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      Registration Statement Under the Securities Act of 1933
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    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">As
      filed with the Securities and Exchange Commission on December 27, 2005
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Registration
      No. 333-___________ </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 18pt; FONT-FAMILY: Times New Roman, serif"><strong>UNITED
      STATES </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 18pt; FONT-FAMILY: Times New Roman, serif"><strong>SECURITIES
      AND EXCHANGE COMMISSION </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 14pt; FONT-FAMILY: Times New Roman, serif">Washington,
      D.C. 20549 </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 18pt; FONT-FAMILY: Times New Roman, serif"><strong>FORM
      S-8 </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>REGISTRATION
      STATEMENT </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman Bold, serif"><strong>UNDER
      </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman Bold, serif"><strong><u>THE
      SECURITIES ACT OF 1933</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><u>&#160;</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 18pt; FONT-FAMILY: Times New Roman, serif"><strong>CALLISTO
      PHARMACEUTICALS, INC. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(Exact
      name of registrant as specified in its charter) </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div align="left">
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td width="5%">&#160;</td>
            <td valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Delaware</font></div>
            </td>
            <td width="10%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">13-3894575</font></div>
            </td>
            <td width="5%">&#160;</td>
          </tr>
          <tr>
            <td width="5%">&#160;</td>
            <td valign="top" width="40%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(State
                or other jurisdiction of incorporation or organization)</font></div>
            </td>
            <td width="10%">&#160;</td>
            <td valign="top" width="40%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(IRS
                Employer Identification No.)</font></div>
            </td>
            <td width="5%">&#160;</td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">420
      Lexington Avenue, Suite 1609</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">New
      York, New York 10170 </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(Address
      of principal executive offices) (Zip Code) </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>1996
      INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman Bold, serif"><strong>2005
      EQUITY COMPENSATION INCENTIVE PLAN</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><strong><font size="2">2005
      DIRECTORS&#8217; STOCK OPTION
      PLAN</font></strong></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>AND
      NON-PLAN EMPLOYEE OPTIONS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><u>(Full
      title of Plan) </u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Gary
      S. Jacob, Ph.D., Chief Executive Officer </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">420
      Lexington Avenue, Suite 1609</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">New
      York, New York 10170 </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(Name
      and address of agent for service) </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(212)
      297-0010 </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(Telephone
      number, including area code, of agent for service) </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><a name="fis_registration_fee"/><a name="fis_unidentified_table"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">With
      a copy to:</font></a></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Jeffrey
      J. Fessler, Esq.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Sichenzia
      Ross Friedman Ference LLP</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">1065
      Avenue of Americas</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">New
      York, NY 10018</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(212)
      930-9700</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Fax
      (212) 930-9725</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
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        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>CALCULATION
      OF REGISTRATION FEE</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div align="left">
      <table border="0" cellpadding="0" cellspacing="0" id="ftable" width="100%">

          <tr>
            <td align="left" valign="bottom" width="27%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>Title
                of </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>Securities
                </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>to
                be </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>Registered</strong></font></div>
            </td>
            <td width="2%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td align="left" colspan="2" valign="bottom" width="16%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>Proposed
                </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>Maximum
                </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>Amount
                </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>to
                be </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>Registered
                (1)</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td align="left" colspan="2" valign="bottom" width="16%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>Proposed
                </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>Maximum
                </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>Offering
                </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>Price
                </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>Per
                Share</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td align="left" colspan="2" valign="bottom" width="16%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>Aggregate
                </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>Offering
                </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>Price</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td align="left" colspan="2" valign="bottom" width="16%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>Amount
                of </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>Registration
                </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>Fee</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="27%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Common
                Stock, <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">$.0001
                par value</font></font></div>
            </td>
            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman, serif">10,000
                (2</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman, serif">)</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman, serif">$</font></div>
            </td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman, serif">1.80
                (7</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman, serif">)</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman, serif">$</font></div>
            </td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman, serif">3,179,459</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman, serif">$</font></div>
            </td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman, serif">340</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="27%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td width="2%" style="border-bottom: medium none;">&#160;</td>
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            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
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            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">&#160;</td>
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            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">&#160;</td>
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            <td align="left" valign="bottom" width="27%" style="border-bottom: medium none;">
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            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
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            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">&#160;</td>
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            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">&#160;</td>
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            <td align="left" valign="bottom" width="27%" style="border-bottom: medium none;">
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            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
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            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
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            <td align="left" valign="bottom" width="27%" style="border-bottom: medium none;">
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            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">
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            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">&#160;</td>
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            <td align="left" valign="bottom" width="27%" style="border-bottom: medium none;">
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            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
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            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
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            <td align="left" valign="bottom" width="27%" style="border-bottom: medium none;">
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            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
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            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
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            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
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          <tr>
            <td align="left" valign="bottom" width="27%" style="border-bottom: medium none;">
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            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">
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            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">
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            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
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            <td align="left" valign="bottom" width="27%" style="border-bottom: medium none;">
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            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">
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            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
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          <tr>
            <td align="left" valign="bottom" width="27%" style="border-bottom: medium none;">
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            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman, serif">25,000
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            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">
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            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">
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            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman, serif">)</font></div>
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            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="27%" style="border-bottom: medium none;">
            </td>
            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">
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            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">
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            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">
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            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman, serif">)</font></div>
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            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="27%" style="border-bottom: medium none;">
            </td>
            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman, serif">22,500
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            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman, serif">)</font></div>
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            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman, serif">1.45
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            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman, serif">)</font></div>
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            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="27%" style="border-bottom: medium none;">
            </td>
            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman, serif">45,000
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            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman, serif">)</font></div>
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            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman, serif">1.50
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            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman, serif">)</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="27%" style="border-bottom: black thin solid;">&#160;</td>
            <td width="2%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="27%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Common
                Stock, $.0001 par value</font></div>
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            <td width="2%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman, serif">5,000,000
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            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman, serif">)</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman, serif">1.43
                (8</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman, serif">)</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman, serif">7,150,000</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman, serif">765</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="27%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Common
                Stock, $.0001 par value</font></div>
            </td>
            <td width="2%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman, serif">1,447,500
                (6</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman, serif">)</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman, serif">1.43
                (8</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman, serif">)</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman, serif">2,069,925</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman, serif">222</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="27%" style="border-bottom: #ffffff solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Total:</font></div>
            </td>
            <td width="2%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: black double;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman, serif">8,806,984&#160;&#160;&#160;&#160;&#160;
                </font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
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            </td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: black double;">
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            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
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            </td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: black double;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman, serif">1,327</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(1)
      Pursuant to Rule 416 promulgated under the Securities Act of 1933, as amended,
      this registration statement covers such indeterminate additional shares of
      common stock to be offered or issued to prevent </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">dilution
      as a result of future stock splits, stock dividends or other similar
      transactions.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(2)
      Consists of shares of common stock issuable upon exercise of options outstanding
      pursuant to our 1996 Incentive and Non-Qualified Stock Option Plan.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(3)
      Consists of shares of common stock issuable upon exercise of options outstanding
      pursuant to our 2005 Directors&#8217; Stock Option Plan.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(4)
      Consists of shares of common stock issuable upon exercise of outstanding
      non-Plan employee options. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(5)
      Consists of shares of common stock issuable upon exercise of options available
      for grant pursuant to our 2005 Equity Compensation Incentive Plan. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(6)
      Consists of shares of common stock issuable upon exercise of options available
      for grant pursuant to our 2005 Directors&#8217; Stock Option Plan.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(7)
      Pursuant to Rule 457(h) under the Securities Act, the proposed maximum offering
      price per share was calculated for an aggregate of 2,261,984 shares of common
      stock issuable upon exercise of outstanding options granted under the 1996
      Plan,
      for an aggregate of 52,500 shares of common stock issuable upon exercise of
      outstanding options granted under the 2005 Directors&#8217; Stock Option Plan, and
      45,000 shares of common stock issuable upon exercise of outstanding non-Plan
      options, based on the per share exercise prices of such options, as set forth
      in
      the Calculation of Registration Fee table. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">2</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(8)
      Estimated solely for purposes of calculating the registration fee in accordance
      with Rule 457(c) under the Securities Act of 1933, using the average of the
      high
      and low price as reported on the American Stock Exchange on December 23,
      2005.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">3</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>EXPLANATORY
      NOTE</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">This
      Registration Statement is being filed in accordance with the requirements of
      Form S-8 in order to register an aggregate of 8,806,984 shares of our common
      stock, par value $0.0001 per share, consisting of (i) 2,261,984 shares of common
      stock issuable upon exercise of options outstanding pursuant to our 1996
      Incentive and Non-Qualified Stock Option Plan, (ii) 5,000,000 shares of common
      stock issuable upon exercise of options available for grant pursuant to our
      2005
      Equity Compensation Incentive Plan, (iii) 1,447,500 shares of common stock
      issuable upon exercise of options available for grant pursuant to our 2005
      Directors&#8217; Stock Option Plan, (iv) 52,500 shares of common stock issuable upon
      exercise of options outstanding pursuant to our 2005 Directors&#8217; Stock Option
      Plan and (v) 45,000 shares of common stock issuable upon exercise of outstanding
      non-plan employee options.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">In
      addition, the Prospectus filed as part of this Registration Statement has been
      prepared in accordance with the requirements of Form S-3 and may be used for
      reofferings and resales of up to an aggregate of 2,089,484 shares of our common
      stock, consisting of (i) 2,036,984 shares issuable upon exercise of options
      previously granted by us to our officers and directors under our 1996 Incentive
      and Non-Qualified Stock Option Plan, and (ii) 52,500 shares issuable upon
      exercise of options previously granted by us to our directors under our 2005
      Directors&#8217; Stock Option Plan.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>PART
      I </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>Item
      1. Plan Information. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">The
      documents containing the information specified in Item 1 will be sent or given
      to participants in the 1996 Incentive and Non-Qualified Stock Option Plan,
      the
      2005 Equity Compensation Incentive Plan and the 2005 Directors&#8217; Stock Option
      Plan as specified by Rule 428(b)(1) of the Securities Act of 1933, as amended
      (the "Securities Act"). Such documents are not required to be and are not filed
      with the Securities and Exchange Commission (the "SEC") either as part of this
      Registration Statement or as prospectuses or prospectus supplements pursuant
      to
      Rule 424. These documents and the documents incorporated by reference in this
      Registration Statement pursuant to Item 3 of Part II of this Form S-8, taken
      together, constitute a prospectus that meets the requirements of Section 10(a)
      of the Securities Act. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>Item
      2. Registrant Information and Employee Plan Annual Information.
</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Upon
      written or oral request, any of the documents incorporated by reference in
      Item
      3 of Part II of this Registration Statement (which documents are incorporated
      by
      reference in this Section 10(a) Prospectus), other documents required to be
      delivered to eligible employees, non-employee directors and consultants,
      pursuant to Rule 428(b) are available without charge by contacting:
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Gary
      S. Jacob, Ph.D., Chief Executive Officer </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">420
      Lexington Avenue, Suite 1609</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">New
      York, New York 10170</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(212)
      297-0010</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
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        </div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">4</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>Prospectus</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman, serif"><strong>Callisto
      Pharmaceuticals, Inc.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">2,089,484</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Arial Unicode MS, Arial, serif">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">SHARES
      OF COMMON STOCK</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">1996
      Incentive and Non-Qualified Stock Option Plan</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">2005
      Directors&#8217; Stock Option Plan</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">This
      prospectus relates to the sale of up to 2,089,484 shares of common stock
      Callisto Pharmaceuticals, Inc. offered by certain holders of our securities,
      including up to (i) 2,036,984 shares issuable upon exercise of options
      previously granted by us to our officers and directors under our 1996 Incentive
      and Non-Qualified Stock Option Plan, and (ii) 52,500 shares issuable upon
      exercise of options previously granted by us to our directors under our 2005
      Directors&#8217; Stock Option Plan. The shares may be offered by the selling
      stockholders from time to time in regular brokerage transactions, in
      transactions directly with market makers or in certain privately negotiated
      transactions. For additional information on the methods of sale, you should
      refer to the section entitled "Plan of Distribution." We will not receive any
      of
      the proceeds from the sale of the shares by the selling stockholders.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Our
      common stock trades on the American Stock Exchange under the symbol
      "KAL."</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Courier New, monospace">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">On
      December 23, 2005, the closing sale price of the common stock was $1.45 per
      share. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>The
      securities offered hereby are speculative and involve a high degree of risk
      and
      substantial dilution. Only investors who can bear the risk of loss of their
      entire investment should invest. See "Risk Factors" beginning on page
      9.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>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.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">The
      date of this prospectus is December 27, 2005</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
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        </div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">5</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
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        </div>
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    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>TABLE
      OF CONTENTS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div align="left">
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="92%">&#160;</td>
            <td align="left" valign="top" width="8%"><strong><font size="2">Page</font></strong></td>
          </tr>
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            <td align="left" valign="top" width="92%">&#160;</td>
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          <tr>
            <td align="left" valign="top" width="92%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><a href="#prospectussummary">Prospectus
                Summary</a></font></div>
            </td>
            <td align="left" valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">7</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="92%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><a href="#riskfactors">Risk
                Factors</a></font></div>
            </td>
            <td align="left" valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">9</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="92%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><a href="#forwardlooking">Forward-Looking
                Statements </a></font></div>
            </td>
            <td align="left" valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">21</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="92%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><a href="#selling">Selling
                Stockholders</a></font></div>
            </td>
            <td align="left" valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">22</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="92%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><a href="#plan">Plan
                of Distribution</a></font></div>
            </td>
            <td align="left" valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">23</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="92%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><a href="#legal">Legal
                Matters</a></font></div>
            </td>
            <td align="left" valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">23</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="92%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><a href="#experts">Experts</a></font></div>
            </td>
            <td align="left" valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">23</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="92%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><a href="#incorporation">Incorporation
                of Certain Documents by
                Reference</a></font></div>
            </td>
            <td align="left" valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">24</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="92%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><a href="#disclosure">Disclosure
                of Commission Position on Indemnification
                For Securities Act Liabilities</a></font></div>
            </td>
            <td align="left" valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">24</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="92%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><a href="#additional">Additional
                Information Available to
                You</a></font></div>
            </td>
            <td align="left" valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">25</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">NO
      PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
      REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN CONNECTION
      WITH THE OFFERING MADE HEREBY, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
      REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
      OR ANY OTHER PERSON. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
      HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS
      BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS
      PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER
      TO
      BUY ANY SECURITIES OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH
      OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH
      OFFER
      OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS
      UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">6</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong><a name="prospectussummary">PROSPECTUS
      SUMMARY</a></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>Overview</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">We
      are a biopharmaceutical company focused on the development of drugs to treat
      relapsed (re-occurrence of active disease) acute leukemia, multiple myeloma
      (an
      incurable blood cancer that invades and proliferates in bone marrow), other
      cancers and osteolytic bone disease (bone disease caused by white blood cells).
      Our lead drug candidate, L-Annamycin, a drug from the anthracycline family
      (chemotherapy drugs which are derived from antibiotics), earlier completed
      an
      initial Phase I/IIa clinical trial in relapsed or refractory leukemia patients
      with a prior sponsor. L-Annamycin, originally developed by scientists at The
      University of Texas M.D. Anderson Cancer Center to address the clinical
      limitations associated with anthracycline drugs such as Adriamycin (doxorubicin)
      to treat cancer, began a clinical trial at The University of Texas M.D. Anderson
      Cancer Center in adult relapsed acute lymphocytic leukemia (ALL) patients on
      December 1, 2005. This single-arm, open label trial will enroll 12 patients
      in a
      dose escalation Phase I portion, followed by 10 patients in a final fixed dose
      in the Phase II portion. We plan to treat up to 34 patients. We also expect
      to
      commence two additional trials of L-Annamycin in 2006, a single agent trial
      in
      pediatric relapsed ALL patients and a combination therapy trial with Ara-C
      (cytosine arabinoside) in relapsed acute myeloid leukemia (AML) patients.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Our
      second drug candidate, Atiprimod, is an orally administered drug with
      antiproliferative and antiangiogenic activity. Atiprimod commenced a Phase
      I/IIa
      clinical trial in relapsed multiple myeloma patients on May 26, 2004. These
      are
      patients that have a re-occurrence of active disease, and no longer respond
      to
      approved therapies. The Phase I/IIa clinical trial is being performed at four
      sites, The University of Texas M.D. Anderson Cancer Center (Houston, TX), the
      Dana-Farber Cancer Institute (Boston, MA), the St. Vincent's Comprehensive
      Cancer Center (New York, NY) and the Roswell Park Cancer Institute (Buffalo,
      NY). In Dcember 2005, we announced an update on interim results from this trial
      performed in relapsed or refractory multiple myeloma patients which consisted
      of
      15 patients treated with Atiprimod, including 3 patients at the highest dose
      level of 180 mg/day. Two patients exhibited stable disease, with one patient
      having a 34% decrease in M protein (measure of tumor burden) over 3 months
      of
      treatment. It was also noted that two patients reported a subjective decrease
      in
      bone pain. We plan to continue this trial at higher dose levels until the
      maximum tolerated dose is reached and then treat 10 additional patients at
      that
      level.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">On
      March 15, 2005 we announced a second Phase I/IIa clinical trial of Atiprimod
      in
      advanced cancer patients. The new trial is entitled: "An Open Label Study of
      the
      Safety and Efficacy of Atiprimod Treatment for Patients with Advanced Cancer".
      The trial is currently being conducted at the University of Texas M.D. Anderson
      Cancer Center.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>History
      </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">In
      March 2002, Callisto Pharmaceuticals, Inc. ("Old Callisto") purchased 99.7%
      of
      the outstanding common shares of Webtronics, Inc., ("Webtronics") a public
      company for $400,000. Webtronics was incorporated in Florida on February 2,
      2001
      and had limited operations at December 31, 2002. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">On
      April 30, 2003, pursuant to an Agreement and Plan of Merger dated March 10,
      2003, as amended April 4, 2003, Synergy Acquisition Corp., a wholly-owned
      subsidiary of Webtronics merged into Synergy Pharmaceuticals Inc. ("Synergy")
      and Callisto Acquisition Corp., a wholly-owned subsidiary of Webtronics merged
      into Old Callisto (collectively, the "Merger"). As a result of the Merger,
      Old
      Callisto and Synergy became wholly-owned subsidiaries of Webtronics. In the
      Merger Webtronics issued 17,318,994 shares of its common stock in exchange
      for
      outstanding Old Callisto common stock and an additional 4,395,684 shares in
      exchange for outstanding Synergy common stock. Old Callisto changed its name
      to
      Callisto Research Labs, LLC ("Callisto Research") and Webtronics changed its
      name to Callisto Pharmaceuticals, Inc. and changed its state of incorporation
      from Florida to Delaware. Subsequently, 171,818 shares of common stock issued
      to
      former Synergy shareholders were returned to us under the terms of certain
      indemnification agreements.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Our
      principal executive office is located at 420 Lexington Avenue, Suite 1609,
      New
      York, New York 10170. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">7</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>This
      Offering</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div align="left">
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr bgcolor="#e2eef6">
            <td align="justify" valign="bottom" width="48%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Shares
                of common stock outstanding prior to this offering</font></div>
            </td>
            <td width="4%">&#160;</td>
            <td align="justify" valign="bottom" width="48%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">33,233,096
                (1)</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="justify" valign="top" width="48%">&#160;</td>
            <td width="4%">&#160;</td>
            <td align="justify" valign="top" width="48%">&#160;</td>
          </tr>
          <tr bgcolor="#e2eef6">
            <td align="justify" valign="bottom" width="48%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Shares
                    of common stock issuable upon exercise of outstanding options
                    which may be
                    offered pursuant to this prospectus</font></div>
                </div>
              </div>
            </td>
            <td width="4%">&#160;</td>
            <td align="justify" valign="bottom" width="48%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">2,089,484</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="justify" valign="top" width="48%">&#160;</td>
            <td width="4%">&#160;</td>
            <td align="justify" valign="top" width="48%">&#160;</td>
          </tr>
          <tr bgcolor="#e2eef6">
            <td align="justify" valign="top" width="48%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Use
                of proceeds</font></div>
            </td>
            <td width="4%">&#160;</td>
            <td align="justify" valign="top" width="48%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">We
                will not receive any proceeds from the sale of the shares of common
                stock
                offered in this prospectus. We will receive proceeds to the extent
                that
                currently outstanding options are exercised for cash. We will use
                the
                exercise proceeds, if any, for working capital and general corporate
                purposes.</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="top" width="48%">&#160;</td>
            <td width="4%">&#160;</td>
            <td valign="top" width="48%">&#160;</td>
          </tr>
          <tr bgcolor="#e2eef6">
            <td align="justify" valign="top" width="48%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Risk
                Factors</font></div>
            </td>
            <td width="4%">&#160;</td>
            <td align="justify" valign="top" width="48%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">The
                purchase of our common stock involves a high degree of <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">risk.
                You should carefully review and consider "Risk Factors" beginning
                on page
                9.</font></font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="justify" valign="top" width="48%">&#160;</td>
            <td width="4%">&#160;</td>
            <td align="justify" valign="top" width="48%">&#160;</td>
          </tr>
          <tr bgcolor="#e2eef6">
            <td align="justify" valign="top" width="48%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">American
                Stock Exchange Symbol</font></div>
            </td>
            <td width="4%">&#160;</td>
            <td align="justify" valign="top" width="48%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">KAL</font></div>
            </td>
          </tr>

      </table>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(1)
      As of December 23, 2005. Does not include shares of common stock issuable upon
      exercise of outstanding options or warrants.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">8</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong><a name="riskfactors">RISK
      FACTORS</a></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Investment
      in our common stock involves a high degree of risk. You should consider the
      following discussion of risks as well as other information in this prospectus.
      The risks and uncertainties described below are not the only ones. If any of
      the
      following risks actually occur, our business could be harmed. In such case,
      the
      trading price of our common stock could decline.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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      RELATED TO OUR BUSINESS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>WE
      ARE AT AN EARLY STAGE OF DEVELOPMENT AS A COMPANY, CURRENTLY HAVE NO SOURCE
      OF
      REVENUE AND MAY NEVER BECOME PROFITABLE. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">We
      are a development stage biopharmaceutical company. Currently, we have no
      products approved for commercial sale and, to date, we have not generated any
      revenue. Our ability to generate revenue depends heavily on: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
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            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">demonstration
                in Phase I/IIa and Phase IIb clinical trials that our two product
                candidates, Atiprimod for the treatment of relapsed multiple myeloma
                and
                L-Annamycin for the treatment of relapsed acute leukemia, respectively,
                are safe and effective;</font></div>
            </td>
          </tr>

      </table>
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    <div>
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          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
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            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">the
                successful development of our other product
                candidates;</font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
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                ability to seek and obtain regulatory approvals, including with respect
                to
                the indications we are seeking;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
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          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">the
                successful commercialization of our product candidates;
                and</font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">market
                acceptance of our products.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">All
      of our existing product candidates will require extensive additional clinical
      evaluation, regulatory review, significant marketing efforts and substantial
      investment before they could provide us with any revenue. For example, Atiprimod
      for the treatment of multiple myeloma entered Phase I/IIa clinical trials in
      May
      2004 and L-Annamycin for the treatment of acute leukemia entered clinical trials
      in December 2005. Our other product candidates are in preclinical development.
      As a result, if we do not successfully develop and commercialize Atiprimod
      or
      L-Annamycin, we will be unable to generate any revenue for many years, if at
      all. We do not anticipate that we will generate revenue for several years,
      at
      the earliest, or that we will achieve profitability for at least several years
      after generating material revenue, if at all. If we are unable to generate
      revenue, we will not become profitable, and we may be unable to continue our
      operations.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>WE
      HAVE INCURRED SIGNIFICANT LOSSES SINCE INCEPTION AND ANTICIPATE THAT WE WILL
      INCUR CONTINUED LOSSES FOR THE FORESEEABLE FUTURE. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">As
      of September 30, 2005 and December 31, 2004, we had an accumulated deficit
      of
      $</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">41,886,574
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">and
      $33,361,197, respectively. We have incurred losses in each year since our
      inception in 1996. We incurred a net loss of $</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">8,525,377
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">for
      the nine months ended September 30, 2005 and $7,543,467 and $13,106,247 for
      the
      years ended December 31, 2004 and 2003, respectively. These losses, among other
      things, have had and will continue to have an adverse effect on our
      stockholders' equity and working capital. We expect to incur significant and
      increasing operating losses for the next several years as we expand our research
      and development, continue our clinical trials of Atiprimod for the treatment
      of
      multiple myeloma, initiate our clinical trials of L-Annamycin for the treatment
      of acute leukemias, acquire or license technologies, advance our other product
      candidates into clinical development, seek regulatory approval and, if we
      receive FDA approval, commercialize our products. Because of the numerous risks
      and uncertainties associated with our product development efforts, we are unable
      to predict the extent of any future losses or when we will become profitable,
      if
      at all. If we are unable to achieve and then maintain profitability, the market
      value of our common stock will likely decline. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>WE
      WILL NEED TO RAISE SUBSTANTIAL ADDITIONAL CAPITAL TO FUND OUR OPERATIONS, AND
      OUR FAILURE TO OBTAIN FUNDING WHEN NEEDED MAY FORCE US TO DELAY, REDUCE OR
      ELIMINATE OUR PRODUCT DEVELOPMENT PROGRAMS OR COLLABORATION EFFORTS.
</strong></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Our
      operations have consumed substantial amounts of cash since inception. We expect
      to continue to spend substantial amounts to: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        <div id="GLFTR" style="WIDTH: 100%" align="left">
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">9</font></div>
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      <div>&#160;</div>
    </div>
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            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">complete
                the clinical development of our two lead product candidates, Atiprimod
                for
                the treatment of multiple myeloma and L-Annamycin for the treatment
                of
                acute leukemia;</font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">continue
                the development of our other product
                candidates;</font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">finance
                our general and administrative
                expenses;</font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">prepare
                regulatory approval applications and seek approvals for Atiprimod
                and
                L-Annamycin and our other product
                candidates;</font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">license
                or acquire additional technologies;</font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">launch
                and commercialize our product candidates, if any such product candidates
                receive regulatory approval; and</font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">develop
                and implement sales, marketing and distribution
                capabilities.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">In
      2004, our cash used in operations increased significantly over 2003 and we
      expect that our cash used in operations will increase significantly for the
      next
      several years. For the nine months ended September 30, 2005, we have spent
      approximately $6.5 million or approximately $722,000 per month. As of September
      30, 2005, we had $3,541,265 in cash and cash equivalents. We will be required
      to
      raise additional capital within the next twelve months to complete the
      development and commercialization of our current product candidates and to
      continue to fund operations at the current cash expenditure levels. Our future
      funding requirements will depend on many factors, including, but not limited
      to:
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">the
                rate of progress and cost of our clinical trials and other development
                activities;</font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">any
                future decisions we may make about the scope and prioritization of
                the
                programs we pursue;</font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">the
                costs of filing, prosecuting, defending and enforcing any patent
                claims
                and other intellectual property
                rights;</font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">the
                costs and timing of regulatory
                approval;</font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">the
                costs of establishing sales, marketing and distribution
                capabilities;</font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">the
                effect of competing technological and market
                developments;</font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">the
                terms and timing of any collaborative, licensing and other arrangements
                that we may establish; and</font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">general
                market conditions for offerings from biopharmaceutical
                companies.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">To
      date, our sources of cash have been primarily limited to the sale of our equity
      securities. We cannot be certain that additional funding will be available
      on
      acceptable terms, or at all. To the extent that we raise additional funds by
      issuing equity securities, our stockholders may experience significant dilution.
      Any debt financing, if available, may involve restrictive covenants that impact
      our ability to conduct our business. If we are unable to raise additional
      capital when required or on acceptable terms, we may have to significantly
      delay, scale back or discontinue the development and/or commercialization of
      one
      or more of our product candidates. We also may be required to:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">seek
                collaborators for our product candidates at an earlier stage than
                otherwise would be desirable and on terms that are less favorable
                than
                might otherwise be available; and</font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">relinquish,
                license or otherwise dispose of rights to technologies, product candidates
                or products that we would otherwise seek to develop or commercialize
                ourselves on unfavorable terms.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>IF
      OUR AGREEMENTS WITH ANORMED INC. OR THE UNIVERSITY OF TEXAS M.D. ANDERSON CANCER
      CENTER TERMINATE, OUR BUSINESS WOULD BE ADVERSELY AFFECTED.
</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Our
      business is dependent on rights we have licensed from AnorMED Inc. and The
      University of Texas M.D. Anderson Cancer Center. Under the terms of the AnorMED
      license agreement, we are obligated to make a maintenance fee payment of
      $200,000 on January 1 of each year for the term of the license agreement.
      Pursuant to the license agreement, failure to pay the maintenance fee is a
      material breach of the agreement. We do not anticipate failing to pay the
      maintenance fee, however in the event we cannot pay the maintenance fee, AnorMED
      may terminate the license agreement and we would not be able to further develop
      and commercialize Atiprimod which would have an adverse effect on our business.
      Under the terms of The University of Texas M.D. Anderson Cancer Center license
      agreement, we are required to make certain good faith expenditures towards
      the
      clinical development of at least one licensed product within the two year period
      after March 2005. In addition, at any time after 5 years from August 12, 2004,
      The University of Texas M.D. Anderson Cancer Center has the right to terminate
      the license if we</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">10</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">fail
      to provide evidence within 90 days of written notice that we have commercialized
      or we are actively and effectively attempting to commercialize L-Annamycin.
      If
      we fail to fulfill these obligations or other material obligations, The
      University of Texas M.D. Anderson Cancer Center license agreement may be
      terminated and our business would be adversely affected. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>CLINICAL
      TRIALS INVOLVE A LENGTHY AND EXPENSIVE PROCESS WITH AN UNCERTAIN OUTCOME, AND
      RESULTS OF EARLIER STUDIES AND TRIALS MAY NOT BE PREDICTIVE OF FUTURE TRIAL
      RESULTS. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">In
      order to receive regulatory approval for the commercialization of our product
      candidates, we must conduct, at our own expense, extensive clinical trials
      to
      demonstrate safety and efficacy of these product candidates. Clinical testing
      is
      expensive, can take many years to complete and its outcome is uncertain. Failure
      can occur at any time during the clinical trial process. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">The
      results of preclinical studies and early clinical trials of our product
      candidates do not necessarily predict the results of later-stage clinical
      trials. Product candidates in later stages of clinical trials may fail to show
      the desired safety and efficacy traits despite having progressed through initial
      clinical testing. The data collected from clinical trials of our product
      candidates may not be sufficient to support the submission of a new drug
      application or to obtain regulatory approval in the United States or elsewhere.
      Because of the uncertainties associated with drug development and regulatory
      approval, we cannot determine if or when we will have an approved product for
      commercialization or achieve sales or profits. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>DELAYS
      IN CLINICAL TESTING COULD RESULT IN INCREASED COSTS TO US AND DELAY OUR ABILITY
      TO GENERATE REVENUE. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">While
      to date there has been no delays in our clinical trials, enrollment in our
      Atiprimod Phase I/IIa trial in multiple myeloma was slower than anticipated
      due
      to limited availability of relapsed multiple myeloma patients. In the future,
      we
      may experience delays in clinical testing of our product candidates. We do
      not
      know whether planned clinical trials will begin on time, will need to be
      redesigned or will be completed on schedule, if at all. Clinical trials can
      be
      delayed for a variety of reasons, including delays in obtaining regulatory
      approval to commence a trial, in reaching agreement on acceptable clinical
      trial
      terms with prospective sites, in obtaining institutional review board approval
      to conduct a trial at a prospective site, in recruiting patients to participate
      in a trial or in obtaining sufficient supplies of clinical trial materials.
      Many
      factors affect patient enrollment, including the size of the patient population,
      the proximity of patients to clinical sites, the eligibility criteria for the
      trial, competing clinical trials and new drugs approved for the conditions
      we
      are investigating. Prescribing physicians will also have to decide to use our
      product candidates over existing drugs that have established safety and efficacy
      profiles. Any delays in completing our clinical trials will increase our costs,
      slow down our product development and approval process and delay our ability
      to
      generate revenue. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>WE
      MAY BE REQUIRED TO SUSPEND OR DISCONTINUE CLINICAL TRIALS DUE TO UNEXPECTED
      SIDE
      EFFECTS OR OTHER SAFETY RISKS THAT COULD PRECLUDE APPROVAL OF OUR PRODUCT
      CANDIDATES. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Our
      clinical trials may be suspended at any time for a number of reasons. For
      example, we may voluntarily suspend or terminate our clinical trials if at
      any
      time we believe that they present an unacceptable risk to the clinical trial
      patients. In addition, regulatory agencies may order the temporary or permanent
      discontinuation of our clinical trials at any time if they believe that the
      clinical trials are not being conducted in accordance with applicable regulatory
      requirements or that they present an unacceptable safety risk to the clinical
      trial patients. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Administering
      any product candidates to humans may produce undesirable side effects. These
      side effects could interrupt, delay or halt clinical trials of our product
      candidates and could result in the FDA or other regulatory authorities denying
      further development or approval of our product candidates for any or all
      targeted indications. Ultimately, some or all of our product candidates may
      prove to be unsafe for human use. Moreover, we could be subject to significant
      liability if any volunteer or patient suffers, or appears to suffer, adverse
      health effects as a result of participating in our clinical trials.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">11</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>IF
      WE ARE UNABLE TO SATISFY REGULATORY REQUIREMENTS, WE MAY NOT BE ABLE TO
      COMMERCIALIZE OUR PRODUCT CANDIDATES. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">We
      need FDA approval prior to marketing our product candidates in the United States
      of America. We commenced in May 2004 a Phase I/IIa trial of Atiprimod for the
      treatment of multiple myeloma. In addition, we commenced a Phase I/IIa clinical
      trial of L-Annamycin for the treatment of acute lymphocytic leukemia in December
      2005. If we fail to obtain FDA approval to market our product candidates, we
      will be unable to sell our product candidates in the United States of America
      and we will not generate any revenue. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">This
      regulatory review and approval process, which includes evaluation of preclinical
      studies and clinical trials of a product candidate as well as the evaluation
      of
      our manufacturing process and our contract manufacturers' facilities, is
      lengthy, expensive and uncertain. To receive approval, we must, among other
      things, demonstrate with substantial evidence from well-controlled clinical
      trials that the product candidate is both safe and effective for each indication
      where approval is sought. Satisfaction of these requirements typically takes
      several years and the time needed to satisfy them may vary substantially, based
      on the type, complexity and novelty of the pharmaceutical product. We cannot
      predict if or when we might submit for regulatory review any of our product
      candidates currently under development. Any approvals we may obtain may not
      cover all of the clinical indications for which we are seeking approval. Also,
      an approval might contain significant limitations in the form of narrow
      indications, warnings, precautions, or contra-indications with respect to
      conditions of use. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">The
      FDA has substantial discretion in the approval process and may either refuse
      to
      file our application for substantive review or may form the opinion after review
      of our data that our application is insufficient to allow approval of our
      product candidates. If the FDA does not file or approve our application, it
      may
      require that we conduct additional clinical, preclinical or manufacturing
      validation studies and submit that data before it will reconsider our
      application. Depending on the extent of these or any other studies, approval
      of
      any applications that we submit may be delayed by several years, or may require
      us to expend more resources than we have available. It is also possible that
      additional studies, if performed and completed, may not be considered sufficient
      by the FDA to make our applications approvable. If any of these outcomes occur,
      we may be forced to abandon our applications for approval, which might cause
      us
      to cease operations. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">We
      will also be subject to a wide variety of foreign regulations governing the
      development, manufacture and marketing of our products. Whether or not FDA
      approval has been obtained, approval of a product by the comparable regulatory
      authorities of foreign countries must still be obtained prior to manufacturing
      or marketing the product in those countries. The approval process varies from
      country to country and the time needed to secure approval may be longer or
      shorter than that required for FDA approval. We cannot assure you that clinical
      trials conducted in one country will be accepted by other countries or that
      approval in one country will result in approval in any other country.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>IF
      OUR PRODUCT CANDIDATES ARE UNABLE TO COMPETE EFFECTIVELY WITH MARKETED CANCER
      DRUGS TARGETING SIMILAR INDICATIONS AS OUR PRODUCT CANDIDATES, OUR COMMERCIAL
      OPPORTUNITY WILL BE REDUCED OR ELIMINATED. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">We
      face competition from established pharmaceutical and biotechnology companies,
      as
      well as from academic institutions, government agencies and private and public
      research institutions. Many of our competitors have significantly greater
      financial resources and expertise in research and development, manufacturing,
      preclinical testing, conducting clinical trials, obtaining regulatory approvals
      and marketing approved products than we do. Smaller or early-stage companies
      may
      also prove to be significant competitors, particularly through collaborative
      arrangements with large, established companies. Our commercial opportunity
      will
      be reduced or eliminated if our competitors develop and commercialize cancer
      drugs that are safer, more effective, have fewer side effects or are less
      expensive than our product candidates. These third parties compete with us
      in
      recruiting and retaining qualified scientific and management personnel,
      establishing clinical trial sites and patient registration for clinical trials,
      as well as in acquiring technologies and technology licenses complementary
      to
      our programs or advantageous to our business. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">We
      expect that our ability to compete effectively will depend upon our ability
      to:
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">12</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
      <div>&#160;</div>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">successfully
                and rapidly complete clinical trials and submit for and obtain all
                requisite regulatory approvals in a cost-effective
                manner;</font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">maintain
                a proprietary position for our products and manufacturing processes
                and
                other related product technology;</font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">attract
                and retain key personnel;</font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">develop
                relationships with physicians prescribing these products;
                and</font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">build
                an adequate sales and marketing infrastructure for our product
                candidates.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Because
      we will be competing against significantly larger companies with established
      track records, we will have to demonstrate to physicians that, based on
      experience, clinical data, side-effect profiles and other factors, our products
      are preferable to existing cancer drugs. If we are unable to compete effectively
      in the cancer drug market and differentiate our products from currently marketed
      cancer drugs, we may never generate meaningful revenue. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Numerous
      pharmaceutical and biotechnology companies have developed anthracycline drugs
      used to treat acute leukemias similar to our compound, L-Annamycin. These
      compounds include Adriamycin&#174; and Ellence&#174; which are marketed by Pfizer and
      Cerubidine&#174; which is marketed by Boehringer Ingelheim. These drugs have been
      approved by the FDA and are currently being marketed as opposed to L-Annamycin
      which is in clinical development. Atiprimod, our drug candidate for relapsed
      multiple myeloma, works through a different mechanism of action than Velcade
      which is currently marketed by Millenium Pharmaceuticals and other drugs in
      development, such as Celgene Corporation&#8217;s Revlimid. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>WE
      CURRENTLY HAVE NO SALES AND MARKETING ORGANIZATION. IF WE ARE UNABLE TO
      ESTABLISH A DIRECT SALES FORCE IN THE UNITED STATES TO PROMOTE OUR PRODUCTS,
      THE
      COMMERCIAL OPPORTUNITY FOR OUR PRODUCTS MAY BE DIMINISHED.
</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">We
      currently have no sales and marketing organization. If any of our product
      candidates are approved by the FDA, we intend to market that product directly
      to
      hospitals in the United States of America through our own sales force. We will
      incur significant additional expenses and commit significant additional
      management resources to establish this sales force. We may not be able to
      establish these capabilities despite these additional expenditures. We will
      also
      have to compete with other pharmaceutical and biotechnology companies to
      recruit, hire and train sales and marketing personnel. If we elect to rely
      on
      third parties to sell our product candidates in the United States, we may
      receive less revenue than if we sold our products directly. In addition, we
      may
      have little or no control over the sales efforts of those third parties. In
      the
      event we are unable to develop our own sales force or collaborate with a third
      party to sell our product candidates, we may not be able to commercialize our
      product candidates which would negatively impact our ability to generate
      revenue. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>WE
      MAY NEED OTHERS TO MARKET AND COMMERCIALIZE OUR PRODUCT CANDIDATES IN
      INTERNATIONAL MARKETS. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">In
      the future, if appropriate regulatory approvals are obtained, we intend to
      commercialize our product candidates in international markets. However, we
      have
      not decided how to commercialize our product candidates in those markets. We
      may
      decide to build our own sales force or sell our products through third parties.
      Currently, we do not have any plans to enter international markets. If we decide
      to sell our product candidates in international markets through a third party,
      we may not be able to enter into any marketing arrangements on favorable terms
      or at all. In addition, these arrangements could result in lower levels of
      income to us than if we marketed our product candidates entirely on our own.
      If
      we are unable to enter into a marketing arrangement for our product candidates
      in international markets, we may not be able to develop an effective
      international sales force to successfully commercialize those products in
      international markets. If we fail to enter into marketing arrangements for
      our
      products and are unable to develop an effective international sales force,
      our
      ability to generate revenue would be limited. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>IF
      OUR RELATIONSHIP WITH OUR CONTRACT MANUFACTURER FOR L-ANNAMYCIN TERMINATES,
      OR
      THEIR FACILITIES ARE DAMAGED OR DESTROYED, WE MAY BE UNABLE TO DEVELOP OR
      COMMERCIALIZE L-ANNAMYCIN. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Currently,
      Antibioticos S.p.A. is our sole supplier of Annamycin (drug substance that
      is
      the active component of the final formulated L-Annamycin drug product). If
      our
      relationship with this contract</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">13</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">manufacturer,
      or any other contract manufacturer we might use, terminates or if any of their
      facilities are damaged for any reason, including fire, flood, earthquake or
      other similar event, we may be unable to obtain supply of Annamycin. If any
      of
      these events were to occur, we may need to find alternative manufacturers or
      manufacturing facilities. The number of contract manufacturers with the
      expertise, required regulatory approvals and facilities to manufacture Annamycin
      on a commercial scale is extremely limited, and it would take a significant
      amount of time to arrange for alternative manufacturers. If we need to change
      to
      other commercial manufacturers, the FDA and comparable foreign regulators must
      approve these manufacturers&#8217; facilities and processes prior to our use, which
      would require new testing and compliance inspections. In addition, we may not
      have the intellectual property rights, or may have to share intellectual
      property rights, to any improvements in the current manufacturing processes
      or
      any new manufacturing processes for Annamycin. Any of these factors could cause
      us to delay or suspend clinical trials, regulatory submissions, required
      approvals or commercialization of L-Annamycin, entail higher costs, and could
      result in our being unable to commercialize L-Annamycin successfully.
      Furthermore, if our contract manufacturers fail to deliver the required
      commercial quantities of bulk drug substance or finished product on a timely
      basis and at commercially reasonable prices, and we were unable to find one
      or
      more replacement manufacturers capable of production at a substantially
      equivalent cost, in substantially equivalent volumes and quality, and on a
      timely basis, we would likely be unable to meet demand for L-Annamycin and
      we
      would lose potential revenue. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>IF
      THE FDA DOES NOT APPROVE OUR CONTRACT MANUFACTURERS' FACILITIES, WE MAY BE
      UNABLE TO DEVELOP OR COMMERCIALIZE OUR PRODUCT CANDIDATES.
</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">We
      rely on third-party contract manufacturers to manufacture our product
      candidates, and currently have no plans to develop our own manufacturing
      facility. The facilities used by our contract manufacturers to manufacture
      our
      product candidates must be approved by the FDA. If the FDA does not approve
      these facilities for the manufacture of our product, we may need to fund
      additional modifications to our manufacturing process, conduct additional
      validation studies, or find alternative manufacturing facilities, any of which
      would result in significant cost to us as well as a delay of up to several
      years
      in obtaining approval for and manufacturing of our product candidates. In
      addition, our contract manufacturers will be subject to ongoing periodic
      unannounced inspection by the FDA and corresponding state agencies for
      compliance with good manufacturing practices regulations, or cGMPs, and similar
      foreign standards. These regulations cover all aspects of the manufacturing,
      testing, quality control and record keeping relating to our product candidates.
      We do not have control over our contract manufacturers' compliance with these
      regulations and standards. Failure by our contract manufacturers to comply
      with
      applicable regulations could result in sanctions being imposed on us, including
      fines, injunctions, civil penalties, failure of the government to grant market
      approval of drugs, delays, suspension or withdrawals of approvals, operating
      restrictions and criminal prosecutions, any of which could significantly and
      adversely affect our business. In addition, we have no control over our contract
      manufacturers' ability to maintain adequate quality control, quality assurance
      and qualified personnel. Failure by our contract manufacturers to comply with
      or
      maintain any of these standards could adversely affect the development of our
      product candidates and our business. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>IF
      PRODUCT LIABILITY LAWSUITS ARE SUCCESSFULLY BROUGHT AGAINST US, WE MAY INCUR
      SUBSTANTIAL LIABILITIES AND MAY BE REQUIRED TO LIMIT COMMERCIALIZATION OF OUR
      PRODUCT CANDIDATES. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">We
      face an inherent risk of product liability lawsuits related to the testing
      of
      our product candidates, and will face an even greater risk if we sell our
      product candidates commercially. Currently, we are not aware of any anticipated
      product liability claims with respect to our product candidates. In the future,
      an individual may bring a liability claim against us if one of our product
      candidates causes, or merely appears to have caused, an injury. If we cannot
      successfully defend ourselves against the product liability claim, we may incur
      substantial liabilities. Regardless of merit or eventual outcome, liability
      claims may result in: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">decreased
                demand for our product candidates;</font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">injury
                to our reputation;</font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">withdrawal
                of clinical trial participants;</font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">costs
                of related litigation;</font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">substantial
                monetary awards to patients;</font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">product
                recalls;</font></div>
            </td>
          </tr>

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    </div>
    <div>
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          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">loss
                of revenue; and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
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          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">the
                inability to commercialize our product
                candidates.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
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      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">14</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">We
      have "clinical trial" liability insurance with a $3,000,000 annual aggregate
      limit for up to 40 patients participating in our Atiprimod and L-Annamycin
      clinical trials. We intend to expand our insurance coverage to include the
      sale
      of commercial products if marketing approval is obtained for our product
      candidates. Our current insurance coverage may prove insufficient to cover
      any
      liability claims brought against us. In addition, because of the increasing
      costs of insurance coverage, we may not be able to maintain insurance coverage
      at a reasonable cost or obtain insurance coverage that will be adequate to
      satisfy any liability that may arise. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>EVEN
      IF WE RECEIVE REGULATORY APPROVAL FOR OUR PRODUCT CANDIDATES, WE WILL BE SUBJECT
      TO ONGOING SIGNIFICANT REGULATORY OBLIGATIONS AND OVERSIGHT.
</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">If
      we receive regulatory approval to sell our product candidates, the FDA and
      foreign regulatory authorities may, nevertheless, impose significant
      restrictions on the indicated uses or marketing of such products, or impose
      ongoing requirements for post-approval studies. Following any regulatory
      approval of our product candidates, we will be subject to continuing regulatory
      obligations, such as safety reporting requirements, and additional
      post-marketing obligations, including regulatory oversight of the promotion
      and
      marketing of our products. If we become aware of previously unknown problems
      with any of our product candidates here or overseas or our contract
      manufacturers' facilities, a regulatory agency may impose restrictions on our
      products, our contract manufacturers or on us, including requiring us to
      reformulate our products, conduct additional clinical trials, make changes
      in
      the labeling of our products, implement changes to or obtain re-approvals of
      our
      contract manufacturers' facilities or withdraw the product from the market.
      In
      addition, we may experience a significant drop in the sales of the affected
      products, our reputation in the marketplace may suffer and we may become the
      target of lawsuits, including class action suits. Moreover, if we fail to comply
      with applicable regulatory requirements, we may be subject to fines, suspension
      or withdrawal of regulatory approvals, product recalls, seizure of products,
      operating restrictions and criminal prosecution. Any of these events could
      harm
      or prevent sales of the affected products or could substantially increase the
      costs and expenses of commercializing and marketing these products.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>WE
      RELY ON THIRD PARTIES TO CONDUCT OUR CLINICAL TRIALS. IF THESE THIRD PARTIES
      DO
      NOT SUCCESSFULLY CARRY OUT THEIR CONTRACTUAL DUTIES OR MEET EXPECTED DEADLINES,
      WE MAY NOT BE ABLE TO SEEK OR OBTAIN REGULATORY APPROVAL FOR OR COMMERCIALIZE
      OUR PRODUCT CANDIDATES. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">We
      have agreements with third-party contract research organizations, or CROs,
      to
      provide monitors and to manage data for our clinical programs. We and our CROs
      are required to comply with current Good Clinical Practices, or GCPs,
      regulations and guidelines enforced by the FDA for all of our products in
      clinical development. The FDA enforces GCPs through periodic inspections of
      trial sponsors, principal investigators and trial sites. In the future, if
      we or
      our CROs fail to comply with applicable GCPs, the clinical data generated in
      our
      clinical trials may be deemed unreliable and the FDA may require us to perform
      additional clinical trials before approving our marketing applications. We
      cannot assure you that, upon inspection, the FDA will determine that any of
      our
      clinical trials for products in clinical development comply with GCPs. In
      addition, our clinical trials must be conducted with product produced under
      cGMP
      regulations, and will require a large number of test subjects. Our failure
      to
      comply with these regulations may require us to repeat clinical trials, which
      would delay the regulatory approval process. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">If
      any of our relationships with these third-party CROs terminate, we may not
      be
      able to enter into arrangements with alternative CROs. If CROs do not
      successfully carry out their contractual duties or obligations or meet expected
      deadlines, if they need to be replaced, or if the quality or accuracy of the
      clinical data they obtain is compromised due to the failure to adhere to our
      clinical protocols, regulatory requirements or for other reasons, our clinical
      trials may be extended, delayed or terminated, and we may not be able to obtain
      regulatory approval for or successfully commercialize our product candidates.
      As
      a result, our financial results and the commercial prospects for our product
      candidates would be harmed, our costs could increase, and our ability to
      generate revenue could be delayed. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">15</font></div>
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        </div>
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      <div id="HDR">
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        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>IF
      WE FAIL TO ATTRACT AND KEEP SENIOR MANAGEMENT AND KEY SCIENTIFIC PERSONNEL,
      WE
      MAY BE UNABLE TO SUCCESSFULLY DEVELOP OUR PRODUCT CANDIDATES, CONDUCT OUR
      CLINICAL TRIALS AND COMMERCIALIZE OUR PRODUCT CANDIDATES. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Our
      success depends in part on our continued ability to attract, retain and motivate
      highly qualified management, clinical and scientific personnel and on our
      ability to develop and maintain important relationships with leading academic
      institutions, clinicians and scientists. We are highly dependent upon our senior
      management and scientific staff, particularly Gary S. Jacob, our Chief Executive
      Officer, Donald Picker, our Executive Vice President, R&amp;D and Pamela Harris,
      our Chief Medical Officer. The loss of services of Drs. Jacob, Picker, Harris
      or
      one or more of our other members of senior management could delay or prevent
      the
      successful completion of our planned clinical trials or the commercialization
      of
      our product candidates. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">The
      competition for qualified personnel in the biotechnology and pharmaceuticals
      field is intense. We will need to hire additional personnel as we expand our
      clinical development and commercial activities. We may not be able to attract
      and retain quality personnel on acceptable terms given the competition for
      such
      personnel among biotechnology, pharmaceutical and other companies. We do not
      carry "key person" insurance covering any members of our senior management.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>IF
      WE FAIL TO ACQUIRE AND DEVELOP OTHER PRODUCTS OR PRODUCT CANDIDATES, WE MAY
      BE
      UNABLE TO GROW OUR BUSINESS. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">To
      date, we have in-licensed or acquired the rights to each of our product
      candidates. As part of our growth strategy, in addition to developing our
      current product candidates, we intend to license or acquire additional products
      and product candidates for development and commercialization. Because we have
      limited internal research capabilities, we are dependent upon pharmaceutical
      and
      biotechnology companies and other researchers to sell or license products to
      us.
      The success of this strategy depends upon our ability to identify, select and
      acquire the right pharmaceutical product candidates and products. We currently
      do not have any intentions to acquire another company. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Any
      product candidate we license or acquire may require additional development
      efforts prior to commercial sale, including extensive clinical testing and
      approval by the FDA and applicable foreign regulatory authorities. All product
      candidates are prone to the risks of failure inherent in pharmaceutical product
      development, including the possibility that the product candidate will not
      be
      shown to be sufficiently safe and effective for approval by regulatory
      authorities. In addition, we cannot assure you that any products that we license
      or acquire that are approved will be manufactured or produced economically,
      successfully commercialized or widely accepted in the marketplace. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Proposing,
      negotiating and implementing an economically viable product acquisition or
      license is a lengthy and complex process. Other companies, including those
      with
      substantially greater financial, marketing and sales resources, may compete
      with
      us for the acquisition or license of product candidates and approved products.
      We may not be able to acquire or license the rights to additional product
      candidates and approved products on terms that we find acceptable, or at all.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>WE
      MAY UNDERTAKE ACQUISITIONS IN THE FUTURE, AND ANY DIFFICULTIES FROM INTEGRATING
      THESE ACQUISITIONS COULD DAMAGE OUR ABILITY TO ATTAIN OR MAINTAIN PROFITABILITY.
      </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">We
      may acquire additional businesses, products or product candidates that
      complement or augment our existing business. Integrating any newly acquired
      business or product could be expensive and time-consuming. We may not be able
      to
      integrate any acquired business or product successfully or operate any acquired
      business profitably. Moreover, we many need to raise additional funds through
      public or private debt or equity financing to make acquisitions, which may
      result in dilution to stockholders and the incurrence of indebtedness that
      may
      include restrictive covenants. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">16</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>WE
      WILL NEED TO INCREASE THE SIZE OF OUR ORGANIZATION, AND WE MAY EXPERIENCE
      DIFFICULTIES IN MANAGING GROWTH. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">We
      are a small company with 10 full-time and 4 part-time employees as of December
      23, 2005. To continue our clinical trials and commercialize our product
      candidates, we will need to expand our employee base for managerial,
      operational, financial and other resources. Future growth will impose
      significant added responsibilities on members of management, including the
      need
      to identify, recruit, maintain and integrate additional employees. Over the
      next
      12 months depending on the progress of our planned clinical trials, we plan
      to
      add approximately four employees who we expect to assist us with our clinical
      programs. Our future financial performance and our ability to commercialize
      our
      product candidates and to compete effectively will depend, in part, on our
      ability to manage any future growth effectively. To that end, we must be able
      to: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">manage
                our development efforts
                effectively;</font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">manage
                our clinical trials effectively;</font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">integrate
                additional management, administrative, manufacturing and sales and
                marketing personnel;</font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">maintain
                sufficient administrative, accounting and management information
                systems
                and controls; and</font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">hire
                and train additional qualified
                personnel.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">We
      may not be able to accomplish these tasks, and our failure to accomplish any
      of
      them could harm our financial results. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>REIMBURSEMENT
      MAY NOT BE AVAILABLE FOR OUR PRODUCT CANDIDATES, WHICH COULD DIMINISH OUR SALES.
      </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Market
      acceptance and sales of our product candidates may depend on reimbursement
      policies and health care reform measures. The levels at which government
      authorities and third-party payors, such as private health insurers and health
      maintenance organizations, reimburse patients for the price they pay for our
      products could affect whether we are able to commercialize these products.
      We
      cannot be sure that reimbursement will be available for any of these products.
      Also, we cannot be sure that reimbursement amounts will not reduce the demand
      for, or the price of, our products. We have not commenced efforts to have our
      product candidates reimbursed by government or third party payors. If
      reimbursement is not available or is available only to limited levels, we may
      not be able to commercialize our products. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">In
      recent years, officials have made numerous proposals to change the health care
      system in the United States. These proposals include measures that would limit
      or prohibit payments for certain medical treatments or subject the pricing
      of
      drugs to government control. In addition, in many foreign countries,
      particularly the countries of the European Union, the pricing of prescription
      drugs is subject to government control. If our products are or become subject
      to
      government regulation that limits or prohibits payment for our products, or
      that
      subject the price of our products to governmental control, we may not be able
      to
      generate revenue, attain profitability or commercialize our products.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">As
      a result of legislative proposals and the trend towards managed health care
      in
      the United States, third-party payers are increasingly attempting to contain
      health care costs by limiting both coverage and the level of reimbursement
      of
      new drugs. They may also refuse to provide any coverage of uses of approved
      products for medical indications other than those for which the FDA has granted
      market approvals. As a result, significant uncertainty exists as to whether
      and
      how much third-party payers will reimburse patients for their use of
      newly-approved drugs, which in turn will put pressure on the pricing of drugs.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>LEGISLATIVE
      OR REGULATORY REFORM OF THE HEALTHCARE SYSTEM MAY AFFECT OUR ABILITY TO SELL
      OUR
      PRODUCTS PROFITABLY. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">In
      both the United States and certain foreign jurisdictions, there have been a
      number of legislative and regulatory proposals to change the healthcare system
      in ways that could impact upon our ability to sell our products profitably.
      In
      recent years, new legislation has been proposed in the United States at the
      federal and state levels that would effect major changes in the healthcare
      system, either nationally or at the state level. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">17</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">These
      proposals have included prescription drug benefit proposals for Medicare
      beneficiaries introduced in Congress. Legislation creating a prescription drug
      benefit and making certain changes in Medicaid reimbursement has recently been
      enacted by Congress and signed by the President. Given this legislation's recent
      enactment, it is still too early to determine its impact on the pharmaceutical
      industry and our business. Further federal and state proposals are likely.
      The
      potential for adoption of these proposals affects or will affect our ability
      to
      raise capital, obtain additional collaborators and market our products. We
      expect to experience pricing pressures in connection with the sale of our
      products due to the trend toward managed health care, the increasing influence
      of health maintenance organizations and additional legislative proposals. Our
      results of operations could be adversely affected by future healthcare reforms.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>RISKS
      RELATED TO OUR INTELLECTUAL PROPERTY</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>IT
      IS DIFFICULT AND COSTLY TO PROTECT OUR PROPRIETARY RIGHTS, AND WE MAY NOT BE
      ABLE TO ENSURE THEIR PROTECTION. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Our
      commercial success will depend in part on obtaining and maintaining patent
      protection and trade secret protection of our product candidates, and the
      methods used to manufacture them, as well as successfully defending these
      patents against third-party challenges. We will only be able to protect our
      product candidates from unauthorized making, using, selling, offering to sell
      or
      importation by third parties to the extent that we have rights under valid
      and
      enforceable patents or trade secrets that cover these activities. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">As
      of December 23, 2005, we own 4 issued United States patents and have licensed
      rights to 8 issued United States patents and 78 issued foreign patents, and
      to 3
      pending United States patent applications and 39 pending foreign patent
      applications. We do not and have not had any control over the filing or
      prosecution of these patents or patent applications. We may file additional
      patent applications and extensions. Our issued United States patents we own
      and
      license primarily are composition of matter and formulation patents related
      to
      Atiprimod and L-Annamycin. Our composition of matter patents for L-Annamycin
      and
      Atiprimod expire in 2008 and 2009, respectively. Our formulation patents for
      L-Annamycin and Atiprimod dimeleate (preferred salt form) expire in 2019 and
      2018, respectively. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">The
      patent positions of pharmaceutical and biotechnology companies can be highly
      uncertain and involve complex legal and factual questions for which important
      legal principles remain unresolved. No consistent policy regarding the breadth
      of claims allowed in biotechnology patents has emerged to date in the United
      States. The biotechnology patent situation outside the United States is even
      more uncertain. Changes in either the patent laws or in interpretations of
      patent laws in the United States and other countries may diminish the value
      of
      our intellectual property. Accordingly, we cannot predict the breadth of claims
      that may be allowed or enforced in our licensed patents or in third-party
      patents. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">The
      degree of future protection for our proprietary rights is uncertain because
      legal means afford only limited protection and may not adequately protect our
      rights or permit us to gain or keep our competitive advantage. For example:
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">others
                may be able to make compounds that are competitive with our product
                candidates but that are not covered by the claims of our licensed
                patents,
                or for which we are not licensed under our license
                agreements;</font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">we
                or our licensors might not have been the first to make the inventions
                covered by our pending patent application or the pending patent
                applications and issued patents of our
                licensors;</font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">we
                or our licensors might not have been the first to file patent applications
                for these inventions;</font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">others
                may independently develop similar or alternative technologies or
                duplicate
                any of our technologies;</font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">it
                is possible that our pending patent application or one or more of
                the
                pending patent applications of our licensors will not result in issued
                patents;</font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">the
                issued patents of our licensors may not provide us with any competitive
                advantages, or may be held invalid or unenforceable as a result of
                legal
                challenges by third parties;</font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">we
                may not develop additional proprietary technologies that are patentable;
                or</font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">the
                patents of others may have an adverse effect on our
                business.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">We
      also may rely on trade secrets to protect our technology, especially where
      we do
      not believe patent protection is appropriate or obtainable. However, trade
      secrets are difficult to protect. While we use</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">18</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">reasonable
      efforts to protect our trade secrets, our employees, consultants, contractors,
      outside scientific collaborators and other advisors may unintentionally or
      willfully disclose our information to competitors. Enforcing a claim that a
      third party illegally obtained and is using our trade secrets is expensive
      and
      time consuming, and the outcome is unpredictable. In addition, courts outside
      the United States are sometimes less willing to protect trade secrets. Moreover,
      our competitors may independently develop equivalent knowledge, methods and
      know-how. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>WE
      MAY INCUR SUBSTANTIAL COSTS AS A RESULT OF LITIGATION OR OTHER PROCEEDINGS
      RELATING TO PATENT AND OTHER INTELLECTUAL PROPERTY RIGHTS AND WE MAY BE UNABLE
      TO PROTECT OUR RIGHTS TO, OR USE, OUR TECHNOLOGY. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">If
      we choose to go to court to stop someone else from using the inventions claimed
      in our licensed patents, that individual or company has the right to ask the
      court to rule that these patents are invalid and/or should not be enforced
      against that third party. These lawsuits are expensive and would consume time
      and other resources even if we were successful in stopping the infringement
      of
      these patents. In addition, there is a risk that the court will decide that
      these patents are not valid and that we do not have the right to stop the other
      party from using the inventions. There is also the risk that, even if the
      validity of these patents is upheld, the court will refuse to stop the other
      party on the ground that such other party's activities do not infringe our
      rights to these patents. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Furthermore,
      a third party may claim that we are using inventions covered by the third
      party's patent rights and may go to court to stop us from engaging in our normal
      operations and activities, including making or selling our product candidates.
      These lawsuits are costly and could affect our results of operations and divert
      the attention of managerial and technical personnel. There is a risk that a
      court would decide that we are infringing the third party's patents and would
      order us to stop the activities covered by the patents. In addition, there
      is a
      risk that a court will order us to pay the other party damages for having
      violated the other party's patents. The biotechnology industry has produced
      a
      proliferation of patents, and it is not always clear to industry participants,
      including us, which patents cover various types of products or methods of use.
      The coverage of patents is subject to interpretation by the courts, and the
      interpretation is not always uniform. If we are sued for patent infringement,
      we
      would need to demonstrate that our products or methods of use either do not
      infringe the patent claims of the relevant patent and/or that the patent claims
      are invalid, and we may not be able to do this. Proving invalidity, in
      particular, is difficult since it requires a showing of clear and convincing
      evidence to overcome the presumption of validity enjoyed by issued patents.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Because
      some patent applications in the United States of America may be maintained
      in
      secrecy until the patents are issued, because patent applications in the United
      States of America and many foreign jurisdictions are typically not published
      until eighteen months after filing, and because publications in the scientific
      literature often lag behind actual discoveries, we cannot be certain that others
      have not filed patent applications for technology covered by our licensors'
      issued patents or our pending applications or our licensors' pending
      applications or that we or our licensors were the first to invent the
      technology. Our competitors may have filed, and may in the future file, patent
      applications covering technology similar to ours. Any such patent application
      may have priority over our or our licensors' patent applications and could
      further require us to obtain rights to issued patents covering such
      technologies. If another party has filed a United States patent application
      on
      inventions similar to ours, we may have to participate in an interference
      proceeding declared by the United States Patent and Trademark Office to
      determine priority of invention in the United States. The costs of these
      proceedings could be substantial, and it is possible that such efforts would
      be
      unsuccessful, resulting in a loss of our United States patent position with
      respect to such inventions. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Some
      of our competitors may be able to sustain the costs of complex patent litigation
      more effectively than we can because they have substantially greater resources.
      In addition, any uncertainties resulting from the initiation and continuation
      of
      any litigation could have a material adverse effect on our ability to raise
      the
      funds necessary to continue our operations. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">19</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>RISKS
      RELATED TO OUR COMMON STOCK</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>MARKET
      VOLATILITY MAY AFFECT OUR STOCK PRICE AND THE VALUE OF YOUR INVESTMENT.
</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">The
      market prices for securities of biopharmaceutical companies in general have
      been
      highly volatile and may continue to be highly volatile in the future. The
      following factors, in addition to other risk factors described in this section,
      may have a significant impact on the market price of our common stock:
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">announcements
                of technological innovations or new products by us or our
                competitors;</font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">announcement
                of FDA approval or non-approval of our product candidates or delays
                in the
                FDA review process; </font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">actions
                taken by regulatory agencies with respect to our product candidates,
                clinical trials, manufacturing process or sales and marketing activities;
                </font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">regulatory
                developments in the United States of America and foreign countries;
                </font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">the
                success of our development efforts and clinical trials;
                </font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">the
                success of our efforts to acquire or in-license additional products
                or
                product candidates; </font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">any
                intellectual property infringement action, or any other litigation,
                involving us; </font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">announcements
                concerning our competitors, or the biotechnology or biopharmaceutical
                industries in general; </font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">actual
                or anticipated fluctuations in our operating results;
                </font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">changes
                in financial estimates or recommendations by securities analysts;
                </font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">our
                ability to maintain listing requirements on the American Stock Exchange;
                </font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">sales
                of large blocks of our common stock;
</font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">sales
                of our common stock by our executive officers, directors and significant
                stockholders; and </font></div>
            </td>
          </tr>

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

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">the
                loss of any of our key scientific or management personnel.
                </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">The
      occurrence of one or more of these factors may cause our stock price to decline,
      and you may not be able to resell your shares at or above the price you paid
      for
      your shares. In addition, the stock markets in general, and the markets for
      biotechnology and biopharmaceutical stocks in particular, have experienced
      extreme volatility that has often been unrelated to the operating performance
      of
      particular companies. These broad market fluctuations may adversely affect
      the
      trading price of our common stock. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>WE
      ARE AT RISK OF SECURITIES CLASS ACTION LITIGATION. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">In
      the past, securities class action litigation has often been brought against
      a
      company following a decline in the market price of its securities. This risk
      is
      especially relevant for us because biotechnology and biopharmaceutical companies
      have experienced significant stock price volatility in recent years. If we
      faced
      such litigation, it could result in substantial costs and a diversion of
      management's attention and resources, which could harm our business.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>WE
      HAVE NOT PAID CASH DIVIDENDS IN THE PAST AND DO NOT EXPECT TO PAY CASH DIVIDENDS
      IN THE FUTURE. ANY RETURN ON INVESTMENT MAY BE LIMITED TO THE VALUE OF OUR
      STOCK. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">We
      have never paid cash dividends on our stock and do not anticipate paying cash
      dividends on our stock in the foreseeable future. The payment of cash dividends
      on our stock will depend on our earnings, financial condition and other business
      and economic factors affecting us at such time as the board of directors may
      consider relevant. If we do not pay cash dividends, our stock may be less
      valuable because a return on your investment will only occur if our stock price
      appreciates.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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      </div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><a name="forwardlooking"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>FORWARD-LOOKING
      STATEMENTS</strong></font></a></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">The
      Private Securities Litigation Reform Act of 1995 (the "Act") provides a safe
      harbor for forward-looking statements made by us or on our behalf. We and our
      representatives may from time to time make written or oral statements that
      are
      "forward-looking," including statements contained in this prospectus and other
      filings with the Securities and Exchange Commission, reports to our stockholders
      and news releases. All statements that express expectations, estimates,
      forecasts or projections are forward-looking statements within the meaning
      of
      the Act. In addition, other written or oral statements which constitute
      forward-looking statements may be made by us or on our behalf. Words such as
      "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates,"
      "projects," "forecasts," "may," "should," variations of such words and similar
      expressions are intended to identify such forward-looking statements. These
      statements are not guarantees of future performance and involve risks,
      uncertainties and assumptions which are difficult to predict. Therefore, actual
      outcomes and results may differ materially from what is expressed or forecasted
      in or suggested by such forward-looking statements. Among the important factors
      on which such statements are based are assumptions concerning our ability to
      complete ongoing clinical trials, results of our clinical trials, the timing
      of
      approval of our products by the United States Food and Drug Administration,
      our
      ability to obtain additional financing, our ability to attract and retain key
      employees, our ability to protect intellectual property, and our ability to
      adapt to economic, political and regulatory conditions affecting the healthcare
      industry.</font><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: Times New Roman, serif">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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      table below sets forth information concerning the resale of the shares of common
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      resale of the common stock by the selling stockholders. We will receive proceeds
      from the exercise of the options. </font></div>
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      following table also sets forth the name of each person who is offering the
      resale of shares of common stock by this prospectus, the number of shares of
      common stock beneficially owned by each person, the number of shares of common
      stock that may be sold in this offering and the number of shares of common
      stock
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      offered which they beneficially own as of the date hereof. </font></div>
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            <td align="left" valign="top" width="20%">&#160;</td>
            <td width="2%">&#160;</td>
            <td colspan="3" valign="top" width="30%" style="border-bottom: black thin solid;">
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            <td width="2%">&#160;</td>
            <td align="left" valign="top" width="14%">&#160;</td>
            <td width="2%">&#160;</td>
            <td colspan="3" valign="top" width="30%" style="border-bottom: black thin solid;">
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            <td valign="top" width="20%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
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            <td valign="top" width="14%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>Number
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            <td width="2%">&#160;</td>
            <td valign="top" width="14%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>Percent
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            <td valign="bottom" width="14%" style="border-bottom: black thin solid;">
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            <td width="2%">&#160;</td>
            <td valign="top" width="14%" style="border-bottom: black thin solid;">
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>Number</strong></font></div>
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            <td width="2%">&#160;</td>
            <td valign="top" width="14%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>Percent
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            <td align="left" valign="top" width="20%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Riccardo
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            <td width="2%">&#160;</td>
            <td valign="top" width="14%">
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            <td width="2%">&#160;</td>
            <td valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">&#8212;</font></div>
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            <td width="2%">&#160;</td>
            <td align="right" valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">81,000</font></div>
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            <td width="2%">&#160;</td>
            <td valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">&#8212;</font></div>
            </td>
            <td width="2%">&#160;</td>
            <td valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">&#8212;</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="20%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Stephen
                Carter </font></div>
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            <td width="2%">&#160;</td>
            <td align="right" valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">28,287
                (3)</font></div>
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            <td width="2%">&#160;</td>
            <td valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">*</font></div>
            </td>
            <td width="2%">&#160;</td>
            <td align="right" valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">19,861</font></div>
            </td>
            <td width="2%">&#160;</td>
            <td align="right" valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">25,000
                </font></div>
            </td>
            <td width="2%">&#160;</td>
            <td valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">*</font></div>
            </td>
          </tr>
          <tr bgcolor="#e2eef6">
            <td align="left" valign="top" width="20%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">John
                Brancaccio</font></div>
            </td>
            <td width="2%">&#160;</td>
            <td align="right" valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">30,707
                (4)</font></div>
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            <td width="2%">&#160;</td>
            <td valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">*</font></div>
            </td>
            <td width="2%">&#160;</td>
            <td align="right" valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">31,123</font></div>
            </td>
            <td width="2%">&#160;</td>
            <td align="right" valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">25,000</font></div>
            </td>
            <td width="2%">&#160;</td>
            <td valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">*</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="20%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Randall
                Johnson</font></div>
            </td>
            <td width="2%">&#160;</td>
            <td align="right" valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">35,000
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            </td>
            <td width="2%">&#160;</td>
            <td valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">*</font></div>
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            <td width="2%">&#160;</td>
            <td align="right" valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">94,000</font></div>
            </td>
            <td width="2%">&#160;</td>
            <td valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">&#8212;</font></div>
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            <td width="2%">&#160;</td>
            <td valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">&#8212;</font></div>
            </td>
          </tr>
          <tr bgcolor="#e2eef6">
            <td align="left" valign="top" width="20%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Pamela
                Harris</font></div>
            </td>
            <td width="2%">&#160;</td>
            <td valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">&#8212;&#160;</font></div>
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            <td width="2%">&#160;</td>
            <td valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">&#8212;</font></div>
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            <td width="2%">&#160;</td>
            <td align="right" valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">350,000</font></div>
            </td>
            <td width="2%">&#160;</td>
            <td valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">&#8212;</font></div>
            </td>
            <td width="2%">&#160;</td>
            <td valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">&#8212;</font></div>
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          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="20%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Gary
                S. Jacob</font></div>
            </td>
            <td width="2%">&#160;</td>
            <td align="right" valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">449,745
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            <td width="2%">&#160;</td>
            <td valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">1.3%</font></div>
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            <td width="2%">&#160;</td>
            <td align="right" valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">350,000</font></div>
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            <td width="2%">&#160;</td>
            <td align="right" valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">449,745</font></div>
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            <td width="2%">&#160;</td>
            <td valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">1.3%</font></div>
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          </tr>
          <tr bgcolor="#e2eef6">
            <td align="left" valign="top" width="20%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Donald
                Picker</font></div>
            </td>
            <td width="2%">&#160;</td>
            <td align="right" valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">315,370
                (7)</font></div>
            </td>
            <td width="2%">&#160;</td>
            <td valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">*</font></div>
            </td>
            <td width="2%">&#160;</td>
            <td align="right" valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">200,000</font></div>
            </td>
            <td width="2%">&#160;</td>
            <td align="right" valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">315,370
                </font></div>
            </td>
            <td width="2%">&#160;</td>
            <td valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">*</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="20%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Bernard
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            </td>
            <td width="2%">&#160;</td>
            <td align="right" valign="top" width="14%">
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      <div>
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            <tr>
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            <tr>
              <td width="10%">&#160;</td>
              <td align="justify" valign="top" width="4%">&#160;</td>
              <td align="justify" valign="top" width="86%">&#160;</td>
            </tr>
            <tr>
              <td width="10%">&#160;</td>
              <td align="justify" valign="top" width="4%">
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                  number and percentage of shares beneficially owned is determined
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                  accordance with Rule&#160;13d-3 of the Securities Exchange Act of 1934,
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                  ownership
                  for any other purpose. Under such rule, beneficial ownership includes
                  any
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                  power
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              <td align="justify" valign="top" width="4%">&#160;</td>
              <td align="justify" valign="top" width="86%">&#160;</td>
            </tr>
            <tr>
              <td width="10%">&#160;</td>
              <td align="justify" valign="top" width="4%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(2)</font></div>
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              <td width="10%">&#160;</td>
              <td align="justify" valign="top" width="4%">&#160;</td>
              <td align="justify" valign="top" width="86%">&#160;</td>
            </tr>
            <tr>
              <td width="10%">&#160;</td>
              <td align="justify" valign="top" width="4%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(3)</font></div>
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              <td align="justify" valign="top" width="86%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Consists
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                  </font></div>
              </td>
            </tr>
            <tr>
              <td width="10%">&#160;</td>
              <td align="justify" valign="top" width="4%">&#160;</td>
              <td align="justify" valign="top" width="86%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              </td>
            </tr>
            <tr>
              <td width="10%">&#160;</td>
              <td align="justify" valign="top" width="4%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(4)</font></div>
              </td>
              <td align="justify" valign="top" width="86%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Consists
                  of shares of common stock issuable upon exercise of stock options.
                  </font></div>
              </td>
            </tr>
            <tr>
              <td width="10%">&#160;</td>
              <td align="justify" valign="top" width="4%">&#160;</td>
              <td align="justify" valign="top" width="86%">&#160;</td>
            </tr>
            <tr>
              <td width="10%">&#160;</td>
              <td align="justify" valign="top" width="4%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(5)</font></div>
              </td>
              <td align="justify" valign="top" width="86%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Consists
                  of shares of common stock issuable upon exercise of stock options.
                  </font></div>
              </td>
            </tr>
            <tr>
              <td width="10%">&#160;</td>
              <td align="justify" valign="top" width="4%">&#160;</td>
              <td align="justify" valign="top" width="86%">&#160;</td>
            </tr>
            <tr>
              <td width="10%">&#160;</td>
              <td align="justify" valign="top" width="4%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(6)</font></div>
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              <td align="justify" valign="top" width="86%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Consists
                  of (i) 124,745 shares of common stock, and (ii) 325,000 shares
                  of common
                  stock issuable upon exercise of stock options.</font></div>
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            </tr>
            <tr>
              <td width="10%">&#160;</td>
              <td align="justify" valign="top" width="4%">&#160;</td>
              <td align="justify" valign="top" width="86%">&#160;</td>
            </tr>
            <tr>
              <td width="10%">&#160;</td>
              <td align="justify" valign="top" width="4%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(7)</font></div>
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                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Consists
                  of (i) 73,704 shares of common stock and (ii) 241,666 shares of
                  common
                  stock issuable upon exercise of stock options.
</font></div>
              </td>
            </tr>

        </table>
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      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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          <div id="GLFTR" style="WIDTH: 100%" align="left">
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            <hr style="COLOR: black" noshade size="2">
          </div>
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          <div id="GLHDR" style="WIDTH: 100%" align="right">
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      <div>
        <table cellpadding="0" cellspacing="0" width="100%">

            <tr>
              <td width="10%">&#160;</td>
              <td align="justify" valign="top" width="4%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(8)</font></div>
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                  of common stock issuable upon exercise of stock
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            </tr>
            <tr>
              <td width="10%">&#160;</td>
              <td align="justify" valign="top" width="4%">&#160;</td>
              <td align="justify" valign="top" width="86%">&#160;</td>
            </tr>
            <tr>
              <td width="10%">&#160;</td>
              <td align="justify" valign="top" width="4%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(9)</font></div>
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              <td align="justify" valign="top" width="86%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Consists
                  of common stock issuable upon exercise of stock
                  options.</font></div>
              </td>
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              <td width="10%">&#160;</td>
              <td align="justify" valign="top" width="4%">&#160;</td>
              <td align="justify" valign="top" width="86%">&#160;</td>
            </tr>
            <tr>
              <td width="10%">&#160;</td>
              <td align="justify" valign="top" width="4%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(10)</font></div>
              </td>
              <td align="justify" valign="top" width="86%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Consists
                  of shares of common stock.</font></div>
              </td>
            </tr>
            <tr>
              <td width="10%">&#160;</td>
              <td align="justify" valign="top" width="4%">&#160;</td>
              <td align="justify" valign="top" width="86%">&#160;</td>
            </tr>
            <tr>
              <td width="10%">&#160;</td>
              <td align="justify" valign="top" width="4%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(11)</font></div>
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                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Consists
                  of (i) 475,699 shares of common stock and (ii) 58,333 shares of
                  common
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              </td>
            </tr>
            <tr>
              <td width="10%">&#160;</td>
              <td align="justify" valign="top" width="4%">&#160;</td>
              <td align="justify" valign="top" width="86%">&#160;</td>
            </tr>
            <tr>
              <td width="10%">&#160;</td>
              <td align="justify" valign="top" width="4%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(12)</font></div>
              </td>
              <td align="justify" valign="top" width="86%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Consists
                  of (i) 1,087,500 </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">shares
                  of common stock issuable upon exercise of stock options and (ii)
                  2,126,737
                  shares of common stock held by Panetta Partners, Ltd. Mr. Cerrone
                  is the
                  sole managing partner of Panetta and in such capacity only exercises
                  voting and dispositive control over securities owned by Panetta.
                  </font></div>
              </td>
            </tr>

        </table>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong><a name="plan">PLAN
      OF DISTRIBUTION</a></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Sales
      of the shares may be effected by or for the account of the selling stockholders
      from time to time in transactions (which may include block transactions) on
      the
      American Stock Exchange, in negotiated transactions, through a combination
      of
      such methods of sale, or otherwise, at fixed prices that may be changed, at
      market prices prevailing at the time of sale or at negotiated prices. The
      selling stockholders may effect such transactions by selling the shares directly
      to purchasers, through broker-dealers acting as agents of the selling
      stockholders, or to broker-dealers acting as agents for the selling
      stockholders, or to broker-dealers who may purchase shares as principals and
      thereafter sell the shares from time to time in transactions (which may include
      block transactions) on the American Stock Exchange, in negotiated transactions,
      through a combination of such methods of sale, or otherwise. In effecting sales,
      broker-dealers engaged by a selling stockholder may arrange for other
      broker-dealers to participate. Such broker-dealers, if any, may receive
      compensation in the form of discounts, concessions or commissions from the
      selling stockholders and/or the purchasers of the shares for whom such
      broker-dealers may act as agents or to whom they may sell as principals, or
      both
      (which compensation as to a particular broker-dealer might be in excess of
      customary commissions).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">The
      selling stockholders and any broker-dealers or agents that participate with
      the
      selling stockholders in the distribution of the shares may be deemed to be
      "underwriters" within the meaning of the Securities Act of 1933. Any commissions
      paid or any discounts or concessions allowed to any such persons, and any
      profits received on the resale of the shares purchased by them may be deemed
      to
      be underwriting commissions or discounts under the Securities Act of
      1933.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">We
      have agreed to bear all expenses of registration of the shares other than legal
      fees and expenses, if any, of counsel or other advisors of the selling
      stockholders. The selling stockholders will bear any commissions, discounts,
      concessions or other fees, if any, payable to broker-dealers in connection
      with
      any sale of their shares.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">We
      have agreed to indemnify the selling stockholders, or their transferees or
      assignees, against certain liabilities, including liabilities under the
      Securities Act of 1933 or to contribute to payments the selling stockholders
      or
      their respective pledgees, donees, transferees or other successors in interest,
      may be required to make in respect thereof.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong><a name="legal">LEGAL
      MATTERS</a></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.2; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">The
      validity of the shares of common stock offered hereby will be passed upon for
      us
      by Sichenzia Ross Friedman Ference LLP, 1065 Avenue of the Americas,
      21</font><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman, serif"><sup>st</sup></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">
      Floor, New York, NY 10018. Sichenzia Ross Friedman Ference LLP owns an aggregate
      of 22,000 shares of our common stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 36pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong><a name="experts">EXPERTS</a></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">The
      financial statements incorporated by reference in this prospectus have been
      audited by BDO Seidman, LLP, an independent registered public accounting firm,
      to the extent and for the periods set forth in their report </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">incorporated
      herein by reference, and are incorporated herein in reliance upon such report
      given upon the authority of said firm as experts in auditing and
      accounting.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">23</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 36pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong><a name="incorporation">INFORMATION
      INCORPORATED BY
      REFERENCE</a></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 36pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">The
      Securities and Exchange Commission allows us to incorporate by reference certain
      of our publicly-filed documents into this prospectus, which means that such
      information is considered part of this prospectus. Information that we file
      with
      the SEC subsequent to the date of this prospectus will automatically update
      and
      supersede this information. We incorporate by reference the documents listed
      below and any future filings made with the SEC under all documents subsequently
      filed by us pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities
      Exchange Act of 1934 until the selling stockholders have sold all of the shares
      offered hereby or such shares have been deregistered.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 36pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">The
      following documents filed with the SEC are incorporated herein by reference:
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 36pt" align="justify"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Reference
                is made to the Registrant&#8217;s quarterly report on Form 10-Q for the period
                ending September 30, 2005, as filed with the SEC on November 14,
                2005,
                which is hereby incorporated by
                reference.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 36pt" align="justify"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Reference
                is made to the Registrant&#8217;s quarterly report on Form 10-Q for the period
                ending June 30, 2005, as filed with the SEC on August 8, 2005, which
                is
                hereby incorporated by reference.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 36pt" align="justify"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Reference
                is made to the Registrant&#8217;s quarterly report on Form 10-Q for the period
                ending March 31, 2005, as filed with the SEC on May 16, 2005, which
                is
                hereby incorporated by reference.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 36pt" align="justify">
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

            <tr valign="top" style="line-height: 1;">
              <td style="width: 36pt;">&#160;</td>
              <td style="width: 36pt;">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Reference
                  is made to the Registrant&#8217;s annual report on Form 10-KSB for the period
                  ending December 31, 2004, as filed with the SEC on March 30, 2005,
                  which
                  is hereby incorporated by
                  reference.</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div>&#160;</div>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Reference
                is made to the Registrant&#8217;s annual report on Form 10-K/A for the period
                ending December 31, 2004, as filed with the SEC on June 6, 2005,
                which is
                hereby incorporated by reference.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Reference
                is made to Registrant's 8-Ks filed with the SEC on February 3, 7,
                and 14,
                2005, March 15 and 30, 2005, April 8, 2005, June 15, 2005, July 7
                and 22,
                2005, August 26, 2005, October 21, 2005, December 6, 2005 and December
                12,
                2005, each of which are hereby incorporated by
                reference.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 36pt" align="justify"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Reference
                is made to the description of the Registrant's common stock as contained
                in Item 1 of its Registration Statement on Form 8-A, filed with the
                Commission on October 22, 2004, including all amendments and reports
                filed
                with the Commission for the purpose of updating such description,
                which is
                hereby incorporated by reference.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 36pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">We
      will provide without charge to each person to whom a copy of this prospectus
      has
      been delivered, on written or oral request a copy of any or all of the documents
      incorporated by reference in this prospectus, other than exhibits to such
      documents. Written or oral requests for such copies should be directed to Gary
      S. Jacob.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 36pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 36pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong><a name="disclosure">DISCLOSURE
      OF COMMISSION POSITION ON INDEMNIFICATION FOR
      SECURITIES ACT LIABILITIES</a></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 36pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Our
      Certificate of Incorporation provides that to the fullest extent permitted
      by
      the Delaware General Corporation Law, a director of the company shall not be
      personally liable to the company or its stockholders for monetary damages for
      breach of fiduciary duty as a director. Under current Delaware law, liability
      of
      a director may not be limited (i) for any breach of the director's duty of
      loyalty to the company or its stockholders, (ii) for acts or omissions not
      in
      good faith or that involve intentional misconduct or a knowing violation of
      law,
      and (iii) for any transaction from which the director derives an improper
      personal benefit. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">24</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">&#160;
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">The
      effect of the provision of our Certificate of Incorporation is to eliminate
      the
      rights of the company and its stockholders (through stockholders' derivative
      suits on behalf of the company) to recover monetary damages against a director
      for breach of the fiduciary duty of care as a director (including breaches
      resulting from negligent or grossly negligent behavior) except in the situations
      described in clauses (i) through (iii) above. This provision does not limit
      or
      eliminate the rights of the company or any stockholder to seek nonmonetary
      relief such as an injunction or rescission in the event of a breach of a
      director's duty of care. In addition, our Certificate of Incorporation provides
      that the company shall indemnify to the fullest extent permitted by law its
      directors, officers and employees and any other persons to which Delaware law
      permits a corporation to provide indemnification against losses incurred by
      any
      such person by reason of the fact that such person was acting in such capacity.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">&#160;
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">We
      have an insurance policy that insures our directors and officers, within the
      limits and subject to the limitations of the policy, against certain expenses
      in
      connection with the defense of actions, suits or proceedings, and certain
      liabilities that might be imposed as a result of such actions, suits or
      proceedings, to which they are parties by reason of being or having been
      directors or officers.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 36pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong><a name="additional">ADDITIONAL
      INFORMATION AVAILABLE TO
      YOU</a></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 36pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">This
      prospectus is part of a Registration Statement on Form S-8 that we filed with
      the SEC. Certain information in the Registration Statement has been omitted
      from
      this prospectus in accordance with the rules of the SEC. We file annual,
      quarterly and special reports, proxy statements and other information with
      the
      SEC. You can inspect and copy the Registration Statement as well as reports,
      proxy statements and other information we have filed with the SEC at the public
      reference room maintained by the SEC at 100 F Street N.E. Washington, D.C.
      20549, You can obtain copies from the public reference room of the SEC at 100
      F
      Street N.E. Washington, D.C. 20549, upon payment of certain fees. You can call
      the SEC at 1-800-732-0330 for further information about the public reference
      room. We are also required to file electronic versions of these documents with
      the SEC, which may be accessed through the SEC's World Wide Web site at
      http://www.sec.gov. No dealer, salesperson or other person is authorized to
      give
      any information or to make any representations other than those contained in
      this prospectus, and, if given or made, such information or representations
      must
      not be relied upon as having been authorized by us. This prospectus does not
      constitute an offer to buy any security other than the securities offered by
      this prospectus, or an offer to sell or a solicitation of an offer to buy any
      securities by any person in any jurisdiction where such offer or solicitation
      is
      not authorized or is unlawful. Neither delivery of this prospectus nor any
      sale
      hereunder shall, under any circumstances, create any implication that there
      has
      been no change in the affairs of our company since the date hereof.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">25</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">CALLISTO
      PHARMACEUTICALS, INC.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center">
      <hr style="COLOR: black" align="center" noshade size="1" width="15%">
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font size="3">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">2,089,484
      SHARES OF COMMON STOCK</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center">
      <hr style="COLOR: black" align="center" noshade size="1" width="15%"><font size="3">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">PROSPECTUS</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center">&#160;

      <div>
        <hr style="COLOR: black" align="center" noshade size="1" width="15%">
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">December
      23, 2005</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>PART
      II </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>INFORMATION
      REQUIRED IN THE REGISTRATION STATEMENT </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>Item
      3. Incorporation of Documents by Reference.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">The
      Registrant hereby incorporates by reference into this Registration Statement
      the
      documents listed below. In addition, all documents subsequently filed pursuant
      to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934
      (the "Exchange Act"), prior to the filing of a post-effective amendment which
      indicates that all securities offered have been sold or which deregisters all
      securities then remaining unsold, shall be deemed to be incorporated by
      reference into this Registration Statement and to be a part hereof from the
      date
      of filing of such documents:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Reference
                is made to the Registrant&#8217;s quarterly report on Form 10-Q for the period
                ending September 30, 2005, as filed with the SEC on November 14,
                2005,
                which is hereby incorporated by
                reference.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Reference
                is made to the Registrant&#8217;s quarterly report on Form 10-Q for the period
                ending June 30, 2005, as filed with the SEC on August 8, 2005, which
                is
                hereby incorporated by reference.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Reference
                is made to the Registrant&#8217;s quarterly report on Form 10-Q for the period
                ending March 31, 2005, as filed with the SEC on May 16, 2005, which
                is
                hereby incorporated by reference.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify">
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 36pt" align="justify">
        <div>
          <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

              <tr valign="top" style="line-height: 1;">
                <td style="width: 36pt;">&#160;</td>
                <td style="width: 36pt;">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
                </td>
                <td>
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Reference
                    is made to the Registrant&#8217;s annual report on Form 10-KSB for the period
                    ending December 31, 2004, as filed with the SEC on March 30,
                    2005, which
                    is hereby incorporated by
                    reference.</font></div>
                </td>
              </tr>

          </table>
        </div>
        <div>&#160;</div>
      </div>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Reference
                is made to the Registrant&#8217;s&#160;annual report on Form 10-K/A for the
                period ending December 31, 2004, as filed with the SEC on June 6,
                2005,
                which is hereby incorporated by
                reference.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Reference
                is made to Registrant's 8-Ks filed with the SEC on February 3, 7,
                and 14,
                2005, March 15 and 30, 2005, April 8, 2005, June 15, 2005, July 7
                and 22,
                2005, August 26, 2005, October 21, 2005, December 6, 205 and December
                12,
                2005, each of which are hereby incorporated by
                reference.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Reference
                is made to the description of the Registrant's common stock as contained
                in Item 1 of its Registration Statement on Form 8-A, filed with the
                Commission on October 22, 2004, including all amendments and reports
                filed
                with the Commission for the purpose of updating such description,
                which is
                hereby incorporated by reference.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>Item
      4. Description of Securities.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Not
      Applicable.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>Item
      5. Interests of Named Experts and Counsel.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.2; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">The
      validity of the shares of common stock offered hereby will be passed upon for
      the Registrant by Sichenzia Ross Friedman Ference LLP, 1065 Avenue of Americas,
      21</font><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman, serif"><sup>st</sup></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">
      flr., New York, NY 10018. Sichenzia Ross Friedman Ference LLP owns an aggregate
      of 22,000 shares of the Registrant&#8217;s common stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.2; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>Item
      6. Indemnification of Directors and Officers.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 36pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Callisto
      Pharmaceuticals, Inc.'s Certificate of Incorporation provides that to the
      fullest extent permitted by the Delaware General Corporation Law, a director
      of
      the company shall not be personally liable to the company or its stockholders
      for monetary damages for breach of fiduciary duty as a director. Under current
      Delaware law, liability of a director may not be limited (i) for any breach
      of
      the director's duty of loyalty to the company or its stockholders, (ii) for
      acts
      or omissions not in good faith or that involve intentional misconduct or a
      knowing violation of law, and (iii) for any transaction from which the director
      derives an improper personal benefit. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">II-1</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">&#160;
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">The
      effect of the provision of Callisto&#8217;s Certificate of Incorporation is to
      eliminate the rights of the company and its stockholders (through stockholders'
      derivative suits on behalf of the company) to recover monetary damages against
      a
      director for breach of the fiduciary duty of care as a director (including
      breaches resulting from negligent or grossly negligent behavior) except in
      the
      situations described in clauses (i) through (iii) above. This provision does
      not
      limit or eliminate the rights of the company or any stockholder to seek
      nonmonetary relief such as an injunction or rescission in the event of a breach
      of a director's duty of care. In addition, Callisto&#8217;s Certificate of
      Incorporation provides that the company shall indemnify to the fullest extent
      permitted by law its directors, officers and employees and any other persons
      to
      which Delaware law permits a corporation to provide indemnification against
      losses incurred by any such person by reason of the fact that such person was
      acting in such capacity. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">&#160;
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Callisto
      has an insurance policy that insures its directors and officers, within the
      limits and subject to the limitations of the policy, against certain expenses
      in
      connection with the defense of actions, suits or proceedings, and certain
      liabilities that might be imposed as a result of such actions, suits or
      proceedings, to which they are parties by reason of being or having been
      directors or officers.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>Item
      7. Exemption from Registration Claimed.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">All
      shares of common stock registered hereunder for reoffer or resale, have been
      or
      will be issued upon exercise of options granted pursuant to the Registrant&#8217;s
      1996 Incentive and Non-Qualified Stock Option Plan, 2005 Equity Compensation
      Incentive Plan, and its Non-Plan Executive and Director Options. The options
      are
      non-transferable and the underlying shares were and will be issued in
      transactions not involving a public offering. Upon exercise of an option, the
      optionee is required to execute an undertaking not to resell such shares except
      pursuant to an effective registration statement or other exemption under the
      Act, a restrictive legend is placed on the certificates for the shares of common
      stock purchased and transfer stops are placed against such certificates. Such
      shares may only be reoffered and sold pursuant to registration under the Act
      or
      pursuant to an applicable exemption under the Act. As a result, such offers
      and
      sales are exempt from the registration requirements of the Act pursuant to
      the
      provisions of Section 4(2) of the Act.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>Item
      8. Exhibits.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div align="left">
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">

            <tr>
              <td align="left" valign="top" width="10%" style="border-bottom: medium none;">&#160;</td>
              <td align="left" valign="top" width="10%" style="border-bottom: medium none;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>EXHIBIT</strong></font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong><u>NUMBER</u>&#160;
                  </strong></font></div>
              </td>
              <td align="left" valign="bottom" width="80%" style="border-bottom: medium none;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong><u>EXHIBIT</u></strong></font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="10%">&#160;</td>
              <td align="left" valign="top" width="10%">&#160;</td>
              <td align="left" valign="top" width="80%">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="top" width="10%">&#160;</td>
              <td align="left" valign="top" width="10%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">4.1</font></div>
              </td>
              <td align="left" valign="top" width="80%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">1996
                  Incentive and Non-Qualified Stock Option Plan (1)</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="10%">&#160;</td>
              <td align="left" valign="top" width="10%">&#160;</td>
              <td align="left" valign="top" width="80%">&#160;</td>
            </tr>
            <tr>
              <td align="justify" valign="top" width="10%">&#160;</td>
              <td align="justify" valign="top" width="10%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">4.2</font></div>
              </td>
              <td align="justify" valign="top" width="80%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">2005
                  Equity Compensation Incentive Plan (2)</font></div>
              </td>
            </tr>
            <tr>
              <td align="justify" valign="top" width="10%">&#160;</td>
              <td align="justify" valign="top" width="10%">&#160;</td>
              <td align="justify" valign="top" width="80%">&#160;</td>
            </tr>
            <tr>
              <td align="justify" valign="top" width="10%">&#160;</td>
              <td align="justify" valign="top" width="10%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">4.3</font></div>
              </td>
              <td align="justify" valign="top" width="80%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">2005
                  Directors&#8217; Stock Option Plan (3)</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="10%">&#160;</td>
              <td align="left" valign="top" width="10%">&#160;</td>
              <td align="left" valign="top" width="80%">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="top" width="10%">&#160;</td>
              <td align="left" valign="top" width="10%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">4.4</font></div>
              </td>
              <td align="left" valign="top" width="80%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Form
                  of Non-Plan Stock Option Agreement (4)</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="10%">&#160;</td>
              <td align="left" valign="top" width="10%">&#160;</td>
              <td align="left" valign="top" width="80%">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="top" width="10%">&#160;</td>
              <td align="left" valign="top" width="10%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">5.1</font></div>
              </td>
              <td align="left" valign="top" width="80%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Opinion
                  of Sichenzia Ross Friedman Ference LLP.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="10%">&#160;</td>
              <td align="left" valign="top" width="10%">&#160;</td>
              <td align="left" valign="top" width="80%">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="top" width="10%">&#160;</td>
              <td align="left" valign="top" width="10%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">23.1</font></div>
              </td>
              <td align="left" valign="top" width="80%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Consent
                  of Sichenzia Ross Friedman Ference LLP is contained in Exhibit
                  5.1.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="10%">&#160;</td>
              <td align="left" valign="top" width="10%">&#160;</td>
              <td align="left" valign="top" width="80%">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="top" width="10%">&#160;</td>
              <td align="left" valign="top" width="10%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">23.2</font></div>
              </td>
              <td align="left" valign="top" width="80%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Consent
                  of BDO Seidman, LLP.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="10%">&#160;</td>
              <td align="left" valign="top" width="10%">&#160;</td>
              <td align="left" valign="top" width="80%">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="top" width="10%">&#160;</td>
              <td align="left" valign="top" width="10%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">24.1</font></div>
              </td>
              <td align="left" valign="top" width="80%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Power
                  of Attorney (Included on signature page).</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="10%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td align="left" colspan="2" valign="top" width="90%" style="border-bottom: black thin solid;">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="top" width="10%">&#160;</td>
              <td align="left" colspan="2" valign="top" width="90%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(1)
                  </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Incorporated
                  by reference to Exhibit 4.1 filed with the Company's Current Report
                  on
                  Form 8-K filed on April 30, 2003.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="10%">&#160;</td>
              <td align="left" colspan="2" valign="top" width="90%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(2)
                  Incorporated by reference to Appendix B filed with the Company's
                  Definitive Proxy Statement on Schedule 14A filed on August 31,
                  2005.</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div>&#160;</div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">II-2</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
      </div>
      <div>&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">

            <tr>
              <td align="left" valign="top" width="10%">&#160;</td>
              <td align="left" colspan="2" valign="top" width="90%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(3)
                  Incorporated by reference to Appendix C filed with the Company's
                  Definitive Proxy Statement on Schedule 14A filed on August 31,
                  2005.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="10%">&#160;</td>
              <td align="left" colspan="2" valign="top" width="90%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(4)
                  Incorporated by reference to Exhibit 4.3 filed with the Company's
                  Registration Statement on Form S-8 filed on October 4,
                  2004.</font></div>
              </td>
            </tr>

        </table>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>Item
      9. Undertakings.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(a)
      The undersigned registrant hereby undertakes: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(1)&#160;To
      file, during any period in which offers or sales are being made, a
      post-effective amendment to this registration statement: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(i)&#160;To
      include any prospectus required by Section&#160;10(a)(3) of the Securities Act
      of 1933; </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(ii)&#160;To
      reflect in the prospectus any facts or events arising after the effective date
      of the registration statement (or the most recent post-effective amendment
      thereof) which, individually or in the aggregate, represent a fundamental change
      in the information set forth in the registration statement. Notwithstanding
      the
      foregoing, any increase or decrease in volume of securities offered (if the
      total dollar value of securities offered would not exceed that which was
      registered) and any deviation from the low or high end of the estimated maximum
      offering range may be reflected in the form of prospectus filed with the
      Commission pursuant to Rule&#160;424(b) if, in the aggregate, the changes in
      volume and price represent no more than 20&#160;percent change in the maximum
      aggregate offering price set forth in the &#8220;Calculation of Registration Fee&#8221;
table in the effective registration statement; </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(iii)&#160;To
      include any material information with respect to the plan of distribution not
      previously disclosed in the registration statement or any material change to
      such information in the registration statement; </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><em>Provided,
      however</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">,
      that paragraphs (1)(i), and (1)(ii) do not apply </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">if
      the Registration Statement is on Form S-8 and </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">if
      the information required to be included in a post-effective amendment by those
      paragraphs is contained in reports filed with or furnished to the Commission
      by
      the Registrant pursuant to section&#160;13 or section&#160;15(d) of the
      Securities Exchange Act of 1934 that are incorporated by reference in the
      registration statement.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(2)&#160;That,
      for the purpose of determining any liability under the Securities Act of 1933,
      each such post-effective amendment shall be deemed to be a new registration
      statement relating to the securities offered therein, and the offering of such
      securities at that time shall be deemed to be the initial </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><em>bona
      fide </em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">offering
      thereof. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(3)&#160;To
      remove from registration by means of a post-effective amendment any of the
      securities being registered which remain unsold at the termination of the
      offering. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(4)&#160;That,
      for purposes of determining any liability under the Securities Act of 1933,
      each
      filing of the registrant&#8217;s annual report pursuant to Section&#160;13(a) or 15(d)
      of the Securities Exchange Act of 1934 (and, where applicable, each filing
      of an
      employee benefit plan&#8217;s annual report pursuant to Section&#160;15(d) of the
      Securities Exchange Act of 1934)&#160;that is incorporated by reference in the
      registration statement shall be deemed to be a new registration statement
      relating to the securities offered therein, and the offering of such securities
      at that time shall be deemed to be the initial </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><em>bona
      fide </em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">offering
      thereof. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(5)&#160;That,
      for the purpose of determining liability under the Securities Act of 1933 to
      any
      purchaser: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(A)&#160;Each
      prospectus filed by a Registrant pursuant to Rule&#160;424(b)(3) shall be deemed
      to be part of the registration statement as of the date the filed prospectus
      was
      deemed part of and included in the registration statement; and </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(B)&#160;Each
      prospectus required to be filed pursuant to Rule&#160;424(b)(2), (b)(5) or
      (b)(7) as part of a registration statement in reliance on Rule&#160;430B
      relating to an offering made pursuant to Rule&#160;415(a)(1)(i),</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">II-3</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(vii)&#160;or
      (x)&#160;for the purpose of providing the information required by Section 10(a)
      of the Securities Act of 1933 shall be deemed to be part of and included in
      the
      registration statement as of the earlier of the date such form of prospectus
      is
      first used after effectiveness or the date of the first contract of sale of
      securities in the offering described in the prospectus. As provided in
      Rule&#160;430B, for liability purposes of the issuer and any person that is at
      that date an underwriter, such date shall be deemed to be a new effective date
      of the registration statement relating to the securities in the registration
      statement to which the prospectus relates, and the offering of such securities
      at that time shall be deemed to be the initial </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><em>bona
      fide </em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">offering
      thereof. </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><em>Provided,
      however</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">,
      that no statement made in a registration statement or prospectus that is part
      of
      the registration statement or made in a document incorporated or deemed
      incorporated by reference into the registration statement or prospectus that
      is
      part of the registration statement will, as to a purchaser with a time of
      contract of sale prior to such effective date, supersede or modify any statement
      that was made in the registration statement or prospectus that was part of
      the
      registration statement or made in any such document immediately prior to such
      effective date. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(6)
      That, for the purpose of determining liability of a Registrant under the
      Securities Act of 1933 to any purchaser in the initial distribution of the
      securities, each undersigned Registrant undertakes that in a primary offering
      of
      securities of an undersigned Registrant pursuant to this registration statement,
      regardless of the underwriting method used to sell the securities to the
      purchaser, if the securities are offered or sold to such purchaser by means
      of
      any of the following communications, the undersigned Registrant will be a seller
      to the purchaser and will be considered to offer or sell such securities to
      such
      purchaser: </font></div>
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      preliminary prospectus or prospectus of an undersigned Registrant relating
      to
      the offering required to be filed pursuant to Rule&#160;424; </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(ii)&#160;Any
      free writing prospectus relating to the offering prepared by or on behalf of
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      undersigned Registrant or used or referred to by an undersigned Registrant;
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
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      portion of any other free writing prospectus relating to the offering containing
      material information about an undersigned Registrant or its securities provided
      by or on behalf of an undersigned Registrant; and </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(iv)&#160;Any
      other communication that is an offer in the offering made by an undersigned
      Registrant to the purchaser. </font></div>
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      as indemnification for liabilities arising under the Securities Act of 1933
      may
      be permitted to directors, officers and controlling persons of the registrant
      pursuant to the foregoing provisions, or otherwise, the registrant has been
      advised that in the opinion of the Securities and Exchange Commission such
      indemnification is against public policy as expressed in the Securities Act
      and
      is, therefore, unenforceable. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">In
      the event that a claim for indemnification against such liabilities (other
      than
      the payment by the registrant of expenses incurred or paid by a director,
      officer or controlling person of the registrant in the successful defense of
      any
      action, suit or proceeding) is asserted by such director, officer or controlling
      person in connection with the securities being registered, the registrant will,
      unless in the opinion of its counsel the matter has been settled by controlling
      precedent, submit to a court of appropriate jurisdiction the question whether
      such indemnification by it is against public policy as expressed in the Act
      and
      will be governed by the final adjudication of such issue. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">II-4</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: Times New Roman, serif"><strong>SIGNATURES
      &#160; </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman, serif">&#160;
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      accordance with the requirements of the Securities Act of 1933, as amended,
      the
      registrant certifies that it has reasonable grounds to believe that it meets
      all
      of the requirements for filing on Form&#160;S-8 and has duly caused this Form
      S-8 to be signed on its behalf by the undersigned, thereunto duly authorized,
      in
      the City of New York, State of New York, on December 27, 2005. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify">
      <table align="center" bgcolor="#ffffff" border="0" cellpadding="0" cellspacing="0" width="100%">

          <tr valign="top" bgcolor="#ffffff">
            <td width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
            <td width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
            <td width="49%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
          </tr>
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            <td colspan="2"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">CALLISTO
              PHARMACEUTICALS, INC.</font></td>
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            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;<br>&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;<br>&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;<br>&#160;</font></td>
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            <td>&#160;</td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">By:&#160;&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">/s/&#160;Gary
              S.
              Jacob</font></td>
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            <td align="left">
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            </td>
          </tr>
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            <td>
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">Gary
                S.
                Jacob,</font></div>
              <div><font size="2"><em>Chief Executive
                Officer</em></font></div>
            </td>
          </tr>

      </table>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">KNOW
      ALL
      MEN BY THESE PRESENTS, that each person whose signature appears below
      constitutes and appoints Gabriele M. Cerrone and Gary S. Jacob, and each of
      them, his true and lawful attorneys-in-fact and agents, with full power of
      substitution and resubstitution for him and in his name, place and stead, in
      any
      and all capacities, to sign any and all amendments (including post-effective
      amendments) to this Registration Statement, and any subsequent registration
      statements pursuant to the Securities Act of 1933 and to file the same, with
      all
      exhibits thereto, and other documents in connection therewith, with the
      Securities and Exchange Commission, granting unto said attorneys-in-fact and
      agents, and each of them, full power and authority to do and perform each and
      every act and thing requisite and necessary to be done in and about the
      premises, as fully to all intents and purposes as he might or could do in
      person, hereby ratifying and confirming all that each of said attorney-in-fact
      or his substitute or substitutes, may lawfully do or cause to be done by virtue
      hereof. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      accordance with the requirements of the Securities Act of 1933, as amended,
      this
      Form S-8 has been signed below by the following persons on behalf of the
      Registrant and in the capacities and on the dates indicated. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman, serif">&#160;
      </font></div>
    <div align="left">
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td valign="bottom" width="35%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>Signature
                </strong></font></div>
            </td>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>&#160;
                </strong></font></div>
            </td>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>Title
                </strong></font></div>
            </td>
            <td valign="bottom" width="2%" style="border-bottom: #ffffff thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>&#160;
                </strong></font></div>
            </td>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><strong>Date
                </strong></font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="35%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">&#160;
                </font></div>
            </td>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">&#160;
                </font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">&#160;
                </font></div>
            </td>
            <td align="left" valign="top" width="35%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">&#160;
                </font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">&#160;
                </font></div>
            </td>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">&#160;
                </font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">&#160;
                </font></div>
            </td>
            <td align="left" valign="top" width="26%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">&#160;
                </font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">&#160;
                </font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="35%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">/s/
                Gary S. Jacob </font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center">
                <hr style="COLOR: black" align="center" noshade size="2" width="100%">
              </div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Gary
                S. Jacob </font></div>
            </td>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">&#160;
                </font></div>
            </td>
            <td align="left" valign="top" width="35%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Chief
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">(Principal
                Executive Officer) </font></div>
            </td>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">&#160;
                </font></div>
            </td>
            <td valign="top" width="26%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: Times New Roman, serif">December
                27</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">,
                2005 </font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="35%">&#160;</td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="35%">&#160;</td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td valign="top" width="26%">&#160;</td>
          </tr>
          <tr>
            <td valign="top" width="35%">
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                Bernard Denoyer</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center">
                <hr style="COLOR: black" align="center" noshade size="2" width="100%">
              </div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Bernard
                Denoyer </font></div>
            </td>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">&#160;
                </font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">&#160;
                </font></div>
            </td>
            <td align="left" valign="top" width="35%">
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            </td>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">&#160;
                </font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">&#160;
                </font></div>
            </td>
            <td valign="top" width="26%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: Times New Roman, serif">December
                27</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">,
                2005 </font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="35%">&#160;</td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="35%">&#160;</td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td valign="top" width="26%">&#160;</td>
          </tr>
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            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="35%">&#160;</td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td valign="top" width="26%">&#160;</td>
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            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="35%">&#160;</td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td valign="top" width="26%">&#160;</td>
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          <tr>
            <td valign="top" width="35%">
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                27</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">,
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            <td valign="top" width="35%">&#160;</td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="35%">&#160;</td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td valign="top" width="26%">&#160;</td>
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            <td align="left" valign="top" width="80%" style="border-bottom: medium none;">&#160;</td>
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            <td width="10%">&#160;</td>
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            <td width="10%">&#160;</td>
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            <td align="left" valign="top" width="80%" style="border-bottom: medium none;">&#160;</td>
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          <tr>
            <td width="10%">&#160;</td>
            <td align="left" valign="top" width="10%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">4.4
                </font></div>
            </td>
            <td align="left" valign="top" width="80%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Form
                of Non-Plan Stock Option Agreement (4)</font></div>
            </td>
          </tr>
          <tr>
            <td width="10%">&#160;</td>
            <td align="left" valign="top" width="10%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="top" width="80%" style="border-bottom: medium none;">&#160;</td>
          </tr>
          <tr>
            <td width="10%">&#160;</td>
            <td align="left" valign="top" width="10%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">5.1</font></div>
            </td>
            <td align="left" valign="top" width="80%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><a href="ex5-1.htm">Opinion
                of Sichenzia Ross Friedman Ference
                LLP.</a></font></div>
            </td>
          </tr>
          <tr>
            <td width="10%">&#160;</td>
            <td align="left" valign="top" width="10%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="top" width="80%" style="border-bottom: medium none;">&#160;</td>
          </tr>
          <tr>
            <td width="10%">&#160;</td>
            <td align="left" valign="top" width="10%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">23.1</font></div>
            </td>
            <td align="left" valign="top" width="80%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Consent
                of Sichenzia Ross Friedman Ference LLP is contained in Exhibit
                5.1.</font></div>
            </td>
          </tr>
          <tr>
            <td width="10%">&#160;</td>
            <td align="left" valign="top" width="10%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="top" width="80%" style="border-bottom: medium none;">&#160;</td>
          </tr>
          <tr>
            <td width="10%">&#160;</td>
            <td align="left" valign="top" width="10%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">23.2</font></div>
            </td>
            <td align="left" valign="top" width="80%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif"><a href="ex23-2.htm">Consent
                of BDO Seidman, LLP.</a></font></div>
            </td>
          </tr>
          <tr>
            <td width="10%">&#160;</td>
            <td align="left" valign="top" width="10%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="top" width="80%" style="border-bottom: medium none;">&#160;</td>
          </tr>
          <tr>
            <td width="10%">&#160;</td>
            <td align="left" valign="top" width="10%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">24.1</font></div>
            </td>
            <td align="left" valign="top" width="80%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Power
                of Attorney (Included on signature page).</font></div>
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            <td align="left" colspan="2" valign="top" width="90%" style="border-bottom: black thin solid;">&#160;</td>
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                </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, serif">Incorporated
                by reference to Exhibit 4.1 filed with the Company's Current Report
                on
                Form 8-K filed on April 30, 2003.</font></div>
            </td>
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            <td width="10%">&#160;</td>
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                Incorporated by reference to Appendix B filed with the Company's
                Definitive Proxy Statement on Schedule 14A filed on August 31,
                2005.</font></div>
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                Incorporated by reference to Appendix C filed with the Company's
                Definitive Proxy Statement on Schedule 14A filed on August 31,
                2005.</font></div>
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                Incorporated by reference to Exhibit 4.3 filed with the Company's
                Registration Statement on Form S-8 filed on October 4,
                2004.</font></div>
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{"company-data": {"conformed-name": "CALLISTO PHARMACEUTICALS INC", "cik": "0001142380", "assigned-sic": "2834", "irs-number": "651107840", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-8", "act": "33", "file-number": "333-130716", "film-number": "051287555"}, "business-address": {"street1": "420 LEXINGTON AVENUE", "street2": "SUITE 601", "city": "NEW YORK", "state": "NY", "zip": "10170", "phone": "2126729190"}, "mail-address": {"street1": "420 LEXINGTON AVENUE", "street2": "SUITE 601", "city": "NEW YORK", "state": "NY", "zip": "10170"}, "former-company": {"former-conformed-name": "WEBTRONICS INC", "date-changed": "20010611"}}
Registration Statement Under the Securities Act of 1933
As
      filed with the Securities and Exchange Commission on December 27, 2005
Registration
      No. 333-___________
UNITED
      STATES
SECURITIES
      AND EXCHANGE COMMISSION
Washington,
      D.C. 20549
FORM
      S-8
REGISTRATION
      STATEMENT
UNDER
THE
      SECURITIES ACT OF 1933
CALLISTO
      PHARMACEUTICALS, INC.
(Exact
      name of registrant as specified in its charter)
Delaware
13-3894575
(State
                or other jurisdiction of incorporation or organization)
(IRS
                Employer Identification No.)
420
      Lexington Avenue, Suite 1609
New
      York, New York 10170
(Address
      of principal executive offices) (Zip Code)
1996
      INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
2005
      EQUITY COMPENSATION INCENTIVE PLAN
2005
      DIRECTORS' STOCK OPTION
      PLAN
AND
      NON-PLAN EMPLOYEE OPTIONS
(Full
      title of Plan)
Gary
      S. Jacob, Ph.D., Chief Executive Officer
420
      Lexington Avenue, Suite 1609
New
      York, New York 10170
(Name
      and address of agent for service)
(212)
      297-0010
(Telephone
      number, including area code, of agent for service)
With
      a copy to:
Jeffrey
      J. Fessler, Esq.
Sichenzia
      Ross Friedman Ference LLP
1065
      Avenue of Americas
New
      York, NY 10018
(212)
      930-9700
Fax
      (212) 930-9725
CALCULATION
      OF REGISTRATION FEE
Title
                of
Securities
to
                be
Registered
Proposed
Maximum
Amount
to
                be
Registered
                (1)
Proposed
Maximum
Offering
Price
Per
                Share
Aggregate
Offering
Price
Amount
                of
Registration
Fee
Common
                Stock,
$.0001
                par value
10,000
                (2
)
$
1.80
                (7
)
$
3,179,459
$
340
10,000
                (2
)
1.75
                (7
)
375,000
                (2
)
1.70
                (7
)
45,000
                (2
)
1.60
                (7
)
200,000
                (2
)
1.54
                (7
)
475,000
                (2
)
1.53
                (7
)
145,000
                (2
)
1.50
                (7
)
75,000
                (2
)
1.38
                (7
)
50,000
                (2
)
1.10
                (7
)
225,000
                (2
)
1.03
                (7
)
550,000
                (2
)
1.01
                (7
)
76,984
                (2
)
1.00
                (7
)
25,000
                (2
)
0.97
                (7
)
30,000
                (3
)
1.17
                (7
)
22,500
                (3
)
1.45
                (7
)
45,000
                (4
)
1.50
                (7
)
Common
                Stock, $.0001 par value
5,000,000
                (5
)
1.43
                (8
)
7,150,000
765
Common
                Stock, $.0001 par value
1,447,500
                (6
)
1.43
                (8
)
2,069,925
222
Total:
8,806,984
$
12,399,384
$
1,327
(1)
      Pursuant to Rule 416 promulgated under the Securities Act of 1933, as amended,
      this registration statement covers such indeterminate additional shares of
      common stock to be offered or issued to prevent
dilution
      as a result of future stock splits, stock dividends or other similar
      transactions.
(2)
      Consists of shares of common stock issuable upon exercise of options outstanding
      pursuant to our 1996 Incentive and Non-Qualified Stock Option Plan.
(3)
      Consists of shares of common stock issuable upon exercise of options outstanding
      pursuant to our 2005 Directors' Stock Option Plan.
(4)
      Consists of shares of common stock issuable upon exercise of outstanding
      non-Plan employee options.
(5)
      Consists of shares of common stock issuable upon exercise of options available
      for grant pursuant to our 2005 Equity Compensation Incentive Plan.
(6)
      Consists of shares of common stock issuable upon exercise of options available
      for grant pursuant to our 2005 Directors' Stock Option Plan.
(7)
      Pursuant to Rule 457(h) under the Securities Act, the proposed maximum offering
      price per share was calculated for an aggregate of 2,261,984 shares of common
      stock issuable upon exercise of outstanding options granted under the 1996
      Plan,
      for an aggregate of 52,500 shares of common stock issuable upon exercise of
      outstanding options granted under the 2005 Directors' Stock Option Plan, and
      45,000 shares of common stock issuable upon exercise of outstanding non-Plan
      options, based on the per share exercise prices of such options, as set forth
      in
      the Calculation of Registration Fee table.
2
(8)
      Estimated solely for purposes of calculating the registration fee in accordance
      with Rule 457(c) under the Securities Act of 1933, using the average of the
      high
      and low price as reported on the American Stock Exchange on December 23,
      2005.
3
EXPLANATORY
      NOTE
This
      Registration Statement is being filed in accordance with the requirements of
      Form S-8 in order to register an aggregate of 8,806,984 shares of our common
      stock, par value $0.0001 per share, consisting of (i) 2,261,984 shares of common
      stock issuable upon exercise of options outstanding pursuant to our 1996
      Incentive and Non-Qualified Stock Option Plan, (ii) 5,000,000 shares of common
      stock issuable upon exercise of options available for grant pursuant to our
      2005
      Equity Compensation Incentive Plan, (iii) 1,447,500 shares of common stock
      issuable upon exercise of options available for grant pursuant to our 2005
      Directors' Stock Option Plan, (iv) 52,500 shares of common stock issuable upon
      exercise of options outstanding pursuant to our 2005 Directors' Stock Option
      Plan and (v) 45,000 shares of common stock issuable upon exercise of outstanding
      non-plan employee options.
In
      addition, the Prospectus filed as part of this Registration Statement has been
      prepared in accordance with the requirements of Form S-3 and may be used for
      reofferings and resales of up to an aggregate of 2,089,484 shares of our common
      stock, consisting of (i) 2,036,984 shares issuable upon exercise of options
      previously granted by us to our officers and directors under our 1996 Incentive
      and Non-Qualified Stock Option Plan, and (ii) 52,500 shares issuable upon
      exercise of options previously granted by us to our directors under our 2005
      Directors' Stock Option Plan.
PART
      I
Item
      1. Plan Information.
The
      documents containing the information specified in Item 1 will be sent or given
      to participants in the 1996 Incentive and Non-Qualified Stock Option Plan,
      the
      2005 Equity Compensation Incentive Plan and the 2005 Directors' Stock Option
      Plan as specified by Rule 428(b)(1) of the Securities Act of 1933, as amended
      (the "Securities Act"). Such documents are not required to be and are not filed
      with the Securities and Exchange Commission (the "SEC") either as part of this
      Registration Statement or as prospectuses or prospectus supplements pursuant
      to
      Rule 424. These documents and the documents incorporated by reference in this
      Registration Statement pursuant to Item 3 of Part II of this Form S-8, taken
      together, constitute a prospectus that meets the requirements of Section 10(a)
      of the Securities Act.
Item
      2. Registrant Information and Employee Plan Annual Information.
Upon
      written or oral request, any of the documents incorporated by reference in
      Item
      3 of Part II of this Registration Statement (which documents are incorporated
      by
      reference in this Section 10(a) Prospectus), other documents required to be
      delivered to eligible employees, non-employee directors and consultants,
      pursuant to Rule 428(b) are available without charge by contacting:
Gary
      S. Jacob, Ph.D., Chief Executive Officer
420
      Lexington Avenue, Suite 1609
New
      York, New York 10170
(212)
      297-0010
4
Prospectus
Callisto
      Pharmaceuticals, Inc.
2,089,484
SHARES
      OF COMMON STOCK
1996
      Incentive and Non-Qualified Stock Option Plan
2005
      Directors' Stock Option Plan
This
      prospectus relates to the sale of up to 2,089,484 shares of common stock
      Callisto Pharmaceuticals, Inc. offered by certain holders of our securities,
      including up to (i) 2,036,984 shares issuable upon exercise of options
      previously granted by us to our officers and directors under our 1996 Incentive
      and Non-Qualified Stock Option Plan, and (ii) 52,500 shares issuable upon
      exercise of options previously granted by us to our directors under our 2005
      Directors' Stock Option Plan. The shares may be offered by the selling
      stockholders from time to time in regular brokerage transactions, in
      transactions directly with market makers or in certain privately negotiated
      transactions. For additional information on the methods of sale, you should
      refer to the section entitled "Plan of Distribution." We will not receive any
      of
      the proceeds from the sale of the shares by the selling stockholders.
Our
      common stock trades on the American Stock Exchange under the symbol
      "KAL."
On
      December 23, 2005, the closing sale price of the common stock was $1.45 per
      share.
The
      securities offered hereby are speculative and involve a high degree of risk
      and
      substantial dilution. Only investors who can bear the risk of loss of their
      entire investment should invest. See "Risk Factors" beginning on page
      9.
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.
The
      date of this prospectus is December 27, 2005
5
TABLE
      OF CONTENTS
Page
Prospectus
                Summary
7
Risk
                Factors
9
Forward-Looking
                Statements
21
Selling
                Stockholders
22
Plan
                of Distribution
23
Legal
                Matters
23
Experts
23
Incorporation
                of Certain Documents by
                Reference
24
Disclosure
                of Commission Position on Indemnification
                For Securities Act Liabilities
24
Additional
                Information Available to
                You
25
NO
      PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
      REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN CONNECTION
      WITH THE OFFERING MADE HEREBY, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
      REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
      OR ANY OTHER PERSON. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
      HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS
      BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS
      PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER
      TO
      BUY ANY SECURITIES OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH
      OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH
      OFFER
      OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS
      UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
6
PROSPECTUS
      SUMMARY
Overview
We
      are a biopharmaceutical company focused on the development of drugs to treat
      relapsed (re-occurrence of active disease) acute leukemia, multiple myeloma
      (an
      incurable blood cancer that invades and proliferates in bone marrow), other
      cancers and osteolytic bone disease (bone disease caused by white blood cells).
      Our lead drug candidate, L-Annamycin, a drug from the anthracycline family
      (chemotherapy drugs which are derived from antibiotics), earlier completed
      an
      initial Phase I/IIa clinical trial in relapsed or refractory leukemia patients
      with a prior sponsor. L-Annamycin, originally developed by scientists at The
      University of Texas M.D. Anderson Cancer Center to address the clinical
      limitations associated with anthracycline drugs such as Adriamycin (doxorubicin)
      to treat cancer, began a clinical trial at The University of Texas M.D. Anderson
      Cancer Center in adult relapsed acute lymphocytic leukemia (ALL) patients on
      December 1, 2005. This single-arm, open label trial will enroll 12 patients
      in a
      dose escalation Phase I portion, followed by 10 patients in a final fixed dose
      in the Phase II portion. We plan to treat up to 34 patients. We also expect
      to
      commence two additional trials of L-Annamycin in 2006, a single agent trial
      in
      pediatric relapsed ALL patients and a combination therapy trial with Ara-C
      (cytosine arabinoside) in relapsed acute myeloid leukemia (AML) patients.
Our
      second drug candidate, Atiprimod, is an orally administered drug with
      antiproliferative and antiangiogenic activity. Atiprimod commenced a Phase
      I/IIa
      clinical trial in relapsed multiple myeloma patients on May 26, 2004. These
      are
      patients that have a re-occurrence of active disease, and no longer respond
      to
      approved therapies. The Phase I/IIa clinical trial is being performed at four
      sites, The University of Texas M.D. Anderson Cancer Center (Houston, TX), the
      Dana-Farber Cancer Institute (Boston, MA), the St. Vincent's Comprehensive
      Cancer Center (New York, NY) and the Roswell Park Cancer Institute (Buffalo,
      NY). In Dcember 2005, we announced an update on interim results from this trial
      performed in relapsed or refractory multiple myeloma patients which consisted
      of
      15 patients treated with Atiprimod, including 3 patients at the highest dose
      level of 180 mg/day. Two patients exhibited stable disease, with one patient
      having a 34% decrease in M protein (measure of tumor burden) over 3 months
      of
      treatment. It was also noted that two patients reported a subjective decrease
      in
      bone pain. We plan to continue this trial at higher dose levels until the
      maximum tolerated dose is reached and then treat 10 additional patients at
      that
      level.
On
      March 15, 2005 we announced a second Phase I/IIa clinical trial of Atiprimod
      in
      advanced cancer patients. The new trial is entitled: "An Open Label Study of
      the
      Safety and Efficacy of Atiprimod Treatment for Patients with Advanced Cancer".
      The trial is currently being conducted at the University of Texas M.D. Anderson
      Cancer Center.
History
In
      March 2002, Callisto Pharmaceuticals, Inc. ("Old Callisto") purchased 99.7%
      of
      the outstanding common shares of Webtronics, Inc., ("Webtronics") a public
      company for $400,000. Webtronics was incorporated in Florida on February 2,
      2001
      and had limited operations at December 31, 2002.
On
      April 30, 2003, pursuant to an Agreement and Plan of Merger dated March 10,
      2003, as amended April 4, 2003, Synergy Acquisition Corp., a wholly-owned
      subsidiary of Webtronics merged into Synergy Pharmaceuticals Inc. ("Synergy")
      and Callisto Acquisition Corp., a wholly-owned subsidiary of Webtronics merged
      into Old Callisto (collectively, the "Merger"). As a result of the Merger,
      Old
      Callisto and Synergy became wholly-owned subsidiaries of Webtronics. In the
      Merger Webtronics issued 17,318,994 shares of its common stock in exchange
      for
      outstanding Old Callisto common stock and an additional 4,395,684 shares in
      exchange for outstanding Synergy common stock. Old Callisto changed its name
      to
      Callisto Research Labs, LLC ("Callisto Research") and Webtronics changed its
      name to Callisto Pharmaceuticals, Inc. and changed its state of incorporation
      from Florida to Delaware. Subsequently, 171,818 shares of common stock issued
      to
      former Synergy shareholders were returned to us under the terms of certain
      indemnification agreements.
Our
      principal executive office is located at 420 Lexington Avenue, Suite 1609,
      New
      York, New York 10170.
7
This
      Offering
Shares
                of common stock outstanding prior to this offering
33,233,096
                (1)
Shares
                    of common stock issuable upon exercise of outstanding options
                    which may be
                    offered pursuant to this prospectus
2,089,484
Use
                of proceeds
We
                will not receive any proceeds from the sale of the shares of common
                stock
                offered in this prospectus. We will receive proceeds to the extent
                that
                currently outstanding options are exercised for cash. We will use
                the
                exercise proceeds, if any, for working capital and general corporate
                purposes.
Risk
                Factors
The
                purchase of our common stock involves a high degree of
risk.
                You should carefully review and consider "Risk Factors" beginning
                on page
                9.
American
                Stock Exchange Symbol
KAL
(1)
      As of December 23, 2005. Does not include shares of common stock issuable upon
      exercise of outstanding options or warrants.
8
RISK
      FACTORS
Investment
      in our common stock involves a high degree of risk. You should consider the
      following discussion of risks as well as other information in this prospectus.
      The risks and uncertainties described below are not the only ones. If any of
      the
      following risks actually occur, our business could be harmed. In such case,
      the
      trading price of our common stock could decline.
RISKS
      RELATED TO OUR BUSINESS
WE
      ARE AT AN EARLY STAGE OF DEVELOPMENT AS A COMPANY, CURRENTLY HAVE NO SOURCE
      OF
      REVENUE AND MAY NEVER BECOME PROFITABLE.
We
      are a development stage biopharmaceutical company. Currently, we have no
      products approved for commercial sale and, to date, we have not generated any
      revenue. Our ability to generate revenue depends heavily on:
·
demonstration
                in Phase I/IIa and Phase IIb clinical trials that our two product
                candidates, Atiprimod for the treatment of relapsed multiple myeloma
                and
                L-Annamycin for the treatment of relapsed acute leukemia, respectively,
                are safe and effective;
·
the
                successful development of our other product
                candidates;
·
our
                ability to seek and obtain regulatory approvals, including with respect
                to
                the indications we are seeking;
·
the
                successful commercialization of our product candidates;
                and
·
market
                acceptance of our products.
All
      of our existing product candidates will require extensive additional clinical
      evaluation, regulatory review, significant marketing efforts and substantial
      investment before they could provide us with any revenue. For example, Atiprimod
      for the treatment of multiple myeloma entered Phase I/IIa clinical trials in
      May
      2004 and L-Annamycin for the treatment of acute leukemia entered clinical trials
      in December 2005. Our other product candidates are in preclinical development.
      As a result, if we do not successfully develop and commercialize Atiprimod
      or
      L-Annamycin, we will be unable to generate any revenue for many years, if at
      all. We do not anticipate that we will generate revenue for several years,
      at
      the earliest, or that we will achieve profitability for at least several years
      after generating material revenue, if at all. If we are unable to generate
      revenue, we will not become profitable, and we may be unable to continue our
      operations.
WE
      HAVE INCURRED SIGNIFICANT LOSSES SINCE INCEPTION AND ANTICIPATE THAT WE WILL
      INCUR CONTINUED LOSSES FOR THE FORESEEABLE FUTURE.
As
      of September 30, 2005 and December 31, 2004, we had an accumulated deficit
      of
      $
41,886,574
and
      $33,361,197, respectively. We have incurred losses in each year since our
      inception in 1996. We incurred a net loss of $
8,525,377
for
      the nine months ended September 30, 2005 and $7,543,467 and $13,106,247 for
      the
      years ended December 31, 2004 and 2003, respectively. These losses, among other
      things, have had and will continue to have an adverse effect on our
      stockholders' equity and working capital. We expect to incur significant and
      increasing operating losses for the next several years as we expand our research
      and development, continue our clinical trials of Atiprimod for the treatment
      of
      multiple myeloma, initiate our clinical trials of L-Annamycin for the treatment
      of acute leukemias, acquire or license technologies, advance our other product
      candidates into clinical development, seek regulatory approval and, if we
      receive FDA approval, commercialize our products. Because of the numerous risks
      and uncertainties associated with our product development efforts, we are unable
      to predict the extent of any future losses or when we will become profitable,
      if
      at all. If we are unable to achieve and then maintain profitability, the market
      value of our common stock will likely decline.
WE
      WILL NEED TO RAISE SUBSTANTIAL ADDITIONAL CAPITAL TO FUND OUR OPERATIONS, AND
      OUR FAILURE TO OBTAIN FUNDING WHEN NEEDED MAY FORCE US TO DELAY, REDUCE OR
      ELIMINATE OUR PRODUCT DEVELOPMENT PROGRAMS OR COLLABORATION EFFORTS.
Our
      operations have consumed substantial amounts of cash since inception. We expect
      to continue to spend substantial amounts to:
9
·
complete
                the clinical development of our two lead product candidates, Atiprimod
                for
                the treatment of multiple myeloma and L-Annamycin for the treatment
                of
                acute leukemia;
·
continue
                the development of our other product
                candidates;
·
finance
                our general and administrative
                expenses;
·
prepare
                regulatory approval applications and seek approvals for Atiprimod
                and
                L-Annamycin and our other product
                candidates;
·
license
                or acquire additional technologies;
·
launch
                and commercialize our product candidates, if any such product candidates
                receive regulatory approval; and
·
develop
                and implement sales, marketing and distribution
                capabilities.
In
      2004, our cash used in operations increased significantly over 2003 and we
      expect that our cash used in operations will increase significantly for the
      next
      several years. For the nine months ended September 30, 2005, we have spent
      approximately $6.5 million or approximately $722,000 per month. As of September
      30, 2005, we had $3,541,265 in cash and cash equivalents. We will be required
      to
      raise additional capital within the next twelve months to complete the
      development and commercialization of our current product candidates and to
      continue to fund operations at the current cash expenditure levels. Our future
      funding requirements will depend on many factors, including, but not limited
      to:
·
the
                rate of progress and cost of our clinical trials and other development
                activities;
·
any
                future decisions we may make about the scope and prioritization of
                the
                programs we pursue;
·
the
                costs of filing, prosecuting, defending and enforcing any patent
                claims
                and other intellectual property
                rights;
·
the
                costs and timing of regulatory
                approval;
·
the
                costs of establishing sales, marketing and distribution
                capabilities;
·
the
                effect of competing technological and market
                developments;
·
the
                terms and timing of any collaborative, licensing and other arrangements
                that we may establish; and
·
general
                market conditions for offerings from biopharmaceutical
                companies.
To
      date, our sources of cash have been primarily limited to the sale of our equity
      securities. We cannot be certain that additional funding will be available
      on
      acceptable terms, or at all. To the extent that we raise additional funds by
      issuing equity securities, our stockholders may experience significant dilution.
      Any debt financing, if available, may involve restrictive covenants that impact
      our ability to conduct our business. If we are unable to raise additional
      capital when required or on acceptable terms, we may have to significantly
      delay, scale back or discontinue the development and/or commercialization of
      one
      or more of our product candidates. We also may be required to:
·
seek
                collaborators for our product candidates at an earlier stage than
                otherwise would be desirable and on terms that are less favorable
                than
                might otherwise be available; and
·
relinquish,
                license or otherwise dispose of rights to technologies, product candidates
                or products that we would otherwise seek to develop or commercialize
                ourselves on unfavorable terms.
IF
      OUR AGREEMENTS WITH ANORMED INC. OR THE UNIVERSITY OF TEXAS M.D. ANDERSON CANCER
      CENTER TERMINATE, OUR BUSINESS WOULD BE ADVERSELY AFFECTED.
Our
      business is dependent on rights we have licensed from AnorMED Inc. and The
      University of Texas M.D. Anderson Cancer Center. Under the terms of the AnorMED
      license agreement, we are obligated to make a maintenance fee payment of
      $200,000 on January 1 of each year for the term of the license agreement.
      Pursuant to the license agreement, failure to pay the maintenance fee is a
      material breach of the agreement. We do not anticipate failing to pay the
      maintenance fee, however in the event we cannot pay the maintenance fee, AnorMED
      may terminate the license agreement and we would not be able to further develop
      and commercialize Atiprimod which would have an adverse effect on our business.
      Under the terms of The University of Texas M.D. Anderson Cancer Center license
      agreement, we are required to make certain good faith expenditures towards
      the
      clinical development of at least one licensed product within the two year period
      after March 2005. In addition, at any time after 5 years from August 12, 2004,
      The University of Texas M.D. Anderson Cancer Center has the right to terminate
      the license if we
10
fail
      to provide evidence within 90 days of written notice that we have commercialized
      or we are actively and effectively attempting to commercialize L-Annamycin.
      If
      we fail to fulfill these obligations or other material obligations, The
      University of Texas M.D. Anderson Cancer Center license agreement may be
      terminated and our business would be adversely affected.
CLINICAL
      TRIALS INVOLVE A LENGTHY AND EXPENSIVE PROCESS WITH AN UNCERTAIN OUTCOME, AND
      RESULTS OF EARLIER STUDIES AND TRIALS MAY NOT BE PREDICTIVE OF FUTURE TRIAL
      RESULTS.
In
      order to receive regulatory approval for the commercialization of our product
      candidates, we must conduct, at our own expense, extensive clinical trials
      to
      demonstrate safety and efficacy of these product candidates. Clinical testing
      is
      expensive, can take many years to complete and its outcome is uncertain. Failure
      can occur at any time during the clinical trial process.
The
      results of preclinical studies and early clinical trials of our product
      candidates do not necessarily predict the results of later-stage clinical
      trials. Product candidates in later stages of clinical trials may fail to show
      the desired safety and efficacy traits despite having progressed through initial
      clinical testing. The data collected from clinical trials of our product
      candidates may not be sufficient to support the submission of a new drug
      application or to obtain regulatory approval in the United States or elsewhere.
      Because of the uncertainties associated with drug development and regulatory
      approval, we cannot determine if or when we will have an approved product for
      commercialization or achieve sales or profits.
DELAYS
      IN CLINICAL TESTING COULD RESULT IN INCREASED COSTS TO US AND DELAY OUR ABILITY
      TO GENERATE REVENUE.
While
      to date there has been no delays in our clinical trials, enrollment in our
      Atiprimod Phase I/IIa trial in multiple myeloma was slower than anticipated
      due
      to limited availability of relapsed multiple myeloma patients. In the future,
      we
      may experience delays in clinical testing of our product candidates. We do
      not
      know whether planned clinical trials will begin on time, will need to be
      redesigned or will be completed on schedule, if at all. Clinical trials can
      be
      delayed for a variety of reasons, including delays in obtaining regulatory
      approval to commence a trial, in reaching agreement on acceptable clinical
      trial
      terms with prospective sites, in obtaining institutional review board approval
      to conduct a trial at a prospective site, in recruiting patients to participate
      in a trial or in obtaining sufficient supplies of clinical trial materials.
      Many
      factors affect patient enrollment, including the size of the patient population,
      the proximity of patients to clinical sites, the eligibility criteria for the
      trial, competing clinical trials and new drugs approved for the conditions
      we
      are investigating. Prescribing physicians will also have to decide to use our
      product candidates over existing drugs that have established safety and efficacy
      profiles. Any delays in completing our clinical trials will increase our costs,
      slow down our product development and approval process and delay our ability
      to
      generate revenue.
WE
      MAY BE REQUIRED TO SUSPEND OR DISCONTINUE CLINICAL TRIALS DUE TO UNEXPECTED
      SIDE
      EFFECTS OR OTHER SAFETY RISKS THAT COULD PRECLUDE APPROVAL OF OUR PRODUCT
      CANDIDATES.
Our
      clinical trials may be suspended at any time for a number of reasons. For
      example, we may voluntarily suspend or terminate our clinical trials if at
      any
      time we believe that they present an unacceptable risk to the clinical trial
      patients. In addition, regulatory agencies may order the temporary or permanent
      discontinuation of our clinical trials at any time if they believe that the
      clinical trials are not being conducted in accordance with applicable regulatory
      requirements or that they present an unacceptable safety risk to the clinical
      trial patients.
Administering
      any product candidates to humans may produce undesirable side effects. These
      side effects could interrupt, delay or halt clinical trials of our product
      candidates and could result in the FDA or other regulatory authorities denying
      further development or approval of our product candidates for any or all
      targeted indications. Ultimately, some or all of our product candidates may
      prove to be unsafe for human use. Moreover, we could be subject to significant
      liability if any volunteer or patient suffers, or appears to suffer, adverse
      health effects as a result of participating in our clinical trials.
11
IF
      WE ARE UNABLE TO SATISFY REGULATORY REQUIREMENTS, WE MAY NOT BE ABLE TO
      COMMERCIALIZE OUR PRODUCT CANDIDATES.
We
      need FDA approval prior to marketing our product candidates in the United States
      of America. We commenced in May 2004 a Phase I/IIa trial of Atiprimod for the
      treatment of multiple myeloma. In addition, we commenced a Phase I/IIa clinical
      trial of L-Annamycin for the treatment of acute lymphocytic leukemia in December
      2005. If we fail to obtain FDA approval to market our product candidates, we
      will be unable to sell our product candidates in the United States of America
      and we will not generate any revenue.
This
      regulatory review and approval process, which includes evaluation of preclinical
      studies and clinical trials of a product candidate as well as the evaluation
      of
      our manufacturing process and our contract manufacturers' facilities, is
      lengthy, expensive and uncertain. To receive approval, we must, among other
      things, demonstrate with substantial evidence from well-controlled clinical
      trials that the product candidate is both safe and effective for each indication
      where approval is sought. Satisfaction of these requirements typically takes
      several years and the time needed to satisfy them may vary substantially, based
      on the type, complexity and novelty of the pharmaceutical product. We cannot
      predict if or when we might submit for regulatory review any of our product
      candidates currently under development. Any approvals we may obtain may not
      cover all of the clinical indications for which we are seeking approval. Also,
      an approval might contain significant limitations in the form of narrow
      indications, warnings, precautions, or contra-indications with respect to
      conditions of use.
The
      FDA has substantial discretion in the approval process and may either refuse
      to
      file our application for substantive review or may form the opinion after review
      of our data that our application is insufficient to allow approval of our
      product candidates. If the FDA does not file or approve our application, it
      may
      require that we conduct additional clinical, preclinical or manufacturing
      validation studies and submit that data before it will reconsider our
      application. Depending on the extent of these or any other studies, approval
      of
      any applications that we submit may be delayed by several years, or may require
      us to expend more resources than we have available. It is also possible that
      additional studies, if performed and completed, may not be considered sufficient
      by the FDA to make our applications approvable. If any of these outcomes occur,
      we may be forced to abandon our applications for approval, which might cause
      us
      to cease operations.
We
      will also be subject to a wide variety of foreign regulations governing the
      development, manufacture and marketing of our products. Whether or not FDA
      approval has been obtained, approval of a product by the comparable regulatory
      authorities of foreign countries must still be obtained prior to manufacturing
      or marketing the product in those countries. The approval process varies from
      country to country and the time needed to secure approval may be longer or
      shorter than that required for FDA approval. We cannot assure you that clinical
      trials conducted in one country will be accepted by other countries or that
      approval in one country will result in approval in any other country.
IF
      OUR PRODUCT CANDIDATES ARE UNABLE TO COMPETE EFFECTIVELY WITH MARKETED CANCER
      DRUGS TARGETING SIMILAR INDICATIONS AS OUR PRODUCT CANDIDATES, OUR COMMERCIAL
      OPPORTUNITY WILL BE REDUCED OR ELIMINATED.
We
      face competition from established pharmaceutical and biotechnology companies,
      as
      well as from academic institutions, government agencies and private and public
      research institutions. Many of our competitors have significantly greater
      financial resources and expertise in research and development, manufacturing,
      preclinical testing, conducting clinical trials, obtaining regulatory approvals
      and marketing approved products than we do. Smaller or early-stage companies
      may
      also prove to be significant competitors, particularly through collaborative
      arrangements with large, established companies. Our commercial opportunity
      will
      be reduced or eliminated if our competitors develop and commercialize cancer
      drugs that are safer, more effective, have fewer side effects or are less
      expensive than our product candidates. These third parties compete with us
      in
      recruiting and retaining qualified scientific and management personnel,
      establishing clinical trial sites and patient registration for clinical trials,
      as well as in acquiring technologies and technology licenses complementary
      to
      our programs or advantageous to our business.
We
      expect that our ability to compete effectively will depend upon our ability
      to:
12
·
successfully
                and rapidly complete clinical trials and submit for and obtain all
                requisite regulatory approvals in a cost-effective
                manner;
·
maintain
                a proprietary position for our products and manufacturing processes
                and
                other related product technology;
·
attract
                and retain key personnel;
·
develop
                relationships with physicians prescribing these products;
                and
·
build
                an adequate sales and marketing infrastructure for our product
                candidates.
Because
      we will be competing against significantly larger companies with established
      track records, we will have to demonstrate to physicians that, based on
      experience, clinical data, side-effect profiles and other factors, our products
      are preferable to existing cancer drugs. If we are unable to compete effectively
      in the cancer drug market and differentiate our products from currently marketed
      cancer drugs, we may never generate meaningful revenue.
Numerous
      pharmaceutical and biotechnology companies have developed anthracycline drugs
      used to treat acute leukemias similar to our compound, L-Annamycin. These
      compounds include Adriamycin® and Ellence® which are marketed by Pfizer and
      Cerubidine® which is marketed by Boehringer Ingelheim. These drugs have been
      approved by the FDA and are currently being marketed as opposed to L-Annamycin
      which is in clinical development. Atiprimod, our drug candidate for relapsed
      multiple myeloma, works through a different mechanism of action than Velcade
      which is currently marketed by Millenium Pharmaceuticals and other drugs in
      development, such as Celgene Corporation's Revlimid.
WE
      CURRENTLY HAVE NO SALES AND MARKETING ORGANIZATION. IF WE ARE UNABLE TO
      ESTABLISH A DIRECT SALES FORCE IN THE UNITED STATES TO PROMOTE OUR PRODUCTS,
      THE
      COMMERCIAL OPPORTUNITY FOR OUR PRODUCTS MAY BE DIMINISHED.
We
      currently have no sales and marketing organization. If any of our product
      candidates are approved by the FDA, we intend to market that product directly
      to
      hospitals in the United States of America through our own sales force. We will
      incur significant additional expenses and commit significant additional
      management resources to establish this sales force. We may not be able to
      establish these capabilities despite these additional expenditures. We will
      also
      have to compete with other pharmaceutical and biotechnology companies to
      recruit, hire and train sales and marketing personnel. If we elect to rely
      on
      third parties to sell our product candidates in the United States, we may
      receive less revenue than if we sold our products directly. In addition, we
      may
      have little or no control over the sales efforts of those third parties. In
      the
      event we are unable to develop our own sales force or collaborate with a third
      party to sell our product candidates, we may not be able to commercialize our
      product candidates which would negatively impact our ability to generate
      revenue.
WE
      MAY NEED OTHERS TO MARKET AND COMMERCIALIZE OUR PRODUCT CANDIDATES IN
      INTERNATIONAL MARKETS.
In
      the future, if appropriate regulatory approvals are obtained, we intend to
      commercialize our product candidates in international markets. However, we
      have
      not decided how to commercialize our product candidates in those markets. We
      may
      decide to build our own sales force or sell our products through third parties.
      Currently, we do not have any plans to enter international markets. If we decide
      to sell our product candidates in international markets through a third party,
      we may not be able to enter into any marketing arrangements on favorable terms
      or at all. In addition, these arrangements could result in lower levels of
      income to us than if we marketed our product candidates entirely on our own.
      If
      we are unable to enter into a marketing arrangement for our product candidates
      in international markets, we may not be able to develop an effective
      international sales force to successfully commercialize those products in
      international markets. If we fail to enter into marketing arrangements for
      our
      products and are unable to develop an effective international sales force,
      our
      ability to generate revenue would be limited.
IF
      OUR RELATIONSHIP WITH OUR CONTRACT MANUFACTURER FOR L-ANNAMYCIN TERMINATES,
      OR
      THEIR FACILITIES ARE DAMAGED OR DESTROYED, WE MAY BE UNABLE TO DEVELOP OR
      COMMERCIALIZE L-ANNAMYCIN.
Currently,
      Antibioticos S.p.A. is our sole supplier of Annamycin (drug substance that
      is
      the active component of the final formulated L-Annamycin drug product). If
      our
      relationship with this contract
13
manufacturer,
      or any other contract manufacturer we might use, terminates or if any of their
      facilities are damaged for any reason, including fire, flood, earthquake or
      other similar event, we may be unable to obtain supply of Annamycin. If any
      of
      these events were to occur, we may need to find alternative manufacturers or
      manufacturing facilities. The number of contract manufacturers with the
      expertise, required regulatory approvals and facilities to manufacture Annamycin
      on a commercial scale is extremely limited, and it would take a significant
      amount of time to arrange for alternative manufacturers. If we need to change
      to
      other commercial manufacturers, the FDA and comparable foreign regulators must
      approve these manufacturers' facilities and processes prior to our use, which
      would require new testing and compliance inspections. In addition, we may not
      have the intellectual property rights, or may have to share intellectual
      property rights, to any improvements in the current manufacturing processes
      or
      any new manufacturing processes for Annamycin. Any of these factors could cause
      us to delay or suspend clinical trials, regulatory submissions, required
      approvals or commercialization of L-Annamycin, entail higher costs, and could
      result in our being unable to commercialize L-Annamycin successfully.
      Furthermore, if our contract manufacturers fail to deliver the required
      commercial quantities of bulk drug substance or finished product on a timely
      basis and at commercially reasonable prices, and we were unable to find one
      or
      more replacement manufacturers capable of production at a substantially
      equivalent cost, in substantially equivalent volumes and quality, and on a
      timely basis, we would likely be unable to meet demand for L-Annamycin and
      we
      would lose potential revenue.
IF
      THE FDA DOES NOT APPROVE OUR CONTRACT MANUFACTURERS' FACILITIES, WE MAY BE
      UNABLE TO DEVELOP OR COMMERCIALIZE OUR PRODUCT CANDIDATES.
We
      rely on third-party contract manufacturers to manufacture our product
      candidates, and currently have no plans to develop our own manufacturing
      facility. The facilities used by our contract manufacturers to manufacture
      our
      product candidates must be approved by the FDA. If the FDA does not approve
      these facilities for the manufacture of our product, we may need to fund
      additional modifications to our manufacturing process, conduct additional
      validation studies, or find alternative manufacturing facilities, any of which
      would result in significant cost to us as well as a delay of up to several
      years
      in obtaining approval for and manufacturing of our product candidates. In
      addition, our contract manufacturers will be subject to ongoing periodic
      unannounced inspection by the FDA and corresponding state agencies for
      compliance with good manufacturing practices regulations, or cGMPs, and similar
      foreign standards. These regulations cover all aspects of the manufacturing,
      testing, quality control and record keeping relating to our product candidates.
      We do not have control over our contract manufacturers' compliance with these
      regulations and standards. Failure by our contract manufacturers to comply
      with
      applicable regulations could result in sanctions being imposed on us, including
      fines, injunctions, civil penalties, failure of the government to grant market
      approval of drugs, delays, suspension or withdrawals of approvals, operating
      restrictions and criminal prosecutions, any of which could significantly and
      adversely affect our business. In addition, we have no control over our contract
      manufacturers' ability to maintain adequate quality control, quality assurance
      and qualified personnel. Failure by our contract manufacturers to comply with
      or
      maintain any of these standards could adversely affect the development of our
      product candidates and our business.
IF
      PRODUCT LIABILITY LAWSUITS ARE SUCCESSFULLY BROUGHT AGAINST US, WE MAY INCUR
      SUBSTANTIAL LIABILITIES AND MAY BE REQUIRED TO LIMIT COMMERCIALIZATION OF OUR
      PRODUCT CANDIDATES.
We
      face an inherent risk of product liability lawsuits related to the testing
      of
      our product candidates, and will face an even greater risk if we sell our
      product candidates commercially. Currently, we are not aware of any anticipated
      product liability claims with respect to our product candidates. In the future,
      an individual may bring a liability claim against us if one of our product
      candidates causes, or merely appears to have caused, an injury. If we cannot
      successfully defend ourselves against the product liability claim, we may incur
      substantial liabilities. Regardless of merit or eventual outcome, liability
      claims may result in:
·
decreased
                demand for our product candidates;
·
injury
                to our reputation;
·
withdrawal
                of clinical trial participants;
·
costs
                of related litigation;
·
substantial
                monetary awards to patients;
·
product
                recalls;
·
loss
                of revenue; and
·
the
                inability to commercialize our product
                candidates.
14
We
      have "clinical trial" liability insurance with a $3,000,000 annual aggregate
      limit for up to 40 patients participating in our Atiprimod and L-Annamycin
      clinical trials. We intend to expand our insurance coverage to include the
      sale
      of commercial products if marketing approval is obtained for our product
      candidates. Our current insurance coverage may prove insufficient to cover
      any
      liability claims brought against us. In addition, because of the increasing
      costs of insurance coverage, we may not be able to maintain insurance coverage
      at a reasonable cost or obtain insurance coverage that will be adequate to
      satisfy any liability that may arise.
EVEN
      IF WE RECEIVE REGULATORY APPROVAL FOR OUR PRODUCT CANDIDATES, WE WILL BE SUBJECT
      TO ONGOING SIGNIFICANT REGULATORY OBLIGATIONS AND OVERSIGHT.
If
      we receive regulatory approval to sell our product candidates, the FDA and
      foreign regulatory authorities may, nevertheless, impose significant
      restrictions on the indicated uses or marketing of such products, or impose
      ongoing requirements for post-approval studies. Following any regulatory
      approval of our product candidates, we will be subject to continuing regulatory
      obligations, such as safety reporting requirements, and additional
      post-marketing obligations, including regulatory oversight of the promotion
      and
      marketing of our products. If we become aware of previously unknown problems
      with any of our product candidates here or overseas or our contract
      manufacturers' facilities, a regulatory agency may impose restrictions on our
      products, our contract manufacturers or on us, including requiring us to
      reformulate our products, conduct additional clinical trials, make changes
      in
      the labeling of our products, implement changes to or obtain re-approvals of
      our
      contract manufacturers' facilities or withdraw the product from the market.
      In
      addition, we may experience a significant drop in the sales of the affected
      products, our reputation in the marketplace may suffer and we may become the
      target of lawsuits, including class action suits. Moreover, if we fail to comply
      with applicable regulatory requirements, we may be subject to fines, suspension
      or withdrawal of regulatory approvals, product recalls, seizure of products,
      operating restrictions and criminal prosecution. Any of these events could
      harm
      or prevent sales of the affected products or could substantially increase the
      costs and expenses of commercializing and marketing these products.
WE
      RELY ON THIRD PARTIES TO CONDUCT OUR CLINICAL TRIALS. IF THESE THIRD PARTIES
      DO
      NOT SUCCESSFULLY CARRY OUT THEIR CONTRACTUAL DUTIES OR MEET EXPECTED DEADLINES,
      WE MAY NOT BE ABLE TO SEEK OR OBTAIN REGULATORY APPROVAL FOR OR COMMERCIALIZE
      OUR PRODUCT CANDIDATES.
We
      have agreements with third-party contract research organizations, or CROs,
      to
      provide monitors and to manage data for our clinical programs. We and our CROs
      are required to comply with current Good Clinical Practices, or GCPs,
      regulations and guidelines enforced by the FDA for all of our products in
      clinical development. The FDA enforces GCPs through periodic inspections of
      trial sponsors, principal investigators and trial sites. In the future, if
      we or
      our CROs fail to comply with applicable GCPs, the clinical data generated in
      our
      clinical trials may be deemed unreliable and the FDA may require us to perform
      additional clinical trials before approving our marketing applications. We
      cannot assure you that, upon inspection, the FDA will determine that any of
      our
      clinical trials for products in clinical development comply with GCPs. In
      addition, our clinical trials must be conducted with product produced under
      cGMP
      regulations, and will require a large number of test subjects. Our failure
      to
      comply with these regulations may require us to repeat clinical trials, which
      would delay the regulatory approval process.
If
      any of our relationships with these third-party CROs terminate, we may not
      be
      able to enter into arrangements with alternative CROs. If CROs do not
      successfully carry out their contractual duties or obligations or meet expected
      deadlines, if they need to be replaced, or if the quality or accuracy of the
      clinical data they obtain is compromised due to the failure to adhere to our
      clinical protocols, regulatory requirements or for other reasons, our clinical
      trials may be extended, delayed or terminated, and we may not be able to obtain
      regulatory approval for or successfully commercialize our product candidates.
      As
      a result, our financial results and the commercial prospects for our product
      candidates would be harmed, our costs could increase, and our ability to
      generate revenue could be delayed.
15
IF
      WE FAIL TO ATTRACT AND KEEP SENIOR MANAGEMENT AND KEY SCIENTIFIC PERSONNEL,
      WE
      MAY BE UNABLE TO SUCCESSFULLY DEVELOP OUR PRODUCT CANDIDATES, CONDUCT OUR
      CLINICAL TRIALS AND COMMERCIALIZE OUR PRODUCT CANDIDATES.
Our
      success depends in part on our continued ability to attract, retain and motivate
      highly qualified management, clinical and scientific personnel and on our
      ability to develop and maintain important relationships with leading academic
      institutions, clinicians and scientists. We are highly dependent upon our senior
      management and scientific staff, particularly Gary S. Jacob, our Chief Executive
      Officer, Donald Picker, our Executive Vice President, R&D and Pamela Harris,
      our Chief Medical Officer. The loss of services of Drs. Jacob, Picker, Harris
      or
      one or more of our other members of senior management could delay or prevent
      the
      successful completion of our planned clinical trials or the commercialization
      of
      our product candidates.
The
      competition for qualified personnel in the biotechnology and pharmaceuticals
      field is intense. We will need to hire additional personnel as we expand our
      clinical development and commercial activities. We may not be able to attract
      and retain quality personnel on acceptable terms given the competition for
      such
      personnel among biotechnology, pharmaceutical and other companies. We do not
      carry "key person" insurance covering any members of our senior management.
IF
      WE FAIL TO ACQUIRE AND DEVELOP OTHER PRODUCTS OR PRODUCT CANDIDATES, WE MAY
      BE
      UNABLE TO GROW OUR BUSINESS.
To
      date, we have in-licensed or acquired the rights to each of our product
      candidates. As part of our growth strategy, in addition to developing our
      current product candidates, we intend to license or acquire additional products
      and product candidates for development and commercialization. Because we have
      limited internal research capabilities, we are dependent upon pharmaceutical
      and
      biotechnology companies and other researchers to sell or license products to
      us.
      The success of this strategy depends upon our ability to identify, select and
      acquire the right pharmaceutical product candidates and products. We currently
      do not have any intentions to acquire another company.
Any
      product candidate we license or acquire may require additional development
      efforts prior to commercial sale, including extensive clinical testing and
      approval by the FDA and applicable foreign regulatory authorities. All product
      candidates are prone to the risks of failure inherent in pharmaceutical product
      development, including the possibility that the product candidate will not
      be
      shown to be sufficiently safe and effective for approval by regulatory
      authorities. In addition, we cannot assure you that any products that we license
      or acquire that are approved will be manufactured or produced economically,
      successfully commercialized or widely accepted in the marketplace.
Proposing,
      negotiating and implementing an economically viable product acquisition or
      license is a lengthy and complex process. Other companies, including those
      with
      substantially greater financial, marketing and sales resources, may compete
      with
      us for the acquisition or license of product candidates and approved products.
      We may not be able to acquire or license the rights to additional product
      candidates and approved products on terms that we find acceptable, or at all.
WE
      MAY UNDERTAKE ACQUISITIONS IN THE FUTURE, AND ANY DIFFICULTIES FROM INTEGRATING
      THESE ACQUISITIONS COULD DAMAGE OUR ABILITY TO ATTAIN OR MAINTAIN PROFITABILITY.
We
      may acquire additional businesses, products or product candidates that
      complement or augment our existing business. Integrating any newly acquired
      business or product could be expensive and time-consuming. We may not be able
      to
      integrate any acquired business or product successfully or operate any acquired
      business profitably. Moreover, we many need to raise additional funds through
      public or private debt or equity financing to make acquisitions, which may
      result in dilution to stockholders and the incurrence of indebtedness that
      may
      include restrictive covenants.
16
WE
      WILL NEED TO INCREASE THE SIZE OF OUR ORGANIZATION, AND WE MAY EXPERIENCE
      DIFFICULTIES IN MANAGING GROWTH.
We
      are a small company with 10 full-time and 4 part-time employees as of December
      23, 2005. To continue our clinical trials and commercialize our product
      candidates, we will need to expand our employee base for managerial,
      operational, financial and other resources. Future growth will impose
      significant added responsibilities on members of management, including the
      need
      to identify, recruit, maintain and integrate additional employees. Over the
      next
      12 months depending on the progress of our planned clinical trials, we plan
      to
      add approximately four employees who we expect to assist us with our clinical
      programs. Our future financial performance and our ability to commercialize
      our
      product candidates and to compete effectively will depend, in part, on our
      ability to manage any future growth effectively. To that end, we must be able
      to:
·
manage
                our development efforts
                effectively;
·
manage
                our clinical trials effectively;
·
integrate
                additional management, administrative, manufacturing and sales and
                marketing personnel;
·
maintain
                sufficient administrative, accounting and management information
                systems
                and controls; and
·
hire
                and train additional qualified
                personnel.
We
      may not be able to accomplish these tasks, and our failure to accomplish any
      of
      them could harm our financial results.
REIMBURSEMENT
      MAY NOT BE AVAILABLE FOR OUR PRODUCT CANDIDATES, WHICH COULD DIMINISH OUR SALES.
Market
      acceptance and sales of our product candidates may depend on reimbursement
      policies and health care reform measures. The levels at which government
      authorities and third-party payors, such as private health insurers and health
      maintenance organizations, reimburse patients for the price they pay for our
      products could affect whether we are able to commercialize these products.
      We
      cannot be sure that reimbursement will be available for any of these products.
      Also, we cannot be sure that reimbursement amounts will not reduce the demand
      for, or the price of, our products. We have not commenced efforts to have our
      product candidates reimbursed by government or third party payors. If
      reimbursement is not available or is available only to limited levels, we may
      not be able to commercialize our products.
In
      recent years, officials have made numerous proposals to change the health care
      system in the United States. These proposals include measures that would limit
      or prohibit payments for certain medical treatments or subject the pricing
      of
      drugs to government control. In addition, in many foreign countries,
      particularly the countries of the European Union, the pricing of prescription
      drugs is subject to government control. If our products are or become subject
      to
      government regulation that limits or prohibits payment for our products, or
      that
      subject the price of our products to governmental control, we may not be able
      to
      generate revenue, attain profitability or commercialize our products.
As
      a result of legislative proposals and the trend towards managed health care
      in
      the United States, third-party payers are increasingly attempting to contain
      health care costs by limiting both coverage and the level of reimbursement
      of
      new drugs. They may also refuse to provide any coverage of uses of approved
      products for medical indications other than those for which the FDA has granted
      market approvals. As a result, significant uncertainty exists as to whether
      and
      how much third-party payers will reimburse patients for their use of
      newly-approved drugs, which in turn will put pressure on the pricing of drugs.
LEGISLATIVE
      OR REGULATORY REFORM OF THE HEALTHCARE SYSTEM MAY AFFECT OUR ABILITY TO SELL
      OUR
      PRODUCTS PROFITABLY.
In
      both the United States and certain foreign jurisdictions, there have been a
      number of legislative and regulatory proposals to change the healthcare system
      in ways that could impact upon our ability to sell our products profitably.
      In
      recent years, new legislation has been proposed in the United States at the
      federal and state levels that would effect major changes in the healthcare
      system, either nationally or at the state level.
17
These
      proposals have included prescription drug benefit proposals for Medicare
      beneficiaries introduced in Congress. Legislation creating a prescription drug
      benefit and making certain changes in Medicaid reimbursement has recently been
      enacted by Congress and signed by the President. Given this legislation's recent
      enactment, it is still too early to determine its impact on the pharmaceutical
      industry and our business. Further federal and state proposals are likely.
      The
      potential for adoption of these proposals affects or will affect our ability
      to
      raise capital, obtain additional collaborators and market our products. We
      expect to experience pricing pressures in connection with the sale of our
      products due to the trend toward managed health care, the increasing influence
      of health maintenance organizations and additional legislative proposals. Our
      results of operations could be adversely affected by future healthcare reforms.
RISKS
      RELATED TO OUR INTELLECTUAL PROPERTY
IT
      IS DIFFICULT AND COSTLY TO PROTECT OUR PROPRIETARY RIGHTS, AND WE MAY NOT BE
      ABLE TO ENSURE THEIR PROTECTION.
Our
      commercial success will depend in part on obtaining and maintaining patent
      protection and trade secret protection of our product candidates, and the
      methods used to manufacture them, as well as successfully defending these
      patents against third-party challenges. We will only be able to protect our
      product candidates from unauthorized making, using, selling, offering to sell
      or
      importation by third parties to the extent that we have rights under valid
      and
      enforceable patents or trade secrets that cover these activities.
As
      of December 23, 2005, we own 4 issued United States patents and have licensed
      rights to 8 issued United States patents and 78 issued foreign patents, and
      to 3
      pending United States patent applications and 39 pending foreign patent
      applications. We do not and have not had any control over the filing or
      prosecution of these patents or patent applications. We may file additional
      patent applications and extensions. Our issued United States patents we own
      and
      license primarily are composition of matter and formulation patents related
      to
      Atiprimod and L-Annamycin. Our composition of matter patents for L-Annamycin
      and
      Atiprimod expire in 2008 and 2009, respectively. Our formulation patents for
      L-Annamycin and Atiprimod dimeleate (preferred salt form) expire in 2019 and
      2018, respectively.
The
      patent positions of pharmaceutical and biotechnology companies can be highly
      uncertain and involve complex legal and factual questions for which important
      legal principles remain unresolved. No consistent policy regarding the breadth
      of claims allowed in biotechnology patents has emerged to date in the United
      States. The biotechnology patent situation outside the United States is even
      more uncertain. Changes in either the patent laws or in interpretations of
      patent laws in the United States and other countries may diminish the value
      of
      our intellectual property. Accordingly, we cannot predict the breadth of claims
      that may be allowed or enforced in our licensed patents or in third-party
      patents.
The
      degree of future protection for our proprietary rights is uncertain because
      legal means afford only limited protection and may not adequately protect our
      rights or permit us to gain or keep our competitive advantage. For example:
·
others
                may be able to make compounds that are competitive with our product
                candidates but that are not covered by the claims of our licensed
                patents,
                or for which we are not licensed under our license
                agreements;
·
we
                or our licensors might not have been the first to make the inventions
                covered by our pending patent application or the pending patent
                applications and issued patents of our
                licensors;
·
we
                or our licensors might not have been the first to file patent applications
                for these inventions;
·
others
                may independently develop similar or alternative technologies or
                duplicate
                any of our technologies;
·
it
                is possible that our pending patent application or one or more of
                the
                pending patent applications of our licensors will not result in issued
                patents;
·
the
                issued patents of our licensors may not provide us with any competitive
                advantages, or may be held invalid or unenforceable as a result of
                legal
                challenges by third parties;
·
we
                may not develop additional proprietary technologies that are patentable;
                or
·
the
                patents of others may have an adverse effect on our
                business.
We
      also may rely on trade secrets to protect our technology, especially where
      we do
      not believe patent protection is appropriate or obtainable. However, trade
      secrets are difficult to protect. While we use
18
reasonable
      efforts to protect our trade secrets, our employees, consultants, contractors,
      outside scientific collaborators and other advisors may unintentionally or
      willfully disclose our information to competitors. Enforcing a claim that a
      third party illegally obtained and is using our trade secrets is expensive
      and
      time consuming, and the outcome is unpredictable. In addition, courts outside
      the United States are sometimes less willing to protect trade secrets. Moreover,
      our competitors may independently develop equivalent knowledge, methods and
      know-how.
WE
      MAY INCUR SUBSTANTIAL COSTS AS A RESULT OF LITIGATION OR OTHER PROCEEDINGS
      RELATING TO PATENT AND OTHER INTELLECTUAL PROPERTY RIGHTS AND WE MAY BE UNABLE
      TO PROTECT OUR RIGHTS TO, OR USE, OUR TECHNOLOGY.
If
      we choose to go to court to stop someone else from using the inventions claimed
      in our licensed patents, that individual or company has the right to ask the
      court to rule that these patents are invalid and/or should not be enforced
      against that third party. These lawsuits are expensive and would consume time
      and other resources even if we were successful in stopping the infringement
      of
      these patents. In addition, there is a risk that the court will decide that
      these patents are not valid and that we do not have the right to stop the other
      party from using the inventions. There is also the risk that, even if the
      validity of these patents is upheld, the court will refuse to stop the other
      party on the ground that such other party's activities do not infringe our
      rights to these patents.
Furthermore,
      a third party may claim that we are using inventions covered by the third
      party's patent rights and may go to court to stop us from engaging in our normal
      operations and activities, including making or selling our product candidates.
      These lawsuits are costly and could affect our results of operations and divert
      the attention of managerial and technical personnel. There is a risk that a
      court would decide that we are infringing the third party's patents and would
      order us to stop the activities covered by the patents. In addition, there
      is a
      risk that a court will order us to pay the other party damages for having
      violated the other party's patents. The biotechnology industry has produced
      a
      proliferation of patents, and it is not always clear to industry participants,
      including us, which patents cover various types of products or methods of use.
      The coverage of patents is subject to interpretation by the courts, and the
      interpretation is not always uniform. If we are sued for patent infringement,
      we
      would need to demonstrate that our products or methods of use either do not
      infringe the patent claims of the relevant patent and/or that the patent claims
      are invalid, and we may not be able to do this. Proving invalidity, in
      particular, is difficult since it requires a showing of clear and convincing
      evidence to overcome the presumption of validity enjoyed by issued patents.
Because
      some patent applications in the United States of America may be maintained
      in
      secrecy until the patents are issued, because patent applications in the United
      States of America and many foreign jurisdictions are typically not published
      until eighteen months after filing, and because publications in the scientific
      literature often lag behind actual discoveries, we cannot be certain that others
      have not filed patent applications for technology covered by our licensors'
      issued patents or our pending applications or our licensors' pending
      applications or that we or our licensors were the first to invent the
      technology. Our competitors may have filed, and may in the future file, patent
      applications covering technology similar to ours. Any such patent application
      may have priority over our or our licensors' patent applications and could
      further require us to obtain rights to issued patents covering such
      technologies. If another party has filed a United States patent application
      on
      inventions similar to ours, we may have to participate in an interference
      proceeding declared by the United States Patent and Trademark Office to
      determine priority of invention in the United States. The costs of these
      proceedings could be substantial, and it is possible that such efforts would
      be
      unsuccessful, resulting in a loss of our United States patent position with
      respect to such inventions.
Some
      of our competitors may be able to sustain the costs of complex patent litigation
      more effectively than we can because they have substantially greater resources.
      In addition, any uncertainties resulting from the initiation and continuation
      of
      any litigation could have a material adverse effect on our ability to raise
      the
      funds necessary to continue our operations.
19
RISKS
      RELATED TO OUR COMMON STOCK
MARKET
      VOLATILITY MAY AFFECT OUR STOCK PRICE AND THE VALUE OF YOUR INVESTMENT.
The
      market prices for securities of biopharmaceutical companies in general have
      been
      highly volatile and may continue to be highly volatile in the future. The
      following factors, in addition to other risk factors described in this section,
      may have a significant impact on the market price of our common stock:
·
announcements
                of technological innovations or new products by us or our
                competitors;
·
announcement
                of FDA approval or non-approval of our product candidates or delays
                in the
                FDA review process;
·
actions
                taken by regulatory agencies with respect to our product candidates,
                clinical trials, manufacturing process or sales and marketing activities;
·
regulatory
                developments in the United States of America and foreign countries;
·
the
                success of our development efforts and clinical trials;
·
the
                success of our efforts to acquire or in-license additional products
                or
                product candidates;
·
any
                intellectual property infringement action, or any other litigation,
                involving us;
·
announcements
                concerning our competitors, or the biotechnology or biopharmaceutical
                industries in general;
·
actual
                or anticipated fluctuations in our operating results;
·
changes
                in financial estimates or recommendations by securities analysts;
·
our
                ability to maintain listing requirements on the American Stock Exchange;
·
sales
                of large blocks of our common stock;
·
sales
                of our common stock by our executive officers, directors and significant
                stockholders; and
·
the
                loss of any of our key scientific or management personnel.
The
      occurrence of one or more of these factors may cause our stock price to decline,
      and you may not be able to resell your shares at or above the price you paid
      for
      your shares. In addition, the stock markets in general, and the markets for
      biotechnology and biopharmaceutical stocks in particular, have experienced
      extreme volatility that has often been unrelated to the operating performance
      of
      particular companies. These broad market fluctuations may adversely affect
      the
      trading price of our common stock.
WE
      ARE AT RISK OF SECURITIES CLASS ACTION LITIGATION.
In
      the past, securities class action litigation has often been brought against
      a
      company following a decline in the market price of its securities. This risk
      is
      especially relevant for us because biotechnology and biopharmaceutical companies
      have experienced significant stock price volatility in recent years. If we
      faced
      such litigation, it could result in substantial costs and a diversion of
      management's attention and resources, which could harm our business.
WE
      HAVE NOT PAID CASH DIVIDENDS IN THE PAST AND DO NOT EXPECT TO PAY CASH DIVIDENDS
      IN THE FUTURE. ANY RETURN ON INVESTMENT MAY BE LIMITED TO THE VALUE OF OUR
      STOCK.
We
      have never paid cash dividends on our stock and do not anticipate paying cash
      dividends on our stock in the foreseeable future. The payment of cash dividends
      on our stock will depend on our earnings, financial condition and other business
      and economic factors affecting us at such time as the board of directors may
      consider relevant. If we do not pay cash dividends, our stock may be less
      valuable because a return on your investment will only occur if our stock price
      appreciates.
20
FORWARD-LOOKING
      STATEMENTS
The
      Private Securities Litigation Reform Act of 1995 (the "Act") provides a safe
      harbor for forward-looking statements made by us or on our behalf. We and our
      representatives may from time to time make written or oral statements that
      are
      "forward-looking," including statements contained in this prospectus and other
      filings with the Securities and Exchange Commission, reports to our stockholders
      and news releases. All statements that express expectations, estimates,
      forecasts or projections are forward-looking statements within the meaning
      of
      the Act. In addition, other written or oral statements which constitute
      forward-looking statements may be made by us or on our behalf. Words such as
      "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates,"
      "projects," "forecasts," "may," "should," variations of such words and similar
      expressions are intended to identify such forward-looking statements. These
      statements are not guarantees of future performance and involve risks,
      uncertainties and assumptions which are difficult to predict. Therefore, actual
      outcomes and results may differ materially from what is expressed or forecasted
      in or suggested by such forward-looking statements. Among the important factors
      on which such statements are based are assumptions concerning our ability to
      complete ongoing clinical trials, results of our clinical trials, the timing
      of
      approval of our products by the United States Food and Drug Administration,
      our
      ability to obtain additional financing, our ability to attract and retain key
      employees, our ability to protect intellectual property, and our ability to
      adapt to economic, political and regulatory conditions affecting the healthcare
      industry.
21
SELLING
      STOCKHOLDERS
The
      table below sets forth information concerning the resale of the shares of common
      stock by the selling stockholders. We will not receive any proceeds from the
      resale of the common stock by the selling stockholders. We will receive proceeds
      from the exercise of the options.
The
      following table also sets forth the name of each person who is offering the
      resale of shares of common stock by this prospectus, the number of shares of
      common stock beneficially owned by each person, the number of shares of common
      stock that may be sold in this offering and the number of shares of common
      stock
      each person will own after the offering, assuming they sell all of the shares
      offered which they beneficially own as of the date hereof.
Shares
                Beneficially Owned
Prior
                to the Offering (1)
Shares
                Beneficially Owned
After
                the Offering (1)
Name
Number
Percent
                (2)
Total
Shares
Offered
Number
Percent
                (2)
Riccardo
                Dalla-Favera
—
—
81,000
—
—
Stephen
                Carter
28,287
                (3)
*
19,861
25,000
*
John
                Brancaccio
30,707
                (4)
*
31,123
25,000
*
Randall
                Johnson
35,000
                (5)
*
94,000
—
—
Pamela
                Harris
—
—
350,000
—
—
Gary
                S. Jacob
449,745
                (6)
1.3%
350,000
449,745
1.3%
Donald
                Picker
315,370
                (7)
*
200,000
315,370
*
Bernard
                Denoyer
30,000
                (8)
*
75,000
30,000
*
Kunwar
                Shailubhai
125,000
                (9)
*
75,000
125,000
*
Daniel
                D'Agostino
16,448
                (10)
*
400,000
16,448
*
Christoph
                Bruening
534,032
                (11)
1.6%
38,500
525,699
1.6%
Gabriele
                M. Cerrone
3,214,237
                (12)
9.4%
375,000
3,026,737
8.8%
*
                  Less than one percent.
(1)
The
                  number and percentage of shares beneficially owned is determined
                  in
                  accordance with Rule 13d-3 of the Securities Exchange Act of 1934,
                  and the information is not necessarily indicative of beneficial
                  ownership
                  for any other purpose. Under such rule, beneficial ownership includes
                  any
                  shares as to which the selling stockholder has sole or shared voting
                  power
                  or investment power and also any shares, which the selling stockholder
                  has
                  the right to acquire within 60 days.
(2)
Based
                  upon 33,233,096 shares issued and outstanding as of December 23,
                  2005.
(3)
Consists
                  of shares of common stock issuable upon exercise of stock options.
(4)
Consists
                  of shares of common stock issuable upon exercise of stock options.
(5)
Consists
                  of shares of common stock issuable upon exercise of stock options.
(6)
Consists
                  of (i) 124,745 shares of common stock, and (ii) 325,000 shares
                  of common
                  stock issuable upon exercise of stock options.
(7)
Consists
                  of (i) 73,704 shares of common stock and (ii) 241,666 shares of
                  common
                  stock issuable upon exercise of stock options.
22
(8)
Consists
                  of common stock issuable upon exercise of stock
                  options.
(9)
Consists
                  of common stock issuable upon exercise of stock
                  options.
(10)
Consists
                  of shares of common stock.
(11)
Consists
                  of (i) 475,699 shares of common stock and (ii) 58,333 shares of
                  common
                  stock issuable upon exercise of stock options.
(12)
Consists
                  of (i) 1,087,500
shares
                  of common stock issuable upon exercise of stock options and (ii)
                  2,126,737
                  shares of common stock held by Panetta Partners, Ltd. Mr. Cerrone
                  is the
                  sole managing partner of Panetta and in such capacity only exercises
                  voting and dispositive control over securities owned by Panetta.
PLAN
      OF DISTRIBUTION
Sales
      of the shares may be effected by or for the account of the selling stockholders
      from time to time in transactions (which may include block transactions) on
      the
      American Stock Exchange, in negotiated transactions, through a combination
      of
      such methods of sale, or otherwise, at fixed prices that may be changed, at
      market prices prevailing at the time of sale or at negotiated prices. The
      selling stockholders may effect such transactions by selling the shares directly
      to purchasers, through broker-dealers acting as agents of the selling
      stockholders, or to broker-dealers acting as agents for the selling
      stockholders, or to broker-dealers who may purchase shares as principals and
      thereafter sell the shares from time to time in transactions (which may include
      block transactions) on the American Stock Exchange, in negotiated transactions,
      through a combination of such methods of sale, or otherwise. In effecting sales,
      broker-dealers engaged by a selling stockholder may arrange for other
      broker-dealers to participate. Such broker-dealers, if any, may receive
      compensation in the form of discounts, concessions or commissions from the
      selling stockholders and/or the purchasers of the shares for whom such
      broker-dealers may act as agents or to whom they may sell as principals, or
      both
      (which compensation as to a particular broker-dealer might be in excess of
      customary commissions).
The
      selling stockholders and any broker-dealers or agents that participate with
      the
      selling stockholders in the distribution of the shares may be deemed to be
      "underwriters" within the meaning of the Securities Act of 1933. Any commissions
      paid or any discounts or concessions allowed to any such persons, and any
      profits received on the resale of the shares purchased by them may be deemed
      to
      be underwriting commissions or discounts under the Securities Act of
      1933.
We
      have agreed to bear all expenses of registration of the shares other than legal
      fees and expenses, if any, of counsel or other advisors of the selling
      stockholders. The selling stockholders will bear any commissions, discounts,
      concessions or other fees, if any, payable to broker-dealers in connection
      with
      any sale of their shares.
We
      have agreed to indemnify the selling stockholders, or their transferees or
      assignees, against certain liabilities, including liabilities under the
      Securities Act of 1933 or to contribute to payments the selling stockholders
      or
      their respective pledgees, donees, transferees or other successors in interest,
      may be required to make in respect thereof.
LEGAL
      MATTERS
The
      validity of the shares of common stock offered hereby will be passed upon for
      us
      by Sichenzia Ross Friedman Ference LLP, 1065 Avenue of the Americas,
      21
st
Floor, New York, NY 10018. Sichenzia Ross Friedman Ference LLP owns an aggregate
      of 22,000 shares of our common stock.
EXPERTS
The
      financial statements incorporated by reference in this prospectus have been
      audited by BDO Seidman, LLP, an independent registered public accounting firm,
      to the extent and for the periods set forth in their report
incorporated
      herein by reference, and are incorporated herein in reliance upon such report
      given upon the authority of said firm as experts in auditing and
      accounting.
23
INFORMATION
      INCORPORATED BY
      REFERENCE
The
      Securities and Exchange Commission allows us to incorporate by reference certain
      of our publicly-filed documents into this prospectus, which means that such
      information is considered part of this prospectus. Information that we file
      with
      the SEC subsequent to the date of this prospectus will automatically update
      and
      supersede this information. We incorporate by reference the documents listed
      below and any future filings made with the SEC under all documents subsequently
      filed by us pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities
      Exchange Act of 1934 until the selling stockholders have sold all of the shares
      offered hereby or such shares have been deregistered.
The
      following documents filed with the SEC are incorporated herein by reference:
·
Reference
                is made to the Registrant's quarterly report on Form 10-Q for the period
                ending September 30, 2005, as filed with the SEC on November 14,
                2005,
                which is hereby incorporated by
                reference.
·
Reference
                is made to the Registrant's quarterly report on Form 10-Q for the period
                ending June 30, 2005, as filed with the SEC on August 8, 2005, which
                is
                hereby incorporated by reference.
·
Reference
                is made to the Registrant's quarterly report on Form 10-Q for the period
                ending March 31, 2005, as filed with the SEC on May 16, 2005, which
                is
                hereby incorporated by reference.
·
Reference
                  is made to the Registrant's annual report on Form 10-KSB for the period
                  ending December 31, 2004, as filed with the SEC on March 30, 2005,
                  which
                  is hereby incorporated by
                  reference.
·
Reference
                is made to the Registrant's annual report on Form 10-K/A for the period
                ending December 31, 2004, as filed with the SEC on June 6, 2005,
                which is
                hereby incorporated by reference.
·
Reference
                is made to Registrant's 8-Ks filed with the SEC on February 3, 7,
                and 14,
                2005, March 15 and 30, 2005, April 8, 2005, June 15, 2005, July 7
                and 22,
                2005, August 26, 2005, October 21, 2005, December 6, 2005 and December
                12,
                2005, each of which are hereby incorporated by
                reference.
·
Reference
                is made to the description of the Registrant's common stock as contained
                in Item 1 of its Registration Statement on Form 8-A, filed with the
                Commission on October 22, 2004, including all amendments and reports
                filed
                with the Commission for the purpose of updating such description,
                which is
                hereby incorporated by reference.
We
      will provide without charge to each person to whom a copy of this prospectus
      has
      been delivered, on written or oral request a copy of any or all of the documents
      incorporated by reference in this prospectus, other than exhibits to such
      documents. Written or oral requests for such copies should be directed to Gary
      S. Jacob.
DISCLOSURE
      OF COMMISSION POSITION ON INDEMNIFICATION FOR
      SECURITIES ACT LIABILITIES
Our
      Certificate of Incorporation provides that to the fullest extent permitted
      by
      the Delaware General Corporation Law, a director of the company shall not be
      personally liable to the company or its stockholders for monetary damages for
      breach of fiduciary duty as a director. Under current Delaware law, liability
      of
      a director may not be limited (i) for any breach of the director's duty of
      loyalty to the company or its stockholders, (ii) for acts or omissions not
      in
      good faith or that involve intentional misconduct or a knowing violation of
      law,
      and (iii) for any transaction from which the director derives an improper
      personal benefit.
24
The
      effect of the provision of our Certificate of Incorporation is to eliminate
      the
      rights of the company and its stockholders (through stockholders' derivative
      suits on behalf of the company) to recover monetary damages against a director
      for breach of the fiduciary duty of care as a director (including breaches
      resulting from negligent or grossly negligent behavior) except in the situations
      described in clauses (i) through (iii) above. This provision does not limit
      or
      eliminate the rights of the company or any stockholder to seek nonmonetary
      relief such as an injunction or rescission in the event of a breach of a
      director's duty of care. In addition, our Certificate of Incorporation provides
      that the company shall indemnify to the fullest extent permitted by law its
      directors, officers and employees and any other persons to which Delaware law
      permits a corporation to provide indemnification against losses incurred by
      any
      such person by reason of the fact that such person was acting in such capacity.
We
      have an insurance policy that insures our directors and officers, within the
      limits and subject to the limitations of the policy, against certain expenses
      in
      connection with the defense of actions, suits or proceedings, and certain
      liabilities that might be imposed as a result of such actions, suits or
      proceedings, to which they are parties by reason of being or having been
      directors or officers.
ADDITIONAL
      INFORMATION AVAILABLE TO
      YOU
This
      prospectus is part of a Registration Statement on Form S-8 that we filed with
      the SEC. Certain information in the Registration Statement has been omitted
      from
      this prospectus in accordance with the rules of the SEC. We file annual,
      quarterly and special reports, proxy statements and other information with
      the
      SEC. You can inspect and copy the Registration Statement as well as reports,
      proxy statements and other information we have filed with the SEC at the public
      reference room maintained by the SEC at 100 F Street N.E. Washington, D.C.
      20549, You can obtain copies from the public reference room of the SEC at 100
      F
      Street N.E. Washington, D.C. 20549, upon payment of certain fees. You can call
      the SEC at 1-800-732-0330 for further information about the public reference
      room. We are also required to file electronic versions of these documents with
      the SEC, which may be accessed through the SEC's World Wide Web site at
      http://www.sec.gov. No dealer, salesperson or other person is authorized to
      give
      any information or to make any representations other than those contained in
      this prospectus, and, if given or made, such information or representations
      must
      not be relied upon as having been authorized by us. This prospectus does not
      constitute an offer to buy any security other than the securities offered by
      this prospectus, or an offer to sell or a solicitation of an offer to buy any
      securities by any person in any jurisdiction where such offer or solicitation
      is
      not authorized or is unlawful. Neither delivery of this prospectus nor any
      sale
      hereunder shall, under any circumstances, create any implication that there
      has
      been no change in the affairs of our company since the date hereof.
25
CALLISTO
      PHARMACEUTICALS, INC.
2,089,484
      SHARES OF COMMON STOCK
PROSPECTUS
December
      23, 2005
PART
      II
INFORMATION
      REQUIRED IN THE REGISTRATION STATEMENT
Item
      3. Incorporation of Documents by Reference.
The
      Registrant hereby incorporates by reference into this Registration Statement
      the
      documents listed below. In addition, all documents subsequently filed pursuant
      to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934
      (the "Exchange Act"), prior to the filing of a post-effective amendment which
      indicates that all securities offered have been sold or which deregisters all
      securities then remaining unsold, shall be deemed to be incorporated by
      reference into this Registration Statement and to be a part hereof from the
      date
      of filing of such documents:
·
Reference
                is made to the Registrant's quarterly report on Form 10-Q for the period
                ending September 30, 2005, as filed with the SEC on November 14,
                2005,
                which is hereby incorporated by
                reference.
·
Reference
                is made to the Registrant's quarterly report on Form 10-Q for the period
                ending June 30, 2005, as filed with the SEC on August 8, 2005, which
                is
                hereby incorporated by reference.
·
Reference
                is made to the Registrant's quarterly report on Form 10-Q for the period
                ending March 31, 2005, as filed with the SEC on May 16, 2005, which
                is
                hereby incorporated by reference.
·
Reference
                    is made to the Registrant's annual report on Form 10-KSB for the period
                    ending December 31, 2004, as filed with the SEC on March 30,
                    2005, which
                    is hereby incorporated by
                    reference.
·
Reference
                is made to the Registrant's annual report on Form 10-K/A for the
                period ending December 31, 2004, as filed with the SEC on June 6,
                2005,
                which is hereby incorporated by
                reference.
·
Reference
                is made to Registrant's 8-Ks filed with the SEC on February 3, 7,
                and 14,
                2005, March 15 and 30, 2005, April 8, 2005, June 15, 2005, July 7
                and 22,
                2005, August 26, 2005, October 21, 2005, December 6, 205 and December
                12,
                2005, each of which are hereby incorporated by
                reference.
·
Reference
                is made to the description of the Registrant's common stock as contained
                in Item 1 of its Registration Statement on Form 8-A, filed with the
                Commission on October 22, 2004, including all amendments and reports
                filed
                with the Commission for the purpose of updating such description,
                which is
                hereby incorporated by reference.
Item
      4. Description of Securities.
Not
      Applicable.
Item
      5. Interests of Named Experts and Counsel.
The
      validity of the shares of common stock offered hereby will be passed upon for
      the Registrant by Sichenzia Ross Friedman Ference LLP, 1065 Avenue of Americas,
      21
st
flr., New York, NY 10018. Sichenzia Ross Friedman Ference LLP owns an aggregate
      of 22,000 shares of the Registrant's common stock.
Item
      6. Indemnification of Directors and Officers.
Callisto
      Pharmaceuticals, Inc.'s Certificate of Incorporation provides that to the
      fullest extent permitted by the Delaware General Corporation Law, a director
      of
      the company shall not be personally liable to the company or its stockholders
      for monetary damages for breach of fiduciary duty as a director. Under current
      Delaware law, liability of a director may not be limited (i) for any breach
      of
      the director's duty of loyalty to the company or its stockholders, (ii) for
      acts
      or omissions not in good faith or that involve intentional misconduct or a
      knowing violation of law, and (iii) for any transaction from which the director
      derives an improper personal benefit.
II-1
The
      effect of the provision of Callisto's Certificate of Incorporation is to
      eliminate the rights of the company and its stockholders (through stockholders'
      derivative suits on behalf of the company) to recover monetary damages against
      a
      director for breach of the fiduciary duty of care as a director (including
      breaches resulting from negligent or grossly negligent behavior) except in
      the
      situations described in clauses (i) through (iii) above. This provision does
      not
      limit or eliminate the rights of the company or any stockholder to seek
      nonmonetary relief such as an injunction or rescission in the event of a breach
      of a director's duty of care. In addition, Callisto's Certificate of
      Incorporation provides that the company shall indemnify to the fullest extent
      permitted by law its directors, officers and employees and any other persons
      to
      which Delaware law permits a corporation to provide indemnification against
      losses incurred by any such person by reason of the fact that such person was
      acting in such capacity.
Callisto
      has an insurance policy that insures its directors and officers, within the
      limits and subject to the limitations of the policy, against certain expenses
      in
      connection with the defense of actions, suits or proceedings, and certain
      liabilities that might be imposed as a result of such actions, suits or
      proceedings, to which they are parties by reason of being or having been
      directors or officers.
Item
      7. Exemption from Registration Claimed.
All
      shares of common stock registered hereunder for reoffer or resale, have been
      or
      will be issued upon exercise of options granted pursuant to the Registrant's
      1996 Incentive and Non-Qualified Stock Option Plan, 2005 Equity Compensation
      Incentive Plan, and its Non-Plan Executive and Director Options. The options
      are
      non-transferable and the underlying shares were and will be issued in
      transactions not involving a public offering. Upon exercise of an option, the
      optionee is required to execute an undertaking not to resell such shares except
      pursuant to an effective registration statement or other exemption under the
      Act, a restrictive legend is placed on the certificates for the shares of common
      stock purchased and transfer stops are placed against such certificates. Such
      shares may only be reoffered and sold pursuant to registration under the Act
      or
      pursuant to an applicable exemption under the Act. As a result, such offers
      and
      sales are exempt from the registration requirements of the Act pursuant to
      the
      provisions of Section 4(2) of the Act.
Item
      8. Exhibits.
EXHIBIT
NUMBER
EXHIBIT
4.1
1996
                  Incentive and Non-Qualified Stock Option Plan (1)
4.2
2005
                  Equity Compensation Incentive Plan (2)
4.3
2005
                  Directors' Stock Option Plan (3)
4.4
Form
                  of Non-Plan Stock Option Agreement (4)
5.1
Opinion
                  of Sichenzia Ross Friedman Ference LLP.
23.1
Consent
                  of Sichenzia Ross Friedman Ference LLP is contained in Exhibit
                  5.1.
23.2
Consent
                  of BDO Seidman, LLP.
24.1
Power
                  of Attorney (Included on signature page).
(1)
Incorporated
                  by reference to Exhibit 4.1 filed with the Company's Current Report
                  on
                  Form 8-K filed on April 30, 2003.
(2)
                  Incorporated by reference to Appendix B filed with the Company's
                  Definitive Proxy Statement on Schedule 14A filed on August 31,
                  2005.
II-2
(3)
                  Incorporated by reference to Appendix C filed with the Company's
                  Definitive Proxy Statement on Schedule 14A filed on August 31,
                  2005.
(4)
                  Incorporated by reference to Exhibit 4.3 filed with the Company's
                  Registration Statement on Form S-8 filed on October 4,
                  2004.
Item
      9. Undertakings.
(a)
      The undersigned registrant hereby undertakes:
(1) To
      file, during any period in which offers or sales are being made, a
      post-effective amendment to this registration statement:
(i) To
      include any prospectus required by Section 10(a)(3) of the Securities Act
      of 1933;
(ii) To
      reflect in the prospectus any facts or events arising after the effective date
      of the registration statement (or the most recent post-effective amendment
      thereof) which, individually or in the aggregate, represent a fundamental change
      in the information set forth in the registration statement. Notwithstanding
      the
      foregoing, any increase or decrease in volume of securities offered (if the
      total dollar value of securities offered would not exceed that which was
      registered) and any deviation from the low or high end of the estimated maximum
      offering range may be reflected in the form of prospectus filed with the
      Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
      volume and price represent no more than 20 percent change in the maximum
      aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement;
(iii) To
      include any material information with respect to the plan of distribution not
      previously disclosed in the registration statement or any material change to
      such information in the registration statement;
Provided,
      however
,
      that paragraphs (1)(i), and (1)(ii) do not apply
if
      the Registration Statement is on Form S-8 and
if
      the information required to be included in a post-effective amendment by those
      paragraphs is contained in reports filed with or furnished to the Commission
      by
      the Registrant pursuant to section 13 or section 15(d) of the
      Securities Exchange Act of 1934 that are incorporated by reference in the
      registration statement.
(2) That,
      for the purpose of determining any liability under the Securities Act of 1933,
      each such post-effective amendment shall be deemed to be a new registration
      statement relating to the securities offered therein, and the offering of such
      securities at that time shall be deemed to be the initial
bona
      fide
offering
      thereof.
(3) To
      remove from registration by means of a post-effective amendment any of the
      securities being registered which remain unsold at the termination of the
      offering.
(4) That,
      for purposes of determining any liability under the Securities Act of 1933,
      each
      filing of the registrant's annual report pursuant to Section 13(a) or 15(d)
      of the Securities Exchange Act of 1934 (and, where applicable, each filing
      of an
      employee benefit plan's annual report pursuant to Section 15(d) of the
      Securities Exchange Act of 1934) that is incorporated by reference in the
      registration statement shall be deemed to be a new registration statement
      relating to the securities offered therein, and the offering of such securities
      at that time shall be deemed to be the initial
bona
      fide
offering
      thereof.
(5) That,
      for the purpose of determining liability under the Securities Act of 1933 to
      any
      purchaser:
(A) Each
      prospectus filed by a Registrant pursuant to Rule 424(b)(3) shall be deemed
      to be part of the registration statement as of the date the filed prospectus
      was
      deemed part of and included in the registration statement; and
(B) Each
      prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5) or
      (b)(7) as part of a registration statement in reliance on Rule 430B
      relating to an offering made pursuant to Rule 415(a)(1)(i),
II-3
(vii) or
      (x) for the purpose of providing the information required by Section 10(a)
      of the Securities Act of 1933 shall be deemed to be part of and included in
      the
      registration statement as of the earlier of the date such form of prospectus
      is
      first used after effectiveness or the date of the first contract of sale of
      securities in the offering described in the prospectus. As provided in
      Rule 430B, for liability purposes of the issuer and any person that is at
      that date an underwriter, such date shall be deemed to be a new effective date
      of the registration statement relating to the securities in the registration
      statement to which the prospectus relates, and the offering of such securities
      at that time shall be deemed to be the initial
bona
      fide
offering
      thereof.
Provided,
      however
,
      that no statement made in a registration statement or prospectus that is part
      of
      the registration statement or made in a document incorporated or deemed
      incorporated by reference into the registration statement or prospectus that
      is
      part of the registration statement will, as to a purchaser with a time of
      contract of sale prior to such effective date, supersede or modify any statement
      that was made in the registration statement or prospectus that was part of
      the
      registration statement or made in any such document immediately prior to such
      effective date.
(6)
      That, for the purpose of determining liability of a Registrant under the
      Securities Act of 1933 to any purchaser in the initial distribution of the
      securities, each undersigned Registrant undertakes that in a primary offering
      of
      securities of an undersigned Registrant pursuant to this registration statement,
      regardless of the underwriting method used to sell the securities to the
      purchaser, if the securities are offered or sold to such purchaser by means
      of
      any of the following communications, the undersigned Registrant will be a seller
      to the purchaser and will be considered to offer or sell such securities to
      such
      purchaser:
(i) Any
      preliminary prospectus or prospectus of an undersigned Registrant relating
      to
      the offering required to be filed pursuant to Rule 424;
(ii) Any
      free writing prospectus relating to the offering prepared by or on behalf of
      an
      undersigned Registrant or used or referred to by an undersigned Registrant;
(iii) The
      portion of any other free writing prospectus relating to the offering containing
      material information about an undersigned Registrant or its securities provided
      by or on behalf of an undersigned Registrant; and
(iv) Any
      other communication that is an offer in the offering made by an undersigned
      Registrant to the purchaser.
Insofar
      as indemnification for liabilities arising under the Securities Act of 1933
      may
      be permitted to directors, officers and controlling persons of the registrant
      pursuant to the foregoing provisions, or otherwise, the registrant has been
      advised that in the opinion of the Securities and Exchange Commission such
      indemnification is against public policy as expressed in the Securities Act
      and
      is, therefore, unenforceable.
In
      the event that a claim for indemnification against such liabilities (other
      than
      the payment by the registrant of expenses incurred or paid by a director,
      officer or controlling person of the registrant in the successful defense of
      any
      action, suit or proceeding) is asserted by such director, officer or controlling
      person in connection with the securities being registered, the registrant will,
      unless in the opinion of its counsel the matter has been settled by controlling
      precedent, submit to a court of appropriate jurisdiction the question whether
      such indemnification by it is against public policy as expressed in the Act
      and
      will be governed by the final adjudication of such issue.
II-4
SIGNATURES
In
      accordance with the requirements of the Securities Act of 1933, as amended,
      the
      registrant certifies that it has reasonable grounds to believe that it meets
      all
      of the requirements for filing on Form S-8 and has duly caused this Form
      S-8 to be signed on its behalf by the undersigned, thereunto duly authorized,
      in
      the City of New York, State of New York, on December 27, 2005.
CALLISTO
              PHARMACEUTICALS, INC.
By:
/s/ Gary
              S.
              Jacob
Gary
                S.
                Jacob,
Chief Executive
                Officer
KNOW
      ALL
      MEN BY THESE PRESENTS, that each person whose signature appears below
      constitutes and appoints Gabriele M. Cerrone and Gary S. Jacob, and each of
      them, his true and lawful attorneys-in-fact and agents, with full power of
      substitution and resubstitution for him and in his name, place and stead, in
      any
      and all capacities, to sign any and all amendments (including post-effective
      amendments) to this Registration Statement, and any subsequent registration
      statements pursuant to the Securities Act of 1933 and to file the same, with
      all
      exhibits thereto, and other documents in connection therewith, with the
      Securities and Exchange Commission, granting unto said attorneys-in-fact and
      agents, and each of them, full power and authority to do and perform each and
      every act and thing requisite and necessary to be done in and about the
      premises, as fully to all intents and purposes as he might or could do in
      person, hereby ratifying and confirming all that each of said attorney-in-fact
      or his substitute or substitutes, may lawfully do or cause to be done by virtue
      hereof.
In
      accordance with the requirements of the Securities Act of 1933, as amended,
      this
      Form S-8 has been signed below by the following persons on behalf of the
      Registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/
                Gary S. Jacob
Gary
                S. Jacob
Chief
                Executive Officer and Director
(Principal
                Executive Officer)
December
                27
,
                2005
/s/
                Bernard Denoyer
Bernard
                Denoyer
Vice
                President, Finance
(Principal
                Financial and Accounting Officer)
December
                27
,
                2005
/s/
                Gabriele M. Cerrone
Gabriele
                M. Cerrone
Chairman
                of the Board
December
                27
,
                2005
/s/
                Christoph Bruening
Christoph
                Bruening
Director
December
                27
,
                2005
/s/
                John P. Brancaccio
John
                P. Brancaccio
Director
December
                27
,
                2005
/s/
                Stephen Carter
Stephen
                Carter
Director
December
                27
,
                2005
/s/
                Randall K. Johnson
Randall
                K. Johnson
Director
December
                27
,
                2005
Riccardo
                Dalla-Favera
Director
December
                ___,
2005
EXHIBIT
NUMBER
EXHIBIT
4.1
1996
                Incentive and Non-Qualified Stock Option Plan (1)
4.2
2005
                Equity Compensation Incentive Plan (2)
4.3
2005
                Directors' Stock Option Plan (3)
4.4
Form
                of Non-Plan Stock Option Agreement (4)
5.1
Opinion
                of Sichenzia Ross Friedman Ference
                LLP.
23.1
Consent
                of Sichenzia Ross Friedman Ference LLP is contained in Exhibit
                5.1.
23.2
Consent
                of BDO Seidman, LLP.
24.1
Power
                of Attorney (Included on signature page).
(1)
Incorporated
                by reference to Exhibit 4.1 filed with the Company's Current Report
                on
                Form 8-K filed on April 30, 2003.
(2)
                Incorporated by reference to Appendix B filed with the Company's
                Definitive Proxy Statement on Schedule 14A filed on August 31,
                2005.
(3)
                Incorporated by reference to Appendix C filed with the Company's
                Definitive Proxy Statement on Schedule 14A filed on August 31,
                2005.
(4)
                Incorporated by reference to Exhibit 4.3 filed with the Company's
                Registration Statement on Form S-8 filed on October 4,
                2004.