<SEC-DOCUMENT>0001144204-14-023752.txt : 20140421
<SEC-HEADER>0001144204-14-023752.hdr.sgml : 20140421
<ACCEPTANCE-DATETIME>20140421125636
ACCESSION NUMBER:		0001144204-14-023752
CONFORMED SUBMISSION TYPE:	424B3
PUBLIC DOCUMENT COUNT:		3
FILED AS OF DATE:		20140421
DATE AS OF CHANGE:		20140421

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ADHEREX TECHNOLOGIES INC
		CENTRAL INDEX KEY:			0001211583
		STANDARD INDUSTRIAL CLASSIFICATION:	BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836]
		IRS NUMBER:				000000000
		STATE OF INCORPORATION:			NY

	FILING VALUES:
		FORM TYPE:		424B3
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-170570
		FILM NUMBER:		14773269

	BUSINESS ADDRESS:	
		STREET 1:		PO BOX 13628
		STREET 2:		68 TW ALEXANDER DRIVE
		CITY:			RESEARCH TRIANGLE PARK
		STATE:			NC
		ZIP:			27709
		BUSINESS PHONE:		(919) 636-4530

	MAIL ADDRESS:	
		STREET 1:		PO BOX 13628
		STREET 2:		68 TW ALEXANDER DRIVE
		CITY:			RESEARCH TRIANGLE PARK
		STATE:			NC
		ZIP:			27709
</SEC-HEADER>
<DOCUMENT>
<TYPE>424B3
<SEQUENCE>1
<FILENAME>v375329_424b3.htm
<DESCRIPTION>424B3
<TEXT>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><B>Field pursuant to Rule 424(b)(3)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><B>Registration
Statement No. 333-170570&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>PROSPECTUS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><IMG SRC="tlogo.jpg" ALT=""></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>ADHEREX TECHNOLOGIES INC.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>OFFERING UP TO 4,697,732 WARRANT SHARES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> This prospectus relates to the issuance by Adherex Technologies
Inc. (referred to herein as the &ldquo;Company&rdquo;, &ldquo;Adherex&rdquo;, or &ldquo;we&rdquo;, &ldquo;us&rdquo;, or &ldquo;our&rdquo;)
of up to 4,697,732 shares of common stock, no par value (the &ldquo;Warrant Shares&rdquo;) issuable upon the exercise of warrants
(the &ldquo;Warrants&rdquo;) that were issued by the Company to subscribing holders of transferable subscription rights (the &ldquo;Rights&rdquo;)
in a rights offering which closed on March 29, 2011 (the &ldquo;Rights Offering&rdquo;). Each eighteen (18) Warrants entitle the
holder thereof to purchase one share of common stock, no par value, at the exercise price of CAD $1.44 per share at any time at
or prior to 5:00 pm Ottawa time on March 30, 2016. Through April 8, 2014, no Warrants have been exercised. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Our common stock is quoted on the Toronto Stock Exchange
(the &ldquo;TSX&rdquo;), under the symbol &ldquo;AHX&rdquo; and on the OTCQB Market under the symbol &ldquo;ADHXF.&rdquo; The
last reported sale price of our common stock on the TSX on March&nbsp;14,&nbsp;2014 was CAD$0.82 per share and on the OTCQB Market
on March&nbsp;14, 2014 was $0.84 per share. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>THIS INVESTMENT INVOLVES A HIGH DEGREE
OF RISK. YOU SHOULD PURCHASE SECURITIES ONLY IF YOU CAN AFFORD A COMPLETE LOSS.</B> <B>SEE &ldquo;RISK FACTORS&rdquo; BEGINNING
ON PAGE 5.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> We will be responsible for all fees and expenses incurred
in connection with the preparation and filing of this registration statement, provided, however, we will not be required to pay
any underwriters&rsquo; discounts or commissions relating to the securities covered by the registration statement.<FONT STYLE="font-weight: normal; text-underline-style: double">
This is not an underwritten offering. The Warrant Shares are being offered directly by us without the services of an underwriter
or selling agent. We intend to use the net proceeds from this offering for working capital and general corporate purposes, primarily
for the development of STS. See &ldquo;Use of Proceeds&rdquo; on page 14.</FONT> </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our board of directors makes no recommendation to you about
whether you should exercise any Warrants. You are urged to make an independent investment decision about whether to exercise your
Warrants based on your own assessment of our business and the offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">You should read this prospectus and any prospectus supplement
carefully before you decided to invest. You should not assume that the information in this prospectus is accurate as of any date
other than the date on the front of this document.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="text-transform: uppercase"><B>Neither
the Securities and Exchange Commission nor any state Securities commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"> The date of this Prospectus is <FONT STYLE="font-weight: normal; text-underline-style: double">April
21</FONT><B>, </B><FONT STYLE="font-weight: normal; text-underline-style: double">2014.</FONT> </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>TABLE OF CONTENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="width: 95%"> Prospectus Summary </TD>
    <TD STYLE="width: 5%; text-align: center"> 3</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD> The Offering </TD>
    <TD STYLE="text-align: center"> 4 </TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD> Risk Factors </TD>
    <TD STYLE="text-align: center"> 5 </TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD> Use of Proceeds </TD>
    <TD STYLE="text-align: center"> 14 </TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD> Plan of Distribution </TD>
    <TD STYLE="text-align: center"> 14 </TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD> Material United States and Canadian Federal Income Tax Consequences </TD>
    <TD STYLE="text-align: center"> 16 </TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD> Description of Securities Registered </TD>
    <TD STYLE="text-align: center"> 21 </TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD> Interests of Named Experts and Counsel </TD>
    <TD STYLE="text-align: center"> 22 </TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD> Cautionary Statement Regarding Forward Looking Statements </TD>
    <TD STYLE="text-align: center"> 22 </TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD> Information About the Company </TD>
    <TD STYLE="text-align: center"> 23 </TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt"> Description of Business </TD>
    <TD STYLE="text-align: center"> 23 </TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 9pt"> Description of Property </TD>
    <TD STYLE="text-align: center"> 31 </TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt"> Legal Proceedings </TD>
    <TD STYLE="text-align: center"> 31 </TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 9pt"> Market Price of and Dividends on Common Equity and Related Stockholder Matters </TD>
    <TD STYLE="text-align: center"> 31 </TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt"> Management&rsquo;s Discussion and Analysis of Financial Condition and Results of Operations </TD>
    <TD STYLE="text-align: center"> 32 </TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 9pt"> Quantitative and Qualitative Disclosures About Market Risk </TD>
    <TD STYLE="text-align: center"> 39 </TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt"> Directors and Executive Officers </TD>
    <TD STYLE="text-align: center"> 39 </TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 9pt"> Executive Compensation </TD>
    <TD STYLE="text-align: center"> 40 </TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt"> Security Ownership and Certain Beneficial Owners and Management </TD>
    <TD STYLE="text-align: center"> 43 </TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 9pt"> Certain Relationships and Related Transactions </TD>
    <TD STYLE="text-align: center"> 44 </TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt"> Legal Matters </TD>
    <TD STYLE="text-align: center"> 45 </TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 9pt"> Experts </TD>
    <TD STYLE="text-align: center"> 45 </TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD> Consolidated Financial Statements </TD>
    <TD STYLE="text-align: center"> 46 </TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 0.25in; text-indent: -9pt"> Index to Financial Statements </TD>
    <TD STYLE="text-align: center"> 46 </TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>ADHEREX TECHNOLOGIES INC.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>PROSPECTUS SUMMARY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following information is a summary
of the prospectus and it does not contain all of the information you should consider before making an investment decision. You
should read the entire prospectus carefully, including the consolidated financial statements and the notes relating to the financial
statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">ABOUT US</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We incorporated under the laws of Canada in September 1996.
On August 25, 2011, we continued from the laws of Canada under the<I> Canada Business Corporations Act</I> (the &ldquo;CBCA&rdquo;)
to the laws of British Columbia in accordance with Section 302 of the <I>Business Corporations Act</I> <I>(British Columbia)</I>
(the &ldquo;Continuance&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our principal executive offices are located at PO BOX 13628,
68 TW Alexander Drive, Research Triangle Park, NC 27709. Our telephone number is (919) 636-4530. Our website is www.adherex.com.
Information contained in our website does not constitute part of this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> We are a biopharmaceutical company focused on cancer therapeutics.
We currently have the following products in the clinical stage of development: (1) STS, a chemoprotectant being developed to reduce
or prevent hearing loss that may result from treatment with platinum-based chemotherapy drugs; and (2) Eniluracil, an oral dihydropyrimidine
dehydrogenase, or DPD, inhibitor, which may improve the tolerability and effectiveness of 5-fluorouracil (5-FU), one of the most
widely used oncology drugs in the world. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> We have limited capital. Therefore, management has determined
to focus our efforts primarily on our clinical activities with STS. We mainly provide limited product support for Eniluracil.
We do not intend to focus our resources on Eniluracil unless we raise additional capital. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> We have not received and do not expect to have significant
revenues from our product candidates until we are either able to sell our product candidates after obtaining applicable regulatory
approvals or we establish collaborations that provide us with up-front payments, licensing fees, milestone payments, royalties
or other revenue. We had a net gain of approximately $1.8 million (including a non-cash gain on derivatives of $3.8 million) in
the twelve months ended December 31, 2013 and a net loss of approximately $5.2 million (including a non-cash loss on derivatives
of $1.6 million) in the twelve months ended December 31, 2012. At December 31, 2013, we had an accumulated deficit of approximately
$108.7 million. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">On April 30, 2010, we entered into
agreements with our largest shareholder, Southpoint Capital Advisors LP and certain other investors for a private placement (the
&ldquo;April 2010 Private Placement&rdquo;). Participating investors in the April 2010 Private Placement purchased 240,066,664
units at a price of CAD$0.03 per unit, for gross proceeds of CAD$7,202,000. Each unit consisted of one share of our common stock,
and one warrant to purchase one share of common stock at a purchase price of CAD$0.08 per share for a period of five years from
the issue date. Purchasers of units in the April 2010 Private Placement that were existing shareholders of Adherex at such time
agreed not to participate in the Rights Offering.<FONT STYLE="font-weight: normal; text-underline-style: double"> We refer to
such purchasers as &ldquo;Private Placement Holders&rdquo; in this prospectus.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On March 29, 2011 we completed the Rights Offering to our shareholders.
Pursuant to the terms of the Rights Offering, we distributed rights to subscribe for up to 425,000,000 units underlying the Rights
(the &ldquo;Units&rdquo;), inclusive of over subscription rights, at a price of CAD$0.03 per unit, for gross proceeds of up to
CAD$12,750,000, to our shareholders on the basis of one Right per each share of common stock held by such shareholder as of March
2, 2011, the record date for the Rights Offering. On March 29, 2011, the expiration date for the Rights Offering, we had received
subscriptions for an aggregate of 84,559,178 Units, representing total net proceeds of approximately $2.5 million.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On August 25, 2011, immediately prior to the Continuance, Adherex
filed Articles of Amendment (the &ldquo;Amendment&rdquo;) under the<B><I>&nbsp;</I></B>CBCA to implement a one-for-eighteen reverse
split of our common stock (the &ldquo;Share Consolidation&rdquo;).&nbsp;&nbsp;The Share Consolidation was authorized by the shareholders
at our annual and special meeting of shareholders on June 28, 2011 (within a share consolidation range of between one-for-fifteen
and one-for-twenty) and was approved by resolution of the Board of Directors on August 10, 2011.&nbsp;&nbsp;The Share Consolidation
became effective on August 25, 2011 and our common stock began trading on the Toronto Stock Exchange and the OTC market (on the
OTCQB tier) on a post-consolidation basis on August 30, 2011. The Share Consolidation reduced the number of shares of the Company's
outstanding common stock from approximately 452.8 million, as of the filing date of the Company's most recent Quarterly Report
on Form 10-Q, to approximately 25.2 million as of August 25, 2011, the effective date of the Share Consolidation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> In November 2013, we announced the closing of the sale of
4.0 million units for gross proceeds of $1.6 million in a non-brokered financing transaction with Manchester Explorer, L.P., certain
individuals and entities associated with Manchester Explorer (collectively, &ldquo;Manchester&rdquo;) and 683 Capital Management
LLC (the &ldquo;November 2013 Financing&rdquo;). Each unit (a &ldquo;Unit&rdquo;) was issued at a price of $0.40 per Unit and
consists of one of our common shares and one common share purchase warrant (the &ldquo;2013 Warrants&rdquo;). Each 2013 Warrant
entitles the holder thereof to acquire one of our common shares at an exercise price of $0.50 per share. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In the prospectus, unless otherwise indicated, (i) the number
of units and unit prices (including with respect to the units issued in our April 2010 Private Placement and the Rights Offering)
have not been adjusted to reflect the Share Consolidation, (ii) the number of warrants outstanding have not been adjusted to reflect
the Share Consolidation (in accordance with the terms of the warrants, the number of shares of common stock issuable thereunder
were adjusted as a result of the Share Consolidation but not the number of warrants outstanding) and (iii) the number of shares
outstanding, common stock issuable upon exercise or conversion of our warrants, options and other derivative securities (including
the Warrant Shares), all exercise or conversion prices with respect thereto, and all market prices and over-the-counter quotations
of our common stock have been adjusted to reflect the Share Consolidation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In the prospectus, unless otherwise indicated, all dollar amounts
and references to &ldquo;$&rdquo; are to U.S. dollars and &ldquo;CAD$&rdquo; refers to Canadian dollars.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>ABOUT THE OFFERING </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">This prospectus relates to the issuance by the Company of up
to 4,697,732 Warrant Shares issuable upon exercise of outstanding Warrants issued in connection with the Company's Rights Offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">When initially issued at the closing of the Rights Offering,
each Warrant entitled the holder thereof (&ldquo;Holder&rdquo;) to purchase one Warrant Share at an exercise price of CAD $0.08
per Warrant Share. As a result of the Share Consolidation, in accordance with the terms of the Warrants, the number of Warrant
Shares issuable upon exercise of each Warrant was adjusted from one Warrant Share per each Warrant to .055 Warrant Shares per
Warrant (or, from an aggregate of 84,559,178 Warrant Shares issuable upon exercise of all Warrants to 4,697,732 Warrant Shares)
and the exercise price per Warrant was adjusted from CAD $0.08 per share to CAD $1.44 per share. Therefore, as a result of the
Share Consolidation, each 18 Warrants held by a Holder will entitle the Holder to purchase one Warrant Share at an exercise price
of CAD $1.44 per share (the &ldquo;Exercise Price&rdquo;) at or prior to 5:00 pm Ottawa time on March 30, 2016, at which time
the Warrants shall expire and have no value (the &ldquo;Expiration Date&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Holders may not purchase fractional Warrant Shares and, upon
exercise, the number of Warrant Shares a Holder is entitled to receive will be rounded up or down to the nearest whole number.
The number of Warrant Shares for which the Warrants may be exercised and the Exercise Price applicable to the Warrants will be
proportionately adjusted (in each case, in accordance with the terms of the Warrants) in the event that we make distributions
of our common stock, or subdivide, combine or reclassify outstanding shares of our common stock, or if we pay a dividend in securities
or property other than common stock. In the case of a merger or consolidation of us into another company where we are not the
surviving company, Holder will have the right to receive a new warrant in the surviving corporation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Based upon the 29,307,618 shares of our common stock outstanding
as of April 8, 2014, and assuming all of the Warrants are exercised, after giving effect to the issuance of all 4,697,732 Warrant
Shares, we would have 34,005,350 shares of our common stock outstanding and we would receive an aggregate gross proceeds from
the exercise of all of the Warrants of CAD $6,764,734. However, it is possible the Warrants may expire before any or all of them
are exercised, in which case we may receive no proceeds from the exercise of the Warrants. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-weight: normal; text-underline-style: double"> &nbsp; </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-weight: normal; text-underline-style: double"> We
currently list the Warrants and the Warrant Shares on the TSX. Such listing is subject to us fulfilling all of the listing requirements
of the TSX. Our </FONT> common stock is quoted on the OTCQB Market. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We will bear the fees and expenses relating
to the offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>RISK FACTORS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Risks Related to Our Business</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>We have a history of significant losses and have had no
revenues to date through the sale of our products. If we do not generate significant revenues, we will not achieve profitability.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> To date, we have been engaged primarily in research and
development activities. We have had no revenues through the sale of our products, and we do not expect to have significant revenues
until we are able to either sell our product candidates after obtaining applicable regulatory approvals or we establish collaborations
that provide us with up-front payments, licensing fees, milestone payments, royalties or other revenue. We have incurred significant
operating losses every year since our inception on September 3, 1996. We had a net gain of approximately $1.8 million (including
a non-cash gain on derivatives of $3.8 million) in the twelve months ended December 31, 2013, and reported a loss of approximately
$5.2 million (which included a $1.6 million non-cash loss on derivatives) for the twelve months ended December 31, 2012. At December
31, 2013, we had an accumulated deficit of approximately $108.7 million. We anticipate incurring substantial additional losses
due to the need to spend substantial amounts on our current clinical trials, anticipated research and development activities,
and general and administrative expenses, among other factors. We have not commercially introduced any product and our product
candidates are in varying stages of development and testing. Our ability to attain profitability will depend upon our ability
to fund and develop products that are safe, effective and commercially viable, to obtain regulatory approval for the manufacture
and sale of our product candidates and to license or otherwise market our product candidates successfully. Any revenues generated
from such products, assuming they are successfully developed, marketed and sold, may not be realized for a number of years. We
may never achieve or sustain profitability on an ongoing basis. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>There is no assurance that we will successfully develop
a commercially viable product.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Since our formation in September 1996, we have engaged in
research and development programs. We have generated no revenue from product sales, do not have any products currently available
for sale, and none are expected to be commercially available for sale until we have completed additional clinical trials, if at
all. There can be no assurance that the research we fund and manage will lead to commercially viable products. We have completed
a Phase II study for Eniluracil and a Phase III study for STS with an additional Phase III study for STS currently enrolling patients.
Our products must still undergo substantial additional regulatory review prior to commercialization. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>We anticipate the need for additional capital in the future
and if we cannot raise additional capital, we will not be able to fulfill our business plan.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We need to obtain additional funding in the future in order
to finance our business strategy, operations and growth. We may not be able to obtain additional financing in sufficient amounts
or on acceptable terms when needed. If we fail to arrange for sufficient capital on a timely basis, we may be required to curtail
our business activities until we can obtain adequate financing. Debt financing must be repaid regardless of whether or not we
generate profits or cash flows from our business activities. Equity financing may result in dilution to existing stockholders
and may involve securities that have rights, preferences, or privileges that are senior to our common stock or other securities.
If we cannot raise sufficient capital when necessary, we will likely have to curtail operations and you may lose part or all of
your investment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>If we do not maintain current or enter into new collaborations
with other companies, we might not successfully develop our product candidates or generate sufficient revenues to expand our business.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> We currently rely on scientific and research and development
collaboration arrangements with academic institutions and other third party collaborators, including our agreement for Eniluracil
with GSK and an exclusive worldwide license from OHSU for STS. We also rely on collaborators for testing STS, including SIOPEL
and the Children&rsquo;s Oncology Group. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> The agreements with GSK and OHSU are terminable by either
party in the event of an uncured breach by the other party. We may also terminate our agreement with OHSU at any time upon prior
written notice of specified durations to the licensor. Termination of any of our collaborative arrangements could materially adversely
affect our business. For example, if we are unable to make the appropriate payments under these agreements, the licensor might
terminate the agreement which might have a material adverse impact. In addition, our collaborators might not perform as agreed
in the future. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Since we conduct a significant portion of our research and
development through collaborations, our success may depend significantly on the performance of such collaborators, as well as
any future collaborators. Collaborators might not commit sufficient resources to the research and development or commercialization
of our product candidates. Economic or technological advantages of products being developed by others, or other factors could
lead our collaborators to pursue other product candidates or technologies in preference to those being developed in collaboration
with us. The commercial potential of, development stage of and projected resources required to develop our drug candidates will
affect our ability to maintain current collaborations or establish new collaborators. There is a risk of dispute with respect
to ownership of technology developed under any collaboration. Our management of any collaboration will require significant time
and effort as well as an effective allocation of resources. We may not be able to simultaneously manage a large number of collaborations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Our product candidates are still in development. Due to
the long, expensive and unpredictable drug development process, we might not ever successfully develop and commercialize any of
our product candidates.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> In order to achieve profitable operations, we, alone or
in collaboration with others, must successfully fund, develop, manufacture, introduce and market our product candidates. The time
necessary to achieve market success for any individual product is long and uncertain. Our product candidates and research programs
are in various stages of clinical development and require significant, time-consuming and costly research, testing and regulatory
clearances. In developing our product candidates, we are subject to risks of failure that are inherent in the development of therapeutic
products based on innovative technologies. For example, our product candidates might be ineffective, as Eniluracil was shown to
be in earlier clinical trials conducted by GSK, or may be overly toxic, or otherwise might fail to receive the necessary regulatory
clearances. The results of preclinical and initial clinical trials are not necessarily predictive of future results. Our product
candidates might not be economical to manufacture or market or might not achieve market acceptance. In addition, third parties
might hold proprietary rights that preclude us from marketing our product candidates or others might market equivalent or superior
products. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>We must conduct human clinical trials to assess our product
candidates. If these trials are delayed or are unsuccessful, our development costs will significantly increase and our business
prospects may suffer.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Before obtaining regulatory approvals for the commercial sale
of our product candidates, we must demonstrate, through preclinical studies with animals and clinical trials with humans, that
our product candidates are safe and effective for use in each target indication. To date, we have performed only limited clinical
trials, and we have only done so with some of our product candidates. Much of our testing has been conducted on animals or on
human cells in the laboratory, and the benefits of treatment seen in animals may not ultimately be obtained in human clinical
trials. As a result, we will need to perform significant additional research and development and extensive preclinical and clinical
testing prior to any application for commercial use. We may suffer significant setbacks in clinical trials, and the trials may
demonstrate our product candidates to be unsafe or ineffective. We may also encounter problems in our clinical trials that will
cause us to delay, suspend or terminate those clinical trials, which would increase our development costs and harm our financial
results and commercial prospects. Identifying and qualifying patients to participate in clinical trials of our potential products
is critically important to our success. The timing of our clinical trials depends on the speed at which we can recruit patients
to participate in testing our product candidates. We have experienced delays in some of our clinical trials and we may experience
significant delays in the future. If patients are unwilling to participate in our trials because of competitive clinical trials
for similar patient populations, perceived risk or any other reason, the timeline for recruiting patients, conducting trials and
obtaining regulatory approval of potential products will be delayed. Other factors that may result in significant delays include
obtaining regulatory or ethics review board approvals for proposed trials, reaching agreement on acceptable terms with prospective
clinical trial sites, and obtaining sufficient quantities of drug for use in the clinical trials. Such delays could result in
the termination of the clinical trials altogether.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Regulatory approval of our product candidates is time-consuming,
expensive and uncertain, and could result in unexpectedly high expenses and delay our ability to sell our products.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Development, manufacture and marketing of our products are
subject to extensive regulation by governmental authorities in the United States and other countries. This regulation could require
us to incur significant unexpected expenses or delay or limit our ability to sell our product candidates. Our clinical studies
might be delayed or halted, or additional studies might be required, for various reasons, including:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.75in"><FONT STYLE="font: 10pt Symbol"> &middot; </FONT></TD><TD> lack of funding; </TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.75in"><FONT STYLE="font: 10pt Symbol"> &middot; </FONT></TD><TD> the drug is
                                         not effective; </TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.75in"><FONT STYLE="font: 10pt Symbol"> &middot; </FONT></TD><TD> patients experience
                                         severe side effects during treatment; </TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.75in"><FONT STYLE="font: 10pt Symbol"> &middot; </FONT></TD><TD> appropriate
                                         patients do not enroll in the studies at the rate expected; </TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.75in"><FONT STYLE="font: 10pt Symbol"> &middot; </FONT></TD><TD> drug supplies
                                         are not sufficient to treat the patients in the studies; or </TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.75in"><FONT STYLE="font: 10pt Symbol"> &middot; </FONT></TD><TD> we decide
                                         to modify the drug during testing. </TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">If regulatory approval of any product is granted, it will be
limited to those indications for which the product has been shown to be safe and effective, as demonstrated to the FDA&rsquo;s
satisfaction through clinical studies. Furthermore, approval might entail ongoing requirements for post-marketing studies. Even
if regulatory approval is obtained, labeling and promotional activities are subject to continual scrutiny by the FDA and state
regulatory agencies and, in some circumstances, the Federal Trade Commission. FDA enforcement policy prohibits the marketing of
approved products for unapproved, or off-label, uses. These regulations and the FDA&rsquo;s interpretation of them might impair
our ability to effectively market our products.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We and our third-party manufacturers are also required to comply
with the applicable current FDA Good Manufacturing Practices regulations, which include requirements relating to quality control
and quality assurance, as well as the corresponding maintenance of records and documentation. Further, manufacturing facilities
must be approved by the FDA before they can be used to manufacture our products, and they are subject to additional FDA inspection.
If we fail to comply with any of the FDA&rsquo;s continuing regulations, we could be subject to reputational harm and sanctions,
including:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.75in"><FONT STYLE="font: 10pt Symbol"> &middot; </FONT></TD><TD> delays, warning
                                         letters and fines; </TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.75in"><FONT STYLE="font: 10pt Symbol"> &middot; </FONT></TD><TD> product recalls
                                         or seizures and injunctions on sales; </TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.75in"><FONT STYLE="font: 10pt Symbol"> &middot; </FONT></TD><TD> refusal of
                                         the FDA to review pending applications; </TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.75in"><FONT STYLE="font: 10pt Symbol"> &middot; </FONT></TD><TD> total or partial
                                         suspension of production; </TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.75in"><FONT STYLE="font: 10pt Symbol"> &middot; </FONT></TD><TD> withdrawals
                                         of previously approved marketing applications; and </TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.75in"><FONT STYLE="font: 10pt Symbol"> &middot; </FONT></TD><TD> civil
                                         penalties and criminal prosecutions. </TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In addition, identification of side effects after a drug is
on the market or the occurrence of manufacturing problems could cause subsequent withdrawal of approval, reformulation of the
drug, additional testing or changes in labeling of the product.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B> We may be unable to effectively deploy the proceeds from
our recent financings for the development of STS. </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> In November 2013, we announced the closing of a private
placement for proceeds of $1.6 million. Any inability on our part to manage effectively the deployment of this capital could limit
our ability to successfully develop STS. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>If our licenses to proprietary technology owned by others
are terminated or expire, we may suffer increased development costs and delays, and we may not be able to successfully develop
our product candidates.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> The development of our drug candidates and the manufacture
and sale of any products that we develop will involve the use of processes, products and information, some of the rights to which
are owned by others. Our product candidates are licensed under agreements with GSK and OHSU. Although we have obtained licenses
or rights with regard to the use of certain processes, products and information, the licenses or rights could be terminated or
expire during critical periods and we may not be able to obtain, on favorable terms or at all, licenses or other rights that may
be required. Some of these licenses provide for limited periods of exclusivity that may be extended only with the consent of the
licensor, which may not be granted. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>If we are unable to adequately protect or maintain our patents
and licenses related to our product candidates, or we infringe upon the intellectual property rights of others, we may not be
able to successfully develop and commercialize our product candidates.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The value of our technology will depend in part upon our ability,
and those of our collaborators, to obtain patent protection or licenses to patents, maintain trade secret protection and operate
without infringing on the rights of third parties. Although we have successfully pursued patent applications in the past, it is
possible that:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.75in"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD><TD>some of all of
                                         our pending patent applications, or those we have licensed, may not be allowed;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.75in"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD><TD>proprietary products
                                         or processes that we develop in the future may not be patentable;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.75in"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD><TD>any issued patents
                                         that we own or license may not provide us with any competitive advantages or may be successfully
                                         challenged by third parties; or</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.75in"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD><TD>the patents of
                                         others may have an adverse effect on our ability to do business.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">It is not possible for us to be certain that we are the original
and first creator of inventions encompassed by our pending patent applications or that we were the first to file patent applications
for any such inventions. Further, any of our patents, once issued, may be declared by a court to be invalid or unenforceable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Eniluracil is currently protected in the US under an issued
method of use patent that we own and expires in 2029. STS is currently protected by methods of use patents that we exclusively
licensed from OHSU that expire in Europe in 2021 and are currently pending in the United States. None of the above expiry dates
take into consideration additional and pending patent applications for Eniluracil that, if issued, could provide additional patent
protection nor possible patent term extensions or periods of data exclusivity that may be available upon marketing approval in
the various countries worldwide. In addition, periods of marketing exclusivity for STS may also be possible in the United States
under orphan drug status. We obtained Orphan Drug Designation in the United States for the use of STS in the prevention of platinum-induced
ototoxicity in pediatric patients in 2004, if approved, will have seven and a half years of pediatric exclusivity in the United
States from the approval date. Refer to the &ldquo;Description of Business&rdquo; section of this report for a further description
of the United States Orphan Drug Designation. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We may be required to obtain licenses under patents or other
proprietary rights of third parties but the extent to which we may wish or need to do so is unknown. Any such licenses may not
be available on terms acceptable to us or at all. If such licenses are obtained, it is likely they would be royalty bearing, which
would reduce any future income. If licenses cannot be obtained on an economical basis, we could suffer delays in market introduction
of planned products or their introduction could be prevented, in some cases after the expenditure of substantial funds. If we
do not obtain such licenses, we would have to design around patents of third parties, potentially causing increased costs and
delays in product development and introduction or precluding us from developing, manufacturing or selling our planned products,
or our ability to develop, manufacture or sell products requiring such licenses could be foreclosed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Litigation may also be necessary to enforce or defend patents
issued or licensed to us or our collaborators or to determine the scope and validity of a third party&rsquo;s proprietary rights.
We could incur substantial costs if litigation is required to defend ourselves in patent suits brought by third parties, if we
participate in patent suits brought against or initiated by our collaborators, or if we initiate such suits. We might not prevail
in any such action. An adverse outcome in litigation or an interference to determine priority or other proceeding in a court or
patent office could subject us to significant liabilities, require disputed rights to be licensed from other parties or require
us or our collaborators to cease using certain technology or products. Any of these events would likely have a material adverse
effect on our business, financial condition and results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Much of our technological know-how that is not patentable may
constitute trade secrets. Our confidentiality agreements might not provide for meaningful protection of our trade secrets, know-how
or other proprietary information in the event of any unauthorized use or disclosure of information. In addition, others may independently
develop or obtain similar technology and may be able to market competing products and obtain regulatory approval through a showing
of equivalency to our product that has obtained regulatory approvals, without being required to undertake the same lengthy and
expensive clinical studies that we would have already completed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>The vulnerability to off-label use or sale of our product
candidates that are covered only by &ldquo;method of use&rdquo; patents may cause downward pricing pressure on these product candidates
if they are ever commercialized and may make it more difficult for us to enter into collaboration or partnering arrangements for
the development of these product candidates.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> STS and Eniluracil, are currently only covered by &ldquo;method
of use&rdquo; patents, which covers the use of certain compounds to treat specific conditions, and not by &ldquo;composition of
matter&rdquo; patents, which would cover the chemical composition of the compound. Method of use patents provides less protection
than composition of matter patents because of the possibility of off-label competition if other companies develop or market the
compound for other uses. If another company markets a drug that we expect to market under the protection of a method of use patent,
physicians may prescribe the other company&rsquo;s drug for use in the indication for which we obtain approval and have a patent,
even if the other company&rsquo;s drug is not approved for such an indication. Off-label use and sales could limit our sales and
exert pricing pressure on any products we develop covered only by method of use patents. Also, it may be more difficult to find
a collaborator to license or support the development of our product candidates that are only covered by method of use patents. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>If our third party manufacturers breach or terminate their
agreements with us, or if we are unable to secure arrangements with third party manufacturers on acceptable terms as needed in
the future, we may suffer significant delays and additional costs.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> We have no experience manufacturing products and do not
currently have the resources to manufacture any products that we may develop. We currently have agreements with contract manufacturers
for clinical supplies of STS, including drug substance providers and drug product suppliers, but they might not perform as agreed
in the future or may terminate our agreement with them before the end of the required term. Significant additional time and expense
would be required to effect a transition to a new contract manufacturer. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We plan to continue to rely on contract manufacturers for the
foreseeable future to produce quantities of products and substances necessary for research and development, preclinical trials,
human clinical trials and product commercialization, and to perform their obligations in a timely manner and in accordance with
applicable government regulations. If we develop any products with commercial potential, we will need to develop the facilities
to independently manufacture such products or secure arrangements with third parties to manufacture them. We may not be able to
independently develop manufacturing capabilities or obtain favorable terms for the manufacture of our products. While we intend
to contract for the commercial manufacture of our product candidates, we may not be able to identify and qualify contractors or
obtain favorable contracting terms. We or our contract manufacturers may also fail to meet required manufacturing standards, which
could result in delays or failures in product delivery, increased costs, injury or death to patients, product recalls or withdrawals
and other problems that could significantly hurt our business. We intend to maintain a second source for back-up commercial manufacturing,
wherever feasible. However, if a replacement to our future internal or contract manufacturers were required, the ability to establish
second-sourcing or find a replacement manufacturer may be difficult due to the lead times generally required to manufacture drugs
and the need for FDA compliance inspections and approvals of any replacement manufacturer, all of which factors could result in
production delays and additional commercialization costs. Such lead times would vary based on the situation, but might be twelve
months or longer.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>We lack the resources necessary to effectively market our
product candidates, and we may need to rely on third parties over whom we have little or no control and who may not perform as
expected.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We do not have the necessary resources to market our product
candidates. If we develop any products with commercial potential, we will either have to develop a marketing capability, including
a sales force, which is difficult and expensive to implement successfully, or attempt to enter into a collaboration, merger, joint
venture, license or other arrangement with third parties to provide a substantial portion of the financial and other resources
needed to market such products. We may not be able to do so on acceptable terms, if at all. If we rely extensively on third parties
to market our products, the commercial success of such products may be largely outside of our control.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>We conduct our business internationally and are subject
to laws and regulations of several countries which may affect our ability to access regulatory agencies and may affect the enforceability
and value of our licenses.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> We have conducted clinical trials in the United States,
Canada, Europe and the Pacific Rim and intend to, or may, conduct future clinical trials in these and other jurisdictions. There
can be no assurance that any sovereign government will not establish laws or regulations that will be deleterious to our interests.
There is no assurance that we, as a British Columbia corporation, will continue to have access to the regulatory agencies in any
jurisdiction where we might want to conduct clinical trials or obtain regulatory approval, and we might not be able to enforce
our license or patent rights in foreign jurisdictions. Foreign exchange controls may have a material adverse effect on our business
and financial condition, since such controls may limit our ability to flow funds into or out of a particular country to meet obligations
under licenses, clinical trial agreements or other collaborations. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Our cash invested in money market funds might be subject
to loss.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Even though we believe we take a conservative approach to investing
our funds, the volatility of the current financial markets exposes us to increased investment risk, including the risks that the
value and liquidity of our money market investments could deteriorate significantly and the issuers of the investments we hold
could be subject to credit rating downgrades. While we have not experienced any loss or write down of our money market investments
in the past, we cannot guarantee that such losses will not occur in future periods.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Risks Related to Our Industry</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>If we are unable to obtain applicable U.S. and/or foreign
regulatory approvals, we will be unable to develop and commercialize our drug candidates.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> The preclinical studies and clinical trials of our product
candidates, as well as the manufacturing, labeling, sale and distribution, export or import, marketing, advertising and promotion
of our product candidates are subject to various regulatory frameworks in the United States, Canada and other countries. Any products
that we develop must receive all relevant regulatory approvals and clearances before any marketing, sale or distribution. The
regulatory process, which includes extensive preclinical studies and clinical testing to establish product safety and efficacy,
can take many years and cost substantial amounts of money. As a result of the length of time, many challenges and costs associated
with the drug development process, the historical rate of failures for drug candidates is extremely high. For example, prior development
of our compound Eniluracil by GSK was not successful. Varying interpretations of the data obtained from studies and tests could
delay, limit or prevent regulatory approval or clearance. Changes in regulatory policy could also cause delays or affect regulatory
approval. Any regulatory delays may increase our development costs and negatively impact our competitiveness and prospects. It
is possible that we may not be able to obtain regulatory approval of any of our drug candidates or approvals may take longer and
cost more to obtain than expected. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Regulatory approvals, if granted, may entail limitations on
the uses for which any products we develop may be marketed, limiting the potential sales for any such products. The granting of
product approvals can be withdrawn at any time, and manufacturers of approved products are subject to regular reviews, including
for compliance with FDA Good Manufacturing Practices regulations. Failure to comply with any applicable regulatory requirement,
which may change from time to time, can result in warning letters, fines, sanctions, penalties, recalling or seizing products,
suspension of production, or even criminal prosecution.<FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Future sales of our product candidates may suffer if they
fail to achieve market acceptance.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Even if our product candidates are successfully developed and
achieve appropriate regulatory approval, they may not enjoy commercial acceptance or success. Product candidates may compete with
a number of new and traditional drugs and therapies developed by major pharmaceutical and biotechnology companies. Market acceptance
is dependent on product candidates demonstrating clinical efficacy and safety, as well as demonstrating advantages over alternative
treatment methods. In addition, market acceptance is influenced by government reimbursement policies and the ability of third
parties to pay for such products. Physicians, patients, the medical community or patients may not accept or utilize any products
we may develop.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>We face a strong competitive environment. Other companies
may develop or commercialize more effective or cheaper products, which may reduce or eliminate the demand for our product candidates.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> The biotechnology and pharmaceutical industry, and in particular
the field of cancer therapeutics where we are focused, is very competitive. Many companies and research organizations are engaged
in the research, development and testing of new cancer therapies or means of increasing the effectiveness of existing therapies,
including, among many others, Amgen, AstraZeneca, Bayer, Bristol-Myers Squibb, Eli Lilly, Eisai, Merck KGaA, Novartis, Johnson
&amp; Johnson, Pfizer, Roche, Taiho and Sanofi-Aventis. Many of these companies have marketed drugs or are developing targeted
cancer therapeutics which, depending upon the mechanism of action of such agents could thus be competitors. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Many of our existing or potential competitors have substantially
greater financial, technical and human resources than we do and may be better equipped to develop, manufacture and market products.
In addition, many of these competitors have extensive experience with preclinical testing and human clinical trials and in obtaining
regulatory approvals. Also, some of the smaller companies that compete with us have formed collaborative relationships with large,
established companies to support the research, development, clinical trials and commercialization of any products that they may
develop. Academic institutions, government agencies and other public and private research organizations may also conduct research,
seek patent protection and establish collaborative arrangements for research, clinical development and marketing of products similar
to those we seek to develop. These companies and institutions compete with us in recruiting and retaining qualified scientific
and management personnel as well as in acquiring technologies complementary to our projects.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We are likely to face competition in the areas of product efficacy
and safety, ease of use and adaptability, as well as pricing, product acceptance, regulatory approvals and intellectual property.
Competitors could develop more effective, safer and more affordable products than we do, and they may obtain patent protection
or product commercialization before we do or even render our product candidates obsolete. The existence of competitive products,
including products or treatments of which we are not aware, or products or treatments that may be developed in the future, may
adversely affect the marketability of any products that we develop.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>We may face product liability claims that could require
us to defend costly lawsuits or incur substantial liabilities that could adversely impact our financial condition, receipt of
regulatory approvals for our product candidates and our results of operation.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> The use of our product candidates in clinical trials and
for commercial applications, if any, may expose us to liability claims in the event that such product candidates cause injury
or death or result in other adverse effects. These claims could be made by health care institutions, contract laboratories, and
subjects participating in our clinical studies, patients or others using our product candidates. In addition to liability claims,
certain serious adverse events could require interruption, delay and/or discontinuation of a clinical trial and potentially prevent
further development of the product candidate. We carry clinical trial insurance but the coverage may not be sufficient to protect
us from legal expenses and liabilities we might incur. Litigation is very expensive, even if we defend successfully against possible
litigation. In addition, our existing coverage may not be adequate if we further develop products, and future coverage may not
be available in sufficient amounts or at reasonable cost. In addition, we might reduce the amount of this coverage due to our
limited financial resources. Adverse liability claims may also harm our ability to obtain or maintain regulatory approvals. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B> We used hazardous material and chemicals in our research
and development, and our failure to comply with laws related to hazardous materials could materially harm us. </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> In the past, our research and development processes involved
the controlled use of hazardous materials, such as flammable organic solvents, corrosive acids and corrosive bases. Accordingly,
we are subject to federal, state, local and foreign laws and regulations governing the use, manufacture, storage, handling and
disposal of such materials and certain waste products. The risk of accidental contamination or injury from these materials cannot
be completely eliminated. We could be held liable for any damages that result and any such liability could exceed our resources
and may not be covered by our general liability insurance. We currently do not carry insurance specifically for hazardous materials
claims. We may be required to incur significant costs to comply with environmental laws and regulations, which may change from
time to time. Our current practice is to outsource these activities. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Efforts to reduce product pricing and health care reimbursement
and changes to government policies could negatively affect the commercialization of our product candidates.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> If any of our product candidates achieve regulatory approval,
we may be materially adversely affected by the continuing efforts of governmental and third-party payers to contain or reduce
health care costs. For example, if we succeed in bringing one or more products to market, such products may not be considered
cost-effective and the availability of consumer reimbursement may not exist or be sufficient to allow the sale of such products
on a competitive basis. The constraints on pricing and availability of competitive products may further limit our pricing and
reimbursement policies as well as adversely impact market acceptance and commercialization for the products. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In many markets, the pricing or profitability of healthcare
products is subject to government control. In recent years, federal, state, provincial and local officials and legislators have
proposed or are proposing a variety of price-based reforms to the healthcare systems in the United States, Canada and elsewhere.
Some proposals include measures that would limit or eliminate payments from third-party payors to the consumer for certain medical
procedures and treatments or allow government control of pharmaceutical pricing. The adoption of any such proposals or reforms
could adversely affect the commercial viability of our product candidates.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> In the U.S., there have been numerous proposals considered
at the federal and state levels for comprehensive reforms of health care and its cost, and it is likely that federal and state
legislatures and health agencies will continue to focus on health care reform in the future. Some states are also considering
legislation that would control the prices of drugs, and state Medicaid programs are increasingly requesting manufacturers to pay
supplemental rebates and requiring prior authorization by the state program for use of any drug for which supplemental rebates
are not being paid. Managed care organizations continue to seek price discounts and, in some cases, to impose restrictions on
the coverage of particular drugs. Government efforts to reduce Medicaid expenses may lead to increased use of managed care organizations
by Medicaid programs. This may result in managed care organizations influencing prescription decisions for a larger segment of
the population and a corresponding constraint on prices and reimbursement for our products. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Any significant changes in the healthcare system in the United
States, Canada or abroad would likely have a substantial impact on the manner in which we conduct business and could have a material
adverse effect on our ability to raise capital and the viability of product commercialization.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Risks Related to This Offering</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>We will have immediate and broad discretion over the use
of the net proceeds from this offering.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The net proceeds from the exercise of Warrants pursuant to
this offering will be immediately available to us to use at our discretion. We intend to use the net proceeds to continue to clinically
develop our products and for working capital purposes. However, if less than all of the Warrants are exercised, only a portion
of the Warrant Shares being offered by this prospectus may be issued and, as a result, our net proceeds may be significantly less
than the amount required to complete all clinical requirements. Our judgment in how to use the net proceeds from this offering
may not result in positive returns on your investment and you will not have an opportunity to evaluate the economic, financial,
or other information upon which we base our decisions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>As the offering is not underwritten, no underwriter has
conducted an independent review to verify the things we say in this prospectus.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our offering is not underwritten. Thus, there has not been
an independent &ldquo;due diligence&rdquo; review of matters covered by this prospectus, such as might be conducted by an underwriter
had one been affiliated with this offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Illiquid trading market for the Warrant Shares.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-weight: normal; text-underline-style: double">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-weight: normal; text-underline-style: double"> The
Warrant Shares will be available for trading on the OTCQB Market and will be listed on the TSX, however, such listing is subject
to us fulfilling all of the listing requirements of the TSX. There is currently a very limited trading market in our common stock
and a more active market is not expected to develop, and, accordingly, you may have difficulty in selling your Warrant Shares
should you desire to do so in the future. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Risks Related to Our Common Stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Our common stock has been delisted from NYSE Alternext US
LLC (formerly the American Stock Exchange), which may make it more difficult for stockholders to dispose of their shares.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> In December 2008, we received notice from the NYSE Alternext
US, LLC (formerly the American Stock Exchange), or AMEX, that we were not in compliance with Section 1003(a)(ii) of its Company
Guide, because our stockholders&rsquo; equity was below $6 million and we had incurred losses from continued operations and net
losses in the five most recent fiscal years. On January 20, 2009, we voluntarily filed to delist our common stock from the AMEX
and effective January 30, 2009, our common stock no longer traded on the AMEX. As a result, any trading of our common stock in
the U.S. will need to be conducted in the over-the-counter market. In addition, our common stock is also subject to the SEC&rsquo;s
penny stock rules, which impose additional requirements on broker-dealers who effect trades. As a result, stockholders might have
difficulty selling our common stock. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>We may be unable to maintain the listing of our common stock
on the TSX and that would make it more difficult for stockholders to dispose of their common stock.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Our common stock is currently listed on the TSX. The TSX
has rules for continued listing, including minimum market capitalization and other requirements, that we might not meet in the
future, particularly if the price of our common stock does not increase or we are unable to raise additional capital to continue
operations. On September 8, 2012, the Toronto Stock Exchange issued an official delisting review of our common stock. The remedial
delisting review was initiated because the value of the shares of our common stock that are held by &ldquo;public shareholders&rdquo;
had been below the CAD$2.0 million threshold required under the TSX continuing listing standards for a period of 30 consecutive
trading days. On January 7, 2013, the Toronto Stock Exchange completed its review of the Company and determined that the Company
met TSX's continued listing requirements. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Delisting from the TSX would make it more difficult for stockholders
to dispose of their common stock and more difficult to obtain accurate quotations on our common stock. This could have an adverse
effect on the price of our common stock. There can be no assurances that a market maker will make a market in our common stock
on the OTCQB or any other stock quotation system after delisting. Furthermore, securities quoted on the Pink Sheets generally
have significantly less liquidity than securities traded on a national securities exchange, not only in the number of shares that
can be bought and sold, but also through delays in the timing of transactions and lower market prices than might otherwise be
obtained. As a result, stockholders might find it difficult to resell shares at prices quoted in the market or at all. Furthermore,
because of the limited market and generally low volume of trading in our common stock, our common stock is more likely to be affected
by broad market fluctuations, general market conditions, fluctuations in our operating results, changes in the market&rsquo;s
perception of our business, and announcements made by us, our competitors or parties with whom we have business relationships.
Our ability to issue additional securities for financing or other purposes, or to otherwise arrange for any financing we may need
in the future, may also be materially and adversely affected by the fact that our securities are not traded on a national securities
exchange.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>The market price of our common stock is highly volatile
and could cause the value of your investment to significantly decline.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Historically, the market price of our common stock has been
highly volatile and the market for our common stock has from time to time experienced significant price and volume fluctuations,
some of which are unrelated to our operating performance. From July 1, 2008 to March 14, 2014, the trading price of our stock
fluctuated from a high closing price of CAD$3.60 per share to a low closing price of CAD$0.08 per share on the TSX. From July
1, 2008 until our delisting on January 30, 2009, the trading price of our stock fluctuated from a high closing price of $4.14
per share to a low closing price of $0.18 per share on the AMEX. Historically, our common stock has had a low trading volume,
and may continue to have a low trading volume in the future. This low volume may contribute to the volatility of the market price
of our common stock. It is likely that the market price of our common stock will continue to fluctuate significantly in the future. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The market price of our stock may be significantly affected
by many factors, including without limitation:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.4in"></TD><TD STYLE="width: 0.6in"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">the
                                         need to raise additional capital and the terms of any transaction we are able to enter
                                         into;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.4in"></TD><TD STYLE="width: 0.6in"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">other
                                         external factors generally or stock market trends in the pharmaceutical or biotechnology
                                         industries specifically;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.4in"></TD><TD STYLE="width: 0.6in"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">announcements
                                         of licensing agreements, joint ventures, collaborations or other strategic alliances
                                         that involve our products or those of our competitors;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.4in"></TD><TD STYLE="width: 0.6in"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">innovations
                                         related to our or our competitors&rsquo; products;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.4in"></TD><TD STYLE="width: 0.6in"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">actual
                                         or potential clinical trial results related to our or our competitors&rsquo; products;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.4in"></TD><TD STYLE="width: 0.6in"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">our
                                         financial results or those of our competitors;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.4in"></TD><TD STYLE="width: 0.6in"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">reports
                                         of securities analysts regarding us or our competitors;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.4in"></TD><TD STYLE="width: 0.6in"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">developments
                                         or disputes concerning our licensed or owned patents or those of our competitors;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.4in"></TD><TD STYLE="width: 0.6in"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">developments
                                         with respect to the efficacy or safety of our products or those of our competitors; and</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.4in"></TD><TD STYLE="width: 0.6in"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">health
                                         care reforms and reimbursement policy changes nationally and internationally.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Our common stock is deemed to be a &ldquo;penny stock,&rdquo;
which may make it more difficult for investors to sell their shares due to suitability requirements.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Our common stock is subject to Rule 15g-1 through 15g-9
under the Exchange Act, which imposes certain sales practice requirements on broker-dealers which sell our common stock to persons
other than established customers and &ldquo;accredited investors&rdquo; who are generally individuals with a net worth in excess
of $1,000,000 (excluding their principal residence)<B>&nbsp;</B>or annual incomes exceeding $200,000, or $300,000 together with
their spouses. For transactions covered by this rule, a broker-dealer must make a special suitability determination for the purchaser
and have received the purchaser&rsquo;s written consent to the transaction prior to the sale. This rule adversely affects the
ability of broker-dealers to sell our common stock and the ability of our stockholders to sell their shares of common stock. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Additionally, our common stock is subject to the SEC regulations
for &ldquo;penny stock.&rdquo; Penny stock includes any equity security that is not listed on a national exchange and has a market
price of less than $5.00 per share, subject to certain exceptions. The regulations require that prior to any non-exempt buy/sell
transaction in a penny stock, a disclosure schedule set forth by the SEC relating to the penny stock market must be delivered
to the purchaser of such penny stock. This disclosure must include the amount of commissions payable to both the broker-dealer
and the registered representative and current price quotations for the common stock. The regulations also require that monthly
statements be sent to holders of penny stock that disclose recent price information for the penny stock and information of the
limited market for penny stocks. These requirements adversely affect the market liquidity of our common stock. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Our existing principal stockholders hold a substantial number
of shares of our common stock and may be able to exercise influence in matters requiring approval of stockholders.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> At March 14, 2014, our current stockholders separately representing
more than 5% ownership in our Company collectively represented beneficial ownership of approximately 60% of our common stock.
In particular, Southpoint Capital Advisors LP owns or exercises control over 11.0 million shares of common stock, representing
approximately 38% of the issued and outstanding common stock. In addition, Manchester Explorer, LP, together with its associates,
owns approximately 3.5 million shares, or 12% of our common stock. Furthermore, Mr. Robert Butts, our former Chairman of our Board
of Directors, individually owns approximately 2.3 million shares, or 8% of our common stock, Southpoint Capital, Manchester Explorer,
our other 5% stockholders, and other insiders, acting alone or together, might be able to influence the outcomes of matters that
require the approval of our stockholders, including but not limited to certain equity transactions (such as a financing), an acquisition
or merger with another company, a sale of substantially all of our assets, the election and removal of directors, or amendments
to our incorporating documents. For example, Southpoint Capital and 683 Capital have agreed with Manchester to vote their shares
in favor of a share consolidation and certain other matters in connection with the November 2013 Financing. These stockholders
might make decisions that are adverse to your interests. The concentration of ownership could have the effect of delaying, preventing
or deterring a change of control of our company, which could adversely affect the market price of our common stock or deprive
our other stockholders of an opportunity to receive a premium for their common stock as part of a sale of our company. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>There are a large number of shares of our common stock underlying
outstanding warrants and options, and reserved for issuance under our stock option plan, that may be sold in the market, which
could depress the market price of our stock and result in substantial dilution to the holders of our common stock.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Sale or issuance of a substantial number of shares of our
common stock in the future could cause the market price of our common stock to decline. It may also impair our ability to obtain
additional financing. At March 14, 2014, we had outstanding warrants to purchase approximately 22.0 million shares of our common
stock of which approximately $18.0 million were denominated in Canadian dollars which had a weighted average exercise price of
$1.44, and $4.0 million denominated in U.S. dollars which had a weighted average exercise price of $0.50. In addition, at March
14, 2014, there were approximately 5.7 million shares issuable upon the exercise of stock options granted by us of which approximately
$4.1 million were denominated in Canadian dollars and had a weighted average exercise price of CAD $0.81 per common share and
approximately $1.6 million were denominated in U.S. dollars and had a weighted average exercise price of $0.60 per common share.
We may also issue further warrants as part of any future financings as well as the additional 0.7 million options to acquire our
common stock currently remaining available for issuance under our stock option plan. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>We may need to raise substantial additional funds in the
near future to continue our operations. Any equity offering could result in significant dilution to the ownership interests of
shareholders and may result in dilution of the value of such interests and any debt offering will increase financial risk.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In order to satisfy our anticipated capital requirements to
develop our products, we may need to raise substantial additional funds through either the sale of additional equity, the issue
of securities convertible into equity, the issuance of debt, the establishment of collaborations that provide us with funding,
the out-license or sale of certain aspects of our intellectual property portfolio, or from other sources. The most likely sources
of financing that may be available to us in the near term are the sale of shares of common stock and/or securities convertible
into common stock and the issuance of debt.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We cannot predict the size of future issues of common stock
or the issue of securities convertible into common stock or the effect that any such future issues and sales of common stock will
have on the market price of our common stock. However, given the current market price of our common stock, any transaction involving
the issue of common stock, or securities convertible into common stock, will likely result in immediate and substantial dilution
to present and prospective holders of common stock. Alternatively, we may rely on debt financing and assume debt obligations that
require us to make substantial interest and capital payments and to pledge some or all of our assets as collateral to secure such
debt obligations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>We have not paid any dividends since incorporation and do
not anticipate declaring any dividends in the foreseeable future. As a result, you will not be able to recoup your investment
through the payment of dividends on your common stock and the lack of a dividend payable on our common stock might depress the
value of your investment.</B><BR>
&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We will use all available funds to finance the development
of our product candidates and operation of our business. Our directors will determine if and when dividends should be declared
and paid in the future based on our financial position at the relevant time, but since we have no present plans to pay dividends,
you should not expect receipt of dividends either for your cash needs or to enhance the value of your common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>USE OF PROCEEDS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> The net proceeds from this offering,
after paying fees and expenses relating to this offering, will be used for working capital and general corporate purposes. We
intend to primarily use the net proceeds on the development of Sodium Thiosulfate (&ldquo;STS&rdquo;). </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>PLAN OF DISTRIBUTION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Instructions for Exercising Warrants</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Holders of Warrants that are held directly in certificated
form may exercise Warrants by completing and duly executing Attachment 1 &ndash; &ldquo;Notice of Exercise&rdquo; and delivering
Holder&rsquo;s original Warrant certificate, together with payment in full of the Exercise Price for the Warrant Shares purchased,
to Olympia Transfer Services, Inc. (the &ldquo;Warrant Registrar&rdquo;) at the address listed below, at or prior to 5:00 p.m.,
Ottawa time, on March 30, 2016, the expiration date of the Warrants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" ALIGN="CENTER" STYLE="font: 10pt Times New Roman, Times, Serif; width: 90%; border-collapse: collapse">
<TR>
    <TD STYLE="vertical-align: top; width: 54%"><B>Warrant Certificate Delivery Method:</B></TD>
    <TD STYLE="vertical-align: bottom; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: top; width: 45%; text-align: center">By Mail/Commercial Courier/Hand Delivery</TD></TR>
<TR>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top"><B>Address/Number:</B></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">Olympia Transfer Services</TD></TR>
<TR>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">Suite 920, 120 Adelaide Street West</TD></TR>
<TR>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">Toronto, Ontario M5H 1T1</TD></TR>
<TR>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">(416) 364-8081</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Delivery to an address other than the address listed above
will not constitute valid delivery and, accordingly, may be rejected by us.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Holders of Warrants in &ldquo;book entry&rdquo; form through
a broker, dealer, trustee, depository for securities, custodian bank or other nominee that desire to exercise their Warrants should
contact the appropriate institution or nominee and request it to effect the transaction for them, including making arrangements
for payment of the Exercise Price and the completion/execution of any documentation required.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Holders will have no right to rescind their Warrant exercises
after receipt of their payment of the Exercise Price for the Warrant Shares purchased.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">To the extent Holder wishes to exercise less than the total
number of Warrant Shares underlying its Warrants, pursuant to the terms of the Warrants, such Holder shall be entitled to receive
a new Warrant back covering the number of Warrant Shares for which such Warrant had not been exercised.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-weight: normal; text-underline-style: double">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-weight: normal; text-underline-style: double">The
Warrant Shares are being offered directly by us without the services of an underwriter, dealer, finder or selling agent. As such,
we will not be required to pay any underwriters&rsquo; discounts or commissions relating to the Warrant Shares covered by the
registration statement.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-weight: normal; text-underline-style: double">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-weight: normal; text-underline-style: double">We
will be responsible for all fees and expenses incurred in connection with the distribution of the Warrant Shares, including the
fees of our Warrant Registrar. </FONT>The Warrant Registrar has previously been paid a fee of approximately $7,500 for its administrative,
processing, invoicing and other services, plus reimbursement for all reasonable out-of-pocket expenses related to this offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Any questions or requests for assistance concerning the method
of exercising the Warrants and purchasing underlying Warrant Shares or for additional copies of this prospectus or Warrant certificates
may be directed to the Warrant Registrar at its telephone number and address listed above. The Warrant Registrar will not be under
any duty to give notification of any defect or irregularity in connection with the submission of Warrant certificates or incur
any liability for failure to give such notification.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">All questions concerning the timeliness, validity, form and
eligibility of any exercise of Warrants in accordance with the terms of the Warrants will be determined by us, whose determinations
will be final and binding. We, in our sole discretion, may waive any defect or irregularity, or permit a defect or irregularity
to be corrected within such time as we may determine, or reject the purported exercise of any Warrant if it&rsquo;s not accomplished
in accordance with the terms of the Warrant.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Payment for Warrant Shares</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Exercise Price shall equal the then applicable Exercise
Price multiplied by the number of whole Warrant Shares being issued. Payment for the Exercise Price shall be payable by certified
or bank check, or by wire transfer, in each case payable to Olympia Transfer Services as Agent for benefit of (FBO) Adherex Technologies
Inc. All payments for Warrant Shares by a Holder must be in Canadian dollars. Non-Canadian Holders shall make the payment of such
Exercise Price based on the US/Canadian currency exchange rate in effect at the effective time of exercise of such Warrants. The
Warrant Registrar will deposit all funds received by it into a segregated account pending distribution of the respective Warrant
Shares.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The method of delivery of Warrant certificates and payment
of the Exercise Price to us will be at the election and risk of the Holders, but if sent by mail it is recommended that such certificates
and payments be sent by registered mail, properly insured, with return receipt requested, and that a sufficient number of days
be allowed to ensure delivery to the Warrant Registrar and clearance of payment prior to 5:00 p.m., Ottawa time, on the Expiration
Date. Because uncertified personal checks may take at least five business days to clear, you are strongly urged to pay, or arrange
for payment, by means of certified or cashier&rsquo;s check or money order. Whichever of the methods described above is used,
issuance of the Warrant Shares purchased is subject to collection of checks and actual payment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Delivery of Warrant Shares</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Holders of Warrant certificates who have properly exercised
such Warrants will be mailed stock certificates for the total number of whole Warrant Shares it purchased promptly after payment
of the Exercise Price for such <FONT STYLE="font-weight: normal; text-underline-style: double">Warrant Shares</FONT> has cleared.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Holders whose Warrants are held through a securities broker
or dealer, bank, custodian or trust company, nominee or other Participant in the book-based systems administered by CDS or DTC
will have any Warrant Shares that they purchased credited to the account of Cede &amp; Co. or the other depository or nominee
promptly after payment of the Exercise Price for such <FONT STYLE="font-weight: normal; text-underline-style: double">Warrant
Shares</FONT> has cleared. Neither <FONT STYLE="font-weight: normal; text-underline-style: double">we</FONT><B> </B>nor the <FONT STYLE="font-weight: normal; text-underline-style: double">Warrant
Registrar agent</FONT> will have liability for: (i) the records maintained by CDS, DTC or Participants relating to the Warrants
<FONT STYLE="font-weight: normal; text-underline-style: double">and the Warrant Shares,</FONT> or the book-entry accounts maintained
by them; (ii) maintaining, supervising or reviewing any records relating to the Warrants or the Warrant Shares; or (iii) any advice
or representations made or given by CDS, DTC or Participants with respect to the rules and regulations of CDS or DTC or any action
to be taken by CDS, DTC of their Participants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-weight: normal; text-underline-style: double">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-weight: normal; text-underline-style: double"> The
Warrant Shares will be available for trading on the OTCQB Market and listed on the TSX. Such listing is subject to us fulfilling
all of the listing requirements of the TSX. However, there is currently a very limited trading market in our common stock and
a more active market is not expected to develop as a result of this offering, and, accordingly, you may have difficulty in selling
the Warrant Shares you have received upon the exercise of Warrants, should you desire to do so in the future. There can be no
assurance that we will continue to fulfill all of the listing requirements of the TSX. See &ldquo;Risk Factors &mdash; Risks Related
to Our Common Stock&rdquo; on page 5. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="text-underline-style: double"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="text-underline-style: double"><B>State
Securities Law Considerations</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-weight: normal; text-underline-style: double">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-weight: normal; text-underline-style: double">We
are not making this offering in any state or other jurisdiction in which it is unlawful to do so. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: center"><FONT STYLE="text-underline-style: double"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: center"><FONT STYLE="text-underline-style: double"><B>MATERIAL
U.S. AND CANADIAN FEDERAL INCOME TAX CONSEQUENCES OF THIS OFFERING</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: center"><FONT STYLE="text-underline-style: double"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following discussion sets forth certain material United
States and Canadian federal income tax consequences resulting from the distribution to a &quot;U.S. Holder&quot; and related transactions
by the U.S. Holder, including the exercise or expiration of Warrants, and the disposition of Warrant Shares or Warrants. For purposes
of this discussion, a U.S. Holder means (1) any U.S. person who holds Warrants or Warrant Shares issued upon the exercise of the
Warrants (&quot;Initial U.S. Holder&quot;) and (2) any U.S. person other than an Initial U.S. Holder who acquires such Warrants
or Warrant Shares issued upon exercise of such Warrants (&quot;Subsequent U.S. Holder&quot;). For purposes of our discussion,
a U.S. person is:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>an individual
                                         who is a citizen or resident of the United States;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>a corporation
                                         (or other entity taxed as a corporation for U.S. federal income tax purposes) created
                                         or organized in the United States or under the laws of the United States or any subdivision
                                         thereof;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>an estate,
                                         the income of which is includable in gross income for U.S. federal income tax purposes
                                         regardless of its source; or</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>a trust, if
                                         a court within the United States is able to exercise primary supervision over the administration
                                         of the trust and one or more U.S. persons have the authority to control all substantial
                                         decisions of the trust (or if the trust was in existence on August 20, 1996, and has
                                         validly elected to be treated as a U.S. person under applicable Treasury regulations);
                                         and</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>for purposes
                                         of the Income Tax Act (Canada) (the &ldquo;Tax Act&rdquo;) is neither resident nor deemed
                                         to be resident in Canada and does not use or hold, and is not deemed to use or hold their
                                         Warrants or Warrant Shares in connection with carrying on business in Canada (a &ldquo;Non-Resident
                                         Holder&rdquo;).</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Material U.S. Federal Income Tax
Considerations </I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We have not sought, and will not seek, a ruling from the IRS
regarding the Federal income tax consequences of this offering or the related Warrant Share issuance.&nbsp; The discussion is
based on current provisions of the Internal Revenue Code of 1986, as amended (the &ldquo;Code&rdquo;), current and proposed Treasury
Regulations promulgated thereunder, and administrative and judicial decisions as of the date hereof, all of which are subject
to change, possibly on a retroactive basis. This discussion is not a representation of, nor does it address, all aspects of United
States federal income taxation that may be relevant to any particular U.S. Holder based on such U.S. Holder&rsquo;s individual
circumstances. The following discussion does not address the tax consequences of this offering or the related Warrant Share issuance
under foreign, state, or local tax laws, or the alternative minimum tax provisions or U.S. federal income tax consequences to
U.S. Holders that are subject to special treatment. Additionally, the discussion does not consider the tax treatment of persons
who hold Warrants or Warrant Shares through a partnership or other pass-through entity or the possible application of U.S. federal
gift or estate tax.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">THIS DISCUSSION DOES NOT ADDRESS THE IMPACT OF AN INVESTOR'S
INDIVIDUAL TAX CIRCUMSTANCES. ACCORDINGLY, EACH INVESTOR SHOULD CONSULT HIS OR HER OWN TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES
TO HIM OR HER OF AN INVESTMENT IN THE WARRANTS OR WARRANT SHARES, INCLUDING THE EFFECTS OF APPLICABLE STATE, LOCAL OR FOREIGN
TAX LAWS AND POSSIBLE CHANGES IN THE TAX LAWS.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Tax Basis and Holding Period of Warrants</B><I>.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The discussion under this subheading applies only to Initial
U.S. Holders. The tax basis of the Warrants shall equal its fair market value on the date of distribution to Holder.&nbsp; The
holding period of the Warrants will begin on the date the Warrants are received by Holder.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Exercise of Warrants; Basis and Holding Period of Warrant
Shares; Sale, Exchange or Other Disposition of Warrant Shares.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">This discussion is qualified by the discussions below under
the subheading &ldquo;Tax Consequences if We Are a Passive Foreign Investment Company.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Gain or loss will be recognized by a U.S. Holder upon the sale,
exchange or other disposition of the Warrants or Warrant Shares, as the case may be, in an amount equal to the difference between
the amount realized and the tax basis of the Warrants or Warrant Shares, as the case may be. Such gain or loss will be a capital
gain or loss and will be considered long-term capital gain or loss if the U.S. Holder's holding period in the Warrants or Warrant
Shares is more than one year. Long-term capital gains of certain non-corporate taxpayers generally are taxed at lower rates than
items of ordinary income. The deductibility of capital losses is subject to limitations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">No gain or loss will be recognized by a Holder upon the exercise
of Warrants.&nbsp; The Warrant Shares that the U.S. Holder acquires as a result of exercising the Warrant will have a tax basis
equal to Holder&rsquo;s adjusted tax basis in the Warrant, if any, plus the Exercise Price.&nbsp; The holding period of the Warrant
Shares will begin on the day the Warrant is exercised.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">If the U.S. Holder allows the Warrant to lapse or expire without
exercise, the Warrant is deemed to be sold or exchanged on the date of expiration.&nbsp; Therefore, Holder will generally recognize
a capital loss in an amount equal to Holder&rsquo;s tax basis in the Warrant.&nbsp; The loss is treated as short-term or long-term
depending on Holder&rsquo;s holding period in the Warrant.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Gains and losses recognized by a U.S. Holder on a sale,
exchange or other disposition of Warrants or Warrant Shares, as applicable, generally will have a U.S. source for foreign tax
credit purposes unless a tax treaty applies and an election is made by the U.S. Holder. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B> Tax Consequences if We are a Passive Foreign Investment
Company </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> A foreign corporation generally will be treated as a &ldquo;passive
foreign investment company&rdquo; (&ldquo;PFIC&rdquo;) if, after applying certain &ldquo;look-through&rdquo; rules, either (i)
75% or more of its gross income is passive income or (ii) 50% or more of the quarterly average value of its assets is attributable
to assets that produce or are held to produce passive income. Passive income for this purpose generally includes dividends, interest,
rents, royalties and gains from securities and commodities transactions. The look-through rules require a foreign corporation
that owns at least 25% by value, of the stock of another corporation to treat a proportionate amount of assets and income as held
or received directly by the foreign corporation. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> The Company has not made the analysis necessary to determine
whether or not it is currently a PFIC or whether it has ever been a PFIC.&nbsp;&nbsp;There can be no assurance that the Company
is not, has never been or will not in the future be a PFIC. If the Company were to be treated as a PFIC, any gain recognized by
a U.S. holder upon the sale (or certain other dispositions) of common stock (or the receipt of certain distributions) generally
would be treated as ordinary income, and a U.S. holder may be required, in certain circumstances, to pay an interest charge together
with tax calculated at maximum rates on certain &ldquo;excess distributions,&rdquo; including any gain on the sale or certain
dispositions of common stock. In order to avoid this tax consequence, a U.S. holder (i) may be permitted to make a &ldquo;qualified
electing fund&rdquo; election, in which case, in lieu of such treatment, such holder would be required to include in its taxable
income certain undistributed amounts of the Company&rsquo;s income or (ii) may elect to mark-to-market the common stock and recognize
ordinary income (or possible ordinary loss) each year with respect to such investment and on the sale or other disposition of
the common stock. Special PFIC rules apply to warrants and shares issued upon the exercise of warrants such as the Warrants and
Warrant Shares. Additionally, if the Company is deemed to be a PFIC, a U.S. holder who acquires common stock in the Company from
a decedent will be denied the normally available step-up in tax basis to fair market value for the common stock at the date of
the death and instead will have a tax basis equal to the decedent&rsquo;s tax basis if lower than fair market value. Neither the
Company nor its advisors have the duty to or will undertake to inform U.S. holders of changes in circumstances that would cause
the Company to become a PFIC. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> In any year in which the Company is classified as a PFIC,
a U.S. Holder will be required to file an annual report with the IRS containing such information as Treasury Regulations and/or
other IRS guidance may require. A failure to satisfy such reporting requirements may result in an extension of the time period
during which the IRS can assess a tax. U.S. Holders should consult their own tax advisors regarding the requirements of filing
such information returns under these rules, including the requirement to file a IRS Form 8621. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> U.S. Holders should consult their own tax advisors regarding
the application of the PFIC rules including eligibility for and the manner and advisability of making certain elections in the
event&nbsp;the Company is determined to be a PFIC at any point in time after the date of this report.&nbsp;The Company does not
currently intend to take the action necessary for a U.S. holder to make a &ldquo;qualified electing fund&rdquo; election in the
event the Company is determined to be a PFIC. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="font-size: 10pt"> &nbsp; </FONT> <B>Tax
Consequences if We are a Controlled Foreign Corporation</B> </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">A foreign corporation will be treated as a &ldquo;controlled
foreign corporation&rdquo; (&ldquo;CFC&rdquo;) for United States federal income tax purposes if, on any day during the taxable
year of such foreign corporation, more than 50% of the equity interests in such corporation, measured by reference to the combined
voting power or value of the equity of the corporation, is owned directly or by application of the attribution and constructive
ownership rules of Sections 958(a) and 958(b) of the Code by United States Shareholders. For this purpose, a &ldquo;United States
Shareholder&rdquo; is any United States person that possesses directly, or by application of the attribution and constructive
ownership rules of Sections 958(a) and 958(b) of the Code, 10% or more of the combined voting power of all classes of equity in
such corporation. If a foreign corporation is a CFC for an uninterrupted period of 30 days or more during any taxable year, each
United States Shareholder of the corporation who owns, directly or indirectly, shares in the corporation on the last day of the
taxable year on which it is a CFC will be required to include in its gross income for United States federal income tax purposes
its pro rata share of the CFC&rsquo;s &ldquo;Subpart F income,&rdquo; even if the Subpart F income is not distributed. Subpart
F income generally includes passive income but also includes certain related party sales, manufacturing and services income.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">United States persons who might, directly,
indirectly or constructively, acquire 10% or more of the shares of the Company or any of its non-U.S. subsidiaries, and therefore
might be a United States Shareholder, should consider the possible application of the CFC rules, and consult a tax advisor with
respect to such matter.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase"><FONT STYLE="text-transform: none">Dividends
Paid on Warrant Shares </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Distributions paid on the Warrant Shares (including any Canadian
taxes withheld) to a U.S. Holder will be treated as ordinary dividend income for United States federal income tax purposes to
the extent of the Company&rsquo;s current and accumulated earnings and profits (as computed for U.S. federal income tax purposes).
Such dividends, which will be treated as foreign source income for U.S. foreign tax credit purposes, generally will not qualify
for the dividends-received deduction available to corporations. Distributions in excess of such earnings and profits will be applied
against and will reduce the shareholder&rsquo;s tax basis in the Warrant Shares and, to the extent in excess of such tax basis,
will be treated as gain from a sale or exchange of such Warrant Shares. The amount of the distribution will equal the US Dollar
value of the distribution, calculated by reference to the exchange rate in effect on the date the distribution is received (or
otherwise made available to the U.S. Holders), regardless of whether a payment in Canadian currency is actually converted to US
Dollars at that time. U.S. Holders should consult their own tax advisors concerning the treatment of foreign currency gain or
loss, if any, on any Canadian currency received which is converted into US Dollars subsequent to receipt.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> U.S. federal income tax on qualified dividend income paid
to non-corporate U.S. holders are taxed at a reduced rates. If a non-corporate U.S. Holder does not hold the Warrant Shares for
more than 60 days during the 120 day period beginning 60 days before an ex-dividend date, dividends received on the Warrant Shares
are not eligible for reduced rates. Dividends received from a foreign corporation that was a passive foreign investment company
(as further discussed above) in either the taxable year of the distribution or the preceding taxable year are not qualified dividend
income. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Qualified dividend income includes dividends received from
a &ldquo;qualified foreign corporation.&rdquo; A &ldquo;qualified foreign corporation&rdquo; includes a foreign corporation whose
shares are readily tradable on an established securities market in the United States as well as a foreign corporation that is
entitled to the benefits of a comprehensive income tax treaty with the United States which includes an exchange of information
program. Canada and the United States are parties to a comprehensive income tax treaty which includes an exchange of information
program. The United States Treasury Department will periodically issue guidance regarding which income tax treaties will be satisfactory
for treating a corporation as a &ldquo;qualified foreign corporation&rdquo;. In the event the Warrant Shares should not be readily
tradable on an established securities market in the United States, non-corporate U.S. Holders should consult their own tax advisors
as to whether any distributions paid on the Warrant Shares will be taxed for United States federal income tax purposes at reduced
tax rates.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase"><FONT STYLE="text-transform: none">&nbsp;</FONT></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase"><FONT STYLE="text-transform: none">Credit
for Canadian Taxes Withheld </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> Subject to certain conditions and limitations,
any Canadian tax withheld or paid with respect to dividends on the Warrant Shares generally will be eligible for credit against
a U.S. Holder&rsquo;s United States federal income tax liability at such U.S. Holder&rsquo;s election. The Code provides limitations
on the amount of foreign tax credits that a U.S. Holder may claim, including extensive separate computation rules under which
foreign tax credits allowable with respect to specific categories of income cannot exceed the United States federal income taxes
otherwise payable with respect to each such category of income. Dividends with respect to the Warrant Shares generally will be
classified as foreign source &ldquo;passive income&rdquo; for the purpose of computing a U.S. Holder&rsquo;s foreign tax credit
limitations for U.S. foreign tax credit purposes. The availability of the Canadian withholding tax as a foreign tax credit will
also be subject to certain restrictions on the use of such credits, including a prohibition on the use of the credit to reduce
liability for the United States individual and corporate minimum taxes by more than 90%. Alternatively, U.S. Holders that do not
elect to claim a foreign tax credit may instead claim a deduction for Canadian income tax withheld or paid, but only for a year
in which these U.S. Holders elect to do so for all foreign income taxes. The rules relating to foreign tax credits are complex,
and you should consult your own tax advisor to determine whether and if you would be entitled to this credit. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U> Receipt of Foreign Currency </U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> The amount of any distribution paid
to a U.S. Holder in foreign currency, or on the sale, exchange or other taxable disposition of Warrants and Warrant Shares, generally
will be equal to the U.S. dollar value of such foreign currency based on the exchange rate applicable on the date of receipt (regardless
of whether such foreign currency is converted into U.S. dollars at that time). If the foreign currency received is not converted
into U.S. dollars on the date of receipt, a U.S. Holder will have a tax basis in the foreign currency equal to its U.S. dollar
value on the date of receipt. Any U.S. Holder who receives payment in foreign currency and engages in a subsequent conversion
or other disposition of the foreign currency may have a foreign currency exchange gain or loss that would be treated as ordinary
income or loss, and generally will be U.S. source income or loss for foreign tax credit purposes. Each U.S. Holder should consult
its own U.S. tax advisor regarding the U.S. federal income tax consequences of receiving, owning, and disposing of foreign currency. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B> Additional Tax on Passive Income </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> U.S. Holders that are individuals,
estates and certain trusts whose income exceeds certain thresholds will be required to pay a 3.8% Medicare surtax on &ldquo;net
investment income&rdquo; including, among other things, dividends and net gain from disposition of property (other than property
held in certain trades or businesses). U.S. Holders should consult with their own tax advisors regarding the effect, if any, of
this tax on their ownership and disposition of Warrants and Warrant Shares. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B> Backup Withholding and Information
Reporting </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B> &nbsp; </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> Under U.S. federal income tax law and
Treasury Regulations, certain categories of U.S. Holders must file information returns with respect to their investment in, or
involvement in, a foreign corporation. For example, U.S. return disclosure obligations (and related penalties) are imposed on
U.S. Holders that hold certain specified foreign financial assets in excess of certain threshold amounts. The definition of specified
foreign financial assets includes not only financial accounts maintained in foreign financial institutions, but also, unless held
in accounts maintained by a financial institution, any stock or security issued by a non-U.S. person, any financial instrument
or contract held for investment that has an issuer or counterparty other than a U.S. person and any interest in a foreign entity.
U.S. Holders may be subject to these reporting requirements unless their Warrants or Warrant Shares are held in an account at
certain financial institutions. Penalties for failure to file certain of these information returns are substantial. U.S. Holders
should consult their own tax advisors regarding the requirements of filing information returns, including the requirement to file
an IRS Form 8938. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> Payments made within the U.S. or by
a U.S. payor or U.S. middleman, of dividends on, and proceeds arising from the sale or other taxable disposition of, Warrants
and Warrant Shares will generally be subject to information reporting and backup withholding tax (currently at a rate of 28%),
if a U.S. Holder (a) fails to furnish such U.S. Holder&rsquo;s correct U.S. taxpayer identification number (generally on Form
W-9), (b) furnishes an incorrect U.S. taxpayer identification number, (c) is notified by the IRS that such U.S. Holder has previously
failed to properly report items subject to backup withholding tax, or (d) fails to certify, under penalty of perjury, that such
U.S. Holder has furnished its correct U.S. taxpayer identification number and that the IRS has not notified such U.S. Holder that
it is subject to backup withholding tax. However, certain exempt persons generally are excluded from these information reporting
and backup withholding rules. Any amounts withheld under the U.S. backup withholding tax rules will be allowed as a credit against
a U.S. Holder&rsquo;s U.S. federal income tax liability, if any, or will be refunded, if such U.S. Holder furnishes required information
to the IRS in a timely manner. Each U.S. Holder should consult its own tax advisor regarding the information reporting and backup
withholding rules. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> The discussion of reporting requirements
set forth above is not intended to constitute an exhaustive description of all reporting requirements that may apply to a U.S.
Holder. A failure to satisfy certain reporting requirements may result in an extension of the time period during which the IRS
can assess a tax, and under certain circumstances, such an extension may apply to assessments of amounts unrelated to any unsatisfied
reporting requirement. Each U.S. Holder should consult its own tax advisor regarding the information reporting and backup withholding
rules. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Tax Consequences for Non-U.S. Holders of Warrant Shares</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Except as described in &ldquo;Information Reporting and Back-up
Withholding&rdquo; below, a non-U.S. holder of Warrant Shares will not be subject to U.S. federal income or withholding tax on
the payment of dividends on, and the proceeds from the disposition of, the Warrant Shares, unless:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Wingdings 2">&mdash;</FONT></TD><TD STYLE="text-align: left">the item is effectively connected with the conduct by
the non-U.S. holder of a trade or business in the United States and:</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; margin-left: 0in; text-indent: 0in; text-align: justify"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in; text-align: left">(i)</TD><TD STYLE="text-align: left">in the case of a resident of a country which has a treaty
with the United States, the item is attributable to a permanent establishment; or</TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in; text-align: left">(ii)</TD><TD STYLE="text-align: left">in the case of an individual, the item is attributable
to a fixed place of business in the United States;</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Wingdings 2">&mdash;</FONT></TD><TD STYLE="text-align: left">the non-U.S. holder is an individual who holds the common
stock as a capital asset and is present in the United States for 183 days or more in the taxable year of the disposition and does
not qualify for an exemption; or</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Wingdings 2">&mdash;</FONT></TD><TD STYLE="text-align: left">the non-U.S. holder is subject to tax under the provisions
of U.S. tax law applicable to U.S. expatriates.</TD>
</TR></TABLE>
<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase"><FONT STYLE="text-transform: none">&nbsp;</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase"><FONT STYLE="text-transform: none">Information
Reporting and Back up Withholding </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">A non-corporate U.S. Holder may, under certain circumstances,
be subject to information reporting requirements and &ldquo;backup withholding&rdquo;, currently at a 28% rate, on cash payments
in the United States of dividends on, and the proceeds of disposition of, the Warrant Shares. Backup withholding will apply only
if a U.S. Holder: (a) fails to furnish its social security or other taxpayer identification number (&ldquo;TIN&rdquo;) within
a reasonable time after the request therefore; (b) furnishes an incorrect TIN; (c) is notified by the IRS that it has failed properly
to report payments of interest and dividends; or (d) under certain circumstances, fails to certify, under penalty of perjury,
that it has furnished a correct TIN and has not been notified by the IRS that it is subject to backup withholding for failure
to report interest and dividend payments. U.S. Holders should consult their tax advisors regarding their qualification for exemption,
if applicable. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed
as a refund or credit against such U.S. Holder&rsquo;s federal income tax liability, provided that the required information is
furnished to the IRS.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Material Canadian Federal Income Tax Considerations</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Non-Residents of Canada</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following portion of the summary is generally applicable
to a U.S. Holder. Special rules, which are not discussed in this summary, may apply to a U.S. Holder that is an insurer that carries
on an insurance business in Canada and elsewhere.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Exercise of Warrants</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The exercise of Warrants will not constitute a disposition
of property for purposes of the Tax Act and, consequently, no tax will be payable under the Tax Act by a U.S. Holder upon the
exercise of Warrants. Warrant Shares acquired by a U.S. Holder upon the exercise of Warrants will have a cost to the U.S. Holder
equal to the aggregate of the Warrant exercise price and the adjusted cost base to the U.S. Holder of the exercised Warrants.
The adjusted cost base of each such Warrant Share held by a U.S. Holder will be averaged with the adjusted cost base of each other
share of common stock held by the U.S. Holder.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Disposition of Warrants or Warrant Shares</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Upon the disposition of a Warrant or Warrant Share by a U.S.
Holder (in the case of Warrants, other than pursuant to the exercise or expiry thereof), the U.S. Holder will not be subject to
tax under the Tax Act in respect of any capital gain realized unless Warrant or Warrant Share, as the case may be, disposed of
constitutes &ldquo;taxable Canadian property&rdquo; of the U.S. Holder and the U.S. Holder is not entitled to relief under an
applicable tax treaty or convention. Warrants and Warrant Shares will generally not constitute &ldquo;taxable Canadian property&rdquo;
of such U.S. Holder unless at any time in the preceding 60 months both of the following statements were true: (a) the U.S. Holder,
together with persons with whom the U.S. Holder does not deal at arm&rsquo;s length, held shares and/or rights to acquire shares
(including Warrants) representing 25% or more of the issued shares of any class of the capital stock of the Company; and (b) more
than 50% of the fair market value of the common stock was derived directly or indirectly from one or any combination of (i) real
or immovable property situated in Canada, (ii) Canadian resource properties, (iii) timber resource properties, and (iv) options
in respect of, or interests in, or for civil law rights in, property described in any of (i) to (iii).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Upon the expiry of an unexercised Warrant, a U.S. Holder will
not be subject to tax under the Tax Act in respect of the disposition of the unexercised Warrant. The Holder will generally recognize
a capital loss in an amount equal to the Holder&rsquo;s adjusted cost base in the Warrant.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">U.S. Holders whose Warrants or Warrant Shares constitute &ldquo;taxable
Canadian property&rdquo; should consult their own tax advisors for advice having regard to their particular circumstances.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">If the U.S. Holder surrenders Warrant Shares to the Company
for cancellation, the U.S. Holder will be deemed to dispose of the Warrant Shares to the Company, and the proceeds received will
be deemed to be a dividend paid by the Company to the U.S. Holder to the extent that the proceeds exceed the paid-up capital of
the Warrant Shares so surrendered.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Dividends paid on Warrant Shares</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Dividends paid, credited or deemed to have been paid or credited
on the Warrant Shares held by a U.S. Holder will be subject to a Canadian withholding tax under the Tax Act at a rate of 25% of
the gross amount of the dividends. Under the tax convention between Canada and the United States (the &ldquo;Tax Treaty&rdquo;),
the rate of withholding tax on dividends generally applicable to U.S. Holders who beneficially own the dividends is reduced to
15%. In the case of U.S. Holders that are corporations that beneficially own at least 10% of the Company&rsquo;s voting shares,
the rate of withholding tax on dividends generally is reduced to 5%. So-called &ldquo;fiscally transparent&rdquo; entities, such
as United States limited liability companies, or LLCs, are not entitled to rely on the terms of the Tax Treaty, and therefore
do not benefit from these reduced rates, however, reduced rates under the Tax Treaty apply to members of fiscally transparent
entities who would be entitled to rely on the Tax Treaty if they held the Warrant Shares directly. Members of such entities are
regarded as holding their proportionate share of the Warrant Shares held by the entity for the purposes of the Tax Treaty.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DESCRIPTION OF SECURITIES REGISTERED</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following is a summary description of the Warrant Shares
being offered pursuant to this registration statement upon exercise of the Warrants. You should also refer to our Notice of Articles
and Articles, as amended, a copy of which is incorporated by reference as an exhibit to the registration statement of which this
prospectus is a part.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Warrants</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> The Warrants entitle Holder to purchase up to 4,697,732
Warrant Shares at an exercise price of CAD$1.44 per whole share. The Warrants will expire five years from the date of issuance,
or March 30, 2016. The number of shares for which the Warrants may be exercised and the exercise price applicable to the Warrants
will be proportionately adjusted in the event that we make distributions of our common stock, or subdivide, combine or reclassify
outstanding shares of our common stock, or if we pay a dividend in securities or property other than common stock. In the case
of a merger or consolidation of us into another company where we are not the surviving company, Holder will have the right to
receive a new warrant in the surviving corporation.<FONT STYLE="font-size: 10pt; font-weight: normal; text-underline-style: double">
We </FONT>are required to reserve from our authorized and unissued share capital a sufficient number of shares of our common stock
to provide for the issuance of the Warrant Shares upon exercise of the Warrants.<FONT STYLE="font-size: 10pt; font-weight: normal; text-underline-style: double">
</FONT> <FONT STYLE="font-weight: normal; text-underline-style: double">As of April&nbsp;8,&nbsp;2014, the registrant had
approximately </FONT>84,559,178<FONT STYLE="font-weight: normal; text-underline-style: double"> Warrants issued and outstanding
to purchase a total of 4,697,732 Warrant Shares (after adjusting the number of common shares issuable upon exercise of said Warrants
as a result of the Share Consolidation)<FONT STYLE="font-size: 10pt">.</FONT></FONT> </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Warrant Shares</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Each Holder is entitled to exercise Warrants on the basis of
eighteen Warrants for one Warrant Share at an exercise price of CAD $1.44 per whole share, as a result of the Share Consolidation.
Pursuant to our charter, we are authorized to issue an unlimited number of shares of common stock, no par value. Each holder of
a Warrant Share is entitled to one vote for each share of common stock held on all matters submitted to a vote of stockholders.
We have not provided for cumulative voting for the election of directors in our Notice of Articles or Articles, as amended. This
means that the holders of a majority of the shares voted can elect all of the directors then standing for election. Subject to
preferences that may apply to shares of preferred stock outstanding at the time, the holders of outstanding shares of our common
stock are entitled to receive dividends out of assets legally available at the times and in the amounts that our board of directors
may determine from time to time.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Holders of Warrant Shares have no preemptive subscription,
redemption or conversion rights or other subscription rights. Upon our liquidation, dissolution or winding-up, the holders of
Warrant Shares are entitled to share in all assets remaining after payment of all liabilities and the liquidation preferences
of any outstanding preferred stock. Each outstanding share of common stock is, and all Warrant Shares to be issued in this offering,
when they are paid for, will be fully paid and non-assessable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="text-underline-style: double"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="text-underline-style: double"><B>Exchange
Controls; Restrictions on Voting or Ownership</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="text-underline-style: double"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-weight: normal; text-underline-style: double">There
is no law, governmental decree or regulation in Canada that affects the remittance of dividends, interest or other payments to
a non-resident holder of any of our securities, including the Warrants and Warrant Shares, other than withholding tax requirements
discussed in &ldquo;Material Canadian Federal Income Tax Considerations&rdquo; below. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-weight: normal; text-underline-style: double">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-weight: normal; text-underline-style: double">The
Warrants, by their terms, do not carry a right to vote. There is no limitation imposed by the laws of Canada or by our charter
or other constituent documents on the right of a non-resident to hold or vote our common stock, other than as provided in the
<I>Investment Canada Act</I>, which subjects an acquisition of control of a Canadian business (as those terms are defined therein)
by a non-Canadian to government review if the book value of the Canadian business&rsquo; assets as calculated pursuant to the
legislation exceeds a threshold amount. A reviewable acquisition may not proceed unless the relevant minister is satisfied that
the investment is likely to be of net benefit to Canada. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>INTERESTS OF NAMED EXPERTS AND COUNSEL</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">No expert or counsel named in this prospectus as having prepared
or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon
other legal matters in connection with the registration or offering of the common stock was employed for such purpose on a contingency
basis, or had, or is to receive, in connection with this offering, a substantial interest, direct or indirect, in us or any of
our parents or subsidiaries, nor was any such person connected with us or any of our parents or subsidiaries as a promoter, managing
or principal underwriter, voting trustee, director, officer, or employee.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CAUTIONARY STATEMENT REGARDING FORWARD
LOOKING STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Some of the statements contained or incorporated by reference
in this prospectus are &ldquo;forward-looking statements&rdquo; and we intend that such forward-looking statements be subject
to the safe harbors thereby. These statements are based on the current expectations, forecasts, and assumptions of our management
and are subject to various risks and uncertainties that could cause our actual results to differ materially from those expressed
or implied by the forward-looking statements. Words such as &ldquo;may,&rdquo; &ldquo;will,&rdquo; &ldquo;expect,&rdquo; &ldquo;believe,&rdquo;
&ldquo;anticipate,&rdquo; &ldquo;intend,&rdquo; &ldquo;could,&rdquo; &ldquo;estimate,&rdquo; &ldquo;project,&rdquo; &ldquo;plan,&rdquo;
and other similar words are one way to identify such forward-looking statements. Forward-looking statements in this prospectus
include, but are not limited to, statements with respect to (1) our anticipated sources and uses of cash and cash equivalents;
(2) our anticipated commencement dates, completion dates and results of clinical trials; (3) our efforts to pursue collaborations
with the government, industry groups or other companies; (4) our anticipated progress and costs of our clinical and preclinical
research and development programs; (5) our corporate and development strategies; (6) our expected results of operations; (7) our
anticipated levels of expenditures; (8) our ability to protect our intellectual property; (9) our ability to fully comply with
domestic and international governmental regulation; (10) the anticipated applications and efficacy of our drug candidates; (11)
the nature and scope of potential markets for our drug candidates; (12) future legal liability; and (13) our ability to attract
and retain key employees. All statements, other than statements of historical fact, included in this prospectus that address activities,
events or developments that we expect or anticipate will or may occur in the future are forward-looking statements. We include
forward-looking statements because we believe that it is important to communicate our expectations to our investors. However,
all forward-looking statements are based on management&rsquo;s current expectations of future events and are subject to a number
of risks and uncertainties, including specifically our need to raise money in the very near term and others, as discussed under
the caption &ldquo;Risk Factors&rdquo; beginning on page 5 of this prospectus. Although we believe the expectations reflected
in the forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be
attained, and we caution you not to place undue reliance on such statements. Readers should carefully review this information
as well as the risks and other uncertainties described in other filings we may make after the date of this prospectus with the
Securities and Exchange Commission.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our periodic and current reports are available, free of charge,
after the material is electronically filed with, or furnished to, the SEC and EDGAR at <U>http://www.sec.gov</U> and the Canadian
securities regulators on SEDAR, at <U>www.sedar.com</U>. The information provided on our website is not part of this prospectus
and is therefore not incorporated herein by reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>INFORMATION ABOUT THE COMPANY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DESCRIPTION OF BUSINESS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Overview</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"> Adherex Technologies Inc. is a
biopharmaceutical company focused on cancer therapeutics. &nbsp;We incorporated under the Canada Business Corporations Act (&quot;CBCA&rdquo;)
in September 1996. Effective on August 25, 2011, the Company continued from the Canada Business Corporations Act to the Business
Corporations Act (British Columbia) (the &ldquo;Continuance&rdquo;), which Continuance was approved by the shareholders of Adherex
at the Company's June 2011 Annual and Special Meeting and by resolution of the Board of Directors on August 10, 2011. We have
three wholly-owned subsidiaries: Oxiquant, Inc. and Adherex, Inc., both Delaware corporations, and Cadherin Biomedical Inc., a
Canadian company. With the exception of Adherex Inc., all subsidiaries are inactive. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-weight: normal">On April 30, 2010, we
entered into agreements with our largest shareholder, Southpoint Capital Advisors LP and certain other investors for a non-brokered
private placement. Participating investors purchased 240,066,664 units</FONT> <FONT STYLE="font-weight: normal">at a price of
CAD$0.03 per unit, for gross proceeds of CAD$7,202,000. Each unit consisted of one share of our common stock and one warrant to
purchase one share of our common stock at a price of CAD$0.08 per share. The additional working capital provided us with the funding
necessary to move the development of Eniluracil forward by developing a study design for a Phase II trial of Eniluracil. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We commenced a rights offering to our shareholders on March
2, 2011, the record date for the Rights Offering. Pursuant to the terms of the Rights Offering, we distributed rights to subscribe
for up to 425,000,000 Units at a price of CAD$0.03 per unit, for gross proceeds of up to CAD$12,750,000, to our shareholders on
the basis of one right per each share of common stock held by such shareholder&nbsp;on March 2, 2011, the record date for the
Rights Offering. &nbsp;Purchasers of units in the Company's April 2010 Private Placement described above that owned common stock
as of the record date for the Rights Offering agreed not to participate in the Rights Offering.&nbsp;&nbsp;Each right was exercisable
for one unit which consisted of one common share and one common share purchase warrant (a &ldquo;Warrant&rdquo;).&nbsp;&nbsp;Each
Warrant entitles the holder thereof to purchase one common share of the Company at a purchase price of CAD$0.08 per share for
a period of five years from the issue date.&nbsp;Adherex filed a final short-form prospectus for the Rights Offering with the
securities regulatory authorities in Canada to qualify the distribution of the rights in Canada on February 11, 2011 and a Form
S-1 registration statement with the Securities and Exchange Commission to register the rights and underlying securities in the
United States, which registration statement was declared effective on February 11, 2011.&nbsp;&nbsp;As of 5:00 pm New York City
time on March 29, 2011, the expiration date for the Rights Offering, we had received subscriptions for an aggregate of 84,559,178
Units, representing estimated aggregate gross proceeds of approximately $2.5 million.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On August 10, 2011, the Board of Directors approved a 1-for-18
reverse stock split, or &ldquo;share consolidation,&rdquo; which became effective on August 25, 2011. The 1-for-18 reverse stock
split affected all of the Company&rsquo;s common shares, stock options and warrants outstanding at the effective time. The share
consolidation was implemented in accordance with the authorization granted by the Company&rsquo;s shareholders at its Annual and
Special Meeting of Shareholders held on June 28, 2011 to consolidate the Company&rsquo;s outstanding common shares in a ratio
of between 1-for-15 and 1-for-20. The share consolidation reduced the number of shares of the Company's outstanding common stock
from approximately 452.8 million, as of the filing date of the Company's most recent Quarterly Report on Form 10-Q, to approximately
25.2 million effective as of August 25, 2011, the effective date of the Share Consolidation<FONT STYLE="font-size: 10pt">.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As a result of the Share Consolidation, in accordance with
the terms of the Warrants, the number of Warrant Shares issuable upon exercise of each Warrant was adjusted from one Warrant Share
per each Warrant to .055 Warrant Shares per Warrant (or, from an aggregate of 84,559,178 Warrant Shares issuable upon exercise
of all Warrants to 4,697,732 Warrant Shares) and the exercise price per Warrant was adjusted from CAD $.0.08 per share to CAD
$1.44 per share. Therefore, as a result of the Share Consolidation, each 18 Warrants held by a Holder will entitle Holder to purchase
one Warrant Share at an exercise price of CAD $1.44 per share (the &ldquo;Exercise Price&rdquo;) at or prior to 5:00 pm Ottawa
time on March 30, 2016, at which time the Warrants shall expire and have no value.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On August 25, 2011, Chris A. Rallis and Steven D. Skolsky were
appointed as members of the Board of Directors and Dr. Arthur T. Porter, William G. Breen and Claudio F. Bussandri resigned from
the Board of Directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Effective August 14, 2013, David Lieberman resigned from
the Board of Directors and Robert Andrade resigned as Chief Financial Officer and a Director of the Company. Effective August
15, 2013, Krysia Lynes was appointed acting Interim Chief Financial Officer of the Company. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> In November 2013, we announced the closing of the sale of
4.0 million units for gross proceeds of $1.6 million in a non-brokered financing transaction with Manchester Explorer, L.P., certain
individuals and entities associated with Manchester Explorer (collectively, &ldquo;Manchester&rdquo;) and 683 Capital Management
LLC (the &ldquo;November 2013 Financing&rdquo;). Each unit (a &ldquo;Unit&rdquo;) was issued at a price of $0.40 per Unit and
consists of one of our common shares and one common share purchase warrant (the &ldquo;2013 Warrants&rdquo;). Each 2013 Warrant
entitles the holder thereof to acquire one of our common shares at an exercise price of $0.50 per share. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"><B> Lead Product Candidates </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"><B> &nbsp; </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"> The following are our lead product
candidates, both of which are in the clinical stage of development: </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> &nbsp; </P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"> &bull; </TD><TD><I> Sodium Thiosulfate (STS) </I> &ndash; a water
                                         soluble thiol compound that acts as a chemical reducing agent, currently in two Phase
                                         III clinical trials for the prevention of cisplatin induced hearing loss, or ototoxicity
                                         in children. </TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in"> &nbsp; </P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"> &bull; </TD><TD><I> Eniluracil </I> &nbsp;(EU) - an oral irreversible
                                         dihydropyrimidine dehydrogenase (DPD) inhibitor, the enzyme responsible for rapidly breaking
                                         down 5-FU, recently completed a Phase II clinical trial in metastatic breast cancer. </TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Sodium Thiosulfate (STS)</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> We have licensed from Oregon Health &amp; Science University
(&ldquo;OHSU&rdquo;) intellectual property rights for the use of STS as a chemoprotectant, and are developing STS as a protectant
against the hearing loss often caused by platinum-based anti-cancer agents in children. Preclinical and clinical studies conducted
by OHSU and others have indicated that STS can effectively reduce the incidence of hearing loss caused by platinum-based anti-cancer
agents. We have received Orphan Drug Designation in the United States for the use of STS in the prevention of platinum-induced
ototoxicity in pediatric patients. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Hearing loss among children receiving platinum-based chemotherapy
is frequent, permanent and often severely disabling. The incidence of hearing loss in these children depends upon the dose and
duration of chemotherapy, and many of these children require lifelong hearing aids. There is currently no established preventive
agent for this hearing loss and only expensive, technically difficult and sub-optimal cochlear (inner ear) implants have been
shown to provide some benefit. In addition, adults undergoing chemotherapy for several common malignancies, including ovarian
cancer, testicular cancer, and particularly head and neck cancer and brain cancer, often receive intensive platinum-based therapy
and may experience severe, irreversible hearing loss, particularly in the high frequencies.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Investigators at OHSU have conducted Phase I and Phase II
studies which have shown STS reduces the hearing loss associated with platinum-based chemotherapy. In one study at OHSU, the need
for hearing aids to correct high frequency hearing loss was reduced from about 50% to less than 5%. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> In October 2007, we announced that our collaborative partner,
the International Childhood Liver Tumour Strategy Group, known as SIOPEL, a multi-disciplinary group of specialists under the
umbrella of the International Society of Pediatric Oncology, had launched a randomized Phase III clinical trial to investigate
whether STS reduces hearing loss in children receiving cisplatin, a platinum-based chemotherapy often used in pediatric oncology.
The study initially opened in the United Kingdom and now includes SIOPEL centers in several additional countries. The clinical
trial is expected to enroll approximately 100 children with liver (hepatoblastoma) cancer. Patients will receive cisplatin alone
or cisplatin plus STS. The study, which is being coordinated through the Children&rsquo;s Cancer and Leukemia Group in the United
Kingdom, is intended to compare the level of hearing loss associated with cisplatin alone versus the combination of cisplatin
plus STS, as well as the safety, tolerability and anti-tumor activity in both arms of the study. Under the terms of our agreement,
SIOPEL will conduct and fund the clinical activity and we will provide drug, drug distribution and pharmacovigilance, or safety
monitoring, for the study. Since the commencement of the study in 2007, the study has enrolled 95 patients. Preliminary safety
data is expected to be presented in the second quarter of 2014. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> In March 2008, we announced the activation of a Phase III
trial with STS to prevent hearing loss in children receiving cisplatin-based chemotherapy in collaboration with the Children&rsquo;s
Oncology Group. The goal of this Phase III study is to evaluate in a multi-centered, randomized trial whether STS is an effective
and safe means of preventing hearing loss in children receiving cisplatin-based chemotherapy for newly diagnosed germ cell, liver
(hepatoblastoma), brain (medulloblastoma), nerve tissue (neuroblastoma) or bone (osteosarcoma) cancers. Eligible children, one
to eighteen years of age, who are to receive cisplatin according to their disease-specific regimen and, upon enrollment in this
study, will be randomized to receive STS or not. Efficacy of STS will be determined through comparison of hearing sensitivity
at follow-up relative to baseline measurements using standard audiometric techniques. The Children&rsquo;s Oncology Group is responsible
for funding the clinical activities for the study and we are responsible for providing the drug, drug distribution and pharmacovigilance,
or safety monitoring, for the study. The trial completed enrollment of 135 pediatric patients in the first quarter of 2012. Final
efficacy and safety data is expected to be presented in the second quarter of 2014. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I> Eniluracil </I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Eniluracil combined with 5-FU was previously being developed
by GlaxoSmithKline (&ldquo;GSK&rdquo;). Although the therapy was successful in Phase I and Phase II clinical trials, it tended
to produce less antitumor activity than the control therapy in two Phase III trials. Development by GSK was subsequently stopped. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> We developed a hypothesis that the dose and schedule used
in GSK&rsquo;s Phase III trials may not have been optimal and licensed the compound from GSK in July 2005. We believe that when
dosed properly, Eniluracil might enhance and expand the therapeutic spectrum of activity of 5-FU and reduce the occurrence of
a disabling side effect known as hand foot syndrome. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> At the end of 2012, Adherex completed the enrollment of
Protocol AHX-03-202, an open-label, randomized Phase II study comparing the completely oral combination of Eniluracil/5-FU/leucovorin
to capecitabine monotherapy in metastatic breast cancer (the &ldquo;main study&rdquo;). The study design included a crossover
arm that allowed patients who had radiologically documented disease progression on capecitabine monotherapy to crossover and take
Eniluracil/5-FU/leucovorin (the &ldquo;Crossover Arm&rdquo;). </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Interim results for the main study show the two regimens,
Eniluracil/5-FU/leucovorin and capecitabine, to be similar in efficacy and tolerability. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR>
    <TD STYLE="vertical-align: bottom; width: 27%; border-bottom: Black 1pt solid"> Arm </TD>
    <TD STYLE="vertical-align: top; width: 1%"> &nbsp; </TD>
    <TD STYLE="vertical-align: bottom; width: 8%; border-bottom: Black 1pt solid"> Evaluated<BR>
    patients </TD>
    <TD STYLE="vertical-align: top; width: 1%"> &nbsp; </TD>
    <TD STYLE="vertical-align: bottom; width: 12%; border-bottom: Black 1pt solid"> Complete<BR>
    Response&nbsp;(CR)<BR>
    N&nbsp;(%) </TD>
    <TD STYLE="vertical-align: top; width: 1%"> &nbsp; </TD>
    <TD STYLE="vertical-align: bottom; width: 12%; border-bottom: Black 1pt solid"> Partial<BR>
    Response&nbsp;(PR)<BR>
    N&nbsp;(%) </TD>
    <TD STYLE="vertical-align: top; width: 1%"> &nbsp; </TD>
    <TD STYLE="vertical-align: bottom; width: 11%; border-bottom: Black 1pt solid"> Stable<BR>
    Disease&nbsp;(SD)<BR>
    N&nbsp;(%) </TD>
    <TD STYLE="vertical-align: top; width: 1%"> &nbsp; </TD>
    <TD STYLE="vertical-align: bottom; width: 13%; border-bottom: Black 1pt solid"> Clinical&nbsp;Benefit<BR>
    (CR+PR+SD)<BR>
    N&nbsp;(%) </TD>
    <TD STYLE="vertical-align: top; width: 1%"> &nbsp; </TD>
    <TD STYLE="vertical-align: bottom; width: 11%; border-bottom: Black 1pt solid"> Median<BR>
    Progression<BR>
    Free&nbsp;Survival<BR>
    (PFS)&nbsp;days </TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD> Eniluracil/5-FU/Leucovorin </TD>
    <TD> &nbsp; </TD>
    <TD> 74 </TD>
    <TD> &nbsp; </TD>
    <TD> 1 (1%) </TD>
    <TD> &nbsp; </TD>
    <TD> 18 (24%) </TD>
    <TD> &nbsp; </TD>
    <TD> 38 (51%) </TD>
    <TD> &nbsp; </TD>
    <TD> 57 (77%) </TD>
    <TD> &nbsp; </TD>
    <TD> 125 </TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD> Capecitabine </TD>
    <TD> &nbsp; </TD>
    <TD> 61 </TD>
    <TD> &nbsp; </TD>
    <TD> 0 (0) </TD>
    <TD> &nbsp; </TD>
    <TD> 18 (30%) </TD>
    <TD> &nbsp; </TD>
    <TD> 27 (44%) </TD>
    <TD> &nbsp; </TD>
    <TD> 45 (74%) </TD>
    <TD> &nbsp; </TD>
    <TD> 126 </TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> However, promising results were seen in the Crossover Arm,
which present rationale for further development. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Twenty-one evaluated patients entered the Crossover Arm
from the capecitabine monotherapy arm to take Eniluracil/5-FU/leucovorin. Twelve experienced rapid disease progression (within
70&nbsp;days) on capecitabine, or within one scan. Nine of the 10 achieved subsequent benefit from the Eniluracil regimen: 3 patients
had partial tumor responses and 6 had stable disease. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR>
    <TD STYLE="vertical-align: bottom; width: 30%; border-bottom: Black 1pt solid"> Arm </TD>
    <TD STYLE="vertical-align: top; width: 1%"> &nbsp; </TD>
    <TD STYLE="vertical-align: bottom; width: 8%; border-bottom: Black 1pt solid"> Evaluated<BR>
    patients </TD>
    <TD STYLE="vertical-align: top; width: 1%"> &nbsp; </TD>
    <TD STYLE="vertical-align: bottom; width: 13%; border-bottom: Black 1pt solid"> Complete<BR>
    Response&nbsp;(CR)<BR>
    N&nbsp;(%) </TD>
    <TD STYLE="vertical-align: top; width: 1%"> &nbsp; </TD>
    <TD STYLE="vertical-align: bottom; width: 14%; border-bottom: Black 1pt solid"> Partial&nbsp;Response<BR>
    (PR)<BR>
    N&nbsp;(%) </TD>
    <TD STYLE="vertical-align: top; width: 1%"> &nbsp; </TD>
    <TD STYLE="vertical-align: bottom; width: 12%; border-bottom: Black 1pt solid"> Stable&nbsp;Disease<BR>
    (SD)<BR>
    N&nbsp;(%) </TD>
    <TD STYLE="vertical-align: top; width: 1%"> &nbsp; </TD>
    <TD STYLE="vertical-align: bottom; width: 18%; border-bottom: Black 1pt solid"> Clinical<BR>
    Benefit(CR+PR+SD)<BR>
    N&nbsp;(%) </TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD> Crossover Arm (All Subjects) </TD>
    <TD> &nbsp; </TD>
    <TD> 21 </TD>
    <TD> &nbsp; </TD>
    <TD> 0 (0%) </TD>
    <TD> &nbsp; </TD>
    <TD> 3 (14%) </TD>
    <TD> &nbsp; </TD>
    <TD> 9 (43%) </TD>
    <TD> &nbsp; </TD>
    <TD> 12 (57%) </TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD> Capecitabine refractory </TD>
    <TD> &nbsp; </TD>
    <TD> 10 </TD>
    <TD> &nbsp; </TD>
    <TD> 0 (0) </TD>
    <TD> &nbsp; </TD>
    <TD> 3 (30%) </TD>
    <TD> &nbsp; </TD>
    <TD> 6 (60%) </TD>
    <TD> &nbsp; </TD>
    <TD> 9 (90%) </TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Based on feedback received from the FDA during 2013, confirmation
of the results from the Crossover Arm of Study AHX-03-202 in metastatic breast cancer will require very large number of patients.
&nbsp;However, it is clear that Eniluracil/5-FU/leucovorin is active and well tolerated in refractory iv 5-FU and capecitabine
populations. &nbsp;Because of known patient preferences for oral regimens and the established safety profile of Eniluracil/5-FU/leucovorin,
this regimen may provide an option for the patients and physicians who prefer to continue with oral 5-FU. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Currently, Adherex does not have the financial resources
to advance the development of Eniluracil. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Intellectual Property</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Patents are important to developing and protecting our competitive
position. Our general policy is to seek patent protection in the United States, major European countries, Japan, Canada and other
jurisdictions as appropriate for our compounds and methods. U.S. patents, as well as most foreign patents, are generally effective
for 20 years from the date the earliest (priority) application was filed; however, U.S. patents that issue on applications filed
before June 8, 1995 may be effective until 17 years from the issue date, if that is later than the 20 year date. In some cases,
the patent term may be extended to recapture a portion of the term lost during FDA regulatory review or because of U.S. Patent
and Trademark Office, or USPTO, delays in prosecuting the application. The duration of foreign patents varies similarly, in accordance
with local law.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Currently, we own 23 issued patents world-wide and we have
14 patents pending throughout the world. In regards to STS, we have licensed from Oregon Health and Science University 1 U.S.
and 9 foreign patents, with an additional 1 patent pending. In regards to Eniluracil, we have been issued 13 patents and are currently
prosecuting 13 additional patents. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In addition, periods of marketing exclusivity for STS may also
be possible in the United States under orphan drug status. We obtained U.S. Orphan Drug Designation for the use of STS in the
prevention of platinum-induced ototoxicity in pediatric patients in 2004.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our success is significantly dependent on our ability to obtain
and maintain patent protection for our product candidates, both in the United States and abroad. The patent position of biotechnology
and pharmaceutical companies, in general, is highly uncertain and involves complex legal and factual questions, which often results
in apparent inconsistencies regarding the breadth of claims allowed and general uncertainty as to their legal interpretation and
enforceability. Further, some of our principal candidates, including STS, are based on previously known compounds, and candidates
or products that we develop in the future may include or be based on the same or other compounds owned or produced by other parties,
some or all of which may not be subject to effective patent protection. In addition, regimens that we may develop for the administration
of pharmaceuticals, such as specifications for the frequency, timing and amount of dosages, may not be patentable. Accordingly,
our patent applications may not result in patents being issued and issued patents may not afford effective protection. In addition,
products or processes that we develop may turn out to be covered by third party patents, in which case we may require a license
under such patents if we intend to continue the development of those products or processes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Our patent position and proprietary rights are subject to
certain risks and uncertainties. Please read the &ldquo;Risk Factors&rdquo; section of this Annual Report for information about
certain risks and uncertainties that may affect our patent position and proprietary rights. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We also rely upon unpatented confidential information to remain
competitive. We protect such information principally through confidentiality agreements with our employees, consultants, outside
scientific collaborators, and other advisers. In the case of our employees, these agreements also provide, in compliance with
relevant law, that inventions and other intellectual property conceived by such employees during their employment shall be our
exclusive property.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Corporate Relationships</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>License Agreement with Oregon Health &amp; Science University</I></B>&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> On February 20, 2013, Adherex entered into a new exclusive
license agreement with OHSU for exclusive worldwide license rights to intellectual property directed to STS and its use for chemoprotection,
including the prevention of ototoxicity induced by platinum chemotherapy, in humans (the &quot;New OHSU Agreement&quot;).&nbsp;Under
the New OHSU Agreement, OHSU will receive certain milestone payments, a 2.5&nbsp;percent royalty on net sales for licensed products
which can be reduced to 1.0 percent upon a $150,000 buy down and a 5&nbsp;percent royalty on any consideration received from sublicensing
of the licensed technology.&nbsp;Milestone payment fees payable to OHSU under the New OHSU Agreement include $100,000 upon our
first commercial sale of STS. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> On February 20, 2013, Adherex terminated the previous exclusive
license agreement with OHSU and Oxiquant, a wholly owned subsidiary of Adherex, dated September 26, 2002 (the &quot;Previous OHSU
Agreement&quot;). Pursuant to the Previous OHSU Agreement, OHSU granted Oxiquant an exclusive worldwide license to intellectual
property directed to thiol-based compounds including STS and their use in oncology. In consideration, OHSU was issued 13,902 shares
of common stock of Oxiquant that were subsequently converted upon the acquisition of Oxiquant into 21,250 shares of Adherex common
stock, and warrants to purchase shares of Adherex common stock that subsequently expired in 2007. In addition under the Previous
OHSU Agreement, the following milestone payments were included in the agreement: (i) $50,000 upon completion of Phase I clinical
trials, (ii) $200,000 upon completion of Phase II clinical trials, (iii) $500,000 upon completion of Phase III clinical trials.
Also, Oxiquant was to be liable for an additional milestone payment of $250,000 upon the first commercial sale for any licensed
product. Further, the Previous OHSU Agreement required Adherex to pay OHSU a 2.5% royalty on net sales of any licensed products
and a 15% royalty on any consideration received from sublicensing of the licensed technology. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>
<P STYLE="margin: 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> The term of the New OHSU Agreement expires on the date of
the last to expire claim(s) covered in the patents licensed to us, unless earlier terminated as provided in the agreement. STS
is currently protected by methods of use patents that we exclusively licensed from OHSU that expire in Europe, Canada and Australia
in 2021 and are currently pending in the United States and Japan. The New OHSU Agreement is terminable by either Adherex or OHSU
in the event of a material breach of the agreement by either party after 45 days prior written notice. Adherex has the right to
terminate the New OHSU Agreement at any time upon 60 days prior written notice and payment of all fees due to OHSU under the New
OHSU Agreement. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Development and License Agreement with GlaxoSmithKline</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> On July 14, 2005, we entered into a development and license
agreement with GSK.&nbsp;&nbsp;The agreement included the in-license by our Company of GSK&rsquo;s oncology product, Eniluracil,
and an option for GSK to license ADH-1, a compound we are no longer developing.&nbsp;&nbsp;As part of the transaction, GSK invested
$3.0 million in our Company's common stock.&nbsp;&nbsp;On October 11, 2006, the GSK option to license ADH-1 expired unexercised.&nbsp;&nbsp;Under
the terms of the agreement relating to Eniluracil, we received an exclusive license to develop Eniluracil for all indications
and GSK retained options to buy-back and assume development of the compound at various points in time. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On March 1, 2007, the GSK agreement was
amended and we purchased all of GSK&rsquo;s remaining buy-back options for a fee of $1.0 million.&nbsp;&nbsp;As a result of the
amendment to the GSK agreement, we now may be required to pay GSK development and sales milestones and royalties until the last
applicable licensed GSK patent expires.&nbsp;&nbsp;Specifically, if we file a New Drug Application, or NDA, with the Food and Drug
Administration, or FDA, we may be required to pay development milestones of $5.0 million to GSK.&nbsp;&nbsp;Additionally, depending
upon whether the NDA is approved by the FDA and whether Eniluracil becomes a commercial success, we may be required to pay up to
an additional $70.0 million in development and sales milestones for the initially approved indication, plus royalties in the low-double
digit range based on annual net sales. If we pursue other indications, we may also be required to pay up to an additional $15.0
million to GSK for each FDA-approved indication. The GSK agreement continues until the earliest of (i) the licensed patents expire
or (ii) is terminated by either party in the event of an uncured breach by the breaching party after 60 days prior written notice.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Competition</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Competition in the biotechnology and pharmaceutical industries
is intense. We expect that if any of our product candidates achieve regulatory approval for sale, they will compete on the basis
of drug efficacy, safety, patient convenience, reliability, ease of manufacture, price, marketing, distribution and patent protection,
among other variables. Our competitors may develop technologies or drugs that are more effective, safer or more affordable than
any we may develop.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">There are a number of different approaches to the development
of therapeutics for the treatment of cancer that are currently being used and studied. These approaches include: (i) surgery to
excise the cancerous tissue; (ii) radiation therapy, which attacks cancerous cells but does not easily distinguish between healthy
and diseased cells; (iii) chemotherapy, which works by preventing a cancerous cell from dividing or by killing cells that quickly
divide; (iv) immunotherapy, which stimulates the body&rsquo;s immune system to respond to the disease; and (v) hormone therapy,
which may slow the growth of cancer cells or even kill them.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> We are aware of a number of companies engaged in the research,
development and testing of new cancer therapies or means of increasing the effectiveness of existing therapies, including, among
many others, Amgen, AstraZeneca, Bayer, Bristol-Myers Squibb, Eli Lilly, Eisai, Merck KGaA, Novartis, Johnson &amp; Johnson, Pfizer,
Roche, Taiho and Sanofi-Aventis. Some of these companies have products that have already received, or are in the process of receiving,
regulatory approval or are in later stages of clinical development than our products. Many of them have much greater financial
resources than we do. Many of these companies have marketed drugs or are developing targeted cancer therapeutics which, depending
upon the mechanism of action of such agents, could be viewed as competitors. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> We are not aware of any commercially available agents that
reduce the incidence of hearing loss associated with the use of platinum-based anti-cancer agents, for which purpose we are developing
STS. There are several potential competitive agents with activity in preclinical or limited clinical settings. These include:
D-methionine, an amino acid that has been shown to protect against hearing loss in experimental settings but was demonstrated
to be inferior to STS in comparative studies; SPI-3005, an oral agent primarily being developed by Sound Pharmaceuticals for noise
and age-related hearing loss but in early Phase II trials for chemotherapy related hearing loss, which mimics glutathione peroxidase
and induces the intracellular induction of glutathione; N-acetylcysteine and amifostine, which have shown effectiveness (but less
than STS) in experimental systems; and Vitamin E, salicylate and tiopronin, which have all demonstrated moderate activity in rat
models to protect against cisplatin-induced ototoxicity, but no clinical trials have been performed. Cochlear implants, which
are small electronic devices that are surgically placed in the inner ear to assist with certain types of deafness, are utilized
to offer some relief but are often suboptimal. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">There are several potential therapies that may be competitive
to Eniluracil, including capecitabine (Xeloda&reg;) which is an oral pro-drug of 5-FU marketed by Roche that is converted to 5-FU
following absorption from the gastrointestinal tract. Capecitabine is approved by the FDA and many other regulatory agencies worldwide
for use in breast and colorectal cancer, but Eniluracil/5-FU has a potential competitive advantage in having minimal hand foot
syndrome compared to the up to 60% incidence with Xeloda&reg;. Hand foot syndrome is a major complication of the use of Xeloda&reg;
and there is currently no adequate treatment, with most physicians resorting to reducing the starting dosage of Xeloda&reg;.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">5-FU is normally rapidly metabolized and broken down by the
enzyme DPD. Eniluracil is an irreversible inhibitor of DPD and its use with 5-FU leads to prolonged and elevated levels of 5-FU.
Uracil is a competitive inhibitor of DPD. Although not FDA approved as a therapeutic agent, uracil has been used with 5-FU and
tegafur, a reversible DPD inhibitor (5-chloro-2, 4-dihydrozypyidine, or CDHP) for the treatment of certain cancers. UFT is an orally
active combination of uracil and tegafur that is available in some international markets through Merck KGaA.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> S-1, which is marketed by Taiho in Japan for gastric cancer,
colorectal cancer, head and neck cancer, non-small cell lung cancer, and inoperable or recurrent breast cancer, is an orally active
combination of tegafur and oxonic acid, an inhibitor of phosphoribosyl pyrophosphate transferase, an enzyme that reduces the incorporation
of 5-FU into RNA. Both S-1 and UFT have been shown to have very low levels of hand foot syndrome, but because they are reversible
inhibitors of DPD, these products would not be expected to be as successful at targeting new product indications where DPD levels
are intrinsically high, such as hepatocellular cancer, compared to an irreversible DPD inhibitor like Eniluracil. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Many chemotherapeutic agents are currently available and numerous
others are being developed. Any chemotherapeutic products that we develop may not be able to compete effectively with existing
or future chemotherapeutic agents. Our competitors might obtain regulatory approval for their drug candidates sooner than we do,
or their drugs may prove to be more effective than ours. However, cancer as a disease is not currently controlled by any one anti-cancer
agent, and there is typically a need for several agents at any one time and over time.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Many of our existing or potential competitors have substantially
greater financial, technical and human resources than we do and may be better equipped to develop, manufacture and market products.
In addition, many of these competitors have extensive experience with preclinical testing and human clinical trials and in obtaining
regulatory approvals. In addition, many of the smaller companies that compete with us have formed collaborative relationships with
large, established companies to support the research, development, clinical trials and commercialization of any products that they
may develop<B>.</B> We may rely on third parties to commercialize the products we develop, and our success will depend in large
part on the efforts and competitive merit of these collaborative partners. Academic institutions, government agencies and other
public and private research organizations may also conduct research, seek patent protection and establish collaborative arrangements
for research, clinical development and marketing of products similar to those we seek to develop. These companies and institutions
compete with us in recruiting and retaining qualified scientific and management personnel as well as in acquiring technologies
complementary to our projects. The existence of competitive products, including products or treatments of which we are not aware,
or products or treatments that may be developed in the future, may adversely affect the marketability of any products that we may
develop.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Government Regulation</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The production and manufacture of our product candidates and
our research and development activities are subject to significant regulation for safety, efficacy and quality by various governmental
authorities around the world. Before new pharmaceutical products may be sold in the U.S. and other countries, clinical trials of
the products must be conducted and the results submitted to appropriate regulatory agencies for approval. Clinical trial programs
must establish efficacy, determine an appropriate dose and regimen, and define the conditions for safe use. This is a high-risk
process that requires stepwise clinical studies in which the candidate product must successfully meet predetermined endpoints.
In the U.S., the results of the preclinical and clinical testing of a product are then submitted to the FDA in the form of a Biologics
License Application or a New Drug Application. In response to these submissions, the FDA may grant marketing approval, request
additional information or deny the application if it determines the application does not provide an adequate basis for approval.
Similar submissions are required by authorities in other jurisdictions who independently assess the product and may reach the same
or different conclusions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The receipt of regulatory approval often takes a number of years,
involves the expenditure of substantial resources and depends on a number of factors, including the severity of the disease in
question, the availability of alternative treatments and the risks and benefits demonstrated in clinical trials. On occasion, regulatory
authorities may require larger or additional studies, leading to unanticipated delay or expense. Even after initial approval from
the FDA or other regulatory agencies has been obtained, further clinical trials may be required to provide additional data on safety
and effectiveness. Additional trials are required to gain clearance for the use of a product as a treatment for indications other
than those initially approved. Furthermore, the FDA and other regulatory agencies require companies to disclose clinical trial
results. Failure to disclose such results within applicable time periods could result in penalties, including civil monetary penalties.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In Canada, these activities are subject to regulation by Health
Canada&rsquo;s Therapeutic Products Directorate, or TPD, and the rules and regulations promulgated under the Food and Drug Act.
In the United States, drugs and biological products are subject to regulation by the FDA. The FDA requires licensing of manufacturing
and contract research facilities, carefully controlled research and testing of products and governmental review and approval of
results prior to marketing therapeutic products. Additionally, the FDA requires adherence to &ldquo;Good Laboratory Practices&rdquo;
as well as &ldquo;Good Clinical Practices&rdquo; during clinical testing and &ldquo;Good Manufacturing Practices&rdquo; and adherence
to labeling and supply controls. The systems of new drug approvals in Canada and the United States are substantially similar, and
are generally considered to be among the most rigorous in the world.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Generally, the steps required for drug approval in Canada and
the United States, specifically in cancer related therapies, include:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><I>Preclinical Studies</I>: Preclinical studies, also known as non-clinical studies, primarily involve evaluations of pharmacology,
toxic effects, pharmacokinetics and metabolism of a drug in animals to provide evidence of the relative safety and bioavailability
of the drug prior to its administration to humans in clinical studies. A typical program of preclinical studies takes 18 to 24
months to complete. The results of the preclinical studies as well as information related to the chemistry and comprehensive descriptions
of proposed human clinical studies are then submitted as part of the Investigational New Drug, application to the FDA, a Clinical
Trial Application to the TPD, or similar submission to other foreign regulatory bodies. This is necessary in Canada, the United
States and most other countries prior to undertaking clinical studies. Additional preclinical studies are conducted during clinical
development to further characterize the toxic effects of a drug prior to submitting a marketing application.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><I>Phase I Clinical Trials</I>: Most Phase I clinical trials take approximately one year to complete and are usually conducted
on a small number of healthy human subjects to evaluate the drug&rsquo;s safety, tolerability and pharmacokinetics. In some cases,
such as cancer indications, Phase I clinical trials are conducted in patients rather than healthy volunteers.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><I>Phase II Clinical Trials</I>: Phase II clinical trials typically take one to two years to complete and are generally carried
out on a relatively small number of patients, generally between 15 and 50, in a specific setting of targeted disease or medical
condition, in order to provide an estimate of the drug&rsquo;s effectiveness in that specific setting. This phase also provides
additional safety data and serves to identify possible common short-term side effects and risks in a somewhat larger group of patients.
Phase II testing frequently relates to a specific disease, such as breast or lung cancer. Some contemporary methods of developing
drugs, particularly molecularly targeted therapies, do not require broad testing in specific diseases, and instead permit testing
in subsets of patients expressing the particular marker. In some cases, such as cancer indications, the company sponsoring the
new drug may submit a marketing application to seek accelerated approval of the drug based on evidence of the drug&rsquo;s effect
on a &ldquo;surrogate endpoint&rdquo; from Phase II clinical trials. A surrogate endpoint is a laboratory finding or physical sign
that may not be a direct measurement of how a patient feels, functions or survives, but is still considered likely to predict therapeutic
benefit for the patient. If accelerated approval is received, the company sponsoring the new drug must continue testing to demonstrate
that the drug indeed provides therapeutic benefit to the patient.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><I>Phase III Clinical Trials</I>: Phase III clinical trials typically take two to four years to complete and involve tests
on a much larger population of patients suffering from the targeted condition or disease. These studies involve conducting controlled
testing and/or uncontrolled testing in an expanded patient population, numbering several hundred to several thousand patients,
at separate test sites, known as multi-center trials, to establish clinical safety and effectiveness. These trials also generate
information from which the overall benefit-risk relationship relating to the drug can be determined and provide a basis for drug
labeling. Phase III trials are generally the most time consuming and expensive part of a clinical trial program. In some instances,
governmental authorities, such as the FDA, will allow a single Phase III clinical trial to serve as a pivotal efficacy trial to
support a Marketing Application.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><I>Marketing Application</I>: Upon completion of Phase III clinical trials, the pharmaceutical company sponsoring the new drug
assembles all the chemistry, preclinical and clinical data and submits it to the TPD or the FDA as part of a New Drug Submission
in Canada or a New Drug Application, in the United States. The marketing application is then reviewed by the regulatory body for
approval to market the product. The review process generally takes twelve to eighteen months.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Any clinical trials that we conduct may not be successfully
completed, either in a satisfactory time period or at all. The typical time periods described above may vary substantially and
may be materially longer. In addition, the FDA and its counterparts in other countries have considerable discretion to discontinue
trials if they become aware of any significant safety issues or convincing evidence that a therapy is not effective for the indication
being tested. It is possible the FDA and its counterparts in other countries may not (i) allow clinical trials to proceed at any
time after receiving an Investigational New Drug, (ii) allow further clinical development phases after authorizing a previous phase,
or (iii) approve marketing of a drug after the completion of clinical trials.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">While European, U.S. and Canadian regulatory systems require
that medical products be safe, effective, and manufactured according to high quality standards, the drug approval process in Europe
differs from that in the United States and Canada and may require us to perform additional preclinical or clinical testing regardless
of whether FDA or TPD approval has been obtained. The amount of time required to obtain necessary approvals may be longer or shorter
than that required for FDA or TPD approval. European Union Regulations and Directives generally classify health care products either
as medicinal products, medical devices or in vitro diagnostics. For medicinal products, marketing approval may be sought using
either the centralized procedure of the European Agency for the Evaluation of Medicinal Products, or EMEA, or the decentralized,
mutual recognition process. The centralized procedure, which is mandatory for some biotechnology derived products, results in an
approval recommendation from the EMEA to all member states, while the European Union mutual recognition process involves country
by country approval.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Good Clinical Practices</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The FDA and other regulatory agencies promulgate regulations
and standards, commonly referred to as current Good Clinical Practices for designing, conducting, monitoring, auditing and reporting
the results of clinical trials to ensure that the data and results are accurate and that the trial participants are adequately
protected. The FDA and other regulatory agencies enforce Good Clinical Practices through periodic inspections of trial sponsors,
principal investigators and trial sites. If our study sites fail to comply with applicable Good Clinical Practices, the clinical
data generated in our clinical trials may be deemed unreliable and relevant regulatory agencies may require us to perform additional
clinical trials before approving our marketing applications.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Good Manufacturing Practices</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The FDA and other regulatory agencies regulate and inspect equipment,
facilities and processes used in the manufacture of pharmaceutical and biologic products prior to approving a product. If, after
receiving approval from regulatory agencies, a company makes a material change in manufacturing equipment, location or process,
additional regulatory review and approval may be required. All facilities and manufacturing techniques that may be used for the
manufacture of our products must comply with applicable regulations governing the production of pharmaceutical products known as
&quot;Good Manufacturing Practices.&quot;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Orphan Drug Act</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Under the U.S. Orphan Drug Act, the FDA may grant orphan drug
designation to drugs intended to treat a &ldquo;rare disease or condition,&rdquo; which generally is a disease or condition that
affects fewer than 200,000 individuals in the U.S. If a product which has an orphan drug designation subsequently receives the
first FDA approval for the indication for which it has such designation, the product is entitled to orphan exclusivity, i.e., the
FDA may not approve any other applications to market the same drug for the same indication for a period of seven years following
marketing approval, except in certain very limited circumstances, such as if the later product is shown to be clinically superior
to the orphan product. Legislation similar to the U.S. Orphan Drug Act has been enacted in other countries, including within the
European Union.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Other Laws</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our present and future business has been and will continue to
be subject to various other laws and regulations. Various laws, regulations and recommendations relating to safe working conditions,
laboratory practices, the experimental use of animals, and the purchase, storage, movement, import and export and use and disposal
of hazardous or potentially hazardous substances, including radioactive compounds and infectious disease agents, used in connection
with our research work are or may be applicable to our activities. Certain agreements entered into by us involving exclusive license
rights may be subject to national or supranational antitrust regulatory control, the effect of which cannot be predicted. The extent
of government regulation, which might result from future legislation or administrative action, cannot accurately be predicted.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Research and Development</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Our research and development efforts have been focused on
the development of Eniluracil and STS. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We have established relationships with contract research organizations,
universities and other institutions, which we utilize to perform many of the day-to-day activities associated with our drug development.&nbsp;&nbsp;Where
possible, we have sought to include leading scientific investigators and advisors to enhance our internal capabilities.&nbsp;&nbsp;Research
and development issues are reviewed internally by our executive management and supporting scientific staff.&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Research and development expenses totaled $0.6 million and
$2.1 million for the fiscal years ended December 31, 2013 and 2012, respectively. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our product candidates are in various stages of development
and still require significant, time-consuming and costly research and development, testing and regulatory clearances.&nbsp;&nbsp;In
developing our product candidates, we are subject to risks of failure that are inherent in the development of products based on
innovative technologies.&nbsp;&nbsp;For example, it is possible that any or all of these products will be ineffective or toxic,
or will otherwise fail to receive the necessary regulatory clearances. There is a risk that our product candidates will be uneconomical
to manufacture or market or will not achieve market acceptance. There is also a risk that third parties may hold proprietary rights
that preclude us from marketing our product candidates or that others will market a superior or equivalent product.&nbsp;&nbsp;As
a result of these factors, we are unable to accurately estimate the nature, timing and future costs necessary to complete the development
of these product candidates. In addition, we are unable to reasonably estimate the period when material net cash inflows could
commence from the sale, licensing or commercialization of such product candidates, if ever.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Employees</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> We currently employ one full time employee,
and we engage the services of non-employee consultants. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DESCRIPTION OF PROPERTY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> We lease approximately 350 square feet of office space in
Research Triangle Park, North Carolina. The current monthly lease payments are approximately $850 and the lease is terminable
with 30 days&rsquo; notice. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>LEGAL PROCEEDINGS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We may be involved from time to time in ordinary litigation,
negotiation and settlement matters. We are not aware of any pending or threatened litigation against us or our officers and directors
in their capacity as such that could have a material impact on our operations or finances.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B> MARKET PRICE OF AND DIVIDENDS ON
COMMON EQUITY AND RELATED STOCKHOLDER MATTERS </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 85%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP> &nbsp; </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="10" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"> OTC Market: OTCQB <BR>(in&nbsp;U.S.&nbsp;dollars) </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="10" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"> Toronto&nbsp;Stock&nbsp;Exchange <BR>(in&nbsp;Canadian&nbsp;dollars) </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold"> Fiscal 2013: </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"> High $ </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"> Low $ </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"> Volume </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"> High $ </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"> Low $ </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"> Volume </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 22%"> Quarter ended 12/31/13 </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> $ </TD><TD STYLE="width: 10%; text-align: right"> 0.41 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> $ </TD><TD STYLE="width: 10%; text-align: right"> 0.22 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 10%; text-align: right"> 30,906 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> $ </TD><TD STYLE="width: 10%; text-align: right"> 0.48 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> $ </TD><TD STYLE="width: 10%; text-align: right"> 0.21 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 10%; text-align: right"> 23,554 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD> Quarter ended 09/30/13 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 0.48 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 0.21 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 12,269 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 0.50 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 0.21 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 11,321 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD> Quarter ended 06/30/13 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 1.13 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 0.30 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 11,885 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 1.15 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 0.32 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 38,208 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD> Quarter ended 03/31/13 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 0.95 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 0.48 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 5,357 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> 0.960 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> 0.32 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 9,689 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left"> Fiscal 2012: </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD> Quarter ended 12/31/12 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> 0.66 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> 0.13 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 81,994 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> 0.65 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> 0.12 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 17,423 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD> Quarter ended 09/30/12 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 0.18 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 0.11 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 4,943 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 0.30 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 0.11 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 2,787 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD> Quarter ended 06/30/12 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 0.15 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 0.18 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 1,162 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 0.20 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 0.15 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 1,814 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD> Quarter ended 03/31/12 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 0.17 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 0.33 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 7,722 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> 0.40 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> 0.18 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 5,733 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Market Information</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Our common stock currently trades on the OTCQB Market under
the trading symbol &ldquo;ADHXF and previously under the trading symbol &ldquo;ADH&rdquo; on the AMEX from November 12, 2004 until
January 29, 2009, and has traded on the TSX, under the trading symbol &ldquo;AHX&rdquo; since June 5, 2001. The above table sets
forth the quarterly high and low market closing prices, and average daily trading volume on the OTCQB and the TSX, for the two
most recent full fiscal years. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> As of March 14, 2014, the last reported sale on the TSX
was CAD$0.82 per share and the last reported sale on the over the counter markets in the U.S. was $0.84 per share. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Record Holders</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> As of March 14, 2014, there were approximately 89 shareholders
of record of our common stock, one of which was Cede &amp; Co., a nominee for Depository Trust Company, or DTC, and one of which
was The Canadian Depository for Securities Limited, or CDS.&nbsp;&nbsp;All of our common shares held by brokerage firms, banks
and other financial institutions in the U.S. or Canada as nominees for beneficial owners are considered to be held of record by
Cede &amp; Co. in respect of brokerage firms, banks and other financial institutions located in Canada.&nbsp;&nbsp;Cede &amp;
Co. and CDS are each considered to be one shareholder of record. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Dividend Policy</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We have never declared or paid cash dividends on our common
stock.&nbsp;&nbsp;We currently expect to retain future earnings, if any, for use in the operation and expansion of business and
do not anticipate paying any cash dividends in the foreseeable future.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Recent Sales of Unregistered Securities</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On April 5, 2012, May 18, 2012, August 20, 2012, November 20,
2012 and December 18, 2012 the Company issued 254,335, 61,111, 33,333, 688,571 and 100,000 stock options, respectively, to certain
consultants and board members of the Company. The options were issued in a private placement exempt under Section 4(2) of the Securities
Act of 1933, as amended (the &quot;Securities Act&quot;). The options were issued in USD dollar denominated grants at an exercise
price equal to the market price on the date of issue at $0.20, $0.18, $0.15, $0.35 and $0.56 per share, respectively, and are exercisable
for a period of 7 years from the grant date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> On April 3, 2013, May 17, 2013, August 13, 2013 and August
23, 2013 the Company issued 25,000, 10,204, 31,250 and 250,000 stock options, respectively, to certain consultants and board members
of the Company. The options were issued in a private placement exempt under Section 4(2) of the Securities Act of 1933, as amended
(the &quot;Securities Act&quot;). The options were issued in USD dollar denominated grants at an exercise price equal to the market
price on the date of issue at $0.80, $0.98, $0.32 and $0.24 per share, respectively, and are exercisable for a period of 7 years
from the grant date. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> On November 22, 2013, the Company issued 4,000,000 units
to certain investors, including Manchester Capital, its associates, and 683 Capital, for gross proceeds of $1,600,000, with each
unit consisting of one share of common stock and one warrant to acquire a share of common stock at an exercise price of $0.50.
Each warrant will be exercisable for a period of five years from the date of issuance.&nbsp; The units were issued in a private
placement exempt under Rule 506 of Regulation D of the Securities Act and were issued solely to accredited investors. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MANAGEMENT&rsquo;S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Cautionary Statement</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> The discussion below contains forward-looking statements
regarding our financial condition and our results of operations that are based upon our annual consolidated financial statements,
which have been prepared in accordance with generally accepted accounting principles within the United States, or&nbsp;U.S. GAAP,
and applicable U.S. Securities and Exchange Commission, or SEC, regulations for financial information.&nbsp;The preparation of
these financial statements requires our management to make estimates and judgments that affect the reported amounts of assets,
liabilities, income and expenses, and related disclosure of contingent assets and liabilities.&nbsp;We evaluate our estimates
on an ongoing basis.&nbsp;Our estimates are based on historical experience and on various other assumptions that we believe to
be reasonable. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Overview</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> In December 2008 we received notice from the American Stock
Exchange that we were not in compliance with Section 1003(a)(ii) of its Company Guide, because our stockholders&rsquo; equity
was below $6 million and we incurred losses from continued operation and net losses in the five most recent fiscal years. On January
29, 2009, we voluntarily filed to delist our common stock from the American Stock Exchange and effective January 29, 2009 our
common stock was no longer traded on the American Stock Exchange. As a result, any trading of our common stock in the U.S. must
now be conducted in the over-the-counter markets. Our common stock continues to trade on the Toronto Stock Exchange. The Toronto
Stock Exchange also has continuing listing standards, including minimum market capitalization and other requirements, that we
might not meet in the future, particularly if the price of our common stock does not increase or we are unable to raise capital
to continue our operations. On September 18, 2012, the Toronto Stock Exchange issued an official delisting review of our common
stock. On January 7, 2013, the Toronto Stock Exchange announced that it had completed its review of the common shares of the Company
and had determined that the Company meets TSX's continuing listing requirements. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Patient enrollment has completed in the Phase III trial
of STS conducted by the Children's Oncology Group. The final results of the study are expected to be presented in the second quarter
of 2014. The International Childhood Liver Tumour Strategy Group, known as SIOPEL study is continuing to enroll patients. Interim
safety data are expected to be presented in the second quarter of 2014.&nbsp;Each of these trials is managed by SIOPEL and the
Children&rsquo;s Oncology Group, respectively, and each group is responsible for the costs of the trial.&nbsp;We continue to hold
STS patents and our responsibility in the testing is limited to providing the drug, drug distribution and pharmacovigilance, or
safety monitoring, for the study.&nbsp;The SIOPEL trial is expected to enroll approximately 100 pediatric patients with liver
(hepatoblastoma) cancer at participating SIOPEL centers worldwide.&nbsp;The Company's Children Oncology Group study completed
enrollment of 135 patients during the first quarter of 2012. The SIOPEL trial has enrolled 95 patients as of March 14, 2014. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Eniluracil was previously under development by GSK. GSK
advanced Eniluracil into a comprehensive Phase III clinical development program that did not produce positive results and GSK
terminated further development. We developed a hypothesis as to why the GSK Phase III trials were not successful and licensed
the compound from GSK in July 2005. We believe that Eniluracil might enhance and expand the therapeutic spectrum of activity of
5-FU, reduce the occurrence of a disabling side effect known as hand foot syndrome and allow 5-FU to be given orally. Adherex
completed the enrollment of a Phase II trial comparing Eniluracil/5-FU/leucovorin vs. capecitabine in metastatic breast cancer
patients at the end of 2012 after having enrolled 153 patients. After the completion of enrollment and with preliminary results
of the trial, Adherex had an End-of-Phase 2 meeting with the FDA on May 22, 2013 to discuss the potential further development
of Eniluracil. During the meeting, Adherex reviewed the opportunity that Eniluracil offers to Metastatic Breast Cancer (MBC) patients
who had rapid disease progression on capecitabine. &nbsp;Adherex proposed a small pivotal single arm clinical study addressing
the special ability of Eniluracil/5-FU/leucovorin to meet the medical needs of these patients. However, the FDA strongly recommended
that Adherex consider other larger clinical trial design alternatives for the future development of Eniluracil in MBC. We believe
that it would be in the best interests of our shareholders and the cancer community to focus on seeking a partnership for Eniluracil,
which may include the Company evaluating viable indications for Eniluracil other than MBC. &nbsp;Data from the Phase 2 trial was
published in a scientific journal.&nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> We have not received and do not expect to have significant
revenues from our product candidates until we are either able to sell our product candidates after obtaining applicable regulatory
approvals or we establish collaborations that provide us with up-front payments, licensing fees, milestone payments, royalties
or other revenue. We earned net income of approximately $1.8 million for the twelve months ended December 31, 2013 and generated
net losses of $5.2 million for the twelve months ended December 31, 2012 (as a result of a non-cash loss on derivatives of $1.6
million). As of December 31, 2013, our deficit accumulated during development stage was approximately $108.7 million. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> As a result of our limited financial resources we have postponed
or terminated many of our previously planned or ongoing clinical development programs, including our Eniluracil program.&nbsp;We
continue to pursue various strategic alternatives, including collaborations with other pharmaceutical and biotechnology companies.&nbsp;As
a result, there is uncertainty of our ability to continue as a going concern.&nbsp;Our projections of&nbsp;our capital requirements&nbsp;are
subject to substantial uncertainty.&nbsp;More capital than we anticipated may be required thereafter.&nbsp;To finance our continuing
operations we will need to raise substantial additional funds through either the sale of additional equity, the issuance of debt,
the establishment of collaborations that provide us with funding, the out-license or sale of certain aspects of our intellectual
property portfolio&nbsp;or from other sources.&nbsp;Given current economic conditions, we might not be able to raise the necessary
capital or such funding may not be available on financially acceptable terms if at all.&nbsp;If we cannot obtain adequate funding
in the future, we might be required to further delay, scale back or eliminate certain research and development studies, consider
business combinations or even shut down some, or all, of our operations. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our operating expenses will depend on many factors, including
the progress of our drug development efforts and the implementation of further cost reduction measures. Our research and development
expenses, which include expenses associated with our clinical trials, drug manufacturing to support clinical programs, salaries
for research and development personnel, stock-based compensation, consulting fees, sponsored research costs, toxicology studies,
license fees, milestone payments, and other fees and costs related to the development of product candidates, will depend on the
availability of financial resources, the results of our clinical trials and any directives from regulatory agencies, which are
difficult to predict. Our general and administration expenses include expenses associated with the compensation of employees, stock-based
compensation, professional fees, consulting fees, insurance and other administrative matters associated in support of our drug
development programs.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> On November 22, 2013, we announced that we had completed
a $1.6 million equity financing. Further development of STS or Eniluracil will require additional capital. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>Results of Operations</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B> Fiscal 2013 versus Fiscal 2012 </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="border-bottom: Black 1pt solid"> In&nbsp;thousands&nbsp;of&nbsp;U.S.&nbsp;Dollars </TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Fiscal <BR>&nbsp;2013 </TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> % </TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Fiscal&nbsp; <BR>2012 </TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> % </TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Increase <BR>(Decrease) </TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD COLSPAN="2"> &nbsp; </TD><TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD COLSPAN="2"> &nbsp; </TD><TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD COLSPAN="2"> &nbsp; </TD><TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD COLSPAN="2"> &nbsp; </TD><TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD COLSPAN="2"> &nbsp; </TD><TD> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold"> Revenue </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left"> Operating expenses: </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 35%; text-align: left; text-indent: -9pt; padding-left: 9pt"> Research and development </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 10%; text-align: right"> 597 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 10%; text-align: right"> 31 </TD><TD STYLE="width: 1%; text-align: left"> % </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 10%; text-align: right"> 2,075 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 10%; text-align: right"> 57 </TD><TD STYLE="width: 1%; text-align: left"> % </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 10%; text-align: right"> (1,478 </TD><TD STYLE="width: 1%; text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 9pt"> General and administration </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 1,334 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 69 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> % </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 1,545 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 43 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> % </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> (211 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> Total operating expense </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 1,931 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 100 </TD><TD STYLE="text-align: left"> % </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 3,620 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 100 </TD><TD STYLE="text-align: left"> % </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (1,689 </TD><TD STYLE="text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> Other&nbsp;income (loss) </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 3,777 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (1,563 </TD><TD STYLE="text-align: left"> ) </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 5,340 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 9pt"> Interest income </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> (1 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> ) </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt; text-align: right"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 20 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt; text-align: right"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> (21 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt"> Net income (loss) </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> $ </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"> 1,845 </TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"> &nbsp; </TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> $ </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"> (5,163 </TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> ) </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"> &nbsp; </TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> $ </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"> 7,008 </TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> &nbsp; </TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol"> &middot; </FONT></TD><TD> Research
                                         and development expenses were lower in fiscal 2013, as compared to fiscal 2012 primarily
                                         due to a reduction in the costs associated with the Phase III study of STS as compared
                                         to the Eniluracil Phase II trial. In fiscal 2013, the Company ceased actively developing
                                         Eniluracil. </TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol"> &middot; </FONT></TD><TD> General
                                         and administrative expenses decreased primarily as a result of reductions in payroll. </TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol"> &middot; </FONT></TD><TD> Other income
                                         increased $5.3 million as a result of change in the fair value of derivatives. </TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol"> &middot; </FONT></TD><TD> Interest
                                         income decreased in fiscal 2013, as compared to 2012 due to a lower average cash balance
                                         for the comparable periods. </TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Quarterly Information</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> The following table presents selected consolidated financial
data for each of the last eight quarters through December 31, 2013, as prepared under U.S. GAAP (dollars in thousands, except
per share information). Share information has been restated to reflect the share consolidation in 2012: </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 85%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"> Period </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"> Net&nbsp;(Loss)/Income <BR>for&nbsp;the
    Period </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"> Basic&nbsp;and&nbsp;Diluted <BR>Net&nbsp;(Loss)/Income&nbsp;per
    <BR>Common&nbsp;Share </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%"> March 31, 2012 </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> $ </TD><TD STYLE="width: 10%; text-align: right"> 2,715 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> $ </TD><TD STYLE="width: 10%; text-align: right"> 0.11 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD> June 30, 2012 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> (602 </TD><TD STYLE="text-align: left"> ) </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> (0.02 </TD><TD STYLE="text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD> September 30, 2012 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> (764 </TD><TD STYLE="text-align: left"> ) </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> (0.03 </TD><TD STYLE="text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD> December 31, 2012 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> (6,511 </TD><TD STYLE="text-align: left"> ) </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> (0.26 </TD><TD STYLE="text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD> March 31, 2013 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> (4,108 </TD><TD STYLE="text-align: left"> ) </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> (0.16 </TD><TD STYLE="text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD> June 30, 2013 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> 6,607 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> 0.26 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD> September 30, 2013 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> (1,766 </TD><TD STYLE="text-align: left"> ) </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> (0.07 </TD><TD STYLE="text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD> December 31, 2013 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> 1,112 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> 0.04 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>


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<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD> &nbsp; </TD><TD STYLE="font-weight: bold"> &nbsp; </TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center"> Three Months Ended </TD><TD STYLE="font-weight: bold"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"> December 31, </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"> December 31, </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; padding-bottom: 1pt"> Dollars in thousands </TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2013 </TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2012 </TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left"> Selected Statement of Operations Data: </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold"> Revenue </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left"> Operating expenses </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%; text-align: left"> &nbsp;&nbsp;&nbsp;Research and development </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 10%; text-align: right"> 90 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 10%; text-align: right"> 561 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt"> &nbsp;&nbsp;&nbsp;General and administrative </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 326 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 562 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt"> Loss from operations </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> (416 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> ) </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> (1,123 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD> &nbsp;&nbsp;&nbsp;Unrealized gain/(loss) </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 1,524 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (5,395 </TD><TD STYLE="text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt"> &nbsp;&nbsp;&nbsp;&nbsp;Interest income and other </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 4 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 7 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt"> Net income/(loss) and comprehensive income/(loss) </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> $ </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"> 1,112 </TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> $ </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"> (6,511 </TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> ) </TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> The Company reported a net loss from operations of $0.4
million which excludes a $1.5 million non-cash gain on derivatives for the fourth quarter ended December 31, 2013, compared to
a net loss from operations of $1.1 million excluding the non-cash loss of $5.4 million in the same period 2012. The decrease in
the net loss from operations excluding the non-cash impact of derivatives is primarily due to a decrease in research and development
expenses associated with the Company&rsquo;s Phase II Eniluracil trial. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Research and development expenses totaled $0.09 million
for the fourth quarter ended December 31, 2013, as compared to a $0.6 million in the same period in 2012. There was a significant
decrease in research and development expenses relating to the conclusion of enrollment and ongoing clinical support of the Phase
II Eniluracil trial. General and administrative expenses were $0.3 million in the fourth quarter ended December 31, 2013, as compared
to $0.6 million in the same period in 2012. This reduction is attributable to the departure of the Company&rsquo;s CFO and CSO. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"> December 31, </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"> December 31, </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold"> Dollars in thousands </TD><TD STYLE="font-weight: bold"> &nbsp; </TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center"> 2013 </TD><TD STYLE="font-weight: bold"> &nbsp; </TD><TD STYLE="font-weight: bold"> &nbsp; </TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center"> 2012 </TD><TD STYLE="font-weight: bold"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left"> Selected Asset and Liability Data: </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%; text-align: left"> Cash and cash equivalents </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> $ </TD><TD STYLE="width: 10%; text-align: right"> 1,663 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> $ </TD><TD STYLE="width: 10%; text-align: right"> 2,303 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> Other current assets </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 89 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 62 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"> Capital assets </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> Current liabilities excluding derivative warrant liability </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 344 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 682 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"> Derivative warrant liability </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 2,863 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 6,640 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> Long term liabilities </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"> Working capital[Current Assets &ndash; Current Liabilities excluding derivative liability] </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 1,408 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 1,683 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left"> Selected Equity: </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> Common stock </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> 66,790 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> 65,952 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"> Accumulated deficit </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (108,698 </TD><TD STYLE="text-align: left"> ) </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (110,543 </TD><TD STYLE="text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> Shareholders&rsquo; (deficit) </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (1,455 </TD><TD STYLE="text-align: left"> ) </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (4,957 </TD><TD STYLE="text-align: left"> ) </TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Liquidity and Capital Resources</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol"> &middot; </FONT></TD><TD> The decrease
                                         in cash and cash equivalents between December 31, 2012 and December 31, 2013 is due to
                                         clinical trial expenses related to our Phase II study of Eniluracil, our Phase III study
                                         of STS and our general and administrative expenses. The decrease was offset by the cash
                                         proceeds from our 2013 private placement. </TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol"> &middot; </FONT></TD><TD> The increase
                                         in other current assets between December 31, 2012 and December 31, 2013 is a result of
                                         an increase in prepaid insurance expenses. </TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol"> &middot; </FONT></TD><TD> Our liabilities
                                         decreased $4.1 million between December 31, 2012 and December 31, 2013. The decrease
                                         was primarily a result of the valuation of the derivative liability at the two valuation
                                         dates as well as a decrease in accrued liabilities from costs related to the Phase II
                                         study of Eniluracil. </TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol"> &middot; </FONT></TD><TD> Current liabilities
                                         excluding derivative warrant liability decreased between December 31, 2012 and December
                                         31, 2013.&nbsp;The decrease was due to primarily to the accrual of a milestone payment
                                         for the Eniluracil trial at December 31, 2012. </TD></TR></TABLE>

<P STYLE="margin-top: 0; margin-bottom: 0"> &nbsp; </P>


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<P STYLE="margin-top: 0; margin-bottom: 0"> &nbsp; </P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol"> &middot; </FONT></TD><TD> At December
                                         31, 2013, our working capital decreased by approximately $0.3 million from December 31,
                                         2012 due to operating expenses for the year. </TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"> 12&nbsp;Months <BR>Ended <BR>December <BR>31, </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"> 12&nbsp;Months <BR>Ended <BR>December <BR>31, </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; padding-bottom: 1pt"> Dollars and shares in thousands </TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2013 </TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2012 </TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left"> Selected Cash Flow Data: </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%; text-align: left"> Net cash used in operating activities </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> $ </TD><TD STYLE="width: 10%; text-align: right"> (2,210 </TD><TD STYLE="width: 1%; text-align: left"> ) </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> $ </TD><TD STYLE="width: 10%; text-align: right"> (2,994 </TD><TD STYLE="width: 1%; text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> Net cash provided from financing activities </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 1,570 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt"> &nbsp;Net cash provided from investing activities </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"> - </TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"> - </TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD> Number of shares of common stock outstanding </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 29,158 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 25,158 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> The net cash flow used in operating activities for the year
ended December 31, 2013 was approximately $2.2 million as compared to $3.0 million during the same period in 2012.&nbsp;This decrease
is due to a decrease in our overall research and development activity associated with the Eniluracil Phase II trials during the
fiscal year ended December 31, 2013, as compared to the same period in 2012.&nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> On September 5, 2013, we announced that we intended to primarily
focus our remaining financial resources on the development of STS.&nbsp;&nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> We continue to pursue various strategic alternatives including
collaborations with other pharmaceutical and biotechnology companies.&nbsp;Our projections of further capital requirements are
subject to substantial uncertainty.&nbsp;Our working capital requirements may fluctuate in future periods depending upon numerous
factors, including: our ability to obtain additional financial resources; our ability to enter into collaborations that provide
us with up-front payments, milestones or other payments; results of our research and development activities; progress or lack
of progress in our preclinical studies or clinical trials; unfavorable toxicology in our clinical programs, our drug substance
requirements to support clinical programs; change in the focus, direction, or costs of our research and development programs;
headcount expense; the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing our patent claims;
competitive and technological advances; the potential need to develop, acquire or license new technologies and products; our business
development activities; new regulatory requirements implemented by regulatory authorities; the timing and outcome of any regulatory
review process; and commercialization activities, if any. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> We had cash and cash equivalents of approximately $1.7 million
as of December 31, 2013.&nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Financial Instruments</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> We invest excess cash and cash equivalents in high credit
quality investments held by financial institutions in accordance with our investment policy designed to protect the principal
investment.&nbsp;At December 31, 2013, we had approximately $0.03 million in our cash accounts and $1.6 million in our money market
accounts.&nbsp;We have not experienced any loss or write down of our money market investments for the year ended December 31,
2013 or for any other year since the inception of the company. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our investment policy is to manage investments to achieve, in
the order of importance, the financial objectives of preservation of principal, liquidity and return on investment.&nbsp;Investments
may be made in U.S. or Canadian obligations and bank securities, commercial paper of U.S. or Canadian industrial companies, utilities,
financial institutions and consumer loan companies, and securities of foreign banks provided the obligations are guaranteed or
carry ratings appropriate to the policy.&nbsp;Securities must have a minimum Dun &amp; Bradstreet rating of A for bonds or R1 low
for commercial paper.&nbsp;The policy also provides for investment limits on concentrations of securities by issuer and maximum-weighted
average time to maturity of twelve months.&nbsp;This policy applies to all of our financial resources.&nbsp;The policy risks are
primarily the opportunity cost of the conservative nature of the allowable investments.&nbsp;As our main purpose is research and
development, we have chosen to avoid investments of a trading or speculative nature.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> We classify investments with original maturities at the
date of purchase greater than three months which mature at or less than twelve months as current.&nbsp;We carry investments at
their fair value with unrealized gains and losses included in other comprehensive income (loss); however we have not held any
instruments that were classified as short term investments during the periods presented in this Annual Report. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Off-Balance Sheet Arrangements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Since our inception, we have not had any material off-balance
sheet arrangements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Contractual Obligations and Commitments</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Since our inception, inflation has not had a material impact
on our operations.&nbsp;We had no material commitments for capital expenses or contractual obligations beyond 3 years as of December
31, 2013.&nbsp;&nbsp;The following table represents our contractual obligations and commitments at December 31, 2013 (in thousands
of U.S. dollars): </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP> &nbsp; </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"> Less&nbsp;than <BR>1&nbsp;year </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"> 1-3 <BR>years </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"> Total </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 61%; text-align: left; padding-bottom: 1pt"> Life Sci Advisors, LLC (1) </TD><TD STYLE="width: 1%; padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="width: 10%; border-bottom: Black 1pt solid; text-align: right"> 55 </TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%; padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="width: 10%; border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%; padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="width: 10%; border-bottom: Black 1pt solid; text-align: right"> 55 </TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> $ </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"> 55 </TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"> - </TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> $ </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"> 55 </TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> &nbsp; </TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-size: 10pt"> (1) </FONT></TD><TD> Under the service agreement
                                         Life Sci Advisors, LLC, the Company is required to make several payments over the course
                                         of a six month agreement. Life Sci Advisors, LLC services include, but are not limited,
                                         an investor meeting program and creating a key message platform. </TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Critical Accounting Policies and Estimates</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The preparation of financial statements in conformity with U.S.
GAAP requires management to make estimates that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities as at the date of the financial statements and the reported amounts of revenue and expense during the reporting
period. These estimates are based on assumptions and judgments that may be affected by commercial, economic and other factors.
Actual results could differ from these estimates.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> An accounting policy is considered to be critical if it
requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate
is made, and if different estimates reasonably could have been used, or changes in the accounting estimates that are reasonably
likely to occur periodically, could materially impact the financial statements. The following description of critical accounting
policies, judgments and estimates should be read in conjunction with our December 31, 2013 consolidated financial statements. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Stock-based Compensation</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> The calculation of the fair values of our stock-based compensation
plans requires estimates that require management&lsquo;s judgments.&nbsp;&nbsp;Under ASC 718, the fair value of each stock option
is estimated on the grant date using the Black-Scholes option-pricing model. The valuation models require assumptions and estimates
to determine expected volatility, expected life, expected dividends and expected risk-free interest rates. The expected volatility
was determined using historical volatility of our stock based on the contractual life of the award. The risk-free interest rate
assumption was based on the yield on zero-coupon U.S. Treasury strips at the award grant date. We also used historical data to
estimate forfeiture experience.&nbsp;&nbsp;In valuing options granted in the year ended December 31, 2013 and fiscal year ended
December 31, 2012 we used the following weighted average assumptions: </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Year&nbsp;Ended <BR>
    December<BR> 31,&nbsp;2013 </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Year&nbsp;Ended<BR>
    December<BR> 31,&nbsp;2012 </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 66%; text-align: left"> Expected dividend </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 14%; text-align: right"> 0 </TD><TD STYLE="width: 1%; text-align: left"> % </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 14%; text-align: right"> 0 </TD><TD STYLE="width: 1%; text-align: left"> % </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"> Risk-free interest rate </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt"> 1.10-1.72 </FONT></TD><TD STYLE="text-align: left"> % </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt"> 1.09-1.26 </FONT></TD><TD STYLE="text-align: left"> % </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> Expected volatility </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt"> 144-175 </FONT></TD><TD STYLE="text-align: left"> % </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt"> 118-133 </FONT></TD><TD STYLE="text-align: left"> % </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"> Expected life </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt"> 7 years </FONT></TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt"> 7 years </FONT></TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
</TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Common stock and warrants</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Common stock is recorded as the net proceeds received on
issuance after deducting all share issuance costs and the value of investor warrants.&nbsp;&nbsp;Warrants are recorded at fair
value and are deducted from the proceeds of common stock and recorded on the consolidated statements of stockholders&rsquo; equity
as additional paid-in capital. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Derivative Instruments</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Effective January 1, 2009, the Company adopted ASC Topic 815-40,
&quot;Derivatives and Hedging&quot; (ASC 815-40). One of the conclusions reached under ASC 815-40 was that an equity-linked financial
instrument would not be considered indexed to the entity's own stock if the strike price is denominated in a currency other than
the issuer's functional currency. The conclusion reached under ASC 815-40 clarified the accounting treatment for these and certain
other financial instruments. ASC 815-40 specifies that a contract would not be treated as a derivative if it met the following
conditions: (a) indexed to the Company's own stock; and (b) classified in shareholders' equity in the Company's statement of financial
position. The Company's outstanding warrants denominated in Canadian dollars are not considered to be indexed to its own stock
because the exercise price is denominated in Canadian dollars and the Company's functional currency is United States dollars. Therefore,
these warrants have been treated as derivative financial instruments and recorded at their fair value as a liability. All other
outstanding convertible instruments are considered to be indexed to the Company's stock, because their exercise price is denominated
in the same currency as the Company's functional currency, and are included in stockholders' deficiency.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">The Company's derivative instruments
include warrants to purchase 18,035 shares, the exercise prices for which are denominated in a currency other than the Company's
functional currency, as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; background-color: white"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Warrants to purchase 13,337 shares at CAD$1.44 per whole share that expire on April 30, 2015; and</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; background-color: white"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Warrants to purchase 4,698 shares exercisable at CAD$1.44 per whole share that expire on March 29, 2016.</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">These warrants have been recorded at
their fair value as a liability at issuance and will continue to be re-measured at fair value as a liability at each subsequent
balance sheet date. Any change in value between reporting periods will be recorded as unrealized gain/(loss). These warrants will
continue to be reported as a liability until such time as they are exercised or expire. The fair value of these warrants is estimated
using the Black-Scholes option-pricing model.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> As of December 31, 2013, the fair value
of the warrants expiring April 30, 2015 and March 29, 2016 was determined to be $2,015 and $794, respectively (December 31, 2012
&ndash; warrants expiring April 30, 2015, fair value of $4,698, March 29, 2016, fair value of $1,847), and the gain on these warrants
for the twelve months ended December 31, 2013 was $2,683 and $1,052, respectively (December 31, 2012 - warrants expiring April
30, 2015, loss of $1,026; March 29,2016, loss of $507). There is no cash flow impact for these derivatives until the warrants
are exercised. If these warrants are exercised, the Company will receive the proceeds from the exercise at the current exchange
rate at the time of exercise. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Outstanding Share Information</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: left"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 98%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid"> Gain/(Loss) on Derivative<BR>
 Instruments </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid"> Twelve months ended December 31, 2013 </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid"> Twelve months ended December 31, 2012 </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 50%; font-weight: bold"> Warrants expiring April 15, 2015 </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 22%; text-align: right"> 2,683 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 22%; text-align: right"> (1,026 </TD><TD STYLE="width: 1%; text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold"> Warrants expiring March 29, 2016 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 1,052 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (507 </TD><TD STYLE="text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left"> Rights offering derivative </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left"> Options to contractors </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 42 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (30 </TD><TD STYLE="text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; padding-bottom: 1pt"> Total </TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right"> 3,777 </TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left"> &nbsp; </TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right"> (1,563 </TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left"> ) </TD></TR>
</TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: left"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in"> Our outstanding share data at December
31, 2013 follows (in thousands): </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 65%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.5in">
<TR STYLE="vertical-align: bottom">
    <TD> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"> December&nbsp;31, <BR>2013 </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 77%"> Common shares </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 20%; text-align: right"> 29,158 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD> Warrants </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 22,035 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt"> Stock options </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 5,725 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt"> Total </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"> 56,918 </TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> &nbsp; </TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Recent Accounting Pronouncements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white; color: #222222">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"> In February 2013,
the FASB issued ASU 2013-02 to improve the reporting of reclassifications out of accumulated other comprehensive income. The ASU
provides amendments to the Comprehensive Income subtopic of the FASB ASC, such that companies must report the effect of significant
reclassifications out of accumulated comprehensive income on the respective line items in net income. For other amounts that are
not required to be reclassified in their entirety to net income, an entity may cross reference to the relevant note disclosure.
The Company adopted this ASU in the first quarter for fiscal 2013. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white; color: #222222">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white; color: #222222">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"> In July 2013, the
FASB issued ASU No. 2013-11, &quot;Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar
Tax Loss, or a Tax Credit Carryforward Exists,&quot; an amendment to FASB Accounting Standards Codification, or &quot;ASC&quot;
Topic 740, Income Taxes, or &quot;FASB ASC Topic 740.&quot; This update clarifies that an unrecognized tax benefit, or a portion
of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net
operating loss carryforward, a similar tax loss, or a tax credit carryforward if such settlement is required or expected in the
event the uncertain tax position is disallowed. In situations where a net operating loss carryforward, a similar tax loss, or
a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction or the tax law
of the jurisdiction does not require, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized
tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets.
This ASU is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013.
Early adoption and retrospective application are permitted. This accounting guidance is not expected to have a material impact
on our consolidated financial statements or financial statement disclosures. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As a Smaller Reporting Company as defined by Rule 12b-2 of the
Exchange Act and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are
not required to provide the information requested by this Item.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DIRECTORS AND EXECUTIVE OFFICERS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"> &nbsp;The following table sets forth the
name of each of our executive officers and directors, such person&rsquo;s principal occupation or employment, all other positions
with Adherex and any significant affiliate thereof now held by such person, if any, the year in which such person became a director
of Adherex and such person&rsquo;s age. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Corporation has an Audit Committee, a Compensation Committee,
and a Governance Committee. The current members of such committees are noted below:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR>
    <TD NOWRAP STYLE="vertical-align: bottom; width: 32%"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B> Name&nbsp;and&nbsp;Province/State&nbsp;and&nbsp;Country&nbsp;of </B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B> Residence,&nbsp;Position </B></P></TD>
    <TD NOWRAP STYLE="vertical-align: top; width: 2%"> &nbsp; </TD>
    <TD NOWRAP STYLE="vertical-align: top; width: 41%"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B> Current&nbsp;Principal&nbsp;Occupation </B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B> and&nbsp;Principal&nbsp;Occupation </B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B> For&nbsp;Previous&nbsp;Five&nbsp;Years </B></P></TD>
    <TD NOWRAP STYLE="vertical-align: top; width: 2%"> &nbsp; </TD>
    <TD NOWRAP STYLE="vertical-align: bottom; width: 15%; text-align: center"><B> Director&nbsp;Since </B></TD>
    <TD NOWRAP STYLE="vertical-align: top; width: 1%"> &nbsp; </TD>
    <TD NOWRAP STYLE="vertical-align: bottom; width: 7%; text-align: center"><B> Age </B></TD></TR>
<TR STYLE="vertical-align: top">
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD></TR>
<TR STYLE="vertical-align: top">
    <TD><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Krysia Lynes </P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> North Carolina, USA </P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Interim Chief Financial Officer </P></TD>
    <TD> &nbsp; </TD>
    <TD> Co-Founder and Partner, GL Financial Consultants, LLC; previously General Manager Pneu-Hyd Industries; previously Controller
    Moncure Plywood </TD>
    <TD> &nbsp; </TD>
    <TD STYLE="text-align: center"> N/A </TD>
    <TD> &nbsp; </TD>
    <TD STYLE="text-align: center"> 44 </TD></TR>
<TR STYLE="vertical-align: top">
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD></TR>
<TR STYLE="vertical-align: top">
    <TD><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Chris A. Rallis (1)(2)(3) </P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> North Carolina, USA </P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Director </P></TD>
    <TD> &nbsp; </TD>
    <TD> Executive in-residence at Pappas Ventures; previously, CEO of ImmunoBiosciences </TD>
    <TD> &nbsp; </TD>
    <TD STYLE="text-align: center"> August 2011 </TD>
    <TD> &nbsp; </TD>
    <TD STYLE="text-align: center"> 60 </TD></TR>
<TR STYLE="vertical-align: top">
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD></TR>
<TR STYLE="vertical-align: top">
    <TD><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Rostislav Raykov </P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> New Jersey, USA </P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Chairman of Board, Chief Executive Officer, Director </P></TD>
    <TD> &nbsp; </TD>
    <TD> Co-Founder and Manager, DCML LLC; previously Portfolio Manager Alchem Partners; previously Portfolio Manager John Levin
    &amp; Associates </TD>
    <TD> &nbsp; </TD>
    <TD STYLE="text-align: center"> July 2009 </TD>
    <TD> &nbsp; </TD>
    <TD STYLE="text-align: center"> 38 </TD></TR>
<TR STYLE="vertical-align: top">
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD></TR>
<TR STYLE="vertical-align: top">
    <TD><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Steven D. Skolsky (1)(2)(3) </P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> North Carolina, USA </P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Director </P></TD>
    <TD> &nbsp; </TD>
    <TD> Global Head of Clinical and Data Operations at Quintiles Transnational; previously CEO of Sequoia Pharmaceuticals </TD>
    <TD> &nbsp; </TD>
    <TD STYLE="text-align: center"> August 2011 </TD>
    <TD> &nbsp; </TD>
    <TD STYLE="text-align: center"> 58 </TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.5in; text-align: left">(1)</TD><TD STYLE="text-align: justify">Member of the Audit Committee</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.5in; text-align: left">(2)</TD><TD STYLE="text-align: justify">Member of the Compensation Committee</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.5in; text-align: left">(3)</TD><TD STYLE="text-align: justify">Member of the Governance Committee</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I> Krysia Lynes </I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Ms. Lynes joined Adherex in January 2010 as Accounting Manager.
She has moved to interim Chief Financial Officer as of 2013. Ms. Lynes is a partner in a management consulting firm. She has over
15 years of experience in accounting and cost management. Ms. Lynes received a MBA from McMaster University and a BASc in Chemical
Engineering from the University of Toronto. She holds a Master Certificate in Six Sigma Black Belt and Lean Six Sigma from Villanova
University and C.P.A. designation from the Canadian Institute Chartered Accountants. As a result of these and her professional
experiences, she brings a great knowledge of management, cost control and process improvement to strengthen the Board&rsquo;s
collective qualifications, skills and experience. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Chris A. Rallis</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Mr. Chris A. Rallis has&nbsp;served as&nbsp;a director of Adherex
since August 2011. Mr. Rallis has been an executive-in-residence at Pappas Ventures, a life&nbsp;science venture capital firm since
January 2008.&nbsp;Previously, Mr. Rallis was the&nbsp;President and Chief Executive Officer of ImmunoBiosciences, Inc. (&ldquo;IBI&rdquo;),
a vaccine&nbsp;technology company formerly located in Raleigh, North Carolina from April 2006 through June 2007. &nbsp;Prior to
joining IBI, Mr. Rallis served as an executive in residence (part time) for Pappas Ventures,&nbsp;and as a consultant for Duke
University and Panacos Pharmaceuticals, Inc.&nbsp; Mr. Rallis is the former President&nbsp;and Chief Operating Officer and director
of Triangle Pharmaceuticals, Inc.,&nbsp;which was acquired by Gilead Sciences in January 2003 for approximately $465&nbsp;million.&nbsp;Prior
to assuming the role of President and COO in March 2000, he was&nbsp;Executive Vice President, Business Development and General
Counsel. &nbsp;While at&nbsp;Triangle, Mr. Rallis&nbsp;participated in 11 equity financings generating gross proceeds&nbsp;of approximately
$500 million.&nbsp;He was also primarily responsible for all business&nbsp;development activities which included a worldwide alliance
with Abbott&nbsp;Laboratories and the in-licensing of ten compounds. &nbsp;Before joining Triangle in&nbsp;1995, Mr. Rallis served
in&nbsp;various business development and legal management roles with Burroughs Wellcome Co. over a 13-year period, including Vice
President of Strategic Planning&nbsp;and Business Development. &nbsp;Mr. Rallis also&nbsp;serves on the boards of Aeolus Pharmaceuticals,
a biopharmaceutical company&nbsp;located in Mission Viejo, California and Oxygene Biotherapeutics, a biopharmaceutical company
located in Morrisville, North Carolina.&nbsp;Mr. Rallis received his A.B. degree in&nbsp;economics from Harvard College and a J.D.
from Duke University. As a result of these and other professional experiences, Mr. Rallis possesses particular healthcare industry
knowledge and experience which strengthens the Board&rsquo;s collective qualifications, skills, and experience.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Rostislav Raykov</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Mr. Raykov has served as a director of Adherex since July 2009
and as Chief Executive Officer since July 2009.&nbsp;&nbsp;Since May 2007, Mr. Raykov has been a General Partner at DCML, a private
investment partnership.&nbsp;Prior to DCML, from January 2006 to December 2007, Mr. Raykov was a portfolio manager for Alchem Investment
Partners and John Levin &amp; Co&nbsp;Prior to founding Alchem, Mr. Raykov was a portfolio manager and securities analyst for John
A. Levin &amp; Co. Event Driven Fund (2002-2005). Prior to joining John A. Levin &amp; Co., Mr. Raykov was a securities analyst
for the Merger Fund at Tiedemann Investment Group (1999-2002) and an investment banking analyst at Bear Stearns (1998-1999).&nbsp;&nbsp;Mr.
Raykov earned a B.S. in Business Administration from the University of North Carolina at Chapel Hill. As a result of these and
other professional experiences, Mr. Raykov has financial expertise and experience with the Company as it has developed within the
drug development industry and, as such, is able to provide the Company with unique insight and guidance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Steven D. Skolsky</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Mr. Steven D. Skolsky has&nbsp;served as&nbsp;a director
since August 2011. With a distinguished career spanning 30 years in the life sciences, Mr. Skolsky is a recognized industry leader
who has held numerous international general management and executive leadership roles in the pharmaceutical and biotech sectors
with a principal emphasis on commercialization, product strategy, and new product development. He was recently appointed to the
position of Global Head of Clinical and Data Operations at Quintiles Transnational after serving as Principal of EXPIS Partners,
a strategic life science consultancy. Mr. Skolsky also currently serves on the Board of BasileaPharmaceutica, a Swiss based biopharmaceutical
company where he previously served as Vice Chairman of the Board. Mr. Skolsky is the former President and Chief Executive Officer
of Sequoia Pharmaceuticals, a privately held company specializing in novel antiviral therapeutics. Prior to his appointment at
Sequoia, he held the position of Chief Executive Officer at Trimeris, Inc., a publicly held company that discovered and commercialized
Fuzeon&reg;, a first- in-class HIV therapeutic in collaboration with partner F. Hoffmann-La Roche. Previously, Mr. Skolsky served
over 20 years at GSK in a range of senior leadership roles, including Senior Vice President of Global Product Strategy and Clinical
Development, Managing Director of GSK&rsquo;s operations in Australia and New Zealand and Head of GlaxoWellcome&rsquo;s Division
of HIV/Oncology. Mr. Skolsky received his Bachelor&rsquo;s Degree in Biology from the University of North Carolina at Chapel Hill.
As a result of these and other professional experiences, Mr. Skolsky possesses particular healthcare industry knowledge and experience
which strengthens the Board&rsquo;s collective qualifications, skills, and experience. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>EXECUTIVE COMPENSATION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Summary Compensation Table</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> The following table sets out certain information respecting
the compensation paid to our Executive Officers, for the fiscal years ended December 31, 2013 and December 31, 2012 exceeded $100,000. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 8pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid"> Name&nbsp;and&nbsp;Principal&nbsp;Position </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Year </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Salary <BR>($) </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Bonus <BR>($) </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Option <BR>Awards
    <BR>($)(1) </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Non-Equity <BR>Incentive&nbsp;Plan
    <BR>Compensation <BR>($)(2) </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> All&nbsp;Other <BR>Compensation
    <BR>($)(3) </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Total <BR>($) </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 25%; text-align: left"> Rostislav Raykov, Chief </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 8%; text-align: center"> 2013 </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 8%; text-align: right"> 140,000 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 8%; text-align: right"> - </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 8%; text-align: right"> 11,656 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 8%; text-align: right"> - </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 8%; text-align: right"> - </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 8%; text-align: right"> 151,656 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> Executive Officer </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: center"> 2012 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 140,000 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 48,012 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 188,012 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> Krysia Lynes, Interim Chief </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: center"> 2013 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 26,453 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 11,656 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 38,109 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> Financial Officer </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: center"> 2012 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 17,145 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 7,372 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 24,517 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> Robert Andrade, Former Chief </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: center"> 2013 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 109,500 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 109,500 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> Financial Officer </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: center"> 2012 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 140,000 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 48,012 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 188,012 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> Dr. Thomas Spector, Chief Scientific </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: center"> 2013 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 71,500 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 30,000 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 101,500 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD> Officer </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: center"> 2012 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 150,000 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 48,012 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 198,012 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in"> (1) </TD><TD> Represents the aggregate grant date fair value computed in accordance
                                         with FASB ASC Topic 718.&nbsp;&nbsp;Dollar value amounts are based on individual grants
                                         to each of, Mr. Raykov of 150,000 options on November 20, 2012 at an exercise price of
                                         $0.35, which options expire on November 20, 2019 and 50,000 options on August 23, 2013
                                         at an exercise price of $0.24, which will expire on August 23, 2020. All options vested
                                         in full on the date of grant. </TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(2)</TD><TD>The term &ldquo;incentive plan&rdquo; means any plan providing compensation intended to serve as incentive for performance
to occur over a specified period, whether such performance is measured by reference to financial performance of the Corporation,
the Corporation's stock price, or any other performance measure.&nbsp;&nbsp;An &ldquo;equity incentive plan&rdquo; is an incentive
plan or portion of an incentive plan under which awards are granted that fall within the scope of SFAS 123(R).&nbsp;&nbsp;A &ldquo;non-equity
incentive plan&rdquo; is an incentive plan or portion of an incentive plan that is not an equity incentive plan.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in"> (3) </TD><TD> Consists of the taxable benefit for premiums paid for group
                                         term life insurance, long term disability and long term care insurance. In addition,
                                         effective June 19, 2013, Dr. Thomas Spector resigned as Chief Scientific Officer and
                                         in connection with such resignation, Dr. Spector entered into a Separation and Mutual
                                         Release Agreement with the Company providing for a lump sum payment to Dr. Spector of
                                         $30,000 for benefits and separation pay. </TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Rostislav Raykov</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Mr. Raykov has been employed by Adherex since July 2009.&nbsp;&nbsp;Pursuant
to an employment agreement dated May 3, 2010 between Rostislav Raykov and Adherex, Mr. Raykov is employed as Adherex&rsquo;s Chief
Executive Officer.&nbsp;Pursuant to this agreement, Mr. Raykov (a) receives an initial annual salary in the amount of $140,000,
(b) upon approval by shareholders of the amended Stock Option Plan was granted options to purchase up to 5.0% of our common stock
outstanding estimated by us to be outstanding upon completion of the Rights Offering, and (c) may receive annual bonuses at the
sole discretion of the Board.&nbsp;If Mr. Raykov&rsquo;s employment terminates due to a change of control of Adherex, any then
remaining unvested shares under his options shall immediately vest and be fully exercisable.&nbsp;On August 18, 2010, Mr. Raykov
was granted 971,885 options and on August 19, 2011 Mr. Raykov was granted 51,152 options pursuant to his employment agreement.
Further, on November 20, 2009, Mr. Raykov was granted 150,000 options. If Mr. Raykov is dismissed from employment by us for any
reason other than &ldquo;cause,&rdquo; we are obligated to pay Mr. Raykov severance compensation equal to twelve months of salary. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I> Krysia Lynes </I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Ms. Lynes joined Adherex in September of 2010. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Robert Andrade</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Mr. Andrade was employed by Adherex from July 2009 until
August 2014. Pursuant to an employment agreement dated May 3, 2010 between Robert Andrade and Adherex, Mr. Andrade was employed
as Adherex&rsquo;s Chief Financial Officer.&nbsp;Pursuant to this agreement, Mr. Andrade (a) received an initial annual salary
in the amount of $140,000, (b) upon approval by shareholders of the amended Stock Option Plan was granted options to purchase
up to 5.0% of our common stock outstanding estimated by us to be outstanding upon completion of the Rights Offering, and (c) was
eligible to receive annual bonuses at the sole discretion of the Board.&nbsp;&nbsp;On August 18, 2010, Mr. Andrade was granted
971,885 options and on August 19, 2011 Mr. Andrade was granted 51,152 options pursuant to his employment agreement. Further, on
November 20, 2009, Mr. Andrade was granted 150,000 options.&nbsp;Mr. Andrade resigned as CFO effective August 14, 2013. No severance
was paid to Mr. Andrade in connection with his separation from the Company. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Dr. Thomas Spector</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Dr. Spector was employed by Adherex from July 2009 until
June 2013. &nbsp;Pursuant to an employment agreement dated May 3, 2010 between Dr. Thomas Spector and Adherex, Dr. Spector was
employed as Adherex&rsquo;s Chief Scientific Officer.&nbsp;Pursuant to this agreement, Dr. Spector (a) received an annual salary
in the amount of $150,000, (b) upon approval by shareholders of the amended Stock Option Plan was granted options to purchase
up to 5.0% of our common stock outstanding estimated by us to be outstanding upon completion of the Rights Offering, and (c) was
eligible to receive annual bonuses at the sole discretion of the Board.&nbsp;&nbsp;On August 18, 2010, Dr. Spector was granted
971,885 options and on August 19, 2011 was granted 51,152 options pursuant to his employment agreement. Further, on November 20,
2009, Dr. Spector was granted 150,000 options. Mr. Spector resigned as Chief Scientific Officer effective June 19, 2013 and in
connection with such resignation, Dr. Spector entered into a Separation and Mutual Release Agreement with the Company providing
for a lump sum payment to Dr. Spector of $30,000 for benefits and separation pay. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> In addition to such employment agreements, Dr. Spector,
Mr. Andrade and Mr. Raykov, are each a party to a confidentiality and intellectual property agreement with us. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> In the employment agreements for each of Dr. Spector, Mr.
Andrade and Mr. Raykov &ldquo;cause&rdquo; is generally defined as (1) material breach of the terms of the employment or intellectual
property agreements; (2) failure to perform the duties inherent in Employee&rsquo;s position in good faith and in a reasonable
and appropriate manner; or (3) acts of fraud or embezzlement or other intentional misconduct which adversely affects the Company's
business. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Equity Grants, Exercises and Holdings</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> The following table sets forth information concerning the
number and value of unexercised options held by each Named Executive Officer as of December 31, 2013. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B> Outstanding Equity Awards at December 31, 2013<FONT STYLE="font: 10pt Times New Roman, Times, Serif"><SUP>1</SUP></FONT> </B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"> &nbsp;<B>Name</B> </TD>
    <TD NOWRAP> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B> Number&nbsp;of&nbsp;Securities </B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B> Underlying&nbsp;Unexercised </B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B> Options&nbsp;(#)&nbsp;Exercisable </B></P></TD>
    <TD NOWRAP><SUB> &nbsp; </SUB></TD>
    <TD NOWRAP> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B> Number&nbsp;of&nbsp;Securities </B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B> Underlying&nbsp;Unexercised </B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B> Options&nbsp;(#) </B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B> Unexercisable </B></P></TD>
    <TD NOWRAP> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B> Option </B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B> Exercise&nbsp;Price&nbsp;($)<FONT STYLE="font-size: 10pt"><SUB>(1)</SUB></FONT> </B></P></TD>
    <TD NOWRAP> &nbsp; </TD>
    <TD NOWRAP><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B> Option </B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B> Expiration&nbsp;Date </B></P></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 20%; padding-left: 0.25in; text-indent: -0.25in"> Rostislav Raykov </TD>
    <TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 20%; text-align: right"> 50,000 </TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt"><SUB> (2) </SUB></FONT></TD>
    <TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 20%"> &mdash; </TD>
    <TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%"> USD$ </TD>
    <TD STYLE="width: 16%; text-align: right"> 0.24 </TD>
    <TD STYLE="width: 1%; text-align: right"> &nbsp; </TD>
    <TD STYLE="width: 16%; text-align: right"> 08/23/2020 </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 0.25in; text-indent: -0.25in"> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD STYLE="text-align: right"> 971,885 </TD>
    <TD><FONT STYLE="font-size: 10pt"><SUB> (3) </SUB></FONT></TD>
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD> &mdash; </TD>
    <TD> &nbsp; </TD>
    <TD> CAD$ </TD>
    <TD STYLE="text-align: right"> 0.81 </TD>
    <TD STYLE="text-align: right"> &nbsp; </TD>
    <TD STYLE="text-align: right"> 08/18/2017 </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 0.25in; text-indent: -0.25in"> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD STYLE="text-align: right"> 51,152 </TD>
    <TD><FONT STYLE="font-size: 10pt"><SUB> (4) </SUB></FONT></TD>
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD> &mdash; </TD>
    <TD> &nbsp; </TD>
    <TD> CAD$ </TD>
    <TD STYLE="text-align: right"> 0.63 </TD>
    <TD STYLE="text-align: right"> &nbsp; </TD>
    <TD STYLE="text-align: right"> 08/19/2018 </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 0.25in; text-indent: -0.25in"> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD STYLE="text-align: right"> 150,000 </TD>
    <TD><FONT STYLE="font-size: 10pt"><SUB> (5) </SUB></FONT></TD>
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD> &mdash; </TD>
    <TD> &nbsp; </TD>
    <TD> USD$ </TD>
    <TD STYLE="text-align: right"> 0.35 </TD>
    <TD STYLE="text-align: right"> &nbsp; </TD>
    <TD STYLE="text-align: right"> 11/20/2019 </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD> Robert Andrade </TD>
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD STYLE="text-align: right"> 971,885 </TD>
    <TD><FONT STYLE="font-size: 10pt"><SUB> (3) </SUB></FONT></TD>
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD> &mdash; </TD>
    <TD> &nbsp; </TD>
    <TD> CAD$ </TD>
    <TD STYLE="text-align: right"> 0.81 </TD>
    <TD STYLE="text-align: right"> &nbsp; </TD>
    <TD STYLE="text-align: right"> 08/18/2017 </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD STYLE="text-align: right"> 51,152 </TD>
    <TD><FONT STYLE="font-size: 10pt"><SUB> (4) </SUB></FONT></TD>
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD> &mdash; </TD>
    <TD> &nbsp; </TD>
    <TD> CAD$ </TD>
    <TD STYLE="text-align: right"> 0.63 </TD>
    <TD STYLE="text-align: right"> &nbsp; </TD>
    <TD STYLE="text-align: right"> 08/19/2018 </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD STYLE="text-align: right"> 150,000 </TD>
    <TD><FONT STYLE="font-size: 10pt"><SUB> (5) </SUB></FONT></TD>
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD> &mdash; </TD>
    <TD> &nbsp; </TD>
    <TD> USD$ </TD>
    <TD STYLE="text-align: right"> 0.35 </TD>
    <TD STYLE="text-align: right"> &nbsp; </TD>
    <TD STYLE="text-align: right"> 11/20/2019 </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD> Dr. Thomas Spector </TD>
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD STYLE="text-align: right"> 971,885 </TD>
    <TD><FONT STYLE="font-size: 10pt"><SUB> (3) </SUB></FONT></TD>
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD> &mdash; </TD>
    <TD> &nbsp; </TD>
    <TD> CAD$ </TD>
    <TD STYLE="text-align: right"> 0.81 </TD>
    <TD STYLE="text-align: right"> &nbsp; </TD>
    <TD STYLE="text-align: right"> 08/18/2017 </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD STYLE="text-align: right"> 51,152 </TD>
    <TD><FONT STYLE="font-size: 10pt"><SUB> (4) </SUB></FONT></TD>
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD> &mdash; </TD>
    <TD> &nbsp; </TD>
    <TD> CAD$ </TD>
    <TD STYLE="text-align: right"> 0.63 </TD>
    <TD STYLE="text-align: right"> &nbsp; </TD>
    <TD STYLE="text-align: right"> 08/19/2018 </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD STYLE="text-align: right"> 150,000 </TD>
    <TD><FONT STYLE="font-size: 10pt"><SUB> (5) </SUB></FONT></TD>
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD> &mdash; </TD>
    <TD> &nbsp; </TD>
    <TD> USD$ </TD>
    <TD STYLE="text-align: right"> 0.35 </TD>
    <TD STYLE="text-align: right"> &nbsp; </TD>
    <TD STYLE="text-align: right"> 11/20/2019 </TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in"><B>(1)</B></TD><TD>The current Stock Option Plan provides for grants denominated in US and CAD dollars.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in"><B> (2) </B></TD><TD> 50,000 options were granted on 08/23/2013 with all 50,000
                                         immediately exercisable. </TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in"><B> (3) </B></TD><TD> 971,885 options were granted on 08/18/2010 with all 971,885
                                         immediately exercisable. </TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in"><B> (4) </B></TD><TD> 51,152 options were granted on 08/19/2011 with all 51,152
                                         immediately exercisable. </TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in"><B> (5) </B></TD><TD> 150,000 options were granted on 11/20/2012 with all 150,000
                                         immediately exercisable. </TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Termination Benefits</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> In the event of his termination with us other than for cause,
we will pay Rostislav Raykov $140,000 severance. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Compensation of Directors</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; text-align: left; margin-bottom: 0pt"><B>Director Compensation
Table</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> The following table summarizes the compensation earned by
or paid to the Company's non-executive directors for the year ended December 31, 2013. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"> Name </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"> Fees&nbsp;Earned <BR>or&nbsp;Paid <BR>in&nbsp;Cash&nbsp;($) </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"> Stock <BR>Awards&nbsp;($) </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"> Option <BR>Awards&nbsp;($)(1) </TD><TD NOWRAP STYLE="padding-bottom: 1pt"><SUB> &nbsp; </SUB></TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"> Non-equity <BR>incentive&nbsp;plan <BR>compensation&nbsp;($) </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"> Nonqualified <BR>deferred <BR>compensation
    <BR>earnings&nbsp;($) </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"> All&nbsp;other <BR>compensation&nbsp;($) </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"> Total&nbsp;($) </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 16%; text-align: left"> Mr. Rallis </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 9%; text-align: right"> 10,500 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 9%; text-align: right"> &mdash; </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 9%; text-align: right"> 8,000 </TD><TD STYLE="width: 1%; text-align: left"><SUB> (2) </SUB></TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 9%; text-align: right"> &mdash; </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 9%; text-align: right"> &mdash; </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 9%; text-align: right"> &mdash; </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> $ </TD><TD STYLE="width: 9%; text-align: right"> 18,500 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> Mr. Skolsky </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 9,000 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &mdash; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 8,000 </TD><TD STYLE="text-align: left"><SUB> (2) </SUB></TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &mdash; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &mdash; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &mdash; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> 17,000 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<!-- Field: Rule-Page --><DIV ALIGN="LEFT" STYLE="margin-top: 3pt; margin-bottom: 3pt"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 25%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(1) Represents the aggregate grant date fair value computed
in accordance with FASB ASC Topic 718.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> (2)&nbsp;Dollar value amounts are based on individual grants
of 12,500 options on April 3, 2013, 5,102 options on May 5, 2013, 15,625 options on August 13 and 50,000 options at an exercise
price of $0.80, $0.98, $0.32 and $0.24 respectively to both Chris Rallis and Steve Skolsy vested in full on the date of grant.
All options expire 7 years from the date of grant. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The annual compensation considerations for non-executive directors
also include the awarding of stock options. The granting of options to the non-executive directors under the Stock Option Plan
serves three primary purposes: (1) to recognize the significant time and effort commitments during the past year; (2) to provide
long-term incentives for future efforts since the value of the options is directly dependent on the market valuation of the Corporation;
and (3) to retain quality individuals as the options typically vest over time. When determining whether and how many new option
grants will be made, the Compensation Committee takes into account the amount and terms of any outstanding options. Adherex does
not require its non-executive directors to own a specific amount of common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Each of <FONT STYLE="color: #010101">Chris A. Rallis and
Steven D. Skolsky </FONT>has entered into an Independent Director Agreement with the Company, dated as of August 25, 2011, which
provides for (i) cash compensation in the form of USD $1,500 per board meeting attended, and (ii) non-cash compensation in the
form of a grant of options to purchase shares of the Company&rsquo;s common stock having an aggregate value equal to USD $5,000
(with price per share and exercise price based on the value of the Company&rsquo;s common stock as of the date of grant) per board
meeting attended.&nbsp;&nbsp;The options immediately vest when granted and are otherwise subject to the terms and conditions of
the Company&rsquo;s stock option plan, as amended. The Independent Director Agreement also provides for the reimbursement of such
director&rsquo;s reasonable travel and related expenses incurred in the course of attending board meetings. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Security Ownership of Certain Beneficial Owners </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> The following table sets forth information regarding shares
of our common stock beneficially owned as of March 14, 2014 by: (i) each of our officers and directors; (ii) all officers and
directors as a group; and (iii) each person known by us to beneficially own five percent or more of the outstanding shares of
our common stock. Except as indicated below, the security holders listed possess sole voting and investment power with respect
to the shares beneficially owned by that person.&nbsp;Except as otherwise indicated below, the address for each listed shareholder
is c/o Adherex Technologies Inc., 68 TW Alexander Drive, PO Box 13628, Research Triangle Park, North Carolina 27709. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="border-bottom: Black 1pt solid"> Name </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"> Common <BR>Stock </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"> Common <BR>Stock <BR>Options <BR>Exercisable
    <BR>Within <BR>60&nbsp;Days </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"> Common <BR>Stock <BR>Purchase <BR>Warrants
    <BR>Exercisable <BR>Within&nbsp;60 <BR>Days </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"> Total&nbsp;Stock <BR>and&nbsp;Stock <BR>Based
    <BR>Holdings&nbsp;(1) </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"> % <BR>Ownership <BR>(1) </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 40%; text-align: left"> Robert Andrade (**) </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 9%; text-align: right"> 82,228 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 9%; text-align: right"> 1,173,037 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 9%; text-align: right"> 38,889 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 9%; text-align: right"> 1,294,154 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 9%; text-align: right"> 4.24 </TD><TD STYLE="width: 1%; text-align: left"> % </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> Krysia Lynes </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 103,576 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 103,576 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> * </TD><TD STYLE="text-align: left"> % </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> Chris A. Rallis </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 193,624 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 193,624 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> * </TD><TD STYLE="text-align: left"> % </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> Rostislav Raykov </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 122,222 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 1,223,037 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 66,667 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 1,411,926 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 4.61 </TD><TD STYLE="text-align: left"> % </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> Steven D. Skolsky </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 160,290 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 160,290 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> * </TD><TD STYLE="text-align: left"> % </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt"> Thomas Spector (**) </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 183,333 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 1,023,037 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 33,333 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 1,239,703 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 4.06 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> % </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> All officers and directors as a group (6 persons) </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 237,783 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 4,026,601 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 138,889 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 4,403,273 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 13.15 </TD><TD STYLE="text-align: left"> % </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> Southpoint Capital Advisors LP <SUP>(2)</SUP> </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 11,111,111 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 8,805,333 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 19,916,444 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 52.26 </TD><TD STYLE="text-align: left"> % </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> 683 Capital&nbsp;&nbsp;Management LLC<SUP>(3)</SUP> </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 2,136,400 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 2,310,402 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 4,446,802 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 14.06 </TD><TD STYLE="text-align: left"> % </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> Robert Butts </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 2,305,778 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 2,305,778 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 4,611,556 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 14.59 </TD><TD STYLE="text-align: left"> % </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> Manchester Management Company LLC <SUP>(4)</SUP> </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 2,716,825 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 2,716,825 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 5,433,650 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 16.97 </TD><TD STYLE="text-align: left"> % </TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right; text-indent: 0.5in"><FONT STYLE="font-size: 10pt">&nbsp;&nbsp;</FONT>*
Percentage of shares beneficially owned does not exceed one percent.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"> ** Such individual resigned as an officer
of the Company during Fiscal Year 2013. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in"> (1) </TD><TD> For purposes of this table &ldquo;beneficial ownership&rdquo;
                                         is determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934,
                                         pursuant to which a person or group of persons is deemed to have &ldquo;beneficial ownership&rdquo;
                                         of any shares of common stock that such person or group has the right to acquire within
                                         60 days after March 14, 2014.&nbsp;&nbsp;For purposes of computing the percentage of
                                         outstanding shares of common stock held by each person or group of persons named above,
                                         any shares that such person or group has the right to acquire within 60 days after March
                                         14, 2014 are deemed outstanding but are not deemed to be outstanding for purposes of
                                         computing the percentage ownership of any other person or group. As of March 14, 2014,
                                         there were 29,307,618 shares of our common stock issued and outstanding. </TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in"> (2) </TD><TD> Southpoint Capital Advisors, LP, 623 Fifth Avenue, Suite 2503,
                                         New York, New York 10022.&nbsp;&nbsp;John S. Clark, II holds dispositive power over the
                                         shares owned by Southpoint Capital Advisors, LP. </TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(3)</TD><TD>683 Capital Management, LLC, 595 Madison Avenue, 17th Floor, New York, New York 10025.&nbsp;&nbsp;Ari Zweiman holds dispositive
power over the shares owned by 683 Capital Management LLC.</TD></TR></TABLE>

<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in"> (4) </TD><TD> Manchester Management Company, LLC, 131 Charles Street, 1<SUP>st
                                         </SUP>Floor, Boston Massachusetts 02114. Includes 3,856,000 shares owned by Manchester
                                         Explorer, L.P. and 1,577,650 shares owned by JEB Partners, L.P. Manchester Management
                                         holds dispositive power over the shares held by Manchester Explorer, L.P. and JEB Partners,
                                         L.P. Jeb Besser and Morgan Frank hold shared dispositive power over the shares held by
                                         Manchester Management Company, LLC. Additionally, Jeb Besser owns 578,000 shares for
                                         which he has sole dispositive power and Morgan Frank owns 500,000 shares for which he
                                         has sole dispositive power. </TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Related Party Transactions</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> In connection with the subscription agreements entered into
as part of the November 2013 Financing, the following matters are proposed to be presented for approval at the Company&rsquo;s
next annual and special meeting of stockholders to be held as soon as practicable following availability of the Company&rsquo;s
audited financial statements for the fiscal year ended December 31, 2013 and in any event prior to June 30, 2014 (the &ldquo;<FONT STYLE="font-weight: normal">Annual
Meeting</FONT>&rdquo;): (i) an offer to holders of warrants issued by the Company on or about April 30, 2010 and on or about March
29, 2011 (collectively, &ldquo;<FONT STYLE="font-weight: normal">Outstanding Warrants</FONT>&rdquo;) a right to exchange such
Outstanding Warrants for new unlisted warrants (&ldquo;<FONT STYLE="font-weight: normal">New Warrants</FONT>&rdquo;) on the basis
of one New Warrant to purchase one (1) common share for Outstanding Warrants to purchase ten (10) common shares, with the New
Warrants having an exercise price per common share of US$0.50 and otherwise having the same terms as the applicable series of
Outstanding Warrants (with the foregoing exchange ratio and exercise price of the New Warrants being before giving effect to any
proposed stock consolidation referred to below) (as further described below, the &ldquo;<FONT STYLE="font-weight: normal">Warrant
Exchange</FONT>&rdquo;), (ii) to consolidate the Common Shares on a one-for-up to ten basis, (iii) the election of up to two nominees
of Manchester to the board of directors of the Company and (iv) to change the Company&rsquo;s name to a name to be determined
by the board of directors of the Company. &nbsp;As a result of the one-for-eighteen reverse split of our common stock on August
25, 2011, each eighteen (18) Outstanding Warrants now entitle the holder thereof to purchase one common share of the Company at
a purchase price of CAD$1.44 per whole share. Accordingly, the Warrant Exchange will entitle the holders of Outstanding Warrants
the right to receive, for each 180 Outstanding Warrants now held (which together are now exercisable into a total of 10 common
shares for a total exercise price of $144.00), one New Warrant to purchase one (1) common share at a price per share of $0.50. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Two of the Company&rsquo;s current shareholders, 683 Capital
Management LLC and Southpoint Capital Advisors LP, have agreed with Manchester, subject to shareholder and regulatory approval,
to (1) vote in favor of the foregoing matters at the Annual Meeting and (2) subject to shareholder and regulatory approval, to
exchange the Outstanding Warrants owned or controlled by such insiders (collectively, the &ldquo;<FONT STYLE="font-weight: normal">Stockholder&rsquo;s
Warrants</FONT>&rdquo;) for New Warrants in accordance with the Warrant Exchange.&nbsp; The undertaking will continue in full
force and effect through the earlier of : (a) if the foregoing matters are approved at the Annual Meeting, upon exchange of all
Stockholder&rsquo;s Warrants for New Warrants in accordance with the Warrant Exchange; (b) June 30, 2014; (c) upon completion
of the Annual Meeting, if none of the foregoing matters are presented to the Annual Meeting or none of the foregoing matters are
approved by the shareholders at the Annual Meeting; (d) the date of the closing of a change in control of the Company or (e) the
date of the mutual agreement of the parties. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> In connection with Dr. Thomas Spector&rsquo;s resignation
as Chief Scientific Officer, effective June 19, 2013, we entered into a Separation and Mutual Release Agreement with Dr. Spector
providing for a lump sum payment to Dr. Spector of $30,000 for benefits and separation pay. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Except for the foregoing, there were no related party transactions
in the last two years that were required to be reported under Item 404(d) of Regulation S-K.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Director Independence</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> The Board of Directors is composed of a majority of independent
directors. The Board applies the definition of independence found in the rules of the SEC and in Canadian National Instrument
58-101 and National Policy 58-201. The Board has determined that Rallis and Skolsky are &ldquo;independent&rdquo;. Mr. Raykov,
Chairman and Chief Executive Officer of the Corporation is considered to have a material relationship with the Corporation by
virtue of his executive officer position and is therefore not independent. Adherex is of the view that the composition of its
Board reflects a diversity of background and experience that are important for effective corporate governance. Other directorships
held by Board members are described in this Annual Report under the heading &ldquo;Directors and Executive Officers.&rdquo; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>LEGAL MATTERS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Certain legal matters in connection with the securities have
been passed upon for us by the law firm of LaBarge Weinstein LLP, Kanata, Ontario. LaBarge Weinstein LLP has not received a direct
or indirect interest in our company and has never been a promoter, underwriter, voting trustee, director, officer or employee of
our company. Nor does LaBarge Weinstein LLP have any contingent based agreement with us or any other interest in or connection
to us.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>EXPERTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> The 2013 and 2012 consolidated financial statements and
the retrospective adjustments to the 2011&nbsp; financial statements included in this Prospectus have been audited by Deloitte
LLP, an independent registered public accounting firm, as stated in their report appearing herein and elsewhere in the Registration
Statement (which report (1) expresses an unqualified opinion on the 2013 and 2012 financial statements and include an explanatory
paragraph referring to the conditions and events that raise substantial doubt on the Company&rsquo;s ability to continue as a
going concern and (2) includes an explanatory paragraph on the retrospective adjustments to the 2008 financial statements to give
effect of the reverse stock split and expresses an unqualified opinion on the retrospective adjustments to the 2011 financial
statements).&nbsp; Such consolidated financial statements have been so included in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> The Company's consolidated statements of operations and
cash flows, and statement of stockholders&rsquo; equity for the period from September 3, 1996 (date of inception) to December
31, 2008, before the effects of the adjustments to retrospectively give effect of the stock split as described in Note 2 and Note
6 to the consolidated financial statements, not presented separately herein, were audited by PricewaterhouseCoopers LLP, whose
report, dated March 30, 2009, expressed an unqualified opinion on those statements. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"><B>FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 90%"><B> Index to Financial Statements </B></TD>
    <TD STYLE="width: 2%"> &nbsp; </TD>
    <TD STYLE="width: 8%; text-align: center"><B> Page </B></TD></TR>
<TR STYLE="vertical-align: top">
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD STYLE="text-align: center"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD> Reports of Independent Registered Public Accounting Firm </TD>
    <TD> &nbsp; </TD>
    <TD STYLE="text-align: center"> 47 </TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD STYLE="text-align: center"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD> Balance Sheets at December 31, 2013 and 2012 </TD>
    <TD> &nbsp; </TD>
    <TD STYLE="text-align: center"> 49 </TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD STYLE="text-align: center"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD> Statements of Operations for the years ended December 31, 2013 and 2012 </TD>
    <TD> &nbsp; </TD>
    <TD STYLE="text-align: center"> 50 </TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD STYLE="text-align: center"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD> Statements of Cash Flows for the years ended December 31, 2013 and 2012 </TD>
    <TD> &nbsp; </TD>
    <TD STYLE="text-align: center"> 51 </TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD STYLE="text-align: center"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD> Statements of Stockholders&rsquo; Equity (Deficit) for the years ended December 31, 2013 and 2012 </TD>
    <TD> &nbsp; </TD>
    <TD STYLE="text-align: center"> 52 </TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD STYLE="text-align: center"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD> Notes to Consolidated Financial Statements </TD>
    <TD> &nbsp; </TD>
    <TD STYLE="text-align: center"> 56 </TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD>
    <TD> &nbsp; </TD></TR>
</TABLE>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B> REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B> Report of Independent Registered Public Accounting Firm </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">To the Board of Directors and Shareholders of Adherex Technologies
Inc.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> We have audited the accompanying consolidated balance sheets
of Adherex Technologies Inc.&nbsp;and subsidiaries (a development stage company) (the &quot;Company&quot;) as of December 31,
2013 and 2012, and the related consolidated statements of operations, stockholders' deficiency, and cash flows for the years then
ended, and cumulatively for the period from September 3, 1996 (date of inception) to December 31, 2013.&nbsp;&nbsp;These financial
statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements
based on our audits. The Company's financial statements for the period September 3, 1996 (date of inception) to December 31, 2008,
before the effects of the adjustments to retrospectively give effect of the stock split as described in Note 2 and Note 6 to the
consolidated financial statements, were audited by other auditors whose report, dated March 30, 2009, expressed an unqualified
opinion on those statements.&nbsp; The financial statements for the period September 3, 1996 (date of inception) to December 31,
2008 reflect a net loss of $97,979,000. The other auditors' report has been furnished to us, and our opinion, insofar as it relates
to the amounts included for such prior period, is based solely on the report of such other auditors. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> We conducted our audits in accordance with the standards
of the Public Company Accounting Oversight Board (United States).&nbsp;&nbsp;Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits
included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control
over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report
of other auditors provide a reasonable basis for our opinion. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> In our opinion, based on our audits and the report of other
auditors, such financial statements present fairly, in all material respects, the financial position of the Company as of December
31, 2013 and 2012, and the results of its operations and its cash flows for the years then ended, and for the period from September
3, 1996 (date of inception) to December 31, 2013, in conformity with accounting principles generally accepted in the United States
of America. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> We have also audited the adjustments to the consolidated
financial statements for the period from September 3, 1996 (date of inception) to December 31, 2008 to retrospectively give effect
of the stock split as described in Note 2 and Note 6 to the consolidated financial statements. In our opinion, such retrospective
adjustments are appropriate and have been properly applied. However, we were not engaged to audit, review, or apply any procedures
to the financial statements of the Company for the period from September 3, 1996 (date of inception) to December 31, 2008 other
than with respect to the retrospective adjustments and, accordingly, we do not express an opinion or any other form of assurance
on the financial statements for the period from September 3, 1996 (date of inception) to December 31, 2008 taken as a whole. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> As discussed in Note 1 to the consolidated financial statements,
the accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.&nbsp;The
Company is a development stage biopharmaceutical company with a portfolio of product candidates under development for use in the
treatment of cancer, as discussed in Note 1 to the consolidated financial statements. During the year ended December 31, 2013,
the Company incurred a loss from operations of $1,931,000.&nbsp;At December 31, 2013, it had an accumulated deficit of $108,698
and had experienced negative cash flows from operating activities since inception in the amount of $87,247,000. In addition, it
had a deficiency in working capital at December 31, 2013 and the Company's operating losses since inception raise substantial
doubt about its ability to continue as a going concern. Management's plans concerning these matters are also discussed in Note
1 to the financial statements. The consolidated financial statements do not include any adjustments that might result from the
outcome of this uncertainty. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 50%; border-bottom: Black 1pt solid"> /s/ Deloitte LLP </TD>
    <TD STYLE="width: 50%; padding-bottom: 1pt"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: top">
    <TD> Chartered Professional Accountants, Chartered Accountants </TD>
    <TD> &nbsp; </TD></TR>
<TR STYLE="vertical-align: top">
    <TD> Licensed Public Accountants </TD>
    <TD> &nbsp; </TD></TR>
<TR STYLE="vertical-align: top">
    <TD> Ottawa, Canada </TD>
    <TD> &nbsp; </TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> March 14, 2014 </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><BR CLEAR="ALL"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Independent Auditors&rsquo; Report</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">To the Shareholders of Adherex Technologies Inc.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In our opinion, the consolidated statements of operations and
cash flows, not separately presented herein, and statement of stockholders&rsquo; equity present fairly, in all material respects,
the results of operations and cash flows for the period from September 3, 1996 (date of inception) to December 31, 2008 of Adherex
Technologies Inc. (a development stage enterprise) (the &ldquo;Company&rdquo;) in conformity with accounting principles generally
accepted in the United States of America. These financial statements are the responsibility of the Company&rsquo;s management.
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these
statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> We were not engaged to audit, review, or apply any procedures
to the adjustments to retrospectively give effect of the reverse stock split as described in Notes 2 and 6 and accordingly, we
do not express an opinion or any other form of assurance about whether such adjustments are appropriate and have been properly
applied. Those adjustments were audited by other auditors. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">/s/ PricewaterhouseCoopers LLP</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Chartered Professional Accountants, Licensed Public Accountants </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Ottawa, Canada</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">March 30, 2009</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Adherex Technologies Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(a development stage company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Consolidated Balance Sheets</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(U.S. Dollars and shares in thousands,
except per share amounts)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> December&nbsp; <BR>31,
    2013 </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> December <BR>31,&nbsp;2012 </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold"> Assets </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left"> Current assets </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%; text-align: left"> Cash and cash equivalents </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> $ </TD><TD STYLE="width: 10%; text-align: right"> 1,663 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> $ </TD><TD STYLE="width: 10%; text-align: right"> 2,303 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> Prepaid expense </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 81 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 56 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt"> Other current assets </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 8 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 6 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt"> Total assets </TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left"> $ </TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"> 1,752 </TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left"> &nbsp; </TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left"> $ </TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"> 2,365 </TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left"> Liabilities and stockholders&rsquo; equity </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left"> Current liabilities </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> Accounts payable </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> 212 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> 259 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"> Accrued liabilities </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 132 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 423 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt"> Derivative liabilities </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 2,863 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 6,640 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt"> Total current liabilities </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 3,207 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 7,322 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt"> Total liabilities </TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right"> 3,207 </TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left"> &nbsp; </TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right"> 7,322 </TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left"> Commitments and contingencies (Note 8) </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left"> Stockholders&rsquo; (deficit) equity </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"> Common stock, no par value; unlimited shares authorized;
    (2013 - 29,158, 2012 - 25,158 shares issued and outstanding) </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 66,790 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 65,952 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> Additional paid-in capital </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 39,210 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 38,391 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"> Deficit accumulated during development stage </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (108,698 </TD><TD STYLE="text-align: left"> ) </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (110,543 </TD><TD STYLE="text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt"> Accumulated other comprehensive income </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 1,243 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 1,243 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt"> Total stockholders&rsquo; (deficit) equity </TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right"> (1,455 </TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left"> ) </TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right"> (4,957 </TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt"> Total liabilities and stockholders&rsquo; (deficit)
    equity </TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left"> $ </TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"> 1,752 </TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left"> &nbsp; </TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left"> $ </TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"> 2,365 </TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left"> &nbsp; </TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(The accompanying notes are an integral
part of these consolidated financial statements)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>


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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Adherex Technologies Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(a development stage company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Consolidated Statements of Operations</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(U.S. dollars and shares in thousands,
except per share information)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: left"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Year&nbsp;Ended <BR>December&nbsp;31,
    <BR>2013 </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Year&nbsp;Ended <BR>December&nbsp;31,
    <BR>2012 </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Cumulative&nbsp;From
    <BR>September&nbsp;3,&nbsp;1996 <BR>to <BR>December&nbsp;31,&nbsp;2013 </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD COLSPAN="2"> &nbsp; </TD><TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD COLSPAN="2"> &nbsp; </TD><TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD COLSPAN="2"> &nbsp; </TD><TD> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold"> Revenue </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left"> Operating expenses: </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 61%; text-align: left; text-indent: -9pt; padding-left: 9pt"> Research and development </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 10%; text-align: right"> 597 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 10%; text-align: right"> 2,075 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 10%; text-align: right"> 69,765 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"> Impairment of capital assets </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 386 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"> Gain on deferred lease inducements </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (497 </TD><TD STYLE="text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"> Acquired in-process research and development </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 13,094 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 9pt"> General and administration </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 1,334 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 1,545 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 33,428 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt"> Loss from operations </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> (1,931 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> ) </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> (3,620 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> ) </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> (116,176 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left"> Other income (expense): </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"> Gain/(loss) on derivative warrants </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 3,777 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (1,563 </TD><TD STYLE="text-align: left"> ) </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 7,034 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> Settlement of Cadherin Biomedical Inc. litigation </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (1,283 </TD><TD STYLE="text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"> Interest expense </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (19 </TD><TD STYLE="text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD> Other (expense)/income </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (3 </TD><TD STYLE="text-align: left"> ) </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (5 </TD><TD STYLE="text-align: left"> ) </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 256 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 9pt"> Interest income </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 2 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 25 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 2,899 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 9pt"> Total other income/(expense) </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 3,776 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> (1,543 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> ) </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 8,887 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt"> Net income/(loss) and total comprehensive income/(loss) </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> $ </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"> 1,845 </TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> $ </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"> (5,163 </TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> ) </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> $ </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"> (107,289 </TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; padding-bottom: 2.5pt; text-indent: -9pt; padding-left: 9pt"> Earnings/(loss) per share of
    common stock, basic </TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left"> $ </TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"> 0.06 </TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left"> &nbsp; </TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left"> $ </TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"> (0.21 </TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left"> ) </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"> &nbsp; </TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; padding-bottom: 2.5pt; text-indent: -9pt; padding-left: 9pt"> Earnings/(loss) per share of
    common stock, diluted </TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left"> $ </TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"> 0.06 </TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left"> &nbsp; </TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left"> $ </TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"> (0.21 </TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left"> ) </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"> &nbsp; </TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9pt; padding-left: 9pt"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -9pt; padding-left: 9pt"> Weighted-average number of shares
    of common stock outstanding, basic </TD><TD STYLE="font-weight: bold"> &nbsp; </TD>
    <TD STYLE="font-weight: bold; text-align: left"> &nbsp; </TD><TD STYLE="font-weight: bold; text-align: right"> 29,158 </TD><TD STYLE="font-weight: bold; text-align: left"> &nbsp; </TD><TD STYLE="font-weight: bold"> &nbsp; </TD>
    <TD STYLE="font-weight: bold; text-align: left"> &nbsp; </TD><TD STYLE="font-weight: bold; text-align: right"> 25,158 </TD><TD STYLE="font-weight: bold; text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9pt; padding-left: 9pt"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -9pt; padding-left: 9pt"> Weighted-average number of shares
    of common stock outstanding, diluted </TD><TD STYLE="font-weight: bold"> &nbsp; </TD>
    <TD STYLE="font-weight: bold; text-align: left"> &nbsp; </TD><TD STYLE="font-weight: bold; text-align: right"> 31,714 </TD><TD STYLE="font-weight: bold; text-align: left"> &nbsp; </TD><TD STYLE="font-weight: bold"> &nbsp; </TD>
    <TD STYLE="font-weight: bold; text-align: left"> &nbsp; </TD><TD STYLE="font-weight: bold; text-align: right"> 25,158 </TD><TD STYLE="font-weight: bold; text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
</TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: left"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: left">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(The accompanying notes are an integral
part of these consolidated financial statements)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;<BR CLEAR="ALL"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Adherex Technologies Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(a development stage company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Consolidated Statements of Cash Flows</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(U.S. Dollars and shares in thousands,
except per share amounts)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Year&nbsp;Ended <BR>December&nbsp;31,
    <BR>2013 </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Year&nbsp;Ended <BR>December&nbsp;31,
    <BR>2012 </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Cumulative <BR>From
    <BR>September&nbsp;3,<BR>
    1996&nbsp;to <BR>December&nbsp;31,2013 </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Cash flows from (used in): </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Operating activities: </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 61%; text-indent: -0.25in; padding-left: 0.25in"> Net income/(loss) </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> $ </TD><TD STYLE="width: 10%; text-align: right"> 1,845 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> $ </TD><TD STYLE="width: 10%; text-align: right"> (5,163 </TD><TD STYLE="width: 1%; text-align: left"> ) </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> $ </TD><TD STYLE="width: 10%; text-align: right"> (107,289 </TD><TD STYLE="width: 1%; text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Adjustments for non-cash items: </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt"> (Gain)/Loss on derivative warrants </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (3,777 </TD><TD STYLE="text-align: left"> ) </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 1563 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (7,034 </TD><TD STYLE="text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt"> Depreciation and amortization </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 1,404 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt"> Non-cash Cadherin Biomedical Inc. litigation expense </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 1,187 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt"> Unrealized foreign exchange loss </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 36 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 27pt"> Loss on impairment of capital assets </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 386 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 27pt"> Amortization of and gain on lease inducements </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (412 </TD><TD STYLE="text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt"> Non-cash severance expense </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 168 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt"> Stock options issued to consultants </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 25 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 152 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 1,073 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt"> Stock options issued to employees </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 62 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 174 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 10,331 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt"> Acquired in-process research and development </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 13,094 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.25in; padding-left: 0.25in"> Changes in non-cash working
    capital </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> (365 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> ) </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 280 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> (191 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.25in; padding-left: 0.25in"> Net cash used in operating
    activities </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> (2,210 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> ) </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> (2,994 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> ) </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> (87,247 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Investing activities: </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Purchase of capital assets </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (1,440 </TD><TD STYLE="text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Disposal of capital assets </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 115 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Proceeds from sale of assets </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 24 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Release of restricted cash </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 190 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Restricted cash </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (209 </TD><TD STYLE="text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.25in; padding-left: 0.25in"> Purchase of short-term investments </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (22,148 </TD><TD STYLE="text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.25in; padding-left: 0.25in"> Redemption of short-term investments </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 22,791 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Investment in Cadherin Biomedical Inc. </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (166 </TD><TD STYLE="text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.25in; padding-left: 0.25in"> Acquired intellectual property
    rights </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> (640 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.25in; padding-left: 0.25in"> Net cash used in investing
    activities </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> (1,483 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Financing activities: </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Conversion of long-term debt to equity </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 68 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Long-term debt repayments </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (65 </TD><TD STYLE="text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Capital lease repayments </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (8 </TD><TD STYLE="text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Issuance of common stock </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 1,570 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 88,013 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Registration expense </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (465 </TD><TD STYLE="text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Financing expenses </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (544 </TD><TD STYLE="text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Proceeds from convertible note </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 3,017 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Other liability repayments </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (87 </TD><TD STYLE="text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Security deposits received </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 35 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.25in; padding-left: 0.25in"> Proceeds from exercise of
    stock options </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 51 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.25in; padding-left: 0.25in"> Net cash provided from financing
    activities </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 1,570 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 90,015 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 9pt"> Effect of exchange
    rate changes on cash and cash equivalents </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 378 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Net change in cash and cash
    equivalents </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (640 </TD><TD STYLE="text-align: left"> ) </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (2,994 </TD><TD STYLE="text-align: left"> ) </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 1,663 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt; text-indent: -0.25in; padding-left: 0.25in"> Cash and
    cash equivalents - Beginning of year </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 2,303 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 5,297 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt; text-indent: -0.25in; padding-left: 0.25in"> Cash
    and cash equivalents - End of year </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> $ </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"> 1,663 </TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> $ </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"> 2,303 </TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> $ </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"> 1,663 </TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> &nbsp; </TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(The accompanying notes are an integral
part of these consolidated financial statements)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Adherex Technologies Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(a development stage company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B> Consolidated Statements of Stockholders'
Deficiency </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(U.S. dollars and shares in thousands,
except per share information)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 8pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Common&nbsp;Stock </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"> Non-redeemable <BR>Preferred&nbsp;Stock </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"> Additional <BR>Paid-in </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"> Accumulated <BR>Other <BR>&nbsp;Comprehensive </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"> Deficit&nbsp; <BR>Accumulated
    <BR>During&nbsp; <BR>Development </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"> Total&nbsp; <BR>Stockholders&rsquo; </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Number </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Amount </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> of Subsidiary </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Capital </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Income </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Stage </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> (Deficit)/Equity </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Balance as at Sept. 3 1996 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 30%; text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Issuance of common stock </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 7%; text-align: right"> 89 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 7%; text-align: right"> - </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 7%; text-align: right"> - </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 7%; text-align: right"> - </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 7%; text-align: right"> - </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 7%; text-align: right"> - </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 7%; text-align: right"> - </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.25in; padding-left: 0.25in"> Net loss </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> (37 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> ) </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> (37 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-indent: -0.25in; padding-left: 0.25in"> Balance at June 30, 1997 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 89 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (37 </TD><TD STYLE="text-align: left"> ) </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (37 </TD><TD STYLE="text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.25in; padding-left: 0.25in"> Net loss </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> (398 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> ) </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> (398 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-indent: -0.25in; padding-left: 0.25in"> Balance at June 30, 1998 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 89 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (435 </TD><TD STYLE="text-align: left"> ) </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (435 </TD><TD STYLE="text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"> Exchange of Adherex Inc. shares for Adherex Technologies
    Inc. shares </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (89 </TD><TD STYLE="text-align: left"> ) </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Issuance of common stock </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 239 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 1,615 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 1,615 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Cumulative translation adjustment </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 20 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 20 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.25in; padding-left: 0.25in"> Net loss </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> (958 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> ) </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> (958 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-indent: -0.25in; padding-left: 0.25in"> Balance at June 30, 1999 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 239 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 1,615 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 20 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (1,393 </TD><TD STYLE="text-align: left"> ) </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 242 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"> Issuance of common stock </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 16 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 793 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 793 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"> Issuance of equity rights </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 171 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 171 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"> Issuance of special warrants </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 255 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 255 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -9pt; padding-left: 9pt"> Settlement of advances: </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt"> Issuance of common stock </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 16 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 175 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 175 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt"> Cancellation of common stock </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (7 </TD><TD STYLE="text-align: left"> ) </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"> Cumulative translation adjustment </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 16 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 16 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 9pt"> Net loss </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> (1,605 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> ) </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> (1,605 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-indent: -0.25in; padding-left: 0.25in"> Balance at June 30, 2000 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 264 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 2,583 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 426 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 36 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (2,998 </TD><TD STYLE="text-align: left"> ) </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 47 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"> Issuance of common stock: </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 0.25in"> Initial Public Offering (&ldquo;IPO&rdquo;) </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 74 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 5,727 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (38 </TD><TD STYLE="text-align: left"> ) </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 5,689 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt"> Other </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 5 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 341 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 341 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"> Issuance of special warrants </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 1,722 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 1,722 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Conversion of special warrants </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 30 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 1,977 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (1,977 </TD><TD STYLE="text-align: left"> ) </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"> Issuance of Series A special warrants </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 4,335 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 4,335 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"> Conversion of Series A special warrants </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 69 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 4,335 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (4,335 </TD><TD STYLE="text-align: left"> ) </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"> Conversion of equity rights </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 4 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 171 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (171 </TD><TD STYLE="text-align: left"> ) </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"> Cumulative translation adjustment </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 182 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 182 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 9pt"> Net loss </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> (2,524 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> ) </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> (2,524 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-indent: -9pt; padding-left: 9pt"> Balance at June 30, 2001 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 446 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 15,134 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 218 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (5,560 </TD><TD STYLE="text-align: left"> ) </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 9,792 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"> Cumulative translation adjustment </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 11 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 11 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 9pt"> Net loss </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> (3,732 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> ) </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> (3,732 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-indent: -9pt; padding-left: 9pt"> Balance at June 30, 2002 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 446 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 15,134 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 229 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (9,292 </TD><TD STYLE="text-align: left"> ) </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 6,071 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(The accompanying notes are an integral
part of these consolidated financial statements)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(continued on next page)</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B> Adherex Technologies Inc. </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B> (a development stage company) </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B> Consolidated Statements of Stockholders'
Deficiency (continued) </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B> (U.S. dollars and shares in thousands,
except per share information) </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"> &nbsp; </P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"> Common&nbsp;Stock </FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> Non-redeemable
    </FONT> <BR><FONT STYLE="font-size: 8pt">Preferred&nbsp;Stock</FONT> </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> Additional
    </FONT> <BR><FONT STYLE="font-size: 8pt">Paid-in</FONT> </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="padding-bottom: 1pt"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 1.8pt 0pt 0; text-indent: 0.5in"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></P><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 1.8pt 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B> Accumulated </B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 1.8pt 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B> Other </B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 1.8pt 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B> Comprehensive </B></FONT></P></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> Deficit&nbsp;
    </FONT> <BR><FONT STYLE="font-size: 8pt">Accumulated&nbsp; </FONT><BR><FONT STYLE="font-size: 8pt">During&nbsp; </FONT><BR><FONT STYLE="font-size: 8pt">Development</FONT> </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> Total
    </FONT> <BR><FONT STYLE="font-size: 8pt">Stockholders&rsquo;</FONT> </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"> Number </FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"> Amount </FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"> of
    Subsidiary </FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"> Capital </FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"> Income </FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"> Stage </FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"> (Deficit)/Equity </FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 30%; text-align: left; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Common stock
    issued for Oxiquant acquisition </FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt"> 446 </FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt"> 11,077 </FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt"> 543 </FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt"> 11,620 </FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.25in; padding-left: 0.25in"><FONT STYLE="font-size: 8pt"> Exercise of stock options </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 1 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 4 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 4 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Distribution to shareholders </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> (158 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> (158 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in"><FONT STYLE="font-size: 8pt"> Stated capital reduction </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> (9,489 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 9,489 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Stock options issued to
    consultants </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 4 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 4 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Equity component of June
    convertible notes </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 1,058 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 1,058 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Financing warrants </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 53 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 53 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Cumulative translation
    adjustment </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> (159 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> (159 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Net
    loss </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> (17,795 </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> (17,795 </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Balance at June 30, 2003 </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 893 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 16,726 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 11,147 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 70 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> (27,245 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 698 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Stock options issued to
    consultants </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 148 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 148 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Repricing of warrants related
    to financing </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 18 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 18 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Equity component of December
    convertible notes </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 1,983 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 1,983 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Financing warrants </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 54 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 54 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Conversion of June convertible notes </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 96 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 1,216 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> (93 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 1,123 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Conversion of December convertible notes </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 60 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 569 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> (398 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 171 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Non-redeemable preferred
    stock </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 1,045 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 1,045 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> December private placement </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 640 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 8,053 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 5,777 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 13,830 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> May private placement </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 259 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 6,356 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 2,118 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 8,474 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Exercise of stock options </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 1 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 23 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 23 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Amalgamation of 2037357
    Ontario Inc. </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 44 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 660 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> (1,045 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 363 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> (22 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Cumulative translation
    adjustment </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> (219 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> (219 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Net
    loss </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> (6,872 </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> (6,872 </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Balance at June 30, 2004 </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 1,993 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 33,603 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 21,117 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> (149 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> (34,117 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 20,454 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Stock options issued to
    consultants </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 39 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 39 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Stock options issued to
    employees </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 604 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 604 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Cost related to SEC registration </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> (493 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> (493 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Acquisition of Cadherin
    Biomedical Inc. </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 37 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 1,252 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 1,252 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Cumulative translation
    adjustment </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 1,392 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 1,392 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Net loss &ndash; six
    months ended December 31, 2004 </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> (6,594 </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> (6,594 </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-indent: -0.25in; padding-left: 0.25in"><FONT STYLE="font-size: 8pt"> Balance at December
    31, 2004 </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 2,030 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 34,362 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 21,760 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 1,243 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> (40,711 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 16,654 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"> <BR>
(The accompanying notes are an integral part of these consolidated financial statements) </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"> (continued on next page) </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"> &nbsp; </P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B> Adherex Technologies Inc. </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B> (a development stage company) </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B> Consolidated Statements of Stockholders'
Deficiency (continued) </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B> (U.S. dollars and shares in thousands,
except per share information) </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"> &nbsp; </P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"> Common&nbsp;Stock </FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> Non-redeemable
    </FONT> <BR><FONT STYLE="font-size: 8pt">Preferred&nbsp;Stock</FONT> </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> Additional
    </FONT> <BR><FONT STYLE="font-size: 8pt">Paid-in</FONT> </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="padding-bottom: 1pt"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 1.8pt 0pt 0; text-indent: 0.5in"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></P><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 1.8pt 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B> Accumulated </B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 1.8pt 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B> Other </B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 1.8pt 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B> Comprehensive </B></FONT></P></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> Deficit&nbsp;
    </FONT> <BR><FONT STYLE="font-size: 8pt">Accumulated&nbsp; </FONT><BR><FONT STYLE="font-size: 8pt">During&nbsp; </FONT><BR><FONT STYLE="font-size: 8pt">Development</FONT> </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> Total
    </FONT> <BR><FONT STYLE="font-size: 8pt">Stockholders&rsquo;</FONT> </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"> Number </FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"> Amount </FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"> of
    Subsidiary </FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"> Capital </FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"> Income </FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"> Stage </FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"> (Deficit)/
    Equity </FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 30%; text-align: left; text-indent: -0.25in; padding-left: 0.25in"><FONT STYLE="font-size: 8pt"> Financing
    costs </FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt"> (141 </FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt"> (141 </FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Exercise of stock options </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 1 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 25 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 25 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Stock options issued to
    consultants </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 276 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 276 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.25in; padding-left: 0.25in"><FONT STYLE="font-size: 8pt"> July private placement </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 337 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 7,060 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 1,074 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 8,134 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.25in; padding-left: 0.25in"><FONT STYLE="font-size: 8pt"> Net
    loss </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> (13,871 </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> (13,871 </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Balance at December 31,
    2005 </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 2,368 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 41,306 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 23,110 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 1,243 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> (54,582 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 11,077 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Stock options issued to
    consultants </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 100 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 100 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Stock options issued to
    employees </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 491 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 491 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.25in; padding-left: 0.25in"><FONT STYLE="font-size: 8pt"> May private placement </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 431 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 5,218 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 822 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 6,040 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.25in; padding-left: 0.25in"><FONT STYLE="font-size: 8pt"> Net
    loss </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> (16,440 </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> (16,440 </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Balance at December 31,
    2006 </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 2,799 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 46,524 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 24,523 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 1,243 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> (71,022 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 1,268 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Stock options issued to
    consultants </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 59 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 59 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Stock options issued to
    employees </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 2,263 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 2,263 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.25in; padding-left: 0.25in"><FONT STYLE="font-size: 8pt"> February financing </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 4,209 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 17,842 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 5,379 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 23,221 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.25in; padding-left: 0.25in"><FONT STYLE="font-size: 8pt"> Exercise of warrants </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 116 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 563 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 131 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 694 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.25in; padding-left: 0.25in"><FONT STYLE="font-size: 8pt"> Net
    loss </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> (13,357 </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> (13,357 </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Balance at December 31,
    2007 </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 7,124 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 64,929 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 32,355 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 1,243 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> (84,379 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 14,148 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Stock options issued to
    consultants </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 88 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 88 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Stock options issued to
    employees </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 2,417 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 2,417 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.25in; padding-left: 0.25in"><FONT STYLE="font-size: 8pt"> Net
    loss </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> (13,600 </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> (13,600 </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Balance at December 31,
    2008 </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 7,124 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 64,929 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 34,860 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 1,243 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> (97,979 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 3,053 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Stock options issued to
    consultants </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 10 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 10 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Stock options issued to
    employees </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 355 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 355 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.25in; padding-left: 0.25in"><FONT STYLE="font-size: 8pt"> Net
    loss </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> (3,012 </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> (3,012 </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Balance at December 31,
    2009 </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 7,124 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 64,929 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 35,225 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 1,243 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> (100,991 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 406 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Stock options issued to
    consultants </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 53 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 53 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Stock options issued to
    employees </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 2,439 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 2,439 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> April Financing </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 13,337 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Net
    loss </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> (7,823 </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> (7,823 </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Balance at December 31,
    2010 </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 20,461 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 64,929 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 37,717 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 1,243 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> (108,814 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> (4,925 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Stock options issued to
    consultants </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 20 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 20 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Stock options issued to
    employees </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 129 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 129 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in"><FONT STYLE="font-size: 8pt"> Rights Offering </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 4,697 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 1,023 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 199 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> (1,250 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> (28 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.25in; padding-left: 0.25in"><FONT STYLE="font-size: 8pt"> Net
    income </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> 4,685 </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> 4,685 </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Balance at December 31,
    2011 </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 25,158 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 65,952 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 38,065 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 1,243 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> (105,379 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> (119 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"> (The accompanying notes are an integral
part of these consolidated financial statements) </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"> (continued on next page) </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"> &nbsp; </P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B> Adherex Technologies Inc. </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B> (a development stage company) </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B> Consolidated Statements of Stockholders'
Deficiency (continued) </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B> (U.S. dollars and shares in thousands,
except per share information) </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B> &nbsp; </B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"> Common&nbsp;Stock </FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt"> Non-redeemable
    </FONT> <BR><FONT STYLE="font-size: 8pt">Preferred&nbsp;Stock</FONT> </TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt"> Additional
    </FONT> <BR><FONT STYLE="font-size: 8pt">Paid-in</FONT> </TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="2" NOWRAP><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 1.8pt 0pt 0; text-indent: 0.5in"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></P><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 1.8pt 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B> Accumulated </B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 1.8pt 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B> Other </B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 1.8pt 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B> Comprehensive </B></FONT></P></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt"> Deficit&nbsp;
    </FONT> <BR><FONT STYLE="font-size: 8pt">Accumulated&nbsp; </FONT><BR><FONT STYLE="font-size: 8pt">During&nbsp; </FONT><BR><FONT STYLE="font-size: 8pt">Development</FONT> </TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt"> Total
    </FONT> <BR><FONT STYLE="font-size: 8pt">Stockholders&rsquo;</FONT> </TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"> Number </FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"> Amount </FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"> of
    Subsidiary </FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"> Capital </FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"> Income </FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"> Stage </FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"> (Deficit)/
    Equity </FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 30%; text-align: left; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Stock options
    issued to consultants </FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt"> 152 </FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt"> 152 </FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Stock options issued to
    employees </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 174 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 174 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.25in; padding-left: 0.25in"><FONT STYLE="font-size: 8pt"> Net
    income </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> (5,163 </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> (5,163 </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt"> Balance at December </FONT> <BR><FONT STYLE="font-size: 8pt">31,
    2012</FONT> </TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 25,158 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 65,952 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 38,391 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 1,243 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> (110,543 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> (4,957 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Stock options issued to
    consultants </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 25 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 25 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Stock options issued to
    employees </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 62 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 62 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Rights Offering </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 4,000 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 838 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 732 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt"> 1,570 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt"> Net
    income </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> 1,845 </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt"> 1,845 </FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt"> Balance at December </FONT> <BR><FONT STYLE="font-size: 8pt">31,
    2013</FONT> </TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt"> 29,158 </FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt"> $ </FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt"> 66,790 </FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt"> $ </FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt"> - </FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt"> $ </FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt"> 39,210 </FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt"> $ </FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt"> 1,243 </FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt"> $ </FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt"> (108,698 </FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt"> $ </FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt"> (1,455 </FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt"> ) </FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B> &nbsp; </B> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"> (The accompanying notes are an integral
part of these consolidated financial statements) </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B> &nbsp; </B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Adherex Technologies Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(a development stage company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Notes to the Consolidated Financial Statements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(U.S. dollars and shares in thousands,
except per share information)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Going
Concern</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Adherex Technologies Inc. (&ldquo;Adherex&rdquo;), a British
Columbia corporation together with its wholly owned subsidiaries Oxiquant, Inc. (&ldquo;Oxiquant&rdquo;) and Adherex, Inc., both
Delaware corporations, and Cadherin Biomedical Inc. (&ldquo;CBI&rdquo;), a Canadian corporation, collectively referred to herein
as the &ldquo;Company,&rdquo; is a development stage biopharmaceutical company with a portfolio of product candidates under development
for use in the treatment of cancer.&nbsp;With the exception of Adherex Inc., all subsidiaries are inactive.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">These consolidated financial statements have been prepared in
accordance with generally accepted accounting principles (&ldquo;GAAP&rdquo;) in the United States (&ldquo;U.S.&rdquo;) of America
that are applicable to a going concern which contemplates that the Company will continue in operation for the foreseeable future
and will be able to realize its assets and discharge its liabilities in the normal course of business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> The Company is a development stage company and during the
year ended December 31, 2013, incurred a loss from operations of $1,931.&nbsp;At December 31, 2013, it had an accumulated deficit
of $108,698, and had experienced negative cash flows from operating activities since inception in the amount of $87,247. In addition,
it had a deficiency in working capital at December 31, 2013 and the Company's operating losses since inception. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">These circumstances raise substantial doubt as to the ability
of the Company to meet its obligations as they come due and, accordingly, the use of accounting principles applicable to a going
concern may not be appropriate. The Company will need to obtain additional funding in the future in order to finance our business
strategy, operations and growth through the issuance of equity, debt or collaboration.&nbsp;If we fail to arrange for sufficient
capital on a timely basis, we may be required to curtail our business activities until we can obtain adequate financing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">These financial statements do not reflect the potentially material
adjustments in the carrying values of assets and liabilities, the reported expenses, and the balance sheet classifications used,
that would be necessary if the going concern assumption were not appropriate.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Significant
Accounting Policies</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Basis of presentation</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The consolidated financial statements include the accounts of
Adherex and of all its wholly-owned subsidiaries and all inter-company transactions and balances have been eliminated upon consolidation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On August 10, 2011, the Board of Directors approved a 1-for-18
reverse stock split, or &ldquo;Share Consolidation&rdquo;, which became effective on August 25, 2011. The 1-for-18 reverse stock
split affected all of the Company&rsquo;s common shares, stock options and warrants outstanding at the effective date.&nbsp;Consequently,
the Company has retroactively adjusted its financial statements for all periods presented to show the shares, stock options and
warrants as if they&nbsp;had always been presented on this basis. The number of units and unit prices (including with respect to
the units issued in our April 2010 Private Placement and the Rights Offering) have not been adjusted to reflect the Share Consolidation,
and the number of warrants outstanding have not been adjusted to reflect the Share Consolidation (in accordance with the terms
of the warrants, the number of shares of common stock issuable thereunder were adjusted as a result of the Share Consolidation
but not the number of warrants outstanding).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Use of estimates</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> The preparation of financial statements in conformity with
U.S. GAAP requires management to make estimates and assumptions that impact the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities as at the date of the consolidated financial statements and the reported amounts
of revenue and expense during the reporting period.&nbsp;Significant estimates include the valuation of derivative warrant liability
and the valuation of stock based compensation.&nbsp;Actual results could differ from those estimates. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> &nbsp; </P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Cash and Cash Equivalents</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Cash equivalents consist of highly liquid investments with original
maturities at the date of purchase of three months or less.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> The Company places its cash and cash equivalents in investments
held by financial institutions in accordance with its investment policy designed to protect the principal investment.&nbsp;At
December 31, 2013, the Company had $1,663 in cash accounts (2012- $2,303).&nbsp;Money market investments typically have minimal
risk; however, in recent years the financial markets have been volatile resulting in concerns regarding money market investments.&nbsp;The
Company has not experienced any loss or write-down of its money market investments.<FONT STYLE="font-size: 10pt">&nbsp;</FONT> </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Financial instruments</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Financial instruments recognized on the balance sheets at
December 31, 2013 and December 31, 2012 consist of cash and cash equivalents, accounts payable, accrued liabilities and derivative
liabilities, the carrying values of which, with the exception of the derivative liabilities, approximate fair value due to their
relatively short time to maturity.&nbsp;The Company does not hold or issue financial instruments for trading. The derivative liabilities
are carried at fair value. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company&rsquo;s investment policy is to manage investments
to achieve, in the order of importance, the financial objectives of preservation of principal, liquidity and return on investment.&nbsp;Investments,
when made, are made in U.S. or Canadian bank securities, commercial paper of U.S. or Canadian industrial companies, utilities,
financial institutions and consumer loan companies, and securities of foreign banks provided the obligations are guaranteed or
carry ratings appropriate to the policy.&nbsp;Securities must have a minimum Dun &amp; Bradstreet rating of A for bonds or R1 low
for commercial paper.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The policy risks are primarily the opportunity cost of the conservative
nature of the allowable investments.&nbsp;As the main purpose of the Company is research and development, the Company has chosen
to avoid investments of a trade or speculative nature.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Common stock and warrants</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">At December 31, 2007, the Company had warrants outstanding to
purchase common stock that were denominated in both U.S. and Canadian dollars, which resulted in the Company having warrants outstanding
that were denominated outside the Company&rsquo;s U.S. dollar functional currency.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> In November 2007, the Emerging Issues Task Force (&ldquo;EITF&rdquo;)
of the FASB issued EITF No. 07-5, Issue Summary No.1 &ldquo;Determining Whether an Instrument (or an Embedded Feature) is Indexed
to an Entity's Own Stock&rdquo; (&ldquo;EITF 07-5&rdquo;), codified as ASC 815-40.&nbsp;&nbsp;In June 2008, one of the conclusions
reached under EITF 07-05 was a consensus that an equity-linked financial instrument would not be considered indexed to the entity's
own stock if the strike price is denominated in a currency other than the issuer's functional currency.&nbsp;The issues brought
to the EITF for discussion related to how an entity should determine whether certain instruments or embedded features are indexed
to its own stock.&nbsp;This discussion included equity-linked financial instruments where the exercise price is denominated in
a currency other than the issuer's functional currency; such as the Company&rsquo;s outstanding warrants to purchase common stock
that were denominated in Canadian dollars.&nbsp;This conclusion reached under EITF 07-05 clarified the accounting treatment for
these and certain other financial instruments as it related to FASB Statement No. 133, &ldquo;Accounting for Derivative Instruments
and Hedging Activities&rdquo; (&ldquo;SFAS 133&rdquo;), codified as ASC 815-10.&nbsp;SFAS 133 specifies that a contract that would
otherwise meet the definition of a derivative under SFAS 133, issued or held by the reporting entity that is both (a) indexed
to its own stock and (b) classified in stockholders' equity in its statement of financial position should not be considered a
derivative financial instrument for purposes of applying SFAS 133.&nbsp;As a result, the Company&rsquo;s outstanding warrants
denominated in Canadian dollars were not considered to be indexed to its own stock and should therefore be treated as derivative
financial instruments and recorded at their fair value as a liability.&nbsp;The Company issued further Canadian dollar denominated
warrants on April 30, 2010 and March 29, 2011 and this resulted in warrants being shown as a liability which is marked to market
as at December 31, 2013 and December 31, 2012.&nbsp;At December 31, 2013, the derivative liabilities were valued at $2,863 (2012:
$6,640) and the unrealized gain on the value of the underlying securities was $3,777 (2012: loss $1,563) for the year ended December
31, 2013. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Revenue recognition</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">At this time, the Company does not have any revenue.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Research and development costs and investment tax credits</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Research costs, including employee compensation, laboratory
fees, lab supplies, and research and testing performed under contract by third parties, are expensed as incurred.&nbsp;Development
costs, including drug substance costs, clinical study expenses and regulatory expenses are expensed as incurred.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Investment tax credits, which are earned as a result of qualifying
research and development expenditures, are recognized when the expenditures are made and their realization is reasonably assured.&nbsp;They
are applied to reduce related capital costs and research and development expenses in the year recognized.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Income taxes</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company accounts for income taxes under the asset and liability
method that requires the recognition of deferred tax assets or liabilities for the expected future tax consequences of temporary
differences between the financial statement carrying amounts and tax basis of assets and liabilities.&nbsp;The Company provides
a valuation allowance to reduce its deferred tax assets when it is more likely than not that such assets will not be realized.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company accounts for uncertainty in income taxes by following
the Financial Accounting Standards Board issued Interpretation No. 48 (&lsquo;&lsquo;FIN 48&rsquo;&rsquo;), codified as ASC 740-10-25,
&lsquo;&lsquo;Accounting for Uncertainty in Income Taxes &ndash; an Interpretation of SFAS No. 109.&rsquo;&rsquo; FIN 48 clarifies
the accounting for uncertainty in income taxes recognized in an enterprise&rsquo;s financial statements in accordance with Statement
of Financial Accounting Standards No. 109, &lsquo;&lsquo;Accounting for Income Taxes.&rsquo;, codified as ASC 740-10.&nbsp;FIN&nbsp;48
provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements.&nbsp;FIN&nbsp;48
requires the evaluation of tax positions taken or expected to be taken in the course of preparing tax returns to determine whether
the tax positions have met a &ldquo;more-likely-than-not&rdquo; threshold of being sustained by the applicable tax authority.&nbsp;Tax
benefits related to tax positions not deemed to meet the &ldquo;more-likely-than-not&rdquo; threshold are not permitted to be recognized
in the financial statements.&nbsp;Upon adoption of FIN&nbsp;48, the Company has elected an accounting policy that continues to
classify accrued interest and penalties related to liabilities for income taxes in income tax expense.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Foreign currency translation</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The U.S. dollar is the functional currency for the Company&rsquo;s
consolidated operations. For those entities, all gains and losses from currency translations are included in results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Earnings/(Loss) per share</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Basic net earnings/(loss) per share is computed by dividing
net earnings/(loss) by the weighted average number of shares of common stock outstanding during the year.&nbsp;Diluted net earnings
per share is computed using the same method, except the weighted average number shares of common stock outstanding includes convertible
debentures, stock options and warrants, if dilutive as determined using the if-converted method and treasury methods. Accordingly,
options to purchase 5,319 and warrants to purchase 21,665 shares at December 31, 2013, were not included in earnings per share.
These options and warrant were not included in the computation of diluted earnings per share because the exercise prices were
greater than the average market price of the common shares at that date, and accordingly, such options would have an antidilutive
effect. In 2012 we incurred a net loss and accordingly none of the options or warrants outstanding, 5,498 and 18,385, respectively,
were included in loss per share because their effect would be antidilutive. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Newly adopted accounting pronouncements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> In February 2013,
the FASB issued ASU 2013-02 to improve the reporting of reclassifications out of accumulated other comprehensive income. The ASU
provides amendments to the Comprehensive Income subtopic of the FASB ASC, such that companies must report the effect of significant
reclassifications out of accumulated comprehensive income on the respective line items in net income. For other amounts that are
not required to be reclassified in their entirety to net income, an entity may cross reference to the relevant note disclosure.
The Company was required to adopt this ASU in the first quarter for fiscal 2013. The adoption of this standard did not have a
significant impact on the Company&rsquo;s reporting. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Recent accounting pronouncements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white; color: #222222">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"> In July 2013, the FASB issued ASU
No. 2013-11, &quot;Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or
a Tax Credit Carryforward Exists,&quot; an amendment to FASB Accounting Standards Codification, or &quot;ASC&quot; Topic 740,
Income Taxes, or &quot;FASB ASC Topic 740.&quot; This update clarifies that an unrecognized tax benefit, or a portion of an unrecognized
tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward,
a similar tax loss, or a tax credit carryforward if such settlement is required or expected in the event the uncertain tax position
is disallowed. In situations where a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not
available at the reporting date under the tax law of the applicable jurisdiction or the tax law of the jurisdiction does not require,
and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented
in the financial statements as a liability and should not be combined with deferred tax assets. This ASU is effective prospectively
for fiscal years, and interim periods within those years, beginning after December 15, 2013. Early adoption and retrospective
application are permitted. This accounting guidance is not expected to have a material impact on our consolidated financial statements
or financial statement disclosures. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B> 3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock
options </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> The Compensation Committee of the Board of Directors administers
the Company&rsquo;s stock option plan.&nbsp;&nbsp;The Compensation Committee designates eligible participants to be included under
the plan and approves the number of options to be granted from time to time under the plan. On June 24, 2010, at the Company&rsquo;s
annual meeting, shareholders approved an amendment to the Company&rsquo;s Stock Option Plan (the &ldquo;Plan Maximum Amendment&rdquo;).
The Plan Maximum Amendment relates to changing the maximum number of shares of common stock issuable under the Stock Option Plan
from a fixed number of 20,000 to the number of shares that represent twenty five percent (25%) of the total number of all issued
and outstanding shares of common stock from time to time.&nbsp;Based upon the current shares outstanding, a maximum of 7,290 options
are authorized for issuance under the plan.&nbsp;&nbsp;The option exercise price for all options issued under the plan is based
on the fair value of the underlying shares on the date of grant.&nbsp;All options vest within three years or less and are exercisable
for a period of seven years from the date of grant.&nbsp;&nbsp;The stock option plan, as amended, allows the issuance of Canadian
and U.S. dollar grants.&nbsp;A summary of the stock option transactions, for both the Canadian and U.S. dollar grants, through
the year ended December 31, 2013 is below. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following options granted under the
stock option plan are exercisable in Canadian dollars:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.5pt"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP> &nbsp; </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP> &nbsp; </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Exercise&nbsp;Price&nbsp;in&nbsp;Canadian
    <BR>Dollars </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Number&nbsp;of <BR>Options </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Range </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Weighted- <BR>average </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 61%; font-weight: bold"> Outstanding at December 31, 2011 </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 10%; text-align: right"> 4,171 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt"> &nbsp;0.54-0.81 </FONT></TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> $ </TD><TD STYLE="width: 10%; text-align: right"> 0.78 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD> Granted </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD> Exercised </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt"> Forfeited or expired </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold"> Outstanding at December 31, 2012 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 4,171 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt"> &nbsp;0.54-0.81 </FONT></TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 0.78 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD> Granted </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD> Exercised </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt"> Forfeited or expired </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> (78 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> ) </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 0.81 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 0.81 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; padding-bottom: 2.5pt"> Outstanding at December 31, 2013 </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"> 4,093 </TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt"> $
                                         0.54-0.81 </FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> $ </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"> 0.79 </TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> &nbsp; </TD></TR>
</TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.5pt"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.5pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Price&nbsp;in&nbsp;Canadian&nbsp;Dollars </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> #&nbsp;outstanding&nbsp;and
    <BR>exercisable&nbsp;at <BR>December&nbsp;31,&nbsp;2013 </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Weighted average remaining&nbsp;life&nbsp;(years) </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 1%; text-align: left"> $ </TD><TD STYLE="width: 31%; text-align: right"> 0.54 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 31%; text-align: right"> 88 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 30%; text-align: right"> 4.26 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> 0.63 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 303 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 4.21 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> $ </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 0.81 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 3,702 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 3.97 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD COLSPAN="2" STYLE="text-align: left"> &nbsp;TOTAL<FONT STYLE="font-size: 10pt"> </FONT>&nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 4,093 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 3.99 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following options granted under the stock option plan are
exercisable in U.S. dollars:</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Exercise&nbsp;Price&nbsp;in&nbsp;U.S.&nbsp;Dollars </TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Number&nbsp;of <BR>Options </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Range </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Weighted- <BR>average </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 55%; font-weight: bold; text-align: justify"> Outstanding at December 31, 2011 </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 12%; text-align: right"> 963 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> $ </TD><TD STYLE="width: 12%; text-align: right"> 0.50 - 24.30 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> $ </TD><TD STYLE="width: 12%; text-align: right"> 8.51 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify"> Granted </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 1,137 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp;0.15 - 0.56&nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 0.32 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify"> Exercised </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 1pt"> Forfeited or expired </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> (773 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> ) </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 5.04
                                         &ndash; 24.30 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 9.92 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: justify"> Outstanding at December 31, 2012 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 1,327 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 0.15 - 11.34 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 0.67 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify"> Granted </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 315 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp;0.24 - 0.98&nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 0.32 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify"> Exercised </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 1pt"> Forfeited or expired </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> (11 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> ) </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 5.22
                                         - 10.26 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 10.14 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: justify; padding-bottom: 2.5pt"> Outstanding at December 31, 2013 </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"> 1,631 </TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> $ </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"> 0.15-10.26 </TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> $ </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"> 0.60 </TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> &nbsp; </TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Price&nbsp;in&nbsp;US&nbsp;Dollars </TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> #&nbsp;Outstanding and<BR>
    Exercisable&nbsp;at <BR>December&nbsp;31,&nbsp;2013 </TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Remaining&nbsp;life <BR>(years) </TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 1%; text-align: left"> $ </TD><TD STYLE="width: 31%; text-align: right"> 0.15 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 31%; text-align: right"> 33 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 30%; text-align: right"> 5.71 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> 0.18 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 61 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 5.45 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> 0.20 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 254 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 5.33 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> 0.24 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 250 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 6.74 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> 0.32 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 31 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 6.71 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> 0.35 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 689 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 5.97 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> 0.50 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 94 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 4.95 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> 0.56 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 100 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 6.05 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> 0.63 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 44 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 4.70 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> 0.80 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 25 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 6.35 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> 0.98 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 10 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 6.47 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> 1.80 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 4 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 1.73 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> 5.04 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 7 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 0.23 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> 5.22 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 2 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 1.42 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> 7.20 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 2 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 0.71 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"> $ </TD><TD STYLE="text-align: right"> 10.26 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 12 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 0.38 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 1pt; text-align: left"> $ </TD><TD STYLE="padding-bottom: 1pt; text-align: right"> 11.34 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 13 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 0.13 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 1,631 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 5.73 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Stock compensation expense for the fiscal years ended December
31, 2013 and 2012 was $87 and $326 respectively.&nbsp;&nbsp;These amounts have been included in the general and administrative
expenses for the respective periods. The weighted average fair value per share of options granted during the fiscal years ended
December 31, 2013 and 2012 was $0.32 and $0.32, respectively.&nbsp;The intrinsic value (being the difference between the share
price as at December 31, 2013 and exercise price) of stock options outstanding at December 31, 2013 was NIL. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> The fair values of options granted in fiscal years ended
December 31, 2013 and 2012&nbsp;were estimated on the date the options were granted based on the Black-Scholes option-pricing
model, using the following weighted average assumptions: </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"> &nbsp; </P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Year&nbsp;Ended<BR>
    December&nbsp;31,<BR> 2013 </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Year&nbsp;Ended<BR>
    December&nbsp;31,<BR> 2012 </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%; text-align: left"> Expected dividend </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 10%; text-align: right"> 0 </TD><TD STYLE="width: 1%; text-align: left"> % </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 10%; text-align: right"> 0 </TD><TD STYLE="width: 1%; text-align: left"> % </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"> Risk-free interest rate </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 1.10-1.73<FONT STYLE="font-size: 10pt"> </FONT> </TD><TD STYLE="text-align: left"> % </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 1.09&ndash;1.26<FONT STYLE="font-size: 10pt"> </FONT> </TD><TD STYLE="text-align: left"> % </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> Expected volatility </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 144-175<FONT STYLE="font-size: 10pt"> </FONT> </TD><TD STYLE="text-align: left"> % </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 118-133 </TD><TD STYLE="width: 1%; text-align: left"> % </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"> Expected life </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 7 years </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 7 years </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company uses the historical volatility and adjusts for available
relevant market information pertaining to the Company&rsquo;s share price.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="font-size: 10pt"> &nbsp; </FONT> <B>4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Derivative
Liabilities</B> </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">Effective January 1, 2009, the Company
adopted ASC Topic 815-40, &quot;Derivatives and Hedging&quot; (ASC 815-40). One of the conclusions reached under ASC 815-40 was
that an equity-linked financial instrument would not be considered indexed to the entity's own stock if the strike price is denominated
in a currency other than the issuer's functional currency. The conclusion reached under ASC 815-40 clarified the accounting treatment
for these and certain other financial instruments. ASC 815-40 specifies that a contract would not be treated as a derivative if
it met the following conditions: (a) indexed to the Company's own stock; and (b) classified in shareholders' equity in the Company's
statement of financial position. The Company's outstanding warrants denominated in Canadian dollars are not considered to be indexed
to its own stock because the exercise price is denominated in Canadian dollars and the Company's functional currency is United
States dollars. Therefore, these warrants have been treated as derivative financial instruments and recorded at their fair value
as a liability. All other outstanding convertible instruments are considered to be indexed to the Company's stock, because their
exercise price is denominated in the same currency as the Company's functional currency, and are included in stockholders' deficiency.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">The Company's derivative instruments
include warrants to purchase 18,035 shares, the exercise prices for which are denominated in a currency other than the Company's
functional currency, as follows:</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; background-color: white"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Warrants to purchase 13,337 shares at CAD$1.44 per whole share that expire on April 30, 2015; and</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; background-color: white"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Warrants to purchase 4,698 shares exercisable at CAD$1.44 per whole share that expire on March 29, 2016.</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">These warrants have been recorded at
their fair value as a liability at issuance and will continue to be re-measured at fair value as a liability at each subsequent
balance sheet date. Any change in value between reporting periods will be recorded as unrealized gain/(loss). These warrants will
continue to be reported as a liability until such time as they are exercised or expire. The fair value of these warrants is estimated
using the Black-Scholes option-pricing model.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> As of December 31, 2013, the fair value
of the warrants expiring April 30, 2015 and March 29, 2016 was determined to be $2,015 and $794 respectively (December 31, 2012
&ndash; warrants expiring April 30, 2015, fair value of $4,698, March 29, 2016, fair value of $1,847), and the gain on these warrants
for the twelve months ended December 31, 2013 was $2,683 and $1,052, respectively (December 31, 2012 - warrants expiring April
30, 2015, loss of $1,026; March 29, 2016, gain of $507). There is no cash flow impact for these derivatives until the warrants
are exercised. If these warrants are exercised, the Company will receive the proceeds from the exercise at the current exchange
rate at the time of exercise. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> &nbsp; </P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 9pt"> Gain/(Loss) on Derivative
    Instruments </FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 9pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 9pt"> Twelve months
    ended December 31, 2013 </FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 9pt"> &nbsp; </FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 9pt"> &nbsp; </FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 9pt"> Twelve months
    ended December 31, 2012 </FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 9pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 62%; font-weight: bold"><FONT STYLE="font-size: 9pt"> Warrant expiring April 15, 2015 </FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 9pt"> &nbsp; </FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 9pt"> &nbsp; </FONT></TD><TD STYLE="width: 16%; text-align: right"><FONT STYLE="font-size: 9pt"> 2,683 </FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 9pt"> &nbsp; </FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 9pt"> &nbsp; </FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 9pt"> &nbsp; </FONT></TD><TD STYLE="width: 16%; text-align: right"><FONT STYLE="font-size: 9pt"> (1,026 </FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 9pt"> ) </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold"><FONT STYLE="font-size: 9pt"> Warrant expiring March 29, 2016 </FONT></TD><TD><FONT STYLE="font-size: 9pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 9pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 9pt"> 1,052 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 9pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 9pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 9pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 9pt"> (507 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 9pt"> ) </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-size: 9pt"> Rights offering derivative </FONT></TD><TD><FONT STYLE="font-size: 9pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 9pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 9pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 9pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 9pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 9pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 9pt"> - </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 9pt"> &nbsp; </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-size: 9pt"> Options to contractors </FONT></TD><TD><FONT STYLE="font-size: 9pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 9pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 9pt"> 42 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 9pt"> &nbsp; </FONT></TD><TD><FONT STYLE="font-size: 9pt"> &nbsp; </FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 9pt"> &nbsp; </FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 9pt"> (30 </FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 9pt"> ) </FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 9pt"> Total </FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 9pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left"><FONT STYLE="font-size: 9pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right"><FONT STYLE="font-size: 9pt"> 3,777 </FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left"><FONT STYLE="font-size: 9pt"> &nbsp; </FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 9pt"> &nbsp; </FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left"><FONT STYLE="font-size: 9pt"> &nbsp; </FONT></TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right"><FONT STYLE="font-size: 9pt"> (1,563 </FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left"><FONT STYLE="font-size: 9pt"> ) </FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"> During the fiscal year ended December
31, 2011, the Company issued 108 options to contractors with a Canadian dollar denominated strike price. Consequently, the Company
now has derivatives relating to these options since the strike price is denominated in a currency other than the US dollar functional
currency of the Company. While there is an exception to this rule for employees in ASU 2010-13 &quot;Compensation-Stock Compensation
(Topic 718):Effect of Denominating the exercise price of a share based payment award in the currency of the market in which the
underlying equity security trades&quot;, no such exception exists for contractors. These options will be marked to market until
the earlier of their expiry or exercise.&nbsp;The fair value of these options at December 31, 2013 and December 31, 2012 was $54
and $96 respectively. The gain for the twelve months ended December 31, 2013 and December 31, 2012 was $42 and a loss of $30 respectively. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B> 5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fair
Value Measurements </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company has adopted Fair Value Measurements and Disclosure
Topic of the FASB. This Topic applies to certain assets and liabilities that are being measured and reported on a fair value basis.
The Fair Value Measurements Topic defines fair value, establishes a framework for measuring fair value in accordance with GAAP,
and expands disclosure about fair value measurements. This Topic enables the reader of the financial statements to assess the inputs
used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used
to determine fair values. The Topic requires that financial assets and liabilities carried at fair value be classified and disclosed
in one of the following three categories:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Level 1: Quoted market prices in active markets for identical
assets or liabilities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Level 2: Observable market based inputs or unobservable inputs
that are corroborated by market data.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Level 3: Unobservable inputs that are not corroborated by market
data.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Assets/Liabilities Measured at Fair Value on a Recurring
Basis</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD COLSPAN="17" NOWRAP STYLE="font-weight: bold"> Fair Value Measurement at December 31, 2013 </TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"> Quoted Price in Active Markets </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"> Significant Other </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"> Significant </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD><TD NOWRAP> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"> &nbsp; </TD><TD NOWRAP> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"> for Identical Instruments </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"> Observable Inputs </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"> Unobservable Inputs </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD><TD NOWRAP> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"> &nbsp; </TD><TD NOWRAP> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"> Level 1 </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"> Level 2 </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"> Level 3 </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"> Total </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold"> Assets </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 48%; text-align: left"> Cash equivalents </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> $ </TD><TD STYLE="width: 10%; text-align: right"> - </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> $ </TD><TD STYLE="width: 10%; text-align: right"> 1,663 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> $ </TD><TD STYLE="width: 10%; text-align: right"> - </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> $ </TD><TD STYLE="width: 10%; text-align: right"> 1,663 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold"> Liabilities </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"> Derivative liabilities </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 2,863 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 2,863 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> The Company's financial instruments include cash equivalents
and derivative liabilities. Only cash equivalents and derivative liabilities are carried at their fair value. The derivative liabilities
include warrants denominated in a currency other than the Company&rsquo;s functional currency and options issued to contractors
in a currency other than the functional currency of the Company. The warrants are carried at fair value and calculated using the
Black-Scholes option pricing model using the following assumptions; expected dividend 0%; risk-free interest rate of 1.10%-1.73%;
expected volatility of 144% - 175%; and a 1.3 or 2.2 year remaining life. The options also use the Black Scholes model with the
following assumptions: expected dividend 0%; risk-free interest rate of 1.43%-1.46% expected volatility of 154%- 172%; and a 3.9-4.4
year remaining life. The risk free rate was based on Bank of Canada Bond issues of similar term. Expected volatility was estimated
by using historical volatility of weekly close share prices for a period equal to the remaining life of the instrument. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B> &nbsp; </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B> 6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholders&rsquo;
Equity </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Authorized capital stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company&rsquo;s authorized capital stock consists of an
unlimited number of shares of no par common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On August 10, 2011, the Board of Directors approved a 1-for-18
reverse stock split, or &ldquo;share consolidation&rdquo;, which became effective on August 25, 2011. The 1-for-18 reverse stock
split affected all of the Company&rsquo;s common shares, stock options and warrants outstanding at the effective date. Consequently,
the Company has retroactively adjusted its financial statements for all periods presented to show the share shares, stock options
and warrants as if they had always been presented on this basis. The number of units and unit prices (including with respect to
the units issued in our 2011 Private Placement and the Rights Offering) have not been adjusted to reflect the Share Consolidation,
and the number of warrants outstanding have not been adjusted to reflect the Share Consolidation (in accordance with the terms
of the warrants, the number of shares of common stock issuable thereunder were adjusted as a result of the Share Consolidation
but not the number of warrants outstanding).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Equity financings</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"> On November 22, 2013, the Company
completed the closing of non-brokered private placement (the &ldquo;<B>Offering</B>&rdquo;) of 4,000 units for gross proceeds
of US$1,600.&nbsp; Each unit (a &ldquo;<B>Unit</B>&rdquo;) was issued at a price of $0.40 per Unit and consisted of one common
share of the Company (the &ldquo;<B>Common Shares</B>&rdquo;) and one common share purchase warrant (the &ldquo;<B>Warrants</B>&rdquo;).
Each Warrant entitles the holder thereof to acquire one Common Share at a price of US$0.50 per share for a period of five years
from the date of issuance. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Warrants to Purchase Common Stock</B>&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> At December 31, 2013, the Company had
the following warrants outstanding to purchase common stock priced in Canadian dollars with a weighted average exercise price
of $1.44 and a weighted average remaining life of 2.6 years. The Company also had warrants outstanding to purchase common stock
priced in U.S. dollars with a weighted average price of $0.50 and a weighted average remaining life of 6.9 years:<FONT STYLE="font-size: 10pt">&nbsp;</FONT> </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: normal; border-bottom: Black 1pt solid; font-style: normal"><B> Warrant Description </B>
    <BR> (Warrants in thousands) </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid"> Common Shares<BR> Issuable Upon Exercise<BR>
    of Outstanding<BR> Warrants at December<BR> 31, 2013 </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid"> Exercise Price<BR> CND/USD </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid"> Expiration Date </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 25%; text-align: left"> Investor Warrants (1) </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 22%; text-align: right"> 13,337 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 24%; text-align: center"> $1.44 CND </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 24%"> April 30, 2015 </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"> Investor Warrants (2) </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 4,698 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: center"> $1.44 CND </TD><TD> &nbsp; </TD>
    <TD> March 29, 2016 </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt"> Investor Warrants (3) </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 4,000 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="text-align: center; padding-bottom: 1pt"> $0.50 USD </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="padding-bottom: 1pt"> November 22, 2020 </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"> 22,035 </TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-weight: normal">(1) On April 30, 2010, the
Company announced that it had completed a first closing of a non-brokered private placement (&ldquo;Private Placement&rdquo;) of
240,066 units, at a price of $0.03 CAD per unit for net proceeds of CAD$7,200. Each unit consisted of one common share and one
common share purchase warrant (a &ldquo;Warrant&rdquo;). As a result of the Share Consolidation, each eighteen (18) Warrants now
entitle the holder thereof to purchase one common share of the Company at a purchase price of CAD$1.44 per whole share for a period
of five years from the issue date.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-weight: normal">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-weight: normal">(2) On March 29, 2011, the
Company announced that it had completed a non-brokered rights offering of 84,559 units, at a price of $0.03 CAD per unit for total
net proceeds of $2,547. Each unit consisted of one common share and one common share purchase warrant (a &ldquo;Warrant&rdquo;).
As a result of the Share Consolidation, each eighteen (18) Warrants now entitle the holder thereof to purchase one common share
of the Company at a purchase price of CAD$1.44 per whole share for a period of five years from the issue date.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B> 7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research
and Development </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Investment tax credits earned as a result of qualifying research
and development expenditures and government grants have been applied to reduce research and development expenses as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"> Year&nbsp;Ended<BR> December&nbsp;31, </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"><B> Year&nbsp;Ended </B> <BR>
    <FONT STYLE="font-size: 10pt"> </FONT><B>December&nbsp;31,</B> </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"><B> Cumulative From </B> <BR>
    <B>September&nbsp;3,1996&nbsp;to</B><BR>
    <FONT STYLE="font-size: 10pt"> </FONT><B>December&nbsp;31,</B> </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD> &nbsp; </TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2013 </TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2012 </TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: center"><B> 2013 </B> <FONT STYLE="font-size: 10pt">
    </FONT> </TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 55%; text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Research and development </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> $ </TD><TD STYLE="width: 12%; text-align: right"> 579 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> $ </TD><TD STYLE="width: 12%; text-align: right"> 2,075 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> $ </TD><TD STYLE="width: 12%; text-align: right"> 69,746 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Investment tax credits </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (1,632 </TD><TD STYLE="text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.25in; padding-left: 0.25in"> National Research Council
    grants </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> (197 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> $ </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"> 579 </TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> $ </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"> 2,075 </TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> $ </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"> 67,917 </TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> &nbsp; </TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B> 8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commitments and
Contingencies </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B> LifeSci Advisors, LLC. </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> The Company has a service agreement with LifeSci Advisors,
LLC under which it is required to make several payments over the course of the agreement. LifeSci Advisors, LLC services include,
but are not limited to, an investor meeting program and creating a key message platform. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP> &nbsp; </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"> Less&nbsp;than <BR>1&nbsp;year </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"> 1-3 <BR>years </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"> Total </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 61%; text-align: left; padding-bottom: 1pt"> LifeSci Advisors, LLC </TD><TD STYLE="width: 1%; padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="width: 10%; border-bottom: Black 1pt solid; text-align: right"> 55 </TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%; padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="width: 10%; border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%; padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="width: 10%; border-bottom: Black 1pt solid; text-align: right"> 55 </TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt"> Total </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> $ </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"> 55 </TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> $ </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"> - </TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> $ </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"> 55 </TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> &nbsp; </TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B> Oregon Health &amp; Science University
Agreement </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On February 20, 2013, Adherex entered into a new exclusive license
agreement with Oregon Health &amp; Science University (&ldquo;OHSU&rdquo;) for exclusive worldwide license rights to intellectual
property directed to thiol-based compounds, including STS and their use in oncology (the &quot;New OHSU Agreement&quot;).&nbsp;OHSU
will receive certain milestone payments, a 2.5&nbsp;percent royalty on net sales for licensed products which can be reduced to
1.0 percent upon a $150,000 buy down and a 5&nbsp;percent royalty on any consideration received from sublicensing of the licensed
technology.&nbsp;Milestone payment fees payable to OHSU include $100,000 upon first commercial sale for any licensed product.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> On February 20, 2013, Adherex terminated the previous exclusive
license agreement with OHSU and Oxiquant a wholly owned subsidiary of Adherex, dated September 26, 2002 (the &quot;Previous OHSU
Agreement&quot;). Pursuant to the Previous OHSU Agreement, OHSU granted Oxiquant an exclusive worldwide license to intellectual
property directed to thiol-based compounds including STS and their use in oncology. In consideration, OHSU was issued 13,902 shares
of common stock of Oxiquant that were subsequently converted upon the acquisition of Oxiquant into 21,250 shares of Adherex common
stock, and warrants to purchase shares of Adherex common stock that subsequently expired in 2007. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> The term of the New OHSU Agreement expires on the date of
the last to expire claim(s) covered in the patents licensed to Adherex, unless earlier terminated as provided in the agreement.
STS is currently protected by methods of use patents that the Company exclusively licensed from OHSU that expire in Europe in
2021 and are currently pending in the United States. The New OHSU Agreement is terminable by either Adherex or OHSU in the event
of a material breach of the agreement by either party after 45 days prior written notice. Adherex also has the right to terminate
the New OHSU Agreement at any time upon 60 days prior written notice and payment of all fees due to OHSU under the New OHSU Agreement. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B> 9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subsequent Events </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"><B> Exercise of Stock Options </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"> On March 5, 2014, Dr. Tom Spector
exercised 150,000 options which were granted to him on November 20, 2012 pursuant to the Company&rsquo;s Amended and Restated
Stock Option Plan at an aggregate exercise price of $52,500 or $0.35 per common share. On June 19, 2013 Dr. Spector resigned as
Chief Scientific Officer of the Company. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"><B> Non-Executive Compensation </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> On January 24, 2014, the board approved an increase in non-executive
compensation from $1,500 per meeting attended to $2,000 per meeting attended for both Chris Rallis and Steven Skolsky. There was
no change to the non-cash compensation for Mr. Rallis or Mr. Skolsky. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B> 10.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income Taxes </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company operates in both U.S. and Canadian tax jurisdictions.&nbsp;Its
income is subject to varying rates of tax and losses incurred in one jurisdiction cannot be used to offset income taxes payable
in another.&nbsp;A reconciliation of the combined Canadian federal and provincial income tax rate with the Company&rsquo;s effective
tax rate is as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"> Year&nbsp;Ended <BR>December&nbsp;31, </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"> Year&nbsp;Ended <BR>December&nbsp;31, </TD><TD NOWRAP STYLE="font-weight: bold"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD> &nbsp; </TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2013 </TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> 2012 </TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%; text-align: left"> Domestic gain </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 10%; text-align: right"> 2,620 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 10%; text-align: right"> (4,397 </TD><TD STYLE="width: 1%; text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt"> Foreign loss </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> (775 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> ) </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> (766 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt"> Gain before income taxes </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 1,845 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> (5,163 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> Expected statutory rate (recovery) </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 26.50 </TD><TD STYLE="text-align: left"> % </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 26.50 </TD><TD STYLE="text-align: left"> % </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"> Expected provision for (recovery of) income tax </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 489 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (1,368 </TD><TD STYLE="text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> Permanent differences </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (977 </TD><TD STYLE="text-align: left"> ) </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 489 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"> Change in valuation allowance </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 230 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 2,467 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> Non-refundable investment tax credits </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"> Effect of foreign exchange rate differences </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 36 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (245 </TD><TD STYLE="text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> Effect of change in future enacted tax rates </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> (1,378 </TD><TD STYLE="text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt"> Effect of tax rate changes and other </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 222 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 36 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt"> Provision for income taxes </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> $ </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"> - </TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> $ </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"> - </TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> &nbsp; </TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> The Canadian statutory come tax rate of 26.5&nbsp;percent
is comprised of federal income tax at approximately 15.5&nbsp;percent and provincial income tax at approximately 11.0 percent. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &nbsp; </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> The primary temporary differences which gave rise to future
income taxes (recovery) at December 31, 2013, December 31, 2012: </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif; margin-left: 1in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> December&nbsp;31,
    <BR>2013 </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> December&nbsp;31,
    <BR>2012 </TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left"> Future tax assets: </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%"> SR&amp;ED expenditures </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 10%; text-align: right"> 2,195 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 10%; text-align: right"> 2,195 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> Income tax loss carryforwards </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 22,220 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 21,783 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"> Non-refundable investment tax credits </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 1,719 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 1,719 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD> Share issue costs </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 31 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 25 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"> Accrued expenses </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> Fixed and intangible assets </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 1,006 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 970 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt"> Harmonization credit </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> - </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> 248 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 27,170 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 26,940 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt"> Less: valuation allowance </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> (27,170 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> ) </TD><TD STYLE="padding-bottom: 1pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"> &nbsp; </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"> (26,940 </TD><TD STYLE="padding-bottom: 1pt; text-align: left"> ) </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt"> Net future tax assets </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> $ </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"> - </TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> &nbsp; </TD><TD STYLE="padding-bottom: 2.5pt"> &nbsp; </TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> $ </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"> - </TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> &nbsp; </TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">There are no current income taxes owed, nor are any income taxes
expected to be owed in the near term.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> At December 31, 2013 the Company has unclaimed Scientific
Research and Experimental Development (&quot;SR&amp;ED&quot;) expenditures, income tax loss carry forwards and non-refundable
investment tax credits.&nbsp;The unclaimed amounts and their expiry dates are as listed below: </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Federal </TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"> &nbsp; </TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Province/ <BR>
    State </TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%; text-align: left"> SR&amp;ED expenditures (no expiry) </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> $ </TD><TD STYLE="width: 10%; text-align: right"> 8,283 </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD><TD STYLE="width: 1%"> &nbsp; </TD>
    <TD STYLE="width: 1%; text-align: left"> $ </TD><TD STYLE="width: 10%; text-align: right"> - </TD><TD STYLE="width: 1%; text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"> Income tax loss carryforwards (expiry date): </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> 2014 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 6,089 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 6,089 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"> 2015 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 11,499 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 11,499 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> 2021 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 26 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"> 2022 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 233 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> 2023 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 133 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> - </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"> 2024 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 1,536 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 1,455 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> 2025 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 4,795 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 4,768 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"> 2026 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 20,562 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 20,496 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> 2027 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 8,340 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 8,320 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"> 2028 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 10,840 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 10,823 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> 2029 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 8,502 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 8,502 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"> 2030 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 2,608 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 2,607 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"> 2031 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 3,377 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 3,377 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in"> 2032 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 3,491 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 3,491 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in"> 2033 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 1,817 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 1,817 </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in"> Investment tax credits (expiry date): </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in"> 2018 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 10 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in"> 2019 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 8 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in"> 2020 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 96 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in"> 2021 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 55 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in"> 2022 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 548 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in"> 2023 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 399 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in"> 2024 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 178 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in"> 2025 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 199 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in"> 2026 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 86 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in"> 2027 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 90 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in"> 2028 </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> 50 </TD><TD STYLE="text-align: left"> &nbsp; </TD><TD> &nbsp; </TD>
    <TD STYLE="text-align: left"> &nbsp; </TD><TD STYLE="text-align: right"> &nbsp; </TD><TD STYLE="text-align: left"> &nbsp; </TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We have been advised that, in the opinion of the Securities
and Exchange Commission, indemnification for liabilities arising under the Securities Act is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities
is asserted by one of our directors, officers, or controlling persons in connection with the securities being registered, we will,
unless in the opinion of our legal counsel the matter has been settled by controlling precedent, submit the question of whether
such indemnification is against public policy to a court of appropriate jurisdiction. We will then be governed by the court&rsquo;s
decision.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>ADDITIONAL INFORMATION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">This prospectus, which is a part of the Registration Statement,
does not contain all of the information in the Registration Statement and the exhibits filed with it, portions of which have been
omitted as permitted by the SEC rules and regulations. For further information concerning us and the securities offered by this
prospectus, please refer to the Registration Statement and to the exhibits filed therewith.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Registration Statement, including all exhibits, may be inspected
without charge at the SEC&rsquo;s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information
on the operation of this public reference room by calling 1-800-SEC-0330. The Registration Statement, including all exhibits and
schedules and amendments, has been filed with the SEC and is available to the public from the SEC&rsquo;s web site at <U>http://www.sec.gov</U>
..</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;<B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; text-align: center; margin-bottom: 0pt"><IMG SRC="tlogo1.jpg" ALT="">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; text-align: center; margin-bottom: 0pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><B>ADHEREX TECHNOLOGIES
INC.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><B>OFFERING UP
TO 4,697,732 WARRANT SHARES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><B>PROSPECTUS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><B>April 21, 2014</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">We have not authorized any dealer,
salesperson or any other person to give any information or to represent anything other than those contained in this prospectus
in connection with the offer contained herein, and, if given or made, you should not rely upon such information or representations
as having been authorized by Adherex Technologies Inc.&nbsp;&nbsp;This prospectus does not constitute an offer of any securities
other than those to which it relates or an offer to sell, or a solicitation of an offer to buy, to those to which it relates in
any jurisdiction to any person to whom it is not lawful to make such offer in such jurisdiction. The delivery of this prospectus
at any time does not imply that the information herein is correct as of any time after the date of this prospectus.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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`
end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
