
                  reference to Exhibit 2.1 to our Form 8-K dated April 18,
                  2007)</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

            <tr valign="top" style="LINE-HEIGHT: 1.25;">
              <td style="WIDTH: 36pt">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">10.40</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Amendment
                  to 7.0% (Subject to Adjustment) Convertible Promissory Notes Due
                  July 27,
                  2007, dated July 25, 2007 by and between us and Oracle Partners
                  LP and
                  affiliates</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

            <tr valign="top" style="LINE-HEIGHT: 1.25;">
              <td style="WIDTH: 36pt">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">10.41</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Amendment
                  to Amended and Restated 7.5% Secured Convertible Promissory Notes
                  Due July
                  26, 2007, dated July 25, 2007 by and between us and SCO Capital
                  Partners
                  LLC, Beach Capital LLC and Lake End Capital
                  LLC</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

            <tr valign="top" style="LINE-HEIGHT: 1.25;">
              <td style="WIDTH: 36pt">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">10.42</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Note
                  Purchase Agreement dated April 26, 2007 between us and Somanta
                  Pharmaceuticals, Inc.</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

            <tr valign="top" style="LINE-HEIGHT: 1.25;">
              <td style="WIDTH: 36pt">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">31.1</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Certification
                  of Chief Executive Officer of Access Pharmaceuticals, Inc. pursuant
                  to
                  Rule 13a-14(a)/15d-14(a)</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

            <tr valign="top" style="LINE-HEIGHT: 1.25;">
              <td style="WIDTH: 36pt">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">31.2</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Certification
                  of Chief Financial Officer of Access Pharmaceuticals, Inc. pursuant
                  to
                  Rule 13a-14(a)/15d-14(a)</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

            <tr valign="top" style="LINE-HEIGHT: 1.25;">
              <td style="WIDTH: 36pt">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">32.1*</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Certification
                  of Chief Executive Officer of Access Pharmaceuticals, Inc. pursuant
                  to 18
                  U.S.C. Section 1350</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

            <tr valign="top" style="LINE-HEIGHT: 1.25;">
              <td style="WIDTH: 36pt">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">32.2*</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Certification
                  of Chief Financial Officer of Access Pharmaceuticals, Inc. pursuant
                  to 18
                  U.S.C. Section 1350</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">______________</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">*This
        exhibit shall not be deemed &#8220;filed for purposes of Section 18 of
        the</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Securities
        Exchange Act of 1934 or otherwise subject to the liabilities of
        that</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Section,
        nor shall it be deemed incorporated by reference in any filings under
        the</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Securities
        Act of 1933 or the Securities and Exchange Act of 1934, whether
        made</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">before
        or
        after the date hereof and irrespective of any general incorporation
        language</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">in
        any
        filings.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman;">22</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div style="WIDTH: 100%" align="left">
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
          </div>
        </div>
      </div><br><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong><u>SIGNATURES</u></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">In
        accordance with the requirements of the Exchange Act of 1934, the registrant
        caused this report to be signed on its behalf by the undersigned, thereunto
        duly
        authorized.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt;"></font><font id="TAB1" style="MARGIN-LEFT: 36pt;"></font><font id="TAB1" style="MARGIN-LEFT: 36pt;"></font><font id="TAB1" style="MARGIN-LEFT: 36pt;"></font><font id="TAB1" style="MARGIN-LEFT: 36pt;"></font><font id="TAB1" style="MARGIN-LEFT: 36pt;"></font><font id="TAB1" style="MARGIN-LEFT: 36pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">ACCESS
        PHARMACEUTICALS, INC.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">

            <tr>
              <td align="right" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Date:</font></div>
              </td>
              <td align="justify" valign="top" width="32%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">August
                  14 2007</font></div>
              </td>
              <td align="justify" valign="top" width="5%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">By:</font></div>
              </td>
              <td align="justify" valign="top" width="37%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">/s/
                  Stephen R. Seiler </font></div>
              </td>
            </tr>
            <tr>
              <td align="justify" colspan="2" valign="top" width="41%">&#160;</td>
              <td align="justify" valign="top" width="5%">&#160;</td>
              <td align="justify" valign="top" width="37%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Stephen
                  R. Seiler </font></div>
              </td>
            </tr>
            <tr>
              <td align="justify" colspan="2" valign="top" width="41%">&#160;</td>
              <td align="justify" valign="top" width="5%">&#160;</td>
              <td align="justify" valign="top" width="37%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">President
                  and Chief Executive Officer</font></div>
              </td>
            </tr>
            <tr>
              <td align="justify" colspan="2" valign="top" width="41%">&#160;</td>
              <td align="justify" valign="top" width="5%">&#160;</td>
              <td align="justify" valign="top" width="37%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">(Principal
                  Executive Officer)</font></div>
              </td>
            </tr>
            <tr>
              <td align="justify" colspan="2" valign="top" width="41%">&#160;</td>
              <td align="justify" valign="top" width="5%">&#160;</td>
              <td align="justify" valign="top" width="37%">&#160;</td>
            </tr>
            <tr>
              <td align="right" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Date:
                  </font></div>
              </td>
              <td align="justify" valign="top" width="32%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">August
                  14, 2007</font></div>
              </td>
              <td align="justify" valign="top" width="5%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">By:</font></div>
              </td>
              <td align="justify" valign="top" width="37%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">/s/
                  Stephen B. Thompson </font></div>
              </td>
            </tr>
            <tr>
              <td align="justify" colspan="2" valign="top" width="41%">&#160;</td>
              <td align="justify" valign="top" width="5%">&#160;</td>
              <td align="justify" valign="top" width="37%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Stephen
                  B. Thompson </font></div>
              </td>
            </tr>
            <tr>
              <td align="justify" colspan="2" valign="top" width="41%">&#160;</td>
              <td align="justify" valign="top" width="5%">&#160;</td>
              <td align="justify" valign="top" width="37%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Vice
                  President and Chief Financial Officer</font></div>
              </td>
            </tr>
            <tr>
              <td align="justify" colspan="2" valign="top" width="41%">&#160;</td>
              <td align="justify" valign="top" width="5%">&#160;</td>
              <td align="justify" valign="top" width="37%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">(Principal
                  Financial and Accounting Officer</font></div>
              </td>
            </tr>
            <tr>
              <td align="justify" colspan="2" valign="top" width="41%">&#160;</td>
              <td align="justify" valign="top" width="5%">&#160;</td>
              <td align="justify" valign="top" width="37%">&#160;</td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman;">23</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div style="WIDTH: 100%" align="left">
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
          </div>
        </div>
      </div><br><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>Access
        Pharmaceuticals, Inc. and Subsidiaries</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Condensed
        Consolidated Balance Sheets</font></div>
      <div align="left">
        <table border="0" cellpadding="0" cellspacing="0" id="ftable" width="100%">

            <tr>
              <td align="left" valign="bottom" width="63%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">ASSETS</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" colspan="2" valign="bottom" width="16%" style="BORDER-BOTTOM: #ffffff 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><u>June
                  30, 2007</u></font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">(unaudied)</font></div>
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              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" colspan="2" valign="bottom" width="16%" style="BORDER-BOTTOM: #ffffff 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><u>December
                  31, 2006</u></font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">(audited)</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="63%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Current
                  assets</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Cash
                  and cash equivalents </font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Short
                  term investments, at cost</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Receivables
                  </font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Prepaid
                  expenses and other current asset</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">$</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
              </td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">170,000</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">1,730,000</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">208,000</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">517,000</font></div>
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              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">$</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
              </td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">1,194,000</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">3,195,000</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">359,000</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">283,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="63%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">Total
                  current assets</div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: #ffffff solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">2,625,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">5,031,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: #ffffff solid">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="63%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Property
                  and equipment, net</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">190,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">212,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="63%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Debt
                  issuance costs, net</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">-</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">158,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="63%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Patents,
                  net</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">794,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">878,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="63%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Licenses,
                  net</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">-</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">25,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="63%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Other
                  assets</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">25,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">122,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="63%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Total
                  assets</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: #ffffff solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">$</font></div>
              </td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">3,634,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">$</font></div>
              </td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">6,426,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: #ffffff solid">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="63%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">LIABILITIES
                  AND STOCKHOLDERS' DEFICIT</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="63%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Current
                  liabilities</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Accounts
                  payable and accrued expenses</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Accrued
                  interest payable</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Deferred
                  revenues</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Current
                  portion of long-term debt, net of discount $0 at </font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><font id="TAB2" style="LETTER-SPACING: 9pt;">&#160;&#160;&#160;</font>&#160;June
                  30, 2007 and $2,062,000 at December 31, 2006</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">$</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
              </td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">1,350,000</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">1,217,000</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">173,000</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">10,895,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">$</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
              </td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">1,226,000</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">581,000</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">173,000</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">8,833,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="63%" style="BORDER-BOTTOM: 4px">
                <div style="MARGIN-LEFT: 27pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><font id="TAB2" style="LETTER-SPACING: 9pt;">&#160;</font>Total
                  current
                  liabilities</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">13,635,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">10,813,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="63%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">&#160;&#160;
                  Long-term debt</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">5,500,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">5,500,00</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="63%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">&#160;&#160;<font id="TAB2" style="LETTER-SPACING: 9pt;">&#160;&#160;
</font>Total
                  liabilities</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">19,135,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">16,313,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="63%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Commitments
                  and contingencies</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">-</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">-</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="63%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Stockholders'
                  deficit</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Preferred
                  stock - $.01 par value; authorized 2,000,000 shares;</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><font id="TAB2" style="LETTER-SPACING: 9pt;">&#160;&#160;&#160;</font>&#160;none
                  issued or outstanding</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Common
                  stock - $.01 par value; authorized 100,000,000 shares;</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><font id="TAB2" style="LETTER-SPACING: 9pt;">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">issued,
                  3,541,394 at June 30, 2007 and 3,535,108 at</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><font id="TAB2" style="LETTER-SPACING: 9pt;">&#160;&#160;&#160;</font>&#160;December
                  31,
                  2006</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Additional
                  paid-in capital</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Notes
                  receivable from stockholders</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Treasury
                  stock, at cost - 163 shares</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Accumulated
                  deficit </font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">-</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">35,000</font></div>
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              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">)</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">)</font></div>
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                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">-</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">35,000</font></div>
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                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
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              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: #ffffff 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">)</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">)</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">)</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="63%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman;">&#160;<font size="3">Total
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              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman;">&#160;</font></td>
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                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">(15,501,000</font>&#160;</div>
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              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff solid">
                <div><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">)</font></div>
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              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman;">&#160;</font></td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: black 2px solid">
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            <tr>
              <td align="left" valign="bottom" width="63%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><font id="TAB2" style="LETTER-SPACING: 9pt;">&#160;&#160;&#160;</font>&#160;Total
                  liabilities and stockholders' deficit</font></div>
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              <td width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
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                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">$</font></div>
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              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
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              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
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              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
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              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: #ffffff solid">&#160;</td>
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      <div style="DISPLAY: block; MARGIN-LEFT: 27pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 25.2pt" align="center">&#160;</div>
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        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
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          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman;">24</font></div>
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          </div>
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        <div id="HDR">
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      <div style="DISPLAY: block; MARGIN-LEFT: 27pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 25.2pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>Access
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      <div>&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 3.6pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Condensed
        Consolidated Statements of Operations</font></div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 3.6pt" align="justify">&#160;</div>
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        <table cellpadding="0" cellspacing="0" id="ftable" width="100%">

            <tr>
              <td align="left" valign="bottom" width="43%">&#160;</td>
              <td width="2%">&#160;</td>
              <td align="left" valign="bottom" width="1%">&#160;</td>
              <td align="right" colspan="5" valign="bottom" width="27%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">Three
                  months ended</div>
              </td>
              <td align="left" valign="bottom" width="1%">&#160;</td>
              <td align="right" colspan="4" valign="bottom" width="25%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">Six
                  months ended</div>
              </td>
              <td align="left" valign="bottom" width="1%">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="43%" style="BORDER-BOTTOM: #ffffff solid">&#160;</td>
              <td width="2%" style="BORDER-BOTTOM: #ffffff solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" colspan="4" valign="bottom" width="25%" style="BORDER-BOTTOM: black 2px solid">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">June
                  30, </div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: #ffffff solid">&#160;</td>
              <td align="right" colspan="4" valign="bottom" width="25%" style="BORDER-BOTTOM: black 2px solid">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">June
                  30, </div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: #ffffff solid">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="43%" style="BORDER-BOTTOM: #ffffff solid">&#160;</td>
              <td width="2%" style="BORDER-BOTTOM: #ffffff solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px" align="center"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">2007</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">2006</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">2007</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">2006</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: #ffffff solid">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="43%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="43%" style="BORDER-BOTTOM: 4px">&#160;
                <font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Expenses</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 6.6pt;">&#160;</font></td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="43%" style="BORDER-BOTTOM: 4px">
                <div style="MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;&#160;
<font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Research
                  and development</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">
                <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px">$</div>
              </td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">
                <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px">523,000</div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">
                <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px">$</div>
              </td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">
                <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px">634,000</div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">
                <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px">$</div>
              </td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">
                <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px">936,000</div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">
                <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px">$</div>
              </td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">
                <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px">1,390,000</div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="43%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 18pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">General
                  and administrative</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">1,113,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">663,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">2,252,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">1,329,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="43%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 18pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Depreciation
                  and amortization</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">74,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">77,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB2" style="MARGIN-LEFT: 0px; COLOR: black; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; LETTER-SPACING: -4.2pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">149,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">154,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="43%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 18pt;"></font><font id="TAB1" style="MARGIN-LEFT: 18pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Total
                  expenses</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">1,710,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">1,374,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">3,337,000
                  </font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB2" style="MARGIN-LEFT: 0px; COLOR: black; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; LETTER-SPACING: -4.2pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">2,873,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="43%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="43%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Loss
                  from operations</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">(1,710,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">)</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">(1,374,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">)</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">(3,337,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">)</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">(2,873,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">)</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="43%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="43%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Interest
                  and miscellaneous income</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">25,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">100,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">60,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">192,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="43%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Interest
                  and other expense</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">(424,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">)</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">(1,969,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">)</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">(2,959,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">)</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">(3,268,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">)</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="43%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Unrealized
                  gain (loss) on fair value of</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 18pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">warrants
                  and conversion feature</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">-</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div>&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">(88,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">)</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">-</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div>&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">(2,238,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: #ffffff 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">)</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="43%" style="BORDER-BOTTOM: #ffffff solid">&#160;</td>
              <td width="2%" style="BORDER-BOTTOM: #ffffff solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">(399,000</font>&#160;</div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff solid">)&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">(1,957,000</font>&#160;</div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff solid">)</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">(2,899,000</font>&#160;</div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff solid">)</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">
              </td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">(5,314,000</font>&#160;</div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: #ffffff solid">)</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="43%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Net
                  loss</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">$</font><font id="TAB2" style="MARGIN-LEFT: 0px; COLOR: black; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; LETTER-SPACING: -4.2pt;"></font></div>
              </td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB2" style="MARGIN-LEFT: 0px; COLOR: black; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; LETTER-SPACING: -4.2pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">(2,109,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB2" style="MARGIN-LEFT: 0px; COLOR: black; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; LETTER-SPACING: -4.2pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">)</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">$</font><font id="TAB2" style="MARGIN-LEFT: 0px; COLOR: black; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; LETTER-SPACING: -4.2pt;"></font></div>
              </td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB2" style="MARGIN-LEFT: 0px; COLOR: black; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; LETTER-SPACING: -4.2pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">(3,331,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB2" style="MARGIN-LEFT: 0px; COLOR: black; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; LETTER-SPACING: -4.2pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">)</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">$</font><font id="TAB2" style="MARGIN-LEFT: 0px; COLOR: black; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; LETTER-SPACING: -4.2pt;"></font></div>
              </td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB2" style="MARGIN-LEFT: 0px; COLOR: black; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; LETTER-SPACING: -4.2pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">(6,236,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB2" style="MARGIN-LEFT: 0px; COLOR: black; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; LETTER-SPACING: -4.2pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">)</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">$</font><font id="TAB2" style="MARGIN-LEFT: 0px; COLOR: black; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; LETTER-SPACING: -4.2pt;"></font></div>
              </td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB2" style="MARGIN-LEFT: 0px; COLOR: black; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; LETTER-SPACING: -4.2pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">(8,187,000</font></div>
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              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
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                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB2" style="MARGIN-LEFT: 0px; COLOR: black; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; LETTER-SPACING: -4.2pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">)</font></div>
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            <tr>
              <td align="left" valign="bottom" width="43%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="43%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Basic
                  and diluted loss per common share</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 18pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Net
                  loss allocable to common</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">shareholders</font></div>
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              <td width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">$</font><font id="TAB2" style="MARGIN-LEFT: 0px; COLOR: black; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; LETTER-SPACING: -4.2pt;"></font></div>
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              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB2" style="MARGIN-LEFT: 0px; COLOR: black; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; LETTER-SPACING: -4.2pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">(0.60</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB2" style="MARGIN-LEFT: 0px; COLOR: black; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; LETTER-SPACING: -4.2pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">)</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">$</font><font id="TAB2" style="MARGIN-LEFT: 0px; COLOR: black; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; LETTER-SPACING: -4.2pt;"></font></div>
              </td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB2" style="MARGIN-LEFT: 0px; COLOR: black; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; LETTER-SPACING: -4.2pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">(0.94</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB2" style="MARGIN-LEFT: 0px; COLOR: black; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; LETTER-SPACING: -4.2pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">)</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">$</div>
              </td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">(1.76</div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">)</div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">$</font></div>
              </td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">(2.32</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">)</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="43%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="43%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Weighted
                  average basic and diluted</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 18pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">common
                  shares outstanding</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black double">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">3,538,409</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black double">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">3,530,931</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black double">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">3,536,812</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black double">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">3,529,887</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: #ffffff solid">&#160;</td>
            </tr>

        </table>
      </div>
      <div align="justify"><br></div>
      <div align="justify"><br></div>
      <div align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">The
        accompanying notes are an integral part of these statements.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 27pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 25.2pt" align="justify"><br></div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman;">25</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 27pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 25.2pt" align="center"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>Access
        Pharmaceuticals, Inc. and Subsidiaries</strong></font></div>
      <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Condensed
        Consolidated Statements of Cash Flows</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 21.25pt;">&#160;</font></div>
      <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">(unaudited)</font></div>
      <div align="left">
        <table border="0" cellpadding="0" cellspacing="0" id="ftable" width="100%">

            <tr>
              <td align="left" valign="bottom" width="60%" style="BORDER-BOTTOM: #ffffff solid">&#160;</td>
              <td width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" colspan="5" valign="bottom" width="34%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Six
                  months ended June 30,</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="60%" style="BORDER-BOTTOM: #ffffff solid">&#160;</td>
              <td width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px" align="center"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">2007</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">2006</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="60%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Cash
                  flows from operating activities:</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="60%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Net
                  loss</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">$</font></div>
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              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">(6,236,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">)</font></div>
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              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">$</font></div>
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              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">(8,187,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">)</font></div>
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            </tr>
            <tr>
              <td align="left" valign="bottom" width="60%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 9pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Adjustments
                  to reconcile net loss to cash used </font></div>
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              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="60%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 9pt;"></font><font id="TAB1" style="MARGIN-LEFT: 18pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Depreciation
                  and amortization</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 1.8pt;">&#160;</font></div>
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              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">149,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">154,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>

        </table>
      </div>
      <div align="left">
        <table cellpadding="0" cellspacing="0" id="ftable" width="100%">

            <tr>
              <td align="left" valign="bottom" width="60%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 9pt;"></font><font id="TAB1" style="MARGIN-LEFT: 18pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Stock
                  option expense</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">603,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">123,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="60%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 27pt; TEXT-INDENT: -27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 9pt;"></font><font id="TAB1" style="MARGIN-LEFT: 18pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Stock
                  compensation expense</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">-</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">46,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="60%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 27pt; TEXT-INDENT: -27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 9pt;"></font><font id="TAB1" style="MARGIN-LEFT: 18pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Amortization
                  of debt costs and discounts</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">2,316,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">2,588,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="60%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 27pt; TEXT-INDENT: -27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 9pt;"></font><font id="TAB1" style="MARGIN-LEFT: 18pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Unrealized
                  loss on fair value of warrants and</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 27pt; TEXT-INDENT: -27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 9pt;"></font><font id="TAB1" style="MARGIN-LEFT: 18pt;"></font><font id="TAB1" style="MARGIN-LEFT: 18pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">conversion
                  feature</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">-</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">2,238,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="60%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 27pt; TEXT-INDENT: -27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 9pt;"></font><font id="TAB1" style="MARGIN-LEFT: 18pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Change
                  in operating assets and liabilities:</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="60%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 9pt;"></font><font id="TAB1" style="MARGIN-LEFT: 18pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Receivables</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">151,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">-</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="60%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: -1.8pt;">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 5.4pt;">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Prepaid
                  expenses and other current assets</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">(234,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">)</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">116,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="60%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 9pt;"></font><font id="TAB1" style="MARGIN-LEFT: 18pt;"></font><font id="TAB1" style="MARGIN-LEFT: 18pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Other
                  assets</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">1,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">92,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="60%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 9pt;"></font><font id="TAB1" style="MARGIN-LEFT: 18pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Accounts
                  payable and accrued expenses</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">124,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">(1,008,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">)</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="60%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 9pt;"></font><font id="TAB1" style="MARGIN-LEFT: 18pt;"></font><font id="TAB1" style="MARGIN-LEFT: 18pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Accrued
                  interest payable </font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">636,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">520,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="60%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 9pt;"></font><font id="TAB1" style="MARGIN-LEFT: 18pt;"></font><font id="TAB1" style="MARGIN-LEFT: 18pt;"></font><font id="TAB1" style="MARGIN-LEFT: 27pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Net
                  cash used in operating activities </font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">(2,490,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">)</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">(3,318,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">)</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="60%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="60%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Cash
                  flows from investing activities:</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="60%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 27pt; TEXT-INDENT: -9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Capital
                  expenditures</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">(18,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">)</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">(3,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">)</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="60%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 9pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Redemptions
                  of short term investments and </font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 9pt;"></font><font id="TAB1" style="MARGIN-LEFT: 18pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">certificates
                  of deposit, net</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">1,465,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">(63,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">)</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="60%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 9pt;"></font><font id="TAB1" style="MARGIN-LEFT: 18pt;"></font><font id="TAB1" style="MARGIN-LEFT: 18pt;"></font><font id="TAB1" style="MARGIN-LEFT: 27pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Net
                  cash provided by (used in) investing activities</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">1,447,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">(66,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">)</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="60%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="60%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Cash
                  flows from financing activities:</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="60%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Payments
                  of notes payable</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">-</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">(68,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">)</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="60%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 27pt; TEXT-INDENT: -9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Proceeds
                  from secured convertible notes payable</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">-</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">4,532,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="60%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 9pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Exercise
                  of stock options</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">19,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">-</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="60%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 9pt;"></font><font id="TAB1" style="MARGIN-LEFT: 18pt;"></font><font id="TAB1" style="MARGIN-LEFT: 18pt;"></font><font id="TAB1" style="MARGIN-LEFT: 27pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Net
                  cash provided by financing activities</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">19,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">4,464,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="60%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="60%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Net
                  (decrease) increase in cash and cash equivalents</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">(1,024,000</font></div>
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              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">
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              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">1,080,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
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            <tr>
              <td align="left" valign="bottom" width="60%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Cash
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              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: black 2px solid">
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              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="60%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Cash
                  and cash equivalents at end of period</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">$</font></div>
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              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: black double">
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              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black double">
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              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: black double">
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              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black double">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="60%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="60%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="60%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><em>Supplemental
                  cash flow information:</em></font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="60%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><em>Cash
                  paid for interest</em></font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;"><em>$</em></font></div>
              </td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;"><em>8,000</em></font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;"><em>$</em></font></div>
              </td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;"><em>4,000</em></font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="60%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 3.6pt" align="center"><br><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">The
        accompanying notes are an integral part of these statements</font><br></div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman;">26</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
        <div>&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 3.6pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>Access
        Pharmaceuticals, Inc. and Subsidiaries</strong></font></div>
      <div>&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Notes
        to
        Condensed Consolidated Financial Statements</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Six
        Months Ended June 30, 2007 and 2006</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">(unaudited)</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><strong>(1)
<font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>Interim
        Financial Statements</strong></font></strong></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">The
        consolidated balance sheet as of June 30, 2007 and the consolidated statements
        of operations and cash flows for the three and six months ended June 30,
        2007
        and 2006 were prepared by management without audit. In the opinion of
        management, all adjustments, consisting only of normal recurring adjustments,
        except as otherwise disclosed, necessary for the fair presentation of the
        financial position, results of operations, and changes in financial position
        for
        such periods, have been made. All share and per share information reflect
        a one
        for five reverse stock split effected on June 5, 2006.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Certain
        information and footnote disclosures normally included in financial statements
        prepared in accordance with accounting principles generally accepted in the
        United States of America have been condensed or omitted. It is suggested
        that
        these interim financial statements be read in conjunction with the consolidated
        financial statements and notes thereto included in our Annual Report on Form
        10-KSB for the year ended December 31, 2006. The results of operations for
        the
        period ended June 30, 2007 are not necessarily indicative of the operating
        results which may be expected for a full year. The consolidated balance sheet
        as
        of December 31, 2006 contains financial information taken from the audited
        financial statements as of that date. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">The
        report of our independent registered public accounting firm for the fiscal
        year
        ended December 31, 2006 contained a fourth explanatory paragraph to reflect
        its
        significant doubt about our ability to continue a going concern as a result
        of
        our history of losses and our liquidity position, as discussed herein and
        in
        this Form 10-QSB. If we are unable to obtain adequate capital funding in
        the
        future, we may not be able to continue as a going concern, which would have
        an
        adverse effect on our business and operations, and investors&#8217; investment in us
        may decline.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>(2)</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt;">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>Intangible
        Assets</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Intangible
        assets consist of the following (in thousands):</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div align="center">
        <table border="0" cellpadding="0" cellspacing="0" id="ftable" width="100%">

            <tr>
              <td align="left" valign="bottom" width="25%" style="BORDER-BOTTOM: #ffffff solid">&#160;</td>
              <td width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td colspan="5" valign="bottom" width="32%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">June
                  30, 2007</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td colspan="5" valign="bottom" width="31%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">December
                  31, 2006</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="25%" style="BORDER-BOTTOM: #ffffff solid">&#160;</td>
              <td width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td colspan="2" valign="bottom" width="15%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Gross</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">carrying</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">value</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="justify" colspan="2" valign="bottom" width="15%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Accumulated</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">amortization</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td colspan="2" valign="bottom" width="15%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Gross</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">carrying</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">value</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="justify" colspan="2" valign="bottom" width="14%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Accumulated</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">amortization</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="25%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Amortizable
                  intangible assets</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 18pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Patents</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 18pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Licenses</font></div>
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              <td width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">$</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB2" style="MARGIN-LEFT: 0px; COLOR: black; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; LETTER-SPACING: 27pt;"></font>&#160;</div>
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              <td align="right" valign="bottom" width="13%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB2" style="MARGIN-LEFT: 0px; COLOR: black; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; LETTER-SPACING: 27pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">1,680</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">500</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">$</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB2" style="MARGIN-LEFT: 0px; COLOR: black; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; LETTER-SPACING: 3.6pt;"></font>&#160;</div>
              </td>
              <td align="right" valign="bottom" width="13%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB2" style="MARGIN-LEFT: 0px; COLOR: black; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; LETTER-SPACING: 3.6pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">886</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">500</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">$</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
              </td>
              <td align="right" valign="bottom" width="13%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">1,680</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">500</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">$</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
              </td>
              <td align="right" valign="bottom" width="13%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB2" style="MARGIN-LEFT: 0px; COLOR: black; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; LETTER-SPACING: 27pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">802</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB1" style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">475</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black double">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="25%" style="BORDER-BOTTOM: #ffffff solid">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman;"><font id="TAB2" style="LETTER-SPACING: 9pt;">&#160;&#160;&#160;</font>&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Total</font></font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: #ffffff solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman;">&#160;</font></td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black double">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman;">&#160;<font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">$</font></font></div>
              </td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB2" style="MARGIN-LEFT: 0px; COLOR: black; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; LETTER-SPACING: 27pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">2,180</font>&#160;</div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman;">&#160;</font></td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black double">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman;"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">$</font></font></div>
              </td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB2" style="MARGIN-LEFT: 0px; COLOR: black; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; LETTER-SPACING: 3.6pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">1,386</font>&#160;</div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman;">&#160;</font></td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">$</font></div>
              </td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">2,180</font>&#160;</div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: #ffffff solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman;">&#160;</font></td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black double">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman;"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">$</font></font></div>
              </td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font id="TAB2" style="MARGIN-LEFT: 0px; COLOR: black; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; LETTER-SPACING: 3.6pt;"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">1,277</font>&#160;</div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: #ffffff solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman;">&#160;</font></td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br>&#160;</div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman;">27</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
        <div>&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Amortization
        expense related to intangible assets totaled $54,000 and $54,000 for each
        of the
        three months ended June 30, 2007 and 2006, respectively and totaled $109,000
        and
        $109,000 for each of the six months ended June 30, 2007 and 2006. The aggregate
        estimated amortization expense for intangible assets remaining as of June
        30 is
        as follows (in thousands):</font></div>
      <div>&#160;</div>
      <div>&#160;</div>
      <div style="MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
        <table bgcolor="white" border="0" cellpadding="0" cellspacing="0" id="ftable" width="34%">

            <tr bgcolor="white">
              <td align="left" valign="bottom" width="20%" style="BORDER-BOTTOM: 4px">&#160;2007</td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td colspan="2" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right">&#160;$<font id="TAB2" style="COLOR: black; LETTER-SPACING: 24pt;">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">84</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td align="left" valign="bottom" width="20%" style="BORDER-BOTTOM: 4px">&#160;2008</td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td colspan="2" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right">&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">168</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td align="left" valign="bottom" width="20%" style="BORDER-BOTTOM: 4px">&#160;2009<font id="TAB2" style="COLOR: black; LETTER-SPACING: -4.5pt;">&#160;</font></td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td colspan="2" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right">&#160;168</div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td align="left" valign="bottom" width="20%" style="BORDER-BOTTOM: 4px">&#160;2010</td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td colspan="2" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right">&#160;168</div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td align="left" valign="bottom" width="20%" style="BORDER-BOTTOM: 4px">&#160;2011<font id="TAB2" style="COLOR: black; LETTER-SPACING: 171pt;">&#160;</font></td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td colspan="2" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right">&#160;168</div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td align="left" valign="bottom" width="20%" style="BORDER-BOTTOM: #ffffff solid">&#160;Thereafter</td>
              <td width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td colspan="2" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right">&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">38</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td align="left" valign="bottom" width="20%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td colspan="2" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td align="left" valign="bottom" width="20%" style="BORDER-BOTTOM: 4px">&#160;Total</td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">
                <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px">$
<font id="TAB2" style="MARGIN-LEFT: 0px; COLOR: black; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; LETTER-SPACING: 171pt;"></font></div>
              </td>
              <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: 4px">
                <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">794</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>

        </table>
      </div>
      <div>&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>(3)</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt;">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>Liquidity</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">The
        Company incurred significant losses from continuing operations of $2.1 million
        for the quarter ended June 30, 2007, $6.2 million for the six months ended
        June
        30, 2007, $13.3 million for the year ended December 31, 2006 and $7.6 million
        for the year ended December 31, 2005. Additionally, at June 30, 2007, our
        working capital deficit is $11.0 million. As of June 30, 2007, we
        did</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">
        not have
        sufficient funds to repay our convertible notes at their maturity and support
        our working capital and operating requirements. Our current funds will allow
        us
        to support our working capital and operating requirements for four months.
        We do
        not have funds to pay the obligations which are due in September 2007 and
        will
        have to raise more funds and/or attempt to restructure the convertible
        notes.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>(4)
        </strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt;">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>Stock
        Based Compensation</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">For
        the
        second quarter, we recognized stock-based compensation expense of $311,000
        in
        2007 and $28,000 in 2006. For the six months we recognized stock-based
        compensation expense of $603,000 in 2007 and $123,000 in 2006. For the second
        quarter of 2007, we did not grant any stock options under our 2005 Equity
        Incentive Plan.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br>&#160;</div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman;">28</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>(5)
        </strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt;">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>Income
        Taxes</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">In
        2006,
        the Financial Accounting Standards Board issued FASB Interpretation No.&#160;48
        (FIN 48)</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><em>,</em></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">
        which
        clarifies the accounting for uncertainty in tax positions. FIN 48 requires
        that
        we recognize in our financial statements the impact of a tax position, if
        that
        position is more likely than not of being sustained on audit, based on the
        technical merits of the position. We adopted the provisions of FIN 48 as
        of the
        beginning of our 2007 fiscal year. There was no effect as a result of our
        adoption of FIN 48. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">As
        of the
        beginning of our 2007 fiscal year, due to our cumulative net losses we do
        not
        have any reserves for income taxes because no taxes are due. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">We
        file
        income tax returns in the U.S. federal jurisdiction and various state
        jurisdictions. A number of years may elapse before an uncertain tax position
        is
        audited and finally resolved. While it is often difficult to predict the
        final
        outcome or the timing of resolution of any particular uncertain tax position,
        we
        believe that our reserves for income taxes reflect the most probable outcome.
        We
        adjust these reserves, as well as the related interest, in light of changing
        facts and circumstances. Settlement of any particular position would usually
        require the use of cash. The resolution of a matter would be recognized as
        an
        adjustment to our provision for income taxes and our effective tax rate in
        the
        period of resolution. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>(6)
        Debt</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div align="left">
        <table border="0" cellpadding="0" cellspacing="0" id="ftable" width="90%">

            <tr>
              <td align="left" valign="bottom" width="40%" style="BORDER-BOTTOM: #ffffff solid">&#160;</td>
              <td width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" colspan="2" valign="bottom" width="12%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">June
                  30, </font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">2007</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="left" colspan="2" valign="bottom" width="12%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">December
                  31, </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">2006</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="40%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Convertible
                  note - Oracle and affiliates</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">$</font></div>
              </td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">4,015,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">$</font></div>
              </td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">4,015,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="40%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Convertible
                  note </font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">5,500,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">5,500,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="40%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Convertible
                  note </font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">880,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">880,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="40%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">10,395,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">10,395,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="40%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Discount</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">-</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">(456,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">)</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="40%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">10,395,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">9,939,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="40%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="40%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Convertible
                  note - SCO and affiliates</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">6,000,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">6,000,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="40%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Discount</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">-</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">(1,606,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">)</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="40%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">6,000,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">4,394,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="40%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="40%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Total</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">$</font></div>
              </td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">16,395,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black double">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">$</font></div>
              </td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">14,333,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black double">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="40%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="40%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Short
                  term</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">$</font></div>
              </td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">10,895,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">$</font></div>
              </td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">8,833,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="40%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Long
                  term</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">5,500,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">5,500,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="40%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">Total</font></div>
              </td>
              <td width="2%" style="BORDER-BOTTOM: #ffffff 2px solid">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">$</font></div>
              </td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">16,395,000</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black double">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">$</font></div>
              </td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black double">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman;">14,333,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black double">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="40%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: 4px">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 4px">&#160;</td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;"><strong>(7)
        Subsequent Events</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">On
        July
        25, 2007, Access and SCO Capital Partners LLC and affiliates (&#8220;SCO&#8221;) agreed to
        extend the maturity date of an aggregate principal amount of $6,000,000 of
        7.5%
        convertible notes to September 6, 2007 from July 26, 2007. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman;">On
        July
        25, 2007, Access and Oracle Partners LP and affiliates (&#8220;Oracle&#8221;) agreed to
        extend the maturity date of an aggregate principal amount of $4,015,000 of
        7.7%
        convertible notes to September 7, 2007 from July 27, 2007.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt;">29</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
      </div>
    </div>
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.40
<SEQUENCE>2
<FILENAME>ex_10-40.htm
<DESCRIPTION>AMENDMENT TO ORACLE AND AFFILIATES CONV NOTES
<TEXT>
<html>
  <head>
    <title>
      Unassociated Document
</title>
<!-- Licensed to: Access Pharmaceuticals, Inc.-->
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<!-- Copyright 2007 EDGARfilings, Ltd., an IEC company.-->
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</head>
  <body bgcolor="#ffffff" style="MARGIN: 12%; TEXT-INDENT: 0pt"><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>EXHIBIT
        10.40</strong></font></div>
      <div>
        <hr style="MARGIN-TOP: -5px; COLOR: #000000" noshade size="4">
        <hr style="MARGIN-TOP: -10px; COLOR: #000000" noshade size="1">
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">AMENDMENT
        TO 7.0% (SUBJECT TO ADJUSTMENT) CONVERTIBLE </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">PROMISSORY
        NOTES DUE JULY 27, 2007</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">This
        Amendment to 7.0% (Subject to Adjustment) Convertible Promissory Notes
        previously Due September 13, 2005, dated as of July 25, 2007 and currently
        due
        July 27, 2007 (the "</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Amendment</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">"),
        is by
        and among Access Pharmaceuticals, Inc., a Delaware corporation (the
        "</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Company</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">"),
        and
        each of Oracle Partners LP, Oracle Institutional Partners LP, SAM Oracle
        Investments Inc. and Oracle Offshore Ltd. (each, a "</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Holder</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">"),
        amending certain provisions of those certain 7.0% (Subject to Adjustment)
        Convertible Promissory Notes Due April 28, 2007 (each as amended and in effect
        from time to time, a "</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Note</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">")
        from
        the Company to each Holder in the original principal amount of $2,524,500,
        $698,500, $660,000 and $132,000, respectively. Terms not otherwise defined
        herein which are defined in any Note shall have the same respective meanings
        herein as therein.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">WHEREAS,
        the Company and each Holder have agreed to modify certain terms and conditions
        of each Note as specifically set forth in this Amendment.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NOW,
        THEREFORE, in consideration of the mutual agreements contained herein and
        for
        other good and valuable consideration, the receipt and sufficiency of which
        are
        hereby acknowledged, the parties hereto agree as follows:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">1.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Amendment
        to Each Note</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
        Each
        Note is hereby amended as follows:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(a)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">The
        title
        of each Note is hereby deleted in its entirety and replaced with the
        following:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">"7.0%
        (Subject to Adjustment) Convertible Promissory Note Due September
        7,&#160;2007."</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(b)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">All
        references to "July 27, 2007" in each Note are hereby deleted and replaced
        with
        "September 7, 2007." </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.41
<SEQUENCE>3
<FILENAME>ex_10-41.htm
<DESCRIPTION>AMENDMENT TO SCO AND AFFILIATES CONV NOTES
<TEXT>
<html>
  <head>
    <title>
      Unassociated Document
</title>
<!-- Licensed to: Access Pharmaceuticals, Inc.-->
<!-- Document Created using EDGARizer 3.9.9.131 -->
<!-- Copyright 2007 EDGARfilings, Ltd., an IEC company.-->
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</head>
  <body bgcolor="#ffffff" style="MARGIN: 12%; TEXT-INDENT: 0pt"><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>EXHIBIT
      10.41</strong></font></div>
    <div>
      <hr style="MARGIN-TOP: -5px; COLOR: #000000" noshade size="4">
      <hr style="MARGIN-TOP: -10px; COLOR: #000000" noshade size="1">
    </div>
    <div>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">AMENDMENT
      TO AMENDED AND RESTATED 7.5% SECURED CONVERTIBLE </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">PROMISSORY
      NOTE DUE JULY 26, 2007</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">This
      Amendment dated July 25, 2007, (the &#8220;Amendment&#8221;) amends certain provisions of
      the Amended and Restated 7.5% Secured Convertible Promissory Note in the
      original principal amount of $4,000,000.00, issued by Access Pharmaceuticals,
      Inc., a Delaware corporation (the &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Company</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#8221;)
      (No.
      PN-2006-1-1AR), due July 26, 2007 (the &#8220;Note&#8221;), and is by and between the
      Company and SCO Capital Partners LLC (&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Holder</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#8221;).
      Terms
      not otherwise defined herein which are defined in the Note shall have the same
      respective meanings herein as therein.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">WHEREAS,
      the Company and Holder have agreed to modify certain terms and conditions of
      the
      Note as specifically set forth in this Amendment.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NOW,
      THEREFORE, in consideration of the mutual agreements contained herein and for
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, the parties hereto agree as follows:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">1.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Amendment
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      The
      Note is hereby amended as follows:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">All
      references to "July 26, 2007" in the Note are hereby deleted and replaced with
      "September 6, 2007." </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">2.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Condition
      to Effectiveness</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      This
      Amendment shall not become effective until Holder receives a counterpart of
      this
      Amendment executed by the Company.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">3.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Ratification,
      Etc</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      Except
      as expressly amended hereby, all terms and conditions of the Note, as amended,
      are hereby ratified and confirmed in all respects and shall continue in full
      force and effect. The obligations under the Note shall be deemed to be
      continuously outstanding and shall not be deemed to have been repaid and
      readvanced or refinanced hereunder or hereby. The Note and this Amendment shall
      be read and construed as a single agreement. All references to the Note shall
      hereafter refer to such Note, as amended hereby.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">4.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>No
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      THE
      COMPANY AND HOLDER HAVE ENTERED INTO THIS AMENDMENT SOLELY TO AMEND CERTAIN
      OF
      THE TERMS OF THE NOTE. THEY DO NOT INTEND THIS AMENDMENT NOR THE TRANSACTIONS
      CONTEMPLATED HEREBY TO BE, AND THIS AMENDMENT AND THE TRANSACTION CONTEMPLATED
      HEREBY SHALL NOT BE CONSTRUED TO BE, A NOVATION OF ANY OF THE OBLIGATIONS OWING
      UNDER OR IN CONNECTION WITH THE NOTE.</font></div>
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      contained herein shall constitute a waiver of, impair or otherwise affect,
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      thereon.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">6.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Counterparts</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
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      instrument.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">7.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Governing</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Law</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">IN
      WITNESS WHEREOF, the parties hereto have executed this Amendment as a document
      under seal as of the date first above written.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 216pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Company</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">:</font></div>
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      PHARMACEUTICALS, INC.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: -9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">By:
      </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>/s/
      Stephen B. Thompson</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 234pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Name:
      Stephen B. Thompson</font></div>
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      Vice President, Chief Financial Officer</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 216pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Holder</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 216pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 216pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: -9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">By:
      </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>/s/
      Steven H. Rouhandeh</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 234pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Name:
      Steven H. Rouhandeh</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 234pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Title:
      Chairman</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 234pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 234pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div><br>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">AMENDMENT
      TO AMENDED AND RESTATED 7.5% SECURED CONVERTIBLE </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">PROMISSORY
      NOTE DUE JULY 26, 2007</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">This
      Amendment dated July 25, 2007, (the &#8220;Amendment&#8221;) amends certain provisions of
      the Amended and Restated 7.5% Secured Convertible Promissory Note in the
      original principal amount of $400,000.00, issued by Access Pharmaceuticals,
      Inc., a Delaware corporation (the &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Company</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#8221;)
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      PN-2006-FO1-1AR), due July 26, 2007 (the &#8220;Note&#8221;), and is by and between the
      Company and SCO Capital Partners LLC (&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Holder</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#8221;).
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      not otherwise defined herein which are defined in the Note shall have the same
      respective meanings herein as therein.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">WHEREAS,
      the Company and Holder have agreed to modify certain terms and conditions of
      the
      Note as specifically set forth in this Amendment.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NOW,
      THEREFORE, in consideration of the mutual agreements contained herein and for
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, the parties hereto agree as follows:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">1.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Amendment
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      Note is hereby amended as follows:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">All
      references to "July 26, 2007" in the Note are hereby deleted and replaced with
      "September 6, 2007." </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">2.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Condition
      to Effectiveness</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      This
      Amendment shall not become effective until Holder receives a counterpart of
      this
      Amendment executed by the Company.</font></div>
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      Etc</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      Except
      as expressly amended hereby, all terms and conditions of the Note, as amended,
      are hereby ratified and confirmed in all respects and shall continue in full
      force and effect. The obligations under the Note shall be deemed to be
      continuously outstanding and shall not be deemed to have been repaid and
      readvanced or refinanced hereunder or hereby. The Note and this Amendment shall
      be read and construed as a single agreement. All references to the Note shall
      hereafter refer to such Note, as amended hereby.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">4.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>No
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      THE
      COMPANY AND HOLDER HAVE ENTERED INTO THIS AMENDMENT SOLELY TO AMEND CERTAIN
      OF
      THE TERMS OF THE NOTE. THEY DO NOT INTEND THIS AMENDMENT NOR THE TRANSACTIONS
      CONTEMPLATED HEREBY TO BE, AND THIS AMENDMENT AND THE TRANSACTION CONTEMPLATED
      HEREBY SHALL NOT BE CONSTRUED TO BE, A NOVATION OF ANY OF THE OBLIGATIONS OWING
      UNDER OR IN CONNECTION WITH THE NOTE.</font></div>
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      Nothing
      contained herein shall constitute a waiver of, impair or otherwise affect,
      any
      obligation of the Company under any Note or any rights of any Holder consequent
      thereon.</font></div>
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      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">&#160;</div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
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      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">&#160;</div>
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      <div>&#160;</div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">6.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Counterparts</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      This
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      be
      deemed an original but which together shall constitute one and the same
      instrument.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">7.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Governing</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Law</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      This
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">IN
      WITNESS WHEREOF, the parties hereto have executed this Amendment as a document
      under seal as of the date first above written.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 216pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Company</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 216pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: -9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">ACCESS
      PHARMACEUTICALS, INC.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: -9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">By:
      </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>/s/
      Stephen B. Thompson</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 234pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Name:
      Stephen B. Thompson</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 234pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Title:
      Vice President, Chief Financial Officer</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 216pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Holder</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 216pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 216pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: -9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">By:
      </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>/s/
      Steven H. Rouhandeh</u></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: -9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 234pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div><br>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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      TO AMENDED AND RESTATED 7.5% SECURED CONVERTIBLE </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">PROMISSORY
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">This
      Amendment dated July 25, 2007, (the &#8220;Amendment&#8221;) amends certain provisions of
      the Amended and Restated 7.5% Secured Convertible Promissory Note in the
      original principal amount of $400,000.00, issued by Access Pharmaceuticals,
      Inc., a Delaware corporation (the &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Company</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#8221;)
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      PN-2006-DEC-1-1AR), due July 26, 2007 (the &#8220;Note&#8221;), and is by and between the
      Company and SCO Capital Partners LLC (&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Holder</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#8221;).
      Terms
      not otherwise defined herein which are defined in the Note shall have the same
      respective meanings herein as therein.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">WHEREAS,
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      Note as specifically set forth in this Amendment.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NOW,
      THEREFORE, in consideration of the mutual agreements contained herein and for
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, the parties hereto agree as follows:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">1.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Amendment
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      Note is hereby amended as follows:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
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      references to "July 26, 2007" in the Note are hereby deleted and replaced with
      "September 6, 2007." </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">2.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Condition
      to Effectiveness</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      This
      Amendment shall not become effective until Holder receives a counterpart of
      this
      Amendment executed by the Company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">3.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Ratification,
      Etc</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      Except
      as expressly amended hereby, all terms and conditions of the Note, as amended,
      are hereby ratified and confirmed in all respects and shall continue in full
      force and effect. The obligations under the Note shall be deemed to be
      continuously outstanding and shall not be deemed to have been repaid and
      readvanced or refinanced hereunder or hereby. The Note and this Amendment shall
      be read and construed as a single agreement. All references to the Note shall
      hereafter refer to such Note, as amended hereby.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">4.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>No
      Novation</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      THE
      COMPANY AND HOLDER HAVE ENTERED INTO THIS AMENDMENT SOLELY TO AMEND CERTAIN
      OF
      THE TERMS OF THE NOTE. THEY DO NOT INTEND THIS AMENDMENT NOR THE TRANSACTIONS
      CONTEMPLATED HEREBY TO BE, AND THIS AMENDMENT AND THE TRANSACTION CONTEMPLATED
      HEREBY SHALL NOT BE CONSTRUED TO BE, A NOVATION OF ANY OF THE OBLIGATIONS OWING
      UNDER OR IN CONNECTION WITH THE NOTE.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">5.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>No
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      contained herein shall constitute a waiver of, impair or otherwise affect,
      any
      obligation of the Company under any Note or any rights of any Holder consequent
      thereon.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
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        <div id="GLFTR" style="WIDTH: 100%" align="left">&#160;</div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">&#160;</div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">&#160;</div>
      </div>
      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">6.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Counterparts</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      This
      Amendment may be executed in one or more counterparts, each of which shall
      be
      deemed an original but which together shall constitute one and the same
      instrument.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">7.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Governing</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Law</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      This
      Amendment shall be governed by, and construed in accordance with, the laws
      of
      the State of New York (without reference to conflict of laws).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">IN
      WITNESS WHEREOF, the parties hereto have executed this Amendment as a document
      under seal as of the date first above written.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 216pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Company</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 216pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: -9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">ACCESS
      PHARMACEUTICALS, INC.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: -9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">By:
      </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>/s/
      Stephen B. Thompson</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 234pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Name:
      Stephen B. Thompson</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 234pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Title:
      Vice President, Chief Financial Officer</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 216pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Holder</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 216pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 216pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: -9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">By:
      </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>/s/
      Steven H. Rouhandeh</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 234pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Name:
      Steven H. Rouhandeh</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 234pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Title:
      Chairman</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 234pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">&#160;</div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">&#160;</div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">&#160;</div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">AMENDMENT
      TO AMENDED AND RESTATED 7.5% SECURED CONVERTIBLE </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">PROMISSORY
      NOTE DUE JULY 26, 2007</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">This
      Amendment dated July 25, 2007, (the &#8220;Amendment&#8221;) amends certain provisions of
      the Amended and Restated 7.5% Secured Convertible Promissory Note in the
      original principal amount of $500,000.00, issued by Access Pharmaceuticals,
      Inc., a Delaware corporation (the &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Company</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#8221;)
      (No.
      PN-2006-2-1AR), due July 26, 2007 (the &#8220;Note&#8221;), and is by and between the
      Company and Beach Capital LLC (&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Holder</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#8221;).
      Terms
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      respective meanings herein as therein.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">WHEREAS,
      the Company and Holder have agreed to modify certain terms and conditions of
      the
      Note as specifically set forth in this Amendment.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NOW,
      THEREFORE, in consideration of the mutual agreements contained herein and for
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, the parties hereto agree as follows:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">1.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Amendment
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      The
      Note is hereby amended as follows:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">All
      references to "July 26, 2007" in the Note are hereby deleted and replaced with
      "September 6, 2007." </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">2.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Condition
      to Effectiveness</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      This
      Amendment shall not become effective until Holder receives a counterpart of
      this
      Amendment executed by the Company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
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      Except
      as expressly amended hereby, all terms and conditions of the Note, as amended,
      are hereby ratified and confirmed in all respects and shall continue in full
      force and effect. The obligations under the Note shall be deemed to be
      continuously outstanding and shall not be deemed to have been repaid and
      readvanced or refinanced hereunder or hereby. The Note and this Amendment shall
      be read and construed as a single agreement. All references to the Note shall
      hereafter refer to such Note, as amended hereby.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">4.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>No
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      THE
      COMPANY AND HOLDER HAVE ENTERED INTO THIS AMENDMENT SOLELY TO AMEND CERTAIN
      OF
      THE TERMS OF THE NOTE. THEY DO NOT INTEND THIS AMENDMENT NOR THE TRANSACTIONS
      CONTEMPLATED HEREBY TO BE, AND THIS AMENDMENT AND THE TRANSACTION CONTEMPLATED
      HEREBY SHALL NOT BE CONSTRUED TO BE, A NOVATION OF ANY OF THE OBLIGATIONS OWING
      UNDER OR IN CONNECTION WITH THE NOTE.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">5.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>No
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      contained herein shall constitute a waiver of, impair or otherwise affect,
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      obligation of the Company under any Note or any rights of any Holder consequent
      thereon.</font></div>
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      <div>&#160;</div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">6.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Counterparts</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">7.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Governing</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Law</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">IN
      WITNESS WHEREOF, the parties hereto have executed this Amendment as a document
      under seal as of the date first above written.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 216pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Company</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 216pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
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      PHARMACEUTICALS, INC.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: -9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">By:
      </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>/s/
      Stephen B. Thompson</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 234pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Name:
      Stephen B. Thompson</font></div>
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      Vice President, Chief Financial Officer</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 216pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Holder</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 216pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 216pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: -9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">By:
      </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>/s/
      Steven H. Rouhandeh</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 234pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Name:
      Steven H. Rouhandeh</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 234pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Title:
      Chairman</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: -9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 234pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        <div id="GLFTR" style="WIDTH: 100%" align="left">&#160;</div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">AMENDMENT
      TO AMENDED AND RESTATED 7.5% SECURED CONVERTIBLE </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">PROMISSORY
      NOTE DUE JULY 26, 2007</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">This
      Amendment dated July 25, 2007, (the &#8220;Amendment&#8221;) amends certain provisions of
      the Amended and Restated 7.5% Secured Convertible Promissory Note in the
      original principal amount of $500,000.00, issued by Access Pharmaceuticals,
      Inc., a Delaware corporation (the &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Company</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#8221;)
      (No.
      PN-2006-3-1AR), due July 26, 2007 (the &#8220;Note&#8221;), and is by and between the
      Company and Lake End Capital LLC (&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Holder</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#8221;).
      Terms
      not otherwise defined herein which are defined in the Note shall have the same
      respective meanings herein as therein.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">WHEREAS,
      the Company and Holder have agreed to modify certain terms and conditions of
      the
      Note as specifically set forth in this Amendment.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NOW,
      THEREFORE, in consideration of the mutual agreements contained herein and for
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, the parties hereto agree as follows:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">1.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Amendment
      to the Note</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      The
      Note is hereby amended as follows:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">All
      references to "July 26, 2007" in the Note are hereby deleted and replaced with
      "September 6, 2007." </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">2.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Condition
      to Effectiveness</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      This
      Amendment shall not become effective until Holder receives a counterpart of
      this
      Amendment executed by the Company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">3.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Ratification,
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      Except
      as expressly amended hereby, all terms and conditions of the Note, as amended,
      are hereby ratified and confirmed in all respects and shall continue in full
      force and effect. The obligations under the Note shall be deemed to be
      continuously outstanding and shall not be deemed to have been repaid and
      readvanced or refinanced hereunder or hereby. The Note and this Amendment shall
      be read and construed as a single agreement. All references to the Note shall
      hereafter refer to such Note, as amended hereby.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">4.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>No
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      THE
      COMPANY AND HOLDER HAVE ENTERED INTO THIS AMENDMENT SOLELY TO AMEND CERTAIN
      OF
      THE TERMS OF THE NOTE. THEY DO NOT INTEND THIS AMENDMENT NOR THE TRANSACTIONS
      CONTEMPLATED HEREBY TO BE, AND THIS AMENDMENT AND THE TRANSACTION CONTEMPLATED
      HEREBY SHALL NOT BE CONSTRUED TO BE, A NOVATION OF ANY OF THE OBLIGATIONS OWING
      UNDER OR IN CONNECTION WITH THE NOTE.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">5.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>No
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      Nothing
      contained herein shall constitute a waiver of, impair or otherwise affect,
      any
      obligation of the Company under any Note or any rights of any Holder consequent
      thereon.</font></div>
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      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">&#160;</div>
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      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">&#160;</div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
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      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">&#160;</div>
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      <div>&#160;</div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">6.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Counterparts</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      This
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      be
      deemed an original but which together shall constitute one and the same
      instrument.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">7.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Governing</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Law</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      This
      Amendment shall be governed by, and construed in accordance with, the laws
      of
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">IN
      WITNESS WHEREOF, the parties hereto have executed this Amendment as a document
      under seal as of the date first above written.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 216pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Company</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 216pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: -9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">ACCESS
      PHARMACEUTICALS, INC.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: -9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">By:
      </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>/s/
      Stephen B. Thompson</u></font></div>
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      Jeffrey B. Davis</u></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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      TO AMENDED AND RESTATED 7.5% SECURED CONVERTIBLE PROMISSORY NOTE DUE JULY 26,
      2007</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">This
      Amendment dated July 25, 2007, (the &#8220;Amendment&#8221;) amends certain provisions of
      the Amended and Restated 7.5% Secured Convertible Promissory Note in the
      original principal amount of $100,000.00, issued by Access Pharmaceuticals,
      Inc., a Delaware corporation (the &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Company</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#8221;)
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      Terms
      not otherwise defined herein which are defined in the Note shall have the same
      respective meanings herein as therein.</font></div>
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      Note as specifically set forth in this Amendment.</font></div>
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      THEREFORE, in consideration of the mutual agreements contained herein and for
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, the parties hereto agree as follows:</font></div>
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      references to "July 26, 2007" in the Note are hereby deleted and replaced with
      "September 6, 2007." </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">2.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Condition
      to Effectiveness</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
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      Amendment shall not become effective until Holder receives a counterpart of
      this
      Amendment executed by the Company.</font></div>
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      Except
      as expressly amended hereby, all terms and conditions of the Note, as amended,
      are hereby ratified and confirmed in all respects and shall continue in full
      force and effect. The obligations under the Note shall be deemed to be
      continuously outstanding and shall not be deemed to have been repaid and
      readvanced or refinanced hereunder or hereby. The Note and this Amendment shall
      be read and construed as a single agreement. All references to the Note shall
      hereafter refer to such Note, as amended hereby.</font></div>
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      THE
      COMPANY AND HOLDER HAVE ENTERED INTO THIS AMENDMENT SOLELY TO AMEND CERTAIN
      OF
      THE TERMS OF THE NOTE. THEY DO NOT INTEND THIS AMENDMENT NOR THE TRANSACTIONS
      CONTEMPLATED HEREBY TO BE, AND THIS AMENDMENT AND THE TRANSACTION CONTEMPLATED
      HEREBY SHALL NOT BE CONSTRUED TO BE, A NOVATION OF ANY OF THE OBLIGATIONS OWING
      UNDER OR IN CONNECTION WITH THE NOTE.</font></div>
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      contained herein shall constitute a waiver of, impair or otherwise affect,
      any
      obligation of the Company under any Note or any rights of any Holder consequent
      thereon.</font></div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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      <div>&#160;</div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">6.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Counterparts</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      This
      Amendment may be executed in one or more counterparts, each of which shall
      be
      deemed an original but which together shall constitute one and the same
      instrument.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">7.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Governing</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Law</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
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      of
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">IN
      WITNESS WHEREOF, the parties hereto have executed this Amendment as a document
      under seal as of the date first above written.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 216pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Company</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 216pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: -9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">ACCESS
      PHARMACEUTICALS, INC.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: -9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">By:
      </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>/s/
      Stephen B. Thompson</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 234pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Name:
      Stephen B. Thompson</font></div>
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      Vice President, Chief Financial Officer</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 216pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Holder</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 216pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 216pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: -9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">By:
      </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>/s/
      Jeffrey B. Davis</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 234pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Name:
      Jeffrey B. Davis</font></div>
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      Chairman, Managing Member</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: -9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 234pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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      TO AMENDED AND RESTATED 7.5% SECURED CONVERTIBLE</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#160;PROMISSORY
      NOTE DUE JULY 26, 2007</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">This
      Amendment dated July 25, 2007, (the &#8220;Amendment&#8221;) amends certain provisions of
      the Amended and Restated 7.5% Secured Convertible Promissory Note in the
      original principal amount of $100,000.00, issued by Access Pharmaceuticals,
      Inc., a Delaware corporation (the &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Company</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#8221;)
      (No.
      PN-2006-DEC-2-1AR), due July 26, 2007 (the &#8220;Note&#8221;), and is by and between the
      Company and Lake End Capital LLC (&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Holder</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#8221;).
      Terms
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      respective meanings herein as therein.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">WHEREAS,
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      Note as specifically set forth in this Amendment.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NOW,
      THEREFORE, in consideration of the mutual agreements contained herein and for
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, the parties hereto agree as follows:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
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      to the Note</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      The
      Note is hereby amended as follows:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">All
      references to "July 26, 2007" in the Note are hereby deleted and replaced with
      "September 6, 2007." </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
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      to Effectiveness</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      This
      Amendment shall not become effective until Holder receives a counterpart of
      this
      Amendment executed by the Company.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">3.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Ratification,
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      Except
      as expressly amended hereby, all terms and conditions of the Note, as amended,
      are hereby ratified and confirmed in all respects and shall continue in full
      force and effect. The obligations under the Note shall be deemed to be
      continuously outstanding and shall not be deemed to have been repaid and
      readvanced or refinanced hereunder or hereby. The Note and this Amendment shall
      be read and construed as a single agreement. All references to the Note shall
      hereafter refer to such Note, as amended hereby.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
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      THE
      COMPANY AND HOLDER HAVE ENTERED INTO THIS AMENDMENT SOLELY TO AMEND CERTAIN
      OF
      THE TERMS OF THE NOTE. THEY DO NOT INTEND THIS AMENDMENT NOR THE TRANSACTIONS
      CONTEMPLATED HEREBY TO BE, AND THIS AMENDMENT AND THE TRANSACTION CONTEMPLATED
      HEREBY SHALL NOT BE CONSTRUED TO BE, A NOVATION OF ANY OF THE OBLIGATIONS OWING
      UNDER OR IN CONNECTION WITH THE NOTE.</font></div>
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      contained herein shall constitute a waiver of, impair or otherwise affect,
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      obligation of the Company under any Note or any rights of any Holder consequent
      thereon.</font></div>
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        </div>
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      <div>&#160;</div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">7.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Governing</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Law</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
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      WITNESS WHEREOF, the parties hereto have executed this Amendment as a document
      under seal as of the date first above written.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 216pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Company</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">:</font></div>
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      PHARMACEUTICALS, INC.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: -9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">By:
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      Stephen B. Thompson</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 234pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Name:
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      Vice President, Chief Financial Officer</font></div>
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      Jeffrey B. Davis</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 234pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Name:
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<DOCUMENT>
<TYPE>EX-10.42
<SEQUENCE>4
<FILENAME>ex_10-42.htm
<DESCRIPTION>NOTE PURCHASE AGREEMENT SOMANTA PHARMA
<TEXT>
<html>
  <head>
    <title>
      Unassociated Document
</title>
<!-- Licensed to: Access Pharmaceuticals, Inc.-->
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<!-- Copyright 2007 EDGARfilings, Ltd., an IEC company.-->
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  <body bgcolor="#ffffff" style="MARGIN: 12%; TEXT-INDENT: 0pt"><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>EXHIBIT
      10.42</strong></font></div>
    <div>
      <hr style="MARGIN-TOP: -5px; COLOR: #000000" noshade size="4">
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>NOTE
      PURCHASE AGREEMENT</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">This
      </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>NOTE
      PURCHASE AGREEMENT</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">
      (this
&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Agreement</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#8221;),
      dated
      as of April&#160;26, 2007, is entered into by and among Somanta Pharmaceuticals,
      Inc., a Delaware corporation (the &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Company</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#8221;),
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      Access Pharmaceuticals, Inc., a Delaware corporation (the &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Lender&#8221;</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">).
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">WHEREAS,
      the Lender has agreed to lend to the Company on the date hereof the aggregate
      principal amount of $33,461.89 and may lend to the Company from time to time
      after the date hereof an additional aggregate principal amounts, all as
      hereinbelow provided.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">NOW,
      THEREFORE, in consideration of the mutual promises and covenants in this
      Agreement, the parties hereto agree as follows:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">1.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(a)&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Initial</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Loan</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Amount</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.&#160;&#160;On
      the date hereof (the &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Closing</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#8220;),
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      Lender shall pay, on behalf of the Company, the initial loan amount of
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      by
      check or wire transfer pursuant to wire transfer instructions furnished by
      the
      Company. At the Closing, the Company shall issue to the Lender a promissory
      note
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      hereto,
      initially reflecting outstanding principal in the amount of the Loan (the
&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Note</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#8221;).
      In
      addition, at the Closing, the Company shall execute, deliver and/or authorize,
      as the case may be, (i)&#160;the Patent Collateral Assignment and Security
      Agreement in the form of </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Exhibit
      B</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">
      hereto
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      (ii)&#160;the Trademark Collateral Assignment and Security Agreement in the form
      of </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Exhibit&#160;C</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">
      hereto
      (the &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Trademark
      Agreement</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#8221;),
      (iii)&#160;the Security Agreement in the form of </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Exhibit&#160;D</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">
      hereto
      (the &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Security
      Agreement</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#8221;),
      and
      (iv)&#160;all other instruments and documents, including, without limitation,
      Uniform Commercial Code financing statements, required to be delivered pursuant
      to the Patent Agreement, the Trademark Agreement and the Security Agreement
      (such other instruments and documents, with the Patent Agreement, the Trademark
      Agreement and the Security Agreement, the &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Security
      Documents</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">,&#8221;
which
      Security Documents, together with this Agreement, and the Note, are collectively
      referred to herein as the &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Loan
      Documents</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#8221;).</font></div>
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      hereto,
      Lender may, in its sole and absolute discretion, advance additional Loan amounts
      requested by the Company, whereupon Lender shall annotate the Table of Advances
      and Repayment of Principal attached to the Note to record such Loan advance,
      thereby increasing the Loan and the then outstanding principal balance owed
      under the Note by the amount of such advance. The Company hereby authorizes
      Lender to make such annotations and such annotations shall be deemed to be
      amendments to the Note duly authorized and agreed by the Company.</font></div>
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    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">2.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Representations,
      Warranties and Certain Covenants of the Lender</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      The
      Lender hereby represents, warrants and covenants to the Company as to itself,
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      follows:</font></div>
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    <div style="MARGIN-LEFT: 36pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(a)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">The
      Lender understands that the offering and sale of the Note are intended to be
      exempt from registration under the Securities Act of 1933, as amended (the
      &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Securities</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Act</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#8221;),
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      promulgated thereunder and, in accordance therewith and in furtherance thereof,
      the Lender further represents and warrants to and agrees with the Company as
      follows:</font></div>
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    <div style="MARGIN-LEFT: 72pt; TEXT-INDENT: 108pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(i)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">the
      Lender is purchasing the Note for such Lender&#8217;s own account, for investment
      only, and not with a view to, or for sale in connection with, any distribution
      of the Note in violation of the Securities Act, any rule or regulation
      thereunder, or any state securities laws;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 72pt; TEXT-INDENT: 108pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(ii)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">the
      Lender understands that all documents, records and books pertaining to this
      investment have been made available for inspection by the Lender, the Lender&#8217;s
      counsel and/or the Lender&#8217;s accountants, the Lender has carefully reviewed all
      such documents, and understands and has relied only on information provided
      to
      such Lender in writing by the Company relating to this investment;</font></div>
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    <div style="MARGIN-LEFT: 72pt; TEXT-INDENT: 108pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(iii)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">the
      Lender and/or the Lender&#8217;s advisor(s) have had a reasonable opportunity to ask
      questions of and receive answers from a person or persons acting on behalf
      of
      the Company concerning the offering of the Note, and all such questions have
      been answered to the full satisfaction of such Lender;</font></div>
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    <div style="MARGIN-LEFT: 72pt; TEXT-INDENT: 108pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(iv)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">the
      Lender is not relying on the Company with respect to the investment
      considerations of the Lender relating to this investment;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 72pt; TEXT-INDENT: 108pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(v)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">the
      Lender (A) will not sell, transfer, pledge, assign or otherwise dispose of
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      Note without registration thereof under the Securities Act or pursuant to an
      exemption from registration and, if pursuant to an exemption from registration
      and if requested by the Company, receipt by the Company of an opinion of counsel
      in form and substance satisfactory to the Company and its counsel to the effect
      that such registration is not required, and (B)&#160;fully understands and
      agrees that the Lender must bear the economic risk of the Lender&#8217;s investment
      for an indefinite period of time because, among other reasons, the Note has
      not
      been registered under the Securities Act or under the securities laws of certain
      states and, therefore, cannot be resold, transferred, pledged, assigned or
      otherwise disposed of unless they are subsequently registered under the
      Securities Act and under the applicable securities laws of such states or unless
      an exemption from such registration is available; and</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 72pt; TEXT-INDENT: 108pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(vi)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">the
      Lender understands that sales or transfers of the Note may be made only in
      compliance with certain state securities laws, and the Note will bear a legend
      reflecting the transfer restrictions imposed thereon and a notation may be
      made
      in the records of the Company restricting the transfer of the Note in a manner
      consistent with the foregoing.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 36pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(b)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">The
      Lender is an "accredited investor" within the meaning of Rule&#160;501 of
      Regulation&#160;D, as promulgated by the Securities and Exchange Commission, as
      presently in effect.</font></div>
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    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">3.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Representations
      and Warranties of the Company</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      The
      Company hereby represents and warrants to the Lender as follows as of the date
      set forth above (</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">and,
      in
      the event of any advance under the Note, as of the date of any request for
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      advance under the Note, as applicable)</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(a)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Corporate
      Power; Binding Effect; Non-Contravention</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.&#160;&#160;The
      Company has all requisite power and full legal right to execute and deliver
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      Agreement and each of the other Loan Documents, and to perform all of its
      obligations hereunder and thereunder in accordance with the respective terms
      hereof and thereof. The Loan Documents and the transactions contemplated thereby
      have been duly approved and authorized by all requisite corporate action on
      the
      part of the Company, and the Loan Documents have been duly executed and
      delivered by the Company and constitute the legal, valid and binding obligations
      of the Company, enforceable against it in accordance with their respective
      terms. The execution, delivery and performance by the Company of the Loan
      Documents in accordance with their respective terms, and the consummation by
      the
      Company of the transactions contemplated thereby, will not result (with or
      without the giving of notice or the lapse of time or both) in any conflict,
      violation, breach, or default, or the creation of any lien or encumbrance of
      any
      nature (&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Liens</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#8221;)
      upon
      any assets of the Company, (other than pursuant to the Security Documents),
      or
      the termination, acceleration, vesting or modification of any right or
      obligation, under or in respect of (i)&#160;the Certificate of Incorporation or
      by-laws of the Company, each as amended to date, (ii)&#160;any judgment, decree,
      order, statute, rule, or regulation binding on or applicable to the Company,
      or
      (iii)&#160;any agreement or instrument to which the Company is a party or by
      which it or any of its assets is or are bound.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(b)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Properties,
      Leases, Etc</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.&#160;&#160;Except
      with respect to Liens in favor of the Lender pursuant to the Security Documents,
      the Company has (A)&#160;good and marketable title to all of the assets and
      properties owned by it, free and clear of all Liens, (B)&#160;valid title to the
      lessee interest in all assets and properties leased by the Company as lessee,
      free and clear of all Liens, and (C)&#160;full right to hold and use all of its
      assets and properties used in or necessary to its businesses and operations,
      in
      each case all free and clear of all Liens, and in each case subject to
      applicable laws and the terms of any lease under which the Company leases such
      assets or properties as lessee. All such assets and properties are in good
      condition and repair, reasonable wear and tear excepted, and are adequate and
      sufficient to carry on the businesses of the Company as presently conducted.
      The
      Company does not own any real property or any interest (other than a leasehold
      interest) in any real property. The Company's leasehold interests are subject
      to
      no Lien, and the Company is in quiet possession of the properties covered by
      such leases. The Company&#8217;s leasehold interests are subject to no Lien caused by
      the Company, and the Company is in quiet possession of the properties covered
      by
      such leases.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(c)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Tax
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      The
      Company has timely filed all tax returns required to be filed by it, each such
      tax return has been prepared in compliance with all applicable laws and
      regulations, and all such tax returns are true and accurate in all material
      respects. All taxes due and payable by the Company have been paid in respect
      of
      any period ending on or before the date hereof, and the Company will not be
      liable for any additional taxes in respect of any taxable period ending on
      or
      before the date hereof in an amount that exceeds the corresponding reserve
      therefor, if any, reflected in the accounting records of the Company as of
      the
      date hereof. No claim has ever been made by a taxing authority in a jurisdiction
      where the Company does not pay tax or file tax returns that the Company is
      or
      may be subject to taxes assessed by such jurisdiction. There are no Liens for
      taxes (other than current taxes not yet due and payable) on the assets of the
      Company. There is no action, suit, taxing authority proceeding, or audit with
      respect to any tax now in progress, pending, or, to the Company's knowledge,
      threatened, against or with respect to the Company. No deficiency or proposed
      adjustment in respect of taxes that has not been settled or otherwise resolved
      has been asserted or assessed by any taxing authority against the Company.
      The
      Company has not consented to extend the time in which any tax may be assessed
      or
      collected by any taxing authority. The Company has not requested or been granted
      an extension of the time for filing any tax return to a date on or after the
      Closing. The Company has withheld and paid all taxes required to have been
      withheld and paid by it in connection with amounts paid or owing to any
      employee, creditor, independent contractor or other third party.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(d)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Governmental
      and Other Third-Party Consents</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.&#160;&#160;Except
      for filings or other notices required by applicable federal and state securities
      laws (which will be completed by the Company within the applicable periods),
      no
      consent, approval or authorization of, or registration, designation, declaration
      or filing with, any governmental authority, federal or other, or any other
      person or entity is required on the part of the Company in connection with
      its
      execution, delivery or performance of this Agreement and the Note and its
      consummation of the transactions contemplated hereby and thereby, or the
      continued conduct of the present business of the Company after the
      Closing.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(e)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Compliance
      with Securities Laws</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      Assuming the accuracy of the representations of the Lender contained in
      Section&#160;2 hereof, the offer, issuance and delivery of the Note as
      contemplated by this Agreement are exempt from the registration requirements
      of
      the Securities Act, and are exempt from registration or qualification under
      applicable states' securities laws. Neither the Company nor anyone authorized
      by
      the Company to act on its behalf will hereafter offer to sell, solicit offers
      to
      buy, or sell, any securities of the Company so as to subject the offer, issuance
      and sale of the Note to the registration requirements of the Securities Act.
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(f)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Brokers</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.&#160;&#160;No
      finder, broker, agent or other intermediary has acted for or on behalf of the
      Company in connection with the negotiation or consummation of the transactions
      contemplated hereby, and no fee will be payable by the Company to any such
      person in connection with such transactions.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(g)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Disclosure</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.&#160;&#160;No
      representation or warranty by the Company in this Agreement or any other Loan
      Document, in any schedule to this Agreement or any other Loan Document, or
      in
      the Note, contains or will contain any untrue statement of a material fact
      or
      omits or will omit to state a material fact required to be stated herein or
      therein or necessary to make the statements contained herein or therein not
      false or misleading.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(h)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Other
      Representations, Warranties and Covenants</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.&#160;&#160;All
      representations, warranties and other statements of fact made by the Company
      in
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      thereto, dated as of April&#160;18, 2007 (the &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Merger</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Agreement</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#8221;),
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      true and correct. The Company has fully performed all of its covenants and
      duties set forth in the Merger Agreement and required to be performed by the
      Company as of the date hereof (and as of the date of any request for an advance
      under the Note, as applicable).</font></div>
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      The
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      directors, and affiliates and each other person, if any, who controls the Lender
      within the meaning of Section 15 of the Securities Act, from and against any
      and
      all loss, liability, claim, damage and expense whatsoever (including, but not
      limited to, any and all expenses reasonably incurred in investigating, preparing
      or defending against any litigation, commenced or threatened or any claim
      whatsoever) arising out of or based upon any false representation or warranty
      or
      breach or failure by the Company to comply with any covenant or agreement made
      by the Company herein or in any other Loan Document furnished by the Company
      to
      any of the foregoing in connection with this transaction.</font></div>
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      Consents and Waivers</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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      Agreement or any provision hereof may be amended or terminated by the agreement
      of the Company and the Lender, and the observance of any provision of this
      Agreement that is for the benefit of the Lender may be waived (either generally
      or in a particular instance, and either retroactively or prospectively), and
      any
      consent, approval, or other action to be given or taken by the Lender pursuant
      to this Agreement, may be given or taken by the waiver, consent, approval or
      other action of the Lender; </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><em>provided,
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      that
      the Lender may, in writing, waive the benefits of any provision of this
      Agreement.</font></div>
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      course
      of dealing between the Company and the Lender will operate as a waiver of any
      of
      the Company's or the Lender's rights under this Agreement. No waiver of any
      breach or default hereunder will be valid unless in a writing signed by the
      waiving party. No failure or other delay by any person in exercising any right,
      power, or privilege hereunder will be or operate as a waiver thereof, nor will
      any single or partial exercise thereof preclude any other or further exercise
      thereof or the exercise of any other right, power, or privilege.</font></div>
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      <div>&#160;</div>
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    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(b)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Notices</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      All
      notices, requests, payments, instructions or other documents to be given
      hereunder will be in writing or by written telecommunication, and will be deemed
      to have been duly given if (i)&#160;delivered personally (effective upon
      delivery), (ii)&#160;mailed by certified mail, return receipt requested, postage
      prepaid (effective five business days after dispatch), (iii)&#160;sent by a
      reputable, established courier service that guarantees overnight delivery
      (effective the next business day) or (iv) dispatched by telecopier if the
      telecopy is received in complete, readable form (effective upon dispatch),
      addressed as follows (or to such other address as the recipient party may have
      furnished to the sending party):</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(i)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">If
      to the
      Company:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Somanta
      Pharmaceuticals, Inc.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">19200
      Von
      Karman Avenue, Suite 400</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Irvine,
      CA 92612</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Attention:
      Terrance Bruggeman</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Telecopier
      No.: (949) 706-3698</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">with
      copies sent at the same time and by the same means to:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Adam
      Lenain</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Foley
      &amp; Lardner LLP</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">402
      W.
      Broadway, Suite 2100</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">San
      Diego, CA 92101</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Attention:&#160;&#160;Adam
      Lenain, Esq.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Telecopier
      No.: (619) 234-3510</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(ii)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">If
      to
      Lender, to</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Access
      Pharmaceuticals, Inc.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">2600
      Stemmons Freeway, Suite 176</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Dallas,
      TX 75207</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Attention:
      Stephen Seiler</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Telecopier
      No.: (214) 905-5101</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">with
      a
      copy sent at the same time and by the same means to:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Bingham
      McCutchen LLP</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">150
      Federal Street</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Boston,
      Massachusetts 02110</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Attention:
      John J. Concannon III, Esq.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Telecopier
      No. (617) 951-8736</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(c)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Counterparts</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      This
      Agreement may be executed by the parties in separate counterparts, each of
      which
      when so executed and delivered will be an original, but all of which together
      will constitute one and the same instrument. In pleading or proving this
      Agreement, it will not be necessary to produce or account for more than one
      such
      complete counterpart.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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      <div>&#160;</div>
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    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(d)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Captions</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      The
      captions of sections or subsections of this Agreement are for reference only
      and
      will not affect the interpretation or construction of this
      Agreement.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(e)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Binding
      Effect and Benefits</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.&#160;&#160;This
      Agreement will bind and inure to the benefit of the parties hereto and their
      respective successors and permitted assigns. Except as otherwise provided in
      this Agreement, the provisions of this Agreement that are for the Lender's
      benefit will inure to the benefit of all permitted transferees of the Note,
      and
      the applicable provisions of this Agreement that bind the Lender will bind
      all
      transferees of the Note. Nothing in this Agreement is intended to or will confer
      any rights or remedies on any person other than the parties hereto and their
      respective successors and permitted assigns.</font></div>
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    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(f)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Assignment</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      This
      Agreement and the rights and obligations hereunder may not be assigned by the
      Company without the prior written consent of the Lender in their sole and
      absolute discretion. This Agreement and the rights and obligations hereunder
      and
      under the Note may be transferred by the Lender in the Lender&#8217;s sole discretion
      at any time, in whole or in part, including, without limitation, to affiliates
      of the Lender, without the consent of any other party hereto.</font></div>
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    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(g)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Further
      Assurances</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.&#160;&#160;From
      time to time on and after the Closing, the Company will promptly execute and
      deliver all such further instruments and assurances, and will promptly take
      all
      such further actions, as the Lender may reasonably request in order more
      effectively to effect or confirm the transactions contemplated by this Agreement
      and/or any of the Loan Documents and to carry out the purposes hereof and
      thereof.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(h)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Severability</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.
      No
      invalidity or unenforceability of any section of this Agreement or any portion
      thereof will affect the validity or enforceability of any other section or
      the
      remainder of such section.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(i)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Entire
      Agreement</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">.&#160;&#160;This
      Agreement, together with the exhibits and schedules hereto and the Loan
      Documents, contains the entire understanding and agreement among the parties,
      or
      between or among any of them, and supersedes any prior understandings or
      agreements between or among any of them, with respect to the subject matter
      hereof.</font></div>
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    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(j)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Governing
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      This
      Agreement will be governed by and interpreted and construed in accordance with
      the internal laws of the Commonwealth of Massachusetts, without regards to
      conflicts of laws principles. </font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">The
      Company agrees that any action or claim arising out of any dispute in connection
      with this Agreement, any rights or obligations hereunder or the performance
      or
      enforcement of such rights or obligations may be brought in the courts of the
      Commonwealth of Massachusetts or any federal court sitting therein, and consents
      to the non-exclusive jurisdiction of such court and to service of process in
      any
      such suit being made upon the Company by mail at the address specified herein.
      The Company hereby waives any objection that it may now or hereafter have to
      the
      venue of any such suit or any such court or that such suit is brought in an
      inconvenient court.</font></div>
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      OBLIGATIONS HEREUNDER OR THE PERFORMANCE OR ENFORCEMENT OF ANY SUCH RIGHTS
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      sentence any special, exemplary, punitive or consequential damages or any
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      in the event of litigation, seek to enforce the foregoing waivers or other
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      on Following Page.]</em></font></div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
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      WITNESS WHEREOF, the Company and the Lender have duly executed this Agreement
      as
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    <div align="center">
      <table bgcolor="white" cellpadding="0" cellspacing="0" width="100%">

          <tr bgcolor="white">
            <td width="50%">&#160;<u>COMPANY:</u></td>
            <td colspan="4" width="50%">&#160;<strong>SOMANTA PHARMACEUTICALS,
              INC.</strong></td>
          </tr>
          <tr bgcolor="white">
            <td width="50%">&#160;</td>
            <td colspan="4" width="50%">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td width="50%">&#160;</td>
            <td colspan="4" width="50%">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td width="50%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td width="6%" style="border-bottom: #ffffff solid;">&#160;By:</td>
            <td width="22%" style="border-bottom: black thin solid;">&#160;/s/ Terrance
              J. Bruggeman</td>
            <td colspan="2" width="22%" style="border-bottom: #ffffff solid;">
            </td>
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          <tr bgcolor="white">
            <td width="50%">&#160;</td>
            <td width="6%">&#160;</td>
            <td colspan="3" width="44%">&#160;Name: Terrance J. Bruggeman&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td width="50%">&#160;</td>
            <td width="6%">&#160;</td>
            <td colspan="3" width="44%">&#160;Title: Executive Chairman</td>
          </tr>
          <tr bgcolor="white">
            <td width="50%">&#160;</td>
            <td width="6%">&#160;</td>
            <td colspan="3" width="44%">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td width="50%">&#160;</td>
            <td width="6%">&#160;</td>
            <td colspan="3" width="44%">&#160;</td>
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            <td colspan="4" width="50%">&#160;<strong>ACCESS PHARMACEUTICALS,
              INC.</strong></td>
          </tr>
          <tr bgcolor="white">
            <td width="50%">&#160;</td>
            <td width="6%">&#160;</td>
            <td colspan="3" width="44%">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td width="50%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td width="6%" style="border-bottom: #ffffff solid;">&#160;By:</td>
            <td width="22%" style="border-bottom: black thin solid;"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#160;/s/
              Stephen R. Seiler </font></td>
            <td colspan="2" width="22%" style="border-bottom: #ffffff solid;">
            </td>
          </tr>
          <tr bgcolor="white">
            <td width="50%">&#160;</td>
            <td width="6%">&#160;</td>
            <td colspan="3" width="44%">&#160;Name: Stephen R. Seiler</td>
          </tr>
          <tr bgcolor="white">
            <td width="50%">&#160;</td>
            <td width="6%">&#160;</td>
            <td colspan="3" width="44%">&#160;Title: President and Chief Executive
              Officer</td>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Exhibit
      A</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Form
      of Note</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(See
      attached.)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><br></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Form
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(See
      attached.)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><br></div><br>
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    <div style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
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      of Trademark Collateral Assignment and Security Agreement</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(See
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    <div style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><br></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
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    <div style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
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      of Security Agreement</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">(See
      attached.)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><br></div><br>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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      E</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Form
      of Request for Loan Advance</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Access
      Pharmaceuticals, Inc.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">2600
      Stemmons Freeway, Suite 176</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Dallas,
      TX 75207</font></div>
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      Stephen Seiler</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Dear
      Mr.
      Seiler:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Somanta
      Pharmaceuticals, Inc. (the &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Borrower</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#8221;)
      hereby
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      advance
      the principal amount set forth below, under the promissory note, executed and
      delivered to by the Borrower as of April&#160;26, 2007 (the &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>Note</u></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">&#8221;).</font></div>
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          <tr>
            <td align="justify" valign="top" width="29%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Amount
                of Advance Requested</font></div>
            </td>
            <td align="justify" valign="top" width="31%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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                Instructions</font></div>
            </td>
            <td align="left" valign="top" width="20%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Date
                Advance is Requested to Be Made</font></div>
            </td>
          </tr>
          <tr>
            <td align="justify" valign="top" width="29%">&#160;</td>
            <td align="justify" valign="top" width="31%">&#160;</td>
            <td align="justify" valign="top" width="20%">&#160;</td>
          </tr>
          <tr>
            <td align="justify" valign="top" width="29%">&#160;</td>
            <td align="justify" valign="top" width="31%">&#160;</td>
            <td align="justify" valign="top" width="20%">&#160;</td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">In
      the
      event the Lender agrees to, and does, advance any amount requested hereunder,
      Borrower hereby requests that the Lender amend the Note and annotate the
</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Table
      of
      Advances and Repayment of Principal attached to the Note to reflect such amount
      as an additional principal amount payable thereunder.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Sincerely,</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Somanta
      Pharmaceuticals, Inc.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">By:
      __________________________</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Name:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Title:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Date:
      ________________________</font></div>
  </body>
</html>



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>5
<FILENAME>ex_31-1.htm
<DESCRIPTION>CERTIFICATION CEO
<TEXT>
<html>
  <head>
    <title>
      Unassociated Document
</title>
<!-- Licensed to: Access Pharmaceuticals, Inc.-->
<!-- Document Created using EDGARizer 3.9.9.131 -->
<!-- Copyright 2007 EDGARfilings, Ltd., an IEC company.-->
<!-- All rights reserved EDGARfilings.com -->
</head>
  <body bgcolor="#ffffff" style="MARGIN: 12%; TEXT-INDENT: 0pt"><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 63pt; TEXT-INDENT: -63pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>Exhibit
      31.1</strong></font></div>
    <div>
      <hr style="MARGIN-TOP: -5px; COLOR: #000000" noshade size="4">
      <hr style="MARGIN-TOP: -10px; COLOR: #000000" noshade size="1">
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 63pt; TEXT-INDENT: -63pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 63pt; TEXT-INDENT: -63pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>CERTIFICATION</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">I,
      Stephen R. Seiler, the President and Chief Executive Officer of Access
      Pharmaceuticals, Inc., certify that:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">1.</font></div>
            </td>
            <td align="left" valign="top" width="1%">&#160;</td>
            <td align="left" valign="top" width="75%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">I
                have reviewed this quarterly report on Form 10-QSB of Access
                Pharmaceuticals, Inc.;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">2.</font></div>
            </td>
            <td align="left" valign="top" width="1%">&#160;</td>
            <td align="left" valign="top" width="75%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Based
                on my knowledge, this quarterly report does not contain any untrue
                statement of a material fact or omit to state a material fact necessary
                to
                make the statements made, in light of the circumstances under which
                such
                statements were made, not misleading with respect to the period covered
                by
                this quarterly report;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">3.</font></div>
            </td>
            <td align="left" valign="top" width="1%">&#160;</td>
            <td align="left" valign="top" width="75%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Based
                on my knowledge, the financial statements, and other financial information
                included in this quarterly report, fairly present in all material
                respects
                the financial condition, results of operations and cash flows of
                the
                registrant as of, and for, the periods presented in this quarterly
                report;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">4.</font></div>
            </td>
            <td align="left" valign="top" width="1%">&#160;</td>
            <td align="left" valign="top" width="75%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">The
                registrant&#8217;s other certifying officer and I are responsible for
                establishing and maintaining disclosure controls and procedures (as
                defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
                control over financial reporting (as defined in Exchange Act Rules
                13a-15(f) and 15d-15(f)) for the registrant and we
                have:</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="middle" width="3%">&#160;</td>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">a.</font></div>
            </td>
            <td align="left" valign="top" width="1%">&#160;</td>
            <td align="left" valign="top" width="72%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Designed
                such disclosure controls and procedures, or caused such disclosure
                controls and procedures to be designed under our supervision to ensure
                that material information relating to the registrant, including its
                consolidated subsidiaries, is made known to us by others within those
                entities, particularly during the period in which this quarterly
                report is
                being prepared;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="middle" width="3%">&#160;</td>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">b.</font></div>
            </td>
            <td align="left" valign="top" width="1%">&#160;</td>
            <td align="left" valign="top" width="72%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Designed
                such internal control over financial reporting, or caused such internal
                control over financial reporting to be designed under our supervision,
                to
                provide reasonable assurance regarding the reliability of financial
                reporting and the preparation of financial statements for external
                purposes in accordance with generally accepted accounting
                principles;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="middle" width="3%">&#160;</td>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">c.</font></div>
            </td>
            <td align="left" valign="top" width="1%">&#160;</td>
            <td align="left" valign="top" width="72%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Evaluated
                the effectiveness of the registrant&#8217;s disclosure controls and procedures
                and presented in this quarterly report our conclusions about the
                effectiveness of the disclosure controls and procedures, as of the
                end of
                the period covered by this quarterly report based on such evaluation;
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="middle" width="3%">&#160;</td>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">d.</font></div>
            </td>
            <td align="left" valign="top" width="1%">&#160;</td>
            <td align="left" valign="top" width="72%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Disclosed
                in this quarterly report any change in the registrant&#8217;s internal control
                over financial reporting that occurred during the registrant&#8217;s most recent
                fiscal quarter (the registrant&#8217;s fourth fiscal quarter in the case of an
                annual report) that has materially affected, or is reasonably likely
                to
                materially affect, the registrant&#8217;s internal control over financial
                reporting.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">5.</font></div>
            </td>
            <td align="left" valign="top" width="1%">&#160;</td>
            <td align="left" valign="top" width="75%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">The
                registrant&#8217;s other certifying officer and I have disclosed, based on our
                most recent evaluation, to the registrant&#8217;s auditors and the audit
                committee of registrant&#8217;s board of directors (or persons performing the
                equivalent function):</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="middle" width="3%">&#160;</td>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">a.</font></div>
            </td>
            <td align="left" valign="top" width="1%">&#160;</td>
            <td align="left" valign="top" width="72%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">All
                significant deficiencies and material weaknesses in the design or
                operation of internal control over financial reporting which are
                reasonably likely to adversely affect the registrant&#8217;s ability to record,
                process, summarize and report financial information;
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="middle" width="3%">&#160;</td>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">b.</font></div>
            </td>
            <td align="left" valign="top" width="1%">&#160;</td>
            <td align="left" valign="top" width="72%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Any
                fraud, whether or not material, that involves management or other
                employees who have a significant role in the registrant&#8217;s internal control
                over financial reporting.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Date:
      August 14, 2007</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>/s/
      Stephen R. Seiler</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Stephen
      R. Seiler</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">President
      and Chief Executive Officer</font></div>
  </body>
</html>



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>6
<FILENAME>ex_31-2.htm
<DESCRIPTION>CERTIFICATION CFO
<TEXT>
<html>
  <head>
    <title>
      Unassociated Document
</title>
<!-- Licensed to: Access Pharmaceuticals, Inc.-->
<!-- Document Created using EDGARizer 3.9.9.131 -->
<!-- Copyright 2007 EDGARfilings, Ltd., an IEC company.-->
<!-- All rights reserved EDGARfilings.com -->
</head>
  <body bgcolor="#ffffff" style="MARGIN: 12%; TEXT-INDENT: 0pt"><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 63pt; TEXT-INDENT: -63pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>Exhibit
      31.2</strong></font></div>
    <div>
      <hr style="MARGIN-TOP: -5px; COLOR: #000000" noshade size="4">
      <hr style="MARGIN-TOP: -10px; COLOR: #000000" noshade size="1">
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 63pt; TEXT-INDENT: -63pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 63pt; TEXT-INDENT: -63pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>CERTIFICATION</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">I,
      Stephen B. Thompson, the Chief Financial Officer of Access Pharmaceuticals,
      Inc., certify that:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">1.</font></div>
            </td>
            <td align="left" valign="top" width="1%">&#160;</td>
            <td align="left" valign="top" width="75%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">I
                have reviewed this quarterly report on Form 10-QSB of Access
                Pharmaceuticals, Inc.;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">2.</font></div>
            </td>
            <td align="left" valign="top" width="1%">&#160;</td>
            <td align="left" valign="top" width="75%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Based
                on my knowledge, this quarterly report does not contain any untrue
                statement of a material fact or omit to state a material fact necessary
                to
                make the statements made, in light of the circumstances under which
                such
                statements were made, not misleading with respect to the period covered
                by
                this quarterly report;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">3.</font></div>
            </td>
            <td align="left" valign="top" width="1%">&#160;</td>
            <td align="left" valign="top" width="75%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Based
                on my knowledge, the financial statements, and other financial information
                included in this quarterly report, fairly present in all material
                respects
                the financial condition, results of operations and cash flows of
                the
                registrant as of, and for, the periods presented in this quarterly
                report;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">4.</font></div>
            </td>
            <td align="left" valign="top" width="1%">&#160;</td>
            <td align="left" valign="top" width="75%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">The
                registrant&#8217;s other certifying officer and I are responsible for
                establishing and maintaining disclosure controls and procedures (as
                defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
                and we have:</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="middle" width="3%">&#160;</td>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">a.</font></div>
            </td>
            <td align="left" valign="top" width="1%">&#160;</td>
            <td align="left" valign="top" width="72%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Designed
                such disclosure controls and procedures, or caused such disclosure
                controls and procedures to be designed under our supervision, to
                ensure
                that material information relating to the registrant, including its
                consolidated subsidiaries, is made known to us by others within those
                entities, particularly during the period in which this quarterly
                report is
                being prepared;</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="middle" width="3%">&#160;</td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="1%">&#160;</td>
            <td align="left" valign="top" width="72%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="middle" width="3%">&#160;</td>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">b.</font></div>
            </td>
            <td align="left" valign="top" width="1%">&#160;</td>
            <td align="left" valign="top" width="72%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Designed
                such internal control over financial reporting, or caused such internal
                control over financial reporting to be designed under our supervision,
                to
                provide reasonable assurance regarding the reliability of financial
                reporting and the preparation of financial statements for external
                purposes in accordance with generally accepted accounting
                principles;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="middle" width="3%">&#160;</td>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">c.</font></div>
            </td>
            <td align="left" valign="top" width="1%">&#160;</td>
            <td align="left" valign="top" width="72%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Evaluated
                the effectiveness of the registrant&#8217;s disclosure controls and procedures
                and presented in this quarterly report our conclusions about the
                effectiveness of the disclosure controls and procedures, as of the
                end of
                the period covered by this quarterly report based on such evaluation;
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="middle" width="3%">&#160;</td>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">d.</font></div>
            </td>
            <td align="left" valign="top" width="1%">&#160;</td>
            <td align="left" valign="top" width="72%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Disclosed
                in this quarterly report any change in the registrant&#8217;s internal control
                over financial reporting that occurred during the registrant&#8217;s most recent
                fiscal quarter (the registrant&#8217;s fourth fiscal quarter in the case of an
                annual report) that has materially affected, or is reasonably likely
                to
                materially affect, the registrant&#8217;s internal control over financial
                reporting.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">5.</font></div>
            </td>
            <td align="left" valign="top" width="1%">&#160;</td>
            <td align="left" valign="top" width="75%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">The
                registrant&#8217;s other certifying officer and I have disclosed, based on our
                most recent evaluation, to the registrant&#8217;s auditors and the audit
                committee of registrant&#8217;s board of directors (or persons performing the
                equivalent function):</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="middle" width="3%">&#160;</td>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">a.</font></div>
            </td>
            <td align="left" valign="top" width="1%">&#160;</td>
            <td align="left" valign="top" width="72%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">All
                significant deficiencies and material weaknesses in the design or
                operation of internal control over financial reporting which are
                reasonably likely to adversely affect the registrant&#8217;s ability to record,
                process, summarize and report financial information;
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="middle" width="3%">&#160;</td>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">b.</font></div>
            </td>
            <td align="left" valign="top" width="1%">&#160;</td>
            <td align="left" valign="top" width="72%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Any
                fraud, whether or not material, that involves management or other
                employees who have a significant role in the registrant&#8217;s internal control
                over financial reporting.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Date:
      August 14, 2007</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>/s/
      Stephen B. Thompson</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Stephen
      B. Thompson </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Vice
      President</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">C</font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">hief
      Financial Officer</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
  </body>
</html>



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.1
<SEQUENCE>7
<FILENAME>ex_32-1.htm
<DESCRIPTION>CERTIFICATION CEO
<TEXT>
<html>
  <head>
    <title>
      Unassociated Document
</title>
<!-- Licensed to: Access Pharmaceuticals, Inc.-->
<!-- Document Created using EDGARizer 3.9.9.131 -->
<!-- Copyright 2007 EDGARfilings, Ltd., an IEC company.-->
<!-- All rights reserved EDGARfilings.com -->
</head>
  <body bgcolor="#ffffff" style="MARGIN: 12%; TEXT-INDENT: 0pt"><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>EXHIBIT
      32.1 </strong></font></div>
    <div>
      <hr style="MARGIN-TOP: -5px; COLOR: #000000" noshade size="4">
      <hr style="MARGIN-TOP: -10px; COLOR: #000000" noshade size="1">
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">CERTIFICATION
      PURSUANT TO 18 U.S.C. SECTION 1350</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">AS
      ADOPTED PURSUANT TO SECTION 906 OF</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">THE
      SARBANES-OXLEY ACT OF 2002</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">The
      certification set forth below is hereby made solely for the purpose of
      satisfying the requirements of Section 906 of the Sarbanes-Oxley Act of 2002
      and
      may not be relied upon or used for any other purposes.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">In
      connection with the Quarterly Report of Access Pharmaceuticals, Inc. (the
&#8220;Company&#8221;) on Form 10-QSB for the period ended June 30, 2007, as filed with the
      Securities and Exchange Commission on the date hereof (the &#8220;Report&#8221;), I, Stephen
      R. Seiler, President and Chief Executive Officer certify pursuant to 18 U.S.C.
      1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002,
      that
      (1) the Report fully complies with the requirements of Section 13(a) or 15(d)
      of
      the Securities Exchange Act of 1934 and (2) the information contained in the
      Report fairly presents, in all material respects, the financial condition and
      results of operations of the Company. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">A
      signed
      original of this written statement required by Section 906 or other document
      authenticating, acknowledging or otherwise adopting the signature that appears
      in typed form within the electronic version of this written statement required
      by Section 906 has been provided to the Company and will be retained by the
      Company and furnished to the Securities and Exchange Commission or its staff
      upon request.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Signed
      at
      the City of Dallas, in the State of Texas, this 14th day of August,
      2007.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>/s/
      Stephen R. Seiler</u></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Stephen
      R. Seiler</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">President
      and Chief Executive Officer</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
  </body>
</html>



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.2
<SEQUENCE>8
<FILENAME>ex_32-2.htm
<DESCRIPTION>CERTIFICATION CFO
<TEXT>
<html>
  <head>
    <title>
      Unassociated Document
</title>
<!-- Licensed to: Access Pharmaceuticals, Inc.-->
<!-- Document Created using EDGARizer 3.9.9.131 -->
<!-- Copyright 2007 EDGARfilings, Ltd., an IEC company.-->
<!-- All rights reserved EDGARfilings.com -->
</head>
  <body bgcolor="#ffffff" style="MARGIN: 12%; TEXT-INDENT: 0pt"><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>EXHIBIT
      32.2</strong></font></div>
    <div>
      <hr style="MARGIN-TOP: -5px; COLOR: #000000" noshade size="4">
      <hr style="MARGIN-TOP: -10px; COLOR: #000000" noshade size="1">
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">CERTIFICATION
      PURSUANT TO 18 U.S.C. SECTION 1350</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">AS
      ADOPTED PURSUANT TO SECTION 906 OF</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">THE
      SARBANES-OXLEY ACT OF 2002</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">The
      certification set forth below is hereby made solely for the purpose of
      satisfying the requirements of Section 906 of the Sarbanes-Oxley Act of 2002
      and
      may not be relied upon or used for any other purposes.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">In
      connection with the Quarterly Report of Access Pharmaceuticals, Inc. (the
&#8220;Company&#8221;) on Form 10-QSB for the period ended June 30, 2007, as filed with the
      Securities and Exchange Commission on the date hereof (the &#8220;Report&#8221;), I, Stephen
      B. Thompson, Chief Financial Officer certify pursuant to 18 U.S.C. 1350, as
      adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002, that (1)
      the
      Report fully complies with the requirements of Section 13(a) or 15(d) of the
      Securities Exchange Act of 1934 and (2) the information contained in the Report
      fairly presents, in all material respects, the financial condition and results
      of operations of the Company. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">A
      signed
      original of this written statement required by Section 906 or other document
      authenticating, acknowledging or otherwise adopting the signature that appears
      in typed form within the electronic version of this written statement required
      by Section 906 has been provided to the Company and will be retained by the
      Company and furnished to the Securities and Exchange Commission or its staff
      upon request.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Signed
      at
      the City of Dallas, in the State of Texas, this 14th day of August,
      2007.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><u>/s/
      Stephen B. Thompson</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Stephen
      B. Thompson </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Chief
      Financial Officer</font></div>
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