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<SEC-DOCUMENT>0000890163-06-000798.txt : 20061214
<SEC-HEADER>0000890163-06-000798.hdr.sgml : 20061214
<ACCEPTANCE-DATETIME>20061214171339
ACCESSION NUMBER:		0000890163-06-000798
CONFORMED SUBMISSION TYPE:	SB-2
PUBLIC DOCUMENT COUNT:		3
FILED AS OF DATE:		20061214
DATE AS OF CHANGE:		20061214

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			PIPEX PHARMACEUTICALS, INC.
		CENTRAL INDEX KEY:			0000894158
		STANDARD INDUSTRIAL CLASSIFICATION:	BLANK CHECKS [6770]
		IRS NUMBER:				133808303
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		SB-2
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-139354
		FILM NUMBER:		061277903

	BUSINESS ADDRESS:	
		STREET 1:		3985 RESEARCH PARK DRIVE
		CITY:			ANN ARBOR
		STATE:			MI
		ZIP:			48108
		BUSINESS PHONE:		734-332-7800

	MAIL ADDRESS:	
		STREET 1:		3985 RESEARCH PARK DRIVE
		CITY:			ANN ARBOR
		STATE:			MI
		ZIP:			48108

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	SHEFFIELD PHARMACEUTICALS INC
		DATE OF NAME CHANGE:	19970730

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	SHEFFIELD MEDICAL TECHNOLOGIES INC
		DATE OF NAME CHANGE:	19940606
</SEC-HEADER>
<DOCUMENT>
<TYPE>SB-2
<SEQUENCE>1
<FILENAME>s11-6900_sb2.htm
<DESCRIPTION>SB-2
<TEXT>
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<body><p align="center"><b><font color="#ff163d"><font size="-1">AS FILED WITH THE UNITED STATES SECURITIES<br>AND EXCHANGE COMMISSION ON DECEMBER 14, 2006</font></font></b></p>
<p align="right"><b><font size="-1">Registration No. 333-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></b></p>
<div align="center">
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<hr noshade color="#000000" align='center' size=0>
</b></p>
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<p align="center"><b><font size="-1">UNITED STATES<br>SECURITIES AND EXCHANGE COMMISSION<br>WASHINGTON, D.C. 20549</font></b></p>
<div align="center">
<H1><b><hr noshade color="#000000" align='center' width=96 size=0>
FORM SB-2</b></H1>
</div>
<p align="center"><b><font size="-1">REGISTRATION STATEMENT UNDER<br>THE SECURITIES ACT OF 1933</font></b></p>
<H1 align="center"><b>Pipex Pharmaceuticals, Inc.</b></H1>
<p align="center"><font size="-1">(Name of small business issuer in its charter)</font></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#ffffff">
<td align='center' valign='bottom'>
<b><font size="-1">Delaware </font></b></td>
<td align='center' valign='bottom'>
<b><font size="-1">2834 </font></b></td>
<td align='center' valign='bottom'>
<b><font size="-1">13-3808303 </font></b></td>
</tr>
<tr bgcolor="#ffffff">
<td align='center' valign='bottom'>
<font size="-1">(State or other jurisdiction of<br>incorporation or organization) </font></td>
<td align='center' valign='bottom'>
<font size="-1">(primary standard industrial classification code number) </font></td>
<td align='center' valign='bottom'>
<font size="-1">(I.R.S. Employer Identification No.) </font></td>
</tr>
</table>
<p align="center"><b><font size="-1">3985 Research Park Drive<br>Ann Arbor, MI 48108<br>(734) 332-7800<br></font></b><font size="-1">(Address and telephone number of principal executive offices and principal place of business)</font></p>
<p align="center"><b><font size="-1">Steve H. Kanzer<br>Chief Executive Officer<br>Pipex Pharmaceuticals, Inc.<br>3985 Research Park Drive<br>Ann Arbor, MI 48108<br>(734)332-7800</font></b></p>
<p align="center"><font size="-1">(Name, address and telephone number of agent for service)</font></p>
<p align="center"><font size="-1">Copies to:</font></p>
<p align="center"><b><font size="-1">Hank Gracin, Esq.<br>Lehman &amp; Eilen LLP<br>Mission Bay Office Plaza<br>Suite 300<br>20283 State Road 7<br>Boca Raton, FL 33498<br>(561) 237-0804</font></b></p>
<p align="left"><font size="-1">Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this registration statement.</font></p>
<p align="left"><font size="-1">If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. <font face='Wingdings'>&#111;</font></font></p>
<p align="left"><font size="-1">If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier registration statement for the same offering. <font face='Wingdings'>&#111;</font></font></p>
<p align="left"><font size="-1">If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. <font face='Wingdings'>&#111;</font></font></p>
<p align="left"><font size="-1">If the delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. <font face='Wingdings'>&#111;</font></font></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' colspan=10>
<hr noshade size=3 color="#000000"></td>
</tr>
<tr bgcolor="#ffffff">
<td align='center' valign='bottom'>
<b><font size="-1">Title of each class of<br>securities to be registered </font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Amount to be registered(1) </font></b></td>
<td align='center' valign='bottom'>
<b><font size="-1">Proposed<br>maximum<br>offering price<br>per share(2) </font></b></td>
<td align='center' valign='bottom'>
<b><font size="-1">Proposed maximum<br>aggregate offering<br>price </font></b></td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Amount of<br>registration<br>fee(3) </font></b></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' colspan=10>
<hr noshade color="#000000"></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Common stock, par value $0.001 per share</font></p></td>
<td align='center' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom'>
<font size="-1">20,746,931</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">4) </font></td>
<td align='center' valign='bottom'>
<font size="-1">$2.675 </font></td>
<td align='center' valign='bottom'>
<font size="-1">$55,498,040 </font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">5,938.30 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Common stock, par value $0.001 per share</font></p></td>
<td align='center' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom'>
<font size="-1">10,203,465</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">5) </font></td>
<td align='center' valign='bottom'>
<font size="-1">$2.675 </font></td>
<td align='center' valign='bottom'>
<font size="-1">$27,294,268 </font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">2,920.49 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Total</font></p></td>
<td align='center' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom'>
<font size="-1">30,950,396 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom'>
<font size="-1">$82,792,308 </font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">8,858.79 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' colspan=10>
<hr noshade size=3 color="#000000"></td>
</tr>
</table>
<p align="left"><font size="-1">(1)&nbsp;In accordance with Rule 416(a), the registrant is also registering hereunder an indeterminate number of shares that may be issued and resold resulting from stock splits, stock dividends or similar transactions.</font></p>
<p align="left"><font size="-1">(2)&nbsp;Estimated in accordance with Rule 457(c) of the Securities Act of 1933 solely for the purpose of computing the amount of the registration fee based on the average of the high and low prices reported on the OTC Bulletin Board on December 11, 2006.</font></p>
<p align="left"><font size="-1">(3)&nbsp;Calculated under Section 6(b) of the Securities Act of 1933 as .000107 of the aggregate offering price.</font></p>
<p align="left"><font size="-1">(4)&nbsp;Represents shares of the registrant&rsquo;s common stock being registered for resale that have been issued to the selling shareholders named in this registration statement.</font></p>
<p align="left"><font size="-1">(5)&nbsp;Represents shares of the registrant&rsquo;s common stock being registered for resale that have been or may be acquired upon the exercise of warrants issued to the selling shareholders named in this registration statement.</font></p>
<p align="left"><font size="-1">The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the United States Securities and Exchange Commission, acting pursuant to said section 8(a), may determine.</font></p>
<div align="center">
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<p style='page-break-before: always'></p>
<PAGE>
<p><FONT COLOR="#FF163d" SIZE=2><B>THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS DECLARED EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.</B></FONT></p><p align="center"><b><font color="#ff163d"><font size="-1">SUBJECT TO COMPLETION, DATED DECEMBER 14, 2006</font></font></b></p>
<p align="center"><b><font size="-1">PRELIMINARY PROSPECTUS</font></b></p>
<H1 align="center"><b>Pipex Pharmaceuticals, Inc.</b></H1>
<p align="center"><b>30,950,396 shares of common stock</b></p>
<p align="left">This prospectus relates to the resale or other disposition of up to 30,950,396 shares of our common stock, $0.001 par value per share, by the persons who are, or will become, our shareholders. These persons, together with their transferees, are referred to throughout this prospectus as &ldquo;selling shareholders.&rdquo; Of these shares, up to 10,203,465 shares are issuable on the exercise of certain warrants.</p>
<p align="left">All of the shares and warrants described above were previously issued in a merger and a private placement transaction completed prior to the filing of this registration statement.</p>
<p align="left">We are not selling any shares of our common stock in this offering and therefore will not receive any proceeds from this offering. We may receive proceeds on exercise of outstanding warrants for shares of common stock covered by this prospectus if the warrants are exercised for cash. We will bear all costs associated with this registration. The selling shareholders may offer the shares covered by this prospectus at fixed prices, at prevailing market prices at the time of sale, at varying prices or negotiated prices, in negotiated transactions, or in trading markets for our common stock.</p>
<p align="left">Our common stock trades on the OTC Bulletin Board under the symbol &ldquo;SFPH.&rdquo; The closing price of our common stock on the OTC Bulletin Board on December 11, 2006, was $3.00 per share.</p>
<p align="left"><i><b>You should consider carefully the risk factors beginning on page 5 of this prospectus.</b></i></p>
<p align="left">Neither the Securities and Exchange Commission nor any state securities commission has approved these securities or determined that this prospectus is accurate or complete. Any representation to the contrary is a criminal offense.</p>
<p align="left">The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted.</p>
<p align="center">The date of this prospectus is December <u>&nbsp;&nbsp;&nbsp;</u>, 2006</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align="center"><b><font size="-1">TABLE OF CONTENTS</font></b></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#ffffff">
<td align='left' valign='top'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">PROSPECTUS SUMMARY</font></p></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">3 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='top'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">RISK FACTORS</font></p></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">5 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='top'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">RISKS RELATING TO OUR BUSINESS</font></p></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">5 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='top'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">RISKS RELATING TO OUR STOCK</font></p></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">14 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='top'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">RISKS RELATING TO OUR INDUSTRY</font></p></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">16 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='top'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">FORWARD-LOOKING STATEMENTS</font></p></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">22 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='top'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">AVAILABLE INFORMATION</font></p></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">22 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='top'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">USE OF PROCEEDS</font></p></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">22 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='top'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">MARKET FOR COMMON STOCK AND RELATED SHAREHOLDER MATTERS</font></p></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">22 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='top'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">DIVIDEND POLICY</font></p></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">23 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='top'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">PLAN OF OPERATION</font></p></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">23 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='top'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">BUSINESS</font></p></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">28 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='top'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">LEGAL PROCEEDINGS</font></p></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">37 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='top'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">DESCRIPTION OF PROPERTY</font></p></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">37 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='top'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">DIRECTORS AND EXECUTIVE OFFICERS</font></p></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">37 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='top'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS</font></p></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">41 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='top'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">EXECUTIVE COMPENSATION</font></p></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">42 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='top'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">SUMMARY COMPENSATION TABLE</font></p></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">42 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='top'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">OPTIONS/SAR GRANTS IN LAST FISCAL YEAR</font></p></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">43 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='top'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</font></p></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">44 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='top'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">DETERMINATION OF OFFERING PRICE</font></p></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">45 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='top'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">SELLING SHAREHOLDERS</font></p></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">45 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='top'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">DILUTION</font></p></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">47 </font></td>
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<p style="margin-left:1em;text-indent:-1em"><font size="-1">PLAN OF DISTRIBUTION</font></p></td>
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<p style="margin-left:1em;text-indent:-1em"><font size="-1">DESCRIPTION OF SECURITIES</font></p></td>
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<p style="margin-left:1em;text-indent:-1em"><font size="-1">INTEREST OF NAMED EXPERTS</font></p></td>
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<p style="margin-left:1em;text-indent:-1em"><font size="-1">LEGAL MATTERS</font></p></td>
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<p style="margin-left:1em;text-indent:-1em"><font size="-1">INDEMNIFICATION OF DIRECTORS AND OFFICERS</font></p></td>
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<p style="margin-left:1em;text-indent:-1em"><font size="-1">CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS</font></p></td>
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<p style="margin-left:1em;text-indent:-1em"><font size="-1">FINANCIAL STATEMENTS</font></p></td>
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<font size="-1">F-1 </font></td>
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<p align="center">2</p>
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<p align="center"><b><font size="-1">PROSPECTUS SUMMARY</font></b></p>
<p align="left"><font size="-1">This summary highlights selected information contained elsewhere in this prospectus. It is not complete and may not contain all of the information that is important to you. To understand this offering fully, you should read the entire prospectus carefully. Investors should carefully consider the information set forth under the heading &ldquo;Risk Factors.&rdquo; In this prospectus, the terms &ldquo;Pipex Pharmaceuticals,&rdquo; &ldquo;we,&rdquo; &ldquo;us,&rdquo; and &ldquo;our&rdquo; refer to Pipex Pharmaceuticals, Inc. and its subsidiaries Pipex Therapeutics, Inc., Effective Pharmaceuticals, Inc., Solovax, Inc., CD4 Biosciences, Inc., and Putney Drug Corp. </font></p>
<p align="left"><i><b><font size="-1">Our Company</font></b></i></p>
<p align="left"><font size="-1">We are a development-stage, specialty pharmaceutical company that is developing proprietary, late-stage drug candidates for the treatment of neurologic and fibrotic diseases. Our strategy is to exclusively in-license proprietary, clinical-stage drug candidates that have demonstrated preliminary efficacy in human clinical trials and to complete the further clinical testing, manufacturing and other regulatory requirements sufficient to seek marketing authorizations via the filing of New Drug Applications (NDA) with the FDA and potential Marketing Application Authorizations (MAA) with the European Medicines Evaluation Agency (EMEA).</font></p>
<p align="left"><font size="-1">Our lead drug candidate, COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> (oral tetrathiomolybdate), is a novel, oral, anticopper therapeutic that has completed two pivotal clinical trials in neurologically-presenting Wilson&rsquo;s disease that we believe have demonstrated sufficient safety and efficacy to support the filing of an NDA with the FDA as well as a MAA with the European Medicines Evaluation Agency. In order to expand the therapeutic utility of COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> beyond the indication of initially-presenting neurological Wilson&rsquo;s disease, our investigators have recently completed an initial 12 month, 16 patient, open label phase II clinical trial for the treatment of refractory idiopathic pulmonary fibrosis (IPF), a progressive fibrotic lung disease associated with high rates
of mortality and for which there is no currently approved therapy. IPF is estimated to affect 124,000 patients in the U.S., resulting in approximately 30,000 deaths annually, exceeding the annual number of deaths attributable to breast and prostate cancer.</font></p>
<p align="left"><font size="-1">We are also developing TRIMESTA</font><font size="-1"><sup>TM</sup></font><font size="-1"> (oral estriol), for the treatment of multiple sclerosis (MS), a life threatening autoimmune disease that affects the central nervous system (CNS). MS is characterized by a progressive loss of motor function, leading to paralysis and death. Estriol has been approved for the treatment of post-menopausal hot flashes in Europe and Asia for approximately 40 years but has never been approved in the U.S. TRIMESTA</font><font size="-1"><sup>TM</sup></font><font size="-1"> has completed a phase IIa clinical trial in the U.S. for the treatment of MS and demonstrated statistically significant benefits in relapsing-remitting MS patients. We plan to initiate a phase II/III clinical trial using TRIMESTA</font><font size="-1"><sup>TM</sup></font><font size="-1"> for the treatment of
relapsing-remitting MS.</font></p>
<p align="left"><font size="-1">We are also developing a series of small molecule and peptide based inhibitors of the CD4 co-receptor of T-cells, an important pathway for the treatment and prevention of autoimmune diseases. Our lead anti-CD4 molecule, Anti-CD4 802-2, is a cyclic, seven amino acid peptide that has demonstrated efficacy in a number of animal models of autoimmune diseases, including MS, and is currently nearing completion of a dose ranging phase I/II clinical trial for the prevention of graft-versus-host disease.</font></p>
<p align="left"><font size="-1">We have eight employees. Our management team includes experienced senior level professionals with a combined 50 years of experience at leading companies in the pharmaceutical industry, including Pfizer, Pharmacia, and Warner-Lambert.</font></p>
<p align="left"><font size="-1">Our corporate headquarters is located at 3985 Research Park Drive, Ann Arbor MI 48108. Our telephone number is (734) 332-7800 and our website is located at www.pipexpharma.com. The information on our website is not part of this prospectus.</font></p>
<p align="center">3</p>
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<p align="left"><i><b><font size="-1">Recent Transactions</font></b></i></p>
<p align="left"><font size="-1">On October 31, 2006, our wholly owned subsidiary completed a merger with Pipex Therapeutics, Inc. (&ldquo;Pipex Therapeutics&rdquo;) whereby Pipex Therapeutics&rsquo; shareholders were issued 34 million of our shares and we assumed the then outstanding options and warrants of Pipex Therapeutics.</font></p>
<p align="left"><font size="-1">Prior to the merger, Pipex Therapeutics completed a private placement to institutional and accredited investors resulting in approximately $4.5 million in gross proceeds to us.</font></p>
<p align="left"><font size="-1">During November 2006, we completed a separate private placement to institutional and accredited investors resulting in approximately $9.3 million in gross proceeds. As a result of these two placements (the &ldquo;Placements&rdquo;)  we received approximately $13.9 million in gross proceeds.</font></p>
<p align="left"><font size="-1">In connection with these transactions, we agreed to file, within 45 days of the closing date of the merger, a registration statement registering for resale the shares exchanged by the Registrant and have it declared effective within 150 days of the closing of the merger. The registration statement of which this prospectus forms a part is being filed to fulfill the obligations to the investors of the Placements.</font></p>
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<i><b><font size="-1">The Offering </font></b></i></td>
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<br><i><font size="-1">Common stock outstanding </font></i></td>
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<i><br></i><font size="-1">48,679,773 shares as of December 11, 2006. </font></td>
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<br><i><font size="-1">Common stock that may be offered by selling shareholders </font></i></td>
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&nbsp;&nbsp;&nbsp;&nbsp;</td>
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<i><br></i><font size="-1">Up to 30,950,396 shares, representing 20,746,931 shares of our common stock that were issued to the selling shareholders and 10,203,465 shares of our common stock underlying warrants that were issued to the selling shareholders. </font></td>
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<br><i><font size="-1">Total proceeds raised by offering </font></i></td>
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<i><br></i><font size="-1">We will not receive any proceeds from the resale or other disposition of the shares covered by this prospectus by any selling shareholder. We may receive proceeds from the exercise of the warrants whose underlying shares of common stock are covered by this prospectus. </font></td>
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<br><i><font size="-1">Risk factors </font></i></td>
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<i><br></i><font size="-1">There are significant risks involved in investing in our company. For a discussion of risk factors you should consider before buying our common stock, see &ldquo;Risk Factors&rdquo; beginning on page 5. </font></td>
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<p align="center">4</p>
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<p align="center"><b><font size="-1">RISK FACTORS</font></b></p>
<p align="left"><font size="-1">An investment in our securities is highly speculative and involves a high degree of risk. Therefore, in evaluating us and our business you should carefully consider the risks set forth below, which are only a few of the risks associated with investing in our common stock. You should be in a position to risk the loss of your entire investment.</font></p>
<p align="center"><b><font size="-1">RISKS RELATING TO OUR BUSINESS</font></b></p>
<p align="left"><i><b><font size="-1">We are a development stage company. We currently have no product revenues and will need to raise additional capital to operate our business.</font></b></i></p>
<p align="left"><font size="-1">We are a development stage company that has experienced significant losses since inception and has a significant accumulated deficit. We expect to incur additional operating losses in the future and expect our cumulative losses to increase. To date, we have generated no product revenues. As of September 30, 2006, we have expended approximately $6 million on a consolidated basis acquiring and developing our current product candidates. Until such time as we receive approval from the FDA and other regulatory authorities for our product candidates, we will not be permitted to sell our drugs and will not have product revenues. Therefore, for the foreseeable future we will have to fund all of our operations and capital expenditures from equity and debt offerings, cash on hand, licensing fees, and grants. We will need to seek additional sources of financing and such
additional financing may not be available on favorable terms, if at all. If we do not succeed in raising additional funds on acceptable terms, we may be unable to complete planned pre-clinical and clinical trials or obtain approval of our product candidates from the FDA and other regulatory authorities. In addition, we could be forced to discontinue product development, reduce or forego sales and marketing efforts, and forego attractive business opportunities. Any additional sources of financing will likely involve the issuance of our equity or debt securities, which will have a dilutive effect on our stockholders.</font></p>
<p align="left"><i><b><font size="-1">We are not currently profitable and may never become profitable.</font></b></i></p>
<p align="left"><font size="-1">We have a history of losses and expect to incur substantial losses and negative operating cash flow for the foreseeable future. Even if we succeed in developing and commercializing one or more of our product candidates, we expect to incur substantial losses for the foreseeable future and may never become profitable. We also expect to continue to incur significant operating and capital expenditures and anticipate that our expenses will increase substantially in the foreseeable future as we do the following:</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;continue to undertake pre-clinical development and clinical trials for our product candidates;</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;seek regulatory approvals for our product candidates;</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;implement additional internal systems and infrastructure;</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;lease additional or alternative office facilities; and</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;hire additional personnel, including members of our management team.</font></p>
<p align="left"><font size="-1">We also expect to experience negative cash flow for the foreseeable future as we fund our technology development with capital expenditures. As a result, we will need to generate significant revenues in order to achieve and maintain profitability. We may not be able to generate these revenues or achieve profitability in the future. Our failure to achieve or maintain profitability could negatively impact the value of our common stock and underlying securities.</font></p>
<p align="left"><i><b><font size="-1">We have a limited operating history on which investors can base an investment decision.</font></b></i></p>
<p align="left"><font size="-1">We are a development-stage company and have not demonstrated our ability to perform the functions necessary for the successful commercialization of any of our product candidates. The successful commercialization of our product candidates will require us to perform a variety of functions, including:</font></p>
<p align="center">5</p>
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<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;continuing to undertake pre-clinical development and clinical trials;</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;participating in regulatory approval processes;</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;formulating and manufacturing products; and</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;conducting sales and marketing activities.</font></p>
<p align="left"><font size="-1">Our operations have been limited to organizing and staffing our company, acquiring, developing, and securing our proprietary technology, and undertaking pre-clinical trials and Phase I/II and Phase II clinical trials of our principal product candidates. These operations provide a limited basis for you to assess our ability to commercialize our product candidates and the advisability of investing in our securities.</font></p>
<p align="left"><i><b><font size="-1">We may not obtain the necessary U.S. or worldwide regulatory approvals to commercialize our product(s).</font></b></i></p>
<p align="left"><font size="-1">We will need FDA approval to commercialize our product candidates in the U.S. and approvals from equivalent regulatory authorities in foreign jurisdictions to commercialize our product candidates in those jurisdictions. In order to obtain FDA approval for any of our product candidates, we must submit to the FDA a new drug application, or &ldquo;NDA,&rdquo; demonstrating that the product candidate is safe for humans and effective for its intended use. This demonstration requires significant research and animal tests, which are referred to as &ldquo;pre-clinical studies,&rdquo; as well as human tests, which are referred to as &ldquo;clinical trials.&rdquo; We will also need to file additional investigative new drug applications and protocols in order to initiate clinical testing of our drug candidates in new therapeutic indications and delays in obtaining required
FDA and institutional review board approvals to commence such studies may delay our initiation of such planned additional studies.</font></p>
<p align="left"><font size="-1">Satisfying the FDA&rsquo;s regulatory requirements typically takes many years, depending on the type, complexity, and novelty of the product candidate, and requires substantial resources for research, development, and testing. We cannot predict whether our research and clinical approaches will result in drugs that the FDA considers safe for humans and effective for indicated uses. The FDA has substantial discretion in the drug approval process and may require us to conduct additional pre-clinical and clinical testing or to perform post-marketing studies. The approval process may also be delayed by changes in government regulation, future legislation or administrative action, or changes in FDA policy that occur prior to or during our regulatory review. Delays in obtaining regulatory approvals may do the following:</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;delay commercialization of, and our ability to derive product revenues from, our product candidates;</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;impose costly procedures on us; and</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;diminish any competitive advantages that we may otherwise enjoy.</font></p>
<p align="left"><font size="-1">Even if we comply with all FDA requests, the FDA may ultimately reject one or more of our NDAs. We cannot be sure that we will ever obtain regulatory clearance for our product candidates. Failure to obtain FDA approval of any of our product candidates will severely undermine our business by reducing our number of salable products and, therefore, corresponding product revenues.</font></p>
<p align="left"><font size="-1">In foreign jurisdictions, we must receive approval from the appropriate regulatory authorities before we can commercialize our drugs. Foreign regulatory approval processes generally include all of the risks associated with the FDA approval procedures described above. We cannot assure you that we will receive the approvals necessary to commercialize our product candidate for sale outside the United States.</font></p>
<p align="center">6</p>
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<p align="left"><i><b><font size="-1">We may not be able to retain rights licensed to us by others to commercialize key products and may not be able to establish or maintain the relationships we need to develop, manufacture, and market our products.</font></b></i></p>
<p align="left"><font size="-1">We currently rely on an exclusive worldwide license agreement with the University of Michigan relating to various uses of COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> . We also have an exclusive license agreement with the McLean Hospital relating to the use of EFFIRMA</font><font size="-1"><sup>TM</sup></font><font size="-1"> to treat fibromyalgia syndrome; an exclusive license agreement with Thomas Jefferson University relating to our anti-CD4 inhibitors; an exclusive license agreement with the Regents of the University of California relating to our TRIMESTA</font><font size="-1"><sup>TM</sup></font><font size="-1"> technology; an exclusive license agreement with the Children&rsquo;s Hospital-Boston relating to our CORRECTA</font><font size="-1"><sup>TM</sup></font><font size="-1"> technology and an exclusive option agreement to license
our T-cell vaccine program from the University of Southern California (USC). Each of these agreements requires us to use our best efforts to commercialize each of the technologies as well as meet certain diligence requirements and timelines in order to keep the license agreement in effect. In the event we are not able to meet our diligence requirements, we may not be able to retain the rights granted under our agreements or renegotiate our arrangement with these institutions on reasonable terms, or at all.</font></p>
<p align="left"><font size="-1">Furthermore, we currently have very limited product development capabilities and no manufacturing, marketing or sales capabilities. For us to research, develop, and test our product candidates, we would need to contract with outside researchers, in most cases those parties that did the original research and from whom we have licensed the technologies.</font></p>
<p align="left"><font size="-1">We can give no assurances that any of our issued patents licensed to us or any of our other patent applications will provide us with significant proprietary protection or be of commercial benefit to us. Furthermore, the issuance of a patent is not conclusive as to its validity or enforceability, nor does the issuance of a patent provide the patent holder with freedom to operate without infringing the patent rights of others.</font></p>
<p align="left"><i><b><font size="-1">Developments by competitors may render our products or technologies obsolete or non-competitive.</font></b></i></p>
<p align="left"><font size="-1">Companies that currently sell or are developing both generic and proprietary pharmaceutical compounds to treat central-nervous-system, inflammatory, autoimmune and fibrotic diseases include: Pfizer, Inc., GlaxoSmithKline Pharmaceuticals, Shire Pharmaceuticals, Plc., Merck &amp; Co., Eli Lilly &amp; Co., Serono, SA, Biogen Idec, Inc., Achillion, Ltd., Active Biotech, Inc., Panteri Biosciences, Meda, Merrimack Pharmaceuticals, Inc., Schering AG, Forest Laboratories, Inc., Attenuon, LLC, Cypress Biosciences, Inc., Axcan Pharma, Inc., Teva Pharmaceuticals, Inc., Intermune, Inc. Fibrogen, Inc., Rare Disease Therapeutics, Inc., Prana Biotechnology, Inc., Merz &amp; Co., AstraZeneca Pharmaceuticals, Inc., Chiesi Pharmaceuticals, Inc., Targacept, Inc., and Johnson &amp; Johnson, Inc. Alternative technologies are being developed to treat autoimmune inflammatory, fibrotic,
Alzheimer&rsquo;s and Wilson&rsquo;s diseases, several of which are in early and advanced clinical trials, such as, pirfenidone, milnacipram, Actimmune</font><font size="-1"><sup>TM</sup></font><font size="-1"> and other interferon preparations. Unlike us, many of our competitors have significant financial and human resources. In addition, academic research centers may develop technologies that compete with our CORRECTA</font><font size="-1"><sup>TM</sup></font><font size="-1"> , TRIMESTA</font><font size="-1"><sup>TM</sup></font><font size="-1">, anti-CD4 inhibitors, flupirtine and COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> technologies. We are aware that other companies are developing competitive anti-copper therapies that are in various stages of clinical trial.</font></p>
<p align="left"><i><b><font size="-1">We may not succeed in enforcing our orphan drug designations.</font></b></i></p>
<p align="left"><font size="-1">COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> has been designated by the FDA as an &ldquo;orphan drug&rdquo; for the treatment of Wilson&rsquo;s disease patients presenting with neurologic complications. CORRECTA</font><font size="-1"><sup>TM</sup></font><font size="-1"> has also been designated by the FDA as an &ldquo;orphan drug&rdquo; for the treatment of pouchitis patients. We intend to file for &ldquo;orphan drug&rdquo; designations in the EMEA (the European equivalent of the FDA) for both COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> and CORRECTA</font><font size="-1"><sup>TM</sup></font><font size="-1"> for similar uses. Pursuant to our agreements with our scientific inventors and universities, we have acquired these designations. Orphan drug designation is an important element of our competitive strategy because
there are no composition of matter patents for COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1">, TRIMESTA</font><font size="-1"><sup>TM</sup></font><font size="-1"> or CORRECTA</font><font size="-1"><sup>TM</sup></font><font size="-1">. Any company that obtains the first FDA approval for a designated </font></p>
<p align="center">7</p>
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<PAGE>
<p align="left"><font size="-1">orphan drug for a rare disease generally receives marketing exclusivity for use of that drug for the designated condition for a period of seven years in the United States and ten years in the European Union.</font></p>
<p align="left"><font size="-1">To be successful in enforcing this designation, our new drug application would need to be the first NDA approved to use COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> to treat Wilson&rsquo;s disease. While we are not aware of any other companies that have sought orphan drug designation for COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> or its active ingredient, tetrathiomolybdate, for this indication, other companies may in the future seek it and may obtain FDA marketing approval before we do. In addition, the FDA may permit other companies to market a form of tetrathiomolybdate to treat Wilson&rsquo;s disease patients with neurologic complication if their product demonstrates clinical superiority. This could create a more competitive market for us.</font></p>
<p align="left"><i><b><font size="-1">Competitors could develop and gain FDA approval of our products for a different indication.</font></b></i></p>
<p align="left"><font size="-1">A competitor could develop our products in a similar format, but for a different indication. For example, other companies could manufacture and develop COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> and its active ingredient, tetrathiomolybdate, and secure approvals for different indications. We are aware that a potential competitor has an exclusive license from the University of Michigan (UM) to an issued U.S. patent that relates to the use of tetrathiomolybdate to treat angiogenic diseases (the &ldquo;Angiogenic Patent&rdquo;) and is currently in phase I and phase II clinical trials for the treatment of various forms of cancer. To our knowledge, this competitor and UM have filed additional patent applications claiming various analog structures and formulations of tetrathiomolybdate to treat various diseases. While our use of COPREXA</font><font
size="-1"><sup>TM</sup></font><font size="-1"> and its active ingredient, tetrathiomolybdate, is in a more advanced state of clinical development, having completed two pivotal clinical trials, we cannot predict whether or not one or more patent applications corresponding to the Angiogenic Patent will be filed or if any U.S. patents will be issued which might prevent us from expanding the commercial applications of COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> . Further, we cannot predict whether our competitor might seek to develop their version of tetrathiomolybdate for Wilson&rsquo;s disease and file for FDA or EMEA approval before us and saturate the market. We also cannot predict whether, if issued, any patent corresponding to the Angiogenic Patent may prevent us from conducting our business or result in lengthy and costly litigation or the need for a license. Furthermore,
if we need to obtain a license to these or other patents in order to conduct our business, we may find that it is not available to us on commercially reasonable terms, or is not available to us at all.</font></p>
<p align="left"><font size="-1">If the FDA approves other tetrathiomolybdate products to treat indications other than those covered by our issued or pending patent applications, physicians may elect to prescribe a competitor&rsquo;s tetrathiomolybdate to treat Wilson&rsquo;s disease&mdash;this is commonly referred to as &ldquo;off-label&rdquo; use. While under FDA regulations a competitor is not allowed to promote off-label uses of its product, the FDA does not regulate the practice of medicine and, as a result, cannot direct physicians as to which source it should use for the tetrathiomolybdate they prescribe to their patients. Consequently, we might be limited in our ability to prevent off-label use of a competitor&rsquo;s tetrathiomolybdate to treat Wilson&rsquo;s disease or inflammatory or fibrotic disease, even if we have orphan drug exclusivity. Our competitor might seek FDA or EMEA
approval to market tetrathiomolybdate for any therapeutic indication, including Wilson&rsquo;s disease or idiopathic pulmonary fibrosis (IPF). If we are not able to obtain and enforce these patents, a competitor could use tetrathiomolybdate for a treatment or use not covered by any of our patents.</font></p>
<p align="left"><i><b><font size="-1">We rely primarily on method patents and patent applications</font></b><font size="-1"> </font><b><font size="-1">and various regulatory exclusivities to protect the development of our technologies, and our ability to compete may decrease or be eliminated if we are not able to protect our proprietary technology.</font></b></i></p>
<p align="left"><font size="-1">Our competitiveness may be adversely affected if we are unable to protect our proprietary technologies. Currently, there are no composition of matter patents for TRIMESTA</font><font size="-1"><sup>TM</sup></font><font size="-1">, EFFIRMA</font><font size="-1"><sup>TM</sup></font><font size="-1">, CORRECTA</font><font size="-1"><sup>TM</sup></font><font size="-1">, COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> or their respective active ingredients estriol, flupirtine, clotrimazole and tetrathiomolybdate. Additionally, we do not have an issued patent for COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1">&rsquo;s use to treat Wilson&rsquo;s disease, although we do have Orphan Drug Designation for this indication. Orphan Drug </font></p>
<p align="center">8</p>
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<p align="left"><font size="-1">Designation provides protection for seven years of marketing exclusivity for that product in that disease indication in the U.S. We also expect to rely on patent protection from an issued U.S. Patent for the use of COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> and related compounds to treat inflammatory and fibrotic diseases (U.S. Patent No 6,855,340) and we have received a notice of allowance for the use of COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> and related compounds to treat Alzheimer&rsquo;s disease. Both of these patents have been exclusively licensed to us. We have also filed various pending patent applications which cover various formulations, packaging, distribution &amp; monitoring methods for COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1">. We rely on issued patent and pending patent
applications for use of TRIMESTA</font><font size="-1"><sup>TM</sup></font><font size="-1"> to treat MS (issued U.S. Patent No. 6,936,599) and various other therapeutic indications which have been exclusively licensed to us. We have also exclusively licensed an issued patent for the treatment of fibromyalgia with EFFIRMA</font><font size="-1"><sup>TM</sup></font><font size="-1"> and have pending patent applications for our uses of CORRECTA</font><font size="-1"><sup>TM</sup></font><font size="-1">.</font></p>
<p align="left"><font size="-1">We also expect to rely on regulatory exclusivities, such as the Orphan Drug Designation with the FDA and EMEA (&ldquo;Orphan Drug&rdquo;) to protect COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> and CORRECTA</font><font size="-1"><sup>TM</sup></font><font size="-1"> for certain therapeutic indications and our other future products. Orphan Drug protection provides for seven years of marketing exclusivity for that disease indication in the U.S. and ten years of marketing exclusivity for that disease indication in Europe. We have received an Orphan Drug Designation for the use of CORRECTA</font><font size="-1"><sup>TM</sup></font><font size="-1"> to treat pouchitis as well as an Orphan Drug Designation for the use of COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> to treat neurologically presenting Wilson&rsquo;s disease
and are in the process of filing similar designations in Europe. Orphan Drug Designation is an important element of our competitive strategy for COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> and CORRECTA</font><font size="-1"><sup>TM</sup></font><font size="-1"> . To be successful in enforcing this designation, our NDA would need to be the first NDA approved to use COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> and CORRECTA</font><font size="-1"><sup>TM</sup></font><font size="-1"> for that indication. While we are not aware of any other companies that have sought orphan drug designation for COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> and CORRECTA</font><font size="-1"><sup>TM</sup></font><font size="-1"> for any indication, other companies may in the future seek it and may obtain FDA marketing approval before we do.</font></p>
<p align="left"><font size="-1">After the Orphan Drug exclusivity period expires, assuming our patents are validly issued, we still expect to rely on our issued and pending method of use patent applications to protect our proprietary technology with respect to the development of COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1">, TRIMESTA</font><font size="-1"><sup>TM</sup></font><font size="-1"> and CORRECTA</font><font size="-1"><sup>TM</sup></font><font size="-1"> . The patent positions of pharmaceutical companies are uncertain and may involve complex legal and factual questions. We may incur significant expense in protecting our intellectual property and defending or assessing claims with respect to intellectual property owned by others. Any patent or other infringement litigation by or against us could cause us to incur significant expense and divert the attention of
our management.</font></p>
<p align="left"><font size="-1">We may also rely on the United States Drug Price Competition and Patent Term Restoration Act, commonly known as the &ldquo;Hatch-Waxman Amendments,&rdquo; to protect some of our current product candidates, specifically COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1">, TRIMESTA</font><font size="-1"><sup>TM</sup></font><font size="-1">, Anti-CD4 802-2, EFFIRMA</font><font size="-1"><sup>TM</sup></font><font size="-1"> and other future product candidates we may develop. Once a drug containing a new molecule is approved by the FDA, the FDA cannot accept an abbreviated NDA for a generic drug containing that molecule for five years, although the FDA may accept and approve a drug containing the molecule pursuant to an NDA supported by independent clinical data. Recent amendments have been proposed that would narrow the scope of Hatch-Waxman exclusivity
and permit generic drugs to compete with our drug.</font></p>
<p align="left"><font size="-1">Others may file patent applications or obtain patents on similar technologies or compounds that compete with our products. We cannot predict how broad the claims in any such patents or applications will be, and whether they will be allowed. Once claims have been issued, we cannot predict how they will be construed or enforced. We may infringe intellectual property rights of others without being aware of it. If another party claims we are infringing their technology, we could have to defend an expensive and time consuming lawsuit, pay a large sum if we are found to be infringing, or be prohibited from selling or licensing our products unless we obtain a license or redesign our product, which may not be possible.</font></p>
<p align="left"><font size="-1">We also rely on trade secrets and proprietary know-how to develop and maintain our competitive position. Some of our current or former employees, consultants, or scientific advisors, or current or prospective corporate collaborators, may unintentionally or willfully disclose our confidential </font></p>
<p align="center">9</p>
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<p align="left"><font size="-1">information to competitors or use our proprietary technology for their own benefit. Furthermore, enforcing a claim alleging the infringement of our trade secrets would be expensive and difficult to prove, making the outcome uncertain. Our competitors may also independently develop similar knowledge, methods, and know-how or gain access to our proprietary information through some other means.</font></p>
<p align="left"><i><b><font size="-1">We may fail to retain or recruit necessary personnel, and we may be unable to secure the services of consultants.</font></b></i></p>
<p align="left"><font size="-1">We currently have eight full-time employees, including Steve H. Kanzer, our co-founder, Chairman and CEO and Dr. Charles Bisgaier, our President. We have also engaged regulatory consultants to advise us on our dealings with the FDA. We intend to recruit certain key executive officers, including a vice president of finance, a vice president of regulatory affairs, and other key executive officers. Our future performance will depend in part on our ability to successfully integrate newly hired executive officers into our management team and our ability to develop an effective working relationship among senior management.</font></p>
<p align="left"><font size="-1">Certain of our officers, directors, (including Mr. Stergis, our Chief Operating Officer and Dr. Rudick, our Chief Medical Officer) scientific advisors, and consultants serve as officers, directors, scientific advisors, or consultants of other biopharmaceutical or biotechnology companies. We can expect this to also be the case with personnel that we engage in the future. We can give no assurances that any such other companies will not have interests that are in conflict with our interests.</font></p>
<p align="left"><font size="-1">Losing key personnel or failing to recruit necessary additional personnel would impede our ability to attain our development objectives. There is intense competition for qualified personnel in the drug-development field, and we may not be able to attract and retain the qualified personnel we would need to develop our business.</font></p>
<p align="left"><font size="-1">We rely on independent organizations, advisors, and consultants to perform certain services for us, including handling substantially all aspects of regulatory approval, clinical management, manufacturing, marketing, and sales. We expect that this will continue to be the case. Such services may not always be available to us on a timely basis when we need them.</font></p>
<p align="left"><i><b><font size="-1">We may experience difficulties in obtaining sufficient quantities of our products or other compounds.</font></b></i></p>
<p align="left"><font size="-1">In order to successfully commercialize our product candidates, we must be able to manufacture our products in commercial quantities, in compliance with regulatory requirements, at acceptable costs, and in a timely manner. Manufacture of the types of biopharmaceutical products that we propose to develop present various risks. For example, manufacture of the active ingredient in COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> is a complex process that can be difficult to scale up for purposes of producing large quantities. This process can also be subject to delays, inefficiencies, and poor or low yields of quality products. Furthermore, the active ingredient of COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> is known to be subject to a loss of potency as a result of prolonged exposure to moisture and other normal atmospheric
conditions. We are developing proprietary formulations and specialty packaging solutions to overcome this stability issue, but we can give no assurances that we will be successful in meeting the stability requirements required for approval by regulatory authorities such as the FDA. Additionally, our SOLOVAX T-cell vaccine technology is complex to manufacture. The vaccine is manufactured through the procurement of a patients own T-cells derived from the patient&rsquo;s plasma. This manufacturing process involves incubation of T-cells, irradiation and refrigeration of the cells. We plan to develop a revised manufacturing procedure which will streamline quality control of the vaccine.</font></p>
<p align="left"><font size="-1">Historically, our manufacturing has been handled by contract manufacturers and compounding pharmacies. We can give no assurances that we will be able to continue to use our current manufacturer or be able to establish another relationship with a manufacturer quickly enough so as not to disrupt commercialization of any of our products, or that commercial quantities of any of our products, if approved for marketing, will be available from contract manufacturers at acceptable costs. </font></p>
<p align="center">10</p>
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<p align="left"><font size="-1">In addition, any contract manufacturer that we select to manufacture our product candidates might fail to maintain a current &ldquo;good manufacturing practices&rdquo; (cGMP) manufacturing facility.</font></p>
<p align="left"><font size="-1">If we decide to establish a full-scale commercial manufacturing facility, we would require substantial additional funds, we would need to hire and train significant numbers of employees and comply with the extensive regulations applicable to such a facility. We might find that we are unable to develop a cGMP manufacturing facility that is able to manufacture quantities of products required for all clinical trials, as well as commercial-scale manufacturing.</font></p>
<p align="left"><font size="-1">The cost of manufacturing certain products may make them prohibitively expensive. In order to successfully commercialize our product candidates we may be required to reduce the costs of production, and we may find that we are unable to do so. We may be unable to obtain, or may be required to pay high prices for compounds manufactured or sold by others that we need for comparison purposes in clinical trials and studies for our products.</font></p>
<p align="left"><i><b><font size="-1">Clinical trials are very expensive, time-consuming, and difficult to design and implement.</font></b></i></p>
<p align="left"><font size="-1">Human clinical trials are very expensive and difficult to design and implement, in part because they are subject to rigorous regulatory requirements. The clinical trial process is also time-consuming. We estimate that clinical trials of our product candidates would take at least several years to complete. Furthermore, failure can occur at any stage of the trials, and we could encounter problems that cause us to abandon or repeat clinical trials. Commencement and completion of clinical trials may be delayed by several factors, including:</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;unforeseen safety issues;</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;determination of dosing;</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;lack of effectiveness during clinical trials;</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;slower than expected rates of patient recruitment;</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;inability to monitor patients adequately during or after treatment; and</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;inability or unwillingness of medical investigators to follow our clinical protocols.</font></p>
<p align="left"><font size="-1">In addition, we or the FDA may suspend our clinical trials at any time if it appears that we are exposing participants to unacceptable health risks or if the FDA finds deficiencies in our submissions or conduct of our trials.</font></p>
<p align="left"><i><b><font size="-1">The results of our clinical trials may not support our product candidate claims.</font></b></i></p>
<p align="left"><font size="-1">Even if our clinical trials are completed as planned, we cannot be certain that the results will support our product-candidate claims. Success in pre-clinical testing and phase II clinical trials does not ensure that later clinical trials will be successful. We cannot be sure that the results of later clinical trials would replicate the results of prior clinical trials and pre-clinical testing. Clinical trials may fail to demonstrate that our product candidates are safe for humans and effective for indicated uses. Any such failure could cause us to abandon a product candidate and might delay development of other product candidates. Any delay in, or termination of, our clinical trials would delay our obtaining FDA approval for the affected product candidate and, ultimately, our ability to commercialize that product candidate.</font></p>
<p align="left"><i><b><font size="-1">Physicians and patients may not accept and use our technologies.</font></b></i></p>
<p align="left"><font size="-1">Even if the FDA approves our product candidates, physicians and patients may not accept and use them. Acceptance and use of our product will depend upon a number of factors, including the following:</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;the perception of members of the health care community, including physicians, regarding the safety and effectiveness of our drugs;</font></p>
<p align="center">11</p>
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<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;the cost-effectiveness of our product relative to competing products;</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;availability of reimbursement for our products from government or other healthcare payers; and</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;the effectiveness of marketing and distribution efforts by us and our licensees and distributors, if any.</font></p>
<p align="left"><font size="-1">Because we expect sales of our current product candidates, if approved, to generate substantially all of our product revenues for the foreseeable future, the failure of any of these drugs to find market acceptance would harm our business and could require us to seek additional financing.</font></p>
<p align="left"><i><b><font size="-1">We depend on researchers who are not under our control.</font></b></i></p>
<p align="left"><font size="-1">We depend upon independent investigators and scientific collaborators, such as universities and medical institutions, to conduct our pre-clinical and clinical trials under agreements with us. These collaborators are not our employees and we cannot control the amount or timing of resources that they devote to our programs or the timing of their procurement of clinical-trial data. They may not assign as great a priority to our programs or pursue them as diligently as we would if we were undertaking those programs ourselves. Failing to devote sufficient time and resources to our drug-development programs, or substandard performance, could result in delay of any FDA applications and our commercialization of the drug candidate involved.</font></p>
<p align="left"><font size="-1">These collaborators may also have relationships with other commercial entities, some of which may compete with us. Our collaborators assisting our competitors at our expense, could harm our competitive position. For example, we depend on scientific collaborators for our TRIMESTA</font><font size="-1"><sup>TM</sup></font><font size="-1">, SOLOVAX</font><font size="-1"><sup>TM</sup></font><font size="-1">, CORRECTA</font><font size="-1"><sup>TM</sup></font><font size="-1">, anti-CD4 802-2, EFFIRMA</font><font size="-1"><sup>TM</sup></font><font size="-1"> and COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> development programs. Specifically, all of the clinical trials have been conducted under physician-sponsored investigational new drug applications (INDs), not corporate-sponsored INDs. We are also dependent on government and private grants
to fund certain of our clinical trials for our product candidates. If we are unable to maintain these grants, we might be forced to scale back development of these product candidates. We have experienced difficulty in collecting the data or transferring these programs to corporate-sponsored INDs. Additionally, we are aware that all of our scientific collaborators also act as advisors to our competitors.</font></p>
<p align="left"><i><b><font size="-1">We have no experience selling, marketing, or distributing products and do not have the capability to do so.</font></b></i></p>
<p align="left"><font size="-1">We currently have no sales, marketing, or distribution capabilities. We do not anticipate having resources in the foreseeable future to allocate to selling and marketing our proposed products. Our success will depend, in part, on whether we are able to enter into and maintain collaborative relationships with a pharmaceutical or a biotechnology company charged with marketing one or more of our products. We may not be able to establish or maintain such collaborative arrangements or to commercialize our products in foreign territories, and even if we do, our collaborators may not have effective sales forces.</font></p>
<p align="left"><font size="-1">If we do not, or are unable to, enter into collaborative arrangements to sell and market our proposed products, we will need to devote significant capital, management resources, and time to establishing and developing an in-house marketing and sales force with technical expertise. We may be unsuccessful in doing so.</font></p>
<p align="left"><i><b><font size="-1">If we fail to maintain positive relationships with particular individuals, we may be unable to successfully develop our product candidates, conduct clinical trials, and obtain financing.</font></b></i></p>
<p align="left"><font size="-1">If we fail to maintain positive relationships with members of our management team or if these individuals decrease their contributions to our company, our business could be adversely impacted. We do not carry key employee insurance policies for any of our key employees.</font></p>
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<p align="left"><font size="-1">We also rely greatly on employing and retaining other highly trained and experienced senior management and scientific personnel. The competition for these and other qualified personnel in the biotechnology field is intense. If we are not able to attract and retain qualified scientific, technical, and managerial personnel, we probably will be unable to achieve our business objectives.</font></p>
<p align="left"><i><b><font size="-1">We may not be able to compete successfully for market share against other drug companies.</font></b></i></p>
<p align="left"><font size="-1">The markets for our product candidates are characterized by intense competition and rapid technological advances. If our product candidates receive FDA approval, they will compete with existing and future drugs and therapies developed, manufactured, and marketed by others. Competing products may provide greater therapeutic convenience or clinical or other benefits for a specific indication than our products, or may offer comparable performance at a lower cost. If our products fail to capture and maintain market share, we may not achieve sufficient product revenues and our business will suffer.</font></p>
<p align="left"><font size="-1">We will compete against fully integrated pharmaceutical companies and smaller companies that are collaborating with larger pharmaceutical companies, academic institutions, government agencies, or other public and private research organizations. Many of these competitors have therapies to treat autoimmune fibrotic and central nervous system diseases already approved or in development. In addition, many of these competitors, either alone or together with their collaborative partners, operate larger research-and-development programs than we do, have substantially greater financial resources than we do, and have significantly greater experience in the following areas:</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;developing drugs;</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;undertaking pre-clinical testing and human clinical trials;</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;obtaining FDA and other regulatory approvals of drugs;</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;formulating and manufacturing drugs; and</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;launching, marketing and selling drugs.</font></p>
<p align="left"><i><b><font size="-1">We may incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property rights, as well as costs associated with frivolous lawsuits.</font></b></i></p>
<p align="left"><font size="-1">If any other person files patent applications, or is issued patents, claiming technology also claimed by us in pending applications, we may be required to participate in interference proceedings in the U.S. Patent and Trademark Office to determine priority of invention. We, or our licensors, may also need to participate in interference proceedings involving our issued patents and pending applications of another entity.</font></p>
<p align="left"><font size="-1">We cannot guarantee that the practice of our technologies will not conflict with the rights of others. In some foreign jurisdictions, we could become involved in opposition proceedings, either by opposing the validity of another&rsquo;s foreign patent or by persons opposing the validity of our foreign patents.</font></p>
<p align="left"><font size="-1">We may also face frivolous litigation or lawsuits from various competitors or from litigious securities attorneys. The cost to us of any litigation or other proceeding relating to these areas, even if resolved in our favor, could be substantial and could distract management from our business. Uncertainties resulting from initiation and continuation of any litigation could have a material adverse effect on our ability to continue our operations.</font></p>
<p align="left"><i><b><font size="-1">If we infringe the rights of others we could be prevented from selling products or forced to pay damages.</font></b></i></p>
<p align="left"><font size="-1">If our products, methods, processes, and other technologies are found to infringe the proprietary rights of other parties, we could be required to pay damages, or we may be required to cease using the technology or to license rights from the prevailing party. Any prevailing party may be unwilling to offer us a license on commercially acceptable terms.</font></p>
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<p align="left"><i><b><font size="-1">Our ability to generate product revenues will be diminished if our drugs sell for inadequate prices or patients are unable to obtain adequate levels of reimbursement.</font></b></i></p>
<p align="left"><font size="-1">Our ability to commercialize our drugs, alone or with collaborators, will depend in part on the extent to which reimbursement is available from government and health administration authorities, private health maintenance organizations, health insurers, and other healthcare payers.</font></p>
<p align="left"><font size="-1">Significant uncertainty exists as to the reimbursement status of newly approved healthcare products. Healthcare payers, including Medicare, are challenging the prices charged for medical products and services. Government and other healthcare payers increasingly attempt to contain healthcare costs by limiting both coverage and the level of reimbursement for drugs. Even if our product candidates are approved by the FDA, insurance coverage may not be available, or may be inadequate, to cover the cost of our drugs. This could affect our ability to commercialize our products.</font></p>
<p align="left"><i><b><font size="-1">We may not be able to obtain adequate insurance coverage against product liability claims.</font></b></i></p>
<p align="left"><font size="-1">Our business exposes us to the product liability risks inherent in the testing, manufacturing, marketing, and sale of human therapeutic technologies and products. Even if it is available, product liability insurance for the pharmaceutical and biotechnology industry generally is expensive. Adequate insurance coverage may not be available at a reasonable cost.</font></p>
<p align="center"><b><font size="-1">RISKS RELATING TO OUR STOCK</font></b></p>
<p align="left"><i><b><font size="-1">We will seek to raise additional funds in the future, which may be dilutive to shareholders or impose operational restrictions.</font></b></i></p>
<p align="left"><font size="-1">We expect to seek to raise additional capital in the future to help fund development of our proposed products. If we raise additional capital through the issuance of equity or debt securities, the percentage ownership of our current shareholders will be reduced. We may also enter into strategic transactions that may be dilutive. Our shareholders may experience additional dilution in net book value per share and any additional equity securities may have rights, preferences and privileges senior to those of the holders of our common stock. If we cannot raise additional funds, we will have to delay development activities of our products candidates.</font></p>
<p align="left"><i><b><font size="-1">We are controlled by our current officers, directors, and principal stockholders.</font></b></i></p>
<p align="left"><font size="-1">Currently, our directors, executive officers, and principal stockholders beneficially own a majority of our common stock. As a result, they will be able to exert substantial influence over the election of our board of directors and the vote on issues submitted to our stockholders.</font></p>
<p align="left"><i><b><font size="-1">We may not be able to consummate the merger of Effective Pharmaceuticals, Inc. (EPI) into our company.</font></b></i></p>
<p align="left"><font size="-1">We intend to seek to complete the merger of our majority owned subsidiary EPI into a new subsidiary to be formed by us. That merger would not require the consent of our shareholders but would require the approval of 34.53% of the aggregate outstanding Series B convertible preferred and common stock of EPI (approximately 2.9 million common shares) that we do not currently own. If holders of these Series B shares do not approve the merger, they will remain outstanding. The holders of the Series B, convertible preferred stock are entitled to a one time 30% payment-in-kind dividend of shares of Series B preferred stock that is payable December 2006. EPI is required to pay these dividends until a merger or trading event of the common stock of EPI in which the shares of Series B preferred stock would be automatically converted. Payment of that dividend will result
in a reduction in our ownership interest in EPI and could result in our losing voting control of EPI.</font></p>
<p align="center">14</p>
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<p align="left"><i><b><font size="-1">Our common stock may be thinly traded and its price volatile. This may make it difficult for shareholders to sell their shares of our common stock.</font></b></i></p>
<p align="left"><font size="-1">There may be significant volatility in the market price for our common stock. The stock market has from time to time experienced significant price and volume fluctuations that have particularly affected the market prices of pharmaceuticals companies and that may be unrelated to our operating performance. General market conditions could materially affect the market price of our common stock. The market price of our shares could also be subject to significant fluctuations in response to, and may be adversely effected by, among other factors, government regulatory actions, variations in our quarterly operating results, developments in the global pharmaceuticals industry, and general stock market conditions.</font></p>
<p align="left"><i><b><font size="-1">Because we will be subject to the &ldquo;penny stock&rdquo; rules, broker-dealers may find it harder to sell the shares of our common stock.</font></b></i></p>
<p align="left"><font size="-1">Our common stock is quoted on the OTCBB (as opposed to NASDAQ or AMEX) and the price of the common stock is below $5.00 per share, we are therefore subject to &ldquo;penny stock&rdquo; regulation. The penny stock rules impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 together with a spouse). For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of such securities and have received the purchaser&rsquo;s written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the rules require the delivery, prior to the transaction,
of a disclosure schedule prescribed by the Securities and Exchange Commission relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements must be sent disclosing recent price information on the limited market in penny stocks. Consequently, the &ldquo;penny stock&rdquo; rules may restrict the ability of broker-dealers to sell shares of our common stock. The market price of our common stock would likely suffer as a result.</font></p>
<p align="left"><i><b><font size="-1">Because we became public by means of a &ldquo;reverse merger&rdquo;, we may not be able to attract the attention of major brokerage firms.</font></b></i></p>
<p align="left"><font size="-1">Additional risks may exist since we became public through a &ldquo;reverse merger.&rdquo; Securities analysts of major brokerage firms may not provide coverage of us since there is little incentive to brokerage firms to recommend the purchase of our common stock. No assurance can be given that brokerage firms will want to conduct any secondary offerings on behalf of our company in the future.</font></p>
<p align="left"><i><b><font size="-1">Our compliance with the Sarbanes-Oxley Act and SEC rules concerning internal controls may be time consuming, difficult and costly.</font></b></i></p>
<p align="left"><font size="-1">Although individual members of our management team have experience as officers of publicly traded companies, much of that experience came prior to the adoption of the Sarbanes-Oxley Act of 2002. It may be time consuming, difficult and costly for us to develop and implement the internal controls and reporting procedures required by Sarbanes-Oxley. We may need to hire additional financial reporting, internal controls and other finance staff in order to develop and implement appropriate internal controls and reporting procedures. If we are unable to comply with Sarbanes-Oxley&rsquo;s internal controls requirements, we may not be able to obtain the independent accountant certifications that Sarbanes-Oxley Act requires publicly-traded companies to obtain.</font></p>
<p align="left"><i><b><font size="-1">When this Registration Statement becomes effective, there will be a significant number of shares of common stock eligible for sale, which could depress the market price of such stock.</font></b></i></p>
<p align="left"><font size="-1">Following the effective date of this Registration Statement, a large number of shares of common stock will become available for sale in the public market, which could harm the market price of our stock. </font></p>
<p align="center">15</p>
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<p align="left"><font size="-1">Further, shares may be offered from time to time in the open market pursuant to Rule 144, and these sales may have a depressive effect as well. In general, a person who has held restricted shares for a period of one year may, upon filing a notification with the SEC on Form 144, sell common stock into the market in an amount equal to the greater of one percent of the outstanding shares or the average weekly trading volume during the last four weeks prior to such sale.</font></p>
<p align="left"><i><b><font size="-1">There is not now, and there may not ever be, an active market for our common stock.</font></b></i></p>
<p align="left"><font size="-1">There currently is no market for our common stock. Further, although our common stock may be quoted on the OTC Bulletin Board, trading of our common stock may be extremely sporadic. For example, several days may pass before any shares may be traded. There can be no assurance that a more active market for the common stock will develop.</font></p>
<p align="left"><i><b><font size="-1">We cannot assure you that the common stock will become liquid or that it will be listed on a securities exchange.</font></b></i></p>
<p align="left"><font size="-1">We cannot assure you that we will be able to meet the listing standards of any stock exchange, such as the American Stock Exchange or the Nasdaq National Market, or that we will be able to maintain any such listing. Such exchanges require companies to meet certain initial listing criteria including certain minimum bid prices per share. We may not be able to achieve or maintain such minimum bid prices or may be required to effect a reverse stock split to achieve such minimum bid prices. Until the common stock is listed on an exchange, we expect that it would be eligible to be quoted on the OTC Bulletin Board, another over-the-counter quotation system, or in the &ldquo;pink sheets.&rdquo; In those venues, however, an investor may find it difficult to obtain accurate quotations as to the market value of the common stock. In addition, if we failed to meet the criteria
set forth in SEC regulations, various requirements would be imposed by law on broker-dealers who sell our securities to persons other than established customers and accredited investors. Consequently, such regulations may deter broker-dealers from recommending or selling the common stock, which may further affect its liquidity. This would also make it more difficult for us to raise additional capital.</font></p>
<p align="left"><i><b><font size="-1">There may be issuances of shares of preferred stock in the future.</font></b></i></p>
<p align="left"><font size="-1">Although we currently do not have preferred shares outstanding, the board of directors could authorize the issuance of a series of preferred stock that would grant holders preferred rights to our assets upon liquidation, the right to receive dividends before dividends would be declared to common stockholders, and the right to the redemption of such shares, possibly together with a premium, prior to the redemption of the common stock. To the extent that we do issue preferred stock, the rights of holders of common stock could be impaired thereby, including without limitation, with respect to liquidation.</font></p>
<p align="left"><i><b><font size="-1">We have never paid dividends.</font></b></i></p>
<p align="left"><font size="-1">We have never paid cash dividends on our common stock and do not anticipate paying any for the foreseeable future.</font></p>
<p align="center"><b><font size="-1">RISKS RELATED TO OUR INDUSTRY</font></b></p>
<p align="left"><i><b><font size="-1">Government Regulation</font></b></i></p>
<p align="left"><font size="-1">The FDA, comparable foreign regulators and state and local pharmacy regulators impose substantial requirements upon clinical development, manufacture and marketing of pharmaceutical products. These and other entities regulate research and development and the testing, manufacture, quality control, safety, effectiveness, labeling, storage, record keeping, approval, advertising, and promotion of our products. The drug approval process required by the FDA under the Food, Drug, and Cosmetic Act generally involves:</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;Preclinical laboratory and animal tests;</font></p>
<p align="center">16</p>
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<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;Submission of an IND, prior to commencing human clinical trials;</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;Adequate and well-controlled human clinical trials to establish safety and efficacy for intended use;</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;Submission to the FDA of a NDA; and</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;FDA review and approval of a NDA.</font></p>
<p align="left"><font size="-1">The testing and approval process requires substantial time, effort, and financial resources, and we cannot be certain that any approval will be granted on a timely basis, if at all.</font></p>
<p align="left"><font size="-1">Preclinical tests include laboratory evaluation of the product candidate, its chemistry, formulation and stability, and animal studies to assess potential safety and efficacy. Certain preclinical tests must be conducted in compliance with good laboratory practice regulations. Violations of these regulations can, in some cases, lead to invalidation of the studies, requiring them to be replicated. In some cases, long-term preclinical studies are conducted concurrently with clinical studies.</font></p>
<p align="left"><font size="-1">We will submit the preclinical test results, together with manufacturing information and analytical data, to the FDA as part of an IND, which must become effective before we begin human clinical trials. The IND automatically becomes effective 30 days after filing, unless the FDA raises questions about conduct of the trials outlined in the IND and imposes a clinical hold, in which case, the IND sponsor and FDA must resolve the matters before clinical trials can begin. It is possible that our submission may not result in FDA authorization to commence clinical trials.</font></p>
<p align="left"><font size="-1">Clinical trials must be supervised by a qualified investigator in accordance with good clinical practice regulations, which include informed consent requirements. An independent Institutional Review Board (&ldquo;IRB&rdquo;) at each medical center reviews and approves and monitors the study, and is periodically informed of the study&rsquo;s progress, adverse events and changes in research. Progress reports are submitted annually to the FDA and more frequently if adverse events occur.</font></p>
<p align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size="-1">Human clinical trials typically have three sequential phases that may overlap:</font></p>
<p align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size="-1">Phase I: The drug is initially tested in healthy human subjects or patients for safety, dosage tolerance, absorption, metabolism, distribution, and excretion.</font></p>
<p align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size="-1">Phase II: The drug is studied in a limited patient population to identify possible adverse effects and safety risks, determine efficacy for specific diseases and establish dosage tolerance and optimal dosage.</font></p>
<p align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size="-1">Phase III: When phase II evaluations demonstrate that a dosage range is effective with an acceptable safety profile, phase III trials to further evaluate dosage, clinical efficacy and safety, are undertaken in an expanded patient population, often at geographically dispersed sites.</font></p>
<p align="left"><font size="-1">We cannot be certain that we will successfully complete phase I, phase II, or phase III testing of our product candidates within any specific time period, if at all. Furthermore, the FDA, an IRB or the IND sponsor may suspend clinical trials at any time on various grounds, including a finding that subjects or patients are exposed to unacceptable health risk.</font></p>
<p align="left"><font size="-1">Concurrent with these trials and studies, we also develop chemistry and physical characteristics data and finalize a manufacturing process in accordance with good manufacturing practice (&ldquo;GMP&rdquo;) requirements. The manufacturing process must conform to consistency and quality standards, and we must develop methods for testing the quality, purity, and potency of the final products. Appropriate packaging is selected and tested, and chemistry stability studies are conducted to demonstrate that the product does not undergo unacceptable deterioration over its shelf-life.</font></p>
<p align="left"><font size="-1">Results of the foregoing are submitted to the FDA as part of a NDA for marketing and commercial shipment approval. The FDA reviews each NDA submitted and may request additional information. Once the FDA accepts the NDA for filing, it begins its in-depth review. The FDA has substantial discretion in the approval process and may disagree with our interpretation of the data submitted. The process may be significantly extended by requests for additional information or clarification regarding </font></p>
<p align="center">17</p>
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<p align="left"><font size="-1">information already provided. As part of this review, the FDA may refer the application to an appropriate advisory committee, typically a panel of clinicians. Manufacturing establishments often are inspected prior to NDA approval to assure compliance with GMPs and with manufacturing commitments made in the application.</font></p>
<p align="left"><font size="-1">Submission of a NDA with clinical data requires payment of a fee (for fiscal year 2004, $573,500). In return, the FDA assigns a goal of ten months for issuing its &ldquo;complete response,&rdquo; in which the FDA may approve or deny the NDA, or require additional clinical data. Even if these data are submitted, the FDA may ultimately decide the NDA does not satisfy approval criteria. If the FDA approves the NDA, the product becomes available for physicians prescription. Product approval may be withdrawn if regulatory compliance is not maintained or safety problems occur. The FDA may require post-marketing studies, also known as phase IV studies, as a condition of approval, and requires surveillance programs to monitor approved products that have been commercialized. The agency has the power to require changes in labeling or prohibit further marketing based
on the results of post-marketing surveillance.</font></p>
<p align="left"><font size="-1">Satisfaction of these and other regulatory requirements typically takes several years, and the actual time required may vary substantially based upon the type, complexity and novelty of the product. Government regulation may delay or prevent marketing of potential products for a considerable period of time and impose costly procedures on our activities. We cannot be certain that the FDA or other regulatory agencies will approve any of our products on a timely basis, if at all. Success in preclinical or early-stage clinical trials does not assure success in later-stage clinical trials. Data obtained from pre-clinical and clinical activities are not always conclusive and may be susceptible to varying interpretations that could delay, limit or prevent regulatory approval. Even if a product receives regulatory approval, the approval may be significantly limited
to specific indications or uses. Even after regulatory approval is obtained, later discovery of previously unknown problems with a product may result in restrictions on the product or even complete withdrawal of the product from the market. Delays in obtaining, or failures to obtain regulatory approvals would have a material adverse effect on our business.</font></p>
<p align="left"><font size="-1">Any products manufactured or distributed by us pursuant to FDA approvals are subject to pervasive and continuing FDA regulation, including record-keeping requirements, reporting of adverse experiences, submitting periodic reports, drug sampling and distribution requirements, manufacturing or labeling changes, record-keeping requirements, and compliance with FDA promotion and advertising requirements. Drug manufacturers and their subcontractors are required to register their facilities with the FDA and state agencies, and are subject to periodic unannounced inspections for GMP compliance, imposing procedural and documentation requirements upon us and third-party manufacturers. Failure to comply with these regulations could result, among other things, in suspension of regulatory approval, recalls, suspension of production or injunctions, seizures, or civil or
criminal sanctions. We cannot be certain that we or our present or future subcontractors will be able to comply with these regulations.</font></p>
<p align="left"><font size="-1">The FDA regulates drug labeling and promotion activities. The FDA has actively enforced regulations prohibiting the marketing of products for unapproved uses. The FDA permits the promotion of drugs for unapproved uses in certain circumstances, subject to stringent requirements. We and our product candidates are subject to a variety of state laws and regulations which may hinder our ability to market our products. Whether or not FDA approval has been obtained, approval by foreign regulatory authorities must be obtained prior to commencing clinical trials, and sales and marketing efforts in those countries. These approval procedures vary in complexity from country to country, and the processes may be longer or shorter than that required for FDA approval. We may incur significant costs to comply with these laws and regulations now or in the future.</font></p>
<p align="left"><font size="-1">The FDA&rsquo;s policies may change, and additional government regulations may be enacted which could prevent or delay regulatory approval of our potential products. Increased attention to the containment of health care costs worldwide could result in new government regulations materially adverse to our </font></p>
<p align="center">18</p>
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<p align="left"><font size="-1">business. We cannot predict the likelihood, nature or extent of adverse governmental regulation that might arise from future legislative or administrative action, either in the U.S. or abroad.</font></p>
<p align="left"><i><b><font size="-1">Other Regulatory Requirements</font></b></i></p>
<p align="left"><font size="-1">The U.S. Federal Trade Commission and the Office of the Inspector General of the U.S. Department of Health and Human Services (&ldquo;HHS&rdquo;) also regulate certain pharmaceutical marketing practices. Government reimbursement practices and policies with respect to our products are important to our success.</font></p>
<p align="left"><font size="-1">We are subject to numerous federal, state and local laws relating to safe working conditions, manufacturing practices, environmental protection, fire hazard control, and disposal of hazardous or potentially hazardous substances. We may incur significant costs to comply with these laws and regulations. The regulatory framework under which we operate will inevitably change in light of scientific, economic, demographic and policy developments, and such changes may have a material adverse effect on our business.</font></p>
<p align="left"><i><b><font size="-1">European Product Approval</font></b></i></p>
<p align="left"><font size="-1">Prior regulatory approval for human healthy volunteer studies (phase I studies) is required in member states of the European Union (E.U.). Summary data from successful phase I studies are submitted to regulatory authorities in member states to support applications for phase II studies. E.U. authorities typically have one to three months (which often may be extended in their discretion) to raise objections to the proposed study. One or more independent ethics committees (similar to U.S. IRBs) review relevant ethical issues.</font></p>
<p align="left"><font size="-1">For E.U. marketing approval, we submit to the relevant authority for review a dossier, or MAA (Market Authorization Application), providing information on the quality of the chemistry, manufacturing and pharmaceutical aspects of the product as well as non-clinical and clinical data.</font></p>
<p align="left"><font size="-1">The E.U. provides two different, elective authorization routes: centralized and decentralized. For NB S101 we have selected the centralized route, leading in one marketing authorization the entire E.U, in which our application will be reviewed by members of the Committee for Proprietary Medicinal Products (&ldquo;CPMP&rdquo;), on behalf of EMEA. Based on that review, EMEA will provide an opinion on safety, quality and efficacy to the European Commission, which makes the decision to grant or refuse authorization.</font></p>
<p align="left"><font size="-1">Approval can take several months to several years, and can be denied, depending on whether additional studies or clinical trials are requested (which may delay marketing approval and involve unbudgeted costs) or regulatory authorities conduct facilities (including clinical investigation site) inspections and review manufacturing procedures, operating systems and personnel qualifications. In many cases, each drug manufacturing facility must be approved, and further inspections may occur over the product&rsquo;s life. The regulatory agency may require post-marketing surveillance to monitor for adverse effects or other studies. Further clinical studies are usually necessary for approval of additional indications. The terms of any approval, including labeling content, may be more restrictive than expected and could affect the marketability of a product.</font></p>
<p align="left"><font size="-1">Failure to comply with these ongoing requirements can result in suspension of regulatory approval and civil and criminal sanctions. European renewals may require additional data, resulting in a license being withdrawn. E.U. regulators have the authority to revoke, suspend or withdraw approvals, prevent companies and individuals from participating in the drug approval process, request recalls, seize violative products, obtain injunctions to close non-compliant manufacturing plants and stop shipments of violative products.</font></p>
<p align="left"><i><b><font size="-1">Pricing Controls</font></b></i></p>
<p align="left"><font size="-1">Pricing for products under approval applications is also subject to regulation. Requirements vary widely between countries and can be implemented disparately intra-nationally.</font></p>
<p align="center">19</p>
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<p align="left"><font size="-1">The E.U. generally provides options for member states to control pricing of medicinal products for human use, ranging from specific price-setting to systems of direct or indirect controls on the producer&rsquo;s profitability. U.K. regulation, for example, generally provides controls on overall profits derived from sales to the U.K. National Health Service that are based on profitability targets or a function of capital employed in servicing the National Health Service market. Italy generally utilizes a price monitoring system based on the European average price over the reference markets of France, Spain, Germany and the U.K. Italy typically establishes price within a therapeutic class based on the lowest price for a medicine belonging to that category. Spain generally establishes selling price based on prime cost plus a profit margin within a range established
yearly by the Spanish Commission for Economic Affairs.</font></p>
<p align="left"><font size="-1">There can be no assurance that price controls or reimbursement limitations will result in favorable arrangements for our products.</font></p>
<p align="left"><i><b><font size="-1">Third-Party Reimbursements</font></b></i></p>
<p align="left"><font size="-1">In the U.S., the E.U. and elsewhere, pharmaceutical sales are dependent in part on the availability and adequacy of reimbursement from third party payers such as governments and private insurance plans. Third party payers are increasingly challenging established prices, and new products that are more expensive than existing treatments may have difficulty finding ready acceptance unless there is a clear therapeutic benefit.</font></p>
<p align="left"><font size="-1">In the U.S., consumer willingness to choose a self-administered outpatient prescription drug over a different drug or other form of treatment often depends on the manufacturer&rsquo;s success in placing the product on a health plan formulary or drug list, which results in lower out-of-pocket costs. Favorable formulary placement typically requires the product to be less expensive than what the health plan determines to be therapeutically equivalent products, and often requires manufacturers to offer rebates. Federal law also requires manufacturers to pay rebates to state Medicaid programs in order to have their products reimbursed by Medicaid. Medicare, which covers most Americans over age 65 and the disabled, has adopted a new insurance regime that will offer eligible beneficiaries limited coverage for outpatient prescription drugs effective January 1, 2006.
The prescription drugs that will be covered under this insurance will be specified on a formulary published by Medicare. As part of these changes, Medicare is adopting new payment formulas for prescription drugs administered by providers, such as hospitals or physicians, that are generally expected to lower reimbursement.</font></p>
<p align="left"><font size="-1">The E.U. generally provides options for member states to restrict the range of medicinal products for which their national health insurance systems provide reimbursement. Member states can opt for a &ldquo;positive&rdquo; or &ldquo;negative&rdquo; list, with the former listing all covered medicinal products and the latter designating those excluded from coverage. The E.U., the U.K. and Spain have negative lists, while France uses a positive list. Canadian provinces establish their own reimbursement measures. In some countries, products may also be subject to clinical and cost effectiveness reviews by health technology assessment bodies. Negative determinations in relation to our products could affect prescribing practices. In the U.K., the National Institute for Clinical Excellence (&ldquo;NICE&rdquo;) provides such guidance to the National Health Service,
and doctors are expected to take it into account when choosing drugs to prescribe. Health authorities may withhold funding from drugs not given a positive recommendation by NICE. A negative determination by NICE may mean fewer prescriptions. Although NICE considers drugs with orphan status, there is a degree of tension on the application of standard cost assessment for orphan drugs, which are often priced higher to compensate for a limited market. It is unclear whether NICE will adopt a more relaxed approach toward the assessment of orphan drugs.</font></p>
<p align="left"><font size="-1">We cannot assure you that any of our products will be considered cost effective, or that reimbursement will be available or sufficient to allow us to sell them competitively and profitably.</font></p>
<p align="center">20</p>
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<p align="left"><i><b><font size="-1">Fraud and Abuse Laws</font></b></i></p>
<p align="left"><font size="-1">The U.S. federal Medicare/Medicaid anti-kickback law and similar state laws prohibit remuneration intended to induce physicians or others either to refer patients, or to acquire or arrange for or recommend the acquisition of health care products or services. While the federal law applies only to referrals, products or services receiving federal reimbursement, state laws often apply regardless of whether federal funds are involved. Other federal and state laws prohibit anyone from presenting or causing to be presented false or fraudulent payment claims. Recent federal and state enforcement actions under these statutes have targeted sales and marketing activities of prescription drug manufacturers. As we begin to market our products to health care providers, the relationships we form, such as compensating physicians for speaking or consulting services, providing
financial support for continuing medical education or research programs, and assisting customers with third-party reimbursement claims, could be challenged under these laws and lead to civil or criminal penalties, including the exclusion of our products from federally-funded reimbursement. Even an unsuccessful challenge could cause adverse publicity and be costly to respond to, and thus could have a material adverse effect on our business, results of operations and financial condition. We intend to consult counsel concerning the potential application of these and other laws to our business and to our sales, marketing and other activities to comply with them. Given their broad reach and the increasing attention given them by law enforcement authorities, however, we cannot assure you that some of our activities will not be challenged.</font></p>
<p align="left"><i><b><font size="-1">Patent Restoration and Marketing Exclusivity</font></b></i></p>
<p align="left"><font size="-1">The U.S. Drug Price Competition and Patent Term Restoration Act of 1984 (Hatch-Waxman) permits the FDA to approve Abbreviated New Drug Applications (&ldquo;ANDAs&rdquo;) for generic versions of innovator drugs, as well as NDAs with less original clinical data, and provides patent restoration and exclusivity protections to innovator drug manufacturers.</font></p>
<p align="left"><font size="-1">The ANDA process permits competitor companies to obtain marketing approval for drugs with the same active ingredient and for the same uses as innovator drugs, but does not require the conduct and submission of clinical studies demonstrating safety and efficacy. As a result, a competitor could copy any of our drugs and only need to submit data demonstrating that the copy is bioequivalent to gain marketing approval from the FDA.</font></p>
<p align="left"><font size="-1">Hatch-Waxman requires a competitor that submits an ANDA, or otherwise relies on safety and efficacy data for one of our drugs, to notify us and/or our business partners of potential infringement of our patent rights. We and/or our business partners may sue the company for patent infringement, which would result in a 30-month stay of approval of the competitor&rsquo;s application. The discovery, trial and appeals process in such suits can take several years. If the litigation is resolved in favor of the generic applicant or the challenged patent expires during the 30-month period, the stay is lifted and the FDA may approve the application.</font></p>
<p align="left"><font size="-1">Hatch-Waxman also allows competitors to market copies of innovator products by submitting significantly less clinical data outside the ANDA context. Such applications, known as &ldquo;505(b)(2) NDAs&rdquo; or &ldquo;paper NDAs,&rdquo; may rely on clinical investigations not conducted by or for the applicant and for which the applicant has not obtained a right of reference or use and are subject to the ANDA notification procedures described above.</font></p>
<p align="left"><font size="-1">The law also restores a portion of a product&rsquo;s patent term that is lost during clinical development and NDA review, and provides statutory protection, known as exclusivity, against FDA approval or acceptance of certain competitor applications. Restoration can return up to five years of patent term for a patent covering a new product or its use to compensate for time lost during product development and regulatory review. The restoration period is generally one-half the time between the effective date of an IND and submission of an NDA, plus the time between NDA submission and its approval (subject to the five-year limit), and no extension can extend total patent life beyond 14 years after the drug approval date. Applications for patent term extension are subject to U.S. Patent and </font></p>
<p align="center">21</p>
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<p align="left"><font size="-1">Trademark Office (&ldquo;USPTO&rdquo;) approval, in conjunction with FDA. Approval of these applications takes at least six months, and there can be no guarantee that it will be given at all.</font></p>
<p align="left"><font size="-1">Hatch-Waxman also provides for differing periods of statutory protection for new drugs approved under an NDA. Among the types of exclusivity are those for a &ldquo;new molecular entity&rdquo; and those for a new formulation or indication for a previously-approved drug. If granted, marketing exclusivity for the types of products that we are developing, which include only drugs with innovative changes to previously-approved products using the same active ingredient, would prohibit the FDA from approving an ANDA or 505(b)(2) NDA relying on safety and efficacy data for three years. This three-year exclusivity, however, covers only the innovation associated with the original NDA. It does not prohibit the FDA from approving applications for drugs with the same active ingredient but without our new innovative change. These marketing exclusivity protections do not
prohibit FDA from approving a full NDA, even if it contains the innovative change.</font></p>
<p align="center"><b><font size="-1">FORWARD-LOOKING STATEMENTS</font></b></p>
<p align="left"><font size="-1">Most of the matters discussed within this registration statement include forward-looking statements on our current expectations and projections about future events. In some cases you can identify forward-looking statements by terminology such as &ldquo;may,&rdquo; &ldquo;should,&rdquo; &ldquo;potential,&rdquo; &ldquo;continue,&rdquo; &ldquo;expects,&rdquo; &ldquo;anticipates,&rdquo; &ldquo;intends,&rdquo; &ldquo;plans,&rdquo; &ldquo;believes,&rdquo; &ldquo;estimates,&rdquo; and similar expressions. These statements are based on our current beliefs, expectations, and assumptions and are subject to a number of risks and uncertainties. Actual results and events may vary significantly from those discussed in the forward-looking statements.</font></p>
<p align="left"><font size="-1">These forward-looking statements are made as of the date of this prospectus, and we assume no obligation to explain the reason why actual results may differ. In light of these assumptions, risks, and uncertainties, the forward-looking events discussed in this prospectus might not occur. </font></p>
<p align="center"><b><font size="-1">AVAILABLE INFORMATION</font></b></p>
<p align="left"><font size="-1">In accordance with the Securities Act of 1933, we filed with the SEC a registration statement on Form SB-2 covering the securities in this offering. As permitted by rules and regulations of the SEC, this prospectus does not contain all of the information in the registration statement. For further information regarding both our company and the securities in this offering, we refer you to the registration statement, including all exhibits and schedules, which you may inspect without charge at the public reference facilities of the SEC&rsquo;s Washington, D.C. office, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies may be obtained upon request and payment of prescribed fees.</font></p>
<p align="left"><font size="-1">We are subject to the information and periodic reporting requirements of the Securities Exchange Act of 1934, and in accordance with the Securities Exchange Act of 1934, we file annual, quarterly and special reports, and other information with the SEC. These periodic reports and other information are available for inspection and copying at the regional offices, public reference facilities and website of the SEC referred to above.</font></p>
<p align="center"><b><font size="-1">USE OF PROCEEDS</font></b></p>
<p align="left"><font size="-1">We will not receive any proceeds from sale of the shares of common stock covered by this prospectus by the selling shareholders. We may, however, receive proceeds on the exercise of outstanding warrants for shares of common stock covered by this prospectus. We intend to use for general working capital and other corporate purposes any such proceeds we receive. Furthermore, the warrants may expire without having been exercised. Even if some or all of these warrants are exercised, we cannot predict when they will be exercised and when we would receive the proceeds.</font></p>
<p align="center"><b><font size="-1">MARKET FOR COMMON STOCK AND RELATED SHAREHOLDER MATTERS</font></b></p>
<p align="left"><font size="-1">Our common stock currently trades on the OTC Bulletin Board under the symbol &ldquo;SFPH.&rdquo; The following table states the range of the high and low bid-prices per share of our common stock for each </font></p>
<p align="center">22</p>
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<p align="left"><font size="-1">of the calendar quarters during the last two fiscal years, as reported by the National Quotation Bureau Incorporated and the OTC Bulletin Board. These quotations represent inter-dealer prices, without retail mark-up, markdown, or commission, and may not represent actual transactions. The last price of our common stock as reported on the OTC Bulletin Board on December 11, 2006 was $3.00 per share. As of December 14, 2006, there were 350 shareholders of record of our common stock, and approximately 3,200 shareholders held in street name.</font></p>
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<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">High<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Low<br><hr noshade color="#000000"></font></b></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">YEAR ENDED DECEMBER 31, 2006<br></font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em"><font size="-1">Fourth quarter</font></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">3.95</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">3.00 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em"><font size="-1">Third quarter</font></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">1.10</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">1.00 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em"><font size="-1">Second quarter</font></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">1.60</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">1.25 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em"><font size="-1">First quarter</font></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">1.02</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">0.01 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:0em"><font size="-1">YEAR ENDED DECEMBER 31, 2005<br></font></p></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em"><font size="-1">Fourth quarter</font></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">3.00</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">0.00 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em"><font size="-1">Third quarter</font></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">2.50</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">0.03 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em"><font size="-1">Second quarter</font></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">0.03</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">0.02 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em"><font size="-1">First quarter</font></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">0.01</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">0.00 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
</table>
<p align="center"><b><font size="-1">DIVIDEND POLICY</font></b></p>
<p align="left"><font size="-1">We have not paid any cash dividends on our common stock to date, and we have no intention of paying cash dividends in the foreseeable future. Whether we declare and pay dividends is determined by our board of directors at their discretion, subject to certain limitations imposed under Delaware corporate law. The timing, amount and form of dividends, if any, will depend on, among other things, our results of operations, financial condition, cash requirements and other factors deemed relevant by our board of directors.</font></p>
<p align="center"><b><font size="-1">PLAN OF OPERATION</font></b></p>
<p align="left"><font size="-1">The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and the notes to those statements included elsewhere in this prospectus. This discussion includes forward-looking statements that involve risks and uncertainties. As a result of many factors, such as those set forth under &ldquo;Risk Factors&rdquo; and elsewhere in this prospectus, our actual results may differ materially from those anticipated in these forward-looking statements.</font></p>
<p align="left"><b><font size="-1">Overview</font></b></p>
<p align="left"><font size="-1">Since our inception during January 2001, our efforts and resources have been focused primarily on acquiring and developing our pharmaceutical technologies, raising capital and recruiting personnel. We are a development stage company and have no product sales to date and we will not receive any product sales until we receive approval from the FDA or receive approval from equivalent foreign regulatory bodies to begin selling our pharmaceutical candidates. Our major sources of working capital have been proceeds from advances from our Chairman and Chief Executive Officer and various private financings, primarily involving private sales of our common stock and other equity securities.</font></p>
<p align="left"><font size="-1">Our company resulted from the October 2006 merger of a newly-created wholly owned subsidiary of Sheffield Pharmaceuticals, Inc. (&ldquo;Sheffield&rdquo;), a Delaware corporation incorporated in September 1993, and Pipex Therapeutics, Inc., a Delaware corporation (&ldquo;Pipex Therapeutics&rdquo;). In connection with that </font></p>
<p align="center">23</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align="left"><font size="-1">transaction, a wholly owned subsidiary of Sheffield merged with and into Pipex Therapeutics, with Pipex Therapeutics remaining as the surviving corporation and a wholly-owned subsidiary of Sheffield. On December 11, 2006, Sheffield changed its name to &ldquo;Pipex Pharmaceuticals, Inc.&rdquo;. In exchange for their shares of capital stock in Pipex Therapeutics, the former stockholders of Pipex Therapeutics received shares of capital stock of Sheffield representing approximately 98 percent of the outstanding equity of Sheffield on a primary diluted basis after giving effect to the transaction, with Sheffield assuming Pipex&rsquo;s outstanding options and warrants. In addition, the board of directors of Sheffield was reconstituted shortly following the effective time of the transaction such that the directors of Sheffield were replaced by our current directors,
all of whom were previously directors of Pipex Therapeutics. Further, upon the effective time of the merger, the business of Sheffield was abandoned and the business plan of Pipex Therapeutics was adopted. The transaction was therefore accounted for as a reverse acquisition with Pipex Therapeutics, Inc. as the acquiring party and Sheffield as the acquired party. Accordingly, when we refer to our business and financial information relating to periods prior to the merger, we are referring to the business and financial information of Pipex Therapeutics, Inc., unless the context indicates otherwise.</font></p>
<p align="left"><font size="-1">Research and development expenses consist primarily of manufacturing costs, salaries and related personnel costs, fees paid to consultants and outside service providers for laboratory development, legal expenses resulting from intellectual property prosecution and organizational affairs and other expenses relating to the design, development, testing, and enhancement of our product candidates. We expense our research and development costs as they are incurred.</font></p>
<p align="left"><font size="-1">General and administrative expenses consist primarily of salaries and related expenses for executive, finance and other administrative personnel, recruitment expenses, professional fees and other corporate expenses, including business development and general legal activities.</font></p>
<p align="left"><font size="-1">Our results include non-cash compensation expense as a result of the issuance of stock and stock option grants. Compensation expense for options granted to employees represents the difference between the fair value of our common stock and the exercise price of the options at the date of grant. We account for stock-based employee compensation arrangements in accordance with the provisions of Accounting Principles Board Opinion No. 25, &ldquo;Accounting for Stock Issued to Employees&rdquo; and comply with the disclosure provisions of Statement of Financial Accounting Standards No. 123, &ldquo;Accounting for Stock- Based Compensation.&rdquo; Compensation for options granted to consultants has been determined in accordance with SFAS No. 123 as the fair value of the equity instruments issued. APB Opinion No. 25 has been applied in accounting for fixed and milestone-based
stock options to employees and directors as allowed by SFAS No. 123. This amount is being recorded over the respective vesting periods of the individual stock options. The expense is included in the respective categories of expense in the statement of operations. We expect to record additional non-cash compensation expense in the future, which may be significant. However, because some of the options are milestone-based, the total expense is uncertain.</font></p>
<p align="left"><b><font size="-1">Results of Operations</font></b></p>
<p align="left"><i><b><font size="-1">Nine Months Ended September 30, 2006; Compared to Nine Months Ended September 30, 2005.</font></b></i></p>
<p align="left"><i><font size="-1">General and administrative expenses.</font></i><font size="-1"> For the nine months ended September 30, 2006, general and administrative expense was $409,875 as compared to $88,024 for the nine months ended September 30, 2005. The increase of $321,851 is due primarily to an increase in payroll expenses of approximately $62,645, an increase in rent and utilities expense of approximately $85,692 and increases to professional fees/accounting fees of $103,408, travel expense of approximately $58,270, and depreciation of $22,410. There was also a decrease in internet charges and insurance expenses of $3,730 and $8,464 respectively.</font></p>
<p align="left"><i><font size="-1">Research and development expenses.</font></i><font size="-1"> For the nine months ended September 30, 2006, research and development expense was $1,277,722 as compared to $589,738 for the nine months ended September 30, 2005. The increase of $687,984 is due primarily to an increase in salaries of $199,044, an increase of $493,461 associated with milestone payments related to advancements in our licensed compounds, and </font></p>
<p align="center">24</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align="left"><font size="-1">an increase in patent expenses of $70,088. For the nine months ended September 30, 2006 the Company also incurred stock based compensation expense for options issued to employees totaling approximately $124,340, as compared to $99,360 for the nine months ended September 30, 2005.</font></p>
<p align="left"><i><font size="-1">Other income (expense), net.</font></i><font size="-1"> For the nine months ended September 30, 2006, other expense was $0 as compared to $1,600 for the nine months ended September 30, 2005.</font></p>
<p align="left"><i><font size="-1">Interest income.</font></i><font size="-1"> For the nine months ended September 30, 2006, interest income was $1 as compared to $867 for the corresponding period of 2005. The increase is attributed to the Company&rsquo;s interest bearing cash account not present in 2006.</font></p>
<p align="left"><i><font size="-1">Net loss.</font></i><font size="-1"> Net loss for the nine months ended September 30, 2006, was $1,989,288 as compared to $880,061 for the nine months ended September 30, 2005. This increase in net loss is attributable primarily to an increase in research and development expenses of $687,984 and an increase in general and administrative expenses of $321,851.</font></p>
<p align="left"><i><font size="-1">Merger costs expense.</font></i><font size="-1"> In the nine months ended September 30, 2006 merger cost expense was $12,500 as compared to $0 for the nine months ended September 30, 2005.</font></p>
<p align="left"><i><font size="-1">Compensation expense.</font></i><font size="-1"> For the nine months ended September 30, 2006 the Company has incurred $289,192 in compensation expenses as compared to $201,566 in the nine months ended September 30, 2005.</font></p>
<p align="left"><i><b><font size="-1">Years Ended December 31, 2005 and 2004</font></b></i></p>
<p align="left"><i><font size="-1">General and administrative expenses.</font></i><font size="-1"> For the year ended December 31, 2005, general and administrative expense was $285,701 as compared to $221,612 for the year ended December 31, 2004. The increase of $64,089 is due primarily to an increase in payroll expenses of approximately $43,835, professional/accounting fees of $9,847, and an increase in travel expenses of approximately $22,000. Rent/utilities and insurance decreased $8,252 and $3,829 respectively.</font></p>
<p align="left"><i><font size="-1">Research and development expenses.</font></i><font size="-1"> For the year ended December 31, 2005, research and development expense was $946,065 as compared to $349,551 for the year ended December 31, 2004. The increase of $596,514 is due primarily to an increase in payroll expenses of $43,836, an increase of $65,902 related to patent expenses, and an increase of $469,705 associated with milestone payments related to advancements in our licensed compounds.</font></p>
<p align="left"><i><font size="-1">Net loss.</font></i><font size="-1"> Net loss for the year ended December 31, 2005, was $1,355,842 as compared to $602,493 for the year ended December 31, 2004. This increase in net loss is attributable primarily to an increase in research and development expenses of $596,514 and an increase in general and administrative expenses of $64,089.</font></p>
<p align="left"><font size="-1">For the year ended December 31, 2005, interest income was $868 as compared to $3 for the corresponding period of 2004.</font></p>
<p align="left"><i><font size="-1">Merger cost expenses.</font></i><font size="-1"> For the year ended December 31, 2005 merger cost expense was $37,500 as compared to $0 expensed in the year ended December 31, 2004.</font></p>
<p align="left"><i><font size="-1">Compensation expenses.</font></i><font size="-1"> In the year ended December 31, 2005 the Company incurred compensation expenses of approximately $87,444 as compared with the corresponding period of the year ended December 31, 2004 of $31,333.</font></p>
<p align="left"><b><font size="-1">Liquidity and Capital Resources</font></b></p>
<p align="left"><font size="-1">From inception to September 30, 2006, we have incurred an aggregate net loss of $5,713,306, primarily as a result of expenses incurred through a combination of research and development activities of approximately $3,445,236 related to the various technologies under our control and general and administrative expenses of approximately $1,689,980 supporting those activities. From inception to September 30, 2006 we have also incurred $552,928 in compensation expenses and an expense of </font></p>
<p align="center">25</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align="left"><font size="-1">$50,000 related to merger costs. Interest income since inception was $26,601 and other expenses was $1,733.</font></p>
<p align="left"><font size="-1">We have financed our operations since inception primarily through related party debt financing and equity raising, consisting of common and preferred stock. During the nine months ended September 30, 2006, we had a net decrease in cash and cash equivalents of $692,079. Total cash resources as of September 30, 2006 were $465,711. During October and November 2006, we consummated private placements of commons stock and warrants to acquire common stock resulting in approximately $13.9 million in gross proceeds.</font></p>
<p align="left"><font size="-1">Our continued operations will depend on whether we are able to raise additional funds through various potential sources, such as equity and debt financing. Such additional funds may not become available on acceptable terms and there can be no assurance that any additional funding that we do obtain will be sufficient to meet our needs in the long term. We will continue to fund operations from cash on hand and through the similar sources of capital previously described. We can give no assurances that any additional capital that we are able to obtain will be sufficient to meet our needs.</font></p>
<p align="left"><b><font size="-1">License and Contractual Agreement Obligations.</font></b></p>
<p align="left"><font size="-1">Below is a table of our contractual obligations for the years 2006, 2007 and 2008. </font></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=15>
<b><font size="-1">Year<br><hr noshade color="#000000"></font></b></td>
</tr>
<tr bgcolor="#ffffff">
<td align='center' valign='bottom'>
<b><font size="-1">Agreements<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Total<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">2006<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">2007<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">2008<br><hr noshade color="#000000"></font></b></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<font size="-1">License Agreements</font></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">350,000 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">140,000 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">155,000 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">55,000 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<font size="-1">Research and Development Agreements</font></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">1,587,163 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">593,500 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">593,500 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">400,163 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<font size="-1">Employment Agreements</font></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">2,645,601 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">386,735 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">1,129,433 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">1,129,433 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
</table>
<p align="left"><b><font size="-1">Current and Future Financing Needs</font></b></p>
<p align="left"><font size="-1">We have incurred negative cash flow from operations since we started our business. We have spent, and expect to continue to spend, substantial amounts in connection with implementing our business strategy, including our planned product development efforts, our clinical trials, and our research and discovery efforts. Based on our current plans, we believe that our cash and cash equivalents and net proceeds from this offering will be sufficient to enable us to meet our planned operating needs for at least the next 18 months. Over the next 18 months we expect to spend approximately $5.0 million on clinical development, $1.8 million on general corporate expenses, and $50,000 on facilities rent.</font></p>
<p align="left"><font size="-1">However, the actual amount of funds we will need to operate is subject to many factors, some of which are beyond our control. These factors include the following:</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;the progress of our research activities;</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;the number and scope of our research programs;</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;the progress of our pre-clinical and clinical development activities;</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;the progress of the development efforts of parties with whom we have entered into research and development agreements;</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;our ability to maintain current research and development programs and to establish new research and development and licensing arrangements;</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;our ability to achieve our milestones under licensing arrangements;</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;the costs involved in prosecuting and enforcing patent claims and other intellectual property rights; and</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;the costs and timing of regulatory approvals.</font></p>
<p align="center">26</p>
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<PAGE>
<p align="left"><font size="-1">We have based our estimate on assumptions that may prove to be wrong. We may need to obtain additional funds sooner or in greater amounts than we currently anticipate. Potential sources of financing include strategic relationships, public or private sales of our shares or debt and other sources. We may seek to access the public or private equity markets when conditions are favorable due to our long-term capital requirements. We do not have any committed sources of financing at this time, and it is uncertain whether additional funding will be available when we need it on terms that will be acceptable to us, or at all. If we raise funds by selling additional shares of common stock or other securities convertible into common stock, the ownership interest of our existing stockholders will be diluted. If we are not able to obtain financing when needed, we may be
unable to carry out our business plan. As a result, we may have to significantly limit our operations and our business, financial condition and results of operations would be materially harmed.</font></p>
<p align="left"><b><font size="-1">Research and Development Projects</font></b></p>
<p align="left"><i><b><font size="-1">COPREXA</font></b><b><font size="-1"><sup>TM</sup></font></b><b><font size="-1"> (oral tetrathiomolybate)</font></b></i></p>
<p align="left"><font size="-1">Based on completed pivotal clinical trials using COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> for the treatment of initially presenting neurologic Wilson&rsquo;s disease and communication with the FDA, we plan to file an NDA during 2007. In order to expand the therapeutic utility of COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1">, we have completed a phase II clinical trial using COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> for the treatment of refractory Idiopathic Pulmonary Fibroiss (IPF), a fatal lung disease for which there is no FDA approved therapy. We have also initiated a phase II clinical trial using COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> in the treatment of primary biliary cirrohis (PBC), a fatal liver disease. The primary purposes for these studies is to evaluate
the safety and efficacy of COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> when administered intravenously to patients with IPF and PBC and who have failed curative or survival prolonging therapy or for whom no such therapies exist, establish the maximum tolerated dose, and identify dose limiting toxicities.</font></p>
<p align="left"><font size="-1">COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> has received clinical development grants from the FDA&rsquo;s Orphan Products group. These grants have covered the predominant cost of pre-clinical efficacy and safety testing, and Phase II and Phase III clinical program. Through September 30, 2006, we have incurred $593,560 of costs related to our development of COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1">, of which $150,285 was incurred in fiscal 2005, and $443,276 has been incurred in the first nine months of 2006.</font></p>
<p align="left"><i><b><font size="-1">TRIMESTA</font></b><b><font size="-1"><sup>TM</sup></font></b><b><font size="-1"> (oral estriol)</font></b></i></p>
<p align="left"><font size="-1">During 2007, we plan to initiate a multicenter, placebo controlled 130 patient phase II/III clinical trial using TRIMESTA</font><font size="-1"><sup>TM</sup></font><font size="-1"> for the treatment of relapsing-remitting Multiple Sclerosis (MS). This phase II/III clinical trial builds upon our encouraging results from our earlier phase IIa clinical trial. The primary purpose of this study will be to evaluate the safety and efficacy of TRIMESTA</font><font size="-1"><sup>TM</sup></font><font size="-1"> in a larger MS patient population. The preclinical and clinical development of TRIMESTA</font><font size="-1"><sup>TM</sup></font><font size="-1"> has been primary financed by grants from the NIH and various non-profit foundations. Through September 30, 2006, we have incurred $118,656 of costs related to our development of TRIMESTA</font><font size="-1"><sup>TM</sup></font><font
size="-1"> of which $49,500 was incurred in fiscal 2005, and $69,156 has been incurred in the first nine months of 2006.</font></p>
<p align="left"><i><b><font size="-1">Anti-CD4 802-2</font></b></i></p>
<p align="left"><font size="-1">During 2007, we plan to complete our phase I/II clinical trial of anti-CD4 802-2 in the prevention of graft-vs-host disease as well as complete our preclinical animal studies of anti-CD4 802-2. The primary purpose of these preclinical studies is to evaluate the molecules potential efficacy in different disease settings. If successful, we may choose to initiate clinical studies in these diseases. The preclinical and clinical development of anti-CD4 802-2 has been primary financed by grants from the NIH and various non-profit foundations. Through September 30, 2006, we have incurred $1,287,408 of costs related to our development of anti-CD4 802-2 of which $57,836, $331,831, $303,332, $295,069, $112,505 was incurred in fiscal 2001, 2002, 2003, 2004 and 2005 respectively and $186,836 has been incurred in the first nine months of 2006. </font></p>
<p align="center">27</p>
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<p style='page-break-before: always'></p>
<PAGE>
<p align="left"><i><b><font size="-1">CORRECTA</font></b><b><font size="-1"><sup>TM</sup></font></b><b><font size="-1"> (clotrimazole emema)</font></b></i></p>
<p align="left"><font size="-1">During 2007, we plan to complete our inflamatory bowel phase II clinical trial of CORRECTA</font><font size="-1"><sup>TM</sup></font><font size="-1"> in the treatment of acute refractory pouchitis, a gastrointestinal disease. The primary purpose of this double blind, placebo-controlled phase II clinical trial is to test CORRECTA&rsquo;s safety and efficacy in treating acute refractory pouchitis.</font></p>
<p align="left"><font size="-1">If successful, we may choose to initiate a phase III clinical study in this disease. The preclinical and clinical development of CORRECTA</font><font size="-1"><sup>TM</sup></font><font size="-1"> has been primarily financed by grants from the FDA&rsquo;s orphan drug products group and various non-profit foundations. Through September 30, 2006, we have incurred $156,930 of costs related to our development of CORRECTA of which $103,238 was incurred in fiscal 2005, and $46,692 has been incurred in the first nine months of 2006.</font></p>
<p align="left"><font size="-1">During 2007, we plan to analyze the data from our phase II clinical trial of SOLAVAX in the treatment of secondary progressive MS, as well as develop a new manufacturing procedure for SOLAVAX.</font></p>
<p align="left"><font size="-1">If successful, we may choose to initiate a phase IIb clinical study in this disease. The preclinical and clinical development of SOLOVAX has been primarily financed by grants from the NIH and various non-profit foundations totaling $5.5 million. Through September 30, 2006, we have incurred $658,740 of costs related to our development of SOLAVAX of which $106,842, $157,721, $164,320, $162,848, and $66,858 was incurred in fiscal 2001, 2002, 2003, 2004, and 2005 respectively, and $152 has been incurred in the first nine months of 2006.</font></p>
<p align="left"><font size="-1">We believe we currently have sufficient capital to fund development activities of COPREXA, TRIMESTA, anti-CD4 802-2, CORRECTA and SOLOVAX during 2006 and 2007 and 2008. Since our business does not generate any cash flow, however, we will need to raise additional capital to continue development of the product beyond 2009. We expect to raise such additional capital by either borrowing money or by selling shares of our capital stock. To the extent additional capital is not available when we need it, we may be forced to sublicense our rights to our product candidates, abandon our development efforts altogether, or lose our licenses to our product candidates, any of which would have a material adverse effect on the prospects of our business. See also the risks identified under the section entitled &ldquo;Risk Factors&rdquo; in this prospectus.</font></p>
<p align="left"><b><font size="-1">Critical Accounting Policies</font></b></p>
<p align="left"><font size="-1">In December 2001, the SEC requested that all registrants discuss their most &ldquo;critical accounting policies&rdquo; in management&rsquo;s discussion and analysis of financial condition and results of operations. The SEC indicated that a &ldquo;critical accounting policy&rdquo; is one which is both important to the portrayal of the company&rsquo;s financial condition and results and requires management&rsquo;s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.</font></p>
<p align="left"><b><font size="-1">Use of Estimates</font></b></p>
<p align="left"><font size="-1">The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.</font></p>
<p align="left"><b><font size="-1">Research and Development Expense</font></b></p>
<p align="left"><font size="-1">Research and development expenses are expensed as incurred.</font></p>
<p align="center">28</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align="center"><b><font size="-1">BUSINESS</font></b></p>
<p align="left"><b><font size="-1">GENERAL</font></b></p>
<p align="left"><font size="-1">We are a development-stage, specialty pharmaceutical company that is developing proprietary, late-stage drug candidates for the treatment of neurologic and fibrotic diseases. Our strategy is to exclusively in-license proprietary, clinical-stage drug candidates that have demonstrated preliminary efficacy in human clinical trials and to complete the further clinical testing, manufacturing and other regulatory requirements sufficient to seek marketing authorizations via the filing of a New Drug Application (NDA) with the FDA and a potential Marketing Application Authorization (MAA) with the European Medicines Evaluation Agency (EMEA).</font></p>
<p align="left"><font size="-1">Below is a table of our product candidates, therapeutic indication(s) and their respective stage of development:</font></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#ffffff">
<td align='center' valign='top'>
<b><font size="-1">PRODUCT </font></b></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<b><font size="-1">THERAPEUTIC INDICATION </font></b></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<b><font size="-1">STAGE OF DEVELOPMENT </font></b></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='center' valign='top'>
<font size="-1">COPREXA</font><font size="-1"><sup>TM</sup></font><br><font size="-1">(oral tetrathiomolybdate)</font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">Initially Presenting Neurologic Wilson&rsquo;s Disease </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">Phase III Clinical Trial (complete)<br>NDA in preparation </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='center' valign='top'>
<font size="-1">COPREXA</font><font size="-1"><sup>TM</sup></font><br><font size="-1">(oral tetrathiomolybdate)</font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">Refactory Idiopathic Pulmonary Fibrosis (IPF) </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">Phase IIa Clinical Trial<br>(complete) </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='center' valign='top'>
<font size="-1">COPREXA</font><font size="-1"><sup>TM</sup></font><br><font size="-1">(oral tetrathiomolybdate) </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">Primary Biliary Cirrhosis (PBC)<br></font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">Phase II Clinical Trial<br>(on-going) </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='center' valign='top'>
<font size="-1">TRIMESTA</font><font size="-1"><sup>TM</sup></font><br><font size="-1">(oral estriol) </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">Relapsing-Remitting Multiple Sclerosis </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">Phase IIA Clinical Trial<br>(completed) </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='center' valign='top'>
<font size="-1">Anti-CD4 802-2 </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">Prevention of Severe Graft Vs. Host Disease </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">Phase I/II Clinical Trial<br>(ongoing) </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='center' valign='top'>
<font size="-1">Anti-CD4 802-2 </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">Autoimmune Diseases </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">Preclinical studies </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='center' valign='top'>
<font size="-1">CORRECTA</font><font size="-1"><sup>TM</sup></font><br><font size="-1">(clotrimazole enema) </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">Refractory Acute Pouchitis </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">Phase II Clinical Trial<br>(ongoing) </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='center' valign='top'>
<font size="-1">EFFIRMA</font><font size="-1"><sup>TM</sup></font><br><font size="-1">(oral flupirtine) </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">Fibromyalgia </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">Phase II Clinical Trial<br>(planned) </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='center' valign='top'>
<font size="-1">SOLOVAX</font><font size="-1"><sup>TM</sup></font><br><font size="-1">(MS T-cell vaccine) </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">Multiple Sclerosis Vaccine </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">Phase II Clinical Trial<br>(complete) </font></td>
</tr>
</table>
<p align="left"><b><font size="-1">PRODUCT SUMMARY</font></b></p>
<p align="left"><font size="-1">The following is a summary of each of the clinical stage drug candidates that we are developing:</font></p>
<p align="left"><b><font size="-1">COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> (oral tetrathiomolybdate)</font></b></p>
<p align="left"><font size="-1">Our lead product candidate, COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1">, is an oral, small-molecule, anticopper agent that is highly specific for lowering the levels of free copper in serum. Free copper in serum represents the toxic form of copper, as opposed to the essential form of copper which is found tightly bound to appropriate copper proteins, such as ceruloplasmin. Free copper in serum readily crosses the blood-brain barrier (BBB) and is generally at equilibrium with free copper levels in the central nervous system (CNS). The brain is the organ most sensitive to the toxic effects of free copper. By lowering the levels of toxic free copper in serum, COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> demonstrated in two pivotal clinical trials the ability to reduce toxic free copper levels and substantially improve
clinical outcomes in initially presenting neurologic Wilson&rsquo;s disease patients. We believe that COPREXA&rsquo;s</font><font size="-1"><sup>TM</sup></font><font size="-1"> unique mechanism of action and specificity for free copper makes it ideally suited for the treatment of other CNS diseases in which abnormal serum and CNS copper homeostasis are implicated.</font></p>
<p align="center">29</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align="left"><b><font size="-1">COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> for Neurologic Wilson&rsquo;s Disease</font></b></p>
<p align="left"><font size="-1">COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> has successfully completed two pivotal clinical trials for the treatment of neurologically-presenting Wilson&rsquo;s disease, a genetic disease characterized by psychiatric and neurologic disorders caused by impaired hepatic copper excretion which results in elevated levels of toxic free copper in the systemic circulation and CNS. Based upon the positive results of these two pivotal clinical trials and communication from the FDA, we intend to submit an NDA with the FDA and an MAA with the EMEA to market COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> in the U.S. and Europe for the initial indication of neurologically-presenting Wilson&rsquo;s disease. Wilson&rsquo;s disease is an orphan drug indication. There are approximately 6,000 Wilson&rsquo;s disease patients in the U.S.,
of which approximately half are diagnosed with neurologic symptoms and half with hepatic symptoms. It is estimated that several hundred of them annually are newly diagnosed, neurologically-presenting patients who are suitable candidates for treatment with COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1">. Wilson&rsquo;s disease is an inherited genetic disease in which affected patients have an impaired ability to properly excrete copper via the liver and stool. Due to the rarity of Wilson&rsquo; s disease and the fact that it is easily mistaken for psychosis, patients typically are not diagnosed until the presentation of neurodegenerative symptoms.</font></p>
<p align="left"><font size="-1">Psychiatric symptoms of neurologically-presenting Wilson&rsquo;s patients will generally precede neurologic symptoms by months or years and may include loss of emotional control, temper tantrums, emotional outbursts, bouts of crying, severe depression, suicidal ideation, loss of inhibitions, delusions, hallucinations and loss of ability to focus on tasks. Neurologic symptoms later develop as a result of neurodegeneration in the basal ganglia of the brain and include impaired speech, tremor, dystonia, incoordination and dysphasia. Crippling movement disorders may ultimately occur. Without proper treatment, Wilson&rsquo;s disease is usually fatal by the age of 30. However, if treatment is begun early enough, symptomatic recovery is usually complete and a life of normal length and quality can be expected.</font></p>
<p align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i><u><font size="-1">Current Therapies for Wilson&rsquo;s Disease</font></u></i></p>
<p align="left"><font size="-1">Therapy for Wilson&rsquo;s disease can be divided into two broad categories: (1) initial therapy in acutely ill patients, and (2) maintenance therapy. Initial therapy relates to the first few weeks to months of therapy, during which a newly presenting patient is still suffering from acute copper toxicity. Once the copper levels have been brought down to a subtoxic threshold, maintenance therapy is provided for the remainder of the patient&rsquo;s life to prevent recurrence of copper accumulation and further copper toxicity. However, the currently approved therapies for Wilson&rsquo;s disease offer suboptimal treatment options for newly-diagnosed Wilson&rsquo;s patients and indeed the FDA approved chelators, penicillamine and trientine, may be contraindicated due to the high incidence of irreversible neurologic worsening attributable to the mechanism of these
agents.</font></p>
<p align="left"><font size="-1">Three drugs are currently available for the treatment of various forms of Wilson&rsquo;s disease: penicillamine (Cupramine</font><font size="-1"><sup>&reg;</sup></font><font size="-1">, trientine (Syprine</font><font size="-1"><sup>&reg;</sup></font><font size="-1">), and zinc acetate (Galzin</font><font size="-1"><sup>&reg;</sup></font><font size="-1">). Zinc acetate&rsquo;s use for Wilson&rsquo;s diease maintenance therapy was invented and developed by our scientific founder, Dr. George Brewer, the inventor of COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1">. Penicillamine, a copper chelator in use since the 1950&rsquo;s, is currently the first-line therapy. As noted above, approximately 50% of Wilson&rsquo;s disease patients initially present with neurologic and psychiatric symptoms. According to published literature, approximately 50%
of patients who receive penicillamine as first-line therapy, suffer further neurologic deterioration upon initiation of the drug. It is estimated that about half of these patients who worsen, or about 25% of the neurologically-presenting Wilson&rsquo;s patients treated with penicillamine, never recover to their pre-penicillamine baseline. There is also evidence that even pre-symptomatic patients can develop neurologic disease after being initiated on penicillamine. Accordingly, treatment with penicillamine may induce additional, irreversible neurological damage.</font></p>
<p align="left"><font size="-1">Trientine (Syprine</font><font size="-1"><sup>&reg;</sup></font><font size="-1">), another copper chelator, is FDA approved as second-line therapy for Wilson&rsquo;s disease patients who have become resistant to penicillamine. The mechanism of action of trientine is similar to that of penicillamine, and it has been found to cause similar symptoms of neurological worsening when used as initial therapy. However, the incidence of neurologic deterioration in patients treated with trientine is approximately 25-30%, as compared to an estimated 50% incidence in </font></p>
<p align="center">30</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align="left"><font size="-1">patients treated with penicillamine. The neurologic worsening attributable to penicillamine and trientine may be explained by the fact that penicillamine and trientine are non-selective chelators that mobilize additional free copper from tissues and organs where copper is normally stored. Such uncontrolled chelation increases the levels of free copper in the serum, tissues and CNS, thereby causing further copper toxicity in the brain. The brain is very sensitive to the toxic effects of free copper and has adapted a very tightly regulated system of copper chaperones and copper transporters to deliver, utilize and clear excess copper.</font></p>
<p align="left"><font size="-1">Galzin</font><font size="-1"><sup>&reg;</sup></font><font size="-1"> (zinc acetate capsules) was approved by the FDA in 1997 and EMEA in 2001. Galzin</font><font size="-1"><sup>&reg;</sup></font><font size="-1"> is the standard maintenance therapy for Wilson&rsquo;s disease, but it is not ideal for patients who initially present with neurologic symptoms because it has a relatively slow onset of action and may take up to six months to produce effects. Furthermore, because Galzin</font><font size="-1"><sup>&reg;</sup></font><font size="-1"> acts by partially blocking the absorption of additional copper via the intestines, it neither complexes nor chelates copper and therefore has little or no effect on circulating levels of toxic free copper present in the body. Unless circulating levels of toxic free copper are brought down to a subtoxic threshold, Wilson&rsquo;s
patients are at risk for further copper toxicity and worsening of their disease.</font></p>
<p align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i><u><font size="-1">Pivotal Clinical Trials of COPREXA in Neurologically-Presenting Wilson&rsquo;s Disease</font></u></i></p>
<p align="left"><font size="-1">The first pivotal clinical trial of COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> was conducted on an open label basis in 55 neurologically-presenting Wilson&rsquo;s disease patients. Galzin</font><font size="-1"><sup>&reg;</sup></font><font size="-1"> maintenance therapy followed for a period of two years. During that follow-up period, neurologic function was assessed with scored neurologic and speech tests. A highly statistically significant improvement was achieved in these patients in annual quantitative neurologic scores (p</font>&lsaquo;0.002) as compared to baseline. Annual quantitative speech scores also yielded a highly statistically significant result (p</font>&lsaquo;0.001) as compared to baseline. Importantly, only 2 of the 55 patients, or 3.6% of
the patients treated with COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1">, showed further neurologic deterioration. This compares very favorably with historical controls of an estimated 52% incidence of neurologic deterioration in patients treated with penicillamine, the first line therapy.</font></p>
<p align="left"><font size="-1">In a second double-blind, randomized comparator, pivotal clinical trial, 48 newly diagnosed, neurologically-presenting Wilson&rsquo;s patients were treated with either trientine (Syprine</font><font size="-1"><sup>&reg;</sup></font><font size="-1">), a copper chelator having a similar mechanism of action to that of penicillamine and approved for use as second line therapy for Wilson&rsquo;s disease, versus COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1">. The primary endpoint of this comparator study was the incidence of neurological worsening between the two groups This comparator trial demonstrated a statistically significant reduction in the incidence of neurologic worsening in favor of COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1">(p</font>&lsaquo;0.05). Twenty-six percent (26%)
of trientine treated patients (6 of 23) experienced neurologic worsening compared to only four percent (4.0%) of COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> treated patients (1 of 25). Importantly, in addition to the high incidence of irreversible neurologic deterioration associated with trientine, this pivotal comparator trial also suggested that neurologic deterioration during the initial treatment phase with trientine is an important prognostic indicator of death in this patient group.</font></p>
<p align="left"><font size="-1">The clinical development of COPREXA has been supported by grants from the Orphan Products Division of the FDA.</font></p>
<p align="left"><b><font size="-1">COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> for Idiopathic Pulmonary Fibrosis (IPF)</font></b></p>
<p align="left"><font size="-1">In order to broaden the therapeutic utility of COPREXA, we are also developing it as a highly potent oral antifibrotic agent. This research is based upon the observation that the fibrotic disease process is dependent upon the availability of endogenous free copper. COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> has demonstrated the ability to inhibit fibrosis in a number of well established animal models through the sequestration of available copper and inhibition of key fibrotic cytokines, including secreted protein acid rich in cysteine (SPARC), NF</font>&Kappa;&ecirc;B, TG</font>&Beta;F-&acirc;, FGF-2, IL-1, IL-6, IL-8, connective tissue growth factor (CTGF) and collagen.</font></p>
<p align="left"><font size="-1">IPF is a fatal respiratory disease characterized by progressive loss of lung function due to extensive fibrosis of lung tissues that are essential for respiration and life. It affects an estimated 124,000 </font></p>
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<p align="left"><font size="-1">patients in the U.S., resulting in approximately 30,000 deaths in the U.S. annually. This represents more deaths annually than either breast or prostate cancer.</font></p>
<p align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i><u><font size="-1">Phase II Clinical Trials of COPREXA in Refractory IPF Patients</font></u></i></p>
<p align="left"><font size="-1">Based upon the successful animal experiments described above, a 16-patient, one-year, open-label, phase II clinical trial of COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> was completed for the treatment of refractory IPF. The prospectively defined primary endpoint of the study was the percentage of patients capable of maintaining clinically stable pulmonary function as determined by forced vital capacity (FVC), an accepted measurement of pulmonary function in IPF. After six months of therapy with oral COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1">, 93.3% of patients had stable disease and after twelve months of therapy with oral COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1">, 75% of patients had stable disease. These results compare favorably to published historical controls which show stable disease
after six months in only 68% of patients and stable disease after twelve months in only 46% of patients. This phase II trial was partially supported by a grant from the Coalition for Pulmonary Fibrosis, a non-profit organization.</font></p>
<p align="left"><b><font size="-1">COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> for Primary Biliary Cirrhosis (PBC)</font></b></p>
<p align="left"><font size="-1">Primary biliary cirrhosis (PBC) is an autoimmune and fibrotic disease which targets the bile ducts of the liver. PBC is a relatively rare disease affecting approximately 20,000 patients in the U.S. Progression of PBC is somewhat variable. Some patients die or require transplant within 5 years, while others have a more protracted course of disease.</font></p>
<p align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i><u><font size="-1">Phase II Clinical Trial of COPREXA</font></u><u><font size="-1"><sup>TM</sup></font></u><u><font size="-1"> in Primary Biliary Cirrhosis</font></u></i></p>
<p align="left"><font size="-1">Based on positive animal experiments, we have initiated a 50-patient, three-year, double-blind, placebo-controlled, phase II clinical trial of COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> for the treatment of PBC. This study is being supported by an $850,000 grant from the Orphan Products Division of the FDA. Therapies currently approved for PBC, such as ursodiol (Urso</font><font size="-1"><sup>&reg;</sup></font><font size="-1">) offer only palliative relief of the symptoms of PBC and do not alter the course of the disease.</font></p>
<p align="left"><i><b><font size="-1">TRIMESTA</font></b><b><font size="-1"><sup>TM</sup></font></b><b><font size="-1"> (oral estriol)</font></b></i></p>
<p align="left"><font size="-1">We are developing TRIMESTA</font><font size="-1"><sup>TM</sup></font><font size="-1"> as an oral immunomodulatory and anti-inflammatory agent for the North American market. Estriol has been approved and marketed throughout Europe and Asia as a mild estrogenic agent for over 40 years for the treatment of post-menopausal hot flashes. Estriol is an important endogenous hormone that is produced in the placenta by women during pregnancy. Maternal levels of estriol increase in a linear fashion throughout the third trimester of pregnancy until birth, whereupon they abruptly fall to near zero. Our scientific collaborator of TRIMESTA</font><font size="-1"><sup>TM</sup></font><font size="-1"> is a leading authority on the role that estriol plays in affording immunologic privilege to the fetus so as to prevent its rejection by the mother. It is a widely observed phenomenon
that pregnant women with autoimmune diseases (such as multiple sclerosis) experience high rates of spontaneous remission during pregnancy (especially in the third trimester) as well as high rates of relapse during the post-partum period (especially in the three-month post-partum period). Based upon these insights, our scientific collaborator of TRIMESTA</font><font size="-1"><sup>TM</sup></font><font size="-1"> has conducted initial clinical trials of TRIMESTA</font><font size="-1"><sup>TM</sup></font><font size="-1"> in multiple sclerosis patients and has demonstrated encouraging results.</font></p>
<p align="left"><b><font size="-1">TRIMESTA</font><font size="-1"><sup>TM</sup></font><font size="-1"> for Relapsing-Remitting Multiple Sclerosis (MS)</font></b></p>
<p align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i><u><font size="-1">Current Therapies for Relapsing-Remitting MS.</font></u></i></p>
<p align="left"><font size="-1">There are currently five FDA-approved therapies for the treatment of relapsing-remitting multiple sclerosis: Betaseron</font><font size="-1"><sup>&reg;</sup></font><font size="-1">, Rebif</font><font size="-1"><sup>&reg;</sup></font><font size="-1">, Avonex</font><font size="-1"><sup>&reg;</sup></font><font size="-1">, Copaxone</font><font size="-1"><sup>&reg;</sup></font><font size="-1"> and Tysabri</font><font size="-1"><sup>&reg;</sup></font><font size="-1">. These therapies provide only a modest benefit for patients with relapsing-remitting MS and therefore serve to only delay progression of the disease. All of these drugs require frequent (daily, weekly &amp; monthly) injections (or infusions) on an ongoing basis and are associated with unpleasant side effects (such as flu-like symptoms), high rates of non-compliance among users, and eventual loss of efficacy
due to the appearance of resistance in approximately 30% of patients. An estimated two-thirds of MS patients are women.</font></p>
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<p align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i><u><font size="-1">Phase II Clinical Trial Results of TRIMESTA</font></u><u><font size="-1"><sup>TM</sup></font></u><u><font size="-1"> in Relapsing-Remitting MS</font></u></i></p>
<p align="left"><font size="-1">TRIMESTA</font><font size="-1"><sup>TM</sup></font><font size="-1"> has completed an initial 10-patient, 16-month, single-agent, crossover, phase IIA clinical trial in the U.S. for the treatment of MS. The results of this study were encouraging.</font></p>
<p align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i><font size="-1">Decrease in Volume and Number of Myelin Lesions</font></i></p>
<p align="left"><font size="-1">In relapsing-remitting MS patients treated, the total volume and number of pathogenic gadolinium enhancing myelin lesions (an established neuroimaging measurement of disease activity in MS) decreased during the treatment period as compared to a six-month pre-treatment baseline period. The median total enhancing lesion volumes decreased by 79% (p =0.02) and the number of lesions decreased by 82% (p =0.09) within the first three months of treatment with TRIMESTA</font><font size="-1"><sup>TM</sup></font><font size="-1">. Over the next three months, lesion volumes decreased by 82% (p =0.02) and the number of lesions decreased by 82% (p =0.02) compared to baseline. During a three-month re-treatment phase of this clinical trial, relapsing-remitting MS patients again showed a decrease in enhancing lesion volumes (88%) (p =0.008) and a decrease in the number of lesions
(48%) (p =0.04) compared to baseline.</font></p>
<p align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i><u><font size="-1">Market Opportunities for TRIMESTA</font></u><u><font size="-1"><sup>TM</sup></font></u></i></p>
<p align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i><font size="-1">Multiple Sclerosis</font></i></p>
<p align="left"><font size="-1">MS is a progressive neurological disease in which the body loses the ability to transmit messages along nerve cells, leading to a loss of muscle control, paralysis, and, in some cases, death. Currently, more than 2.5 million people worldwide (approximately 400,000 patients in the US), mainly young adults aged 18-50, are afflicted with MS and 66% of these patients are women. The most common form of MS is relapsing-remitting MS, which accounts for approximately 75% of MS patients.</font></p>
<p align="left"><font size="-1">MS exacts a heavy toll on our healthcare system. According to a published study, the total annual cost for all people with MS in the U.S. is estimated to be more than $9 billion. The average annual cost of MS is approximately $44,000 to $95,625 per person. These figures include lost wages and healthcare costs (caregiving, hospital and physician costs, pharmaceutical therapy and nursing home care). The cost of treating patients with later-stage progressive forms of MS is approximately $65,000 per year per person. The average lifetime costs for people with MS are more than $2.2 million per person.</font></p>
<p align="left"><font size="-1">During 2005, sales estimates of FDA-approved MS therapies, which include Avonex</font><font size="-1"><sup>&reg;</sup></font><font size="-1">, Betaseron</font><font size="-1"><sup>&reg;</sup></font><font size="-1">, Copaxone</font><font size="-1"><sup>&reg;</sup></font><font size="-1">, and Rebif</font><font size="-1"><sup>&reg;</sup></font><font size="-1">, totaled approximately $5.0 billion, with Avonex</font><font size="-1"><sup>&reg;</sup></font><font size="-1"> accounting for $1.5 billion in worldwide sales ($935 million were in the U.S.).</font></p>
<p align="left"><b><font size="-1">ANTI-CD4 802-2</font></b></p>
<p align="left"><font size="-1">We are developing a series of small molecule and peptide based inhibitors of the T-cell CD4 co-receptor. The CD4 co-receptor is central to a number of autoimmune disorders such as MS.</font></p>
<p align="left"><font size="-1">Our lead anti-CD4 molecule, named 802-2, has demonstrated efficacy in a number of animal models of autoimmune disease models, and it is currently being evaluated in a phase I/II clinical trial for the prevention of graft-vs.-host disease. Anti-CD4 802-2 may represent the first clinical stage, non-antibody-based molecule capable of inducing immune tolerance for a variety of CD4-mediated autoimmune diseases.</font></p>
<p align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i><u><font size="-1"> Market Opportunity for Anti-CD4 802-2 and Small Molecule CD4 Inhibitors</font></u></i></p>
<p align="left"><font size="-1">From a commercial perspective, anti-CD4 802-2 and our other anti-CD4 molecules address an autoimmune disease market projected to be $21 billion in 2006 with an anticipated annual growth rate of 15% thereafter. Autoimmune diseases represent the third-largest category of illness in the industrialized world, after heart disease and cancer. A partial list of such diseases includes MS, psoriasis, and rheumatoid arthritis, as well as &ldquo;non-typical&rdquo; CD4-mediated diseases such as allergy and asthma.</font></p>
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<p align="left"><b><font size="-1">CORRECTA</font><font size="-1"><sup>TM</sup></font><font size="-1"> (clotrimazole enema)</font></b></p>
<p align="left"><font size="-1">We are developing CORRECTA</font><font size="-1"><sup>TM</sup></font><font size="-1">, a proprietary retention enema formulation of the widely used topical antifungal agent clotrimazole, for the treatment of acute refractory pouchitis, a subset of inflammatory bowel disease (IBD) and ulcerative colitis (UC) market. CORRECTA</font><font size="-1"><sup>TM</sup></font><font size="-1"> is currently the subject of a double-blind, placebo-controlled, multi-center, one-month, phase II clinical trial for acute pouchitis. This study, called the &ldquo;CAPTURE&rdquo; study, is currently being funded by a $750,000 grant from the FDA&rsquo;s Orphan Drug Group. </font></p>
<p align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i><u><font size="-1">Market Opportunity for CORRECTA</font></u><u><font size="-1"><sup>TM</sup></font></u></i></p>
<p align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i><font size="-1">Pouchitis</font></i></p>
<p align="left"><font size="-1">Pouchitis is a debilitating complication that can develop following corrective surgical treatment of ulcerative colitis, wherein an ileal reservoir (or pouch) is constructed to enable normal bowel movements after removal of the diseased colon. This ileal reservoir can become inflamed, leading to debilitating gastrointestinal symptoms including diarrhea, incontinence, bleeding, fever and urgency. Currently, there are no approved treatments for pouchitis. Published scientific data suggest that there are approximately 30,000 to 45,000 pouchitis patients and between 5,000 to 10,000 refractory pouchitis patients in the U.S.</font></p>
<p align="left"><b><font size="-1">EFFIRMA</font><font size="-1"><sup>TM</sup></font></b><font size="-1"> </font><b><font size="-1"> (oral flupirtine)</font></b></p>
<p align="left"><font size="-1">We are developing EFFIRMA</font><font size="-1"><sup>TM</sup></font><font size="-1"> (oral flupirtine), a novel, centrally-active, oral therapy for the treatment of fibromyalgia syndrome (FMS) and we plan to conduct a limited, controlled phase II pilot clinical trial in this indication. FMS is a common, centrally-mediated pain disorder characterized by chronic diffuse pain and other symptoms. The active ingredient of EFFIRMA</font><font size="-1"><sup>TM</sup></font><font size="-1">, flupirtine, was originally developed by Asta Medica and has been approved in Europe since 1984 for the treatment of chronic lower back pain, although it has never been introduced to the U.S. market for any indication.</font></p>
<p align="left"><b><font size="-1">EFFIRMA</font><font size="-1"><sup>TM</sup></font><font size="-1"> for FMS</font></b></p>
<p align="left"><font size="-1">Our scientific collaborator has demonstrated preliminary anecdotal efficacy of EFFIRMA</font><font size="-1"><sup>TM</sup></font><font size="-1"> for the treatment of FMS in a small number of U.S. patients suffering from FMS that were refractive to other analgesics and therapies. EFFIRMA</font><font size="-1"><sup>TM</sup></font><font size="-1"> was well tolerated by patients with no untoward side effects. In addition, substantial improvement in signs and symptoms was demonstrated in this difficult-to-treat FMS patient population.</font></p>
<p align="left"><b><font size="-1">INTELLECTUAL PROPERTY</font></b></p>
<p align="left"><font size="-1">Our goal is to (a) obtain, maintain, and enforce patent protection for our products, formulations, processes, methods, and other proprietary technologies, (b) preserve our trade secrets, and (c) operate without infringing on the proprietary rights of other parties, worldwide. We seek, where appropriate, the broadest intellectual property protection for product candidates, proprietary information, and proprietary technology through a combination of contractual arrangements and patents.</font></p>
<p align="left"><font size="-1">We have exclusively licensed from various universities more than 45 patent and patent applications, including foreign equivalents relating to our product candidates. </font></p>
<p align="left"><font size="-1">We have also obtained various regulatory exclusivities, such as &ldquo;Orphan Drug&rdquo; designations for two of our product candidates, COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> and CORRECTA</font><font size="-1"><sup>TM</sup></font><font size="-1">. Orphan Drug designations provide 7 years of market exclusivity in the U.S. and 10 years of marketing exclusivity in Europe. Specifically, we have obtained orphan drug protection for the use of COPREXA in the treatment of neurologic Wilson&rsquo;s disease. We have also obtained orphan drug protection for the use of CORRECTA for the treatment of acute pouchitis. These regulatory exclusivities combined with our patents and patent applications provide for supplemental intellectual property protection for our products against competitors. </font></p>
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<p align="left"><font size="-1">Below is a description of our license and development agreements relating to our product candidates:</font></p>
<p align="left"><i><b><font size="-1">University of Michigan (UM) Exclusive License Agreement</font></b></i></p>
<p align="left"><font size="-1">We have entered into an exclusive worldwide license agreement with the University of Michigan (UM) for all uses of U.S. Patent No. 6,855,340, corresponding international applications, and a related corresponding patent application that relates to various uses of anticopper therapeutics, including COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1">, to treat inflammatory and fibrotic diseases. Pursuant to this agreement, we will use our best efforts to commercialize COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> for the therapeutic uses embodied in the issued patent and pending patent application; reimburse UM for patent expenses; pay UM royalties equal to 2% of net sales of COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> for uses covered by the UM patents; issue UM 1,261,492 shares of our common stock; pay
UM success-based milestone fees totaling $350,000 (the first of which is due when we file an NDA and the second of which is due when we receive FDA approval for COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> in an indication covered by the UM patents), and indemnify UM against certain liabilities.</font></p>
<p align="left"><i><b><font size="-1">Collaborative Research and Development Agreement with UM</font></b></i></p>
<p align="left"><font size="-1">During September 2005, we entered into a three-year sponsored research agreement with UM relating to expanding the therapeutic utility of COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> to treat other copper mediated diseases. Pursuant to that agreement, we sponsor approximately $450,000 per annum, payable in monthly installments. This agreement can be extended for an additional two-year period.</font></p>
<p align="left"><i><b><font size="-1">Consulting Agreement with Dr. George Brewer</font></b></i></p>
<p align="left"><font size="-1">We have entered into a three-year consulting agreement with Dr. George Brewer, inventor of the COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> technology. Pursuant to this agreement, we pay Dr. Brewer a quarterly fee of $30,000. We also issued to Dr. Brewer options to acquire 650,000 shares of our common stock and agreed to pay Dr. Brewer a royalty on sales of COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> equal to 3% of net sales for 17 years. On November 22, 2006, we issued Dr. Brewer an additional 650,000 options to acquire our common stock. This agreement has a provision for a two-year extension.</font></p>
<p align="left"><i><b><font size="-1">McLean Hospital Exclusive License Agreement</font></b></i></p>
<p align="left"><font size="-1">We have entered into an exclusive license agreement with the McLean Hospital, a Harvard University hospital, relating to U.S. Patent No. 6,610,324 and its foreign equivalents, entitled &ldquo;Flupirtine in the treatment of fibromyalgia and related conditions.&rdquo; Pursuant to this agreement, we agreed to pay McLean royalties on net sales of flupirtine equal to 3.5% of net sales of flupirtine for indications covered by the issued patents, reduced to 1.75% if we have a license to other intellectual property covering those indications; use our best efforts to commercialize flupirtine for the therapeutic uses embodied in the patent applications; reimburse back patent costs of approximately $41,830; and pay the following milestone payments: $150,000 upon the initiation of a pivotal phase III clinical trial of flupirtine; $300,000 upon the filing of an NDA for
flupirtine; and $600,000 upon FDA approval of flupirtine.</font></p>
<p align="left"><i><b><font size="-1">University of Southern California Agreement</font></b></i></p>
<p align="left"><font size="-1">Through our majority owned subsidiary Solovax we have an exclusive option agreement, as amended, with the University of Southern California (USC) to license U.S. Patent Application serial nos. 09/156509 and 10/773356 and its foreign equivalents entitled &ldquo;T-Cell Vaccination for the Treatment of Multiple Sclerosis.&rdquo; Under this agreement we are required to reimburse USC&rsquo;s patent expenses and pay USC royalties of 4% of net sales relating to the vaccine. We have until December 2007 to exercise our option and enter into an exclusive license. If we wish to enter into an exclusive license, we will have to issue to USC stock representing a 10% ownership interest of our Solovax subsidiary.</font></p>
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<p align="left"><i><b><font size="-1">Children&rsquo;s Hospital-Boston Agreement</font></b></i></p>
<p align="left"><font size="-1">Our majority owned subsidiary EPI, has entered into an exclusive worldwide license agreement with Children&rsquo;s Hospital Medical Corporation, an affiliate of Children&rsquo;s Hospital-Boston, relating to a certain pending patent application covering all gastrointestinal, hepatic, and rectal uses of the clotrimazole technology, including CORRECTA</font><font size="-1"><sup>TM</sup></font><font size="-1">.</font></p>
<p align="left"><font size="-1">Pursuant to this agreement, we paid a $150,000 upfront payment in two installments, as well as annual maintenance fees, milestone payments totaling $3 million that are payable on issuance of U.S. and European patents covering the clotrimazole technology, on initiation of a pivotal phase III clinical trial, on filing of a New Drug Application (NDA), and on approval of an NDA with the FDA and European Medical Agency, as well as royalties on net sales of the clotrimazole technology covered by the licensed patents. We may be permitted to partially pay milestone payments in the form of equity. We also acquired rights to valuable data generated under an investigational new drug (IND) application filing with the FDA and an orphan drug designation. These data include all preclinical and clinical data know-how relating to the clotrimazole technology. We would also be
required to indemnify Children&rsquo;s Hospital and its employees against certain liabilities.</font></p>
<p align="left"><i><b><font size="-1">Thomas Jefferson University License Agreement</font></b></i></p>
<p align="left"><font size="-1">Our majority-owned subsidiary CD4 Biosciences Inc., has entered into an exclusive worldwide license agreement with Thomas Jefferson University (TJU) relating to certain U.S. and foreign issued patents and patent applications relating to all uses of anti-CD4 802-2 and CD4 inhibitor technology. We are obligated to pay annual maintenance fees, milestone payments upon the filing of an NDA and approval of an NDA with the FDA, as well as royalties on net sales of anti-CD4 802-2 and other anti-CD4 molecules covered by the licensed patents. We also received rights to valuable data generated under any IND application filing, which includes toxicology and manufacturing information relating to anti-CD4 802-2. As partial consideration for this license, TJU was issued shares representing 5% of the common stock of CD4 Biosciences Inc. We also agreed that TJU would receive
antidilution protection on those CD4 shares through the first $2 million in financing to CD4. We also agree to indemnify TJU against certain liabilities.</font></p>
<p align="left"><i><b><font size="-1">The Regents of University of California License Agreement</font></b></i></p>
<p align="left"><font size="-1">We have an exclusive worldwide license agreement with the Regents of the University of California relating to an issued US Patent No. 6,936,599 and pending patent applications covering the uses of the TRIMESTA</font><font size="-1"><sup>TM</sup></font><font size="-1"> technology. Pursuant to this agreement, we paid an upfront license fee of $20,000, reimbursed patent expenses of $41,000 and agreed to pay a license fee of $25,000 during 2006, as well as annual maintenance fees, milestone payments totaling $750,000 that are payable on filing a NDA, and on approval of an NDA with the FDA, as well as royalties on net sales of the TRIMESTA</font><font size="-1"><sup>TM</sup></font><font size="-1"> technology covered by the licensed patents. If we become public or are acquired by a public company, we may be permitted to partially pay milestone payments in the form
of equity.</font></p>
<p align="left"><i><b><font size="-1">Asset Purchase Agreement for TRIMESTA</font></b><b><font size="-1"><sup>TM</sup></font></b></i></p>
<p align="left"><font size="-1">Through an asset purchase agreement and the approval of the stockholders of EPI and General Fiber, Inc., a related party company controlled by Accredited Ventures, we have an option to acquire an exclusive license to TRIMESTA</font><font size="-1"><sup>TM</sup></font><font size="-1">. </font></p>
<p align="left"><i><b><font size="-1">Agreement to Acquire EPI</font></b></i></p>
<p align="left"><font size="-1">During December 2005, we acquired 65.47% of Effective Pharmaceuticals, Inc. (EPI) from two of our directors for no additional consideration. During December 2006, we entered into a letter of intent to consummate a merger with EPI in which we will acquire the 34.53% of EPI&rsquo;s outstanding Series B, convertible preferred stock that we do not currently own for 2,987,959 shares of our common stock. However, we can give no assurances that we will be able to consummate this merger with EPI (see &ldquo;Risk Factors&mdash;we may not be able to consummate the merger of EPI into our company&rdquo;). Upon the </font></p>
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<p align="left"><font size="-1">closing of this merger, EPI would become a wholly-owned subsidiary and there will be no minority interest.</font></p>
<p align="left"><b><font size="-1">MANUFACTURING</font></b></p>
<p align="left"><font size="-1">We utilize contract manufacturing firms to produce the bulk active ingredients for COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1">, TRIMESTA</font><font size="-1"><sup>TM</sup></font><font size="-1">, CORRECTA</font><font size="-1"><sup>TM</sup></font><font size="-1">, Anti-CD4 802-2, and EFFIRMA</font><font size="-1"><sup>TM</sup></font><font size="-1"> in accordance with &ldquo;current good manufacturing processes&rdquo; (cGMP) guidelines outlined by the FDA.</font></p>
<p align="left"><b><font size="-1">SALES AND MARKETING</font></b></p>
<p align="left"><font size="-1">We plan to establish our own in-house neuroscience sales and marketing effort in the United States to market our neurology products, specifically, COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> and TRIMESTA</font><font size="-1"><sup>TM</sup></font><font size="-1">. As we expand the use of COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1"> and TRIMESTA</font><font size="-1"><sup>TM</sup></font><font size="-1"> into larger CNS diseases, we will be able to utilize our existing marketing infrastructure to market these products. We may choose to enter into a co-promotion or licensing agreement for specific territories with biotechnology or pharmaceutical companies to market CORRECTA</font><font size="-1"><sup>TM</sup></font><font size="-1">, Anti-CD4 802-2, EFFIRMA</font><font size="-1"><sup>TM</sup></font><font size="-1">, SOLOVAX</font><font
size="-1"><sup>TM</sup></font><font size="-1">, and certain uses of COPREXA</font><font size="-1"><sup>TM</sup></font><font size="-1">.</font></p>
<p align="center"><b><font size="-1">LEGAL PROCEEDINGS</font></b></p>
<p align="left"><font size="-1">We are not a party to any pending legal proceeding, nor are we aware of any proceeding contemplated by any governmental authority involving us.</font></p>
<p align="center"><b><font size="-1">DESCRIPTION OF PROPERTY</font></b></p>
<p align="left"><font size="-1">Our primary offices are located at 3985 Research Park Drive, Ann Arbor, MI 48108. We currently rent approximately 5,500 square feet of office, laboratory and production space on a month-to-month basis for monthly rent of $5,500. Our phone number is (734) 332-7800 and our facsimile number is (734) 332-7878. Our website is located at www.pipexinc.com. We also have additional offices in Miami, Florida, which we share with Accredited Ventures, Inc., an affiliate of our company for which we pay $2,150 on a month to month basis. We believe our current offices will be adequate for the foreseeable future until a suitable replacement facility is located.</font></p>
<p align="center"><b><font size="-1">DIRECTORS AND EXECUTIVE OFFICERS</font></b></p>
<p align="left"><font size="-1">Below is certain information regarding our directors and executive officers. The following table states who are our directors and officers, as well as biographical information regarding our directors and management.</font></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#ffffff">
<td align='center' valign='bottom'>
<b><font size="-1">Name<br><hr noshade color="#000000"></font></b></td>
<td align='center' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='bottom'>
<b><font size="-1">Age<br><hr noshade color="#000000"></font></b></td>
<td align='center' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='bottom'>
<b><font size="-1">Position<br><hr noshade color="#000000"></font></b></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='top'>
<font size="-1">Steve H. Kanzer, CPA, Esq. </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">42 </font></td>
<td align='left' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='top'>
<font size="-1">Chairman and Chief Executive Officer </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='top'>
<font size="-1">Charles L. Bisgaier, Ph.D. </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">53 </font></td>
<td align='left' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='top'>
<font size="-1">President and Director </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='top'>
<font size="-1">Jeffrey J. Kraws </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">41 </font></td>
<td align='left' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='top'>
<font size="-1">Vice President, Business Development and Director </font></td>
</tr>
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<td align='left' valign='top'>
<font size="-1">A. Joseph Rudick, M.D. </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">49 </font></td>
<td align='left' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='top'>
<font size="-1">Chief Medical Officer and Director </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='top'>
<font size="-1">Nicholas Stergis, M.S. </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">32 </font></td>
<td align='left' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='top'>
<font size="-1">Chief Operating Officer and Director </font></td>
</tr>
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<td align='left' valign='top'>
<font size="-1">John S. Althaus, M.S., M.B.A. </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">52 </font></td>
<td align='left' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='top'>
<font size="-1">Vice President, Advanced Technology </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='top'>
<font size="-1">Jeff Wolf, Esq. </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">43 </font></td>
<td align='left' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='top'>
<font size="-1">Director </font></td>
</tr>
</table>
<p align="left"><i><b><font size="-1">Steve H. Kanzer, CPA, Esq.</font></b></i></p>
<p align="left"><font size="-1">Mr. Kanzer, 42, is our co-founder and has served as President since our inception in February 2001 until May 2006. In September 2004, Mr. Kanzer assumed the additional roles of Chairman and Chief Executive Officer and serves on a full-time basis at our corporate headquarters in Ann Arbor, Michigan. Mr. Kanzer has also been a director and officer of our subsidiaries, including Solovax, Inc., Effective Pharmaceuticals, Inc., Putney Drug Corp. and CD4 Biosciences, Inc. Since December 2000, </font></p>
<p align="center">37</p>
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<p align="left"><font size="-1">he has served as co-founder and Chairman of Accredited Ventures Inc. and Accredited Equities Inc., a venture capital firm and NASD-member investment bank, respectively, which both specialize in the biotechnology industry. Mr. Kanzer was co-founder, Chairman, President and Chief Executive Officer of Developmental Therapeutics, Inc., a cardiovascular drug development company which was developing an oral thyroid hormone analog, DITPA, for congestive heart failure. Developmental Therapeutics was acquired in October 2003 by Titan Pharmaceuticals, Inc., a publicly traded biopharmaceutical company. Prior to founding Accredited Ventures and Accredited Equities in December 2000, Mr. Kanzer served as Senior Managing Director-Head of Venture Capital at Paramount Capital from 1991 until December 2000. While at Paramount Capital, Mr. Kanzer was involved in the formation
and financing of a number of biotechnology companies and held various positions in these companies. Mr. Kanzer was founding Chairman of the Board of Discovery Laboratories, Inc. from 1995 through 1999. From 1997 until 2000, Mr. Kanzer was founding President of PolaRx Biopharmaceuticals, Inc., a biopharmaceutical company that licensed and developed TRISENOX</font><font size="-1"><sup>&reg;</sup></font><font size="-1"> (arsenic trioxide), a leukemia drug that was approved by the FDA in 2000 and which currently holds the FDA record for fastest drug ever developed from IND filing until NDA approval (30 months). PolaRx was merged with Cell Therapeutics Inc. (NASDAQ:CTIC) in January 2000, and Cephalon acquired the rights to TRISENOX</font><font size="-1"><sup>&reg;</sup></font><font size="-1"> in 2005 for $165 million. Since 1996, Mr. Kanzer has served as a member of the board of directors of DOR
BioPharma, Inc., a public biotechnology company that is preparing to file an NDA for orBec</font><font size="-1"><sup>&reg;</sup></font><font size="-1"> (oral beclomethasone dipropionate), a drug that Mr. Kanzer licensed in 1997. Mr. Kanzer currently serves as non-executive Vice Chairman of the Board of DOR and also served as Interim President from June 2002 until January 2003. In March 1998, Mr. Kanzer led the privatization of the Institute for Drug Research Kft. (IDR) in Budapest, Hungary, a 400-employee, 26 acre pharmaceutical research and development center. Since 1950, IDR operated as the central pharmaceutical R&amp;D center for the country of Hungary, served the active pharmaceutical ingredients (API) needs of Eastern Europe, and performed original drug discovery research, resulting in the registration of over 80 API products. Mr. Kanzer served as Chief Executive Officer of IDR from
March 1998 and led the sale of IDR to IVAX Corporation in October 1999. Mr. Kanzer has also been a co-founder and director of 23 biotechnology companies, including Avigen, Inc., XTLBio, Boston Life Sciences, Inc. and Titan Pharmaceuticals, Inc., all publicly traded companies. Prior to joining Paramount Capital in 1992, Mr. Kanzer was an attorney at the law firm of Skadden, Arps, Slate, Meagher &amp; Flom in New York where he specialized in mergers and acquisitions. Mr. Kanzer received his J.D. from New York University School of Law in 1988 and a B.B.A. in Accounting from Baruch College in 1985, where he was a Baruch Scholar. Mr. Kanzer is active in university-based pharmaceutical technology licensing and has served as Co-Chair of the New York Chapter of the Licensing Executives Society.</font></p>
<p align="left"><i><b><font size="-1">Charles L. Bisgaier, Ph.D.</font></b></i></p>
<p align="left"><font size="-1">Dr. Bisgaier, 53, is our President and a director. Prior to joining Pipex, Dr. Bisgaier was the Senior Director of Pharmacology at Esperion Therapeutics, a Division of Pfizer Global Research and Development in Ann Arbor, Michigan. In 1998, Dr. Bisgaier co-founded Esperion Therapeutics and served as the Vice President of Pharmacology. At Esperion he played an active role in the discovery, pre-clinical or clinical development of product candidates, including ETC-216 (ApoA-IMilano), ETC-588, ETC-642 and small molecule lipid regulators, that may have utility for the treatment and prevention of cardiovascular diseases. ETC-216 was the first agent every to show rapid regression of artery plaques in humans. In 2004, Esperion Therapeutics was acquired by Pfizer for $1.3 billion.</font></p>
<p align="left"><font size="-1">Prior to Esperion Therapeutics, Dr. Bisgaier was an Associate Research Fellow in the Department of Vascular and Cardiac Disease at Warner-Lambert/Parke-Davis, where he played a role in discovery and development of pharmaceuticals that modulate lipoprotein and cholesterol metabolism. There he participated in the discovery and development of pharmaceutical agents including Gemfibrozil (Lopid</font><font size="-1"><sup>&reg;</sup></font><font size="-1">), Atorvastatin calcium (Lipitor</font><font size="-1"><sup>&reg;</sup></font><font size="-1">), Avasimibe and Gemcabene. He also lead the discovery efforts for lipid regulating agents including cholesteryl ester transfer protein inhibitors, fatty acid mimetics and cholesterol esterase inhibitors. He has carried out basic research on HDL and its </font></p>
<p align="center">38</p>
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<p align="left"><font size="-1">associated proteins including studies on apolipoprotein synthesis, paraoxonase, oxidation, and cholesteryl ester transfer protein function.</font></p>
<p align="left"><font size="-1">He has published over 70 peer reviewed articles and reviews and is a named inventor on numerous patents and patent applications. He currently holds an adjunct position in Pharmacology at the University of Michigan. He is also the Editor-in-Chief of Current Medicinal Chemistry Immunology, Endocrine and Metabolic Agents. Dr. Bisgaier serves as a member of the Michigan Society of Medical Research Board as well as the ProNAI Therapeutics Scientific Board (Kalamazoo, MI).</font></p>
<p align="left"><font size="-1">Dr. Bisgaier received a B.A. (1974) in Biology from the State University College at Oneonta, NY, and a M.S. (1977) and Ph.D. (1981) in Biochemistry from George Washington University. Following his doctorate, he studied lipoprotein metabolism within a Specialized Center of Research (SCOR) for atherosclerosis at Columbia University College of Physicians and Surgeons prior to joining Warner-Lambert/Parke-Davis in 1990.</font></p>
<p align="left"><i><b><font size="-1">Jeffrey J. Kraws</font></b></i></p>
<p align="left"><font size="-1">Mr. Kraws, 41, is a director of Pipex and our Vice President of Business Development. Mr. Kraws is Chief Executive Officer and co-founder of Crystal Research Associates. Well known and respected on Wall Street, Mr. Kraws has received some of the most prestigious awards in the industry. Among other awards, he was given a &ldquo;5-Star Rating&rdquo; in 2001 by Zacks and was ranked the number one analyst among all pharmaceutical analysts for stock performance in 2001 by Starmine.com. Prior to founding Crystal Research Associates, Mr. Kraws served as co-president of The Investor Relations Group (IRG), a firm representing primarily under-followed, small-capitalization companies. Previously, Mr. Kraws served as a managing director of healthcare research for Ryan Beck &amp; Co. and as director of research/senior pharmaceutical analyst and managing director at Gruntal
&amp; Co., LLC (prior to its merger with Ryan Beck &amp; Company). Mr. Kraws served as managing director of the healthcare research group and senior pharmaceutical analyst at First Union Securities (formerly EVEREN Securities); as senior U.S. pharmaceutical analyst for the Swedish-Swiss conglomerate Asea Brown Boveri; and as managing director and president of the Brokerage/Investment Banking operation of ABB Aros Securities, Inc. He also served as senior pharmaceutical analyst at Nationsbanc Montgomery Securities, BT Alex Brown &amp; Sons, and Buckingham Research. Mr. Kraws also has industry experience, having been responsible for competitive analysis within the treasury group at Bristol-Myers-Squibb Company. He holds an MBA from Cornell University and a B.S. degree from State University of New York-Buffalo. Mr. Kraws only devotes a portion of his time to our business.</font></p>
<p align="left"><i><b><font size="-1">A. Joseph Rudick, M.D.</font></b></i></p>
<p align="left"><font size="-1">Dr. Rudick, 49, was appointed to the board of directors of Pipex during December 2004. Dr. Rudick currently serves as our Chief Medical Officer and is president and chief medical officer of our majority-owned subsidiary Effective Pharmaceuticals, Inc.</font></p>
<p align="left"><font size="-1">Dr. Rudick was Chief Executive Officer and President of Atlantic Technology Ventures, Inc. (Atlantic), a public drug-development company, as well as a member of it board of directors from May 1999 until its merger with Manhattan Pharmaceuticals, Inc. in February 2003. He was also a founder of Atlantic and two of its majority-owned subsidiaries, Optex Opthalmalogics, Inc. and Channel Therapeutics, Inc. During his tenure at Atlantic, he structured a corporate partnership with Bausch &amp; Lomb for development of Atlantic&rsquo;s novel cataract removal device, named Catarex</font><font size="-1"><sup>TM</sup></font><font size="-1">, as well as a partnership with Indevus Pharmaceuticals, Inc. for development of their novel clinical-stage neuropathic pain compound, now known as IP-571. From 1994 to 2001, Dr. Rudick was a vice president of Paramount Capital, Inc.,
an investment bank specializing in the biotechnology and biopharmaceutical industries, where he participated in numerous private equity financings.</font></p>
<p align="left"><font size="-1">Since 1988, he has been a partner of Associate Ophthalmologists P.C., a private ophthalmology practice located in New York, and from 1993 to 1998 he served as a director of Healthdesk Corporation, a publicly traded medical information company of which he was a co-founder. Dr. </font></p>
<p align="center">39</p>
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<p align="left"><font size="-1">Rudick earned a B.A. in Chemistry, with the distinction of Phi Beta Kappa, from Williams College and a Doctorate of Medicine, with the distinction of Alpha Omega Alpha, from the University of Pennsylvania. Dr. Rudick is also a registered representative of Accredited Equities Inc.</font></p>
<p align="left"><i><b><font size="-1">John S. Althaus, M.S., M.B.A.</font></b></i></p>
<p align="left"><font size="-1">Mr. Althaus, 52, currently serves as the Vice President, Advanced Technology for Pipex. Mr. Althaus&rsquo; professional career spans 30 + years of scientific research and development in academia and industry and business development in industry. His industry experience includes employment in pharmaceutical, biotechnology and medical device businesses. Mr. Althaus was a faculty research associate at the University of Virginia, Department of Anesthesiology, where he investigated the impact of anesthesia on neurotransmitter mechanisms in peripheral and central nervous systems. While at Pharmacia &amp; Upjohn and the Upjohn Companies, Mr. Althaus became an expert in free-radical-dependent drug therapies in the treatment of neurological diseases and traumatic brain injury. He was a member of the discovery, research and development team that produced the drug Mirapex,
a treatment for Parkinson&rsquo;s disease. He was also a member of the discovery, research and development team that produced the drug Freedox, a treatment for brain hemorrhage. Mr. Althaus presented lectures nationally and internationally as the scientific liaison for marketing regarding the promotion of Freedox.</font></p>
<p align="left"><font size="-1">While at Parke-Davis/Pfizer, Mr. Althaus designed, built and managed a bioanalytical research laboratory. The goal of the laboratory was the discovery, development and use of biomarkers to evaluate drug efficacy in clinical trials. Tyrosine nitration and halogenation as biomarkers of disease-dependent free radical injury were found to be diagnostic in atherosclerosis, Parkinson&rsquo;s disease and broncopulmonary dysplasia. Mr. Althaus next joined HandyLab, Inc., a microfluidic biotechnology company that manufactures DNA diagnostic medical devices. Mr. Althaus was the main author and principal investigator of a $2 million NIST ATP grant to develop and commercialize electrochemical detection of DNA diagnostic medical devices.</font></p>
<p align="left"><font size="-1">Prior to his position with Pipex, Mr. Althaus was the founder of Holomics, Inc., a diagnostic device company. In addition, he was also the President of General Fiber, a biotechnology company that develops innovative fibers to address unmet health needs. Mr. Althaus is a co-inventor on eight patents and patent applications and a co-author on 52 peer-reviewed publications. Mr. Althaus received his MS in biochemistry from the University of Maryland and his MBA in general studies from Western Michigan University.</font></p>
<p align="left"><i><b><font size="-1">Nicholas Stergis, M.S.</font></b></i></p>
<p align="left"><font size="-1">Mr. Stergis, 32, is our co-founder, Chief Operating Officer and a member of our board of directors. Mr. Stergis is also a co-founder and Interim Chief Operating Officer and director of our majority-owned subsidiary Effective Pharmaceuticals, Inc. Prior to co-founding Pipex, Mr. Stergis was a co-founder, Chief Operating Officer and director of Developmental Therapeutics, Inc., a cardiovascular drug development company, until its acquisition in October 2003 by Titan Pharmaceuticals, Inc. (AMEX: TTP), a publicly-traded pharmaceutical company.</font></p>
<p align="left"><font size="-1">Mr. Stergis is also a co-founder and Managing Director of Accredited Ventures Inc., a venture capital firm specializing in the biotechnology and pharmaceutical industries. Mr. Stergis is also Managing Director of Accredited Equities, Inc., an NASD member firm. Prior to co-founding Accredited Ventures, Mr. Stergis was the Interim Director of Corporate Development for Corporate Technology Development, Inc. (CTD), a biopharmaceutical company based in Miami, Florida, until its merger with DOR BioPharma, Inc. (DOR), a publicly traded biotechnology company. During his tenure at CTD, he was responsible for all development tasks associated with the company&rsquo;s lead product, orBec</font><font size="-1"><sup>&reg;</sup></font><font size="-1">, which has completed a pivotal Phase III clinical trial and is pending NDA and MAA approval. He was also instrumental in CTD&rsquo;s
divestiture of important botulinum toxin intellectual property to Allergan, Inc. (NYSE:AGN), a publicly traded specialty pharmaceutical companies. Prior to joining CTD, Mr. Stergis was a Technology Associate at Paramount Capital, a New York based </font></p>
<p align="center">40</p>
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<p align="left"><font size="-1">private equity, venture capital, investment banking and asset management group specializing in the biotechnology and pharmaceutical industries. There, he participated in the startup, acquisition and financing of various biotechnology companies, including CTD. Mr. Stergis received his M.S. in Biology from New York University as well as a B.S. in Biology from the University at Albany, State University of New York. Mr. Stergis is also a director and interim officer of several privately held biopharmaceutical companies such as General Fiber, Inc. which are engaged in the in-licensing of biopharmaceutical candidates. As such, Mr. Stergis devotes a portion of his time to the business of the company.</font></p>
<p align="left"><i><b><font size="-1">Jeffrey Wolf, Esq.</font></b></i></p>
<p align="left"><font size="-1">Mr. Wolf, 43, currently serves as one of the directors of Pipex. Mr. Wolf has substantial experience in creating, financing, nurturing and growing new ventures based upon breakthrough research and technology. Mr. Wolf is the founding partner of Seed-One Ventures, LLC, a venture capital group focused on seed-stage technology-based investments. Mr. Wolf has been a founder of Elusys Therapeutics, Inc., an antibody-based therapeutic company, Tyrx Pharma, Inc., a biopolymer-based company, Sensatex, Inc., a medical device company and Generation Mobile, Inc. a telecommunications company. Prior to founding Seed-One Ventures, Mr. Wolf served as the Managing Director of The Castle Group, Ltd., a biomedical venture capital firm. At both organizations, Mr. Wolf was responsible for supervising the formation and funding of new technology, biomedical, and service oriented
ventures. Mr. Wolf currently sits on the board of Elusys Therapeutics and Netli, Inc. Mr. Wolf received his MBA from Stanford Business School, his JD from New York University School of Law and his BA with honors in Economics from the University of Chicago.</font></p>
<p align="left"><i><b><font size="-1">Directors&rsquo; Term of Office</font></b></i></p>
<p align="left"><font size="-1">Directors will hold office until the next annual meeting of shareholders and the election and qualification of their successors. Officers are elected annually by our board of directors and serve at the discretion of the board of directors.</font></p>
<p align="left"><i><b><font size="-1">Audit Committee and Audit Committee Financial Expert</font></b></i></p>
<p align="left"><font size="-1">Our board of directors acts as our audit committee. No member of our board of directors is an &ldquo;audit committee financial expert,&rdquo; as that term is defined in Item 401(e) of Regulation S-B promulgated under the Securities Act.</font></p>
<p align="left"><font size="-1">To date, we have conducted research and development operations and generated no revenue since inception. In light of the foregoing, and upon evaluating our internal controls, our board of directors determined that our internal controls are adequate to insure that financial information is recorded, processed, summarized and reported in a timely and accurate manner in accordance with applicable rules and regulations of the SEC. Accordingly, our board of directors concluded that the benefits of retaining an individual who qualifies as an &ldquo;audit committee financial expert&rdquo; would be outweighed by the costs of retaining such a person.</font></p>
<p align="center"><b><font size="-1">CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS</font></b></p>
<p align="left"><font size="-1">During January 2001, we sold approximately $1.1 million of Series A Preferred Stock to Accredited Venture Capital, LLC, a company controlled by Steve H. Kanzer, our Chairman and Chief Executive Officer. From 2002 until October 2006, we relied on non-interest bearing bridge loans from Accredited Ventures, Inc. (AVI), a company controlled Steve H. Kanzer, our Chairman and Chief Executive Officer and the managing member of our largest stockholder, Accredited Venture Capital, LLC. During this 5 year period, AVI loaned us $3,363,494 for no additional consideration. In connection with the private placement during October 2006, AVI agreed to convert these loans into units in the offering. As a result of the conversion of these loans, we issued 4,995,634 million shares of common stock and 2,497,817 warrants to purchase common stock. In the merger, all shares of preferred
stock were converted into common stock of the Registrant.</font></p>
<p align="center">41</p>
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<p align="left"><font size="-1">In connection with a private placement in October and November 2006, we engaged Accredited Equities Inc. (AEI), a company controlled by Steve H. Kanzer, our Chairman and Chief Executive Officer as our placement agent. At the closing of our private placement during October and November 2006, we paid AEI the sum of approximately $639,844 as commissions for its services and the selected dealer was paid a cash fee of $327,950. AEI also received a non-accountable expense allowance of $75,000 and a warrant to purchase 2,874,831 shares of common stock. Dr. Joseph Rudick, our director, Chief Medical Officer and President of our majority owned subsidiary EPI is a registered representative of AEI. Mr. Nicholas Stergis, our co-founder and Chief Operating Officer, is the managing director of AEI and AVI. </font></p>
<p align="left"><font size="-1">As part of the October 2006 private placement, Pipex sold 297,310 shares of its common stock and 148,655 warrants to purchase common stock for total proceeds of $200,000 to entities controlled by Dr. Charles Bisgaier, our President. As part of the same private placement, Pipex sold 148,655 shares of its common stock and 74,327 warrants to purchase common stock for total proceeds of $100,000 to the father of our Chairman and CEO. The terms on which their purchases were made were identical to the terms in which the other investors in these offerings purchased shares.</font></p>
<p align="left"><font size="-1">In connection with our acquisition of Effective Pharmaceuticals Inc. (EPI), Accredited Venture Capital, LLC and Mr. Stergis, both directors of Pipex contributed their 65.47% equity ownership in EPI to Pipex for no additional consideration. During 2005, EPI paid $152,200 to AEI for placement agent services rendered in connection with the issuance of its Series B preferred stock. EPI also issued a warrant to purchase 171,225 shares of common stock to designees of AEI, including Mr. Kanzer, Dr. Rudick and Mr. Stergis, all members of our board of directors. During March 2005, EPI repaid AVI for loans totaling $200,000 and AVI agreed to defer repayment of loans totaling $513,886 until the next financing or a merger of EPI. These EPI loans were converted into Units as part of our October 2006 private placement. Mr. Stergis had been paid $6,000 per month which increased
to $8,166 per month on November 1, 2006. We currently pay AVI $2,150 per month for office, managerial and secretarial services.</font></p>
<p align="left"><font size="-1">We have entered into an agreement with Crystal Research Associates, LLC, a firm in which Mr. Kraws one of our directors and VP of Business Development is the CEO to write an executive information overview. Pursuant to this agreement, we have paid Crystal Research Associates $17,500 and will pay an additional $17,500 upon completion of the report. </font></p>
<p align="left"><font size="-1">We have employment agreements with Drs. Rudick, Bisgaier, Mr. Kraws and Mr. Kanzer, all directors and executive officers of the company. See &ldquo;Employment Agreements&rdquo; section of this filing for further descriptive information on employment compensation.</font></p>
<p align="center"><b><font size="-1">EXECUTIVE COMPENSATION</font></b></p>
<p align="left"><font size="-1">The following table discloses the compensation we paid to our senior executive officers in our 2006 fiscal year.</font></p>
<p align="center">42</p>
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<p align="center"><b><font size="-1">SUMMARY COMPENSATION TABLE</font></b></p>
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<b><font size="-1">Annual Compensation<br><hr noshade color="#000000"></font></b></td>
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<b><font size="-1">Name and Principal<br> Position<br><hr noshade color="#000000"></font></b></td>
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<b><font size="-1">Year<br><hr noshade color="#000000"></font></b></td>
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<b><font size="-1">Salary($)<br><hr noshade color="#000000"></font></b></td>
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<b><font size="-1">Bonus($)<br><hr noshade color="#000000"></font></b></td>
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<b><font size="-1">Other Annual<br> Compensation<br><hr noshade color="#000000"></font></b></td>
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<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Securities <br>Underlying <br>Options/<br>SARs<br><hr noshade color="#000000"></font></b></td>
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<b><font size="-1">All Other<br>Compensation($)<br><hr noshade color="#000000"></font></b></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='top'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Steve H. Kanzer<br>Chairman &amp; Chief Executive Officer </font></p></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">2006<br>2005<br>2004 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">0 <br>0 <br>0 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">0 <br>0 <br>0 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">0 <br>0 <br>0 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">0 <br>0 <br>0 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">0 <br>0 <br>0 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='top'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Charles Bisgaier, Ph.D.<br>President<br></font></p></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">2006<br>2005<br>2004 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='top' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='top'>
<font size="-1">153,173 <br>0 <br>0 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">0 <br>0 <br>0 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">0 <br>0 <br>0 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">1,992,756 <br>0 <br>0 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">0 <br>0 <br>0 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='top'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">A. Joseph Rudick, M.D.<br>Chief Medical Officer, President of EPI </font></p></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">2006<br>2005<br>2004 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='top' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='top'>
<font size="-1">160,416 <br>0 <br>0 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">0 <br>0 <br>0 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">0 <br>0 <br>0 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">0 <br>0 <br>0 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">0 <br>0 <br>0 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='top'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">John Althuas, M.D.<br>Vice President, Advanced Technology </font></p></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">2006<br>2005<br>2004 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='top' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='top'>
<font size="-1">73,145 <br>0 <br>0 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">0 <br>0 <br>0 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">0 <br>0 <br>0 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">162,635 <br>0 <br>0 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">0 <br>0 <br>0 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
</table>
<p align="left"><font size="-1">The following table contains information relating to grants of stock options made during the last fiscal year to our senior executive officers. No stock options were exercised by our senior executive officers during the last fiscal year.</font></p>
<p align="center"><b><font size="-1">OPTION/SAR GRANTS IN LAST FISCAL YEAR</font></b></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#b2e5ff">
<td align='center' valign='bottom'>
<b><font size="-1">Name<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Number of securities<br>underlying options/SARs<br>granted (#)<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Percent of total<br>options/SARs<br>granted to<br>employees in<br>fiscal year<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Exercise price<br>($/Sh)<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Expiration date<br><hr noshade color="#000000"></font></b></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='top'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Steve H. Kanzer<br>Chairman &amp; Chief Executive Officer </font></p></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">813,175 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">18.68</font></td>
<td align='left' valign='top' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
<td align='left' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='top' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='top'>
<font size="-1">.67 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">11/21/2016 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='top'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Charles Bisgaier, Ph.D.<br>President </font></p></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">1,992,756</font></td>
<td align='left' valign='top' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">45.77</font></td>
<td align='left' valign='top' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
<td align='left' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='top' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='top'>
<font size="-1">.6149 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">5/30/2016 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='top'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">A. Joseph Rudick, M.D.<br>Chief Medical Officer </font></p></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='top'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">John Althuas, M.D.<br>Vice President, Advanced Technology </font></p></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">162,635</font></td>
<td align='left' valign='top' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">3.74</font></td>
<td align='left' valign='top' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
<td align='left' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='top' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='top'>
<font size="-1">.06 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">2/6/2010 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='top'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Jeffrey Kraws<br>Vice President, Business Development </font></p></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">686,320</font></td>
<td align='left' valign='top' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">15.76</font></td>
<td align='left' valign='top' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
<td align='left' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='top' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='top'>
<font size="-1">.03 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">1/26/2010 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
</table>
<p align="left"><font size="-1">(1) These options were issued during the last fiscal year and exchanged on October 31, 2006 for options of Pipex Pharmaceuticals in connection with the merger of Pipex Therapeutics and a subsidiary of the Registrant.</font></p>
<p align="left"><i><b><font size="-1">Employment Agreements</font></b></i></p>
<p align="left"><font size="-1">Pipex entered into an employment agreement with Dr. Charles L. Bisgaier on May 24, 2006. Pursuant to this agreement, Pipex will pay Dr. Bisgaier an annual base salary of $295,000 and a guaranteed bonus of one-third of his base salary. Pipex has also granted Dr. Bisgaier a ten year option to purchase 1,992,756 shares of common stock, of which 332,126 have already vested. The remainder of this option will vest quarterly over a three year period. In event of a termination without just cause, Pipex will provide Dr. Bisgaier with six months severance, payable over a six month period.</font></p>
<p align="center">43</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align="left"><font size="-1">Pipex has entered into an employment letter agreement with Jeffrey Kraws, a director and Vice President of Business Development, pursuant to which we will pay him an annual base salary of $75,000 and have granted him an option to purchase 686,320 shares of common stock, at an exercise price of $0.03 per share, with 343,160 vested upon execution of his employment agreement and the remainder vesting annually over three years. As of the date of this filing, we have not paid Mr. Kraws. </font></p>
<p align="left"><font size="-1">Pursuant to an employment letter agreement, our majority-owned subsidiary, EPI agreed to pay Dr. Rudick $175,000 per annum, pay life and disability insurance on behalf of Dr. Rudick and he received an option to purchase 262,500 shares of EPI common stock.</font></p>
<p align="left"><font size="-1">In January 2005, we entered into a four year employment agreement with Steve H. Kanzer to serve as our Chairman and Chief Executive Officer. We agreed to pay him an annual base salary of $297,000, an annual bonus equal to 30% of his base salary and issue him a ten-year option to acquire 813,175 shares of our common stock, vesting annually over a three year period commencing at the completion of our private placement financing.</font></p>
<p align="left"><font size="-1">During November 2005, we entered into an employment agreement as amended with John Althaus, MS, our Vice President of Advanced Technology. We currently pay Mr. Althaus $100,000 per year and we issued him 162,635 options to acquire our common stock.</font></p>
<p align="center"><b><font size="-1">SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</font></b></p>
<p align="left"><font size="-1">The following table sets forth certain information regarding beneficial ownership of our common stock and warrants to purchase shares of common stock as of December 1, 2006 by (i) each person (or group of affiliated persons) who is known by us to own more than five percent of the outstanding shares of our common stock, (ii) each director and executive officer, and (iii) all of our directors and executive officers as a group.</font></p>
<p align="left"><font size="-1">Beneficial ownership is determined in accordance with SEC rules and generally includes voting or investment power with respect to securities. The principal address of each of the stockholders listed below except as indicated is c/o Pipex Pharmaceuticals, Inc., 3985 Research Park Drive, Ann Arbor, MI 48108. We believe that all persons named in the table have sole voting and investment power with respect to shares beneficially owned by them. All share ownership figures include shares issuable upon exercise of options or warrants exercisable within 60 days of December 1, 2006, which are deemed outstanding and beneficially owned by such person for purposes of computing his or her percentage ownership, but not for purposes of computing the percentage ownership of any other person.</font></p>
<p align="center"><b><font size="-1">Principal Stockholders Table</font></b></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#b2e5ff">
<td align='center' valign='bottom'>
<b><font size="-1">Name of Owner<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Shares Owned<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Percentage of Shares<br>Outstanding<br><hr noshade color="#000000"></font></b></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<font size="-1">Accredited Venture Capital, LLC (1)</font></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">24,877,873 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">47.57</font></td>
<td align='left' valign='top' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<font size="-1">Steve H. Kanzer (1)</font></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">24,877,873 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">47.57</font></td>
<td align='left' valign='top' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<font size="-1">Ridgeback Capital Investment Ltd. (2)</font></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">5,569,693 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">11.02</font></td>
<td align='left' valign='top' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<font size="-1">Firebird Capital (3)</font></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">4,459,648 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">8.89</font></td>
<td align='left' valign='top' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<font size="-1">Nicholas Stergis (4)</font></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">5,186,794 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">10.42</font></td>
<td align='left' valign='top' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<font size="-1">Charles Bisgaier, Ph.D. (5)</font></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">778,091 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">1.60</font></td>
<td align='left' valign='top' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<font size="-1">Jeffrey J. Kraws (6)</font></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">343,160 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">* </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<font size="-1">A. Joseph Rudick, M.D. (7)</font></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">282,495 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">* </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<font size="-1">Jeffrey Wolf, Esq. (8)</font></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">32,527 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">* </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<font size="-1">All officers and directors as a group (6 persons)</font></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">30,012,782 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">61.65</font></td>
<td align='left' valign='top' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
</table>
<p align="left"><font size="-1">* represents less than 1% of our common stock</font></p>
<p align="left"><font size="-1">(1) Consist of 21,259,138 shares of common stock and a warrant to purchase 3,618,735 shares of common stock issued to Accredited Venture Capital, LLC, a company in which Pharmainvestors, </font></p>
<p align="center">44</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align="left"><font size="-1">LLC, is the managing member and a partial beneficial owner. Steve H. Kanzer is the Managing Member of Pharmainvestors, LLC. As such, Mr. Kanzer may be considered to have control over the voting and disposition of those shares. Mr. Kanzer disclaims beneficial ownership of those shares, except to the extent of his pecuniary interest. Excludes an option to purchase 813,715 shares of common stock which will vest annually over three years. Mr. Kanzer&rsquo;s business address is 3985 Research Park Drive, Suite 4, Ann Arbor, MI 48108.</font></p>
<p align="left"><font size="-1">(2) Consists of 3,713,129 of shares of common stock and 1,856,564 warrants to purchase common stock issued to Ridgeback Capital Investment Ltd. Ridgeback Capital Investment Ltd.&rsquo;s address is 430 Park Avenue, 12</font><font size="-1"><sup>th</sup></font><font size="-1"> Floor, New York, New York 10022.</font></p>
<p align="left"><font size="-1">(3) Consists of 1,486,549 of shares of common stock and 743,275 warrants to purchase common stock issued to Firebird Global Master Fund, Ltd and 1,486,549 of shares of common stock and 743,275 warrants to purchase common stock issued to Firebird Global Master Fund II, Ltd. Firebird&rsquo;s address is 152 West 57</font><font size="-1"><sup>th</sup></font><font size="-1"> Street, 24</font><font size="-1"><sup>th</sup></font><font size="-1"> Floor, New York, New York 10019.</font></p>
<p align="left"><font size="-1">(4) Consists of 4,065,876 shares of common stock, and a warrant to purchase 1,120,918 shares of common stock, issued to Mr. Stergis. Mr. Stergis&rsquo;s business address is 801 Brickell Avenue, 9th Floor, Miami, Florida 33131.</font></p>
<p align="left"><font size="-1">(5) Consists of 332,126 vested options to purchase common stock, 148,655 shares of common stock and 74,327 warrants to purchase common stock issued to Bisgaier Family LLC, a company of which Dr. Bisgaier is the managing member; 148,655 shares of common stock and 74,327 warrants to purchase common stock issued to two trusts for which Dr. Bisgaier has control of. Excludes 1,660,618 unvested options to purchase common stock vesting over three years. Dr. Bisgaier&rsquo;s business address is 3985 Research Park Drive, Suite 4, Ann Arbor, MI 48108.</font></p>
<p align="left"><font size="-1">(6) Assumes the exercise of a vested option to purchase 343,160 shares of our common stock. This option is exercisable within 60 days of the date of this filing. Excludes an unvested option to purchase 343,160 shares of common stock which will vest annually over three years. Mr. Kraws&rsquo;s business address is 800 Third Avenue, 17</font><font size="-1"><sup>th</sup></font><font size="-1"> Fl., New York, NY 10022.</font></p>
<p align="left"><font size="-1">(7) Includes an option to purchase 81,318 shares of common stock and a warrant to purchase 201,177 shares of common stock. Dr. Rudick&rsquo;s business address is 150 Broadway, Suite 1800, New York, NY 10128.</font></p>
<p align="left"><font size="-1">(8) Assumes the exercise of an option to purchase 32,527 shares of our common stock. Mr. Wolf&rsquo;s business address is c/o Seed-One Ventures, LLC, 1205 Lincoln Road, Suite 216, Miami Beach, Florida 33139.</font></p>
<p align="center"><b><font size="-1">DETERMINATION OF OFFERING PRICE</font></b></p>
<p align="left"><font size="-1">The prices at which the shares of common stock covered by the prospectus may actually be sold will be determined by the prevailing public market price for shares of common stock or by negotiations in private transactions. </font></p>
<p align="center"><b><font size="-1">SELLING SHAREHOLDERS</font></b></p>
<p align="left"><font size="-1">The table below sets forth the name of each person who is offering for resale shares of common stock covered by this prospectus, the number of shares of common stock beneficially owned by each person, the number of shares of common stock that may be sold in this offering, and the number of shares of common stock each person will own after the offering, assuming they sell all of the shares offered.</font></p>
<p align="left"><font size="-1">Because the selling shareholders may offer all, some, or none of their shares of our common stock, we cannot provide a definitive estimate of the number of shares that the selling shareholders will hold after this offering.</font></p>
<p align="left"><font size="-1">None of the selling shareholders has at any time during the past three years acted as one of our employees, officers, or directors or otherwise had a material relationship with us.</font></p>
<p align="center">45</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align="left"><font size="-1">For purposes of the following table, beneficial ownership is determined in accordance with the rules of the SEC. In computing the number of shares beneficially owned by a selling shareholder and the percentage of ownership of that selling shareholder, shares of common stock issuable on exercise of warrants held by that selling shareholder that are exercisable within 60 days of December 11, 2006, are included. Those shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of any other selling shareholder. Each selling shareholder&rsquo;s percentage of ownership in the following table is based on 48,679,773 shares of common stock outstanding as of December 11, 2006.</font></p>
<p align="center">46</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=7>
<b><font size="-1">Shares beneficially<br>owned prior to the<br>offering<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Number of<br>common shares<br>registered in this prospectus<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=7>
<b><font size="-1">Shares beneficially<br>owned after the<br>offering<br><hr noshade color="#000000"></font></b></td>
</tr>
<tr bgcolor="#ffffff">
<td align='center' valign='bottom'>
<b><font size="-1">Selling Shareholder<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Number<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Percent<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Number<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Percent<br><hr noshade color="#000000"></font></b></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">George S. Tsandikos </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">55,697 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">* </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">55,697</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Arvinder S. Sooch, Trust Dated 11/20/2006</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">111,394 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">* </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">111,394</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Firebird Global Master Fund, Ltd. </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">2,227,880 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">4.5</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">2,227,880</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Firebird Global Master Fund II, Ltd. </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">2,227,880 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">4.5</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">2,227,880</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">NITE Capital LP </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">445,576 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">* </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">445,576</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">J&amp;N Invest LLC </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">111,394 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">* </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">111,394</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Wendi V. Rodrigueza </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">55,697 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">* </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">55,697</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Gemini Master Fund, Ltd.</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,113,940 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">2.2</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,113,940</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Catalytix, LDC </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">111,394 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">* </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">111,394</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Catalytix, LDC Life Science Hedge AC </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">111,394 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">* </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">111,394</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Alan S. Bloom Revocable Trust </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">44,558 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">* </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">44,558</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Mary Darling </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">55,697 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">* </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">55,697</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">ICON Capital Partners LP </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">222,788 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">* </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">222,788</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Brio Capital LP </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">222,788 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">* </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">222,788</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">SDS Capital Group SPC, Ltd. </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">2,227,880 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">4.5</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">2,227,880</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Little Gem Life Sciences Fund LLC </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">121,976 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">* </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">121,976</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Harris &amp; Jewell Kanzer JTWOS </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">222,788 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">* </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">222,788</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Jonathan Blaustein </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">556,969 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1.1</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">556,969</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Chestnut Ridge Partners LP </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">2,227,880 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">4.5</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">2,227,880</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Mark Goldstein </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">55,697 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">* </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">55,697</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Thomas E. Hodapp </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">167,090 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">* </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">167,090</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Clarion Capital Corporation </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">556,969 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1.1</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">556,969</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">WHI Morula Fund LLC </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,113,940 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">2.2</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,113,940</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">AFA Private Equity Fund I </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">2,227,880 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">4.5</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">2,227,880</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Prominence Capital Inc. </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">22,279 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">* </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">22,279</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Red Metal Capital, LLC </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">55,697 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">* </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">55,697</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Stephen Jones </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">111,394 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">* </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">111,394</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Stanley Friefeld IRA Rollover </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">55,697 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">* </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">55,697</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">DeFiore Family Limited Partnership</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">44,558 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">* </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">44,558</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Ades Bros, Inc. </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,113,940 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">2.2</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,113,940</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Perceptive Life Sciences Master Fund Ltd. </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,119,402 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">2.2</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,119,402</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Goodman Capital Partners LP </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">445,576 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">* </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">445,576</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Michael M. Ades </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">556,969 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1.1</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">556,969</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Ridgeback Capital Investment Ltd. </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">5,569,693 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">11.0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">5,569,693</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Rodney and Sari Nathan </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">111,394 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">* </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">111,394</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Roland and Jacqueline Rofe </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">222,788 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">* </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">222,788</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">James Frank </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">334,182 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">* </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">334,182</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Adam W. Rothkrug </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">111,394 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">* </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">111,394</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Richard S. Rofe </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">222,788 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">* </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">222,788</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Iroquois Master Fund, Ltd. </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">445,576 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">* </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">445,576</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
</table>
<p align="center">47</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=7>
<b><font size="-1">Shares beneficially<br>owned prior to the<br>offering<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Number of<br>common shares<br>registered in this prospectus<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=7>
<b><font size="-1">Shares beneficially<br>owned after the<br>offering<br><hr noshade color="#000000"></font></b></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='center' valign='bottom'>
<b><font size="-1">Selling Shareholder<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Number<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Percent<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Number<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Percent<br><hr noshade color="#000000"></font></b></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Elliot Bossen </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">746,339 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1.5</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">746,339</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Whalehaven Capital Fund, Limited</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,113,940 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">2.2</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,113,940</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">James H. Harris &amp; Lynn Charles Harris JTROS </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">111,394 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">* </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">111,394</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Ivy Scheinholz Revocable Trust U/A dated 1/26/05 </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">38,988 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">* </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">38,988</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Michael F. Manion </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">340,000 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">* </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">340,000</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">2) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Brian and Lauren Diamond JTROWS </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">222,788 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">* </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">222,788</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">John Khadem </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">222,788 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">* </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">222,788</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Arturo Constantiner </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">66,837 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">* </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">66,837</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Matthew G. Roszak </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">222,788 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">* </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">222,788</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Joseph R. Nemeth </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">334,182 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">* </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">334,182</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Vasilis and Elisabeth Myriathopoulos </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">55,697 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">* </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">55,697</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Horizon Capital Fund LP </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">111,394 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">* </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">111,394</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Barclay Jones </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">222,788 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">* </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">222,788</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">(</font><font size="-1">1) </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">%</font><font size="-1"> </font></td>
</tr>
</table>
<div align="left">
<p><hr noshade color="#000000" align='left' width=60 size=0>
</p>
</div>
<p align="left"><font size="-1">*&nbsp;&nbsp;&nbsp;Less than 1%.</font></p>
<p align="left"><font size="-1">(1) One-third of these shares are issuable upon the exercise of warrants.</font></p>
<p align="left"><font size="-1">(2) These shares are subject to a lock-up agreement which expires on November 1, 2007.</font></p>
<p align="center"><b><font size="-1">DILUTION</font></b></p>
<p align="left"><font size="-1">The common stock to be sold by the selling shareholder is common stock that is currently issued and outstanding or is issuable on exercise of warrants that have already been issued. Accordingly, there will be no dilution to our existing shareholders.</font></p>
<p align="center"><b><font size="-1">PLAN OF DISTRIBUTION</font></b></p>
<p align="left"><font size="-1">The selling shareholders and any of their respective pledgees, donees, assignees, and other successors-in-interest may, from time to time, sell any or all of their shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices.</font></p>
<p align="left"><font size="-1">We have agreed, subject to certain limits, to bear all costs, expenses, and fees of registration of shares of our common stock offered by the selling shareholders for resale. However, any brokerage commissions, discounts, concessions, or other fees, if any, payable to broker-dealers in connection with any sale of shares of common stock will be borne by the selling shareholders selling those shares or by the purchasers of those shares.</font></p>
<p align="left"><font size="-1">On our being notified by a selling shareholder that any material arrangement has been entered into with a broker-dealer for the sale of shares through a block trade, special offering, exchange distribution, or secondary distribution, or a purchase by a broker or dealer, a supplement to this prospectus will be filed, if required, pursuant to Rule 424(b) under the Securities Act, disclosing the following:</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;the name of each such selling shareholder and of any participating broker-dealer</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;the number of securities involved</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;the price at which such securities were sold</font></p>
<p align="center">48</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;the commissions paid or discounts or concessions allowed to any broker-dealer, where applicable</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;that any broker-dealer did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;other facts material to the transaction.</font></p>
<p align="left"><font size="-1">The selling shareholders may use any one or more of the following methods when selling shares:</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;directly as principals</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;purchases by a broker-dealer as principal and resale by the broker-dealer for its account</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;an exchange distribution in accordance with the rules of the applicable exchange</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;privately negotiated transactions</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;short sales that are in compliance with the applicable laws and regulations of any state or the United States</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;broker-dealers may agree with the selling shareholders to sell a specified number of such shares at a stipulated price per share</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;a combination of any such methods of sale</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">&bull;&nbsp;any other method permitted pursuant to applicable law</font></p>
<p align="left"><font size="-1">The selling shareholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.</font></p>
<p align="left"><font size="-1">Any sales of the shares may be effected through the OTC Bulletin Board, in private transactions or otherwise, and the shares may be sold at market prices prevailing at the time of sale, at prices related to prevailing market prices, or at negotiated prices.</font></p>
<p align="left"><font size="-1">The selling shareholders may also engage in short sales against the box, puts and calls, and other transactions in our securities or derivatives of our securities and may sell or deliver shares in connection with these trades. The selling shareholders may pledge their shares to their brokers under the margin provisions of customer agreements. If a selling shareholder defaults on a margin loan, the broker may, from time to time, offer and sell the pledged shares. We believe that the selling shareholders have not entered into any agreements, understandings or arrangements with any underwriters or broker-dealers regarding sale of their shares other than ordinary course brokerage arrangements, nor is there an underwriter or coordinating broker acting in connection with the proposed sale of shares by the selling shareholders.</font></p>
<p align="left"><font size="-1">Broker-dealers engaged by the selling shareholders may arrange for other brokers-dealers to participate in sales. If the selling shareholders effect sales through underwriters, brokers, dealers or agents, such firms may receive compensation in the form of discounts, concessions or commissions from the selling shareholders or the purchasers of the shares for whom they may act as agent, principal or both in amounts to be negotiated. Those persons who act as broker-dealers or underwriters in connection with the sale of the shares may be selected by the selling shareholders and may have other business relationships with, and perform services for, us. The selling shareholders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved.</font></p>
<p align="left"><font size="-1">Any selling shareholder or broker-dealer who participates in the sale of the shares may be deemed to be an &ldquo;underwriter&rdquo; within the meaning of section 2(11) of the Securities Act. Any commissions </font></p>
<p align="center">49</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align="left"><font size="-1">received by any underwriter or broker-dealer and any profit on any sale of the shares as principal may be deemed to be underwriting discounts and commissions under the Securities Act.</font></p>
<p align="left"><font size="-1">The anti-manipulation provisions of Rules 101 through 104 of Regulation M promulgated under the Exchange Act may apply to purchases and sales of shares of common stock by the selling shareholders. In addition, there are restrictions on market-making activities by persons engaged in the distribution of the common stock. We have advised each selling shareholder that it may not use shares of common stock issuable on conversion of warrants and included in prospectus to cover short sales of common stock made prior to the date on which the registration statement of which this prospectus forms a part has been declared effective.</font></p>
<p align="left"><font size="-1">Under the securities laws of certain states, the shares may be sold in those states only through registered or licensed brokers or dealers. In addition, in certain states the shares may not be able to be sold unless our common stock has been registered or qualified for sale in that state or an exemption from registration or qualification is available and is complied with.</font></p>
<p align="left"><font size="-1">We are required to pay expenses incident to the registration, offering, and sale of the shares under this offering. We estimate that our expenses will total approximately $40,000. We have agreed to indemnify certain selling shareholders and certain other persons against certain liabilities, including liabilities under the Securities Act, and to contribute to payments to which those selling shareholders or their respective pledgees, donees, transferees or other successors in interest may be required to make in respect thereof. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons, we have been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore, unenforceable.</font></p>
<p align="center"><b><font size="-1">DESCRIPTION OF SECURITIES</font></b></p>
<p align="left"><font size="-1">Our authorized capital consists of 100 million shares of common stock, par value $0.001 per share, and 10 million shares of preferred stock, par value $0.001 per share. As of December 1, 2006, 48,679,773 shares of common stock and no shares of preferred stock were outstanding.</font></p>
<p align="left"><i><b><font size="-1">Common Stock</font></b></i></p>
<p align="left"><font size="-1">Holders of shares of common stock have the right to cast one vote for each share of common stock in their name on the books of our company, whether represented in person or by proxy, on all matters submitted to a vote of holders of common stock, including election of directors. There is no right to cumulative voting in election of directors. Except where a greater requirement is provided by statute, by our articles of incorporation, or by our bylaws, the presence, in person or by proxy duly authorized, of the one or more holders of a majority of the outstanding shares of our common stock constitutes a quorum for the transaction of business. The vote by the holders of a majority of outstanding shares is required to effect certain fundamental corporate changes such as liquidation, merger, or amendment of our articles of incorporation.</font></p>
<p align="left"><font size="-1">There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. The Delaware General Corporation Law does, however, prohibit us from declaring dividends where, after giving effect to the distribution of the dividend (1) we would not be able to pay our debts as they become due in the usual course of business or (2) our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution.</font></p>
<p align="left"><font size="-1">We have not declared any dividends, and we do not plan to declare any dividends in the foreseeable future.</font></p>
<p align="left"><font size="-1">Holders of shares of our common stock are not entitled to preemptive or subscription or conversion rights, and no redemption or sinking fund provisions are applicable to our common stock. All outstanding shares of common stock are, and the shares of common stock sold in the offering will when issued be, fully paid and non-assessable.</font></p>
<p align="center">50</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align="left"><i><b><font size="-1">Warrants</font></b></i></p>
<p align="left"><font size="-1">As of December 1, 2006, warrants to purchase 15,725,153 shares of our common stock were outstanding. Of these, warrants to purchase 12,850,323 shares of our common stock were issued to institutional and accredited investors for a term of five years at an exercise price of $.74 per share in the private financing transactions that occurred during October and November 2006. We may call each warrant if the average daily trading price for our common stock on the OTCBB exceeds for at least 20 of 30 consecutive trading days a price per share corresponding to at least 250% of the exercise price while a registration statement covering the shares underlying the warrants is effective. Also in connection with these transactions, we granted to the placement agents warrants to purchase 2,874,831 shares of our common stock at an exercise price of $.74 per share. Holders of
our warrants have no voting rights, and therefore no right to participate in shareholder decisions, until such time as the warrants are exercised for shares of our common stock.</font></p>
<p align="left"><i><b><font size="-1">Preferred Stock</font></b></i></p>
<p align="left"><font size="-1">There are no shares of preferred stock outstanding. </font></p>
<p align="left"><i><b><font size="-1">Stock Options</font></b></i></p>
<p align="left"><font size="-1">We currently have 5,118,590 options outstanding which we assumed in our merger with Pipex Therapeutics. At the next shareholders meeting or a special meeting of shareholders, we plan to seek stockholder approval for the Pipex Pharmaceuticals 2006 Stock Incentive Plan which would cover approximately seven million shares of our common stock.</font></p>
<p align="left"><i><b><font size="-1">Transfer Agent</font></b></i></p>
<p align="left"><font size="-1">We have retained Standard Registrar as our transfer agent. They are located at 12528 South 1849 East, Draper, UT 84020. Their telephone number is (801)571-8844 and facsimile number is (801)571-2551</font></p>
<p align="center"><b><font size="-1">INTEREST OF NAMED EXPERTS</font></b></p>
<p align="left"><font size="-1">Our audited financial statements for the period ended December 31, 2005 have been included in this prospectus in reliance upon the report of Berman &amp; Company, P.A., independent auditors, appearing in this registration statement, and their authority as experts in accounting and auditing.</font></p>
<p align="center"><b><font size="-1">LEGAL MATTERS</font></b></p>
<p align="left"><font size="-1">The validity of our common stock offered hereby will be passed upon for us by Lehman &amp; Eilen LLP, Boca Raton, Florida.</font></p>
<p align="center"><b><font size="-1">INDEMNIFICATION OF DIRECTORS AND OFFICERS</font></b></p>
<p align="left"><font size="-1">Section 145 of the Delaware General Corporation Law provides that a director or officer is not individually liable to the corporation or its shareholders or creditors for any damages as a result of any act or failure to act in his capacity as a director or officer unless it is proven that (1) his act or failure to act constituted a breach of his fiduciary duties as a director or officer and (2) his breach of those duties involved intentional misconduct, fraud or a knowing violation of law.</font></p>
<p align="left"><font size="-1">This provision is intended to afford directors and officers protection against and to limit their potential liability for monetary damages resulting from suits alleging a breach of the duty of care by a director or officer. As a consequence of this provision, shareholders of our company will be unable to recover monetary damages against directors or officers for action taken by them that may constitute negligence or gross negligence in performance of their duties unless such conduct falls within one of the foregoing exceptions. The provision, however, does not alter the applicable standards governing a director&rsquo;s or officer&rsquo;s fiduciary duty and does not eliminate or limit the right of our company or any </font></p>
<p align="center">51</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align="left"><font size="-1">shareholder to obtain an injunction or any other type of non-monetary relief in the event of a breach of fiduciary duty.</font></p>
<p align="center"><b><font size="-1">CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS</font></b></p>
<p align="left"><font size="-1">During the two most recent fiscal years and interim period subsequent to December 31, 2005, we have had no disagreements with Berman &amp; Company, P.A., our independent auditor, on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure.</font></p>
<p align="center">52</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align="center"><b><font size="-1">Pipex Therapeutics, Inc.<br>and Subsidiaries<br>(A Development Stage Company)<br><br>Consolidated Financial Statements<br><br>Years Ended December 31, 2005, 2004, and<br>for the period from January 8, 2001 (Inception)<br>to December 31, 2005</font></b></p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align="center"><b><font size="-1">Contents</font></b></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Page(s)<br><hr noshade color="#000000"></font></b></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Report of Independent Registered Public Accounting Firm</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Consolidated Balance Sheet</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">2 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Consolidated Statements of Operations</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">3 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Consolidated Statement of Changes in Stockholders&rsquo; Deficit</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">4 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Consolidated Statements of Cash Flows</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">5 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Notes to Consolidated Financial Statements</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">6-29 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
</table>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align="center"><font size="-1">Report of Independent Registered Public Accounting Firm</font></p>
<p align="left"><font size="-1">To the Board of Directors and Shareholders of:<br>&nbsp;&nbsp;&nbsp;Pipex Therapeutics, Inc.<br>&nbsp;&nbsp;&nbsp;(A Development Stage Company)</font></p>
<p align="left"><font size="-1">We have audited the accompanying consolidated balance sheet of Pipex Therapeutics, Inc. and Subsidiaries (a development stage company) as of December 31, 2005 and the related consolidated statements of operations, changes in stockholders&rsquo; deficit and cash flows for the years ended December 31, 2005 and 2004 and for the period from January 8, 2001 (inception) to December 31, 2005. These consolidated financial statements are the responsibility of the Company&rsquo;s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. </font></p>
<p align="left"><font size="-1">We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.</font></p>
<p align="left"><font size="-1">In our opinion, the consolidated financial statements referred to above present fairly in all material respects, the consolidated financial position of Pipex Therapeutics, Inc. and Subsidiaries (a development stage company) as of December 31, 2005, and the consolidated results of their operations, changes in stockholders&rsquo; deficit and cash flows for the years ended December 31, 2005 and 2004, and for the period from January 8, 2001 (inception) to December 31, 2005, in conformity with accounting principles generally accepted in the United States of America.</font></p>
<p align="left"><font size="-1">The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has a net loss of $1,355,842 and net cash used in operations of $1,082,109, respectively for the year ended December 31, 2005 and a working capital deficit of $985,968, deficit accumulated during the development stage of $3,914,268 and a stockholders&rsquo; deficit of $703,838 at December 31, 2005. These factors raise substantial doubt about its ability to continue as a going concern. Management&rsquo;s plan in regards to these matters is also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.</font></p>
<p align="left"><font size="-1">Berman &amp; Company, P.A.<br>Certified Public Accountants</font></p>
<p align="left"><font size="-1">Boca Raton, Florida<br>July 20, 2006 except for Note 8(E) as to which the date is November 2, 2006</font></p>
<p align="center">F-1</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align="center"><b><font size="-1">Pipex Therapeutics, Inc. and Subsidiaries<br>(A Development Stage Company)<br>Consolidated Balance Sheet<br>December 31, 2005</font></b></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#ffffff">
<td align='center' valign='bottom' colspan=5>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><font size="-1">ASSETS</font></b></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Current Assets</font></b></p></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:2em;text-indent:-1em"><font size="-1">Cash</font></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">1,157,790 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Total Current Assets</font></b></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,157,790 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Equipment, net of accumulated depreciation of $2,260</font></b></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">282,130 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Total Assets</font></b></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">$</font></b></td>
<td align='right' valign='bottom'>
<b><font size="-1">1,439,920</font></b><font size="-1"> </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='center' valign='bottom' colspan=5>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><font size="-1">LIABILITIES AND STOCKHOLDERS&rsquo; DEFICIT</font></b></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Current Liabilities</font></b></p></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:2em;text-indent:-1em"><font size="-1">Accounts payable</font></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">214,374 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:2em;text-indent:-1em"><font size="-1">Loans payable &mdash; related party</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,929,384 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Total Current Liabilities</font></b></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<b><font size="-1">2,143,758</font></b><font size="-1"> </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Commitments and Contingencies (See Note 6)</font></b></p></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Stockholders&rsquo; Deficit</font></b></p></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:2em;text-indent:-1em"><font size="-1">Series A, convertible preferred stock, $0.001 par value; 5,000,000 shares authorized, issued and outstanding</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">5,000 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:2em;text-indent:-1em"><font size="-1">Series B, convertible preferred stock, $0.001 par value; 10,000,000 shares authorized, none issued and outstanding</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:2em;text-indent:-1em"><font size="-1">Common stock, $0.001 par value; 10,000,000 shares authorized, 1,450,000 shares issued and outstanding</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,450 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:2em;text-indent:-1em"><font size="-1">Additional paid-in capital</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">3,203,980 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:2em;text-indent:-1em"><font size="-1">Deficit accumulated during the development stage</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(3,914,268</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Total Stockholders&rsquo; Deficit</font></b></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<b><font size="-1">(703,838</font></b></td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">)</font></b></td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Total Liabilities and Stockholders&rsquo; Deficit</font></b></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">$</font></b></td>
<td align='right' valign='bottom'>
<b><font size="-1">1,439,920</font></b><font size="-1"> </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
</table>
<p align="left"></p>
<p align="center"><font size="-1">See accompanying notes to financial statements</font></p>
<p align="center">F-2</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align="center"><b><font size="-1">Pipex Therapeutics, Inc. and Subsidiaries<br>(A Development Stage Company)<br>Consolidated Statements of Operations</font></b></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=7>
<b><font size="-1">For the year ended December 31,<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">2005<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">2004<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">For the<br>Period from<br>January 8, 2001<br>(Inception) to<br>December 31, 2005<br><hr noshade color="#000000"></font></b></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Operating Expenses</font></b></p></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Research and development</font></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">946,065</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">349,551</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">2,167,514 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">General and administrative</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">285,701</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">221,612</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,280,105 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Compensation</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">87,444</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">31,333</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">263,766 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Merger costs</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">37,500</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">37,500 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Total Operating Expenses</font></b></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,356,710</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">602,496</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">3,748,885 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Loss from Operations</font></b></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(1,356,710</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(602,496</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(3,748,885</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Other Income (Expense)</font></b></p></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Interest income</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">868</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">3</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">26,600 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Other expense</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(1,733</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Total Other Income, net</font></b></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">868</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">3</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">24,867 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Net Loss</font></b></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">$</font></b></td>
<td align='right' valign='bottom'>
<b><font size="-1">(1,355,842</font></b></td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">)</font></b></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">$</font></b></td>
<td align='right' valign='bottom'>
<b><font size="-1">(602,493</font></b></td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">)</font></b></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">$</font></b></td>
<td align='right' valign='bottom'>
<b><font size="-1">(3,724,018</font></b></td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">)</font></b></td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Less: Preferred stock dividend &mdash; subsidiary</font></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">(190,250</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">(190,250</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Net Loss Applicable to Common Shareholders</font></b></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">$</font></b></td>
<td align='right' valign='bottom'>
<b><font size="-1">(1,546,092</font></b></td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">)</font></b></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">$</font></b></td>
<td align='right' valign='bottom'>
<b><font size="-1">(602,493</font></b></td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">)</font><font size="-1"> </font></b></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">$</font></b></td>
<td align='right' valign='bottom'>
<b><font size="-1">(3,914,268</font></b></td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">)</font></b></td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Net Loss Per Share &mdash; Basic and Diluted</font></b></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">$</font></b></td>
<td align='right' valign='bottom'>
<b><font size="-1">(1.07</font></b></td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">)</font></b></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">$</font></b></td>
<td align='right' valign='bottom'>
<b><font size="-1">(0.42</font></b></td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">)</font></b></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">$</font></b></td>
<td align='right' valign='bottom'>
<b><font size="-1">(2.70</font></b></td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">)</font></b></td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Weighted average number of shares outstanding<br>during the year/period &mdash; basic and diluted</font></b></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<b><font size="-1">1,450,000</font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<b><font size="-1">1,450,000</font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<b><font size="-1">1,450,000</font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
</table>
<p align="left"></p>
<p align="center"><font size="-1">See accompanying notes to consolidated financial statements</font></p>
<p align="center">F-3</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align="center"><b><font size="-1">Pipex Therapeutics, Inc. and Subsidiaries<br>(A Development Stage Company)<br>Consolidated Statement of Changes in Stockholders&rsquo; Deficit<br>For the years ended December 31, 2005 and 2004<br>and for the period from January 8, 2001 (inception) to December 31, 2005</font></b></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=7>
<b><font size="-1">Series A, convertible preferred stock<br>$0.001 Par Value<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=7>
<b><font size="-1">Common Stock<br>$0.001 Par Value<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Number of<br>Shares<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Amount<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Number of<br>Shares<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Amount<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Additional<br>Paid-In<br>Capital<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Deficit<br>accumulated<br>during<br>development<br>stage<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Total<br>Stockholders&rsquo;<br>Deficit<br><hr noshade color="#000000"></font></b></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Issuance of common stock to founders as compensation ($0.0002/share)</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,450,000 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">1,450 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">(1,100</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">350 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Issuance of preferred stock to founder for cash ($0.06/share)</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">5,000,000 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">5,000 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">295,000 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">300,000 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Issuance of preferred and common stock to founder for cash &mdash; subsidiaries</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">850,540 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">850,540 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Net loss for the period ended December 31, 2001</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(277,868</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(277,868</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Balance, December 31, 2001</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">5,000,000 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">5,000 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,450,000 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,450 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,144,440 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(277,868</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">873,022 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Issuance of stock for compensation &mdash; subsidiary</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">67 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">67 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Issuance of stock for consulting services &mdash; subsidiary</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">52 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">52 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Grant of stock options for consulting services &mdash; subsidiary</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">5,890</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">5,890 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Net loss for the year ended December 31, 2002</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(768,508</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(768,508</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Balance, December 31, 2002</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">5,000,000</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">5,000</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,450,000</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,450</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,150,449</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(1,046,376</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">110,523 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Grant of stock options for compensation &mdash; subsidiary</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">17,984</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">17,984 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Net loss for the year ended December 31, 2003</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(719,307</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(719,307</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Balance, December 31, 2003</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">5,000,000</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">5,000</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,450,000</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,450 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,168,433</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(1,765,683</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(590,800</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Issuance of common stock for cash &mdash; subsidiary</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">50</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">50 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Grant of stock options for consulting services &mdash; subsidiary</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">10,437</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">10,437 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Net loss for the year ended December 31, 2004</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(602,493</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(602,493</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Balance, December 31, 2004</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">5,000,000</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">5,000</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,450,000</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,450</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,178,920</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(2,368,176</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(1,182,806</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Grant of stock options for consulting services</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">59,960</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">59,960 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Grant of stock options for compensation</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">10,493</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">10,493 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Recognition of deferred compensation &mdash; subsidiary</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">14,057</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">14,057 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Issuance of Series B, convertible preferred stock for cash &mdash; subsidiary</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,902,500</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,902,500 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Direct offering costs in connection with sale of Series B, convertible preferred stock &mdash; subsidiary</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(152,200</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(152,200</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">10% in-kind Series B, convertible preferred stock dividend &mdash; subsidiary</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">190,250</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(190,250</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Net loss for the year ended December 31, 2005</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(1,355,842</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(1,355,842</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Balance, December 31, 2005</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<b><font size="-1">5,000,000</font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">$</font></b></td>
<td align='right' valign='bottom'>
<b><font size="-1">5,000</font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<b><font size="-1">1,450,000</font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">$</font></b></td>
<td align='right' valign='bottom'>
<b><font size="-1">1,450 </font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">$</font></b></td>
<td align='right' valign='bottom'>
<b><font size="-1">3,203,980</font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">$</font></b></td>
<td align='right' valign='bottom'>
<b><font size="-1">(3,914,268</font></b></td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">)</font></b></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">$</font></b></td>
<td align='right' valign='bottom'>
<b><font size="-1">(703,838</font></b></td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">)</font></b></td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
</table>
<p align="left"></p>
<p align="center"><font size="-1">See accompanying notes to consolidated financial statements.</font></p>
<p align="center">F-4</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align="center"><b><font size="-1">Pipex Therapeutics, Inc. and Subsidiaries<br>(A Development Stage Company)<br>Consolidated Statements of Cash Flows</font></b></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=7>
<b><font size="-1">For the year ended December 31,<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">2005<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">2004<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">For the<br>Period from<br>January 8, 2001<br>(Inception) to<br>December 31, 2005<br><hr noshade color="#000000"></font></b></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Cash Flows From Operating Activities:</font></b></p></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Net Loss</font></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">(1,355,842</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">(602,493</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">(3,724,018</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:2em;text-indent:-1em"><font size="-1">Adjustments to reconcile net loss to net cash used in operations </font></p></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:3em;text-indent:-1em"><font size="-1">Stock based consulting</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">59,960</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">10,437</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">76,354 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:3em;text-indent:-1em"><font size="-1">Stock based compensation</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">24,550</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">42,936 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:3em;text-indent:-1em"><font size="-1">Depreciation</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">2,260</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">2,260 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:2em;text-indent:-1em"><font size="-1">Changes in operating assets and liabilities: </font></p></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:3em;text-indent:-1em"><font size="-1">Increase (Decrease) in: </font></p></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:3em;text-indent:-1em"><font size="-1">Accounts payable</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">186,963</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(194,628</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">214,374 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Net Cash Used In Operating Activities</font></b></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<b><font size="-1">(1,082,109</font></b></td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">)</font></b></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<b><font size="-1">(786,684</font></b></td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">)</font></b></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<b><font size="-1">(3,388,094</font></b></td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">)</font></b></td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Cash Flows From Financing Activities:</font></b></p></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Proceeds from issuance of Series B, convertible preferred stock &mdash; subsidiary</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,902,500</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,902,500 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Direct offering costs in connection with issuance of Series B, convertible preferred stock &mdash; subsidiary</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(152,200</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(152,200</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Proceeds from issuance of preferred and common stock</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">50</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,150,590 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Proceeds from loans payable &mdash; related party</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">684,553</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">785,281</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,844,994 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Repayments of loans payable &mdash; related party</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(200,000</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(200,000</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Net Cash Provided by Financing Activities</font></b></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<b><font size="-1">2,234,853</font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<b><font size="-1">785,331</font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<b><font size="-1">4,545,884</font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Net Increase (Decrease) in Cash</font></b></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,152,744</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(1,353</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,157,790 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Cash at Beginning of year/period</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">5,046</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">6,399</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Cash at End of year/period</font></b></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">$</font></b></td>
<td align='right' valign='bottom'>
<b><font size="-1">1,157,790</font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">$</font></b></td>
<td align='right' valign='bottom'>
<b><font size="-1">5,046</font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">$</font></b></td>
<td align='right' valign='bottom'>
<b><font size="-1">1,157,790</font></b><font size="-1"> </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Supplemental disclosure of cash flow information:</font></b></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1"> </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Cash paid for interest</font></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Cash paid for taxes</font></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Supplemental disclosure of non-cash investing and financing activities:</font></b></p></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">On December 31, 2004, EPI issued 825,000 shares of common stock to acquire a 91.61% ownership in CD4. (See Note 1(C))</font></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">On July 31, 2005, Solovax transferred 96.9% of its equity to Pipex (See Note 1(C))</font></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">On December 31, 2005, EPI transferred 65.47% of its equity to Pipex (See Note 1(C))</font></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">During 2005, Pipex acquired equipment in exchange for a loan with a related party. (See Note 3)</font></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">284,390</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">284,390 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">During 2005, EPI declared a 10% in-kind dividend on its Series B, convertible preferred stock. (See Note 4(C) (1))</font></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">190,250</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">190,250 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
</table>
<p align="left"></p>
<p align="center"><font size="-1">See accompanying notes to consolidated financial statements.</font></p>
<p align="center">F-5</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align=center><FONT SIZE=2><B>Pipex Therapeutics, Inc. and Subsidiaries<BR>(A Development Stage Company)<BR>Notes to Consolidated Financial Statements<BR>December 31, 2005</B></FONT></p><p align="left"><b><font size="-1">Note 1 Organization, Nature of Operations and Summary of Significant Accounting Policies</font></b></p>
<p align="left"><b><font size="-1">(A) Corporate Structure</font></b></p>
<p align="left"><font size="-1">The Company consists of four separate entities previously under common control. As of December 31, 2005, three of the entities were majority owned subsidiaries of Pipex. The combinations of these entities were accounted for in a manner similar to a pooling of interests. </font></p>
<p align="left"><font size="-1">For financial reporting purposes, the preferred stock and common stock of the Company is that of Pipex. The par value of preferred stock and common stock of Solovax, EPI and CD4 are eliminated in the consolidated financial statements with an offsetting credit to additional paid in capital.</font></p>
<p align="left"><font size="-1">All statements of operations, deficit and cash flows for each of the four entities are presented as consolidated since inception (January 8, 2001) due to the existence of common control since that date.</font></p>
<p align="left"><b></p><p align="left" style="margin-left:2%"><font size="-1">1.&nbsp;Pipex Therapeutics, Inc.</font></b></p>
<p align="left"></p><p align="left" style="margin-left:4%"><font size="-1">Pipex Therapeutics, Inc. (&ldquo;Pipex&rdquo;) (&ldquo;Company&rdquo;) (&ldquo;We&rdquo;) was formed as a Delaware corporation on January 8, 2001 under the name Pipex, Inc. On October 13, 2005, the Company changed its name to Pipex Therapeutics, Inc.</font></p>
<p align="left"><b></p><p align="left" style="margin-left:2%"><font size="-1">2.&nbsp;Solovax, Inc.</font></b></p>
<p align="left"></p><p align="left" style="margin-left:4%"><font size="-1">Solovax, Inc. (&ldquo;Solovax&rdquo;) was formed as a Delaware corporation on January 8, 2001 under the name Technology General Corp. and on June 11, 2001, it changed its name to Autoimmune Vaccines, Inc. On December 14, 2001, the company changed its name to Solovax, Inc. </font></p>
<p align="left"><b></p><p align="left" style="margin-left:2%"><font size="-1">3.&nbsp;Effective Pharmaceuticals, Inc.</font></b></p>
<p align="left"></p><p align="left" style="margin-left:4%"><font size="-1">Effective Pharmaceuticals, Inc. (&ldquo;EPI&rdquo;) was formed as a Delaware corporation on December 12, 2000 under the name Vertical Memories Inc. On August 2, 2004, the Company changed its name to Effective Pharmaceuticals, Inc.</font></p>
<p align="left"><b></p><p align="left" style="margin-left:2%"><font size="-1">4.&nbsp;CD4 Biosciences, Inc.</font></b></p>
<p align="left"></p><p align="left" style="margin-left:4%"><font size="-1">CD4 Biosciences, Inc. (&ldquo;CD4&rdquo;) was formed as a Delaware corporation on January 8, 2001 under the name Oncology Services, Inc. On June 11, 2001, the corporation changed its name to Quantas Biopharmaceuticals, Inc. On March 2, 2002, the corporation changed its name to CD4 Biosciences, Inc.</font></p>
<p align="left"><b><font size="-1">(B) Business Purpose</font></b></p>
<p align="left"></p><p align="left" style="margin-left:2%"><b><font size="-1">1.&nbsp;Pipex</font></b><font size="-1"> &mdash; </font><font size="-1">license and develop pharmaceutical products to treat various human diseases.</font></p>
<p align="left"></p><p align="left" style="margin-left:2%"><b><font size="-1">2.&nbsp;Solovax</font></b><font size="-1"> &mdash; </font><font size="-1">developing a proprietary vaccine technology to treat certain autoimmune diseases.</font></p>
<p align="left"></p><p align="left" style="margin-left:2%"><b><font size="-1">3.&nbsp;EPI</font></b><font size="-1"> &mdash; </font><font size="-1">license and develop pharmaceutical products to treat various human diseases. EPI is also developing three clinical stage drug candidates for the treatment of autoimmune diseases.</font></p>
<p align="center">F-6</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align=center><FONT SIZE=2><B>Pipex Therapeutics, Inc. and Subsidiaries<BR>(A Development Stage Company)<BR>Notes to Consolidated Financial Statements<BR>December 31, 2005</B></FONT></p><p align="left"></p><p align="left" style="margin-left:2%"><b><font size="-1">4.&nbsp;CD4</font></b><font size="-1"> &mdash; </font><font size="-1">developing various proprietary vaccine technologies to treat certain autoimmune diseases.</font></p>
<p align="left"><b><font size="-1">(C) Contribution Agreements &mdash; Consolidation of Entities under Common Control</font></b></p>
<p align="left"><b></p><p align="left" style="margin-left:2%"><font size="-1">1.&nbsp;EPI&rsquo;s Acquisition of CD4</font></b></p>
<p align="left"></p><p align="left" style="margin-left:4%"><font size="-1">On December 31, 2004, EPI acquired 91.61% of the issued and outstanding common stock of CD4 in exchange for 825,000 shares of common stock having a fair value of $825 (See 4(D)(1)). EPI assumed certain outstanding accounts payable and loans of CD4 of approximately $664,000. The fair value of the exchange was equivalent to the par value of the common stock issued. CD4 shareholders retained 119,000 shares (8.39%) of the issued and outstanding common stock of CD4; these shareholders comprise the non-controlling shareholder base of CD4.</font></p>
<p align="left"><b></p><p align="left" style="margin-left:2%"><font size="-1">2.&nbsp;Pipex&rsquo;s Acquisition of Solovax</font></b></p>
<p align="left"></p><p align="left" style="margin-left:4%"><font size="-1">On July 31, 2005, Pipex acquired 100% and 86.21%, respectively, of the issued and outstanding Series A, convertible preferred stock and common stock of Solovax. Taken together, Pipex acquired 96.9% of Solovax. Pipex assumed all outstanding liabilities of approximately $310,000, the transfer of 1,000,000 shares of Series A, convertible preferred stock owned by Solovax&rsquo;s president and 250,000 shares of common stock owned by Solovax&rsquo;s COO. The fair value of the exchange was equivalent to the par value of the common stock received pursuant to the terms of the contribution. Solovax shareholders retained an aggregate 40,000 shares (3.1%) of the issued and outstanding common stock of Solovax; these shareholders comprise the non-controlling shareholder base of Solovax.</font></p>
<p align="left"><b></p><p align="left" style="margin-left:2%"><font size="-1">3.&nbsp;Pipex&rsquo;s Acquisition of EPI/CD4</font></b></p>
<p align="left"></p><p align="left" style="margin-left:4%"><font size="-1">On December 31, 2005, Pipex acquired 100% and 90.91%, respectively, of the issued and outstanding Series A, convertible preferred stock and common stock of EPI. Taken together, Pipex acquired 65.47% of EPI and its majority owned subsidiary CD4. Pipex assumed all outstanding liabilities of EPI totaling approximately $583,500. The fair value of the exchange was equivalent to the par value of the common stock received pursuant to the terms of the contribution.</font></p>
<p align="left"></p><p align="left" style="margin-left:4%"><font size="-1">In the consolidated financial statements, each of these transactions was analogous to a recapitalization with no net change to equity since the entities were under common control at the date of the transaction. </font></p>
<p align="left"><b><font size="-1">(D) Development Stage</font></b></p>
<p align="left"><font size="-1">Activities during the development stage primarily include acquisition of debt and equity-based financing, related party debt financing, acquisition of and creation of intellectual properties and certain research and development activities to improve current technological concepts. As the Company is devoting its efforts to research and development, there has been no revenue generated from sales, license fees or royalties. The Company&rsquo;s financial statements are presented as statements of a development stage enterprise.</font></p>
<p align="center">F-7</p>
<hr noshade color="#000000">
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<PAGE>
<p align=center><FONT SIZE=2><B>Pipex Therapeutics, Inc. and Subsidiaries<BR>(A Development Stage Company)<BR>Notes to Consolidated Financial Statements<BR>December 31, 2005</B></FONT></p><p align="left"><b><font size="-1">(E) Principles of Consolidation</font></b></p>
<p align="left"><font size="-1">The consolidated financial statements include the accounts of Pipex and its majority owned subsidiaries, Solovax, EPI, and CD4. All significant intercompany accounts and transactions have been eliminated in consolidation.</font></p>
<p align="left"><font size="-1">For financial accounting purposes, the Company&rsquo;s inception is deemed January 8, 2001. The activity of EPI for the period from December 12, 2000 to January 7, 2001 was nominal. Therefore, there is no financial information presented for this period.</font></p>
<p align="left"><b><font size="-1">(F) Use of Estimates</font></b></p>
<p align="left"><font size="-1">In preparing financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the periods presented. Actual results may differ from these estimates.</font></p>
<p align="left"><font size="-1">Significant estimates during 2005 and 2004 include depreciable lives of property, valuation of stock options and warrants granted for services or compensation pursuant to SFAS No. 123R, existence and recording of research and development expenditures as expenses in connection with the provisions of SFAS No. 2, and the valuation allowance for deferred tax assets. </font></p>
<p align="left"><b><font size="-1">(G) Cash</font></b></p>
<p align="left"><font size="-1">The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits. At December 31, 2005, the balance exceeded the federally insured limit by $937,866.</font></p>
<p align="left"><b><font size="-1">(H) Equipment</font></b></p>
<p align="left"><font size="-1">Equipment is stated at cost, less accumulated depreciation. Expenditures for maintenance and repairs are charged to expense as incurred. Equipment consists primarily of computer equipment and various other equipment used in connection with research and development. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which is generally ten years.</font></p>
<p align="left"><b><font size="-1">(I) Long Lived Assets</font></b></p>
<p align="left"><font size="-1">Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. There were no impairment charges taken during the years ended December 31, 2005 and 2004 and for the period from January 8, 2001 (inception) to December 31, 2005.</font></p>
<p align="center">F-8</p>
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<p align=center><FONT SIZE=2><B>Pipex Therapeutics, Inc. and Subsidiaries<BR>(A Development Stage Company)<BR>Notes to Consolidated Financial Statements<BR>December 31, 2005</B></FONT></p><p align="left"><b><font size="-1">(J) Derivative Liabilities</font></b></p>
<p align="left"><font size="-1">Pursuant to the terms of Pipex&rsquo;s Series A, convertible preferred stock, management determined that there are no liability instruments present pursuant to the provisions of EITF No. 00-19, </font><i><font size="-1">&ldquo;Accounting for Derivative Financial Instruments Index to, and Potentially Settled in, a Company&rsquo;s Own Stock&rdquo;</font></i><font size="-1">, and, therefore, should not be accounted for as a derivative liability. The Company&rsquo;s majority owned subsidiaries also contain issued convertible preferred stock; however, none of these instruments currently contains any provisions that require the recording of a derivative liability.</font></p>
<p align="left"><b><font size="-1">(K) Net Loss per Share</font></b></p>
<p align="left"><font size="-1">Basic earnings (loss) per share is computed by dividing the net income (loss) less preferred dividends for the period by the weighted average number of shares outstanding. Diluted earnings per share is computed by dividing net income (loss) less preferred dividends by the weighted average number of shares outstanding including the effect of share equivalents. Since the Company reported a net loss at December 31, 2005 and 2004 and for the period from January 8, 2001 (inception) to December 31, 2005, respectively, all common stock equivalents would be antidilutive; as such there is no separate computation for diluted earnings per share.</font></p>
<p align="left"><font size="-1">See Note 4 (F) (3) for all common stock equivalents.</font></p>
<p align="left"><font size="-1">The Company&rsquo;s net loss per share for the years ended December 31, 2005 and 2004 and for the period from January 8, 2001 (inception) to December 31, 2005 was computed assuming the retroactive application of a 5 for 1 stock split declared on April 12, 2005 for Pipex. Additionally, the numerator for computing net loss per share was adjusted for a preferred stock dividend recorded in June 2005 in connection with the sale of EPI&rsquo;s Series B, convertible preferred stock.</font></p>
<p align="left"><font size="-1">All share and per share amounts have been retroactively restated for the presentation of these consolidated financial statements.</font></p>
<p align="left"><b><font size="-1">(L) Research and Development Costs </font></b></p>
<p align="left"><font size="-1">The Company expenses all research and development costs as incurred for which there is no alternative future use. These costs also include the expensing of employee compensation and employee stock based compensation.</font></p>
<p align="left"><b><font size="-1">(M) Income Taxes</font></b></p>
<p align="left"><font size="-1">Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. (See Note 7)</font></p>
<p align="left"><b><font size="-1">(N) Fair Value of Financial Instruments</font></b></p>
<p align="left"><font size="-1">The carrying amounts of the Company&rsquo;s short-term financial instruments, including accounts payable and loans payable &mdash; related party, approximate fair value due to the relatively short period to maturity for these instruments.</font></p>
<p align="center">F-9</p>
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<PAGE>
<p align=center><FONT SIZE=2><B>Pipex Therapeutics, Inc. and Subsidiaries<BR>(A Development Stage Company)<BR>Notes to Consolidated Financial Statements<BR>December 31, 2005</B></FONT></p><p align="left"><b><font size="-1">(O) Stock Based Compensation</font></b></p>
<p align="left"><font size="-1">In December 2004, the FASB issued SFAS No. 123(R), </font><i><font size="-1">&ldquo;Share-Based Payment,&rdquo;</font></i><font size="-1"> which replaces SFAS No. 123 and supersedes APB Opinion No. 25. Under SFAS No. 123(R), companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation arrangements include stock options, stock warrants, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. In March 2005, the SEC issued Staff Accounting Bulletin No. 107, or &ldquo;SAB 107&rdquo;. SAB 107 expresses views of the staff regarding the interaction between SFAS No. 123(R) and certain SEC rules
and regulations and provides the staff&rsquo;s views regarding the valuation of share-based payment arrangements for public companies. SFAS No. 123(R) permits public companies to adopt its requirements using one of two methods. On April 14, 2005, the SEC adopted a rule amending the compliance dates for SFAS 123R. Companies may elect to apply this statement either prospectively, or on a modified version of retrospective application under which financial statements for prior periods are adjusted on a basis consistent with the pro forma disclosures required for those periods under SFAS No. 123. The Company has elected to retroactively adopt the provisions of SFAS No. 123R.</font></p>
<p align="left"><font size="-1">All share-based payments to employees since inception have been recorded and expensed in the statements of operations as applicable.</font></p>
<p align="left"><b><font size="-1">(P) Recent Accounting Pronouncements</font></b></p>
<p align="left"><font size="-1">In May 2005, the Financial Accounting Standard Board (&ldquo;FASB&rdquo;) issued Statement No. 154, </font><i><font size="-1">&ldquo;Accounting Changes and Error Corrections, a replacement of APB Opinion No. 20, Accounting Changes, and Statement No. 3, Reporting Accounting Changes in Interim Financial Statements&rdquo; </font></i><font size="-1">(&ldquo;SFAS 154&rdquo;). SFAS 154 changes the requirements for the accounting for, and reporting of, a change in accounting principle. Previously, most voluntary changes in accounting principles were required to be recognized by way of a cumulative effect adjustment within net income during the period of the change. SFAS 154 requires retrospective application to prior periods&rsquo; financial statements, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change.
SFAS 154 is effective for accounting changes made in fiscal years beginning after December 15, 2005; however, the Statement does not change the transition provisions of any existing accounting pronouncements. The Company does not believe adoption of SFAS 154 will have a material effect on our financial position, results of operations or cash flows.</font></p>
<p align="left"><font size="-1">In June 2005, the Emerging Issues Task Force (&ldquo;EITF&rdquo;) issued EITF 05-2, </font><i><font size="-1">&ldquo;The Meaning of Conventional Convertible Debt Instrument in Issue No. 00-19&rdquo;</font></i><font size="-1">. EITF 05-2 retained the definition of a conventional convertible debt instrument as set forth in EITF 00-19, and which is used in determining certain exemptions to the accounting treatments prescribed under SFAS 133, </font><i><font size="-1">&ldquo;Accounting for Derivative Instruments and Hedging Activities&rdquo;</font></i><font size="-1">. EITF 05-2 also clarified that certain contingencies related to the exercise of a conversion option would not be outside the definition of &ldquo;conventional&rdquo; and determined that convertible preferred stock with a mandatory redemption date would also qualify for similar exemptions if the economic
characteristics of the preferred stock are more akin to debt than equity. EITF 05-2 is effective for new instruments entered into and instruments modified in periods beginning after June 29, 2005. We adopted the provisions of EITF 05-2 on July 1, 2005. The Company does not believe adoption of EITF 05-2 will have a material effect on our financial position, results of operations or cash flows.</font></p>
<p align="center">F-10</p>
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<PAGE>
<p align=center><FONT SIZE=2><B>Pipex Therapeutics, Inc. and Subsidiaries<BR>(A Development Stage Company)<BR>Notes to Consolidated Financial Statements<BR>December 31, 2005</B></FONT></p><p align="left"><font size="-1">In July 2005, the FASB issued FASB Staff Position (&ldquo;FSP&rdquo;) 150-5, </font><i><font size="-1">&ldquo;Accounting Under SFAS 150 for Freestanding Warrants and Other Similar Instruments on Redeemable Shares&rdquo;</font></i><font size="-1">. FSP 150-5 clarifies that warrants on shares that are redeemable or puttable immediately upon exercise and warrants on shares that are redeemable or puttable in the future qualify as liabilities under SFAS 150, regardless of the redemption feature or redemption price. The FSP is effective for the first reporting period beginning after June 30, 2005, with resulting changes to prior period statements reported as the cumulative effect
of an accounting change in accordance with the transition provisions of SFAS 150. We adopted the provisions of FSP 150-5 on July 1, 2005. The Company does not believe adoption of FSP 150-5 will have a material effect on our financial position, results of operations or cash flows. </font></p>
<p align="left"><font size="-1">In February 2006 the FASB issued SFAS 155, </font><i><font size="-1">&ldquo;Accounting for Certain Hybrid Financial Instruments&rdquo;</font></i><font size="-1"> which amends SFAS No. 133 to narrow the scope exception for interest-only and principal-only strips on debt instruments to include only such strips representing rights to receive a specified portion of the contractual interest or principal cash flows. SFAS No. 155 also amends SFAS No. 140 to allow qualifying special-purpose entities to hold a passive derivative financial instrument pertaining to beneficial interests that it is a derivative financial instrument. The Company will adopt SFAS No. 155 on January 1, 2007 and do not expect it to have a material effect on our financial position, results of operations, or cash flows. </font></p>
<p align="left"><b><font size="-1">Note 2 Going Concern</font></b></p>
<p align="left"><font size="-1">As reflected in the accompanying consolidated financial statements, the Company has a net loss of $1,355,842 and net cash used in operations of $1,082,109, respectively, for the year ended December 31, 2005 and a working capital deficit of $985,968, deficit accumulated during the development stage of $3,914,268 and a stockholders&rsquo; deficit of $703,838 at December 31, 2005. The Company is currently in the development stage and has not generated any operating revenues since inception. The Company has relied on related party debt financing (see note 3) to sustain operations.</font></p>
<p align="left"><font size="-1">The ability of the Company to continue as a going concern is dependent on the Company&rsquo;s ability to further implement its business plan, resolve its liquidity problems, principally by obtaining additional debt/equity financing, and generate revenues from collaborative agreements or sale of pharmaceutical products. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.</font></p>
<p align="left"><b><font size="-1">Note 3 Loans Payable &mdash; Related Party</font></b></p>
<p align="left"><font size="-1">An affiliate of the Company&rsquo;s founder, President and CEO has advanced working capital to or on behalf of the Company. Loan activity for the Company was as follows since inception:</font></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#b2e5ff">
<td align='center' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='bottom'>
<b><font size="-1">Total loans/ (repayments) per year<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Amount<br><hr noshade color="#000000"></font></b></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Year ended December 31, 2001 &mdash; loans </font></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Year ended December 31, 2002 &mdash; loans</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">130,520 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Year ended December 31, 2003 &mdash; loans</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">244,640 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Year ended December 31, 2004 &mdash; loans</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">785,281 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Year ended December 31, 2005 &mdash; loans</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">968,943 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Year ended December 31, 2005 &mdash; repayments</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(200,000</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Balance, December 31, 2005</font></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">1,929,384 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
</table>
<p align="center">F-11</p>
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<PAGE>
<p align=center><FONT SIZE=2><B>Pipex Therapeutics, Inc. and Subsidiaries<BR>(A Development Stage Company)<BR>Notes to Consolidated Financial Statements<BR>December 31, 2005</B></FONT></p><p align="left"><font size="-1">During 2005, the Company acquired $284,390 in equipment in exchange for an increase in loans payable &mdash; related party. This advance is the non-cash component of the $968,943 in 2005.</font></p>
<p align="left"><font size="-1">These loans are non-interest bearing and due on demand. These loans are secured by all assets of the Company.</font></p>
<p align="left"><b><font size="-1">Note 4 Stockholders&rsquo; Deficit and Non-Controlling Interest</font></b></p>
<p align="left"><font size="-1">These are the equity transactions of Pipex, Solovax, EPI and CD4 since inception, respectively.</font></p>
<p align="left"><b><font size="-1">(A) Preferred Stock Issuances</font></b></p>
<p align="left"><b></p><p align="left" style="margin-left:2%"><font size="-1">1. Pipex Therapeutics, Inc.</font></b></p>
<p align="left"></p><p align="left" style="margin-left:2%"><font size="-1">On January 15, 2001, Pipex issued 5,000,000 shares of Series A, convertible preferred stock to the Founder serving as the President, CEO and Chairman of the Board of Pipex in exchange for $300,000 ($0.06 per share).</font></p>
<p align="left"><b></p><p align="left" style="margin-left:2%"><font size="-1">2. Solovax, Inc.</font></b></p>
<p align="left"></p><p align="left" style="margin-left:2%"><font size="-1">On January 31, 2001, Solovax issued 1,000,000 shares of Series A, convertible preferred stock to the Founder serving as the President, CEO and Chairman of the Board of Solovax in exchange for $300,000 ($0.30 per share).</font></p>
<p align="left"><b></p><p align="left" style="margin-left:2%"><font size="-1">3. Effective Pharmaceuticals, Inc.</font></b></p>
<p align="left"></p><p align="left" style="margin-left:2%"><font size="-1">On January 4, 2001, EPI issued 3,000,000 shares of Series A, convertible preferred stock to the Founder serving as the CEO and Chairman of the Board of EPI in exchange for $250,000 ($0.08 per share).</font></p>
<p align="left"></p><p align="left" style="margin-left:2%"><font size="-1">On March 10, 2005, EPI&rsquo;s board of directors and stockholders voted to authorize the designation of a Series B, convertible preferred stock. (See Note 4(C))</font></p>
<p align="left"></p><p align="left" style="margin-left:2%"><font size="-1">From March through June 2005, EPI issued 1,902,500 shares of Series B, convertible preferred stock, at $1 per share, for proceeds of $1,902,500. In connection with this offering, EPI paid $152,200 of offering costs that were charged against additional paid in capital. The Company also granted 171,225 warrants as compensation in connection with this equity raise. (See Note 4(C)(1))</font></p>
<p align="left"><b></p><p align="left" style="margin-left:2%"><font size="-1">4. CD4 Biosciences, Inc.</font></b></p>
<p align="left"></p><p align="left" style="margin-left:2%"><font size="-1">On February 7, 2001, CD4 issued 1,000,000 shares of Series A, convertible preferred stock, to the Founder serving as the CEO and Chairman of the Board of CD4 in exchange for $300,000 ($.30 per share).</font></p>
<p align="left"><b><font size="-1">(B) Series A, convertible preferred stock</font></b></p>
<p align="left"></p><p align="left" style="margin-left:2%"><font size="-1">The Company and its majority owned subsidiaries has each authorized and issued Series A, convertible preferred stock.</font></p>
<p align="center">F-12</p>
<hr noshade color="#000000">
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<PAGE>
<p align=center><FONT SIZE=2><B>Pipex Therapeutics, Inc. and Subsidiaries<BR>(A Development Stage Company)<BR>Notes to Consolidated Financial Statements<BR>December 31, 2005</B></FONT></p><p align="left"></p><p align="left" style="margin-left:2%"><font size="-1">As of December 31, 2005, there were 5,000,000 shares of Series A, convertible preferred stock outstanding. The issued and outstanding Series A, convertible preferred stock in the accompanying financial statements is that solely of Pipex.</font></p>
<p align="left"></p><p align="left" style="margin-left:2%"><font size="-1">The terms of the Series A, convertible preferred stock for the Company and its majority owned subsidiaries is summarized below. The terms are the same for each of the four entities.</font></p>
<p align="left"><b></p><p align="left" style="margin-left:2%"><font size="-1">1. Dividends</font></b></p>
<p align="left"></p><p align="left" style="margin-left:2%"><font size="-1">Each share of Series A, convertible preferred stock is entitled to receive dividends in an amount equal to dividends declared and paid with respect to that number of shares of common stock into which one share of Series A, convertible preferred stock is then convertible. For the period from January 8, 2001 (inception) to December 31, 2005, neither the Company, nor any of its majority owned subsidiaries has declared any Series A, convertible preferred stock dividends.</font></p>
<p align="left"><b></p><p align="left" style="margin-left:2%"><font size="-1">2. Liquidation Preference</font></b></p>
<p align="left"></p><p align="left" style="margin-left:2%"><font size="-1">Upon liquidation, holders of the Series A, convertible preferred stock will be entitled to the greater of (1) a per share amount equal to the original purchase price plus any dividends accrued but not paid and (2) the amount that the holder would receive in respect of a share of Series A, preferred if immediately prior to dissolution and liquidation, all shares of Series A, convertible preferred stock were converted into shares of common stock.</font></p>
<p align="left"><b></p><p align="left" style="margin-left:2%"><font size="-1">3. Conversion</font></b></p>
<p align="left"></p><p align="left" style="margin-left:2%"><font size="-1">Each share of Series A, convertible preferred stock is immediately convertible on a one for one basis at the option of the holder. The conversion ratio is determined by dividing the original issue price of the Series A, convertible preferred stock by the conversion price for the Series A, convertible preferred stock in effect on the date the certificate is surrendered for conversion. The conversion price will initially be the original issue price, which is subject to future adjustment. Therefore, at December 31, 2005, the conversion ratio is 1.00.</font></p>
<p align="left"><b></p><p align="left" style="margin-left:2%"><font size="-1">4. Voting Rights</font></b></p>
<p align="left"></p><p align="left" style="margin-left:2%"><font size="-1">Each holder of Series A, convertible preferred stock is entitled to one vote for each share of common stock into which each share of Series A, convertible preferred stock could then be converted.</font></p>
<p align="left"><b></p><p align="left" style="margin-left:2%"><font size="-1">5. Beneficial Conversion Feature and Derivative Liability</font></b></p>
<p align="left"></p><p align="left" style="margin-left:2%"><font size="-1">The Company and its majority owned subsidiaries has reviewed each of the provisions of its Series A, convertible preferred stock and noted no required accounting for a beneficial conversion feature pursuant to the guidance in EITF No.&rsquo;s 98-5 or 00-27. Upon issuance, the original issue price, its fair value, and conversion price were equivalent.</font></p>
<p align="left"></p><p align="left" style="margin-left:2%"><font size="-1">Additionally, there is no required accounting or financial statement impact for derivative instruments. None of the Company or its majority owned subsidiaries Series A, convertible preferred stock has embedded features requiring such treatment.</font></p>
<p align="center">F-13</p>
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<PAGE>
<p align=center><FONT SIZE=2><B>Pipex Therapeutics, Inc. and Subsidiaries<BR>(A Development Stage Company)<BR>Notes to Consolidated Financial Statements<BR>December 31, 2005</B></FONT></p><p align="left"><b><font size="-1">(C) Series B, convertible preferred stock</font></b></p>
<p align="left"></p><p align="left" style="margin-left:2%"><font size="-1">Only Pipex and EPI have authorized Series B, convertible preferred stock.</font></p>
<p align="left"></p><p align="left" style="margin-left:2%"><font size="-1">At December 31, 2005, Pipex has not issued any of its Series B, convertible preferred stock. Pipex has not yet designated their Series B, convertible preferred stock as it pertains to dividends, liquidation preference, conversion, voting rights, etc...</font></p>
<p align="left"></p><p align="left" style="margin-left:2%"><font size="-1">At December 31, 2005, the only Series B, convertible preferred stock that has been issued was in EPI. The consolidated balance sheet reflects these transactions as a component of equity and the par value is eliminated in consolidation. (See Note 1(A)).</font></p>
<p align="left"></p><p align="left" style="margin-left:2%"><font size="-1">The terms of the Series B, convertible preferred stock for EPI are summarized below.</font></p>
<p align="left"><b></p><p align="left" style="margin-left:2%"><font size="-1">1. Dividends</font></b></p>
<p align="left"></p><p align="left" style="margin-left:2%"><font size="-1">If the common stock of the company trades on a national securities exchange (a &ldquo;Trading Event&rdquo;) or the company completes an initial public offering of EPI common stock (an &ldquo;IPO&rdquo;), or the conversion of all of the outstanding shares of Series B, convertible preferred stock, each share of Series B, convertible preferred stock will be entitled to receive a dividend in additional shares of Series B, convertible preferred stock at the rate of 10% of the Series B purchase price per year, with those dividends being payable only in a number of shares equal to the dollar amount of those dividends divided by the Series B original purchase price (as adjusted for any stock dividends, consolidations, splits, recapitalizations, and the like). Dividends accrue on each share of Series B, convertible preferred
stock, whether or not earned or declared and regardless of when any share of Series B, convertible preferred stock was issued. At December 31, 2005, EPI recorded a preferred stock dividend for 190,250 shares having a fair value of $190,250. (See Note 4(A)(3)).</font></p>
<p align="left"></p><p align="left" style="margin-left:2%"><font size="-1">Each share of Series B, convertible preferred stock is also entitled to receive an additional dividend at the rate of 30% of the Series B original purchase price if within 18 months from the final closing (this occurred effective June 30, 2005) of this offering there has occurred neither an IPO nor a Trading Event. These dividends are payable only in a number of shares equal to the dollar amount of those dividends divided by the Series B original purchase price.</font></p>
<p align="left"></p><p align="left" style="margin-left:2%"><font size="-1">At December 31, 2005, there was no accounting treatment for this specified 30% dividend as the contingency had not yet been resolved. Management will reevaluate this contingency provision through December 31, 2006 or sooner should the related contingency be resolved.</font></p>
<p align="left"><b></p><p align="left" style="margin-left:2%"><font size="-1">2. Liquidation Preference</font></b></p>
<p align="left"></p><p align="left" style="margin-left:2%"><font size="-1">Upon liquidation, holders of the shares of Series B, convertible preferred stock will be entitled to receive in preference to holders of shares of any junior stock an amount per share of Series B, convertible preferred stock equal to the greater of (1) an amount equal to the Series B original purchase price (as adjusted for any stock dividends, consolidations, splits, recapitalizations and the like) plus any dividends accrued on a share of Series B, convertible preferred stock but not paid and (2) the current market price of our common stock multiplied by the number of shares of common stock into which a share of Series B, convertible preferred stock could be converted immediately prior to dissolution and liquidation. After payment of the liquidation amount to </font></p>
<p align="center">F-14</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align=center><FONT SIZE=2><B>Pipex Therapeutics, Inc. and Subsidiaries<BR>(A Development Stage Company)<BR>Notes to Consolidated Financial Statements<BR>December 31, 2005</B></FONT></p><p align="left"><font size="-1">holders of shares of Series B, convertible preferred stock, the remaining assets will be distributed to holders of shares of common stock.</font></p>
<p align="left"><b></p><p align="left" style="margin-left:2%"><font size="-1">3. Conversion</font></b></p>
<p align="left"></p><p align="left" style="margin-left:2%"><font size="-1">Each share of Series B, convertible preferred stock is convertible at the option of the holder at any time into one share of common stock, subject to adjustment.</font></p>
<p align="left"></p><p align="left" style="margin-left:2%"><font size="-1">Upon consummation of an IPO or a Trading Event, all shares of Series B, convertible preferred stock will be deemed automatically converted into that number of fully paid and nonassessable shares of common stock into which those shares would have then been convertible in the event of optional conversion. In the event of a merger in which our shareholders constitute a majority of the voting power of the surviving corporation, or our common stock trades at 300% of the Series B original purchase price, then all of the shares of Series B, convertible preferred stock then outstanding will convert into shares of common stock.</font></p>
<p align="left"><b></p><p align="left" style="margin-left:2%"><font size="-1">4. Voting Rights</font></b></p>
<p align="left"></p><p align="left" style="margin-left:2%"><font size="-1">Each holder of shares of Series B, convertible preferred stock is entitled to one vote for each share of common stock into which each share of Series B, convertible preferred stock could then be converted and is entitled to vote together with our shares of Series A, convertible preferred stock and common stock.</font></p>
<p align="left"><b></p><p align="left" style="margin-left:2%"><font size="-1">5. Beneficial Conversion Feature and Derivative Liability</font></b></p>
<p align="left"></p><p align="left" style="margin-left:2%"><font size="-1">EPI&rsquo;s Series B, convertible preferred stock has no required accounting for a beneficial conversion feature pursuant to the guidance in EITF No.&rsquo;s 98-5 or 00-27. Upon issuance, the original issue price, its fair value, and conversion price were equivalent.</font></p>
<p align="left"></p><p align="left" style="margin-left:2%"><font size="-1">Additionally, there is no required accounting or financial statement impact for derivative instruments. EPI&rsquo;s Series B, convertible preferred stock has no embedded features requiring such treatment.</font></p>
<p align="left"><b></p><p align="left" style="margin-left:2%"><font size="-1">6. Antidilution Protection</font></b></p>
<p align="left"></p><p align="left" style="margin-left:2%"><font size="-1">If EPI issues any shares of common stock (with certain exceptions) without consideration or for a consideration per share less than the &ldquo;Conversion Price&rdquo; (as defined in the certificate of amendment containing the terms of the Series B, convertible preferred stock) in effect immediately prior to the issuance of those shares, holders of shares of Series B, convertible preferred stock will be entitled to weighted-average antidilution protection. EPI has not issued or granted any common stock or common stock equivalents since the issuance of the Series B, convertible preferred stock during 2005 or through the date of the accompanying report.</font></p>
<p align="left"><b><font size="-1">(D) Common Stock Issuances</font></b></p>
<p align="left"></p><p align="left" style="margin-left:2%"><font size="-1">All common stock issuances for the Company and each of its majority owned subsidiaries since inception were issued having a fair value equivalent to par value. The par value for purposes of </font></p>
<p align="center">F-15</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align=center><FONT SIZE=2><B>Pipex Therapeutics, Inc. and Subsidiaries<BR>(A Development Stage Company)<BR>Notes to Consolidated Financial Statements<BR>December 31, 2005</B></FONT></p><p align="left"><font size="-1">valuation has been retroactively restated for Pipex due to the stock split in April 2005. (See Note 4(G)</font></p>
<p align="left"><b></p><p align="left" style="margin-left:2%"><font size="-1">1.&nbsp;Pipex Therapeutics, Inc.</font></b></p>
<p align="left"></p><p align="left" style="margin-left:4%"><font size="-1">On January 9, 2001, Pipex issued 1,450,000 shares of common stock to its Founder, COO and affiliates of the CEO for $350 as compensation ($0.0002 per share).</font></p>
<p align="left"><b></p><p align="left" style="margin-left:2%"><font size="-1">2.&nbsp;Solovax, Inc.</font></b></p>
<p align="left"></p><p align="left" style="margin-left:4%"><font size="-1">On January 9, 2001, Solovax issued 290,000 shares of common stock to its COO and affiliates of the Founder/CEO in exchange for $290 ($0.001 per share).</font></p>
<p align="left"><b></p><p align="left" style="margin-left:2%"><font size="-1">3.&nbsp;Effective Pharmaceuticals, Inc.</font></b></p>
<p align="left"></p><p align="left" style="margin-left:4%"><font size="-1">On December 31, 2004, EPI issued 825,000 shares having a fair value of $825 ($0.001 per share) to acquire 91.61% of CD4.</font></p>
<p align="left"></p><p align="left" style="margin-left:4%"><font size="-1">In the consolidated financial statements, this transaction was analogous to a recapitalization with no net change to equity since the entities were under common control at the date of the transaction.</font></p>
<p align="left"><b></p><p align="left" style="margin-left:2%"><font size="-1">4.&nbsp;CD4 Biosciences, Inc.</font></b></p>
<p align="left"></p><p align="left" style="margin-left:4%"><font size="-1">On January 9, 2001, CD4 issued 250,000 shares of common stock in exchange for $250 ($0.001 per share) to the Company&rsquo;s COO. The shares were considered founders shares.</font></p>
<p align="left"></p><p align="left" style="margin-left:4%"><font size="-1">During March through May 2002, CD4 issued 119,000 shares of common stock for $119 ($0.001 per share) for past services rendered and for the partial consideration required to obtain an exclusive license for certain technology. Fair value was based on the value of service provided. Of the total, $67 was attributable to compensation; the remaining $52 was classified as consulting expense.</font></p>
<p align="left"></p><p align="left" style="margin-left:4%"><font size="-1">On May 15, 2004, CD4 issued 50,000 shares of common stock in exchange for $50 (0.001 per share) to the Company&rsquo;s President.</font></p>
<p align="left"></p><p align="left" style="margin-left:4%"><font size="-1">In summary, the following shares of common stock are issued and outstanding as follows:</font></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<font size="-1">Pipex: </font></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">1,450,000 shares (amount represented in Companys balance sheet) </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<font size="-1">Solovax: </font></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">290,000 shares </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<font size="-1">EPI: </font></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">825,000 shares </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<font size="-1">CD4: </font></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">419,000 shares </font></td>
</tr>
</table>
<p align="left"><b><font size="-1">(E) Stock Option Plan</font></b></p>
<p align="left"><font size="-1">During 2001 (the &ldquo;Effective Date&rdquo;), the Company&rsquo;s Board and stockholders adopted the 2001 Stock Incentive Plan (the &ldquo;Plan&rdquo;). Under the Plan, the maximum number of options to acquire shares of the Company&rsquo;s common stock that are available for issuance is 15% of the total of the issued and </font></p>
<p align="center">F-16</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align=center><FONT SIZE=2><B>Pipex Therapeutics, Inc. and Subsidiaries<BR>(A Development Stage Company)<BR>Notes to Consolidated Financial Statements<BR>December 31, 2005</B></FONT></p><p align="left"><font size="-1">outstanding stock, including common and preferred as of the effective date of the Plan. The total number of shares of stock with respect to which stock options and stock appreciation rights may be granted to any one employee of the Company or a subsidiary during any one-year period shall not exceed 1,250,000 (not affected for stock split). All awards pursuant to the Plan shall terminate upon the termination of the grantee&rsquo;s employment for any reason.</font></p>
<p align="left"><font size="-1">Pursuant to the provisions of SFAS No. 123R, in the event of termination, the Company will cease to recognize compensation expense. There is no deferred compensation recorded upon initial grant date, instead, the fair value of the share-based payment is recognized ratably over the stated vesting period.</font></p>
<p align="left"><font size="-1">Awards include options, restricted shares, stock appreciation rights, performance shares and cash-based awards (the &ldquo;Awards&rdquo;). The Plan contains certain anti-dilution provisions in the event of a stock split, stock dividend or other capital adjustment, as defined in the Plan. The Plan provides for a Committee of the Board (the &ldquo;Committee&rdquo;) to grant awards and to determine the exercise price, vesting term, expiration date and all other terms and conditions of the awards, including acceleration of the vesting of an award at any time.</font></p>
<p align="left"><font size="-1">At December 31, 2005, the Company only has one specific stock option grant that was not fully vested on its grant date. (See Note 4(F)(1)(C))</font></p>
<p align="left"><b><font size="-1">(F) Common Stock Options and Warrants</font></b></p>
<p align="left"><font size="-1">The Company has followed fair value accounting and the related provisions of SFAS No. 123R for all share based payment awards since inception. The fair value of each option or warrant granted is estimated on the date of grant using the Black-Scholes option-pricing model. The following is a summary of all stock options and warrants granted since the company&rsquo;s inception and reflects the activity of Pipex, Solovax, EPI and CD4. All option and warrant grants are expensed in the appropriate period based upon vesting terms, in each case with an offsetting credit to additional paid in capital.</font></p>
<p align="left"><b></p><p align="left" style="margin-left:2%"><font size="-1">(1) Stock Options</font></b></p>
<p align="left"><b></p><p align="left" style="margin-left:4%"><font size="-1">(A) Pipex</font></b></p>
<p align="left"></p><p align="left" style="margin-left:4%"><font size="-1">On April 5, 2005, the Company granted 200,000 stock options, having a fair value of $59,960, to a consultant pursuant to the terms of a consulting agreement (See Note 6(B)). The options are fully vested and non-forfeitable.</font></p>
<p align="left"></p><p align="left" style="margin-left:4%"><font size="-1">On June 1, 2005, the Company granted an aggregate 35,000 stock options, having a fair value of $10,493, to the President of EPI and a Director of Pipex. The options are fully vested and non-forfeitable.</font></p>
<p align="left"><b></p><p align="left" style="margin-left:4%"><font size="-1">(B) Solovax</font></b></p>
<p align="left"></p><p align="left" style="margin-left:4%"><font size="-1">None since inception.</font></p>
<p align="center">F-17</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align=center><FONT SIZE=2><B>Pipex Therapeutics, Inc. and Subsidiaries<BR>(A Development Stage Company)<BR>Notes to Consolidated Financial Statements<BR>December 31, 2005</B></FONT></p><p align="left"><b></p><p align="left" style="margin-left:4%"><font size="-1">(C) EPI</font></b></p>
<p align="left"></p><p align="left" style="margin-left:4%"><font size="-1">On September 15, 2004, the Company granted 262,500 stock options, having a fair value of $65,599, to the President of EPI. Pursuant to the terms of an employment agreement, certain milestones are required to be reached in order for the President to become vested in the earned percentage of options previously granted. Upon the occurrence of the Company&rsquo;s raise of net proceeds exceeding $1,500,000, the President was entitled to 56,250 options or 21.43% of the total options granted. In connection with this milestone, the Company recorded compensation expense totaling $14,057 with an offsetting credit to additional paid-in capital. At December 31, 2005, 206,250 options remain unexercisable. This individual also received an annual salary of $175,000.</font></p>
<p align="left"></p><p align="left" style="margin-left:4%"><font size="-1">On October 4, 2004, the Company granted 30,000 stock options, having a fair value of $7,494, to a consultant pursuant to the terms of a consulting agreement. The options are fully vested and non-forfeitable.</font></p>
<p align="left"><b></p><p align="left" style="margin-left:4%"><font size="-1">(D) CD4</font></b></p>
<p align="left"></p><p align="left" style="margin-left:4%"><font size="-1">On May 16, 2002, the Company granted 20,000 stock options, having a fair value of $5,890, to a consultant pursuant to the terms of a consulting agreement. The options are fully vested and non-forfeitable.</font></p>
<p align="left"></p><p align="left" style="margin-left:4%"><font size="-1">On January 3, 2003, the Company granted an aggregate 60,736 stock options to its President and a former officer having a fair value of $17,984, for past services rendered. All 60,736 options were cancelled during 2004.</font></p>
<p align="left"></p><p align="left" style="margin-left:4%"><font size="-1">Of the total, 50,736 options were owned by the Company&rsquo;s President, and in connection with the December 31, 2004 acquisition of CD4 by EPI, were cancelled. There was no additional consideration for this cancellation. The remaining 10,000 options were cancelled pursuant to contractual terms since the Company no longer employed the individual at December 31, 2004. There was no additional consideration for this cancellation. Both awards were fully vested at their grant dates. The related expense of $17,984 was charged to operations in 2003.</font></p>
<p align="left"></p><p align="left" style="margin-left:4%"><font size="-1">On August 6, 2004, the Company granted 10,000 stock options, having a fair value of $2,943, to a consultant pursuant to the terms of a consulting agreement. The options are fully vested and non-forfeitable.</font></p>
<p align="left"><b></p><p align="left" style="margin-left:4%"><font size="-1">(E)&nbsp;Weighted average assumptions used by management to determine grant date fair value for all stock option grants since inception were as follows:</font></b></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Exercise price</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">$0.03 - $0.20 </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Expected dividends</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0% </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Expected volatility</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">200% </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Risk free interest rate</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">3.03% - 4.52% </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Expected life of option</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">5-10 years </font></td>
</tr>
</table>
<p align="center">F-18</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align=center><FONT SIZE=2><B>Pipex Therapeutics, Inc. and Subsidiaries<BR>(A Development Stage Company)<BR>Notes to Consolidated Financial Statements<BR>December 31, 2005</B></FONT></p><p align="left"><b></p><p align="left" style="margin-left:2%"><font size="-1">(2) Stock Warrants</font></b></p>
<p align="left"><b></p><p align="left" style="margin-left:4%"><font size="-1">(A)&nbsp;Pipex</font></b></p>
<p align="left"></p><p align="left" style="margin-left:4%"><font size="-1">None since inception.</font></p>
<p align="left"><b></p><p align="left" style="margin-left:4%"><font size="-1">(B)&nbsp;Solovax</font></b></p>
<p align="left"></p><p align="left" style="margin-left:4%"><font size="-1">None since inception.</font></p>
<p align="left"><b></p><p align="left" style="margin-left:4%"><font size="-1">(C)&nbsp;EPI</font></b><br><font size="-1">In connection with the sale of 1,902,500 shares of Series B, convertible preferred stock, the Company granted 171,225 warrants as compensation. Of the total warrants granted, 144,590 warrants were granted to the Company&rsquo;s Founder/CEO and COO. The remaining 26,635 warrants were granted to an unrelated party. The warrants granted had a fair value of $170,985 based upon SFAS No. 123R and the related Black-Scholes option-pricing model. Since these warrants were granted as compensation in connection with an equity raise, the Company has treated these warrants as a direct offering cost. The result of the transaction has a net effect to equity of $0, as the amount recorded is both debited and credited to additional paid in capital. The warrants are fully vested and non-forfeitable.</font></p>
<p align="left"><b></p><p align="left" style="margin-left:4%"><font size="-1">(D)&nbsp;CD4</font></b></p>
<p align="left"></p><p align="left" style="margin-left:4%"><font size="-1">None since inception.</font></p>
<p align="left"><b></p><p align="left" style="margin-left:4%"><font size="-1">(E)&nbsp;Weighted average assumptions used by management to determine grant date fair value for all stock warrant grants since inception were as follows:</font></b></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#ffffff">
<td align='left' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='top'>
<font size="-1">Exercise price</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">$1.10 </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='top'>
<font size="-1">Expected dividends</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0% </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='top'>
<font size="-1">Expected volatility</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">200% </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='top'>
<font size="-1">Risk free interest rate</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">4.00% </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='top'>
<font size="-1">Expected life of warrants</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">10 years </font></td>
</tr>
</table>
<p align="left"><b><font size="-1">(3) Summary of Stock Options and Warrants Outstanding</font></b></p>
<p align="left"><b></p><p align="left" style="margin-left:4%"><font size="-1">(A)&nbsp;Pipex</font></b></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#b2e5ff">
<td align='left' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='top'>
<b><font size="-1">1.</font></b>&nbsp;<font size="-1">Stock options - </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">235,000 </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='top'>
<b><font size="-1">2.</font></b>&nbsp;<font size="-1">Stock options - related party</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">35,000 </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='top'>
<b><font size="-1">3.</font></b>&nbsp;<font size="-1">Stock warrants -</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0 </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='top'>
<b><font size="-1">4.</font></b>&nbsp;<font size="-1">Stock warrants - related party</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0 </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='top'>
<b><font size="-1">5.</font></b>&nbsp;<font size="-1">Valuation pursuant to SFAS No. 123R -</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">$70,453 </font></td>
</tr>
</table>
<p align="center">F-19</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align=center><FONT SIZE=2><B>Pipex Therapeutics, Inc. and Subsidiaries<BR>(A Development Stage Company)<BR>Notes to Consolidated Financial Statements<BR>December 31, 2005</B></FONT></p><p align="left"><b></p><p align="left" style="margin-left:4%"><font size="-1">(B)&nbsp;Solovax</font></b></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#ffffff">
<td align='left' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='top'>
<b><font size="-1">1.</font></b>&nbsp;<font size="-1">Stock options - </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0 </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='top'>
<b><font size="-1">2.</font></b>&nbsp;<font size="-1">Stock options - related party</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0 </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='top'>
<b><font size="-1">3.</font></b>&nbsp;<font size="-1">Stock warrants -</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0 </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='top'>
<b><font size="-1">4.</font></b>&nbsp;<font size="-1">Stock warrants - related party</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0 </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='top'>
<b><font size="-1">5.</font></b>&nbsp;<font size="-1">Valuation pursuant to SFAS No. 123R -</font><font size="-1"> </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">$0 </font></td>
</tr>
</table>
<p align="left"><b></p><p align="left" style="margin-left:4%"><font size="-1">(C) EPI</font></b></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#b2e5ff">
<td align='left' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='top'>
<b><font size="-1">1.</font></b>&nbsp;<font size="-1">Stock options -</font><font size="-1"> </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">292,500 </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='top'>
<b><font size="-1">2.</font></b>&nbsp;<font size="-1">Stock options - related party</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">262,500 </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='top'>
<b><font size="-1">3.</font></b>&nbsp;<font size="-1">Stock warrants - </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">171,225 </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='top'>
<b><font size="-1">4.</font></b>&nbsp;<font size="-1">Stock warrants - related party</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">144,590 </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='top'>
<b><font size="-1">5.</font></b>&nbsp;<font size="-1">Valuation pursuant to SFAS No. 123R -</font><font size="-1"> </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">$21,551 </font></td>
</tr>
</table>
<p align="left"><b></p><p align="left" style="margin-left:4%"><font size="-1">(D)&nbsp; CD4</font></b></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#ffffff">
<td align='left' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='top'>
<b><font size="-1">1.</font></b>&nbsp;<font size="-1">Stock options - </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">30,000 </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='top'>
<b><font size="-1">2.</font></b>&nbsp;<font size="-1">Stock options - related party</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0 </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='top'>
<b><font size="-1">3.</font></b>&nbsp;<font size="-1">Stock warrants -</font><font size="-1"> </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0 </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='top'>
<b><font size="-1">4.</font></b>&nbsp;<font size="-1">Stock warrants - related party</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0 </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='top'>
<b><font size="-1">5.</font></b>&nbsp;<font size="-1">Valuation pursuant to SFAS No. 123R -</font><font size="-1"> </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">$27,526 </font></td>
</tr>
</table>
<p align="left"><b><font size="-1">(4) Options and Warrants Rollforward Schedule and Related Data</font></b></p>
<p align="left"><b><font size="-1">(A) Pipex</font></b></p>
<p align="left"><font size="-1">The following tables summarize all stock option grants to employees and non-employees of Pipex as of December 31, 2005 and 2004 and the related changes during these periods is presented below.</font></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Number of<br>Options<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Weighted Average<br>Exercise Price<br><hr noshade color="#000000"></font></b></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<b><font size="-1">Stock Options </font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<font size="-1">Balance at December 31, 2003</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">-&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<font size="-1">Granted</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<font size="-1">Exercised</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<font size="-1">Forfeited</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<font size="-1">Balance at December 31, 2004</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<font size="-1">Granted</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">235,000 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">0.10 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<font size="-1">Exercised</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1"> </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<font size="-1">Forfeited</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<font size="-1">Balance at December 31, 2005</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">235,000 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">0.10 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<font size="-1">Options exercisable at December 31, 2005</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">235,000 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">0.10 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<font size="-1">Weighted average fair value of options granted during 2005</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">0.10 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
</table>
<p align="center">F-20</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align=center><FONT SIZE=2><B>Pipex Therapeutics, Inc. and Subsidiaries<BR>(A Development Stage Company)<BR>Notes to Consolidated Financial Statements<BR>December 31, 2005</B></FONT></p><p align="left"><font size="-1">Of the total options granted, all 235,000 are fully vested, exercisable and non-forfeitable.</font></p>
<p align="left"><font size="-1">The following table summarizes information about stock options for Pipex at December 31, 2005:</font></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#ffffff">
<td align='center' valign='bottom' colspan=7>
<b><font size="-1">Options Outstanding<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Options Exercisable<br><hr noshade color="#000000"></font></b></td>
</tr>
<tr bgcolor="#ffffff">
<td align='center' valign='bottom'>
<b><font size="-1">Range of<br>Exercise<br>Price<br><hr noshade color="#000000"></font></b></td>
<td align='center' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='bottom'>
<b><font size="-1">Number<br>Outstanding at<br>December 31,<br>2005<br><hr noshade color="#000000"></font></b></td>
<td align='center' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='bottom'>
<b><font size="-1">Weighted<br>Average<br>Remaining<br>Contractual<br>Life<br><hr noshade color="#000000"></font></b></td>
<td align='center' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='bottom'>
<b><font size="-1">Weighted<br>Average<br>Exercise<br>Price<br><hr noshade color="#000000"></font></b></td>
<td align='center' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='bottom'>
<b><font size="-1">Number<br>Exercisable at<br>December 31,<br>2005<br><hr noshade color="#000000"></font></b></td>
<td align='center' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='bottom'>
<b><font size="-1">Weighted<br>Average<br>Exercise<br>Price<br><hr noshade color="#000000"></font></b></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='center' valign='top'>
<font size="-1">$0.10 </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">235,000 </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">9.36 Years </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">$0.10 </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">235,000 </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">$0.10 </font></td>
</tr>
</table>
<p align="left"><b><font size="-1">(B) EPI</font></b></p>
<p align="left"><font size="-1">The following tables summarize all stock option and warrant grants to employees and non-employees of EPI as of December 31, 2005 and 2004 and the related changes during these periods is presented below.</font></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Number of<br>Options/Warrants<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Weighted Average<br>Exercise Price<br><hr noshade color="#000000"></font></b></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<b><u><font size="-1">Stock Options/Warrants</font></u></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<font size="-1">Balance at December 31, 2003</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<font size="-1">Granted</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">292,500 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">0.04 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<font size="-1">Exercised</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<font size="-1">Forfeited</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<font size="-1">Balance at December 31, 2004</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">292,500 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">0.04 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<font size="-1">Granted</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">171,225 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">1.10 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<font size="-1">Exercised</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<font size="-1">Forfeited</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<font size="-1">Balance at December 31, 2005</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">463,725 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">0.43 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<font size="-1">Options/Warrants exercisable at December 31, 2005</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">257,479 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">0.75 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<font size="-1">Weighted average fair value of options granted during 2005</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">1.10 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
</table>
<p align="left"><font size="-1">Of the total options granted, 86,254 are fully vested, exercisable and non-forfeitable.</font></p>
<p align="left"><font size="-1">Of the total warrants granted, all 171,225 are fully vested, exercisable and non-forfeitable.</font></p>
<p align="left"><font size="-1">The following table summarizes information about stock options/warrants for EPI at December 31, 2005:</font></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#b2e5ff">
<td align='center' valign='bottom' colspan=9>
<b><font size="-1">Options/Warrants Outstanding<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=5>
<b><font size="-1">Options/Warrants Exercisable<br><hr noshade color="#000000"></font></b></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='center' valign='bottom'>
<b><font size="-1">Range of<br>Exercise<br>Price<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Number<br>Outstanding at<br>December 31,<br>2005<br><hr noshade color="#000000"></font></b></td>
<td align='center' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='bottom'>
<b><font size="-1">Weighted<br>Average<br>Remaining<br>Contractual<br>Life<br><hr noshade color="#000000"></font></b></td>
<td align='center' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='bottom'>
<b><font size="-1">Weighted<br>Average<br>Exercise<br>Price<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Number<br>Exercisable at<br>December 31,<br>2005<br><hr noshade color="#000000"></font></b></td>
<td align='center' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='bottom'>
<b><font size="-1">Weighted<br>Average<br>Exercise<br>Price<br><hr noshade color="#000000"></font></b></td>
</tr>
<tr bgcolor="#ffffff">
<td align='center' valign='top'>
<font size="-1">$0.03 </font></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">262,500 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">8.71 Years </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">$0.03 </font></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">56,254 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">$0.03 </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='center' valign='top'>
<font size="-1">$0.10 </font></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">30,000 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">8.76 Years </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">$0.10 </font></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">30,000 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">$0.10 </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='center' valign='top'>
<font size="-1">$1.10 </font></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">171,225 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">9.42 Years </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">$1.10 </font></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">171,225 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">$1.10 </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">463,725 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">9.19 Years </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">$0.43 </font></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">257,479 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">$0.75 </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
</table>
<p align="center">F-21</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align=center><FONT SIZE=2><B>Pipex Therapeutics, Inc. and Subsidiaries<BR>(A Development Stage Company)<BR>Notes to Consolidated Financial Statements<BR>December 31, 2005</B></FONT></p><p align="left"><b><font size="-1">(C) CD4</font></b></p>
<p align="left"><font size="-1">The following tables summarize all stock option grants to employees and non-employees of CD4 as of December 31, 2005 and 2004 and the related changes during these periods is presented below.</font></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Number of<br>Options<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Weighted Average<br>Exercise Price<br><hr noshade color="#000000"></font></b></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<b><u><font size="-1">Stock Options</font></u></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<font size="-1">Balance at December 31, 2003</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">80,736 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">0.12 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<font size="-1">Granted</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">10,000 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">0.20 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<font size="-1">Exercised</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<font size="-1">Forfeited</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(60,736</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">0.10 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<font size="-1">Balance at December 31, 2004</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">30,000 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">0.20 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<font size="-1">Granted</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<font size="-1">Exercised</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<font size="-1">Forfeited</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<font size="-1">Balance at December 31, 2005</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">30,000 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">0.20 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<font size="-1">Options exercisable at December 31, 2005</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">30,000 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">0.20 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<font size="-1">Weighted average fair value of options granted during 2005</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
</table>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#b2e5ff">
<td align='center' valign='bottom' colspan=7>
<b><font size="-1">Options Outstanding<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Options Exercisable<br><hr noshade color="#000000"></font></b></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='center' valign='bottom'>
<b><font size="-1">Range of<br>Exercise<br>Price<br><hr noshade color="#000000"></font></b></td>
<td align='center' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='bottom'>
<b><font size="-1">Number<br>Outstanding at<br>December 31,<br>2005<br><hr noshade color="#000000"></font></b></td>
<td align='center' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='bottom'>
<b><font size="-1">Weighted<br>Average<br>Remaining<br>Contractual<br>Life<br><hr noshade color="#000000"></font></b></td>
<td align='center' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='bottom'>
<b><font size="-1">Weighted<br>Average<br>Exercise<br>Price<br><hr noshade color="#000000"></font></b></td>
<td align='center' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='bottom'>
<b><font size="-1">Number<br>Exercisable at<br>December 31,<br>2005<br><hr noshade color="#000000"></font></b></td>
<td align='center' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='bottom'>
<b><font size="-1">Weighted<br>Average<br>Exercise<br>Price<br><hr noshade color="#000000"></font></b></td>
</tr>
<tr bgcolor="#ffffff">
<td align='center' valign='top'>
<font size="-1">$0.20 </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">30,000 </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">2.48 Years </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">$0.20 </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">30,000 </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">$0.20 </font></td>
</tr>
</table>
<p align="left"><b><font size="-1">(G) Stock Split</font></b></p>
<p align="left"><font size="-1">On April 12, 2005, Pipex effected a 5 for 1 split of both Series A, convertible preferred stock and common stock. All outstanding common stock options of Pipex have been increased on a 5 for 1 ratio as well as the exercise prices for these stock options granted have been reduced on a 5 for 1 ratio.</font></p>
<p align="left"><b><font size="-1">(H) Non-Controlling Interest</font></b></p>
<p align="left"><font size="-1">Since the Company&rsquo;s majority owned subsidiaries have never been profitable and present negative equity, there has been no establishment of a positive non-controlling interest. Since this value cannot be presented as a deficit balance, the accompanying consolidated balance sheet reflects a $0 balance.</font></p>
<p align="left"><b><font size="-1">Note 5 Related Parties</font></b></p>
<p align="left"><font size="-1">The Company currently leases office space in both Ann Arbor, Michigan and Miami, Florida for corporate operations. The lease agreements are month to month and the fees are paid by the Company&rsquo;s affiliate, Accredited Ventures, Inc. which is controlled by the Company&rsquo;s CEO. The advances for these services were included as a component of loans payable - related party and rent expense was recorded as a component of general and administrative.</font></p>
<p align="center">F-22</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align=center><FONT SIZE=2><B>Pipex Therapeutics, Inc. and Subsidiaries<BR>(A Development Stage Company)<BR>Notes to Consolidated Financial Statements<BR>December 31, 2005</B></FONT></p><p align="left"><font size="-1">Rent expense for the years ended December 31, 2005 and 2004 and for the period from January 8, 2001 (inception) to December 31, 2005 was $97,663, $109,500 and $224,485, respectively.</font></p>
<p align="left"><b><font size="-1">Note 6 Commitments and Contingencies</font></b></p>
<p align="left"><b><font size="-1">(A) Research and Development</font></b></p>
<p align="left"><font size="-1">Since inception, the Company has entered into various option and license agreements for the use of patents and their corresponding applications. These agreements have been entered into with various educational institutions and hospitals. These agreements contain payment schedules or stated amounts due for (a) option and license fees, (b) expense reimbursements, and (c) achievement of success milestones.</font></p>
<p align="left"><font size="-1">All expenses related to these agreements have been recorded as research and development. At December 31, 2005, the Company had $208,240 outstanding as accounts payable in connection with these agreements.</font></p>
<p align="left"><font size="-1">The following schedule shows committed amounts due for license fees, patent cost reimbursements, sponsored research agreements, option fees and consulting fees (see Note 6(B)) over the next 5 years and thereafter;</font></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">2006:</font></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">733,500 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">2007:</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">748,500 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">2008:</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">455,163 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">2009:</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">15,000 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">2010:</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">15,000 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Thereafter:</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">80,000 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Total:</font></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">$</font></b></td>
<td align='right' valign='bottom'>
<b><font size="-1">2,047,163 </font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<b><hr noshade size=3 color="#000000"></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
</table>
<p align="left"><b><font size="-1">(B) Consulting Agreement &mdash; Pipex</font></b></p>
<p align="left"><font size="-1">In August 2005, Pipex entered into an agreement with an individual to provide consulting services for the Company&rsquo;s research and development. The consultant was paid $25,000 upon the execution of the agreement. The consultant will receive annual consulting fees of $120,000 for each of the next three years. The schedule in Note 6(A) includes the value of this commitment. The consultant also received 200,000 stock options. (See Note 4(F)(1)(A))</font></p>
<p align="left"><b><font size="-1">Note 7 Income Taxes</font></b></p>
<p align="left"><font size="-1">There was no income tax expense for the years ended December 31, 2005 and 2004 due to the Company&rsquo;s net losses.</font></p>
<p align="left"><font size="-1">The Company&rsquo;s tax expense differs from the &ldquo;expected&rdquo; tax expense for the years ended December 31, 2005 and 2004, (computed by applying the Federal Corporate tax rate of 34% to loss before taxes and 5.5% for State Corporate taxes. The blended rate used was 37.63%), as follows:</font></p>
<p align="center">F-23</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align=center><FONT SIZE=2><B>Pipex Therapeutics, Inc. and Subsidiaries<BR>(A Development Stage Company)<BR>Notes to Consolidated Financial Statements<BR>December 31, 2005</B></FONT></p><table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">2005<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">2004<br><hr noshade color="#000000"></font></b></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Computed &ldquo;expected&rdquo; tax expense (benefit) &mdash; Federal</font></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">(435,632</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">(193,581</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Computed &ldquo;expected&rdquo; tax expense (benefit) &mdash; State</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(74,571</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(33,137</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Change in valuation allowance</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">510,203 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">226,718 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
</table>
<p align="left"><font size="-1">The effects of temporary differences that gave rise to significant portions of deferred tax assets at December 31, 2005 are as follows:</font></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Deferred tax assets: </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Non-deductible stock based compensation</font></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">(39,467</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Net operating loss carryforward</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(1,361,881</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Total gross deferred tax assets</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(1,401,348</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Less valuation allowance</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,401,348 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Net deferred tax assets</font></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
</table>
<p align="left"><font size="-1">At December 31, 2005, the Company has a net operating loss carryforward of $3,619,135 available to offset future taxable income expiring 2025. Utilization of these net operating losses may be limited due to potential ownership changes under Section 382 of the Internal Revenue Code.</font></p>
<p align="left"><font size="-1">The valuation allowance at December 31, 2004 was $891,145. The net change in valuation allowance during the year ended December 31, 2005 was an increase of $510,203. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on consideration of these items, Management has determined that enough uncertainty exists relative to the realization of the deferred income tax asset
balances to warrant the application of a full valuation allowance as of December 31, 2005.</font></p>
<p align="left"><b><font size="-1">Note 8 Subsequent Events</font></b></p>
<p align="left"><b><font size="-1">(A) Loan Payable - Related Party</font></b></p>
<p align="left"><font size="-1">Company incurred additional indebtedness from the related party totaling $680,349. These loans are non-interest bearing and due on demand. These loans are secured by all assets of the Company.</font></p>
<p align="center">F-24</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align=center><FONT SIZE=2><B>Pipex Therapeutics, Inc. and Subsidiaries<BR>(A Development Stage Company)<BR>Notes to Consolidated Financial Statements<BR>December 31, 2005</B></FONT></p><p align="left"><b><font size="-1">(B) Employment Agreements</font></b></p>
<p align="left"><b></p><p align="left" style="margin-left:2%"><font size="-1">Board Director and Vice President of Business Development</font></b></p>
<p align="left"></p><p align="left" style="margin-left:2%"><font size="-1">In January 2006, the Company entered into an employment agreement with an executive to serve as Vice President of Business Development concurrently with being appointed to the board of directors. Pursuant to the terms of this agreement, the Company is obligated to pay $75,000 per annum upon the completion of an equity financing, as well as issue options to purchase 211,000 shares of common stock, at an exercise price of $0.10 per share. Of the options granted, 105,500 (50% of share based payment) vested upon execution of this agreement with the remainder cliff vesting annually over three years provided that this individual remains employed as a director of the Company.</font></p>
<p align="left"></p><p align="left" style="margin-left:2%"><font size="-1">The fair value of these options pursuant to the Black-Scholes options pricing model was $209,650</font></p>
<p align="left"><b></p><p align="left" style="margin-left:2%"><font size="-1">Weighted average assumptions used by management to determine grant date fair value for this stock option grant was as follows:</font></b></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Expected dividends</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0% </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Expected volatility</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">200% </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Risk free interest rate</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">4.44% </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Expected life of options</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">5 years </font></td>
</tr>
</table>
<p align="left"></p><p align="left" style="margin-left:2%"><font size="-1">On the date of grant, the Company recognized compensation expense for 50% of the grant date fair value of $104,825. Over the remaining thirty-six month vesting period, the Company will record straight-line monthly compensation expense of $2,912 with an offset to additional paid in capital. The monthly expensing of the remaining options would cease in the event that this individual&rsquo;s employment with the Company terminated prior to the subsequent thirty-six months from the grant date.</font></p>
<p align="left"><b></p><p align="left" style="margin-left:2%"><font size="-1">(2) President of Pipex</font></b></p>
<p align="left"></p><p align="left" style="margin-left:2%"><font size="-1">Effective May 30, 2006, the Company executed an employment agreement with Pipex&rsquo;s new President. Pursuant to this agreement, Pipex will pay this individual an annual base salary of $295,000. Additionally, on each anniversary date of this agreement, the President will be entitled to a guaranteed bonus of one-third of his base salary. The Company has also granted the President a ten year option to purchase 612,643 shares of common stock an at exercise price of $2 per share. This option will cliff vest quarterly over a three-year period. In event of a termination without just cause, Pipex will provide the President with six months severance, payable over a six-month period. The Company has also required the execution of a non-compete agreement in the event the President&rsquo;s employment ceases to continue.</font></p>
<p align="left"></p><p align="left" style="margin-left:2%"><font size="-1">The fair value of these options pursuant to the Black-Scholes options pricing model was $545,804.</font></p>
<p align="center">F-25</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align=center><FONT SIZE=2><B>Pipex Therapeutics, Inc. and Subsidiaries<BR>(A Development Stage Company)<BR>Notes to Consolidated Financial Statements<BR>December 31, 2005</B></FONT></p><p align="left"><b></p><p align="left" style="margin-left:2%"><font size="-1">Weighted average assumptions used by management to determine grant date fair value for this stock option grant was as follows:</font></b></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Expected dividends</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0% </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Expected volatility</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">200% </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Risk free interest rate</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">4% </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Expected life of warrants</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">3 years </font></td>
</tr>
</table>
<p align="left"></p><p align="left" style="margin-left:2%"><font size="-1">Over the remaining thirty-six month vesting period, the Company will record straight-line monthly compensation expense of $15,161 with an offset to additional paid in capital. The monthly expensing of the remaining options would cease in the event that this individual&rsquo;s employment with the Company terminated prior to the subsequent thirty-six months from the grant date.</font></p>
<p align="left"><b></p><p align="left" style="margin-left:2%"><font size="-1">(3) Other Employees</font></b></p>
<p align="left"><b></p><p align="left" style="margin-left:4%"><font size="-1">(A) Vice President</font></b></p>
<p align="left"></p><p align="left" style="margin-left:4%"><font size="-1">On February 6, 2006, the Company executed an employment agreement with Pipex&rsquo;s new Vice President of Advanced Technology. Pursuant to this agreement, Pipex will pay this individual an annual base salary of $40,000. On April 10, 2006, the Company amended the original agreement to $100,000 annually. The terms of the agreement stipulate that the employment is on a month-to-month basis. Additionally, the Company granted 50,000 options to this employee. These options had an exercise price of $1. The fair value of these options pursuant to the Black-Scholes options pricing model was $46,090. The entire expense was recorded on the grant date since there was no associated term for which this employees service was attributable to nor was there a requisite service period defined in the agreement.</font></p>
<p align="left"><b></p><p align="left" style="margin-left:4%"><font size="-1">Weighted average assumptions used by management to determine grant date fair value for this stock option grant was as follows:</font></b></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Expected dividends</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0% </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Expected volatility</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">200% </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Risk free interest rate</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">4.57% </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Expected life of options</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">3 years </font></td>
</tr>
</table>
<p align="left"><b></p><p align="left" style="margin-left:4%"><font size="-1">(B) Office Employee</font></b></p>
<p align="left"></p><p align="left" style="margin-left:4%"><font size="-1">On January 26, 2006, the Company granted 15,000 options to an employee. These options had an exercise price of $1. In May 2006, the employee resigned. The Company has accounted for these options as cancelled since the individual is no longer an employee of the Company. All of these options remained unexercised at the date of cancellation. The fair value of these options pursuant to the Black-Scholes options pricing model was $13,827. The entire expense was recorded on the grant date since there was no associated term for which these employee&rsquo;s services was attributable to nor was there a requisite service period defined in the agreement.</font></p>
<p align="center">F-26</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align=center><FONT SIZE=2><B>Pipex Therapeutics, Inc. and Subsidiaries<BR>(A Development Stage Company)<BR>Notes to Consolidated Financial Statements<BR>December 31, 2005</B></FONT></p><p align="left"><b></p><p align="left" style="margin-left:4%"><font size="-1">Weighted average assumptions used by management to determine grant date fair value for this stock option grant was as follows:</font></b></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Expected dividends</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0% </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Expected volatility</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">200% </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Risk free interest rate</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">4.44% </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Expected life of warrants</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">3 years </font></td>
</tr>
</table>
<p align="left"><b><font size="-1">(C) Services Agreement with Director</font></b></p>
<p align="left"><font size="-1">During January 2006, the Company entered into an agreement with an affiliate of one of the Company&rsquo;s directors to write an executive information report for a $35,000 fee. The Company paid $17,500 as a retainer for these services.</font></p>
<p align="left"><b><font size="-1">(D) Advances - Potential Merger Candidate</font></b></p>
<p align="left"><font size="-1">During 2005, the Company entered into a non-binding letter of intent to merge with a Canadian public company. The Company agreed to advance an aggregate $50,000 in four equal installments to the potential merger candidate. During 2005, $37,500 was advanced and expensed as merger costs. The fourth tranche of $12,500 was also expensed as merger costs during January 2006. As of July 20, 2006, the discussions ceased as no definitive agreement could be reached.</font></p>
<p align="left"><b><font size="-1">(E) Public Shell Merger and Private Placement</font></b></p>
<p align="left"><b><font size="-1">(1) Sheffield Pharmaceuticals Inc. Reverse Merger</font></b></p>
<p align="left"><font size="-1">On October 31, 2006 (the &ldquo;Effective Date&rdquo;), Sheffield Pharmaceuticals, Inc. (&ldquo;Sheffield&rdquo;) (&ldquo;Registrant&rdquo;), entered into a Merger Agreement (the &ldquo;Merger Agreement&rdquo;) with Pipex Therapeutics, Inc., a privately owned Delaware company (&ldquo;Pipex&rdquo;) (&ldquo;accounting acquiror&rdquo;), and Pipex Therapeutics Acquisition Corp, a Delaware corporation and wholly owned subsidiary of the Registrant (&ldquo;Acquisition Sub&rdquo;) (&ldquo;legal acquiror&rdquo;), whereby Pipex was the surviving corporation. Acquisition Sub was formed on October 27, 2006 for pursuing the merger transaction contemplated by the Merger Agreement.</font></p>
<p align="left"><font size="-1">For financial accounting purposes, the transaction is treated as a reverse triangular merger due to Pipex being merged into the acquisition sub, as well as a recapitalization of Pipex. Since Pipex is acquiring a controlling voting interest, they are deemed the accounting acquiror, while Sheffield is deemed the legal acquiror. The historical financial statements of the Company will become those of Pipex since inception, consolidated with those of Sheffield from October 31, 2006 and subsequent.</font></p>
<p align="left"><font size="-1">Since the transaction is considered a reverse triangular merger and recapitalization, the guidance in SFAS No. 141 does not apply for purposes of presenting pro forma financial information on the registrants Form SB-2.</font></p>
<p align="left"><font size="-1">Pursuant to the Merger Agreement, Sheffield issued 34,000,000 shares of common stock to the shareholders of Pipex and all of Pipex&rsquo;s outstanding options and warrants were assumed by Sheffield. On October 31, 2006, Pipex executed a private stock purchase agreement to purchase an additional 2,426,300 shares of common stock held by Sheffield&rsquo;s sole officer and director. Aggregate </font></p>
<p align="center">F-27</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align=center><FONT SIZE=2><B>Pipex Therapeutics, Inc. and Subsidiaries<BR>(A Development Stage Company)<BR>Notes to Consolidated Financial Statements<BR>December 31, 2005</B></FONT></p><p align="left"><font size="-1">consideration paid for Sheffield was $665,000. The 2,426,300 shares were cancelled and retired after the completion of the transaction. As a result of these transactions, Pipex acquired approximately 98% ownership of the issued and outstanding common shares of Sheffield. </font></p>
<p align="left"><font size="-1">The Registrant is required to file a registration statement within 45 days of closing of the merger and the registration statement must be declared effective 150 days from closing. If these conditions are not met, the Company is required to pay a monthly-liquidated damages penalty equal to 2% of the gross proceeds raised. The registration statement must remain in effect for a period of two years from the date of being declared effective. Of the non-controlling minority interest retained by Sheffield, the agreement stipulates that if these shares are not covered in an effective registration statement by August 31, 2008, Pipex will be obligated to pay an additional $150,000 as liquidated damages. The Company is currently evaluating the effect, if any, of EITF No. 05-4, </font><i><font size="-1">&ldquo;The Effect of a Liquidated Damages Clause on a Freestanding
Financial Instrument&rdquo;</font></i><font size="-1">, as it pertains to the valuation and classification of a derivative liability.</font></p>
<p align="left"><font size="-1">In addition, at October 31, 2006, all loans payable to the Company&rsquo;s CEO were converted into units in the private placement under the same terms as those given to the other investors. As such, approximately $3,300,000 was converted into approximately 1,535,842 shares of common stock and 767,921 warrants.</font></p>
<p align="left"><b><font size="-1">(2) Private Placement</font></b></p>
<p align="left"><font size="-1">During October (Pipex) and November 2006 (Sheffield), the Company completed a private placement offering of units to institutional and &ldquo;accredited&rdquo; investors. Each unit contained 45,702 shares of common stock along with a warrant to purchase 22,851 shares of the Company&rsquo;s common stock. The warrants have an exercise price of $2.41 and each warrant has a life of 5 years. As of November 2006, the Company sold approximately 139 units for aggregate cash proceeds approximating $13,900,000. All subscriptions have been received in full.</font></p>
<p align="left"><font size="-1">In order to assist the Company in consummating this private placement, the Company had engaged Accredited Equities Inc. (the &ldquo;Placement Agent&rdquo;), as placement agent, a company controlled by Company&rsquo;s Chairman &amp; CEO. The Placement Agent was paid a net cash fee of $639,844, the selected dealer received a cash fee of $327,950 and the Placement Agent received a non-accountable expense allowance of $75,000. The Placement Agent and selected dealer also received an allocation of warrants to purchase common stock equal to 954,606 shares, with an exercise price of $2.41 and each warrant has a life of 10 years. These warrants will be distributed to designees of the Placement Agent and the selected dealer. Additionally, two of the Company&rsquo;s directors and one officer are affiliates of the placement agent.</font></p>
<p align="left"><font size="-1">Since these warrants were granted as compensation in connection with an equity raise, the Company has treated these warrants as a direct offering cost. The result of the transaction has a net effect to equity of $0, as the amount recorded is both debited and credited to additional paid in capital. The warrants are fully vested and non-forfeitable.</font></p>
<p align="center">F-28</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align="center"><b><font size="-1">Pipex Therapeutics, Inc.<br>and Subsidiaries<br> (A Development Stage Company)</font></b></p>
<p align="center"><b><br><font size="-1">Consolidated Financial Statements</font></b></p>
<p align="center"><b><br><font size="-1">Nine Months Ended September 30, 2006, 2005, and<br>for the period from January 8, 2001 (Inception)<br>to September 30, 2006<br>(Unaudited)</font></b></p>
<p align="center">F-29</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align="center"><b><font size="-1">Contents</font></b></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em"></p></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<b><font size="-1">Page(s)<br><hr noshade color="#000000"></font></b></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Consolidated Balance Sheet (Unaudited)</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1 </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Consolidated Statements of Operations (Unaudited)</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">2 </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Consolidated Statement of Changes in Stockholders&rsquo; Deficit (Unaudited)</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">3 </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Consolidated Statements of Cash Flows (Unaudited)</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">4 </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Notes to Consolidated Financial Statements (Unaudited)</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">5-17 </font></td>
</tr>
</table>
<p align="center">F-30</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align="center"><b><font size="-1">Pipex Therapeutics, Inc. and Subsidiaries<br>(A Development Stage Company)<br>Consolidated Balance Sheet<br>September 30, 2006<br>(Unaudited)</font></b></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#b2e5ff">
<td align='center' valign='bottom' colspan=5>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><font size="-1">ASSETS</font></b></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Current Assets</font></b></p></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:2em;text-indent:-1em"><font size="-1">Cash</font></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">465,711 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Total Current Assets</font></b></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">465,711 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Equipment, net of accumulated depreciation of $24,670</font></b></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">290,353 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Total Assets</font></b></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">$</font></b></td>
<td align='right' valign='bottom'>
<b><font size="-1">756,064 </font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='center' valign='bottom' colspan=5>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><font size="-1">LIABILITIES AND STOCKHOLDERS&rsquo; DEFICIT</font></b></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Current Liabilities</font></b></p></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:2em;text-indent:-1em"><font size="-1">Accounts payable</font></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">184,792 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:2em;text-indent:-1em"><font size="-1">Loans payable &mdash; related party (See Note 9(A))</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">3,009,733 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Total Current Liabilities</font></b></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<b><font size="-1">3,194,525 </font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Commitments and Contingencies</font></b></p></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Stockholders&rsquo; Deficit</font></b></p></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:2em;text-indent:-1em"><font size="-1">Series A, convertible preferred stock, $0.001 par value; 5,000,000<br>shares authorized, issued and outstanding</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">5,000 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:2em;text-indent:-1em"><font size="-1">Series B, convertible preferred stock, $0.001 par value; 10,000,000<br>shares authorized, none issued and outstanding</font></p></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:2em;text-indent:-1em"><font size="-1">Common stock, $0.001 par value; 10,000,000 shares authorized,<br>1,450,000 shares issued and outstanding</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,450 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:2em;text-indent:-1em"><font size="-1">Additional paid-in capital</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">3,648,895 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:2em;text-indent:-1em"><font size="-1">Deficit accumulated during the development stage</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(6,093,806</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Total Stockholders&rsquo; Deficit</font></b></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<b><font size="-1">(2,438,461</font></b></td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">)</font><font size="-1"> </font></b></td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Total Liabilities and Stockholders&rsquo; Deficit</font></b></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">$</font></b></td>
<td align='right' valign='bottom'>
<b><font size="-1">756,064 </font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
</table>
<p align="left"></p>
<p align="center"><font size="-1">See accompanying notes to unaudited financial statements</font></p>
<p align="center">F-31</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align="center"><b><font size="-1">Pipex Therapeutics, Inc. and Subsidiaries<br>(A Development Stage Company)<br>Consolidated Statements of Operations<br>(Unaudited)</font></b></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=7>
<b><font size="-1">For the nine months ended<br>September 30,<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">2006<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">2005<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">For the<br>Period from<br>January 8, 2001<br>(Inception) to<br>September 30, 2006<br><hr noshade color="#000000"></font></b></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Operating Expenses</font></b></p></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Research and development</font></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">1,277,722</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">589,738</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">3,445,236 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">General and administrative</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">409,875</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">88,024</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,689,980 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Compensation</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">289,192</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">201,566</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">552,958 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Merger costs</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">12,500</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">50,000 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Total Operating Expenses</font></b></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,989,289</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">879,328</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">5,738,174 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Loss from Operations</font></b></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(1,989,289</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(879,328</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(5,738,174</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Other Income (Expense)</font></b></p></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Interest income</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">867</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">26,601 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Other expense</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(1,600</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(1,733</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Total Other Income (Expense), net</font></b></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(733</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">24,868 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Net Loss</font></b></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">$</font></b></td>
<td align='right' valign='bottom'>
<b><font size="-1">(1,989,288</font></b></td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">)</font></b></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">$</font></b></td>
<td align='right' valign='bottom'>
<b><font size="-1">(880,061</font></b></td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">)</font></b></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">$</font></b></td>
<td align='right' valign='bottom'>
<b><font size="-1">(5,713,306</font></b></td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">)</font><font size="-1"> </font></b></td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Less: Preferred stock dividend &mdash; subsidiary</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(190,250</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(190,250</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">(380,500</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Net Loss Applicable to Common Shareholders</font></b></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">$</font></b></td>
<td align='right' valign='bottom'>
<b><font size="-1">(2,179,538</font></b></td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">)</font></b></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">$</font></b></td>
<td align='right' valign='bottom'>
<b><font size="-1">(1,070,311</font></b></td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">)</font><font size="-1"> </font></b></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">$</font></b></td>
<td align='right' valign='bottom'>
<b><font size="-1">(6,093,806</font></b></td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">)</font><font size="-1"> </font></b></td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Net Loss Per Share &mdash; Basic and Diluted</font></b></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">$</font></b></td>
<td align='right' valign='bottom'>
<b><font size="-1">(1.50</font></b></td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">)</font></b></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">$</font></b></td>
<td align='right' valign='bottom'>
<b><font size="-1">(0.74</font></b></td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">)</font></b></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">$</font></b></td>
<td align='right' valign='bottom'>
<b><font size="-1">(4.20</font></b></td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">)</font><font size="-1"> </font></b></td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Weighted average number of shares outstanding<br>during the period &mdash; basic and diluted</font></b></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<b><font size="-1">1,450,000</font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<b><font size="-1">1,450,000</font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<b><font size="-1">1,450,000 </font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
</table>
<p align="left"></p>
<p align="center"><font size="-1">See accompanying notes to unaudited financial statements</font></p>
<p align="center">F-32</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align="center"><b><font size="-1">Pipex Therapeutics, Inc. and Subsidiaries<br>(A Development Stage Company)<br>Consolidated Statement of Changes in Stockholders&rsquo; Deficit<br>For the nine months ended September 30, 2006<br>and for the period from January 8, 2001 (inception) to September 30, 2006<br>(Unaudited)</font></b></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=7>
<b><font size="-1">Series A, convertible preferred stock<br>$0.001 Par Value<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=7>
<b><font size="-1">Common Stock<br>$0.001 Par Value<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Number of<br>Shares<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Amount<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Number of<br>Shares<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Amount<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Additional<br>Paid-In<br>Capital<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Deficit<br>accumulated<br>during<br>development<br>stage<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Total<br>Stockholders&rsquo;<br>Deficit<br><hr noshade color="#000000"></font></b></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Issuance of common stock to founders as compensation ($0.0002/share)</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,450,000</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">1,450</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">(1,100</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">350 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Issuance of preferred stock to founder for cash ($0.06/share)</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">5,000,000</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">5,000</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">295,000</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">300,000 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Issuance of preferred and common stock to founder for cash &mdash; subsidiaries</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">850,540</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">850,540 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Net loss for the period ended December 31, 2001</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(277,868</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(277,868</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Balance, December 31, 2001</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">5,000,000</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">5,000</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,450,000</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,450</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,144,440</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(277,868</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">873,022 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Issuance of stock for compensation &mdash; subsidiary</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">67</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">67 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Issuance of stock for consulting services &mdash; subsidiary</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">52</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">52 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Grant of stock options for consulting services &mdash; subsidiary</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">5,890</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">5,890 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Net loss for the year ended December 31, 2002</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(768,508</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(768,508</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Balance, December 31, 2002</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">5,000,000</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">5,000</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,450,000</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,450</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,150,449</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(1,046,376</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">110,523 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Grant of stock options for compensation &mdash; subsidiary</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">17,984</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">17,984 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Net loss for the year ended December 31, 2003</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(719,307</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(719,307</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Balance, December 31, 2003</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">5,000,000</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">5,000</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,450,000</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,450</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,168,433</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(1,765,683</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(590,800</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Issuance of common stock for cash &mdash; subsidiary</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">50</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">50 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Grant of stock options for consulting services &mdash; subsidiary</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">10,437</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">10,437 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Net loss for the year ended December 31, 2004</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(602,493</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(602,493</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Balance, December 31, 2004</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">5,000,000</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">5,000</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,450,000</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,450</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,178,920</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(2,368,176</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(1,182,806</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Grant of stock options for consulting services</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">59,960</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">59,960 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Grant of stock options for compensation</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">10,493</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">10,493 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Recognition of deferred compensation &mdash; subsidiary</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">14,057</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">14,057 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Issuance of Series B, convertible preferred stock for cash &mdash; subsidiary</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,902,500</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,902,500 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Direct offering costs in connection with sale of<br>Series B, convertible preferred stock &mdash; subsidiary</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(152,200</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(152,200</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">10% in-kind Series B, convertible <br>preferred stock dividend &mdash; subsidiary</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">190,250</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(190,250</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Net loss for the year ended December 31, 2005</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(1,355,842</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(1,355,842</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Balance, December 31, 2005</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">5,000,000</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">5,000</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,450,000</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,450 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">3,203,980</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(3,914,268</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(703,838</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">10% in-kind Series B, convertible<br>preferred stock dividend &mdash; subsidiary</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">190,250</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(190,250</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Grant of stock options for compensation</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">254,665</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">254,665 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Net loss for the period ended September 30, 2006</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;(1,989,288</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(1,989,288</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Balance, September 30, 2006 &mdash; unaudited for the<br>nine months ended September 30, 2006</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<b><font size="-1">5,000,000</font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">$</font></b></td>
<td align='right' valign='bottom'>
<b><font size="-1">5,000</font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<b><font size="-1">1,450,000</font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">$</font></b></td>
<td align='right' valign='bottom'>
<b><font size="-1">1,450</font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">$</font></b></td>
<td align='right' valign='bottom'>
<b><font size="-1">3,648,895</font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">$</font></b></td>
<td align='right' valign='bottom'>
<b><font size="-1">(6,093,806</font></b></td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">)</font><font size="-1"> </font></b></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">$</font></b></td>
<td align='right' valign='bottom'>
<b><font size="-1">(2,438,461</font></b></td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">)</font></b></td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
</table>
<p align="left"></p>
<p align="center"><font size="-1">See accompanying notes to unaudited financial statements.</font></p>
<p align="center">F-33</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align="center"><b><font size="-1">Pipex Therapeutics, Inc. and Subsidiaries<br>(A Development Stage Company)<br>Consolidated Statements of Cash Flows<br>(Unaudited)</font></b></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=7>
<b><font size="-1">For the nine months<br>ended September 30,<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">2006<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">2005<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">For the<br>Period from<br>January 8, 2001<br>(Inception) to<br>September 30, 2006<br><hr noshade color="#000000"></font></b></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Cash Flows From Operating Activities:</font></b></p></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Net Loss</font></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">(1,989,288</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">(880,061</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">(5,713,306</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:2em;text-indent:-1em"><font size="-1">Adjustments to reconcile net loss to net cash used in operations </font></p></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:3em;text-indent:-1em"><font size="-1">Stock based consulting</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">76,354 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:3em;text-indent:-1em"><font size="-1">Stock based compensation</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">254,665</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">5,424</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">297,601 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:3em;text-indent:-1em"><font size="-1">Depreciation</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">22,410</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">24,670 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:3em;text-indent:-1em"><font size="-1">Changes in operating assets and liabilities: </font></p></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:3em;text-indent:-1em"><font size="-1">Increase (Decrease) in: </font></p></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:3em;text-indent:-1em"><font size="-1">Accounts payable</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(29,582</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">184,792 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Net Cash Used In Operating Activities</font></b></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<b><font size="-1">(1,741,795</font></b></td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">)</font></b></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<b><font size="-1">(874,637</font></b></td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">)</font></b></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<b><font size="-1">(5,129,889</font></b></td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">)</font><font size="-1"> </font></b></td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Cash Flows From Investing Activities:</font></b></p></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Purchase of property and equipment</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(30,633</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(3,192</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(30,633</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Net Cash Used In Investing Activities</font></b></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<b><font size="-1">(30,633</font></b></td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">)</font></b></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<b><font size="-1">(3,192</font></b></td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">)</font></b></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<b><font size="-1">(30,633</font></b></td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">)</font><font size="-1"> </font></b></td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Cash Flows From Financing Activities:</font></b></p></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Proceeds from issuance of Series B, convertible preferred stock</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,902,500</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,902,500 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Direct offering costs in connection with issuance of Series B, convertible preferred and common stock</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(152,200</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(152,200</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Proceeds from issuance of preferred and common stock</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,150,590 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Proceeds from loans payable &mdash; related party</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,100,349</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">2,945,343 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Repayments of loans payable &mdash; related party</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(20,000</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">88,412</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(220,000</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Net Cash Provided by Financing Activities</font></b></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<b><font size="-1">1,080,349</font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<b><font size="-1">1,838,712</font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<b><font size="-1">5,626,233 </font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Net Increase (Decrease) in Cash</font></b></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(692,079</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">960,883</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">465,711 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Cash at Beginning of year/period</font></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">1,157,790</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">5,046</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Cash at End of year/period</font></b></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">$</font></b></td>
<td align='right' valign='bottom'>
<b><font size="-1">465,711</font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">$</font></b></td>
<td align='right' valign='bottom'>
<b><font size="-1">965,929</font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<b><font size="-1">$</font></b></td>
<td align='right' valign='bottom'>
<b><font size="-1">465,711 </font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Supplemental disclosure of cash flow information:</font></b></p></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Cash paid for interest</font></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Cash paid for taxes</font></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Supplemental disclosure of non-cash investing and financing activities:</font></b></p></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">On December 31, 2004, EPI issued 825,000 shares of common stock to acquire a 91.61% ownership in CD4. (See Note 1(A))</font></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">On July 31, 2005, Solovax transferred 96.9% of its equity to Pipex (See Note 1(A))</font></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">On December 31, 2005, EPI transferred 65.47% of its equity to Pipex (See Note 1(A))</font></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">During 2005, Pipex acquired equipment in exchange for a loan with a related party. (See Note 3)</font></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">284,390 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">During 2006 and 2005, EPI declared a 10% in-kind dividend on its Series B, convertible preferred stock. (See Note 4(C))</font></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">190,250 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">190,250</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">380,500 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
</table>
<p align="left"></p>
<p align="center"><font size="-1">See accompanying notes to unaudited financial statements.</font></p>
<p align="center">F-34</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align=center><FONT SIZE=2><B>Pipex Therapeutics, Inc. and Subsidiaries<BR>(A Development Stage Company)<BR>Notes to Consolidated Financial Statements<BR>September 30, 2006<BR>(Unaudited)<BR></B></FONT></p><p align="left"><b><font size="-1">Note 1 Basis of Presentation</font></b></p>
<p align="left"><font size="-1">The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, stockholders&rsquo; deficit or cash flows. It is management&rsquo;s opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation. The results for the interim period are not necessarily indicative of the results to be expected for the full year.</font></p>
<p align="left"><font size="-1">For further information, refer to the audited consolidated financial statements and footnotes of the Company for the year ending December 31, 2005 included in the Company&rsquo;s Form SB-2.</font></p>
<p align="left"><b><font size="-1">Note 2 Going Concern</font></b></p>
<p align="left"><font size="-1">As reflected in the accompanying unaudited consolidated financial statements, the Company has a net loss of $1,989,288 and net cash used in operations of $1,741,795, respectively, for the nine months ended September 30, 2006 and a working capital deficit of $2,728,814, deficit accumulated during the development stage of $6,093,806 and a stockholders&rsquo; deficit of $2,438,461 at September 30, 2006. The Company is currently in the development stage and has not generated any operating revenues since inception. The Company has relied on related party debt financing (see notes 5 and 9(A)) as well as a private placement financing (see note 9(C)) to sustain operations. </font></p>
<p align="left"><font size="-1">The ability of the Company to continue as a going concern is dependent on the Company&rsquo;s ability to further implement its business plan, resolve its liquidity problems, principally by obtaining additional debt/equity financing, and generate revenues from collaborative agreements or sale of pharmaceutical products. The unaudited consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.</font></p>
<p align="left"><b><font size="-1">Note 3 Summary of Significant Accounting Policies</font></b></p>
<p align="left"><b><font size="-1">(A) Principles of Consolidation</font></b></p>
<p align="left"><font size="-1">The unaudited consolidated financial statements include the accounts of Pipex and its majority owned subsidiaries, Solovax, EPI, and CD4. All significant intercompany accounts and transactions have been eliminated in consolidation. </font></p>
<p align="left"><font size="-1">For financial accounting purposes, the Company&rsquo;s inception is deemed January 8, 2001. The activity of EPI for the period from December 12, 2000 to January 7, 2001 was nominal. Therefore, there is no financial information presented for this period.</font></p>
<p align="left"><b><font size="-1">(B) Use of Estimates</font></b></p>
<p align="left"><font size="-1">In preparing financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the periods presented. Actual results may differ from these estimates. </font></p>
<p align="center">F-35</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align=center><FONT SIZE=2><B>Pipex Therapeutics, Inc. and Subsidiaries<BR>(A Development Stage Company)<BR>Notes to Consolidated Financial Statements<BR>September 30, 2006<BR>(Unaudited)<BR></B></FONT></p><p align="left"><b><font size="-1">(C) Cash</font></b></p>
<p align="left"><font size="-1">The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits. At September 30, 2006, the balance exceeded the federally insured limit by $290,262. </font></p>
<p align="left"><b><font size="-1">(D) Net Loss per Share</font></b></p>
<p align="left"><font size="-1">Basic earnings (loss) per share is computed by dividing the net income (loss) less preferred dividends for the period by the weighted average number of shares outstanding. Diluted earnings per share is computed by dividing net income (loss) less preferred dividends by the weighted average number of shares outstanding including the effect of share equivalents. Since the Company reported a net loss at September 30, 2006 and 2005 and for the period from January 8, 2001 (inception) to September 30, 2006, respectively, all common stock equivalents would be antidilutive; as such there is no separate computation for diluted earnings per share. </font></p>
<p align="left"><font size="-1">Additionally, the numerator for computing net loss per share was adjusted for a preferred stock dividend recorded in September 2006 and 2005 and for the period from January 8, 2001 (inception) to September 30, 2006 in connection with the sale of EPI&rsquo;s Series B, convertible preferred stock.</font></p>
<p align="left"><font size="-1">See Note 7 for all common stock equivalents.</font></p>
<p align="left"><b><font size="-1">(E) Research and Development Costs </font></b></p>
<p align="left"><font size="-1">The Company expenses all research and development costs as incurred for which there is no alternative future use. These costs also include the expensing of employee compensation and employee stock based compensation.</font></p>
<p align="left"><b><font size="-1">(F) Stock Based Compensation</font></b></p>
<p align="left"><font size="-1">In December 2004, the FASB issued SFAS No. 123(R), </font><i><font size="-1">&ldquo;Share-Based Payment,&rdquo;</font></i><font size="-1"> which replaces SFAS No. 123 and supersedes APB Opinion No. 25. Under SFAS No. 123(R), companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation arrangements include stock options, stock warrants, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. In March 2005, the SEC issued Staff Accounting Bulletin No. 107, or &ldquo;SAB 107&rdquo;. SAB 107 expresses views of the staff regarding the interaction between SFAS No. 123(R) and certain SEC rules
and regulations and provides the staff&rsquo;s views regarding the valuation of share-based payment arrangements for public companies. SFAS No. 123(R) permits public companies to adopt its requirements using one of two methods. On April 14, 2005, the SEC adopted a rule amending the compliance dates for SFAS 123R. Companies may elect to apply this statement either prospectively, or on a modified version of retrospective application under which financial statements for prior periods are adjusted on a basis consistent with the pro forma disclosures required for those periods under SFAS No. 123. The Company has elected to retroactively adopt the provisions of SFAS No. 123R.</font></p>
<p align="left"><font size="-1">All share-based payments to employees since inception have been recorded and expensed in the statements of operations as applicable. </font></p>
<p align="center">F-36</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align=center><FONT SIZE=2><B>Pipex Therapeutics, Inc. and Subsidiaries<BR>(A Development Stage Company)<BR>Notes to Consolidated Financial Statements<BR>September 30, 2006<BR>(Unaudited)<BR></B></FONT></p><p align="left"><b><font size="-1">(G) Recent Accounting Pronouncements</font></b></p>
<p align="left"><font size="-1">In July 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, (&ldquo;FIN 48&rdquo;) </font><i><font size="-1">&ldquo;Accounting for uncertainty in income taxes &mdash; an interpretation of SFAS No. 109.&rdquo;</font></i><font size="-1"> This Interpretation provides guidance for recognizing and measuring uncertain tax positions, as defined in FASB No. 109, &ldquo;</font><i><font size="-1">Accounting for income taxes.&rdquo;</font></i><font size="-1"> FIN 48 prescribes a threshold condition that a tax position must meet for any of the benefit of an uncertain tax position to be recognized in the financial statements. Guidance is also provided regarding derecognition, classification and disclosure of uncertain tax positions. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company does not expect that
this Interpretation will have a material impact on their financial position, results of operations or cash flows.</font></p>
<p align="left"><font size="-1">In September 2006, the FASB issued SFAS No. 157 (&ldquo;SFAS 157&rdquo;), </font><i><font size="-1">&ldquo;Fair Value Measurements.&rdquo;</font></i><font size="-1"> SFAS 157 clarifies the principle that fair value should be based on the assumptions that market participants would use when pricing an asset or liability. Additionally, it establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007. The Company does not expect the adoption of SFAS 157 to have a material impact on their financial position, results of operations or cash flows. </font></p>
<p align="left"><font size="-1">In September 2006, the FASB issued SFAS No. 158 (&ldquo;SFAS 158&rdquo;), </font><i><font size="-1">&ldquo;Employers&rsquo; Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106, and 132(R).&rdquo;</font></i><font size="-1"> SFAS 158 requires employers to recognize the underfunded or overfunded status of a defined benefit postretirement plan as an asset or liability in its statement of financial position and to recognize changes in the funded status in the year in which the changes occur through accumulated other comprehensive income. Additionally, SFAS 158 requires employers to measure the funded status of a plan as of the date of its year-end statement of financial position. The new reporting requirements and related new footnote disclosure rules of SFAS 158 are effective for fiscal years ending
after December 15, 2006. The new measurement date requirement applies for fiscal years ending after December 15, 2008. The Company does not expect the adoption of SFAS 158 to have a material impact on their financial position, results of operations or cash flows. </font></p>
<p align="left"><b><font size="-1">Note 4 Contribution Agreements &mdash; Consolidation of Entities under Common Control</font></b></p>
<p align="left"><font size="-1">The following acquisitions of entities under common control are included in the unaudited results of operations and cash flows for the nine months ended September 30, 2005 as well as for the period from January 8, 2001 (inception) to September 30, 2006. Although the acquisition of EPI (see note 4(B)) occurred after September 30, 2005, the combination of these entities were accounted for in a manner similar to a pooling of interests.</font></p>
<p align="left"><b><font size="-1">(A) Pipex&rsquo;s Acquisition of Solovax</font></b></p>
<p align="left"><font size="-1">On July 31, 2005, Pipex acquired 100% and 86.21%, respectively, of the issued and outstanding Series A, convertible preferred stock and common stock of Solovax. Taken together, Pipex acquired 96.9% of Solovax. </font></p>
<p align="left"><b><font size="-1">(B) Pipex&rsquo;s Acquisition of EPI/CD4</font></b></p>
<p align="left"><font size="-1">On December 31, 2005, Pipex acquired 100% and 90.91%, respectively, of the issued and outstanding Series A, convertible preferred stock and common stock of EPI. Taken together, Pipex acquired 65.47% of EPI and its majority owned subsidiary CD4. </font></p>
<p align="center">F-37</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align=center><FONT SIZE=2><B>Pipex Therapeutics, Inc. and Subsidiaries<BR>(A Development Stage Company)<BR>Notes to Consolidated Financial Statements<BR>September 30, 2006<BR>(Unaudited)<BR></B></FONT></p><p align="left"><font size="-1">In the unaudited consolidated financial statements, each of these transactions was analogous to a recapitalization with no net change to equity since the entities were under common control at the date of the transaction and since inception.</font></p>
<p align="left"><b><font size="-1">Note 5 Loans Payable &mdash; Related Party</font></b></p>
<p align="left"><font size="-1">An affiliate of the Company&rsquo;s founder, President and CEO has advanced working capital to or on behalf of the Company. Loan activity for the Company was as follows since inception:</font></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<b><font size="-1">Total loans/ (repayments) per year/period<br><hr noshade color="#000000"></font></b></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<b><font size="-1">Amount<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Year ended December 31, 2001 &mdash; loans</font></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Year ended December 31, 2002 &mdash; loans</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">130,520 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Year ended December 31, 2003 &mdash; loans</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">244,640 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Year ended December 31, 2004 &mdash; loans</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">785,281 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Year ended December 31, 2005 &mdash; loans</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">968,943 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Year ended December 31, 2005 &mdash; repayments</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(200,000</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Nine months ended September 30, 2006 &mdash; loans</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,100,349 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Nine months ended September 30, 2006 &mdash; repayments </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(20,000</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Balance, September 30, 2006</font></p></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">3,009,733 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
</table>
<p align="left"><font size="-1">During 2005, the Company acquired $284,390 in equipment in exchange for an increase in loans payable &mdash; related party. This advance is the non-cash component of the $968,943 in 2005.</font></p>
<p align="left"><font size="-1">These loans are non-interest bearing and due on demand. These loans are secured by all assets of the Company.</font></p>
<p align="left"><b><font size="-1">Note 6 Stockholders&rsquo; Deficit and Non-Controlling Interest</font></b></p>
<p align="left"><font size="-1">On June 30, 2006, pursuant to the terms of EPI&rsquo;s Series B, convertible preferred stock, EPI recorded a preferred stock dividend for 190,250 shares having a fair value of $190,250.</font></p>
<p align="left"><font size="-1">Since the Company&rsquo;s majority owned subsidiaries have never been profitable and present negative equity, there has been no establishment of a positive non-controlling interest. Since this value cannot be presented as a deficit balance, the accompanying consolidated balance sheet reflects a $0 balance. </font></p>
<p align="left"><b><font size="-1">Note 7 Common Stock Options and Warrants</font></b></p>
<p align="left"><font size="-1">The Company has followed fair value accounting and the related provisions of SFAS No. 123R for all share based payment awards since inception. The fair value of each option or warrant granted is estimated on the date of grant using the Black-Scholes option-pricing model. All option and warrant grants are expensed on a straight-line basis in the appropriate period based upon vesting terms, in each case with an offsetting credit to additional paid in capital. If the requisite service term is not fulfilled, the expensing of options ceases from that date.</font></p>
<p align="left"><font size="-1">During 2006, Pipex granted an aggregate 903,643 common stock options having a fair value of $829,895. Pursuant to the vesting terms of each grant, the Company recognized an aggregate expense and offsetting credit to additional paid in capital totaling $254,665 for the nine months ended September 30, 2006.</font></p>
<p align="left"><font size="-1">The stock option grants were as follows:</font></p>
<p align="center">F-38</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align=center><FONT SIZE=2><B>Pipex Therapeutics, Inc. and Subsidiaries<BR>(A Development Stage Company)<BR>Notes to Consolidated Financial Statements<BR>September 30, 2006<BR>(Unaudited)<BR></B></FONT></p><p align="left"><b><font size="-1">(A) Board Director and Vice President of Business Development</font></b></p>
<p align="left"><font size="-1">In January 2006, the Company entered into an employment agreement with an executive to serve as Vice President of Business Development concurrently with being appointed to the board of directors. Pursuant to the terms of this agreement, the Company is obligated to pay $75,000 per annum upon the completion of an equity financing, as well as issue options to purchase 211,000 shares of common stock, at an exercise price of $0.10 per share. Of the options granted, 105,500 (50% of share the based payment) vested upon execution of this agreement with the remainder cliff vesting annually over three years.</font></p>
<p align="left"><font size="-1">The fair value of these options pursuant to the Black-Scholes options pricing model was $209,650</font></p>
<p align="left"><b><font size="-1">Weighted average assumptions used by management to determine grant date fair value for this stock option grant was as follows:</font></b></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Expected dividends</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0% </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Expected volatility</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">200% </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Risk free interest rate</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">4.44% </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Expected life of options</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">5 years </font></td>
</tr>
</table>
<p align="left"><font size="-1">On the date of grant, the Company recognized compensation expense for 50% of the grant date fair value of $104,825. Over the remaining thirty-six month vesting period, the Company will record straight-line monthly compensation expense of $2,912. </font></p>
<p align="left"><font size="-1">For the nine months ended September 30, 2006, the Company recognized compensation expense of $128,119. Of the total, 50% has been recorded as a component of research and development.</font></p>
<p align="left"><b><font size="-1">(B) President of Pipex</font></b></p>
<p align="left"><font size="-1">Effective May 30, 2006, the Company executed an employment agreement with Pipex&rsquo;s new President. Pursuant to this agreement, Pipex will pay this individual an annual base salary of $295,000. Additionally, on each anniversary date of this agreement, the President will be entitled to a guaranteed bonus of one-third of his base salary. The Company has also granted the President a ten year option to purchase 612,643 shares of common stock an at exercise price of $2 per share. This option will cliff vest quarterly over a three-year period. In event of a termination without just cause, Pipex will provide the President with six months severance, payable over a six-month period. The Company has also required the execution of a non-compete agreement in the event the President&rsquo;s employment ceases to continue.</font></p>
<p align="left"><font size="-1">The fair value of these options pursuant to the Black-Scholes options pricing model was $545,804.</font></p>
<p align="left"><b><font size="-1">Weighted average assumptions used by management to determine grant date fair value for this stock option grant was as follows:</font></b></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Expected dividends</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0% </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Expected volatility</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">200% </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Risk free interest rate</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">4% </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Expected life of warrants</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">3 years </font></td>
</tr>
</table>
<p align="left"><font size="-1">Over the remaining thirty-six month vesting period, the Company will record straight-line monthly compensation expense of $15,161. </font></p>
<p align="left"><font size="-1"> For the nine months ended September 30, 2006, the Company recognized compensation expense of $60,645. Of the total, 50% has been recorded as a component of research and development.</font></p>
<p align="center">F-39</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align=center><FONT SIZE=2><B>Pipex Therapeutics, Inc. and Subsidiaries<BR>(A Development Stage Company)<BR>Notes to Consolidated Financial Statements<BR>September 30, 2006<BR>(Unaudited)<BR></B></FONT></p><p align="left"><b><font size="-1">(C) Other Employees</font></b></p>
<p align="left"><b><font size="-1">(1) Vice President of Advanced Technology</font></b></p>
<p align="left"><font size="-1">On February 6, 2006, the Company executed an employment agreement with Pipex&rsquo;s new Vice President. Pursuant to this agreement, Pipex will pay this individual an annual base salary of $40,000. On April 10, 2006, the Company amended the original agreement to $100,000 annually. The terms of the agreement stipulate that the employment is on a month-to-month basis. Additionally, the Company granted 50,000 options to this employee. These options had an exercise price of $1. The fair value of these options pursuant to the Black-Scholes options pricing model was $46,090. The entire expense was recorded on the grant date since there was no associated term for which this employee&rsquo;s service was attributable too, nor was there a requisite service period defined in the agreement.</font></p>
<p align="left"><b><font size="-1">Weighted average assumptions used by management to determine grant date fair value for this stock option grant was as follows:</font></b></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Expected dividends</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0% </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Expected volatility</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">200% </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Risk free interest rate</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">4.57% </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Expected life of options</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">3 years </font></td>
</tr>
</table>
<p align="left"><font size="-1">For the nine months ended September 30, 2006, the Company recognized compensation expense of $46,090. Of the total, 75% has been recorded as a component of research and development.</font></p>
<p align="left"><b><font size="-1">(2) Former Office Employee</font></b></p>
<p align="left"><font size="-1">On January 26, 2006, the Company granted 15,000 options to an employee. These options had an exercise price of $1. In May 2006, the employee resigned. The Company has accounted for these options as forfeited since the individual is no longer an employee of the Company. All of these options remained unexercised at the date of forfeiture. The fair value of these options pursuant to the Black-Scholes options pricing model was $13,827. The entire expense was recorded on the grant date since there was no associated term for which these employee&rsquo;s services were attributable to, nor was there a requisite service period defined in the agreement.</font></p>
<p align="left"><b><font size="-1">Weighted average assumptions used by management to determine grant date fair value for this stock option grant was as follows:</font></b></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Expected dividends</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0% </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Expected volatility</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">200% </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Risk free interest rate</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">4.44% </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Expected life of warrants</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">3 years </font></td>
</tr>
</table>
<p align="left"><b><font size="-1">(3) Office Employee Stock Option Grant</font></b></p>
<p align="left"><font size="-1">On August 1, 2006, Pipex granted 15,000 options to an employee. These options had an exercise price of $0.20. The fair value of these options pursuant to the Black-Scholes options pricing model was $14,525. The options cliff vest one-third each at the one year, two year and three year anniversary from the grant date. Over the remaining thirty-six month vesting period, the Company will record straight-line monthly compensation expense of $403.</font></p>
<p align="left"><font size="-1">Upon vesting, the Company will recognize compensation expense by allocating 50% of the total as a component of research and development with the remaining portion allocated to general and administrative expenses.</font></p>
<p align="center">F-40</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align=center><FONT SIZE=2><B>Pipex Therapeutics, Inc. and Subsidiaries<BR>(A Development Stage Company)<BR>Notes to Consolidated Financial Statements<BR>September 30, 2006<BR>(Unaudited)<BR></B></FONT></p><p align="left"><b><font size="-1">Weighted average assumptions used by management to determine grant date fair value for this stock option grant was as follows:</font></b></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Expected dividends</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">0% </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Expected volatility</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">200% </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Risk free interest rate</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">4.99% </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Expected life of warrants</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">3 years </font></td>
</tr>
</table>
<p align="left"><b><font size="-1">(D) Options and Warrants Rollforward Schedule and Related Data</font></b></p>
<p align="left"><b><font size="-1">(1) Pipex</font></b></p>
<p align="left"><font size="-1">The following tables summarize all stock option grants to employees and non-employees of Pipex as of September 30, 2006, December 31, 2005 and 2004 and the related changes during these periods is presented below.</font></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Number of<br>Options<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Weighted Average<br>Exercise Price<br><hr noshade color="#000000"></font></b></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Stock Options</font></b></p></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Balance at December 31, 2004</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Granted</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">235,000</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">0.10 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Exercised</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Forfeited</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Balance at December 31, 2005</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">235,000</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">0.10 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Granted</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">903,643</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">1.45 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Exercised</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Forfeited</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">(15,000</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font></td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">(1.00</font></td>
<td align='left' valign='bottom' nowrap>
<font size="-1">)</font><font size="-1"> </font></td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Balance at September 30, 2006 </font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">1,123,643</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">1.18 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Options exercisable at September 30, 2006</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">482,016</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">0.46 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Weighted average fair value of options granted during 2006</font></p></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">1.45 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
</table>
<p align="left"><font size="-1">Of the total options granted, 482,016 are fully vested, exercisable and non-forfeitable.</font></p>
<p align="left"><font size="-1">The following table summarizes information about stock options for Pipex at September 30, 2006:</font></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#b2e5ff">
<td align='center' valign='bottom' colspan=11>
<b><font size="-1">Options Outstanding<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=5>
<b><font size="-1">Options Exercisable<br><hr noshade color="#000000"></font></b></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Range of<br>Exercise<br>Price<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Number<br>Outstanding at<br>December 31,<br>2005<br><hr noshade color="#000000"></font></b></td>
<td align='center' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='bottom'>
<b><font size="-1">Weighted<br>Average<br>Remaining<br>Contractual<br>Life<br><hr noshade color="#000000"></font></b></td>
<td align='center' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='bottom'>
<b><font size="-1">Weighted<br>Average<br>Exercise<br>Price<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Number<br>Exercisable at<br>December 31,<br>2005<br><hr noshade color="#000000"></font></b></td>
<td align='center' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='bottom'>
<b><font size="-1">Weighted<br>Average<br>Exercise<br>Price<br><hr noshade color="#000000"></font></b></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='top' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='top'>
<font size="-1">0.10 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">446,000 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">7.54 Years </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">$0.10 </font></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">363,944 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">$0.10 </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='top' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='top'>
<font size="-1">0.20</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">15,000 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">2.84 Years </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">$0.20 </font></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">$0.20 </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='top' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='top'>
<font size="-1">1.00 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">50,000 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">1.18 Years </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">$1.00 </font></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">50,000 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">$1.00</font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='top' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='top'>
<font size="-1">2.00 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">612,643 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">2.66 Years </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">$2.00 </font></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">68,071 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">$2.00 </font></td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">1,123,643 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">5.43 Years </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">$1.18 </font></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">482,016 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">$0.46 </font></td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
</table>
<p align="center">F-41</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align=center><FONT SIZE=2><B>Pipex Therapeutics, Inc. and Subsidiaries<BR>(A Development Stage Company)<BR>Notes to Consolidated Financial Statements<BR>September 30, 2006<BR>(Unaudited)<BR></B></FONT></p><p align="left"><b><font size="-1">(2) EPI</font></b></p>
<p align="left"><font size="-1">The following tables summarize all stock option and warrant grants to employees and non-employees of EPI as of September 30, 2006, December 31, 2005 and 2004 and the related changes during these periods is presented below.</font></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Number of<br>Options/Warrants<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Weighted Average<br>Exercise Price<br><hr noshade color="#000000"></font></b></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><b><font size="-1">Stock Options/Warrants</font></b></p></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Balance at December 31, 2004</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">292,500</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">0.04 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Granted</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">171,225</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">1.10 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Exercised</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Forfeited</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Balance at December 31, 2005</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">463,725</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">0.43 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Granted</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Exercised</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Forfeited</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Balance at September 30, 2006</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">463,725</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">0.43 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Options exercisable at September 30, 2006</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">257,479</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">0.75 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Weighted average fair value of options granted during 2006</font></p></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
</table>
<p align="left"><font size="-1">Of the total options granted, 86,254 are fully vested, exercisable and non-forfeitable.</font></p>
<p align="left"><font size="-1">Of the total warrants granted, all 171,225 are fully vested, exercisable and non-forfeitable.</font></p>
<p align="left"><font size="-1">The following table summarizes information about stock options/warrants for EPI at September 30, 2006:</font></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#b2e5ff">
<td align='center' valign='bottom' colspan=11>
<b><font size="-1">Options/Warrants Outstanding<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=5>
<b><font size="-1">Options/Warrants Exercisable<br><hr noshade color="#000000"></font></b></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Range of<br>Exercise<br>Price<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Number<br>Outstanding at<br>September 30,<br>2006<br><hr noshade color="#000000"></font></b></td>
<td align='center' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='bottom'>
<b><font size="-1">Weighted<br>Average<br>Remaining<br>Contractual<br>Life<br><hr noshade color="#000000"></font></b></td>
<td align='center' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='bottom'>
<b><font size="-1">Weighted<br>Average<br>Exercise<br>Price<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Number<br>Exercisable at<br>September 30,<br>2006<br><hr noshade color="#000000"></font></b></td>
<td align='center' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='bottom'>
<b><font size="-1">Weighted<br>Average<br>Exercise<br>Price<br><hr noshade color="#000000"></font></b></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='top' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='top'>
<font size="-1">0.03 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">262,500 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">7.96 Years </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">$0.03 </font></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">56,254 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">$0.03 </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='top' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='top'>
<font size="-1">0.10 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">30,000 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">8.01 Years </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">$0.20 </font></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">30,000 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">$0.20 </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='top' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='top'>
<font size="-1">1.10 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">171,225 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">8.67 Years </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">$1.10 </font></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">171,225 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">$1.10</font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">463,725 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">8.44 Years </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">$0.43 </font></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">257,479 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">$0.75 </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
</table>
<p align="left"><b><font size="-1">(3) CD4</font></b></p>
<p align="left"><font size="-1">The following tables summarize all stock option grants to employees and non-employees of CD4 as of September 30, 2006, December 31, 2005 and 2004 and the related changes during these periods is presented below.</font></p>
<p align="center">F-42</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align=center><FONT SIZE=2><B>Pipex Therapeutics, Inc. and Subsidiaries<BR>(A Development Stage Company)<BR>Notes to Consolidated Financial Statements<BR>September 30, 2006<BR>(Unaudited)<BR></B></FONT></p><table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Number of<br>Options<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Weighted Average<br>Exercise Price<br><hr noshade color="#000000"></font></b></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><u><font size="-1">Stock Options</font></u></p></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Balance at December 31, 2004</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">30,000</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">0.20 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Granted</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Exercised</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Forfeit</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Balance at December 31, 2005</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">30,000</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">0.20 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Granted</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Exercised</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Forfeit</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">&mdash;</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Balance at September 30, 2006</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">30,000</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">0.20 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Options exercisable at September 30, 2006</font></p></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">30,000</font></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">0.20 </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom'>
<p style="margin-left:1em;text-indent:-1em"><font size="-1">Weighted average fair value of options granted during 2006</font></p></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='bottom'>
<font size="-1">&mdash; </font></td>
<td bgcolor="#ffffff">&nbsp;</td>
</tr>
<tr bgcolor="#b2e5ff">
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='bottom'>
<hr noshade size=3 color="#000000"></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
</tr>
</table>
<p align="left"><font size="-1">Of the total options granted, all 30,000 are fully vested, exercisable and non-forfeitable.</font></p>
<p align="left"><font size="-1">The following table summarizes information about stock options for CD4 at September 30, 2006:</font></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#ffffff">
<td align='center' valign='bottom' colspan=11>
<b><font size="-1">Options Outstanding<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=5>
<b><font size="-1">Options Exercisable<br><hr noshade color="#000000"></font></b></td>
</tr>
<tr bgcolor="#ffffff">
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Range of<br>Exercise<br>Price<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Number<br>Outstanding at<br>September 30,<br>2006<br><hr noshade color="#000000"></font></b></td>
<td align='center' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='bottom'>
<b><font size="-1">Weighted<br>Average<br>Remaining<br>Contractual<br>Life<br><hr noshade color="#000000"></font></b></td>
<td align='center' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='bottom'>
<b><font size="-1">Weighted<br>Average<br>Exercise<br>Price<br><hr noshade color="#000000"></font></b></td>
<td bgcolor="#ffffff">&nbsp;</td>
<td align='center' valign='bottom' colspan=3>
<b><font size="-1">Number<br>Exercisable at<br>September 30,<br>2006<br><hr noshade color="#000000"></font></b></td>
<td align='center' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='bottom'>
<b><font size="-1">Weighted<br>Average<br>Exercise<br>Price<br><hr noshade color="#000000"></font></b></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='top' nowrap>
<font size="-1">$</font></td>
<td align='right' valign='top'>
<font size="-1">0.20 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">30,000</font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">1.74 Years </font></td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">$0.20 </font></td>
<td align='right' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='right' valign='top'>
<font size="-1">30,000 </font></td>
<td bgcolor="#b2e5ff">&nbsp;</td>
<td align='center' valign='top' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='center' valign='top'>
<font size="-1">$0.20 </font></td>
</tr>
</table>
<p align="left"><b><font size="-1">Note 8 Related Parties</font></b></p>
<p align="left"><b><font size="-1">(A) Office Space</font></b></p>
<p align="left"><font size="-1">The Company currently leases office space in both Ann Arbor, Michigan and Miami, Florida for corporate operations. The lease agreements are month to month and the fees are paid by the Company&rsquo;s affiliate, Accredited Ventures, Inc. which is controlled by the Company&rsquo;s CEO. The advances for these services were included as a component of loans payable &mdash; related party and rent expense was recorded as a component of general and administrative.</font></p>
<p align="left"><font size="-1">Rent expense for the nine months ended September 30, 2006 and 2005 and for the period from January 8, 2001 (inception) to September 30, 2006 was $37,113, $1,663 and $370,768, respectively.</font></p>
<p align="left"><b><font size="-1">(B) Services Agreement with Director</font></b></p>
<p align="left"><font size="-1">During January 2006, the Company entered into an agreement with an affiliate of one of the Company&rsquo;s directors to write an executive information report for a $35,000 fee. The Company paid $17,500 as a retainer for these services.</font></p>
<p align="left"><b><font size="-1">(C) Advances &mdash; Potential Merger Candidate</font></b></p>
<p align="left"><font size="-1">During 2005, the Company entered into a non-binding letter of intent to merge with a Canadian public company. Pursuant to the letter of intent, the Company agreed to advance an aggregate $50,000 </font></p>
<p align="center">F-43</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align=center><FONT SIZE=2><B>Pipex Therapeutics, Inc. and Subsidiaries<BR>(A Development Stage Company)<BR>Notes to Consolidated Financial Statements<BR>September 30, 2006<BR>(Unaudited)<BR></B></FONT></p><p align="left"><font size="-1">in four equal installments to the potential merger candidate. During 2005, $37,500 was advanced and expensed as merger costs. The fourth tranche of $12,500 was also expensed as merger costs during January 2006. As of July 20, 2006, the discussions ceased as no definitive agreement could be reached. </font></p>
<p align="left"><b><font size="-1">Note 9 Subsequent Events</font></b></p>
<p align="left"><b><font size="-1">(A) Loan Payable &mdash; Related Party</font></b></p>
<p align="left"><font size="-1">During the period October 1, 2006 to October 26, 2006, the Company incurred additional indebtedness from an affiliate of the Company&rsquo;s Chairman and CEO, a related party of approximately $354,000. These loans are non-interest bearing and due on demand. These loans were secured by all assets of the Company.</font></p>
<p align="left"><font size="-1">Total advances received from this related party during 2006 were approximately $1,434,000. In connection with the merger and private placement, these advances were converted into units on the same terms as investors participating in the offering.</font></p>
<p align="left"><font size="-1">In addition, at October 31, 2006, all loans payable to an affiliate of the Company&rsquo;s Chairman and CEO were converted into units in the private placement under the same terms as those given to the other investors. As such, approximately $3,363,000 was converted into 1,535,842 shares of common stock and 767,921 warrants.</font></p>
<p align="left"><b><font size="-1">(B) Sheffield Pharmaceuticals Inc. Reverse Merger </font></b></p>
<p align="left"><font size="-1">On October 31, 2006 (the &ldquo;Effective Date&rdquo;), Sheffield Pharmaceuticals, Inc. (&ldquo;Sheffield&rdquo;) (&ldquo;Registrant&rdquo;), entered into a Merger Agreement (the &ldquo;Merger Agreement&rdquo;) with Pipex Therapeutics, Inc., a privately owned Delaware company (&ldquo;Pipex&rdquo;) (&ldquo;accounting acquiror&rdquo;), and Pipex Therapeutics Acquisition Corp, a Delaware corporation and wholly owned subsidiary of the Registrant (&ldquo;Acquisition Sub&rdquo;) (&ldquo;legal acquiror&rdquo;), whereby Pipex was the surviving corporation. Acquisition Sub was formed on October 27, 2006 for pursuing the merger transaction contemplated by the Merger Agreement.</font></p>
<p align="left"><font size="-1">For financial accounting purposes, the transaction is treated as a reverse triangular merger due to Pipex being merged into the acquisition sub, as well as a recapitalization of Pipex. Since Pipex is acquiring a controlling voting interest, they are deemed the accounting acquiror, while Sheffield is deemed the legal acquiror. The historical financial statements of the Company will become those of Pipex since inception, consolidated with those of Sheffield from October 31, 2006 and subsequent.</font></p>
<p align="left"><font size="-1">Since the transaction is considered a reverse triangular merger and recapitalization, the guidance in SFAS No. 141 does not apply for purposes of presenting pro forma financial information on the registrants Form SB-2.</font></p>
<p align="left"><font size="-1">Pursuant to the Merger Agreement, Sheffield issued 34,000,000 shares of common stock to the shareholders of Pipex and all of Pipex&rsquo;s outstanding options and warrants were assumed by Sheffield. On October 31, 2006, Pipex executed a private stock purchase agreement to purchase an additional 2,426,300 shares of common stock held by Sheffield&rsquo;s sole officer and director. Aggregate consideration paid for Sheffield was $665,000. The 2,426,300 shares were cancelled and retired after the completion of the transaction. As a result of these transactions, Pipex acquired approximately 98% ownership of the issued and outstanding common shares of Sheffield.</font></p>
<p align="left"><font size="-1">The Registrant is required to file a registration statement within 45 days of closing of the merger and the registration statement must be declared effective 150 days from closing. If these conditions are not </font></p>
<p align="center">F-44</p>
<hr noshade color="#000000">
<p style='page-break-before: always'></p>
<PAGE>
<p align=center><FONT SIZE=2><B>Pipex Therapeutics, Inc. and Subsidiaries<BR>(A Development Stage Company)<BR>Notes to Consolidated Financial Statements<BR>September 30, 2006<BR>(Unaudited)<BR></B></FONT></p><p align="left"><font size="-1">met, the Company is required to pay a monthly-liquidated damages penalty equal to 2% of the gross proceeds raised. The registration statement must remain in effect for a period of two years from the date of being declared effective. Of the non-controlling minority interest retained by Sheffield, the agreement stipulates that if these shares are not covered in an effective registration statement by August 31, 2008, Pipex will be obligated to pay an additional $150,000 as liquidated damages. The Company is currently evaluating the effect, if any, of EITF No. 05-4, </font><i><font size="-1">&ldquo;The Effect of a Liquidated Damages Clause on a Freestanding
Financial Instrument&rdquo;</font></i><font size="-1">, as it pertains to the valuation and classification of a derivative liability.</font></p>
<p align="left"><b><font size="-1">(C) Private Placement </font></b></p>
<p align="left"><font size="-1">During October (Pipex) and November 2006 (Sheffield), the Company completed a private placement offering of units to institutional and &ldquo;accredited&rdquo; investors. Each unit contained 45,702 shares of common stock along with a warrant to purchase 22,851 shares of the Company&rsquo;s common stock. The warrants have an exercise price of $2.41 and each warrant has a life of 5 years. As of November 2006, the Company sold approximately 139 units for aggregate cash proceeds approximating $13,900,000. All subscriptions have been received in full.</font></p>
<p align="left"><font size="-1">In order to assist the Company in consummating this private placement, the Company had engaged Accredited Equities Inc. (the &ldquo;Placement Agent&rdquo;), as placement agent, a company controlled by Company&rsquo;s Chairman &amp; CEO. The Placement Agent was paid a net cash fee of $639,844, the selected dealer received a cash fee of $327,950 and the Placement Agent received a non-accountable expense allowance of $75,000. The Placement Agent and selected dealer also received an allocation of warrants to purchase common stock equal to 954,606 shares, with an exercise price of $2.41 and each warrant has a life of 10 years. These warrants will be distributed to designees of the Placement Agent and the selected dealer. Additionally, two of the Company&rsquo;s directors and one officer are affiliates of the placement agent.</font></p>
<p align="left"><font size="-1">Since these warrants were granted as compensation in connection with an equity raise, the Company has treated these warrants as a direct offering cost. The result of the transaction has a net effect to equity of $0, as the amount recorded is both debited and credited to additional paid in capital. The warrants are fully vested and non-forfeitable.</font></p>
<p align="left"><b><font size="-1">(D) Corporate Name Change </font></b></p>
<p align="left"><font size="-1">The board of directors has approved the name change of the Company to Pipex Pharmaceuticals, Inc. The name change takes effect on December 11, 2006.</font></p>
<p align="center">F-45</p>
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<PAGE>
<p align="center"><b><font size="-1">Part II</font></b></p>
<p align="center"><b><font size="-1">INFORMATION NOT REQUIRED IN PROSPECTUS</font></b></p>
<p align="left"><i><b><font size="-1">Item 24. Indemnification of Directors and Officers</font></b></i></p>
<p align="left"><font size="-1">Section 145 of the Delaware General Corporation Law provides that a director or officer is not individually liable to the corporation or its shareholders or creditors for any damages as a result of any act or failure to act in his capacity as a director or officer unless it is proven that (1) his act or failure to act constituted a breach of his fiduciary duties as a director or officer and (2) his breach of those duties involved intentional misconduct, fraud or a knowing violation of law.</font></p>
<p align="left"><font size="-1">This provision is intended to afford directors and officers protection against and to limit their potential liability for monetary damages resulting from suits alleging a breach of the duty of care by a director or officer. As a consequence of this provision, shareholders of our company will be unable to recover monetary damages against directors or officers for action taken by them that may constitute negligence or gross negligence in performance of their duties unless such conduct falls within one of the foregoing exceptions. The provision, however, does not alter the applicable standards governing a director&rsquo;s or officer&rsquo;s fiduciary duty and does not eliminate or limit the right of our company or any shareholder to obtain an injunction or any other type of non-monetary relief in the event of a breach of fiduciary duty.</font></p>
<p align="left"><i><b><font size="-1">Item 25. Other Expenses of Issuance and Distribution.</font></b></i></p>
<p align="left"><font size="-1">We will pay all expenses in connection with the registration and sale of the common stock by the selling shareholders. The estimated expenses of issuance and distribution are set forth below:</font></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Registration fee</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">$8,759.90 </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Transfer agent fees</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">$5,000 </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Legal fees</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">$20,000 </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Accounting fees</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">$5,000 </font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Miscellaneous</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">$3,241 </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='left' valign='bottom'>
<font size="-1">Total estimated costs of offering</font></td>
<td align='right' valign='bottom' nowrap>
&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align='right' valign='bottom'>
<font size="-1">$40,000 </font></td>
</tr>
</table>
<p align="left"><i><b><font size="-1">Item 26. Recent Sales of Unregistered Securities</font></b></i></p>
<p align="left"><font size="-1">From November 22, 2006 to November 27, 2006, the Registrant sold a total of 93.875 Units, with each Unit consisting of 148,525 shares of common stock and 74,263 warrants to purchase 74,263 shares of common stock at $.74 per share. This offering and sale of Units qualified for exemption under Section 4(2) of the Securities Act of 1933 since the issuance did not involve a public offering. The offering was not a public offering as defined in Section 4(2) because the offer and sale was made to an insubstantial number of persons and because of the manner of the offering. The investors had the necessary investment intent as required by Section 4(2) since they agreed to, and received, share certificates bearing a legend stating that such shares are restricted. This restriction ensures that these shares will not be immediately redistributed into the market and therefore
not be part of a public offering. This offering was done with no general solicitation or advertising by the Registrant. Based on an analysis of the above factors, the Registrant has met the requirements to qualify this offering and sale for exemption under Section 4(2) of the Securities Act of 1933.</font></p>
<p align="left"><i><b><font size="-1">Item 27. Exhibits</font></b></i></p>
<p align="left"><font size="-1">3.1 Certificate of Incorporation (1)</font></p>
<p align="left"><font size="-1">3.2 By-Laws (1) </font></p>
<p align="left"><font size="-1">4.1 Form of Warrant Certificate (2)</font></p>
<p align="left"><font size="-1">5.1 Opinion of Lehman &amp; Eilen LLP Re: Legality of Shares (3)</font></p>
<p align="left"><font size="-1">10.1 Employment Agreement with Charles L. Bisgaier (4)</font></p>
<p align="left"><font size="-1">10.2 Consulting Agreement with George J. Brewer (4)</font></p>
<p align="center">II-1</p>
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<PAGE>
<p align="left"><font size="-1">10.3 License Agreement with the Regents of the University of Michigan (4) </font></p>
<p align="left"><font size="-1">10.4 Research Agreement with the Regents of the University of Michigan (4)</font></p>
<p align="left"><font size="-1">10.5 Option and License Agreement between University of Southern California and Solovax, Inc. (4)</font></p>
<p align="left"><font size="-1">10.6 First Amendment to Option and License Agreement between University of Southern California and Solovax, Inc. (4)</font></p>
<p align="left"><font size="-1">10.7 License Agreement between Children&rsquo;s Medical Center Corporation and Effective Pharmaceuticals, Inc. (4)</font></p>
<p align="left"><font size="-1">10.8 License Agreement between Thomas Jefferson University and CD4 Biosciences, Inc. (4)</font></p>
<p align="left"><font size="-1">10.9 First Amendment to License Agreement between Thomas Jefferson University and CD4 Biosciences, Inc. (4) </font></p>
<p align="left"><font size="-1">10.10 Private Stock Purchase Agreement with Michael Manion (4)</font></p>
<p align="left"><font size="-1">10.11 Lock-up Agreement with Michael Manion (4)</font></p>
<p align="left"><font size="-1">10.12 Lock-up Agreement with Accredited Venture Capital, LLC (4)</font></p>
<p align="left"><font size="-1">10.13 Lock-up Agreement with Nicholas Stergis (4)</font></p>
<p align="left"><font size="-1">10.14 Lock-up Agreement with Joseph Rudick (4)</font></p>
<p align="left"><font size="-1">10.15 Lock-up Agreement with Jeffrey Kraws (4)</font></p>
<p align="left"><font size="-1">10.16 Lock-up Agreement with Jeffrey Wolf (4) </font></p>
<p align="left"><font size="-1">10.17 Lock-up Agreement with Charles Bisgaier (4)</font></p>
<p align="left"><font size="-1">10.18 Unit Purchase Agreement (2)</font></p>
<p align="left"><font size="-1">23.1 Consent of Berman &amp; Company, P.A., Independent Registered Public Accounting Firm (3)</font></p>
<p align="left"><font size="-1">23.2 Consent of Lehman &amp; Eilen LLP (contained in Exhibit 5.1)</font></p>
<div align="left">
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</p>
</div>
<p align="left"><font size="-1">(1) Incorporated by reference to the Registrant&rsquo;s Form 10-KSB for the fiscal year ended December 31, 1996. </font></p>
<p align="left"><font size="-1">(2) Incorporated by reference to the Registrant&rsquo;s Form 8-K filed on December 1, 2006. </font></p>
<p align="left"><font size="-1">(3) Filed herewith.</font></p>
<p align="left"><font size="-1">(4) Incorporated by reference to the Registrant&rsquo;s Form 8-K filed on November 6, 2006.</font></p>
<p align="left"><i><b><font size="-1">Item 28. Undertakings</font></b></i></p>
<p align="left"><font size="-1">The undersigned registrant hereby undertakes that it will:</font></p>
<p align="left"><font size="-1">(1) File, during any period in which it offers or sells securities, a post- effective amendment to this registration statement to:</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">(i) Include any prospectus required by section 10(a)(3) of the Securities Act;</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">(ii) Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) ( &sect; 230.424(b) of this chapter) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the &lsquo;&lsquo;Calculation of Registration Fee&rsquo;&rsquo; table in the effective registration statement; and</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">(iii) Include any additional or changed material information on the plan of distribution.</font></p>
<p align="left"><font size="-1">(2) For determining liability under the Securities Act, treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time to be the initial bona fide offering.</font></p>
<p align="center">II-2</p>
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<p align="left"><font size="-1">(3) File a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering.</font></p>
<p align="left"><font size="-1">Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the &lsquo;&lsquo;Act&rsquo;&rsquo;) may be permitted to directors, officers and controlling persons of the small business issuer pursuant to the foregoing provisions, or otherwise, the small business issuer has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.</font></p>
<p align="left"><font size="-1">In accordance with the requirements of the Act, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements of filing on Form SB-2 and authorized this registration statement to be signed on its behalf by the undersigned, in Ann Arbor, Michigan, on December 14, 2006.</font></p>
<p align="left"></p><p align="left" style="margin-left:50%"><font size="-1">PIPEX PHARMACEUTICALS, INC.</font></p>
<p align="left"></p><p align="left" style="margin-left:50%"><font size="-1">By:&nbsp;</font><u><font size="-1">/s/ Steve H. Kanzer </font></u></p>
<p align="left"></p><p align="left" style="margin-left:50%"><font size="-1">Steve H. Kanzer<br>Chairman &amp; Chief Executive Officer<br>(principal executive officer and principal financial officer)</font></p>
<p align="left"><font size="-1">In accordance with the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.</font></p>
<table width=100% cellpadding=0 cellspacing=0 border=0>
<tr bgcolor="#ffffff">
<td align='left' valign='top'>
<p style="margin-left:1em;text-indent:-1em"><br><font size="-1">Date: December 14, 2006</font></p></td>
<td align='left' valign='top'>
<br><font size="-1">By: </font><u><font size="-1">/s/ Steve H. Kanzer</font></u><br><font size="-1">Steve H. Kanzer<br>Chairman and Chief Executive Office<br>(principal executive officer and principal financial officer)</font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='top'>
<p style="margin-left:1em;text-indent:-1em"><br><font size="-1">Date: December 14, 2006</font></p></td>
<td align='left' valign='top'>
<br><font size="-1">By: </font><u><font size="-1">/s/ Jeffrey J. Kraws</font></u><br><font size="-1">Jeffrey J. Kraws<br>Director</font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='top'>
<p style="margin-left:1em;text-indent:-1em"><br><font size="-1">Date: December 14, 2006 </font></p></td>
<td align='left' valign='top'>
<br><font size="-1">By: </font><u><font size="-1">/s/ Nicholas Stergis</font></u><br><font size="-1">Nicholas Stergis<br>Director </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='top'>
<p style="margin-left:1em;text-indent:-1em"><br><font size="-1">Date: December 14, 2006 </font></p></td>
<td align='left' valign='top'>
<br><font size="-1">By: </font><u><font size="-1">/s/ A. Joseph Rudick</font></u><br><font size="-1">Joseph Rudick<br>Director</font></td>
</tr>
<tr bgcolor="#ffffff">
<td align='left' valign='top'>
<p style="margin-left:1em;text-indent:-1em"><br><font size="-1">Date: December 14, 2006 </font></p></td>
<td align='left' valign='top'>
<br><font size="-1">By: </font><u><font size="-1">/s/ Charles Bisgaier</font></u><br><font size="-1">Charles Bisgaier<br>Director </font></td>
</tr>
<tr bgcolor="#b2e5ff">
<td align='left' valign='top'>
<p style="margin-left:1em;text-indent:-1em"><br><font size="-1">Date: December 14, 2006 </font></p></td>
<td align='left' valign='top'>
<br><font size="-1">By: </font><u><font size="-1">/s/ Jeff Wolf</font></u><br><font size="-1">Jeff Wolf<br>Director </font></td>
</tr>
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<p align="center">II-3</p>
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<TYPE>EX-5
<SEQUENCE>2
<FILENAME>s11-6900_ex51.htm
<DESCRIPTION>EXHIBIT 5.1
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<p align="right"><b><font size="-1">Exhibit 5.1</font></b></p>
<p align="center"><font size="-1">LEHMAN &amp; EILEN LLP<br>Mission Bay Office Plaza<br>20283 State Road 7, Suite 300<br>Boca Raton, FL 33498<br>(561) 237-0804</font></p>
<p align="left"></p><p align="left" style="margin-left:50%"><font size="-1">December 14, 2006</font></p>
<p align="left"><font size="-1">The Board of Directors<br>Pipex Pharmaceuticals, Inc.<br>3985 Research Park Drive<br>Ann Arbor, MI 48108</font></p>
<p align="left"></p><p align="left" style="margin-left:5%"><font size="-1">Re: Registration Statement on Form SB-2</font></p>
<p align="left"><font size="-1">Gentlemen:</font></p>
<p align="left"><font size="-1">At your request, we have examined the Registration Statement on Form SB-2 (the &ldquo;Registration Statement&rdquo;) to which this letter is attached as Exhibit 5.1 filed by Pipex Pharmaceuticals, Inc., a Delaware corporation (the &ldquo;Company&rdquo;), that is intended to register under the Securities Act of 1933, as amended (the &ldquo;Securities Act&rdquo;), 20,746,931 shares of the Company&rsquo;s common stock which are issued and outstanding (the &ldquo;Outstanding Shares&rdquo;) and 10,203,465 shares (the &ldquo;Warrant Shares&rdquo;) which are issuable upon the exercise of certain warrants described in the Registration Statement (the &ldquo;Warrants&rdquo;).</font></p>
<p align="left"><font size="-1">We have examined originals or certified copies of such corporate records of the Company and other certificates and documents of officials of the Company, public officials and others as we have deemed appropriate for purposes of this letter. We have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to authentic original documents of all copies submitted to us as conformed and certified or reproduced copies. </font></p>
<p align="left"><font size="-1">Based on the foregoing, we are of the opinion that under Delaware law the Outstanding Shares have been duly authorized and are validly issued, fully paid and non-assessable, and that upon the proper exercise of the Warrants, as described in the Registration Statement, the Warrant Shares will be duly authorized and will be validly issued, fully paid and non-assessable.</font></p>
<p align="left"><font size="-1">We consent to the use of this opinion as an Exhibit to the Registration Statement and to the use of our name in the prospectus constituting a part thereof. </font></p>
<p align="left"></p><p align="left" style="margin-left:50%"><font size="-1">Very truly yours,</font></p>
<p align="left"></p><p align="left" style="margin-left:50%"><font size="-1">/s/ Lehman &amp; Eilen LLP<br>Lehman &amp; Eilen LLP</font></p>
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<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>3
<FILENAME>s11-6900_ex231.htm
<DESCRIPTION>EXHIBIT 23.1
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<p align="right"><b><font size="-1">Exhibit 23.1</font></b></p>
<p align="center"><b><font size="-1">CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</font></b></p>
<p align="left"><font size="-1">The Board of Directors<br>Pipex Pharmaceuticals, Inc.</font></p>
<p align="left"><font size="-1">We consent to the use of our report dated July 20, 2006, except for Note 8(E) as to which the date is November 2, 2006 on the consolidated financial statements of Pipex Therapeutics, Inc. and Subsidiaries for the years ended December 31, 2005, 2004 and for the period from January 8, 2001 (inception) to December 31, 2005, included herein on the registration statement of Pipex Pharmaceuticals, Inc. and Subsidiaries on Form SB-2, and to the reference to our firm under the heading &ldquo;Experts&rdquo; in the prospectus.</font></p>
<p align="left"></p><p align="left" style="margin-left:50%"><font size="-1">BERMAN &amp; COMPANY, P.A. <br>Certified Public Accountants</font></p>
<p align="left"></p><p align="left" style="margin-left:50%"><font size="-1">/s/ Berman &amp; Company, P.A.<br>Boca Raton, Florida</font></p>
<p align="left"></p><p align="left" style="margin-left:50%"><font size="-1">December 12, 2006</font></p>
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