<HTML>
<HEAD>
<TITLE>Filed by Bowne Pure Compliance</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV
style="margin-left: 0.25in; width: 7.2in; font-family: 'Times New Roman',Times,serif">
<DIV style="font-size: 10pt">
<DIV
style="font-size: 1pt; width: 100%; border-bottom: black 2pt solid">&nbsp;</DIV>
<DIV
style="font-size: 1pt; width: 100%; border-bottom: black 1pt solid">&nbsp;</DIV>

<P style="font-size: 14pt" align="center"><B>UNITED STATES<BR>
SECURITIES AND
EXCHANGE COMMISSION<BR>
<FONT style="font-size: 12pt">Washington, D.C. 20549
</FONT></B>

<P style="font-size: 18pt" align="center"><B>FORM 8-K</B>

<P style="font-size: 12pt" align="center"><B>CURRENT REPORT<BR>
Pursuant to
Section 13 OR 15(d) of The Securities Exchange Act of 1934</B>

<P style="font-size: 10pt" align="center"><B>Date of Report (Date of earliest
event reported): September 25, 2008</B>


<P style="font-size: 24pt" align="center"><B>Getting Ready
Corporation<BR>
</B><FONT style="font-size: 10pt">(Exact name of registrant as
specified in its charter) </FONT>
<TABLE style="font-size: 10pt; text-align: center" cellspacing="0"
cellpadding="0" width="100%" border="0">

 <TR>
  <TD width="32%">&nbsp;</TD>
  <TD width="1%">&nbsp;</TD>
  <TD width="33%">&nbsp;</TD>
  <TD width="1%">&nbsp;</TD>
  <TD width="32%">&nbsp;</TD>
 </TR>
 <TR valign="bottom">
  <TD style="border-bottom: #000000 1px solid"><B>Delaware</B></TD>
  <TD>&nbsp;</TD>
  <TD style="border-bottom: #000000 1px solid"><B>000-51314</B></TD>
  <TD>&nbsp;</TD>
  <TD style="border-bottom: #000000 1px solid"><B>30-0131755</B></TD>
 </TR>
 <TR valign="top">
  <TD>(State or other Jurisdiction of Incorporation)</TD>
  <TD>&nbsp;</TD>
  <TD>(Commission File Number)</TD>
  <TD>&nbsp;</TD>
  <TD>(IRS Employer Identification No.)</TD>
 </TR>

</TABLE>
<TABLE style="font-size: 10pt; text-align: center" cellspacing="0"
cellpadding="0" width="100%" border="0">

 <TR>
  <TD width="49%">&nbsp;</TD>
  <TD width="1%">&nbsp;</TD>
  <TD width="49%">&nbsp;</TD>
 </TR>
 <TR valign="bottom">
  <TD style="border-bottom: #000000 1px solid"><B>100 North Fairway
Drive,<BR>
Suite 134<BR>
Vernon Hills, Illinois<BR>
</B></TD>
  <TD>&nbsp;</TD>
  <TD style="border-bottom: #000000 1px solid"><B>60061</B></TD>
 </TR>
 <TR valign="top">
  <TD>(Address of Principal Executive Offices)</TD>
  <TD>&nbsp;</TD>
  <TD>(Zip Code)</TD>
 </TR>

</TABLE>


<P style="font-size: 10pt" align="center">Registrant&#8217;s telephone number,
including area code: <B>(847) 362-8200</B>
<TABLE style="font-size: 10pt; text-align: center" cellspacing="0"
cellpadding="0" width="30%" border="0">

 <TR>
  <TD width="100%">&nbsp;</TD>
 </TR>
 <TR>
  <TD style="border-bottom: #000000 1px solid" nowrap><B>N/A<BR>
</B></TD>
 </TR>
 <TR>
  <TD nowrap>(Former name or former address if changed since last report.)</TD>
 </TR>

</TABLE>


<P style="font-size: 10pt" align="left">Check the appropriate box below if the
Form 8-K filing is intended to simultaneously satisfy the filing obligation of
the registrant under any of the following provisions:

<P style="font-size: 10pt" align="left"><FONT face="Wingdings">o</FONT> Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)<BR>
<BR>
<FONT face="Wingdings">o</FONT> Soliciting material pursuant
to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)<BR>
<BR>
<FONT
face="Wingdings">o</FONT> Pre-commencement communications pursuant to Rule
14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))<BR>
<BR>
<FONT
face="Wingdings">o</FONT> Pre-commencement communications pursuant to Rule
13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))<BR>


<DIV
style="margin-top: 10pt; font-size: 1pt; width: 100%; border-bottom: black 1pt solid">&nbsp;</DIV>
<DIV
style="font-size: 1pt; width: 100%; border-bottom: black 2pt solid">&nbsp;</DIV>
</DIV>

<P style="font-size: 10pt" align="center">&nbsp;

<P style="display: none; font-size: 10pt" align="center">1
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left">
<!-- TOC -->
</DIV>
<DIV align="left">
<A name="tocpage"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><U>Table of Contents</U>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="96%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#101">Item&nbsp;1.01 Entry into a Material Definitive Agreement</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#102">Item&nbsp;2.01 Completion of Acquisition or Disposition of Assets</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#103">DESCRIPTION OF OUR COMPANY</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#104">DESCRIPTION OF OUR BUSINESS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#105">MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#106">RISK FACTORS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#107">MANAGEMENT</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#108">EXECUTIVE COMPENSATION</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#109">CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#110">PRINCIPAL STOCKHOLDERS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#111">WHERE YOU CAN OBTAIN ADDITIONAL INFORMATION</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#112">DESCRIPTION OF SECURITIES</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#113">MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#114">EQUITY COMPENSATION PLAN INFORMATION</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#115">RECENT SALES OF UNREGISTERED SECURITIES</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#116">INDEMNIFICATION OF DIRECTORS AND OFFICERS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#117">Item&nbsp;3.02. Unregistered Sales of Equity Securities</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#118">Item&nbsp;5.01. Changes in Control of Registrant</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#119">Item&nbsp;5.02. Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#120">Item&nbsp;5.06. Change in Shell Company Status</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#121">Item&nbsp;9.01. Financial Statements and Exhibits</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c75577exv3w5.htm">Exhibit 3.5</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c75577exv3w6.htm">Exhibit 3.6</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c75577exv3w7.htm">Exhibit 3.7</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c75577exv4w1.htm">Exhibit 4.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c75577exv4w2.htm">Exhibit 4.2</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c75577exv4w3.htm">Exhibit 4.3</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c75577exv10w1.htm">Exhibit 10.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c75577exv10w2.htm">Exhibit 10.2</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c75577exv10w3.htm">Exhibit 10.3</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c75577exv10w4.htm">Exhibit 10.4</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c75577exv10w5.htm">Exhibit 10.5</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c75577exv10w6.htm">Exhibit 10.6</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c75577exv10w7.htm">Exhibit 10.7</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c75577exv10w8.htm">Exhibit 10.8</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c75577exv10w9.htm">Exhibit 10.9</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c75577exv10w10.htm">Exhibit 10.10</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c75577exv10w11.htm">Exhibit 10.11</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c75577exv21w1.htm">Exhibit 21.1</A></FONT></TD></TR>
<!-- End Table Body --></TABLE>
</DIV>

<DIV align="left">
<!-- /TOC -->
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our business, financial condition, results of operations, cash flows and prospects, and the
prevailing market price and performance of our common stock, may be adversely affected by a number
of factors. Certain statements and information set forth in this Current Report on Form 8-K, as
well as other written or oral statements made from time to time by us or by our authorized
executive officers on our behalf, constitute &#147;forward-looking statements&#148; within the meaning of the
Federal Private Securities Litigation Reform Act of 1995. We intend for our forward-looking
statements to be covered by the safe harbor provisions for forward-looking statements contained in
the Private Securities Litigation Reform Act of 1995, and we set forth this statement and the risk
factors in this Current Report on Form 8-K in order to comply with such safe harbor provisions. You
should note that our forward-looking statements speak only as of the date of this Current Report on
Form 8-K or when made and we undertake no duty or obligation to update or revise our
forward-looking statements, whether as a result of new information, future events or otherwise.
Although we believe that the expectations, plans, intentions and projections reflected in our
forward-looking statements are reasonable, such statements are subject to known and unknown risks,
uncertainties and other factors that may cause our actual results, performance or achievements to
be materially different from any future results, performance or achievements expressed or implied
by the forward-looking statements. The risks, uncertainties and other factors that our stockholders
and prospective investors should consider are included under the heading &#147;Risk Factors.&#148;
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>EXPLANATORY NOTE</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">This Current Report on Form 8-K is being filed in connection with a series of transactions
consummated by, and certain related events and actions taken by, Getting Ready Corporation.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">This Current Report responds to the following items on Form 8-K:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Item&nbsp;1.01 Entry into a Material Definitive Agreement.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Item&nbsp;2.01 Completion of Acquisition or Disposition of Assets.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Item&nbsp;3.02 Unregistered Sales of Equity Securities.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Item&nbsp;5.01 Changes in Control of Registrant.
</DIV>


<DIV align="left" style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="7%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">Item&nbsp;5.02</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">Departure of Directors or Principal Officers; Election of
Directors; Appointment of Principal Officers.</DIV></TD>
</TR>
</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Item&nbsp;5.06 Change in Shell Company Status.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Item&nbsp;9.01 Financial Statements and Exhibits.
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->2<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">


<DIV align="left">
<A name="101"></A>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Item&nbsp;1.01 Entry into a Material Definitive Agreement.</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As used in this Current Report on Form 8-K, all references to the &#147;Company&#148;, &#147;Getting Ready
Corporation&#148;, &#147;we&#148;, &#147;our&#148;, and &#147;us&#148; or similar terms refer to Getting Ready Corporation, including
its predecessors and its subsidiaries. Information about the Company and the principal terms of
the merger are set forth below.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Effective November&nbsp;13, 2007, the Company, entered into a definitive Merger Agreement and Plan
of Reorganization (the &#147;Merger Agreement&#148;) with Winston Laboratories, Inc., a Delaware corporation
(&#147;Winston&#148;), Winston Acquisition Corp., a Delaware corporation (&#147;Merger Sub&#148;), which is a
wholly-owned subsidiary of the Company. Pursuant to the Merger Agreement, on September&nbsp;25, 2008,
Winston became a wholly-owned subsidiary of the Company (the &#147;Merger&#148;). Under the terms of the
Merger Agreement, at the closing of the Merger:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">all of the issued and outstanding capital stock of Winston, consisting of 23,937,358
shares of common stock, par value $0.001 per share, 5,815,851 shares of the Winston
Series&nbsp;A Convertible Preferred Stock, par value $0.001 per share (&#147;Series&nbsp;A Preferred
Stock&#148;), and 4,187,413 shares of the Winston Series&nbsp;B Convertible Preferred Stock, par
value $0.001 per share (&#147;Series&nbsp;B Preferred Stock&#148;), was exchanged for 422,518,545
shares of the Company&#146;s common stock, par value $0.001 per share (at an exchange ratio
of 17.65101 shares of Company common stock per share of Winston common stock), 101,849
shares of the Company&#146;s Series&nbsp;A Convertible Preferred Stock and 73,332 shares of the
Company&#146;s Series&nbsp;B Convertible Preferred Stock (at an exchange ratio of .01751238
shares of Company preferred stock per share of Winston preferred stock);</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">the Company assumed Winston&#146;s stock option plans;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Winston&#146;s outstanding 1,643,750 options to purchase 1,643,750 shares of Winston&#146;s
common stock were converted to options to purchase 29,013,848 shares of the Company&#146;s
common stock; and</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">all outstanding warrants to purchase Winston Series&nbsp;A Preferred Stock were assumed
by the Company and converted into the right to acquire, expiring November&nbsp;13, 2012,
upon the exercise of such warrants, an aggregate of 71,672 shares of the Company&#146;s
Series&nbsp;A Preferred Stock at a price per share of $49.09.</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Prior to the closing of the Merger, the Company had 18,332,896 shares of common stock issued
and outstanding and, subsequent to the Merger, we had 440,851,441 shares of common stock issued and
outstanding. The Company had no shares of Series&nbsp;A or Series&nbsp;B Preferred Stock outstanding prior
to the Merger. The Merger was accounted for as a reverse merger for accounting purposes. Upon the
closing of the Merger on September&nbsp;25, 2008, Winston became a wholly-owned subsidiary of the
Company.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->3<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On November&nbsp;13, 2007, Winston issued 5,815,851 shares of its Series&nbsp;A Preferred Stock and
warrants to purchase 4,092,636 shares of its Series&nbsp;A Preferred Stock, and on September&nbsp;25, 2008,
4,187,413 shares of its Series&nbsp;B Preferred Stock, in two separate private placements to
investors for an aggregate purchase price of $9.0&nbsp;million. All of the Winston shares issued
in these transactions were exchanged for shares of Series&nbsp;A and Series&nbsp;B Preferred Stock of the
Company and warrants to purchase the Company&#146;s Series&nbsp;A Preferred Stock pursuant to the Merger
Agreement.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our issuance of the Company&#146;s securities to the shareholders of Winston in the Merger is
intended to be exempt from registration under the Securities Act of 1933, as amended (the
&#147;Securities Act&#148;), pursuant to Section&nbsp;4(2) thereof or Rule&nbsp;506 promulgated thereunder. As such,
the Company&#146;s shares of common stock and preferred stock issued in the Merger may not be offered or
sold unless they are registered under the Securities Act or an exemption from the registration
requirements of the Securities Act is available. No registration statement covering these
securities has been filed with the United States Securities and Exchange Commission (the
&#147;Commission&#148;) or with any state securities commission in respect of the Merger.
</DIV>
<DIV align="left">
<A name="102"></A>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Item&nbsp;2.01 Completion of Acquisition or Disposition of Assets.</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Overview</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On November&nbsp;13, 2007, we entered into the Merger Agreement with Winston and Merger Sub,
pursuant to which, upon completion of the Merger on September&nbsp;25, 2008, Winston became our
wholly-owned subsidiary. A copy of the Merger Agreement is filed herewith as Exhibit&nbsp;2.1.
Immediately following the closing of the Merger, we had outstanding 440,851,441 shares of common
stock, of which 4,864,328 shares of common stock constitutes our current &#147;public float.&#148; Our Board
of Directors recommended and our stockholders approved, an amendment to our charter to increase the
number of authorized shares of Company Common Stock from 499,000,000 shares to 900,000,000 shares
to permit the conversion of all outstanding shares of the Company&#146;s preferred stock, including
shares of the Company&#146;s preferred stock underlying the Adjusted Parent Warrants (as such term is
defined in the Merger Agreement).
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->4<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>General Changes Resulting from the Merger</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We intend to carry on the business of Winston as our sole line of business and we have
retained all of Winston&#146;s management. We will relocate our executive offices to 100 North Fairway
Drive, Suite&nbsp;134, Vernon Hills, Illinois 60061 and our telephone number will be (847)&nbsp;362-8200. We
intend to change our name from Getting Ready Corporation to &#147;Winston Pharmaceuticals, Inc.&#148;, and
have discontinued any and all prior business operations in favor of the business plan and
operations of Winston, which will be our only significant operations as a result of the Merger.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our common stock is currently quoted on the OTC Bulletin Board, or OTCBB, sponsored by the
National Association of Securities Dealers, Inc. under the symbol &#147;GTRY&#148;. The OTCBB is a network
of security dealers who buy and sell stock. The dealers are connected by a computer network that
provides information on current &#147;bids&#148; and &#147;asks,&#148; as well as volume information. We anticipate we
will apply to change our symbol in the near future as a result of the change anticipated in the
Company&#146;s name to Winston Pharmaceuticals, Inc.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Merger and the related transactions were approved by the boards of directors of each of
the Company and Winston on November&nbsp;12, 2007, and by the requisite number of Winston stockholders
by written consent in lieu of a meeting on September&nbsp;25, 2008.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Registration under Securities Act</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our issuance of securities to the shareholders of Winston in the Merger is intended to be
exempt from registration under the Securities Act of 1933, as amended (the &#147;Securities Act&#148;),
pursuant to Section&nbsp;4(2) thereof or Rule&nbsp;506 promulgated thereunder and, as such, our shares of
common stock and preferred stock issued in the Merger or pursuant to the warrants may not be
offered or sold unless they are registered under the Securities Act or an exemption from the
registration requirements of the Securities Act is available.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Accounting Treatment</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Merger was accounted for as a &#147;reverse merger,&#148; since as a result of the Merger the
shareholders of Winston now own a majority of the outstanding shares of the common stock of the
Company. Winston is deemed to be the acquirer in the Merger for accounting purposes and,
consequently, the assets and liabilities and the historical operations that are reflected in the
financial statements are those of Winston and will be recorded at the historical cost basis of
Winston. As a result of the Merger, there was a change in control of the Company. The Company
will continue to be a &#147;smaller reporting company&#148;, as defined under the Securities Exchange Act of
1934, as amended (the &#147;Exchange Act&#148;), following the Merger.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Material Federal Income Tax Consequences</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">A Winston stockholder&#146;s receipt of our common stock in exchange for Winston common stock, our
preferred stock in exchange for Winston preferred stock, or our warrants in exchange for Winston
warrants in the Merger will generally be tax-free for U.S. federal income tax purposes. There will
be no U.S. federal income tax consequences to a holder of our stock as a result of the
Merger. The U.S. federal income tax consequences described above may not apply to some holders
of our stock or warrants.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->5<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Amendment to Certificate of Incorporation</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As of June&nbsp;30, 2008, we had 18,332,896 shares of common stock outstanding and no shares of
preferred stock outstanding. We had a sufficient number of shares of common stock and preferred
stock authorized to complete the Merger. The preferred stock issued in conjunction with the Merger
is convertible into our common stock.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">A previous amendment to our Certificate of Incorporation was filed with the State of Delaware
in 2004 to authorize the Company to issue &#147;1,000,000 shares of blank check preferred stock.&#148; Prior
to the Merger, the Company had never issued any preferred stock. We amended our Certificate of
Incorporation on September&nbsp;16, 2008, to:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">increase the authorized number of shares of the Company&#146;s
common stock to have 900,000,000 shares of common stock authorized for
issuance;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">increase the authorized number of shares of preferred stock to
have 250,000,000 shares of preferred stock authorized for issuance; and</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(iii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">to clarify the terms of the Company&#146;s preferred stock, to
specifically authorize the Company&#146;s Board of Directors to create separate
series of preferred stock and to fix and determine the terms thereof including
dividend or interest rates, conversion prices, voting rights, mandatory or
optional redemption provisions (including prices), and similar matters.</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On September&nbsp;24, 2008, the Company filed its Certificate of Designation, Preferences and
Rights of Series&nbsp;A Convertible Preferred Stock and Certificate of Designations, Preferences and
Rights of Series&nbsp;B Convertible Preferred Stock, which set forth respectively, the terms of the
Company&#146;s Series&nbsp;A and Series&nbsp;B Preferred Stock issued in conjunction with the Merger. See the
information set forth in this Current Report on Form 8-K under &#147;Description of Securities&#148;.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Election to the Board of Directors</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Immediately following the Merger, as described more fully below, the size of our Board of
Directors was increased to seven. Two directors of the Company, Alan Jay Weisburg and Noah M.
Silver resigned effective at the effective time of the Merger and on September&nbsp;25, 2008, the
remaining directors, Glenn L. Halpryn and Curtis Lockshin, Ph.D. appointed Joel E. Bernstein, M.D.,
Neal S. Penneys, M.D., Ph.D., Scott B. Phillips, M.D., Robert A. Yolles and Subbarao Uppaluri,
Ph.D. to fill the vacancies on the Board of Directors.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Listing</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We plan to file an initial listing application with the American Stock Exchange for inclusion
of our common stock on the American Stock Exchange. If approved, we will be subject to the
corporate governance provisions of the American Stock Exchange.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Prior to the Merger, the Company was a shell company as defined by the Securities Act. As a
result, the following information is provided in substantially the form it would be provided were
the registrant filing a Form&nbsp;10.
</DIV>

<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->6<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left">
<A name="103"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>DESCRIPTION OF OUR COMPANY</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Getting Ready Corporation was incorporated as a Delaware corporation in November&nbsp;2002. The
Company attempted to open Mother Supercare Center, a one-stop destination for expectant and new
mothers. On September&nbsp;1, 2006, the Company&#146;s management determined that it was no longer feasible
to operate or attempt to effect the Company&#146;s business plan. Since that date until the Merger,
Getting Ready Corporation&#146;s sole activity has been searching for a merger or acquisition candidate
with which it could combine.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Winston Laboratories, Inc. or Winston, a Delaware corporation, was incorporated in July&nbsp;1998
as a specialty pharmaceutical company engaged in the discovery and development of products for pain
management.
</DIV>
<DIV align="left">
<A name="104"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>DESCRIPTION OF OUR BUSINESS</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>As used herein, the terms &#147;we,&#148; &#147;our&#148; and &#147;us&#148; refer to the operations of Winston historically,
as combined with the Company on a going-forward basis.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following discussion should be read together with the information contained in the
financial statements and related notes included elsewhere in this Current Report on Form 8-K.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Description of Business</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Winston Laboratories, Inc. or Winston, a Delaware corporation, was incorporated in July&nbsp;1998
as a specialty pharmaceutical company engaged in the discovery and development of products for pain
management. Winston is a specialty pharmaceutical company engaged in the discovery and development
of products for pain management. Its core proprietary technology affects the functioning of
certain neurotransmitters that control and mediate pain transmission. Based on this technology,
Winston is developing products that reduce pain transmission from peripheral receptors along nerve
pathways to the brain. Winston focuses on major pain indications such as osteoarthritis, chronic
daily headache, migraine headache, and neuropathic pain syndromes, which have estimated worldwide
market sizes of $10&nbsp;billion (Analyst Research), $5&nbsp;billion (Analyst Research), $4&nbsp;billion (Analyst
Research) and $4&nbsp;billion (Datamonitor, Commercial Insight: Neuropathic Pain, July&nbsp;2006),
respectively, as well as niche indications that have limited or no products currently available.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->7<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Pain Management Market</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Pain is a worldwide problem with serious health and economic consequences. The medical effort
to treat pain, known as pain management, addresses a large and under-served market. Pain in the
hospital is associated with increased length of stay, longer recovery times and poorer patient
outcomes, all of which have health care quality and cost implications. Decision Resources, an
international research/analyst firm estimates that the worldwide prescription market for pain drugs
totaled $27&nbsp;billion in 2006. In the United States:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">medical economists estimate that the economic impact of pain is approximately $100&nbsp;billion annually
according to the 1998 &#147;NIH Guide: New Directions in Research;&#148;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Decision Resources estimates that nearly $17&nbsp;billion was spent in 2006 on prescription pain drugs;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">approximately 25&nbsp;million Americans experience acute pain each year due to injury or surgery,
according to the American Pain Society, as published in 2006 by Medtech Insight (a division of
Windhover Information, Inc., that provides business information and intelligence on new trends,
technologies, and companies in the medical device, diagnostics, and biotech marketplace); and</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">approximately 50&nbsp;million Americans suffer from chronic pain, according to the American Pain Society.</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">According to a 2004 Global Strategic Business Report by Global Industry Analysts, Inc., the
prescription pain management market is anticipated to grow at a compounded annual growth rate of 9
percent through 2010 due to a number of factors, including:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">a rapidly aging population with an increasing need to address pain-related ailments;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">longer survival times for patients with painful chronic conditions, such as cancer and AIDS;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">patients&#146; increased demand for effective pain relief; and</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">increasing recognition of the therapeutic and economic benefits of effective pain
management by physicians, other health care providers and payors.</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Analgesic Drugs</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Drugs that treat pain are referred to as analgesics, and the type of analgesic selected for
treatment depends principally upon the severity of the pain. For mild pain, weak analgesics such as
acetaminophen or non-steroidal anti-inflammatory drugs, or NSAIDs, such as ibuprofen are used. For
moderate pain, NSAIDs, weak opioids such as codeine or short-acting formulations of strong opioids
may be used. Severe pain requires strong opioids such as morphine, oxycodone, hydrocodone or
fentanyl.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Shortcomings of Current Pain Management</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Despite widespread clinical use of drugs for pain, pain management remains less than optimal
due to a variety of factors, including:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>&#149;</B> <I>Insufficient efficacy</I>. Opioids, the current standard of care for severe pain originating
from a painful stimulus, or nociceptive pain, reduce pain less than 50&nbsp;percent in a majority of
situations. Neuropathic pain is difficult to treat with existing analgesics because of the
differing types of nerves and organs involved in, and types of injuries causing, this kind of pain.
Neuropathic pain does not respond to treatment with NSAIDs and responds poorly to treatment with
opioids at doses that do not impair the ability of patients to live reasonably active lifestyles.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->8<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>&#149;</B> <I>Lack of site specificity</I>. Most analgesics, including opioids and NSAIDs, are given orally or
by intravenous infusion and thereby subject the patient to high circulating concentrations of drug,
even though most types of pain are experienced in discrete parts of the body. Opioids must be
given by mouth or infusion because they provide pain relief by acting on nerves all over
the body: in the spinal cord, in the brain and at the site of injury. As a consequence,
opioids do not provide site-specific pain relief because their action is not targeted specifically
to the area of the body that is experiencing pain. Moreover, circulating drugs cause side effects
at parts of the body unrelated to the perception of pain. Although there are currently means of
delivering site-specific analgesia, such as by injection of short-acting anesthetics into joints
such as the ankle or knee, these techniques are reserved to provide relatively short-term
anesthesia prior to surgery and are not appropriate for long-term pain relief.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>&#149;</B> <I>Occurrence of side effects. </I>NSAIDs may cause gastrointestinal ulcers, and between 10,000 and
20,000 patients die each year from gastrointestinal bleeding believed to be related to the use of
NSAIDs. Use of opioids is associated with nausea and vomiting in many patients. High-dose opioids
cause sedation and may also cause respiratory depression, or a decrease in the ability to breathe
spontaneously. Opioids used chronically can cause severe constipation that leads many patients to
stop using them, and opioids may sometimes cause severe itching. Drugs used to treat neuropathic
pain frequently cause sedation and problems with coordination.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>&#149;</B> <I>Need for frequent dosing. </I>Drugs used to treat neuropathic pain require frequent dosing that
makes their use inconvenient, often leading to reduced patient compliance.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>&#149;</B> <I>Slow onset of pain relief. </I>This slow onset, as well as poor efficacy, is due to the poor
penetration of skin by the anesthetics used in these products.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>&#149;</B> <I>Potential to cause physical dependence. </I>Opioids, when used chronically, can cause physical
dependence. Fear of physical dependence often influences clinicians to prescribe less than adequate
doses of opioid analgesics. Similar fears lead many patients to refuse opioid analgesics.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Given doctors&#146; and patients&#146; desire to achieve adequate control of pain, and the significant
shortcomings associated with existing treatments, doctors and patients often struggle to find an
appropriate balance between pain relief and adverse side effects. With both over- and
under-treatment of pain, patients may be suffering unnecessarily, have poor quality of life and
have difficulty meeting their social, familial and work-related commitments.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Winston Product Pipeline</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Winston has developed multiple proprietary formulations and uses of civamide and doxepin
hydrochloride, two agents that affect a variety of neuroactive chemical transmitters that convey
primary sensory input (e.g., pain) from the periphery to the central nervous system. Winston&#146;s
focus on neurotransmitter-active compounds has generated several of its most important product
candidates. A common feature of these product candidates is the use of an active ingredient that
depletes or interferes with the action of a neuroactive transmitter (e.g., substance P (SP),
calcitonin gene-related peptide (CGRP), histamine, serotonin), thereby decreasing the ability of
sensory fibers or nerve ganglia to transmit or receive sensory stimuli and mediate inflammatory
reactions. SP is believed to be the principal neurotransmitter of pain.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Civamide is a proprietary TRPV-1 (transient receptor potential vanilloid receptor) receptor
modulator, and doxepin hydrochloride is a potent histamine receptor blocker and serotonin reuptake
inhibitor. Civamide is being developed in several different dosage forms for a variety of
painful conditions. Doxepin is being developed in a nasal solution for prophylaxis and
treatment of chronic daily headache.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->9<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 0%"><B>Table
1: Winston&#146;s Current Compound Pipeline</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>LATE-STAGE PIPELINE</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="34%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="27%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">U.S.</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center"> Dosage</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">Development Status in</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Market Size</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Product/Compound</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"> Form</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Product Indication(s)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">U.S.<SUP style="font-size: 85%; vertical-align: text-top"> </SUP>, Canada and Europe</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">($MM)</TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Civamide</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Topical (Cream)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>&nbsp;      Treatment of Osteoarthritis</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>&nbsp;      MAA (EU) filed 1/08</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">5,000</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>&nbsp;      File NDS (Canada) Q4 08</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>&nbsp;      File NDA Q4 08</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="top" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Civamide</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Oral Capsule</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:12px; text-indent:-12px"><B>&#149;</B>&nbsp; Treatment of Chronic Neuropathic Pain</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>&nbsp;  IND filed 5/08</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3,000</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>&nbsp;      Treatment of Cancer Pain</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>&nbsp;      Phase I Q4 08</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">850</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="top" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
 <TD align="left" valign="top"><B>&#149;</B>&nbsp;      Treatment of Post-Surgical Pain</TD>
    <TD>&nbsp;</TD>
       <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3,000</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="top" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Civamide</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Patch</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>&nbsp;      Treatment of Neuropathic Pain</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>&nbsp;      Phase I Q3 08</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3,000</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>&nbsp;      Start Phase II Q4 08</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Civamide</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Nasal Solution</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:12px; text-indent:-12px"><B>&#149;</B>&nbsp; Treatment of PHN of the Trigeminal Nerve</div></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>&nbsp; Phase II/III</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">50</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="top" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:12px; text-indent:-12px"><B>&#149;</B>&nbsp;      Prophylaxis of Episodic Cluster Headache</div></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>&nbsp;      Phase III</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2,000</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="top" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>&nbsp;      Treatment of Dry Eye</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>&nbsp;      Start Phase II Q4 08</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1,000</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style=" padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD nowrap valign="top"><DIV style="margin-left:15px; text-indent:-15px">Doxepin
hydrochloride</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Nasal Solution</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:12px; text-indent:-12px"><B>&#149;</B>&nbsp; Prophylaxis of Chronic Daily Headache</div></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>&nbsp;      Phase IIa Completed</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2,500</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Civamide</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Civamide, a synthetically produced, proprietary new chemical entity, is the active ingredient
in several of Winston&#146;s product candidates. Civamide produces analgesia by decreasing the activity
of sensory neurons. Civamide appears to affect preferentially type-C neurons by specific binding
to a membrane receptor, the TRPV-1 receptor, which is coupled to an action channel. The
specificity of civamide for type-C neurons limits its sensory effects to the inhibition of pain
transmission unlike local anesthetics, which act to block the activity of all sensory neurons,
thereby impairing all sensations including touch, pressure, heat, and vibration, in addition to
pain signals.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Initial applications of civamide cause a transient release of SP from type-C neurons and
probably account for the transient burning sensation that is often felt following initial
applications of civamide. Civamide has also been shown to inhibit the synthesis of SP and reduce
axonal transport of granules containing SP from the cell body to the nerve terminals. These
effects may likely contribute to the analgesic effects of civamide by reducing the amount of SP
available for release. The analgesic effect of civamide is completely reversible, since after
administration of civamide is discontinued, SP stores gradually return to normal and neuronal
sensitivity to noxious stimuli returns. However, in animal and human studies, civamide has a very
long duration of analgesic activity, with a single dose or one-week course of treatment providing
weeks of effective analgesic activity. In human studies to date, civamide has not exhibited
systemic toxicity. Because of these attributes, Winston believes civamide represents a clinically
significant treatment advance for a number of painful conditions, including headache pain,
arthritis pain, neuropathic pain and cancer pain.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->10<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Winston has completed all clinical studies required for a new drug application (an &#147;NDA&#148;)
submission to the Food and Drug Administration (&#147;FDA&#148;) on Civamide Cream for osteoarthritis.
In a pivotal 695 patient Phase III trial in osteoarthritis, Civamide Cream demonstrated
statistically significant reductions in all three co-primary efficacy parameters. Winston
submitted Marketing Authorization Applications (MAA)&nbsp;in Europe for Civamide Cream in January&nbsp;2008,
and anticipates approval in Europe during the first quarter, 2009. Winston intends to submit a new
drug submission (&#147;NDS&#148;) in Canada in the fourth quarter of 2008 and an NDA 505(b)(2) in the United
States in the fourth quarter of 2008, with approval anticipated in the fourth quarter of 2009 in
Canada, and the fourth quarter of 2009 in the United States. Winston is currently in partnering
discussions with several pharmaceutical companies regarding marketing and distribution of Civamide
Cream in North America and Europe.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Formulation development for a civamide capsule and a civamide patch are nearing completion. An
investigational new drug application (an &#147;IND&#148;) was filed in the second quarter of 2008 for the
civamide oral capsule for chronic neuropathic pain. A Phase II clinical trial for the civamide
patch for neuropathic pain (e.g. postherpetic neuralgia and painful diabetic neuropathy) will be
initiated in the third quarter of 2008.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The FDA approved a Special Protocol Assessment (an &#147;SPA&#148;) for a Phase III pivotal study of
Civamide Nasal Solution for prophylaxis and treatment of episodic cluster headache. The SPA is a
process that provides for an official FDA evaluation of Phase III clinical study protocols. The
SPA provides trial sponsors with a binding written agreement that the design and analysis of the
studies are adequate to support a license application submission if the study is performed
according to the SPA and the results are successful. The FDA has agreed that if this pivotal study
is robustly positive, it would be the final study necessary to support approval of Civamide Nasal
Solution 0.01% for this indication. Civamide Nasal Solution has been studied in several additional
indications, and there is positive Phase II data for acute migraine treatment and for vasomotor
rhinitis. Civamide Nasal Solution has received orphan designation by FDA for treatment of PHN of
the trigeminal nerve. An orphan designation grants special status to a product to treat a rare
disease or condition upon request of a sponsor. This is a key designation as the marketing
application for a prescription drug product that has been designated as a drug for a rare disease
or condition is not subject to a prescription drug user fee unless the application includes an
indication for other than a rare disease or condition. The product also receives seven year market
exclusively and tax credits for the sponsor.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Doxepin</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Winston is also developing doxepin hydrochloride, a potent histamine receptor blocker and
serotonin reuptake inhibitor as a nasal solution for the prophylaxis and treatment of chronic daily
headache, an indication for which there are no FDA-approved treatment options. There are
approximately 12&nbsp;million patients in the United States with chronic daily headaches. This product
appears to interfere with the release/actions of histamine and serotonin as well as modulating
neuronal sodium ion channels involved in the pathogenesis of this disorder. A successful Phase IIa
trial of Doxepin Nasal Solution in this condition has been completed. Winston&#146;s next step in the
clinical development of Doxepin Nasal Solution is to conduct a Phase II/III study of longer
duration.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->11<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Manufacturing and Raw Materials</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">All of Winston&#146;s manufacturing is performed under contract by outside vendors. Winston has
manufacturing agreements with DPT Laboratories, Ltd. and Patheon, Inc. to produce certain of its
development-stage products for clinical studies and, if approved, for commercial sale. Most of
Winston&#146;s development-stage products may be manufactured only at a site approved by the FDA
specifically for the individual product, as specified in the NDA for the product.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Winston believes that adequate and reliable sources of raw materials and manufacturing for all
the development-stage products are currently available. Winston currently relies on a limited
number of suppliers to provide raw materials and manufacture its finished products. Some of the
raw materials and finished drug products are purchased from only one supplier and, as a result,
Winston&#146;s operations may be adversely affected if certain suppliers are unable to provide raw
materials or to manufacture drug substance or finished products on its behalf, as outlined in the
&#147;Risk Factors&#148; section.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Sales and Marketing</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Winston&#146;s goal is to continue to develop novel drugs that are more effective or safer than
drugs used today. Winston&#146;s strategy includes the following elements:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>&#149;</B> Winston intends to continue to outsource preclinical studies, clinical trials and
formulation and manufacturing activities. Winston believes outsourcing permits significant time
savings and allows for more efficient deployment of its resources.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>&#149;</B> Winston intends to license its lead products to medium to large pharmaceutical companies
with existing sales forces and marketing capabilities, specifically outside of the United States
where it currently does not have a sales and marketing infrastructure.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>&#149;</B> Winston will also consider building its own sales force when economics and other factors
indicate that this is a better strategy than out-licensing.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Intellectual Property</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Winston attempts, to the extent practicable, to use patent protection in the commercialization
of its owned and licensed technology, e.g. civamide nasal solution for keratoconjunctivitis (dry
eye). Winston actively seeks patent protection for its proprietary technology in the United States
and, as appropriate and cost-effective, in other countries. Winston currently has three U.S.
issued patents and one pending U.S. application and numerous issued foreign patents. These patents
and patent applications are principally composition of matter and method of use claims. Upon
regulatory approval of any of Winston&#146;s patent-protected products, Winston plans to seek patent
extension, where available, under existing U.S. and foreign regulations permitting extension of a
pharmaceutical patent.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->12<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In the United States, the Hatch-Waxman Act provides for patent term extension calculated as a
portion of time during which the drug was in clinical development or under review at the FDA with a
maximum extension of five years. Additionally, under the Hatch-Waxman Act, all new molecular
entities (&#147;NMEs&#148;) such as civamide automatically receive five (5)&nbsp;years data exclusivity
upon approval. Winston believes that it is eligible for the full five-year patent term
extension period on patents covering civamide. Also, Winston expects to employ product life-cycle
management, including the development of new formulations, new indications, and other significant
product improvements, in order to maximize the value of its intellectual property.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Set forth below, please find a table of Winston&#146;s current trademarks:
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>ACTIVE TRADEMARKS</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="24%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Trademark Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Listed Owner</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Actual Owner</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Filed</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Registered</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Action Date</B></TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="top" style="background: #cceeff; padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>CIVANEX</B><br>
2,729,437
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Winston Labs
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Winston Labs
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">February&nbsp;16, 1999
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;24, 2003
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;24, 2009</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>MICANOL</B><br>
3,283,446
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Winston Labs
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Winston Labs
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">March&nbsp;27, 2003
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>August&nbsp;21, 2007
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>August&nbsp;21, 2013</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="top" style="background: #cceeff; padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>WINSTON
LABORATORIES, <BR>
The Pain Company</B><br>
2,856,161
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Winston Labs
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Winston Labs
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">October&nbsp;13, 1999
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;22, 2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;22, 2010</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>WINSTON LABORATORIES</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Winston Labs
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Winston Labs
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>August&nbsp;13, 1993
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>August&nbsp;13, 2008</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="top" style="background: #cceeff; padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Illinois State<br>
Trademark 73000</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>AXSAIN </B><br>
2,925,798
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Rodlen
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Winston Labs</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="top" style="background: #cceeff; padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>ZITHRANOL</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Winston Labs
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Winston Labs
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">January&nbsp;18, 2008</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>ZITHRACORT</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Winston Labs
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Winston Labs
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">January&nbsp;18, 2008</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="top" style="background: #cceeff; padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>DURAPHEN</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Winston Labs
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Winston Labs
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">March&nbsp;31, 2008</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In addition to seeking the protection of patents, licenses and trademarks, Winston also relies
on unpatented proprietary technology and know-how to maintain its competitive position. To protect
its rights in these areas, Winston has a policy of requiring its employees, consultants, advisors,
prospective licensees and business partners to enter into confidentiality agreements.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->13<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Competition</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In general, a company&#146;s ability to compete successfully in the pharmaceutical industry is
based on: relative product performance (efficacy, safety, ease of use); price; acceptance by
physicians, patients, and third-party payers; marketing support and distribution; availability of
patent protection; and the ability to obtain and maintain FDA approval for testing, manufacturing
and marketing.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Winston&#146;s products and technologies face competition from various classes of drugs, currently
marketed and in development, across a range of therapeutic categories, from migraine headache to
neuropathic pain. For some niche indications, such as prophylaxis of episodic cluster headache and
PHN of the trigeminal nerve, there are no existing FDA-approved products, and Winston is not aware
of any other drugs presently in development for these conditions. A summary of what Winston
believes to be the competitive advantages of its major products is presented below:
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Table 3: Competitive Advantages Summary</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt">Competitive Advantages Summary
</DIV>

<DIV align="center">
<TABLE style="font-size: 9pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="14%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="32%">&nbsp;</TD>
</TR>
<TR style="font-size: 9pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Winston Product</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Indication</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Competitor Product(s)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Winston&#146;s Competitive Advantages</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="top" style="background: #cceeff; padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:12px; text-indent:-12px">Civamide Topical
(Cream) 0.075%
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:12px; text-indent:-12px"><B>&#149;</B>&nbsp; Osteoarthritis
Pain</div></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" valign="top"><DIV style="margin-left:12px; text-indent:-12px"><B>&#149;</B>&nbsp; Oral Cox-2 Inhibitors<br>
(e.g., Celebrex<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>)</div>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap><B>&#149;</B>&nbsp; No Cardiovascular or GI Side Effects</TD>
</TR>
<TR valign="top" style="background: #cceeff; padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="top" style="background: #cceeff; padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>&nbsp; Rheumatoid
Arthritis Pain
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:12px; text-indent:-12px"><B>&#149;</B>&nbsp; Oral NSAIDs (e.g., Mobic<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>, Naprosyn<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>)</div></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>&nbsp; No Safety Monitoring Required<BR><br>
<B>&#149;</B>&nbsp; No Drug Interaction<BR><BR></TD>
</TR>
<TR valign="top" style="background: #cceeff; padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>&nbsp; Topical NSAID&#146;s (e.g.,
Volteran<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>)<BR><BR>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>&nbsp; Can Be Used Adjunctively</TD>
</TR>
<TR valign="top" style="background: #cceeff; padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:12px; text-indent:-12px"><B>&#149;</B>&nbsp; Long-Lasting Effect after<BR>
Discontinuance</div></TD>
</TR>
<TR><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:12px; text-indent:-12px">Civamide Oral Capsule
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>&nbsp; Cancer Pain<BR><br>
<B>&#149;</B>&nbsp; Neuropathic Pain
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>&nbsp; Cymbalta<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP><BR><br>
<B>&#149;</B>&nbsp; Neurontin<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>/Lyrica<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP><BR><br>
<B>&#149;</B>&nbsp; Opioids
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>&nbsp; Single Dose Provides <font face="symbol">&#179;</font> 7 Days
Analgesia<BR><br>
<B>&#149;</B>&nbsp; No Addiction Potential</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="top" style="background: #cceeff; padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Civamide Patch
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:12px; text-indent:-12px"><B>&#149;</B>&nbsp; Neuropathic Pain</div></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:12px; text-indent:-12px"><B>&#149;</B>&nbsp; Lidoderm<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> Patch</div></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>&nbsp; No Cardiovascular or GI Side Effects</TD>
</TR>
<TR valign="top" style="background: #cceeff; padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="top" style="background: #cceeff; padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:12px; text-indent:-12px"><B>&#149;</B>&nbsp; Osteoarthritis<BR>
Pain</div></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>&nbsp; No FDA-approved Patch
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B></TD>
</TR>
<TR valign="top" style="background: #cceeff; padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="top" style="background: #cceeff; padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>&nbsp; No Disposal Issues</TD>
</TR>
<TR valign="top" style="background: #cceeff; padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="top" style="background: #cceeff; padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>&nbsp; See Also Civamide Cream Advantages</TD>
</TR>
<TR valign="top" style="background: #cceeff; padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="top" style="background: #cceeff; padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>&nbsp; Neuropathic Pain
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>&nbsp; Neurontin<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>/ Lyrica<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>&nbsp; No Systemic Side Effects</TD>
</TR>
<TR valign="top" style="background: #cceeff; padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>


<TR valign="top" style="background: #cceeff; padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>&nbsp; Cymbalta<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>&nbsp; No Drug Interactions</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:12px; text-indent:-12px">Civamide Nasal
Solution 0.01%
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:12px; text-indent:-12px"><B>&#149;</B>&nbsp; Episodic Cluster<BR>
Headache</div></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:12px; text-indent:-12px"><B>&#149;</B>&nbsp; No FDA-approved<BR>
medication</div></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>&nbsp; No Systemic Side Effects<BR><br>
<B>&#149;</B>&nbsp; No Drug Interactions</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="top" style="background: #cceeff; padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:12px; text-indent:-12px">Doxepin Nasal Solution
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:12px; text-indent:-12px"><B>&#149;</B>&nbsp; Chronic Daily
Headache</div></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:12px; text-indent:-12px"><B>&#149;</B>&nbsp; No FDA-approved medication</div></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>&nbsp; No Systemic Side Effects<BR><br>
<B>&#149;</B>&nbsp; No Drug Interactions</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->14<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Winston&#146;s primary competitors include: drug development companies focused on pain management,
such as Adolor Corporation, Anesiva, Inc., Neurogen Corporation, NeurogesX, Inc., NicOx S.A., Pain
Therapeutics, Inc., Pozen Inc., and Renovis, Inc.; mid-sized companies with significant pain
franchises, such as Alpharma, Inc., Endo Pharmaceuticals Holdings, Inc., King Pharmaceuticals,
Inc., Purdue Pharma LP, and Valeant Pharmaceuticals International; and very large, diversified
pharmaceutical companies including GlaxoSmithKline, Merck &#038; Co., Inc., and Pfizer Inc.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">For certain of Winston&#146;s products, particularly those targeting large markets and thus
requiring a very large sales force, Winston intends to collaborate with larger pharmaceutical
companies to market (and distribute) such products most effectively.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Government Regulation</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Government authorities in the United States, at the federal, state, and local level, and other
countries extensively regulate, among other things, the safety, efficacy, research, development,
testing, manufacture, storage, record-keeping, labeling, promotion, advertising, distribution,
marketing and export and import of pharmaceutical products such as those Winston is developing.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>United States Government Regulation</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act
and implementing regulations. If Winston fails to comply with the applicable United States
requirements at any time during the product development process, clinical testing, and the approval
process or after approval, Winston may become subject to administrative or judicial sanctions.
These sanctions could include the FDA&#146;s refusal to approve pending applications, license suspension
or revocation, withdrawal of an approval, warning letters, product recalls, product seizures, total
or partial suspension of production or distribution, injunctions, fines, civil penalties or
criminal prosecution. Any agency enforcement action could have a material adverse effect on
Winston.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Winston&#146;s products are considered by the FDA to be drugs. The drugs are subject to FDA review
and approval or clearance. If the FDA denies approval or clearance of the drugs, Winston&#146;s ability
to market its products could be significantly delayed or precluded.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The steps required before a drug may be marketed in the United States include:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">completion of preclinical laboratory tests, animal studies and formulation studies
under the FDA&#146;s good laboratory practices regulations;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">submission to the FDA of an Investigational New Drug, or IND, application for human
clinical testing, which must become effective before human clinical trials may begin;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">performance of adequate and well-controlled clinical trials to establish the safety
and efficacy of the product for each proposed indication;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">submission to the FDA of an NDA;</DIV></TD>
</TR>


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->15<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV style="margin-top: 10pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">satisfactory completion of an FDA inspection of the manufacturing facility or
facilities at which the product is produced to assess compliance with current good
manufacturing practice, or cGMP; and</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">FDA review and approval of the NDA before any commercial marketing, sale or shipment
of the product.</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Preclinical tests include laboratory evaluations of product chemistry, toxicity, and
formulation, as well as animal studies. The results of the preclinical tests, together with
manufacturing information and analytical data, are submitted to the FDA as part of an IND
application. The FDA requires a 30-day waiting period after the filing of each IND application
before clinical tests may begin, in order to ensure that human research subjects will not be
exposed to unreasonable health risks. An IND will automatically become effective 30&nbsp;days after
receipt by the FDA, unless before that time the FDA has placed the IND on clinical hold. In that
case, the IND sponsor and the FDA must resolve any outstanding FDA concerns or questions before
clinical trials can proceed. Submission of an IND may result in the FDA not allowing clinical
trials to commence or not allowing the trial to commence on the terms originally specified in the
IND.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Clinical trials involve the administration of the investigational product to human subjects
under the supervision of qualified investigators. Clinical trials are conducted under protocols
detailing, among other things, the objectives of the study, the parameters to be used in monitoring
safety and the effectiveness criteria to be evaluated. Each protocol must be submitted to the FDA
as part of the IND. Each trial must be reviewed and approved by an independent Institutional
Review Board, or IRB, before it can begin and the trial is subject to IRB oversight. The FDA, the
IRB or Winston may discontinue a clinical trial at any time for various reasons, including a belief
that the subjects are being exposed to an unacceptable health risk. Clinical testing also must
satisfy extensive good clinical practice requirements and the requirements for informed consent.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Clinical trials typically are conducted in three sequential phases, but the phases may overlap
or be combined. Phase 1 trials usually involve the initial introduction of the investigational
drug into humans to evaluate the product&#146;s safety, dosage tolerance, pharmacodynamics, and, if
possible, to gain an early indication of its effectiveness.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Phase 2 trials usually involve controlled trials in a limited patient population to:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">evaluate dosage tolerance and appropriate dosage;</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">identify possible adverse effects and safety risks; and</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">evaluate preliminarily the efficacy of the drug for specific indications.</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Phase 3 trials usually further evaluate clinical efficacy and test further for safety in an
expanded patient population. Phase 1, Phase 2 and Phase 3 testing may not be completed successfully
within any specified period, if at all. Furthermore, the FDA or Winston may suspend or terminate
clinical trials at any time on various grounds, including a finding that the subjects or patients
are being exposed to an unacceptable health risk.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->16<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Assuming successful completion of the required clinical testing, the results of the
preclinical studies and of the clinical studies, together with other detailed information,
including extensive manufacturing information and information on the composition of the product,
are submitted to the FDA in the form of an NDA requesting approval to market the product for one or
more specified indications. An NDA may also be submitted in the format of an electronic Common
Technical Document, or eCTD, which under ICH guidelines, is acceptable to the FDA and many foreign
regulatory authorities. The FDA reviews an NDA or eCTD to determine, among other things, whether a
product is safe and effective for its intended use.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Before approving an application, the FDA will inspect the facility or the facilities at which
the product is manufactured, and will not approve the product unless cGMP compliance is
satisfactory. FDA will also inspect the clinical sites at which the trials were conducted to
assess their compliance, and will not approve the product unless compliance with Good Clinical
Practice requirements is satisfactory. If the FDA determines the application demonstrates that the
product is safe and effective for the proposed indication and that the manufacturing process and
the manufacturing facilities are acceptable, the FDA will issue an approval letter. If the FDA
determines the application, manufacturing process or manufacturing facilities are not acceptable,
the FDA will outline the deficiencies in the submission and often will request additional testing
or information. Notwithstanding the submission of any requested additional information, the FDA
ultimately may decide that the application does not satisfy the regulatory criteria for approval
and may deny the application, limit the indication for which the drug is approved or require
additional post-approval testing in other requirements.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The testing and approval process requires substantial time, effort, and financial resources,
and each may take several years to complete. The FDA may not grant approval on a timely basis, or
at all. Winston may encounter difficulties or unanticipated costs in its efforts to secure
necessary governmental approvals, which could delay or preclude it from marketing its products.
The FDA may limit the indications for use or place other conditions on any approvals that could
restrict the commercial application of the products. After approval, certain changes to the
approved product, such as adding new indications, manufacturing changes, or additional
labeling claims are subject to further FDA review and approval.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">If and when regulatory approval of a product is obtained, Winston will be required to comply
with a number of post-approval requirements. Winston also must comply with other regulatory
requirements, including cGMP regulations and adverse event reporting. Holders of an approved NDA
are required to report certain adverse reactions and production problems, if any, to the FDA, to
provide updated safety and efficacy information and to comply with requirements concerning
advertising and promotional labeling for their products. Also, quality control and manufacturing
procedures must continue to conform to cGMP after approval. The FDA periodically inspects
manufacturing facilities to assess compliance with cGMP. Accordingly, manufacturers must continue
to expend time, money, and effort in the area of production and quality control to maintain
compliance with cGMP and other aspects of regulatory compliance.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Winston uses, and will continue to use at least in the near term, third-party manufacturers to
produce its products in clinical and commercial quantities. Future FDA inspections may identify
compliance issues at its facilities or at the facilities of its contract manufacturers that may
disrupt production or distribution, or require substantial resources to correct. In addition,
discovery of problems with a product or the failure to comply with requirements may result in
restrictions on a product, manufacturer, or holder of an approved NDA, including withdrawal or
recall of the product from the market or other voluntary or FDA-initiated action that could delay
further marketing. Also, new government requirements may be established that could delay or prevent
regulatory approval of Winston&#146;s products under development.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->17<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Foreign Regulation</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In addition to regulations in the United States, Winston will be subject to a variety of
foreign regulations governing clinical trials and commercial sales and distribution of its
products. Whether or not Winston obtains FDA approval for a product, it must obtain approval of a
product by the comparable regulatory authorities of foreign countries before it can commence
clinical trials or marketing of the product in those countries. The approval process varies from
country to country, and the time may be longer or shorter than that required for FDA approval. The
requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement
vary greatly from country to country.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Under European Union regulatory systems, marketing authorizations may be submitted either
under a centralized or mutual recognition procedure. The centralized procedure provides for the
grant of a single marketing authorization that is valid for all European Union member states. The
mutual recognition procedure provides for mutual recognition of national approval decisions. Under
this procedure, the holder of a national marketing authorization may submit an application to the
remaining member states. Within 90&nbsp;days of receiving the applications and assessment report, each
member state must decide whether to recognize approval.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In addition to regulations in Europe and the United States, Winston will be subject to a
variety of foreign regulations governing clinical trials and commercial distribution of its
products.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Employees</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As of September&nbsp;25, 2008, we had 13 full time employees, two of whom hold M.D. degrees and two
of whom hold other advanced degrees. Our employees are not represented by any collective bargaining
unit. We believe that we maintain good relations with our employees.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Description of Property</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Winston maintains a 7,300 square foot leased office and warehouse facility in Vernon Hills,
Illinois (a suburb of Chicago), which serves as its headquarters. Although Winston believes this
facility is adequate for its business needs at this time, it is currently exploring other
facilities that will support Winston&#146;s growth plans.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Legal Proceedings</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Winston is currently not subject to any material legal proceedings.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->18<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>SELECTED FINANCIAL DATA</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The selected financial data for the fiscal years ended December&nbsp;31, 2007 and 2006 was derived
from Winston&#146;s consolidated financial statements that have been audited by McGladrey &#038; Pullen, LLP
for the fiscal years then ended. The information for the six months ended June&nbsp;30, 2008 and 2007
was derived from Winston&#146;s unaudited consolidated financial data but, in the opinion of Winston&#146;s
management, reflects all adjustments (consisting of those of a normal recurring nature) necessary
for a fair presentation of the results for such periods. The selected financial information
presented below should be read in conjunction with Winston&#146;s audited consolidated financial
statements and related notes appearing in this Report beginning on page F-1. See &#147;Management&#146;s
Discussion and Analysis of Financial Condition and Results of Operations&#148; for a discussion of
Winston&#146;s financial condition and results of operations for the fiscal years ended December&nbsp;31,
2007 and 2006 and for the six months ended June&nbsp;30, 2008 and 2007.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Statement of Operations Data</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Year Ended December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Six Months Ended June 30,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">800,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">294,453</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">99,993</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">450,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,231,128</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,449,544</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,925,588</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,004,752</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss from operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,431,128</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,155,091</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,825,595</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(554,752</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,733</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76,439</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57,694</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,552</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,338</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">86,548</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,183</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">845</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss from continuing operations before minority
interest and income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,383,057</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,992,104</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,766,718</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(534,355</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minority interest in loss of subsidiary</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(28,105</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss from continuing operations before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,383,057</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,020,209</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,766,718</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(534,355</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss from continuing operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,383,057</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,020,209</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,766,718</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(534,355</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income from discontinued operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">647,040</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,383,057</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,373,169</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,766,718</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(534,355</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Balance Sheet Data</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>As of June 30, 2008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>As of December 31, 2007</B></TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,003,785</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,481,611</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,117,008</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,591,463</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accounts payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">782,883</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">491,560</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accrued expenses and other current
liabilities
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">255,190</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">254,250</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,038,023</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">745,810</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stockholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,078,935</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,845,653</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>



<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->19<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">



<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>PRO FORMA SELECTED FINANCIAL DATA</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>SUPPLEMENTARY FINANCIAL INFORMATION</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Winston Laboratories, Inc. and Subsidiaries<BR>
Pro Forma Unaudited Financial Statements<BR>
As of June&nbsp;30, 2008<BR>
And<BR>
For the Six Months Ended June&nbsp;30, 2008 and the Year Ended December&nbsp;31, 2007</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following unaudited pro forma financial statements (&#147;pro forma statements&#148;) give effect to
the reverse acquisition of Winston Laboratories Inc., (&#147;Winston&#148;) by Winston Acquisition Corp., a
Delaware corporation and wholly owned subsidiary of Getting Ready Corporation (&#147;Company&#148;) and are
based on the estimates and assumptions set forth herein and in the notes to such pro forma
statements.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On November&nbsp;13, 2007, the Company entered into a Merger Agreement and Plan of Reorganization
(the &#147;Merger Agreement&#148;) with Winston Laboratories, Inc. (&#147;Winston&#148;) and Winston Acquisition Corp.,
which is a wholly-owned subsidiary of the Company. Pursuant to the Merger Agreement, Winston
became a wholly-owned subsidiary of the Company (the &#147;Merger&#148;).
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Merger occurred on September&nbsp;25, 2008. The Merger was accounted for as a &#147;reverse
merger,&#148; since as a result of the Merger the shareholders of Winston own a majority of the
outstanding shares of the common stock of the Company. Winston is deemed to be the acquirer in the
Merger for accounting purposes and, consequently, the assets and liabilities and the historical
operations that will be reflected in the financial statements will be those of Winston and will be
recorded at the historical cost basis of Winston. As a result of the Merger, there was a change in
control of the Company.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following unaudited pro forma financial information gives effect to the above. The
unaudited pro forma financial information was prepared from (1)&nbsp;the Company&#146;s audited historical
financial statements included in the Company&#146;s Form&nbsp;10K for the period ended September&nbsp;30, 2007;
(2)&nbsp;the Company&#146;s unaudited historical financial statements included in the Company&#146;s Form&nbsp;10Q for
the period ended December&nbsp;31, 2007; (3)&nbsp;the Company&#146;s unaudited historical financial statements
included in the Company&#146;s Form&nbsp;10Q for the period ended March&nbsp;31, 2008; (4)&nbsp;the Company&#146;s unaudited
historical financial statements included in the Company&#146;s Form&nbsp;10Q for the period ended June&nbsp;30,
2008; (5)&nbsp;Winston&#146;s audited historical financial statements for the year ended December&nbsp;31, 2007;
and (6)&nbsp;Winston&#146;s unaudited historical financial statements for the six months ended June&nbsp;30, 2008.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The unaudited pro forma balance sheet at June&nbsp;30, 2008 assumes the effects if the Merger
occurred on June&nbsp;30, 2008. The unaudited pro forma statements of operations assume that the Merger
occurred on January&nbsp;1, 2007 (the beginning of Winston&#146;s most recently completed year).
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The unaudited pro forma financial information is presented for illustrative purposes only and
is not necessarily indicative of the operating results or financial position that would have
occurred if the transaction had been consummated at the date indicated, nor is it necessarily
indicative of the future operating results or financial position of the consolidated companies.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->20<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Winston Laboratories, Inc. and Subsidiaries</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Pro Forma Unaudited Balance Sheet<BR>
As of June&nbsp;30, 2008</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Pro Forma</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Winston</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Company</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Adjustments</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Pro Forma</B></TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>ASSETS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD align="left" valign="top">&nbsp;</TD></TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">CURRENT ASSETS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,003,785</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">928,077</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">3,750,000</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">1,2</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,681,862</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,710</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,710</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Related party receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,073</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,073</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Prepaid and other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,819</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,470</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,289</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,067,387</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">943,547</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,750,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,760,934</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">PROPERTY AND EQUIPMENT</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,815</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,815</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">INTANGIBLE ASSETS, NET</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,492</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,492</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">OTHER ASSETS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,314</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,314</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px"><B>TOTAL ASSETS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>2,117,008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>943,547</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>3,750,000</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>6,810,555</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>LIABILITIES AND STOCKHOLDERS&#146; EQUITY</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">CURRENT LIABILITIES</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">782,883</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">16,331</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">799,214</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accrued expenses and other current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">255,190</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">255,190</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,038,073</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,331</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,054,404</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long Term Liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Commitments and Contingencies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,038,073</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,331</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,054,404</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stockholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Preferred Stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Series&nbsp;A, Convertible</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,815</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,713</TD>
    <TD nowrap>)<SUP style="font-size: 85%; vertical-align: text-top">3</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Series&nbsp;B, Convertible</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">4,187</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">2,3</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">73</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Common stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,936</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">422,518</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">3</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">440,851</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(23,936</TD>
    <TD nowrap>)<SUP style="font-size: 85%; vertical-align: text-top">3</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Additional paid-in capital</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,401,938</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,316,594</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(250,000</TD>
    <TD nowrap>)<SUP style="font-size: 85%; vertical-align: text-top">1</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,667,879</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">3,995,813</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">2</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(412,691</TD>
    <TD nowrap>)<SUP style="font-size: 85%; vertical-align: text-top">3</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">23,936</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">3</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,407,711</TD>
    <TD nowrap>)<SUP style="font-size: 85%; vertical-align: text-top">3</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accumulated deficit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(44,352,754</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,407,711</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">1,407,711</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">3</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(44,352,754</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total stockholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,078,935</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">927,216</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,750,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,756,151</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>TOTAL LIABILITIES AND
STOCKHOLDERS&#146; EQUITY</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>2,117,008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>943,547</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>3,750,000</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>6,810,555</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>See accompanying notes</B>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->21<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">



<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Winston Laboratories, Inc. and Subsidiaries</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Pro Forma Unaudited Statement of Operations<BR>
For the Six months ended June&nbsp;30, 2008</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Pro Forma</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Winston</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Company</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Adjustments</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Pro Forma</B></TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">REVENUE</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Royalty revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">99,993</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">99,993</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">EXPENSES</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Research and development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,131,668</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,131,668</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">790,214</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">128,310</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">918,524</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,706</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,706</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,925,588</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">128,310</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,053,898</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Loss from operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(2,825,595</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(128,310</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(2,953,905</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57,694</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,153</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">73,847</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,183</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,183</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58,877</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,153</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75,030</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Loss before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(2,766,718</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(112,157</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(2,878,875</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income Taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Current</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Deferred</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:75px; text-indent:-15px"><B>NET LOSS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(2,766,718</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(112,157</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(2,878,875</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic and Diluted Net Loss Per Share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.01</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic and Diluted Weighted Average
Shares Outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">440,851,441</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">4</SUP></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>See accompanying notes</B>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->22<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">



<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Winston Laboratories, Inc. and Subsidiaries</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Pro Forma Unaudited Statement of Operations<BR>
For the Year ended December&nbsp;31, 2007</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Pro Forma</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Winston</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Company</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Adjustments</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Pro Forma</B></TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">REVENUE</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Royalty revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">800,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">800,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">EXPENSES</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Research and development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,939,429</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,939,429</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,281,612</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">208,516</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,490,128</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,087</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,087</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,231,128</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">208,516</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,439,644</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Loss from operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(2,431,128</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(208,516</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,639,644</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,733</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,719</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">85,452</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,338</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,338</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48,071</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,719</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90,790</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Loss from continuing operations
before income tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(2,383,057</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(165,797</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,548,854</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income Taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Current</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Deferred</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:75px; text-indent:-15px"><B>NET LOSS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(2,383,057</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(165,797</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right"><B>(2,548,854</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic and Dilutive Net Loss Per Share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(.01</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic Weighted Average Shares Outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">440,851,441</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">4</SUP></TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>See accompanying notes</B>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->23<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">



<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Winston Laboratories, Inc. and Subsidiaries</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>NOTES TO PRO FORMA UNAUDITED FINANCIAL STATEMENTS</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>NOTE A &#151; Basis of Presentation</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Pro Forma Unaudited financial statements reflect the financial information, which gives effect
to the acquisition of all the outstanding common stock of Winston Laboratories, Inc. (&#147;Winston&#148;) in
exchange for 422,518,545 shares of Getting Ready Corporation&#146;s (&#147;Company&#148;) common stock, par value
$0.001 per share (at an exchange ratio of 17.65101 shares of Company common stock per share of
Winston common stock), 101,849 shares of the Company&#146;s Series&nbsp;A Convertible Preferred Stock and
73,332 shares of the Company&#146;s Series&nbsp;B Convertible Preferred Stock (at an exchange ratio of .01751238 shares of Company preferred stock per share of Winston preferred stock).
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Merger was accounted for as a &#147;reverse merger,&#148; since as a result of the Merger the
shareholders of Winston own a majority of the outstanding shares of the common stock of the
Company. Winston is deemed to be the acquirer in the Merger for accounting purposes and,
consequently, the assets and liabilities and the historical operations that are reflected in the
financial statements are those of Winston and are recorded at the historical cost basis of Winston.
As a result of the Merger, there was a change in control of the Company. The Company will
continue to be a &#147;smaller reporting company,&#148; as defined under the Securities Exchange Act of 1934,
as amended, following the Merger. Because the acquisition was accounted for as a reverse merger,
there was neither goodwill recognized nor any adjustments to the book value of the net assets of
Winston that would affect the Pro Forma Statements of Operations.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>NOTE B &#151; Adjustments</B>
</DIV>


<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">The decrease in cash and a corresponding charge to equity represents a $250,000
transaction fee payable to Lazard Freres &#038; Co. LLC upon a successful completion of the
merger.</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Prior to the consummation of the Merger, 4,187,413 shares of the Winston Series&nbsp;B
Convertible Preferred Stock, par value $0.001 per share (&#147;Series&nbsp;B Preferred Stock&#148;), were
issued to investors for $4,000,000. Of the $9,000,000 committed, Dr.&nbsp;Frost and other
investors purchased $5,000,000 of Winston stock and warrants on November&nbsp;13, 2007, and an
additional $4,000,000 of Winston stock was purchased prior to
consummation of the Merger by Frost Gamma Investments Trust and other
investors, including Glenn L. Halpryn, a director and a former
officer of the Company, and
Noah Silver, a former officer
and director of the Company.</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Under the terms of the Merger Agreement, at the closing of the Merger, each common
share of Winston will be converted into approximately 17.65 shares of the Company&#146;s common
stock. In addition, Winston&#146;s Series&nbsp;A Preferred Stock and Series&nbsp;B Preferred Stock will
be converted to 101,849 shares of the Company&#146;s Series&nbsp;A Convertible Preferred Stock and
73,332 shares of the Company&#146;s Series&nbsp;B Convertible Preferred Stock, respectively, at an
exchange ratio of .01751238.</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Weighted average shares outstanding. The number of weighted average shares is
comprised of Getting Ready Corporation&#146;s number of weighted shares outstanding as of June
30, 2008 and December&nbsp;31, 2007 and the conversion (17.65101 to 1) of Winston&#146;s weighted
average shares outstanding for the same period.</DIV></TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->24<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">
<DIV align="left">
<A name="105"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF<BR>
FINANCIAL CONDITION AND RESULTS OF OPERATION</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">THE FOLLOWING DISCUSSION SHOULD BE READ TOGETHER WITH THE INFORMATION CONTAINED IN THE
FINANCIAL STATEMENTS AND RELATED NOTES INCLUDED ELSEWHERE IN THIS CURRENT REPORT ON FORM 8-K.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">This discussion should be read in conjunction with the audited consolidated financial
statements of Winston Laboratories, Inc. for the fiscal years ended December&nbsp;31, 2007 and December
31, 2006 and unaudited consolidated financial statements of Winston Laboratories, Inc. for the
three and six month periods ended June&nbsp;30, 2008 and June&nbsp;30, 2007. This discussion contains
forward-looking statements, within the meaning of Section&nbsp;27A of the Securities Act of 1933, as
amended, Section&nbsp;21E of the Securities Exchange Act of 1934, as amended, and the Private Securities
Litigation Reform Act of 1995, including statements regarding Winston&#146;s expected financial position
and business and financing plans. These statements involve risks and uncertainties. Winston&#146;s
actual results could differ materially from the results described in or implied by these
forward-looking statements as a result of various factors, including those discussed below and
elsewhere in this Current Report on Form 8-K, particularly under the headings &#147;Forward Looking
Statements&#148; and Risk Factors.&#148;
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Overview
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Winston is the successor to a research and development partnership, Cisco Ltd. (&#147;Cisco&#148;)
formed in 1992 to develop a specific novel neuroactive compound, civamide. Civamide was discovered
and patented by Joel E. Bernstein, M.D., the managing general partner of Cisco and subsequently,
the founder and Chief Executive Officer, or CEO, of Winston. In 1997, Cisco became Winston
Laboratories LLC, which in 1998 was converted to a &#147;C&#148; Corporation. Winston&#146;s initial operating
funds were obtained from a rights offering in 1997 and a private equity placement in 1998. In
1999, Winston sold approximately 19% of its common stock to Bioglan Pharma Plc (&#147;Bioglan&#148;) for $25
million; in 2004, Bioglan&#146;s stock ownership was subsequently reduced below 7% when it did not
participate in Winston&#146;s offering of additional shares of its common stock. In September&nbsp;2007,
Winston purchased all of Bioglan&#146;s outstanding ownership in Winston from Bioglan for $225,000.
Subsequent to this transaction, Winston retired all of the shares purchased from Bioglan.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In 2000, Winston established a subsidiary, Rodlen Laboratories, Inc. (&#147;Rodlen,&#148; formerly
Oncovir Corporation). In 2001, Bioglan purchased approximately 18% of Rodlen&#146;s outstanding common
stock for $13.3&nbsp;million. In 2002, Bioglan&#146;s stock ownership in Rodlen was reduced below 3% as a
result of Bioglan&#146;s election not to participate in a Rodlen rights offering. The proceeds of this
rights offering were used to acquire the Zostrix<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> line of over-the-counter topical analgesics.
Rodlen marketed the Zostrix<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> product line until July&nbsp;2005, when it sold the product to Hi-Tech
Pharmacal Co. (&#147;Hi-Tech&#148;). In October&nbsp;2004, Rodlen launched the marketing and sale of another
topical analgesic, Axsain<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>, which it promoted to physicians and other health-care professionals.
In June&nbsp;2005, based on disappointing sales, Rodlen sharply reduced promotion of the Axsain<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> product
and in March&nbsp;2006, Rodlen discontinued selling this product altogether. In February&nbsp;2007, Rodlen
licensed certain technology underlying the Axsain<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> product to Hi-Tech.
Rodlen operated as a &#147;virtual company&#148; with no employees of its own. From inception to
September, 2007, Rodlen was consolidated into the financial statements of Winston. In September
2007, Winston purchased all of the then outstanding ownership in Rodlen from Bioglan for $10,000.
Subsequent to this transaction, all of the shares purchased from Bioglan were retired. On
September&nbsp;21, 2007, Rodlen was merged into Winston.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->25<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In 2005, Winston established a wholly owned UK subsidiary, Winston Laboratories Limited (&#147;UK
Ltd.&#148;). UK Ltd. was established for the purpose of conducting work with European drug regulatory
authorities, who typically require a European entity. UK Ltd. has no employees or material assets.
The consolidated entity of Winston, Rodlen, and UK Ltd. is hereinafter referred to as &#147;Winston.&#148;
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In November&nbsp;2005, Winston spun off Gideon Pharmaceuticals, Inc. (&#147;Gideon&#148;). Gideon received
certain early-stage technologies not being actively developed by Winston, and all Winston
shareholders were offered the opportunity to purchase Gideon shares on a pro-rata basis. Not all
Winston shareholders purchased Gideon shares, but overlap in the shareholders of Winston and Gideon
is substantial. Gideon is an independent entity and not a subsidiary of Winston; however, as part
of the spin-off process, Winston did end up purchasing and maintaining a minority stake in Gideon
(approximately 10.7% ownership), for the purpose of preserving the rights of those option holders
in Winston prior to the Gideon spin-off. In particular, option holders in Winston prior to the
spin off of Gideon have, upon exercise of their Winston options, an opportunity to purchase a
pro-rata allotment of Gideon shares. During 2006, Winston undertook certain development projects
on behalf of Gideon, which were billed back to Gideon at cost. As of December&nbsp;31, 2006, Winston
had a receivable due from Gideon of $2,642, which was included in related party receivables on
Winston&#146;s balance sheet and was subsequently collected in full in 2007. In October&nbsp;2007, in
preparation for signing a merger agreement with the Company, Winston&#146;s Board of Directors voted to
distribute the shares of Gideon owned by Winston on behalf of the Winston option holders on a
pro-rata basis to such option holders. As of December&nbsp;31, 2007, Winston had no ownership stake in
Gideon.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On January&nbsp;30, 2006, Winston licensed to Sirius Laboratories, Inc., a company founded by Dr.
Bernstein, the rights to market products containing anthralin owned by Winston, including a
marketed 1% anthralin cream trade name Psoriatic<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>. The license had a two-year term which expired
on January&nbsp;31, 2008 and provided for the following key terms: (i)&nbsp;a 25% royalty on net sales; (ii)
a $300,000 minimum royalty; and (iii)&nbsp;a $750,000 purchase option.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">This agreement was assigned by Sirius to DUSA Pharmaceuticals, Inc. following DUSA&#146;s purchase
of Sirius. This license has been extended until September&nbsp;30, 2008 by mutual written consent of
the parties and the extension provides for continuing of the 25% royalty on net sales but
eliminates the minimum royalty and purchase option.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On August&nbsp;14, 2007, Winston entered into an exclusive technology license agreement with
Exopharma, Inc., now known as Elorac, Inc. (&#147;Exopharma&#148;). Under the terms of the license agreement,
Winston granted Exopharma an exclusive license to the proprietary rights of certain products (<font face="symbol">&#163;</font>
0.025% civamide with the stated indication of psoriasis of the skin). In exchange, Exopharma paid
Winston a license fee of $100,000 and is required to pay a 9% royalty on sales of the product. In
addition, the agreement requires Exopharma to pay Winston a non-refundable
payment of $250,000 upon approval of a Marketing Authorization by Exopharma on the product(s)
described in the agreement.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->26<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On September&nbsp;19, 2007, Winston entered into an exclusive technology license agreement with
Opko Ophthalmologics, LLC, (&#147;OPKO&#148;). Under the terms of the license agreement, Winston granted OPKO
an exclusive license to the proprietary rights of certain products (pharmaceutical compositions or
preparations containing the active ingredient civamide in formulations suitable for use in the
therapeutic or preventative treatment of ophthalmic conditions in humans). In exchange, OPKO paid
Winston a license fee of $100,000 and is required to pay a 10% royalty on sales of the product. In
addition, the agreement requires OPKO to pay Winston a non-refundable payment of $5,000,000 upon
approval of a marketing authorization by OPKO on the product described in the agreement. Phillip
Frost, M.D. is the Chairman and Chief Executive Officer of OPKO&#146;s parent company, Opko Health, Inc.
(&#147;Opko Health&#148;), and as of September&nbsp;24, 2008 was the beneficial owner of 47.3% of Opko Health&#146;s
common stock. Dr.&nbsp;Frost is also the beneficial owner of 5,900,827 shares of (1.34%) the Company&#146;s
common stock, 99,812 shares of the Company&#146;s Series&nbsp;A Convertible Preferred Stock, 70,238 warrants
to purchase Series&nbsp;A Convertible Preferred Stock, and 36,666 shares of the Company&#146;s Series&nbsp;B
Convertible Preferred Stock. Furthermore, Subbarao Uppaluri, Ph.D., the Senior Vice President &#151;
Chief Financial Officer of Opko Health, is the beneficial owner of 659,596 shares (0.39%) of the
Company&#146;s common stock, 1,019 shares of the Company&#146;s Series&nbsp;A Convertible Preferred Stock and 717
warrants to purchase Series&nbsp;A Convertible Preferred Stock and is a director of the Company.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Winston does not currently market any products. In the past, Winston has marketed certain
products, for the purpose of using the proceeds to help fund its research programs. Winston is
engaged in the development of innovative products for managing and alleviating pain. After
discontinuing the Zostrix<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> and Axsain<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> product lines, Winston has devoted most of its resources to
research and development, and these activities constitute the core of its business purpose.
Winston estimates that it has spent approximately 16,000 hours per year, during each of the years
2006 and 2007 on research and development activities. Winston has incurred significant operating
losses since the initiation of operations in 1997 and as of December&nbsp;31, 2007, had an accumulated
deficit of approximately $41.6&nbsp;million.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Research and Development, or R&#038;D, expenses include costs associated with manufacturing,
formulation and development of Winston&#146;s product candidates. Also included in R&#038;D expenses are
clinical trial costs, such as investigator payments, institutional review board costs, laboratory
costs, supplies, fees paid to contractors and travel. Salaries of R&#038;D personnel are also included
in R&#038;D expenses.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Winston&#146;s selling, general, and administrative, or SG &#038; A, expenses consist primarily of
salaries and related expenses of non-R&#038;D employees, facilities expenses, insurance, travel,
consulting fees, legal and professional fees, and general corporate expenses.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->27<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Results of Operations</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>For the three months ended June&nbsp;30, 2008 compared to three months ended June&nbsp;30, 2007</I>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Three Months Ended June 30,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">REVENUES</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">20,113</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">75,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">EXPENSES</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Research and development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,123,138</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">326,827</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">348,904</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">236,390</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,037</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,299</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total Operating Expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,474,079</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">566,516</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loss from Operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,453,966</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(491,516</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,329</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,159</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">806</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">522</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other income (expenses)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,135</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,681</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Loss before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,435,831</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(475,835</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income Taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Current</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income Taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">NET LOSS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,435,831</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(475,835</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">License and royalty revenue for the three months ended June&nbsp;30, 2008 decreased approximately
$55,000 to approximately $20,000 from approximately $75,000 for the same period in 2007. The
decrease is primarily due to a $75,000 minimum quarterly license revenue payment from DUSA received
in the second quarter of 2007 and $4,400 received from DUSA for the same period in 2008. The
$75,000 minimum quarterly license revenue payment was eliminated by mutual written consent of DUSA
and Winston, according to the extension agreement dated January&nbsp;29, 2008. In addition,
approximately $15,000 received from Hi-Tech accounted for the remainder of license revenue for the
three month period ending June&nbsp;30, 2008.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->28<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">R&#038;D for the three months ended June&nbsp;30, 2008 increased by approximately $796,000 to $1,123,000
from $327,000 for the same period in 2007, as a result of increased spending for the development of
oral capsule and patch.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Selling, general and administrative expenses for the three months ended June&nbsp;30, 2008
increased by approximately $113,000 to approximately $349,000 from approximately $236,000 for the
same period in 2007. The increase is due largely to increased legal and accounting fees incurred
in preparation for the Merger with the Company.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Interest income increased by approximately $2,000 to approximately $17,000 for the three
months ended June&nbsp;30, 2008 for the same period in 2007 due to increased amounts of funds on
deposit.
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->29<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Results of Operations</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>For the six months ended June&nbsp;30, 2008 compared to six months ended June&nbsp;30, 2007</I>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Six Months Ended June 30,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">REVENUES</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">99,993</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">450,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">EXPENSES</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Research and development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,131,668</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">501,210</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">790,214</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">496,139</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,706</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,403</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total Operating Expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,925,588</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,004,752</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loss from Operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,825,595</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(554,752</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57,694</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,552</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,183</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">845</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other income (expenses)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58,877</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,397</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Loss before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,766,718</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(534,355</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income Taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Current</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income Taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">NET LOSS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,766,718</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(534,355</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">License and royalty revenue for the six months ended June&nbsp;30, 2008 decreased approximately
$350,000 to approximately $100,000 from $450,000 for the same period in 2007. The decrease is
primarily due to a $300,000 license revenue payment from Hi-Tech received in 2007 that was not
received for the same period in 2008. The decrease was also due to a change in terms of the
License Agreement with DUSA that included a $25,000&nbsp;monthly minimum payment received in 2007 that
was not received for same period in 2008.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->30<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">R&#038;D for the six months ended June&nbsp;30, 2008 increased by approximately $1,631,000 to
approximately $2,132,000 from $501,000 for the same period in 2007, as a result of increased
spending on the various European regulatory filings, carcinogenicity study for the civamide cream
as well as spending on the development of oral capsule and patch.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Selling, general and administrative for the six months ended June&nbsp;30, 2008 increased by
approximately $294,000 to approximately $790,000 from approximately $496,000 for the same period in
2007. The increase is due largely to increased legal and accounting fees incurred in preparation
for the Merger with the Company.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Interest income increased by approximately $38,000 to approximately $58,000 for the six months
ended June&nbsp;30, 2008 for the same period in 2007 due to increased amounts of funds on deposit.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->31<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>For the Year Ended December&nbsp;31, 2007 compared to Year Ended December&nbsp;31, 2006</I>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Year Ended December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">REVENUE</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Royalty revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">800,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">294,453</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">EXPENSES</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Research and development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,939,429</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,279,672</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,281,612</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,154,309</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,087</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,563</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,231,128</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,449,544</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loss from operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(2,431,128</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(2,155,091</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,733</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76,439</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,338</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">86,548</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48,071</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">162,987</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Loss from continuing operations before minority
interest and income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(2,383,057</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(1,992,104</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minority interest in loss of subsidiary</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(28,105</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Loss from continuing operations before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,383,057</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,020,209</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income Taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Current</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss from continuing operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,383,057</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,020,209</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Discontinued operations (Note J)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Gain on sale of Zostrix<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> product line, net of tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">675,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net loss from discontinued operations, net of tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(27,960</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Income from discontinued operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">647,040</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><B>NET LOSS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,383,057</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,373,169</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">License and royalty revenue for the year ended December&nbsp;31, 2007 increased approximately
$506,000 to approximately $800,000 from approximately $294,000 for the year ended December&nbsp;31,
2006. The increase is due to the licensing agreements with Hi-Tech, Exopharma and OPKO which did
not exist in 2006.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">R&#038;D expenses increased approximately $660,000 to approximately $1,940,000 in 2007, from
approximately $1,280,000 in 2006 as a result of increased spending on the various European
regulatory filings as well as a carcinogenicity study for the Civamide cream.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->32<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Selling, general and administrative expenses increased approximately $128,000 to approximately
$1,282,000 in 2007, from approximately $1,154,000 in 2006 as a result of compensation expenses
related to the accelerated vesting of stock options.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Interest income decreased to approximately $33,000 in 2007, from approximately $76,000 in 2006
due to a reduced amount of funds on deposit.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Winston also realized approximately $647,000 in income from discontinued operations in 2006,
mainly from fulfilling the conditions for receipt of an escrow payment associated with the sale of
the Zostrix<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> product line to Hi-Tech.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Liquidity and Capital Resources</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Since Winston&#146;s inception, it has financed its operations through the private placement of
equity securities and, to a lesser extent, through licensing revenues and product sales. Through
June&nbsp;30, 2008, Winston has raised approximately $50&nbsp;million from the private placement of Winston
and Rodlen common shares.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">While the focus going forward is to improve our financial performance, we expect operating
losses and negative cash flow to continue for the foreseeable future. Winston anticipates that its
losses may increase from current levels because it expects to incur significant additional costs
and expenses related to being a public company, continuing its research and development activities,
filing with regulatory agencies (e.g. FDA) as well as developing new compounds and products,
advertising, marketing and promotional activities, all of which will involve employing additional
personnel as our business expands. Our ability to become profitable depends on our ability to
generate and sustain substantially higher revenue through new license and distribution agreements
while maintaining reasonable expense levels.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The bulk of Winston&#146;s expenditures are for operating activities. Winston&#146;s net cash used in
operating activities was $2&nbsp;million for the year ended December&nbsp;31, 2006, and $1.9&nbsp;million for the
year ended December&nbsp;31, 2007. These amounts were used to fund its operating losses for the
periods, adjusted for non-cash expenses and changes in operating assets and liabilities.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Winston&#146;s capital expenditures have historically been a small fraction of its overall
expenses, since it outsources manufacturing and other capital-intensive functions. The highest
annual amount of capital expenditures was $56,000 in the year ended December&nbsp;31, 2004, reflecting
expenditures on computer equipment, phone equipment and furniture to support the field force and
increased headcount associated with the Axsain<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> launch. Winston does not anticipate making
significant capital expenditures in the near future.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Historically, Winston&#146;s investing activities have included the acquisition or purchase of
product rights, such as Psoriatec<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> in 2001 and Zostrix<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> in 2002, the divestment of product rights,
such as Zostrix<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> in 2005, and the acquisition or redemption of holdings in other companies, such as
the preferred shares in Ovation that Winston redeemed in 2005.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On November&nbsp;13, 2007, Winston issued 5,815,851 shares of its Series&nbsp;A Preferred Stock and
warrants to purchase 4,092,636 shares of its Series&nbsp;A Preferred Stock in a private placement for an
aggregate purchase price of $5.0&nbsp;million. Immediately prior to consummation of the
Merger, Winston issued 4,187,413 shares of its Series&nbsp;B Preferred Stock in a private placement
for an aggregate purchase price of $4.0&nbsp;million. All of the Winston shares and warrants issued in
these transactions were exchanged for shares of Series&nbsp;A and B Preferred Stock of the Company and
warrants to purchase the Company&#146;s Series&nbsp;A Preferred Stock pursuant to the Merger Agreement.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->33<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As of June&nbsp;30, 2008, Winston had cash and cash equivalents of approximately $2.0&nbsp;million. On
September&nbsp;25, Winston received $4&nbsp;million in a private placement in exchange for 4,187,413 shares
of its Series&nbsp;B Preferred Stock. Although we expect that our available funds and funds generated
from our operations will be sufficient to meet our anticipated needs for 12&nbsp;months, we will need
and will seek to obtain additional capital to continue to operate and grow our business. Our cash
requirements may vary materially from those currently anticipated due to changes in our operations,
including our research and development, expansion of our personnel and the timing of our receipt of
license revenues. Our ability to obtain additional financing in the future will depend in part upon
the prevailing capital market conditions, as well as our business performance. There can be no
assurance that we will be successful in our efforts to arrange additional financing on terms
satisfactory to us or at all.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Off Balance Sheet Arrangements</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Winston does not have any off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition, changes in financial condition,
revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Winston leases its facilities and certain equipment under operating leases that expire through
2010. Future minimum operating lease payments at December&nbsp;31, 2007, are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="77%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">68,373</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,224</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,708</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Rental expense for the years ended December&nbsp;31, 2007 and 2006 was $123,121 and $143,197,
respectively.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Winston enters into contracts in the normal course of business with clinical research
organizations and clinical investigators, for third party manufacturing and formulation
development. These contracts generally provide for termination with notice, and therefore,
Winston&#146;s management believes that Winston&#146;s non-cancelable obligations under these agreements are
not material.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Critical Accounting Policies and Estimates</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The critical accounting policies and procedures below should be read in conjunction with
Winston&#146;s audited financial statements and the notes thereto for the year ended December&nbsp;31, 2007.
Below are Winston&#146;s critical accounting policies and procedures.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->34<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Revenue Recognition </I>&#151; Winston records revenue from product sales when title and risk of
ownership have been transferred to the customer, typically upon delivery. Royalty revenues are
recognized when determinable, in accordance with the terms of the license agreement, generally
upon receipt of cash payment which is not refundable. Since Winston is not able to forecast
product sales or attainment of milestones by licensees, royalty payments that are based on product
sales or attainment of milestones by licensees are not determinable until the licensee has
completed their computation of the royalties due and/or remitted cash payment to Winston.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Income Taxes </I>&#151; Winston files a consolidated tax return that includes all subsidiaries.
Deferred income taxes are recognized for the tax consequences in future years of differences
between the tax bases of assets and liabilities and their financial reporting amounts at each
year-end, based on enacted tax laws and statutory tax rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances are established when
necessary to reduce deferred income tax assets to the amount expected to be realized.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Stock-Based Compensation </I>&#151; In December&nbsp;2004, the Financial Accounting Standards Board (&#147;FASB&#148;)
issued Statement No.&nbsp;123 (revised 2004), &#147;Share-Based Payment&#148; (&#147;SFAS 123(R)&#148;). SFAS 123(R)
requires that the compensation cost relating to share-based payment transactions be recognized in
financial statements, based on the fair value of the instruments issued. SFAS 123(R) covers a wide
range of share-based compensation including stock options, restricted stock, performance-based
awards, share appreciation rights and employee share purchase plans. SFAS 123(R) replaces
Statement No.&nbsp;123 (&#147;SFAS 123&#148;), &#147;Accounting for Stock-Based Compensation,&#148; and supersedes
Accounting Principles Board (&#147;APB&#148;) Opinion No.&nbsp;25, &#147;Accounting for Stock Issued to Employees.&#148; As
originally issued in 1995, SFAS 123 established as preferable the fair-value-based method of
accounting for share-based payment transactions. However, SFAS 123 permitted entities to continue
to apply the guidance in Opinion No.&nbsp;25, with appropriate footnote disclosure. Prior to January&nbsp;1,
2006, Winston accounted for stock-based compensation arrangements using the intrinsic value method
in accordance with the provisions of APB Opinion No.&nbsp;25 and in compliance with the disclosure
provisions of SFAS 123. Winston adopted SFAS 123(R) as of January&nbsp;1, 2006. Since Winston had
previously used the minimum value method for recognition and disclosure, SFAS 123(R) has been
applied prospectively for 2006. Hence, new awards of options, as well as any options modified,
repurchased, or canceled after January&nbsp;1, 2006 are accounted for under the provisions of SFAS
123(R), whereas awards outstanding before that date continue to be accounted for using the
accounting provisions originally applied to these awards. In conjunction with the Merger,
Winston&#146;s Board of Directors voted to accelerate the vesting of all unvested stock options as of
October&nbsp;30, 2007. Accordingly, the compensation expense associated with the acceleration of these
stock options has been accounted for under FAS 123(R) and reflected in the statement of operations
for the year ended December&nbsp;31, 2007.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Research and Development Costs </I>&#151; Research and development costs are charged to operations as
incurred. Research and development costs, as presented herein, include the salaries and related
expenses of personnel engaged in activities directly related to research and development
activities, including administrative personnel working in the clinical and operations areas of
Winston. All other salaries have been included in general and administrative expense. Research
and development costs totaled $1,939,429 and $1,279,672 in 2007 and 2006, respectively, and
$2,131,668 and $501,210 for the six months ended June&nbsp;30, 2008 and 2007, respectively.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->35<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Recent Accounting Pronouncements</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In July&nbsp;2006, the Financial Accounting Standards Board (&#147;FASB&#148;) issued Interpretation No.&nbsp;48
(&#147;FIN 48&#148;), Accounting for Uncertainty in Income Taxes &#151; an interpretation of FASB Statement 109.
FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise&#146;s
financial statements in accordance with FASB Statement No.&nbsp;109, Accounting for Income Taxes. FIN
48 prescribes a comprehensive model for recognizing, measuring, presenting and disclosing in the
financial statements tax positions taken or expected to be taken on a tax return. If there are
changes in net assets as a result of application of FIN 48 these will be accounted for as an
adjustment to the opening balance of retained earnings. Additional disclosures about the amounts
of such liabilities will be required also. In February&nbsp;2008, the FASB delayed the effective date
of FIN 48 for certain nonpublic enterprises to annual financial statements for fiscal years
beginning after December&nbsp;15, 2007. The adoption of FIN 48 did not have any material impact on the
Company&#146;s tax positions.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In September&nbsp;2006, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No.&nbsp;157, Fair Value Measurements (&#147;SFAS No.&nbsp;157&#148;). SFAS No.&nbsp;157 defines fair
value, establishes a framework for measuring fair value, and expands disclosures about fair value
measurement. SFAS No.&nbsp;157 also emphasizes that fair value is a market-based measurement, not an
entity-specific measurement, and sets out a fair value hierarchy with the highest priority being
quoted prices in active markets. Under SFAS No.&nbsp;157, fair value measurements are disclosed by
level within that hierarchy. This Statement is effective for fiscal years beginning after November
15, 2007. The adoption of SFAS 157 did not have a material impact on the Company&#146;s fair value
measurements.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In February&nbsp;2007, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No.&nbsp;159, The Fair Value Option for Financial Assets and Financial Liabilities
(&#147;SFAS No.&nbsp;159&#148;). SFAS No.&nbsp;159 permits companies to elect to follow fair value accounting for
certain financial assets and liabilities in an effort to mitigate volatility in earnings without
having to apply complex hedge accounting provisions. The standard also establishes presentation
and disclosure requirements designed to facilitate comparison between entities that choose
different measurement attributes for similar types of assets and liabilities. SFAS No.&nbsp;159 is
effective for fiscal years beginning after November&nbsp;15, 2007. The adoption of SFAS 159 did not
have any impact on the Company&#146;s results of operations and financial position.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In December&nbsp;2007, the FASB issued Statement of Financial Accounting Standards No.&nbsp;141(R),
&#147;Business Combinations&#148; (FAS 141(R)). This Statement provides greater consistency in the accounting
and financial reporting for business combinations. FAS 141(R) establishes new disclosure
requirements and, among other things, requires the acquiring entity in a business combination to
record contingent consideration payable, to expense transaction costs, and to recognize all assets
acquired and liabilities assumed at acquisition-date fair value. This standard is effective for the
beginning of Winston&#146;s first fiscal year beginning after December&nbsp;15, 2008. FAS 141(R) will have a
significant impact on the accounting for future business combinations after the effective date and
will impact financial statements both on the acquisition date and subsequent periods.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->36<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In December&nbsp;2007, the FASB issued Statement of Financial Accounting Standards No.&nbsp;160,
&#147;Noncontrolling Interests in Consolidated Financial Statements&#148; (FAS 160). FAS 160 amends
Accounting Research Bulletin No.&nbsp;51, &#147;Consolidated Financial Statements&#148;, to establish accounting
and reporting standards for the minority or noncontrolling interests in a subsidiary or variable
interest entity and for the deconsolidation of a subsidiary or variable interest entity. Minority
interests will be recharacterized as noncontrolling interests and classified as a component of
equity. It also establishes a single method of accounting for changes in a parent&#146;s ownership
interest in a subsidiary and requires expanded disclosures. FAS 160 is effective for the beginning
of Winston&#146;s first fiscal year beginning after December&nbsp;15, 2008, and requires retroactive adoption
of the presentation and disclosure requirements for existing minority interests. Winston does not
expect the adoption of this standard to have a material impact on its financial position or results
of operations.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In March&nbsp;2008, the FASB issued SFAS No.&nbsp;161, &#147;Disclosures about Derivative Instruments and
Hedging Activities &#151; An Amendment of FASB Statement No.&nbsp;133&#148; (or SFAS 161). This statement revises
the requirements for the disclosure of derivative instruments and hedging activities that include
the reasons a company uses derivative instruments, how derivative instruments and related hedged
items are accounted under SFAS 133 and how derivative instruments and related hedged items affect a
company&#146;s financial position, financial performance and cash flows. SFAS 161 will be effective in
the fourth quarter of fiscal 2009. The Company is currently evaluating the impact of adopting SFAS
161 and does not anticipate a material effect.
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->37<!-- /Folio -->
</DIV>



<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">
<DIV align="left">
<A name="106"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>RISK FACTORS</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">This Report includes &#147;forward-looking statements&#148; within the meaning of Section&nbsp;21E of the
Securities Exchange Act of 1934, as amended, including, in particular, certain statements about our
plans, strategies and prospects. Although we believe that our plans, intentions and expectations
reflected in or suggested by such forward-looking statements are reasonable, we cannot assure you
that such plans, intentions or expectations will be achieved. Important factors that could cause
our actual results to differ materially from our forward-looking statements include those set forth
in this Risk Factors section. All forward-looking statements attributable to us or any persons
acting on our behalf are expressly qualified in their entirety by the cautionary statements set
forth below.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">If any of the following risks, or other risks not presently known to us or that we currently
believe to not be significant, develop into actual events, then our business, financial condition,
results of operations, cash flows or prospects could be materially adversely affected.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As used in this section, the terms &#147;we,&#148; &#147;our&#148; and &#147;us&#148; refer to the operations of Winston
historically, as combined with the Company on a going-forward basis.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Risks Related to Our Company and its Business</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>We may be unable to fund our working capital needs</I>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We have incurred significant operating losses since the initiation of operations in 1997 and,
as of June&nbsp;30, 2008, had an accumulated deficit of approximately $44.3&nbsp;million. In the near term,
we do not expect our revenues to be able to fund our expenditures on working capital and research
and development. As a result, our future is dependent upon our ability to obtain financing until
such point as the development of our products yields profitable operations. In the event that we
fail to raise sufficient capital, we may not be able to fund our research and development programs,
we may have to reduce or cease our business operations, and our stockholders may lose their
investment.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>We may need to raise additional capital, which may not be available on acceptable terms, if at all.</I>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We will need to raise additional capital during the next several years, to continue and expand
our research and development programs, to increase our sales and marketing activities, to acquire
or license new products and technologies in our therapeutic area, to extend and protect our
intellectual property assets, to make expenditures on physical and human capital needed to support
our operations or for other purposes.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">To raise such capital, we may utilize a variety of channels, including the public equity
markets, additional private equity financings, collaborative arrangements and private debt
financings or the sale of certain property rights. If additional capital is raised through the
issuance of equity securities, our existing stockholders will experience dilution, and the new
securities may have rights, preferences or privileges senior to those of other holders. If we
raise additional capital through the issuance of debt securities, the debt securities may have
rights, preferences and privileges senior to those of holders of equity securities, and the terms
of that debt could impose restrictions on our operations.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->38<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We cannot be assured that additional capital will be available on acceptable terms, if at all.
If adequate funds are not available, we may have to:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">delay, reduce the scope of or eliminate one or more of our research and
development programs;</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">reduce or curtail the extent of our sales, marketing and promotional
activities; or</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">license or sell the rights to certain of our technologies or product candidates
on terms that are less favorable than might otherwise prevail.</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>We may be exposed to litigation relating to claims arising out of our products and operations that
could adversely affect our earnings.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">From time to time, we may be exposed to litigation arising out of our products and operations.
The process of resolving matters through litigation is inherently uncertain, and it is possible
that the resolution of such matters will adversely affect us, our results of operations and our
financial condition. As of September&nbsp;20, 2008, we are not engaged in any legal proceedings that
are expected individually or in the aggregate to have a material adverse effect on our financial
condition.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>In order to become profitable and grow our business, we must successfully develop and commercialize
our new products. If we are unsuccessful in these endeavors, our ability to grow will be severely
limited.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our future revenues and profitability depend, to a significant extent, on our ability to
commercialize new branded pharmaceutical products successfully. In order to be marketable, such
products must receive the necessary regulatory approvals. The products we are currently developing
may or may not receive the requisite regulatory approvals to permit their sale in the United States
and other important markets, such as Europe, Japan and Canada. The process of discovering,
developing, and commercializing new pharmaceuticals is costly, time-consuming, and unpredictable.
As a result, there is no assurance that any of our products will be successful in reaching the
market or in achieving significant market penetration, even if commercialized.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>As we evolve from a company primarily involved in development to a company also involved in
commercialization, we may encounter difficulties in managing our growth and expanding our
operations successfully.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As we advance our product candidates through clinical trials, we will need to expand our
development, regulatory, manufacturing, marketing and sales capabilities or contract with third
parties to provide these capabilities for us. As our operations expand, we expect that we will
need to manage additional relationships with such third parties, as well as additional
collaborators and suppliers. Maintaining these relationships and managing our future growth will
impose significant added responsibilities on members of our management. We must be able to: manage
our development efforts effectively; manage our clinical trials effectively; hire, train and
integrate additional management, development, administrative and sales and marketing personnel;
improve our managerial, development, operational and finance systems; and expand our facilities,
all of which may impose a strain on our administrative and operational infrastructure.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->39<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Furthermore, we may acquire additional businesses, products and/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. Our future financial performance
will depend, in part, on our ability to manage any future growth effectively and our ability to
integrate any acquired businesses. We may not be able to accomplish these tasks, and our failure
to accomplish any of them could prevent us from successfully growing our company.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>We have a relatively small number of compounds under development, so the failure of any compound in
clinical trials could significantly impact our future potential for growth.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">At present, our principal development programs involve two active pharmaceutical ingredients
in a variety of different formulations. If any of these compounds is determined to be unsafe or
ineffective in pain control or in other medical applications, our future sales, profitability, and
cash flows could be materially adversely affected.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>If we are unable to demonstrate the safety and efficacy of our products through clinical trials, we
may be unable to commercialize our products.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Prior to obtaining regulatory approvals for the sale of a new prescription product, we must
demonstrate through preclinical studies and clinical trials that the product is safe and effective
for its intended use. The outcome of clinical trials is uncertain, and even promising results from
early-phase clinical studies may not accurately predict results in later, large-scale trials.
Failure to demonstrate safety and efficacy of our products would prevent us from obtaining
regulatory approvals that may be needed prior to commercialization.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Many factors can adversely affect the outcome of clinical trials. For instance, the rate of
patient enrollment sometimes delays completion of clinical studies. There is considerable
competition to enlist patients for clinical trials of products, and such competition may slow
clinical development of products, increase development costs and delay regulatory approvals.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Also, we rely on third-party independent investigators and other parties to help conduct our
clinical trials. To the extent that third-party expert clinical investigators, contractors or
clinical research organizations do not meet prescribed deadlines or follow the appropriate
regulatory guidelines, we may not be able to obtain required approvals and commercialize our drug
candidates on a timely basis, if at all.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>The pharmaceutical industry is heavily regulated, which creates uncertainty about our ability to
bring new products to market.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Governmental authorities, principally the FDA in the United States, impose substantial
requirements on the testing, manufacture, labeling, sale, distribution, marketing, advertising and
promotion of pharmaceutical products.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The process of achieving FDA approval on an NDA is time-consuming, costly and complex. The
drug development and NDA approval process typically takes many years and usually costs tens of
millions of dollars, though the requisite time and expenses vary substantially depending on the
nature of the pharmaceutical product involved and its intended use. The FDA
may also act to change existing regulations or adopt new regulations that could delay the
approval of our new products, impose additional costs on our development programs, or negatively
impact the marketing of any products being marketed by us.
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->40<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Even if the FDA approves the NDA for a particular drug, it may not include all the uses for
which we seek to market the product. The FDA actively enforces regulations prohibiting marketing
of products for non-indicated uses and may impose significant penalties for inappropriate
marketing.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We cannot be assured that the FDA or other regulatory agencies will approve any of our
products on a timely basis, if at all, or that, if granted, regulatory approval will not entail
restricting the indicated uses for which we may market our products, which could limit the
potential market for the products. Any failure to obtain regulatory approval or delays in
obtaining such approval could adversely impact our ability to market our products and, thereby, to
generate revenue, income, and cash flow.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The FDA regulates the manufacturing facilities and procedures of all pharmaceutical products
made in the United States or for sale in the United States. Such facilities must be registered
with the FDA and all products made in such facilities must be manufactured in accordance with
&#147;current good manufacturing practices&#148; (cGMPs) as stipulated by the FDA. Compliance with cGMP
regulations is costly, and even though we use third-party manufacturers, we are responsible for
ensuring that our products meet the requirements of cGMPs. The FDA periodically inspects
third-party manufacturing facilities to ensure compliance with cGMPs, and it may impose substantial
penalties, including recall or withdrawal of product approvals, if regulatory standards are not
met. Our business could be materially adversely impacted if the FDA determined that the approved
manufacturing facility for a particular drug was not in compliance with cGMPs.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>Failure to obtain regulatory approval in foreign jurisdictions will prevent us from marketing our
products abroad.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We intend to market our products in international markets. In order to market our products in
the European Community and many other foreign jurisdictions, we must obtain separate regulatory
approvals. The approval procedures vary among countries and can involve additional testing, and
the time required to obtain approval may differ from that required to obtain FDA approval. The
foreign regulatory approval process may include all of the risks associated with obtaining FDA
approval, in addition to other risks. We may not obtain foreign regulatory approvals on a timely
basis, if at all. Importantly, approval by the FDA does not ensure approval by regulatory
authorities in other countries, and approval by one foreign regulatory authority does not ensure
approval by regulatory authorities in other foreign countries or by the FDA. We may not be able to
file for regulatory approvals and may not receive necessary approvals to commercialize our products
in any market. Failure to obtain such regulatory approval would have a material adverse effect on
our business, financial condition and results of operations.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->41<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>Our current and future clinical trials may not begin on time or at all, and may not be completed on
schedule or at all.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In order to test our proposed products, we will need to work closely with the FDA to outline
necessary protocol design, as well as the appropriate regulatory pathways for the approval of these
products. The timing and approval of our protocol designs may be delayed as the FDA may be slow in
evaluating our protocols or may impose additional requirements.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Moreover, clinical trials may require the enrollment of large numbers of patients, and
suitable patients may be difficult to identify and recruit. Patient enrollment in clinical trials
and completion of patient follow-up in clinical trials depends on many factors, including the size
of the patient population, the nature of the trial protocol, the proximity of patients to clinical
sites and eligibility criteria for the study of patient compliance. For example, patients may be
discouraged from enrolling in our clinical trials if the trial protocol requires them to undergo
extensive procedures to assess the effectiveness or accuracy of our proposed products, or they may
be persuaded to participate in contemporaneous trials of competitive products. Delays in patient
enrollment or failure of patients to continue to participate in a study may cause an increase in
costs and delays or result in the failure of the trial. In addition, the results of previous
clinical trials may not be predictive of future results.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>Independent clinical investigators and contract research organizations that we engage to conduct
our clinical trials may not be diligent, careful or timely. In the past, we have encountered such
delays.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We will depend on independent clinical investigators to conduct our clinical trials. Contract
research organizations may also assist us in the collection and analysis of data. These
investigators and contract research organizations will not be our employees and we will not be able
to control, other than by contract, the amount of resources, including time, that they devote to
products that we develop. If independent investigators fail to devote sufficient resources to the
development of product candidates, or if their performance is substandard, it will delay the
approval and commercialization of any products that we develop. In the past, we have experienced
such delays. Further, the FDA requires that we comply with standards, commonly referred to as good
clinical practice, for conducting, recording and reporting clinical trials to assure that data and
reported results are credible and accurate and that the rights, integrity and confidentiality of
trial subjects are protected. If our independent clinical investigators and contract research
organizations fail to comply with good clinical practice, the results of our clinical trials could
be called into question and the clinical development of our product candidates could be delayed.
Failure of clinical investigators or contract research organizations to meet their obligations to
us or comply with good clinical practice procedures could adversely affect the clinical development
of our product candidates and harm our business.
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->42<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">
<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>There is no guarantee that, if approved, our products will gain market acceptance, and this may
negatively impact our revenues, profitability, and cash flows.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Even after obtaining the necessary regulatory approvals, our products may or may not be
favorably received in the marketplace. A number of factors may limit the market acceptance of our
products, including but not limited to:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">the timing of regulatory approvals relative to those of competitive products;</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">any restrictions on the use or marketing of our products;</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">access to third-party reimbursement for our products;</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">the availability of alternative products; and</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">the performance of our sales and marketing initiatives or those by third-party
distributors or agents.</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Due to the competitive nature of the pharmaceutical business, there is no guarantee that
approved products will necessarily earn returns commensurate with their development costs.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>We face intense competition.</I>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The pharmaceutical industry is intensely competitive, and our competitors include large, fully
integrated pharmaceutical companies, specialty pharmaceutical companies, biotechnology enterprises,
universities and public and private research institutions. Most of these entities have
substantially greater financial resources than us, so they may be able to make larger investments
in research and development, undertake more extensive marketing campaigns and achieve more
substantial economies of scale in activities, such as manufacturing and sales promotion.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Competitors may succeed in developing and commercializing products earlier than us.
Competitors may develop products or technologies that are superior to those that we are developing,
and render our product candidates or technologies obsolete or uneconomical. Competitors may
develop generic alternatives to our products, and even if such generics are not identical or
therapeutically equivalent to our products, they may capture significant market share at our
expense. Under any of these scenarios, our business, operating results and financial condition
might suffer in a material and adverse way.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>We are dependent on outside contractors for the manufacture of our products.</I>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">All of our products are currently manufactured by third-party contractors pursuant to
contractual arrangements. We rely on our third-party manufacturers to maintain compliance with FDA
regulations and those of other government authorities. If these manufacturing facilities are found
to be in significant non-compliance, they could be forced to curtail operations, which could cause
supply disruptions that negatively impact our business.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our reliance on third-party manufacturers also limits our ability to control the manufacturing
process and related costs. The production of our products must also occur in a highly controlled,
clean environment to minimize particles and other yield- and quality-limiting contaminants. In
spite of stringent quality controls, weaknesses in process control or minute impurities in
materials may cause a substantial percentage of defective products in a lot. If we are not able to
maintain stringent quality controls, or if contamination problems arise, our clinical development
and commercialization efforts could be delayed, which would harm our business and our results of
operations. Margins and profitability may be adversely impacted by increases in the
prices we pay to our contract manufacturers or by manufacturing problems that cause
interruptions in the supply of our products or necessitate recalls of marketed products.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->43<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>If we cannot obtain sufficient raw materials or finished products from key suppliers that in some
cases may be the only source of such materials or products, we may face supply disruptions and
additional manufacturing expenses that could adversely affect our business.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The FDA requires pharmaceutical manufacturers to identify in their NDAs the suppliers of all
the raw materials, especially the active pharmaceutical ingredient, as well as the suppliers of the
finished drug product. To the extent practicable, we will attempt to identify in each NDA multiple
suppliers for the active ingredient and finished drug product. However, many products and raw
materials are available only from a single source and, even where multiple sources exist, we may be
reliant on a single manufacturer for raw materials and/or finished products.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">To the extent raw materials for a particular product become unavailable from an approved
supplier, any difficulties experienced by our suppliers cannot be resolved, extensions of our key
supply agreements cannot be negotiated within a reasonable time or on commercially reasonable
terms, or an existing supplier should lose its regulatory status as an approved source, we would
attempt to locate a qualified alternative. However, typically when a manufacturing source needs to
be replaced, long lead times are necessary to find another viable manufacturer and transfer the
required know-how. In such an event, we would be required to qualify a new supplier with the FDA.
Hence, replacement of any manufacturing source may be time-consuming and expensive, and may result
in an adverse impact on our business.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>We currently have limited marketing staff and no sales or distribution organization. If we are
unable to develop our sales and marketing and distribution capability on our own or through
collaborations with marketing partners, we will not be successful in commercializing our product
candidates.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We currently have limited marketing and no sales or distribution capabilities. If our product
candidates are approved, we intend to establish our sales and marketing organization with technical
expertise and supporting distribution capabilities to commercialize our product candidates, which
will be expensive and time consuming. Any failure or delay in the development of our internal
sales, marketing and distribution capabilities would adversely impact the commercialization of
these products. With respect to our existing and future product candidates, we may choose to
collaborate with third parties that have direct sales forces and established distribution systems,
either to augment our own sales force and distribution systems or in lieu of our own sales force
and distribution systems. To the extent that we enter into co-promotion or other licensing
arrangements, our product revenue is likely to be lower than if we directly marketed or sold our
products. In addition, any revenue we receive will depend in whole or in part upon the efforts of
such third parties, which may not be successful. If we are unable to enter into such arrangements
on acceptable terms or at all, we may not be able to successfully commercialize our existing and
future product candidates. If we are not successful in commercializing our existing and future
product candidates, either on our own or through collaborations with one or more third parties, our
future product revenue will suffer and we may incur significant additional losses.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->44<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>We face uncertainty surrounding pharmaceutical pricing and health care reform.</I>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Government, private insurers and other third-party payers are increasingly attempting to
contain or reduce the costs of health care, including the costs and reimbursement rates for
pharmaceuticals, through various means. If government, insurance companies and other significant
third-party payers do not provide adequate coverage and reimbursement for users of our products,
acceptance of our products in the market could be adversely affected. To the extent that health
care reform legislation or developments in the private health care system act to depress
pharmaceutical prices and reduce demand, our business, results of operations, and financial
condition could suffer.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>We must protect our proprietary technologies and intellectual property rights, and we cannot be
certain of their confidentiality and protection.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In the pharmaceutical industry, it is crucial to obtain patent and trade secret protection for
new technologies, products and processes. Our success will depend, in part, on our ability to
obtain and enforce our exclusive rights to our product candidates, technologies and processes under
the patent laws of the United States and those of other countries. In addition, we must operate in
a way that does not infringe or violate the patent, trade secret and other intellectual property
rights of other parties.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We currently have a number of U.S. and foreign patents issued and pending. We cannot be sure
that we will receive patents for any of our pending patent applications or any patent applications
we may file in the future. If our current and future patent applications are not approved or, if
approved, are not upheld in a court of law if challenged, it may reduce our ability to
competitively exploit our products. Our policy is to seek patent protection and enforce the
intellectual property rights that we own and license. Litigation to establish the validity of
patents, to assert patent infringement claims against others or to defend against patent
infringement claims of others is expensive and time-consuming, even if the outcome is favorable to
us. Also, such patents may or may not provide competitive advantages for their respective products
or they may be challenged or circumvented by our competitors, in which case our ability to
commercially market these products could be diminished.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We also rely upon trade secrets, know-how and other confidential information in the operation
of our business. Although we attempt to protect our proprietary technologies and knowledge by
means of confidentiality agreements with our employees, consultants, contractors, prospective
licensees and business partners, there is no certainty that these agreements will not be breached
or that we would have adequate remedies for any breach.
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->45<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">
<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>Third parties may claim that we infringe on their proprietary rights and may prevent us from
manufacturing and selling some of our products.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The manufacture, use and sale of new products that are the subject of conflicting patent
rights have been the subject of substantial litigation in the pharmaceutical industry. These
lawsuits relate to the validity and infringement of patent or proprietary rights of third parties.
We may have to defend against claims that we violated patents or proprietary rights of third
parties. This is especially true in the case of brand new products where a competitor has obtained
patents for
similar products. Litigation may be costly and time-consuming, and could divert the attention
of our management and technical personnel. In addition, if we infringe on the rights of others, we
could lose our rights to develop or manufacture products or could be required to pay monetary
damages or royalties to license proprietary rights from third parties. Although the parties to
patent and intellectual property disputes in the pharmaceutical industry have often settled their
disputes through licensing or similar arrangements, the costs associated with these arrangements
may be substantial and could include ongoing royalties. Furthermore, we cannot be certain that the
necessary license would be available to us on commercially reasonable terms, if at all. As a
result, an adverse determination in a judicial or administrative proceeding or the failure to
obtain necessary licenses could prevent us from manufacturing and selling a number of our products,
which could harm business, financial condition, results of operations and cash flows.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>We may face product liability claims or product recalls.</I>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our business exposes us to potential liability risks that arise from the testing,
manufacturing and sale of our products. Although we currently maintain product liability
insurance, there is no guarantee that such insurance is sufficient in amount or scope against
potential liability claims. Product liability claims may also generate adverse publicity that
negatively impacts our business. In addition, product liability insurance is becoming increasingly
expensive, so we may not be able to obtain or maintain product liability insurance on acceptable
terms or with adequate coverage, and this could inhibit our ability to market potential products.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Additionally, if products marketed by us do not meet approved specifications or are deemed by
the relevant regulatory agencies not to be marketable for some reason, we may need to recall such
products, which would result in adverse publicity, recall costs and revenue impairment.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>We may not be able to consummate collaborative sales or licensing agreements with other parties,
and there is no assurance, that if consummated, any such agreements will be successful.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As part of our strategy, we intend to pursue collaborative agreements with larger
pharmaceutical companies. For certain products in development, where the target physician market
is large and diffuse, an extensive sales force would be needed to achieve significant market
penetration. In such cases, it would be desirable for us to have a large marketing partner. For
other geographic territories, we plan on out-licensing the marketing rights to our products to
other companies that have existing sales and marketing operations within those territories.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our management has devoted, and will continue to devote, significant efforts to pursuing
collaborative agreements with other companies, but there is no assurance that we will be able to
execute any such agreements. In addition, even if we are able to enter into collaborative
arrangements with other companies, there is no guarantee that such arrangements will be successful.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>We face risks from expanding operations and management of growth.</I>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">To execute our strategic plan successfully over the next few years, we must achieve rapid
growth, which will place significant strain on our financial, managerial and operational resources.
To manage this growth effectively, we must continue to improve and expand our operational
capabilities, infrastructure and human resources, while preserving our financial wherewithal.
Failure to manage growth effectively could negatively impact our business, results of
operations and financial condition.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->46<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>If we are unable to retain our key personnel, or to attract and retain qualified personnel, our
business could be harmed.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our success is highly dependent on the talents and contributions of our senior management and
scientific team. The loss of the services of key personnel or the failure to recruit and retain
additional personnel with the requisite qualifications could have a material adverse effect on our
business. In addition, we face substantial competition for qualified personnel from other
pharmaceutical companies and we may be unable to attract and recruit the personnel necessary for
the future development of our business. Other than Dr.&nbsp;Bernstein, we do not have any employment
agreements with our key personnel and cannot give any assurances that we will be able to attract
and retain key personnel. We do not carry key-man life insurance on any of our officers.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>Our future operating and financial results could differ significantly from the financial
projections.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Any financial projections included herein are based on assumptions made by us without the
benefit of significant operating history under our current business model and prior to the
introduction to any of our newly developed products. Such projections are included solely to give
prospective investors information concerning our estimates of future operating results based on
these assumptions. Although we believe that such assumptions are reasonable as of the date hereof,
there can be no assurance that such assumptions will prove to be correct or that projected results
will be achieved. Actual results will vary from the projected results, and such variations may be
material and adverse. We reserve the right to conduct business in a manner different from that set
forth in the assumptions as changing circumstances require. The financial projections have not
been prepared or compiled by any accounting firm.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Risks Related to Our Common Stock</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>There is not now, and there may not ever be, an active market for our shares of common stock.</I>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Although our common stock may be quoted on the OTC Bulletin Board, trading may be extremely
sporadic. For example, several days may pass before any shares may be traded. There can be no
assurance that following the Merger, a more active market for our common stock will develop. If a
public market for our common stock does not develop, shareholders may not be able to re-sell the
shares of our common stock that they own and may lose all of their investment.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In addition, approximately 68% of the outstanding shares of our common stock (including
outstanding shares of our preferred stock on an as converted basis) are subject to lockup
agreements which limit sales for a two-year period. These factors may result in lower prices for
our common stock than might otherwise be obtained and could also result in a larger spread between
the bid and ask prices for our common stock. In addition, without a large float, our common stock
is less liquid than the stock of companies with broader public ownership and, as a result, the
trading prices of our common stock may be more volatile. In the absence of an active public
trading market, an investor may be unable to liquidate his investment in our common stock. Trading
of a relatively small volume of our common stock may have a greater impact on the
trading price of our stock than would be the case if our public float were larger. We cannot
predict the prices at which our common stock will trade in the future.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->47<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>As we have become public by means of a reverse merger, we may not be able to attract the attention
of major brokerage firms.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">There may be risks associated with Winston&#146;s becoming public through a &#147;reverse merger.&#148;
Securities analysts of major brokerage firms may not provide coverage of us. No assurance can be
given that brokerage firms will, in the future, assign analysts to cover us or want to conduct any
secondary offerings on our behalf.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>Sales of a substantial number of shares of our common stock may cause the price of our common stock
to decline.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Should a market develop and our stockholders sell substantial amounts of our common stock in
the public market, shares sold at a price below the current market price at which the common stock
is trading will cause that market price to decline. Moreover, the offer or sale of a large number
of shares at any price may cause the market price to fall. These sales also may make it more
difficult for us to sell equity or equity-related securities in the future at a time and price that
we deem reasonable or appropriate.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>There may be issuances of shares of preferred stock in the future.</I>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our Board of Directors could authorize the issuance of a series of preferred stock that would
grant holders preferred rights to our assets upon liquidation, the right to receive dividends
before dividends would be declared to common stockholders, and the right to the redemption of such
shares, possibly together with a premium, prior to the redemption of the common stock. To the
extent that we do issue preferred stock, the rights of holders of preferred stock and common stock
could be impaired thereby, including without limitation, with respect to liquidation.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>Additional stock offerings may dilute current stockholders</I><B><I>.</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Given our plans and our expectation that we may need additional capital and personnel, we may
need to issue additional shares of capital stock or securities convertible or exercisable for
shares of capital stock, including preferred stock, options or warrants. The issuance of additional
capital stock may dilute the ownership of our current stockholders.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>Our common stock may be considered a &#147;penny stock.&#148;</I>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The SEC has adopted regulations which generally define &#147;penny stock&#148; to be an equity security
that has a market price of less than $5.00 per share, subject to specific exemptions. Following
the Merger, the market price of our common stock may be less than $5.00 per share and therefore may
be a &#147;penny stock.&#148; Brokers and dealers effecting transactions in &#147;penny stock&#148; must disclose
certain information concerning the transaction, obtain a written agreement from the purchaser and
determine that the purchaser is reasonably suitable to purchase the securities. These rules may
restrict the ability of brokers or dealers to sell our common stock and may affect our
shareholders&#146; ability to sell shares.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->48<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>We have never declared or paid dividends on our capital stock and we do not anticipate paying any
cash dividends in the foreseeable future.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We have never declared or paid dividends on our common stock and we do not anticipate paying
any cash dividends in the foreseeable future. We currently intend to retain future earnings, if
any, to fund the development and growth of our business. Except for the rights of holders of
shares of preferred stock that are authorized and issued to receive dividends, any future
determination to pay dividends will be at the discretion of our Board of Directors and will be
dependent upon our financial condition, operating results, capital requirements, applicable
contractual restrictions and other such factors as our Board of Directors may deem relevant.
</DIV>
<DIV align="left">
<A name="107"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>MANAGEMENT</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Prior to the Merger, the Company did not have any paid employees. As of September&nbsp;25, 2008,
Winston employed thirteen full-time individuals, two of whom hold M.D. degrees and two of whom hold
an advanced degree. Most of Winston&#146;s management and professional employees have substantial prior
experience with other pharmaceutical, biotechnology or medical products and service companies.
Winston expects to increase its employee census over the next two years, principally due to an
expansion in its ongoing research programs. None of Winston&#146;s employees is a member of a labor
union. Winston believes that it maintains good relations with its employees.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The table and text below provide certain descriptive information about our senior management
and directors following the Merger.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="33%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="54%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Name</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Age</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Position</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Joel E. Bernstein, M.D.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">65</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">President and Chief Executive Officer; Director</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Scott B. Phillips, M.D.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">48</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Vice President, Scientific Affairs; Director</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">David Starr
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">38</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vice President, Chief Financial Officer</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Curtis Lockshin, Ph.D.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">48</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Robert A. Yolles
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">68</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Glenn L. Halpryn
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">48</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Neal S. Penneys, M.D., Ph.D.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">66</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Subbarao Uppaluri, Ph.D.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">59</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Executive Officers</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Joel E. Bernstein, M.D. </I>is Winston&#146;s founder and has served as Winston&#146;s Chief Executive
Officer, and as a director since 2002. Following the Merger, Dr.&nbsp;Bernstein will also serve as the
Company&#146;s President and Chief Executive Officer. Before founding Winston, Dr.&nbsp;Bernstein was the
founder, Chairman, and Chief Executive Officer of GenDerm Corporation, a pharmaceutical company
that was acquired by Medicis Pharmaceutical Corporation in 1997. Previously, Dr.&nbsp;Bernstein was
head of dermatopharmacology at Northwestern University Medical School and the University of Chicago
Pritzker School of Medicine. Dr.&nbsp;Bernstein has also held senior scientific positions at Abbott
Laboratories and Schering-Plough Corporation. He has authored more than 125 scientific
publications and holds over 150 patents. Dr.&nbsp;Bernstein received a B.A. from Carleton College and
an M.D. from the University of Chicago Pritzker School of Medicine, where he received the Roche
Award for ranking first in his class. He
completed specialty training programs in both dermatology and clinical pharmacology at the
University of Chicago. Dr.&nbsp;Bernstein is a past president of the University of Chicago Medical and
Biological Alumni Association. In 1988, he was chosen as the Illinois high-tech entrepreneur of
the year by KPMG and the State of Illinois. Dr.&nbsp;Bernstein was also the founder and non-executive
chairman of Sirius Laboratories, Inc., a dermatologic products company acquired in 2006 by DUSA
Pharmaceuticals.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->49<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Scott B. Phillips, M.D. </I>is Winston&#146;s Senior Vice President, Scientific Affairs since April
1999. Previously Director of Drug Discovery at GenDerm Corporation, Dr.&nbsp;Phillips has 15&nbsp;years of
experience in the pharmaceutical industry. In addition, he has been Chief of the Clinical
Investigations Unit at Harvard Medical School and Clinical Assistant Professor of Dermatology and
Medicine at the University of Chicago Pritzker School of Medicine. He received a B.A. in biology
from Cornell University and an M.D. from Harvard University.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>David Starr </I>is Winston&#146;s Vice President and Chief Financial Officer since November&nbsp;2007. From
August&nbsp;2005 to October&nbsp;2007, Mr.&nbsp;Starr was a Chief Financial Officer of DayOne Health, which set up
and managed bariatric surgery programs for ambulatory surgery centers. From October&nbsp;2003 to August
2005, Mr.&nbsp;Starr was a Chief Financial Officer and Director of Operations Research of MSO Medical, a
national obesity disease management company serving hospitals with a proprietary version of the
gastric bypass surgery. From March&nbsp;1998 to September&nbsp;2003, Mr.&nbsp;Starr served in senior management
positions at several technology companies. From September&nbsp;1991 to March&nbsp;1998, Mr.&nbsp;Starr was an
audit manager with Arthur Andersen&#146;s Enterprise Group. Mr.&nbsp;Starr has an MBA from Northwestern&#146;s
Kellogg Graduate School of Business and a BS in Accounting from Indiana University, Bloomington.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Outside Directors</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Curtis Lockshin</I><B>, </B><I>Ph.D. </I>Since 2003, Dr.&nbsp;Lockshin has been an independent pharmaceutical and
life sciences consultant, focused on small companies that seek to leverage their technology assets
inside healthcare, biotechnology and security sectors. At Sepracor Inc. from 1998 to 2002, as a
Scientist, Associate Director, and Director of Discovery Biology &#038; Informatics, Dr.&nbsp;Lockshin was
instrumental in establishing the New Leads program, which delivered novel chemical entities into
the preclinical pipeline. In 2002-2003, while Director of Discovery Biology at Beyond Genomics,
Inc., Dr.&nbsp;Lockshin co-developed strategies for utilizing proprietary technology platforms in
clinical trial optimization and prediction of off-target drug activities. Since 2004, Dr.&nbsp;Lockshin
has served on the Board of Directors of the Ruth K. Broad Biomedical Research Foundation, a Duke
University support corporation, which supports basic research related to Alzheimer&#146;s disease and
neurodegeneration via intramural, extramural, and international grants. Dr.&nbsp;Lockshin has been a
director of clickNsettle.com, Inc. since September&nbsp;2007. Dr.&nbsp;Lockshin is a co-inventor on several
U.S. patents and applications covering pharmaceuticals, biomaterials, and optics for remote
biochemical sensing. He holds a Bachelor&#146;s degree in Life Sciences and a Ph.D. in Biological
Chemistry, both from the Massachusetts Institute of Technology.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Robert A. Yolles, J.D</I>., is Winston&#146;s Chairman of the Board and a retired partner of the
international law firm Jones Day. While a partner, he served as the chair of the Firm&#146;s domestic
and international finance practices and, previously, co-chair of the Firm&#146;s corporate practice. He
received a B.A. and J.D. from Northwestern University.
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->50<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Glenn L. Halpryn</I><B>. </B>Mr.&nbsp;Halpryn was Chairman of the Board and Chief Executive Officer of
clickNsettle.com, Inc., a public company, from September&nbsp;2007 until September&nbsp;2008 when
clickNsettle.com, Inc. merged with Cardo Medical, LLC. Mr.&nbsp;Halpryn has been Chairman of the Board
and Chief Executive Officer of Quikbyte Software, Inc. since July&nbsp;2008. Mr.&nbsp;Halpryn is also Chief
Executive Officer and a director of Transworld Investment Corporation (&#147;TIC&#148;), serving in such
capacity since June&nbsp;2001. Since 2000, Mr.&nbsp;Halpryn has been an investor and the managing member of
investor groups that
were joint venture partners in 26 land acquisition and development projects with one of the
largest home builders in the country. From 1984 to June&nbsp;2001, Mr.&nbsp;Halpryn served as Vice
President/Treasurer of TIC. From 1999, Mr.&nbsp;Halpryn also served as Vice President of Ivenco, Inc.
(&#147;Ivenco&#148;) until Ivenco&#146;s merger into TIC in June&nbsp;2001. In addition, since 1984, Mr.&nbsp;Halpryn has
been engaged in real estate investment and development activities. From April&nbsp;1988 through June
1998, Mr.&nbsp;Halpryn was Vice Chairman of Central Bank, a Florida state-chartered bank. Since June
1987, Mr.&nbsp;Halpryn has been the President of and beneficial holder of stock of United Security
Corporation (&#147;United Security&#148;), a broker-dealer registered with the NASD. From June&nbsp;1992 through
May&nbsp;1994, Mr.&nbsp;Halpryn served as the Vice President, Secretary-Treasurer of Frost Hanna Halpryn
Capital Group, Inc., a &#147;blank check&#148; company whose business combination was effected in May&nbsp;1994
with Sterling Healthcare Group, Inc. From June&nbsp;1995 through October&nbsp;1996, Mr.&nbsp;Halpryn served as a
member of the Board of Directors of Sterling Healthcare Group, Inc. Since October&nbsp;2002, Mr.
Halpryn has been a director of Ivax Diagnostics, Inc., a publicly held corporation, and is a member
of its audit committee and chairman of its compensation committee.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Neal S. Penneys, M.D., Ph.D.</I><B>, </B>is currently a dermatopathologist with AmeriPath, American
Laboratories, Fort Lauderdale, Florida. Prior to joining AmeriPath, from 1999-2001 Dr.&nbsp;Penneys
served as Associate Dean, Chief Operating Officer, Saint Louis University Health Sciences Center,
and from 1995-1999 as Chairperson, Department of Dermatology, Saint Louis University School of
Medicine. Dr.&nbsp;Penneys has served on many Boards, including those of the Association of Professors
of Dermatology, the American Society of Dermatopathology, GenDerm Corporation and Sirius
Laboratories, Inc. He was a senior consultant to the FDA from 1989-2006, and from 1985-2004 served
on several FDA Advisory Panels including those for Dermatologic Drugs and for Orphan Drugs. Dr.
Penneys received a B.A. from Franklin and Marshall College, a M.D. from the University of
Pennsylvania, a Ph.D. from the University of Miami, and an M.B.A. from St. Louis University.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Subbarao Uppaluri, Ph.D., CFA. </I>Dr.&nbsp;Uppaluri has served as the Chief Financial Officer of Opko
Health, Inc. (formerly known as eXegenics Inc.) since the consummation of its acquisitions of
Acuity Pharmaceuticals Inc. and Froptix Corporation on March&nbsp;27, 2007. He is also a member of The
Frost Group. Dr.&nbsp;Uppaluri served as the Vice President, Strategic Planning and Treasurer of IVAX
from February&nbsp;1997 until December&nbsp;2006. Before joining IVAX, from 1987 to August&nbsp;1996, Dr.&nbsp;Uppaluri
was Senior Vice President, Senior Financial Officer and Chief Investment Officer with
Intercontinental Bank, a publicly traded commercial bank in Florida. In addition, he served in
various positions, including Senior Vice President, Chief Investment Officer and Controller, at
Peninsula Federal Savings &#038; Loan Association, a publicly traded Florida savings &#038; loan, from
October&nbsp;1983 to 1987. His prior employment, during 1974 to 1983, included engineering, marketing
and research positions with multinational companies and research institutes in India and the United
States. In addition to serving as a director of Opko, Dr.&nbsp;Uppaluri currently serves on the Board
of Directors of Ideation Acquisition Corp. (AMEX: IDI), a special purpose acquisition company
formed for the purpose of acquiring a business in the digital media sector, and Longfoot
Communications Corp. (OTCBB: LGFC), a public shell company that recently completed a merger with
Kidville Holdings, LLC, an operator of upscale learning and play facilities for children. Dr.
Uppaluri holds a B.S. and M.S. in Engineering from Andhra University in India and an M.B.A. and
Ph.D. in Finance from Indiana University.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->51<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">
<DIV align="left">
<A name="108"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>EXECUTIVE COMPENSATION</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Summary Compensation Table</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following table sets forth information concerning the compensation paid by Winston and the
Company, respectively, during the fiscal years ended December&nbsp;31, 2007 and 2006 to the chief
executive officers and other executive officers whose salary and bonus for the year exceeded
$100,000 and who served as an executive officer of each of the respective companies as of, or
during the fiscal year ended, December&nbsp;31, 2007 (each, a &#147;Named Executive Officer&#148;).
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Option</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>All Other</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Total</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Salary</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Awards</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Compensation</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Compensation</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name and Principal Position</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Year</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>($)</B><SUP style="font-size: 85%; vertical-align: text-top"><B>(1)</B></SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>($)</B><SUP style="font-size: 85%; vertical-align: text-top"><B>(2)</B></SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>($)</B></TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Joel E. Bernstein, M.D.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">235,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,158</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,986</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">291,139</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">President and Chief</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">232,083</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,629</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">248,712</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-0px">Executive Officer of
Winston; Director of Winston</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Scott B. Phillips, M.D.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">210,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">73,695</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,728</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">300,423</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Senior Vice President,</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">207,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,763</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">223,263</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-0px">Scientific Affairs of
Winston</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em; background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Jeffrey R. Bernstein,Ph.D.<SUP style="font-size: 85%; vertical-align: text-top"> (3)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">116,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,448</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">123,698</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Senior Vice President and</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">152,916</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,515</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">163,431</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-0px">Chief Operating Officer of
Winston</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Glenn L. Halpryn<SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Director of the Company;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-0px">Former Chief Executive
Officer of the Company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>





<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">Represents the expense to Winston pursuant to FAS 123R for the respective
year for restricted stock options granted as long term incentive pursuant to 2007
Option Plan. No options were granted to the above officers for fiscal years 2007 and
2006.</DIV></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">Drs.&nbsp;Joel and Jeffrey Bernstein and Dr.&nbsp;Phillips received additional
compensation in 2007 and 2006, comprised of the following components: 401(k) matching
contributions in 2007 in amounts of $7,050, $3,100 and $6,300, respectively, and in
2006 of $6,600, $4,588 and $6,225, respectively; and insurance premium payments in 2007
in amounts of $10,936, $4,348 and $10,428, respectively, and in 2006 of $10,029, $5,928
and $9,538, respectively.</DIV></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">On September&nbsp;30, 2007, Jeffrey Bernstein resigned as Senior Vice President
and Chief Operating Officer of Winston, and entered into a consulting agreement with
Winston.</DIV></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">Mr.&nbsp;Halpryn served as Chief Executive Officer and Director of the Company
until the date of the Merger, when he resigned from his executive role, but remains on
the Board. Mr.&nbsp;Halpryn received no compensation in 2006 or 2007 in connection with his
service as an officer.</DIV></TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->52<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">





<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Outstanding Equity Awards at Fiscal Year-End</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following table provides information regarding exercisable and unexercisable option and stock
awards held by the Named Executive Officers as of December&nbsp;31, 2007.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="43%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Number of Securities</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Underlying</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Option</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Option</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Unexercised Options</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Expiration</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(#) Exercisable</B><SUP style="font-size: 85%; vertical-align: text-top"><B>(1) (2)</B></SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Price ($)</B><SUP style="font-size: 85%; vertical-align: text-top"><B>(2)</B></SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Date</B></TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Joel E. Bernstein, M.D.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,853,356</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.05</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1/12/2009</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,295,303</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.05</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4/6/2010</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Scott B. Phillips, M.D.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,270,873</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5/3/2009</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,177,182</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10/18/2009</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,641,544</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12/10/2012</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,853,356</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1/12/2014</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,295,303</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4/6/2015</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em; background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Jeffrey R. Bernstein, Ph.D.<SUP style="font-size: 85%; vertical-align: text-top"> </SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">794,295</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2/1/2009</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">397,148</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2/1/2010</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">132,383</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2/1/2011</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">264,765</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2/1/2011</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>





<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">In conjunction with the Merger, Winston&#146;s Board of Directors voted to
accelerate the vesting of all unvested stock options as of October&nbsp;30, 2007.</DIV></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">The number of options exercisable and the exercise prices set forth in the
table have been adjusted to reflect the conversion in connection with the Merger.
Each option to purchase a share of Winston&#146;s common stock was converted into an
option to purchase approximately 17.65 shares of common stock of the Company. The
exercise price of each option to purchase shares of the Company&#146;s common stock was
determined by dividing the pre-conversion, option exercise price by approximately
17.65 and rounding up to the nearest whole cent.</DIV></TD>
</TR>

</TABLE>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Employment and Consulting Agreements; Termination, Severance and Change-in-Control Matters</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Company and Winston have entered into (or will enter into in connection with the Merger)
certain employment, severance and/or consulting agreements with certain of our Named Executive
Officers (after the Merger) and former Named Executive Officers. Such agreements are summarized
below. Such summaries are intended solely as a synopsis of the material terms of such agreements
and are qualified in their entirety by the terms and provisions of such agreements.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Joel E. Bernstein, M.D. Employment Agreement</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In connection with the Merger, we have entered into an employment agreement with Dr.&nbsp;Joel
Bernstein, effective on the date of the Merger. The agreement provides that Dr.&nbsp;Bernstein will
serve as President and Chief Executive Officer, or Vice Chairman in the event that the Board hires
a new Chief Executive, for a term of two years. His base salary under the agreement is $260,000
for the first year of the agreement and $280,000 for the second. Dr.&nbsp;Bernstein will be eligible to
receive bonuses in such amounts and in such form as may be determined by the Board if awarded by
the Board, as well as medical insurance, life insurance, 401(k) participation and six weeks of
vacation annually.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->53<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Under the agreement, Dr.&nbsp;Bernstein is allowed to pursue other employment during the period he is
employed by us, provided he devotes at least 60% of his working time to us. He has also assigned
to Winston all patents relating to pharmaceutical products that he invents following the date of
the agreement, except those related to dermatological and ophthalmic products.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The agreement provides that we may terminate Dr.&nbsp;Bernstein for any reason; however, if such
termination is not due to Cause, death or Disability, we will be required to pay the following:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">the base salary in effect on the date of termination for the twelve months
following termination;</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">life insurance benefits, to the same extent as provided to similarly situated
employees, for the twelve months following termination;</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">medical insurance continuation coverage under COBRA up to twelve months
following termination; and</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">all benefits not fully vested will vest on the date of termination.</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Dr.&nbsp;Bernstein will not be entitled to any such compensation or benefits if he breaches any of the
covenants in the agreement relating to the protection of confidential information, non-disclosure,
non-competition and non-solicitation. He will also not be entitled to any compensation or other
benefits under the Agreement if his employment is terminated for Cause.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As used in Dr.&nbsp;Bernstein&#146;s employment agreement, the following terms have the following
definitions:
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">&#147;<U>Cause</U>&#148; means the following: (i)&nbsp;the conviction of Dr.&nbsp;Bernstein of, or the entry
of a plea of guilty or nolo contendere by Dr.&nbsp;Bernstein to, any misdemeanor involving moral
turpitude or any felony; (ii)&nbsp;fraud, misappropriation or embezzlement by Dr.&nbsp;Bernstein with
respect to the Company or any subsidiary or affiliate thereof, including without limitation
Winston; (iii)&nbsp;Dr.&nbsp;Bernstein&#146;s willful failure, gross negligence or gross misconduct in the
performance of his assigned duties for the Company or any subsidiary or affiliate thereof,
including without limitation Winston; (iv)&nbsp;Dr.&nbsp;Bernstein&#146;s material breach of a fiduciary
duty to the Company or any subsidiary or affiliate thereof, including without limitation
Winston; (v)&nbsp;any wrongful act or omission of Dr.&nbsp;Bernstein not at the express direction of
the Board of Directors of the Company or any subsidiary or affiliate thereof, including
without limitation Winston, that reflects materially and adversely on the integrity and
reputation for honesty and fair dealing of the Company or any subsidiary or affiliate
thereof, including without limitation Winston, or has a material detrimental effect on the
Company&#146;s financial condition, position or business, or the financial condition, position or
business of any subsidiary or affiliate thereof, including without limitation Winston; or
(vi)&nbsp;the breach by Dr.&nbsp;Bernstein of any material term of his employment agreement
(<U>provided</U> that in the case of clauses (iii),(iv),(v) and (vi) (but excluding
breaches of Section&nbsp;6 or 7 (i.e., confidentiality, non-solicitation and non-competition
provisions), the Company shall have provided Dr.&nbsp;Bernstein with written notice of the acts,
breaches or other events that would otherwise constitute &#147;Cause&#148; thereunder and Dr.
Bernstein shall have failed to cure or remedy such acts, breaches or other events within ten
(10)&nbsp;days following receipt of such notice, and <U>provided</U> <U>further</U> that the
failure of the Company or any subsidiary to achieve any financial objective shall not serve
as the basis for Cause hereunder).
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->54<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">&#147;<U>Disability</U>&#148; means the incapacity of Dr.&nbsp;Bernstein due to physical or mental illness
where Dr.&nbsp;Bernstein has been unable to perform his duties during the preceding 90&nbsp;days, or
where said incapacity has been determined to exist or have existed such that he is or was
unable to perform his previously assigned duties, and that such incapacity continued, has
continued and/or will continue for such period of time for at least 90&nbsp;days during any
consecutive 365&nbsp;day period by either (i)&nbsp;the liability insurance carrier for the Company or
its subsidiaries or (ii)&nbsp;the concurring opinions of two board certified, licensed physicians
(as selected one by the Company and one by Dr.&nbsp;Bernstein); <U>provided</U> that Dr.
Bernstein shall, within 15&nbsp;days after the written request of the Company or any subsidiary
or affiliate thereof, including without limitation Winston, submit to a physical and/or
mental examination for purposes of determining Disability.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Scott B. Phillips, M.D. &#151; Severance Agreements</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Winston has entered into two separate agreements dated as of October&nbsp;8, 2003 (the &#147;Phillips
Change in Control Agreement&#148;) and January&nbsp;26, 2006 (the &#147;Phillips Severance Letter&#148;, and
collectively with the Change in Control Agreement, the &#147;Phillips Severance Agreements&#148;) with Scott
B. Phillips, its Senior Vice President and Chief Scientific Officer, which together outline the
terms upon which Dr.&nbsp;Phillips&#146; employment with Winston may be terminated and the conditions upon
which certain severance payments will be made to Dr.&nbsp;Phillips in the event of such termination,
including termination of his employment in connection with a change in control of Winston.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Pursuant to the terms of the Phillips Severance Letter, Winston may terminate Dr.&nbsp;Phillips&#146;
employment at any time upon thirty (30)&nbsp;days written notice. Dr.&nbsp;Phillips may terminate his
employment with Winston at any time upon fourteen (14)&nbsp;days written notice. If Dr.&nbsp;Phillips&#146;
employment is terminated by Winston, then Dr.&nbsp;Phillips is entitled to receive by reason of such
termination his base salary and life insurance benefits in effect at the time of such termination
for an additional six (6)&nbsp;months from the termination date. Any COBRA benefits shall begin at the
conclusion of such six (6)&nbsp;month period. All other benefits that are not fully vested on the
termination date shall cease and be extinguished on such date. If Dr.&nbsp;Phillips terminates his
employment for any reason, all salary and benefits that are not fully-vested, including any and all
unvested bonuses, shall cease and be extinguished on the termination date.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Pursuant to the terms of the Phillips Change in Control Agreement, in the event Dr.&nbsp;Phillips&#146;
employment with Winston is terminated by Winston following a change in control of Winston, Dr.
Phillips shall be entitled to receive the following severance compensation (&#147;Change in Control
Severance&#148;): (i)&nbsp;a lump-sum severance payment equal to two times his annual salary at the highest
rate in effect at any time prior to such termination, plus incentive pay in an amount not less than
the highest incentive, bonus or other cash payment made to Dr.&nbsp;Phillips in addition to his salary
in any of the three years immediately preceding the year in which the change in control occurred
and (ii)&nbsp;for a period of twenty-four (24)&nbsp;months following the termination date, welfare benefits
(but excluding stock option, stock purchase, stock appreciation and similar compensatory benefits)
substantially similar to those which Dr.&nbsp;Phillips was entitled to receive immediately prior to the
termination date, reduced to the extent comparable welfare benefits are actually received by Dr.
Phillips from another employer during such period.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->55<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Dr.&nbsp;Phillips shall also be entitled to receive Change in Control Severance following a change
in control of Winston, if he terminates his employment following: (i)&nbsp;failure by Winston to elect
or re-elect Dr.&nbsp;Phillips to the position (or a substantially equivalent position) he held
immediately prior to the change in control, or the removal of Dr.&nbsp;Phillips as a director of Winston
if he was a director immediately prior to the change in control; (ii)&nbsp;a significant adverse change
in the nature or scope of Dr.&nbsp;Phillips&#146; duties, or a reduction in his base pay, incentive pay or
benefits; (iii)&nbsp;a good faith determination by Dr.&nbsp;Phillips that a change in circumstances (e.g. a
change in the scope of business or Dr.&nbsp;Phillips&#146; responsibilities) has occurred following a change
in control; (iv)&nbsp;the liquidation, dissolution, merger, consolidation, or reorganization or sale of
substantially all of Winston&#146;s assets, unless the successor assumes all duties and obligations
under the Phillips Change in Control Severance Agreement; (v)&nbsp;the relocation of Winston&#146;s principal
executive offices or of Dr.&nbsp;Phillips&#146; principal location of work in excess of 25 miles from the
location thereof immediately prior to the change in control, or the requirement that Dr.&nbsp;Phillips
travel away from his office in the course of discharging his duties to Winston at least 20% more
often than was required immediately prior to the change in control; and (vi)&nbsp;the material breach of
the Phillips Change in Control Agreement by Winston or its successor.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Dr.&nbsp;Phillips will not be entitled to receive Change in Control Severance if his employment is
terminated for Cause or due to Dr.&nbsp;Phillips&#146; death or permanent disability.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As used in the Phillips Change in Control Agreement, &#147;Cause&#148; means:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">an intentional act of fraud, embezzlement or theft in connection with Dr.
Phillips&#146; duties or in the course of his employment with Winston or a subsidiary
thereof;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">intentional wrongful damage to the property of Winston or a subsidiary thereof;</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(iii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">intentional wrongful disclosure of secret processes or confidential
information of Winston or a subsidiary thereof; or</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(iv)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">intentional wrongful engagement by Dr.&nbsp;Phillips in the management of any
business enterprise that engages in substantial and direct competition with Winston and
such enterprise&#146;s sales of any product or service competitive with any of Winston&#146;s
products or services amounted to 10% of the net sales of such enterprise and of Winston
for their respective most recently-completed fiscal years.</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Jeffrey R. Bernstein, Ph.D. &#151; Consulting Agreement</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On September&nbsp;30, 2007, Dr.&nbsp;Jeffrey Bernstein resigned as Senior Vice President and Chief
Operating Officer of Winston, and entered into a consulting agreement with that company, effective
as of October&nbsp;1, 2007. Dr.&nbsp;Bernstein&#146;s responsibilities as set forth in his consulting agreement
include assisting with the Merger, interfacing with various of Winston&#146;s service providers, aiding
in the completion of audits of Winston&#146;s financial statements for fiscal years 2006 and 2007, and
working with Winston&#146;s new Chief Financial Officer, David Starr. Pursuant to the terms of his
consulting agreement, Winston agreed to compensate Dr.&nbsp;Bernstein at a rate of $150 per hour.
Further, Winston, agreed to reimburse Dr.&nbsp;Bernstein for all reasonable out-of-pocket expenses
incurred in the course of his services to Winston, including, but not limited to, reasonable
expenses related to travel, telephone, postage, and office supplies. The consulting
agreement is terminable by either Dr.&nbsp;Bernstein or by Winston upon thirty (30)&nbsp;days notice to
the other party.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->56<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Compensation of Directors</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following table provides information regarding compensation of directors for the year ended
December&nbsp;31, 2007.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Option</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Fees earned or</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Awards</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Total</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Paid in Cash($)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>($)</B><SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>($)</B></TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Ronald H. Abrahams</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,235</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,735</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Robert A. Yolles</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,385</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,885</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Jeffrey R. Bernstein Ph.D.<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">625</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">625</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Glenn L. Halpryn</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,400</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Alan Jay Weisberg</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,400</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Noah M. Silver</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,400</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Curtis Lockshin Ph.D.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,400</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>




<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">In connection with the Merger, each option to purchase a share of
common stock of Winston was converted into options to purchase approximately
17.51 shares of common stock of the Company. As of December&nbsp;31, 2007, the
aggregate number of as-converted option awards outstanding for each of Ronald H.
Abrahams, Robert A. Yolles and Jeffrey R. Bernstein, was 3,574,330, 2,250,504,
1,588,591, respectively. On July&nbsp;28, 2008, all 3,574,330 options of Robert H.
Abrahams expired.</DIV></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">On September&nbsp;30, 2007, Jeffrey Bernstein resigned as Senior Vice
President and Chief Operating Officer, and entered into a consulting agreement
with Wionston. Since Mr.&nbsp;Bernstein was no longer an employee as of such date,
he began receiving compensation as a member of the Board.</DIV></TD>
</TR>

</TABLE>



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><I>Winston Directors</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Each of Winston&#146;s non-employee directors receives $625 a quarter for service on the Board and
15,000 stock options, awarded annually around the time of its annual meeting. Directors do not
receive additional compensation for service on any committees or for attendance at meetings.
Directors who are also Winston employees do not receive compensation for their service on the
Board.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><I>Getting Ready Corporation Directors</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Each of the Company&#146;s directors receives $400 for attendance at each meeting of the Board.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->57<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><I>Compensation of Directors Following the Merger</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The compensation of the directors following the Merger has not been determined at this time,
however it is anticipated that they will receive compensation in an amount greater than the
compensation received by Winston&#146;s directors prior to the Merger.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Independence of Directors</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Board has determined that the following individuals are independent as defined by the listing
standards of the Nasdaq Stock Market: Messrs.&nbsp;Yolles, Penneys and Halpryn and Drs.&nbsp;Lockshin and
Uppaluri. In reaching this conclusion, the Board considered family and employment relationships
that such directors have with the members of the Board.
</DIV>
<DIV align="left">
<A name="109"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Opko License</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On September&nbsp;19, 2007, Winston entered into an exclusive technology license agreement with
Opko Ophthalmologics, LLC (&#147;OPKO&#148;). Under the terms of the license agreement, Winston granted OPKO
an exclusive license to the proprietary rights of certain products (pharmaceutical compositions or
preparations containing the active ingredient civamide in formulations suitable for use in the
therapeutic or preventative treatment of ophthalmic conditions in humans). In exchange, OPKO paid
Winston a license fee of $100,000 and is required to pay a 10% royalty on sales of the product. In
addition, the agreement requires OPKO to pay Winston a non-refundable payment of $5,000,000 upon
approval of a marketing authorization by OPKO on the product described in the agreement. Phillip
Frost, M.D. is the Chairman and Chief Executive Officer of OPKO&#146;s parent company, Opko Health, Inc.
(&#147;Opko Health&#148;), and as of September&nbsp;24, 2008 was the beneficial owner of 47.3% of Opko Health&#146;s
common stock. Dr.&nbsp;Frost is also the beneficial owner of 5,900,827 shares of (1.34%) the Company&#146;s
common stock, 99,812 shares of the Company&#146;s Series&nbsp;A Convertible Preferred Stock, 70,238 warrants
to purchase Series&nbsp;A Convertible Preferred Stock, and 36,666 shares of the Company&#146;s Series&nbsp;B
Convertible Preferred Stock. Furthermore, Subbarao Uppaluri, Ph.D., the Senior Vice President -
Chief Financial Officer of Opko Health, is the beneficial owner of 659,596 shares (0.39%) of the
Company&#146;s common stock, 1,019 shares of the Company&#146;s Series&nbsp;A Convertible Preferred Stock and 717
warrants to purchase Series&nbsp;A Convertible Preferred Stock and is a director of the Company.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Exopharma License</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On August&nbsp;14, 2007, Winston entered into an exclusive technology license agreement with
Exopharma, Inc., now known as Elorac, Inc. (&#147;Exopharma&#148;), an entity that is controlled by Dr.
Bernstein, CEO of Winston and the Company (following the Merger). Under the terms of the license
agreement, Winston granted Exopharma an exclusive license to the proprietary rights of certain
products (&#8804; 0.025% civamide with the stated indication of psoriasis of the skin). In exchange,
Exopharma paid Winston a license fee of $100,000 and is required to pay a 9% royalty on sales of
the product. In addition, the agreement requires Exopharma to pay Winston a non-refundable payment
of $250,000 upon approval of a Marketing Authorization by Exopharma on the product(s) described in
the agreement.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->58<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Gideon Pharmaceuticals, Inc.</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In November&nbsp;2005, Winston spun off Gideon Pharmaceuticals, Inc. (&#147;Gideon&#148;). Gideon received
certain early-stage technologies not being actively developed by Winston, and all Winston
shareholders were offered the opportunity to purchase Gideon shares on a pro-rata basis. Not all
Winston shareholders purchased Gideon shares, but overlap in the shareholders of Winston and Gideon
is very significant. Gideon is an independent entity and not a subsidiary of Winston; however, as
part of the spin-off process, Winston did end up purchasing and maintaining a minority stake in
Gideon (approximately 10.7% ownership), for the purpose of preserving the rights of those option
holders in Winston prior to the Gideon spin-off. In particular, option holders in Winston prior to
the spin off of Gideon have, upon exercise of their Winston options, an opportunity to purchase a
pro-rata allotment of Gideon shares. During 2006, Winston undertook certain development projects
on behalf of Gideon, which were billed back to Gideon at cost. As of December&nbsp;31, 2006, Winston
had a receivable due from Gideon of $2,642, which was was included in related party receivables on
Winston&#146;s balance sheet and was subsequently collected in full in 2007. In October&nbsp;2007, in
preparation for signing a merger agreement with the Company, the Winston&#146;s Board of Directors voted
to distribute the shares of Gideon owned by Winston on behalf of the Winston option holders on a
pro-rata basis to such option holders. As of December&nbsp;31, 2007, Winston had no ownership stake in
Gideon.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Sirius (DUSA)&nbsp;License</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On January&nbsp;30, 2006, Winston licensed to Sirius Laboratories, Inc., a company founded by Dr.
Bernstein, the rights to market products containing anthralin owned by Winston, including a
marketed 1% anthralin cream trade name Psoriatic<SUP style="font-size: 85%; vertical-align: text-top"><SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP></SUP>. The license had a two-year term
which expired on January&nbsp;31, 2008 and provided for the following key terms: (i)&nbsp;a 25% royalty on
net sales; (ii)&nbsp;a $300,000 minimum royalty; and (iii)&nbsp;a $750,000 purchase option.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">This agreement was assigned by Sirius to DUSA Pharmaceuticals, Inc. following DUSA&#146;s purchase
of Sirius. This license has been extended until September&nbsp;30, 2008 by mutual written consent of
the parties and the extension provides for continuing of the 25% royalty on net sales but
eliminates the minimum royalty and purchase option. Under the technology license agreement,
Winston recorded royalty revenue of $34,847 and $150,000 for the six months ended June&nbsp;30, 2008 and
2007, respectively.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Packer&#146;s-Pine Corporation</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In 2006 and 2007, Winston assisted Packer&#146;s-Pine Corporation (&#147;Packer&#146;s&#148;) with distribution of
certain personal care products and administration. Packer&#146;s is a corporation whose chairman is
Joel E. Bernstein, M.D., president and CEO of the Company following the Merger, and two directors
of the Company following the Merger serve on the board of directors of Packer&#146;s. Under this
arrangement, Packer&#146;s reimbursed Winston for direct costs. The amount received by Winston from
Packer&#146;s as a fee for performing this function amounted to $0 and $3,317 during the years ended
December&nbsp;31, 2007 and 2006, respectively and was $0 for the six month period ended June&nbsp;30, 2008
and June&nbsp;30, 2007. Amounts due from Packer&#146;s of $5,554 and $16,167 as of December&nbsp;31, 2007 and
2006, respectively, are included in related party receivables in Winston&#146;s balance sheet. In March
2008, Packer&#146;s merged into Exopharma, Inc., now known as Elorac, Inc.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->59<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Consulting Agreement with Jeffrey Bernstein</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Please see the description of Dr.&nbsp;Jeffrey Bernstein&#146;s consulting agreement in the section
above entitled &#147;Executive Compensation&#151;Employment and Consulting Agreements; Termination,
Severance and Change-in-Control Matters.&#148;
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Sales of Stock of Getting Ready Corporation</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On December&nbsp;4, 2006, investors, including Glenn L. Halpryn of Miami, Florida, and Steven Jerry
Glauser of Denver, Colorado, purchased an aggregate of 89% of the outstanding common stock of the
Company from 45 shareholders. The Company&#146;s former chief executive officer assumed the Company&#146;s
liabilities in connection with the sale of his shares. In addition to purchasing the shares, the
investors contributed an aggregate of $699,405 in working capital to the Company in exchange for
shares of its common stock in a private placement. Following the transaction, the investors then
beneficially owned an aggregate of 93.3% of the outstanding shares of the Company.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On March&nbsp;21, 2007, the Company sold 9,349,777 shares of its restricted common stock to a group
of investors led by Dr.&nbsp;Phillip Frost (the &#147;Frost Investors&#148;). The Frost Investors paid the
Company $567,000 for the shares, which amount was approximately equal to the Company&#146;s cash on hand
on the purchase date. After the purchase, the Frost Investors beneficially owned 51% of the
Company&#146;s outstanding shares and now control the Company. Prior to the Merger, Dr.&nbsp;Frost was the
beneficial owner of 5,699,533 shares of Winston Series&nbsp;A Preferred Stock, 4,010,784 warrants to
purchase Winston&#146;s Series&nbsp;A Convertible Preferred Stock and 2,093,706 shares of Winston Series&nbsp;B
Preferred Stock.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Sales of Winston Stock for Bioglan Purchasers</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In September&nbsp;2007, Winston purchased all of the then outstanding ownership in Winston from
Bioglan for $225,000. Winston also purchased all of the then outstanding ownership in Rodlen from
Bioglan for $10,000. Subsequent to this transaction, Rodlen was merged into Winston on September
21, 2007. Both of these purchases were financed by the sale of 385,000 shares of Winston common
stock to seven existing stockholders or option holders of Winston for an aggregate purchase price
of $346,500.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->60<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">
<DIV align="left">
<A name="110"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>PRINCIPAL STOCKHOLDERS</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our voting securities consist of our common stock, par value $0.001 per share, of which
440,851,441 shares are outstanding, our Series&nbsp;A Convertible Preferred Stock, of which 101,849
shares are outstanding, and our Series&nbsp;B Convertible Preferred Stock, of which 73,332 shares are
outstanding. The holders of our voting securities are entitled to one vote for each outstanding
share on all matters submitted to our stockholders. The following tables contain information
regarding record ownership of our common stock as of September&nbsp;25, 2008 held by:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">persons who own beneficially more than 5% of our outstanding voting securities,</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">our directors,</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">named executive officers, and</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">all of our directors and officers as a group.</DIV></TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Management and Directors:</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Shares Beneficially Owned</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Percentage Ownership</B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR><TD align="center" valign="top">&nbsp;</TD></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Joel E. Bernstein, M.D.(1)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">211,222,541</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">29.47</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Scott B. Phillips, M.D.(2)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,223,361</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">2.4</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">David Starr</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Curtis Lockshin, Ph.D.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Robert A. Yolles(3)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,221,309</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Glenn L. Halpryn</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,839,539</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Neal Penneys, M.D., Ph.D.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,494,900</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Subbarao Uppaluri, Ph.D.(4)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,394,810</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">All officers and directors
As a group (8 people)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">240,406,461</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">33.54</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>5% Stockholders</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Shares Beneficially Owned</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Percentage Ownership</B></TD>
    <TD>&nbsp;</TD>
</TR>


<TR><TD align="left" valign="top">&nbsp;</TD></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Frost Gamma Investments
Trust(5)(6)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">212,617,389</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">29.67</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Jeffrey Bernstein(7)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,897,197</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">5.99</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">David Bernstein</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39,851,038</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">5.56</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Rebecca Zelken</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39,851,038</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">5.56</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>




<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">Less than 1%.</DIV></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">Includes 7,148,659 shares of common stock underlying options. Also includes 101,675,095
shares of common stock that will be beneficially owned by Dr.&nbsp;Bernstein&#146;s wife, with respect
to which Dr.&nbsp;Bernstein disclaims any beneficial ownership.</DIV></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">Includes 13,238,258 shares of common stock underlying options.</DIV></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">Includes 2,250,504 shares of common stock underlying options.</DIV></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">Includes 1,018,503 shares of common stock underlying Series&nbsp;A Convertible Preferred Stock and
716,712 shares of common stock underlying warrants to purchase Series&nbsp;A Convertible Preferred
Stock.</DIV></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(5)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">Includes 99,812,388 shares of common stock underlying Series&nbsp;A Convertible Preferred Stock
and 70,238,374 shares of common stock underlying warrants to purchase Series&nbsp;A Convertible
Preferred Stock and 36,665,775 shares of common stock underlying Series&nbsp;B Convertible
Preferred Stock.</DIV></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(6)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">As the sole trustee of the Frost Gamma Investments Trust, Dr.&nbsp;Phillip Frost may be deemed the
beneficial owner of all shares owned by the trust by virtue of his power to vote or direct the
vote of such shares or to dispose or direct the disposition of such shares owned by the trust.</DIV></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(7)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">Includes 1,588,591 shares of common stock underlying options.</DIV></TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->61<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">




<DIV align="left">
<A name="111"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>WHERE YOU CAN OBTAIN ADDITIONAL INFORMATION</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We are required to file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the SEC&#146;s public reference
rooms at 100 F Street, N.E, Washington, D.C. 20549. You may also obtain copies of the documents at
prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Room
1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more information on the
operation of the public reference rooms. Copies of our SEC filings are also available to the
public from the SEC&#146;s web site at www.sec.gov.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->62<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">
<DIV align="left">
<A name="112"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>DESCRIPTION OF SECURITIES</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Terms of Common Stock; Options</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We currently have 900,000,000 shares of common stock, par value $0.001 per share, authorized
for issuance, of which 440,851,441 shares were issued and outstanding immediately following the
Merger.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Upon liquidation, dissolution or winding up of the corporation, the holders of common stock
are entitled to share ratably in all net assets available for distribution to stockholders after
payment to creditors. The common stock is not convertible or redeemable and has no preemptive,
subscription or conversion rights. Each outstanding share of common stock is entitled to one vote
on all matters submitted to a vote of stockholders. There are no cumulative voting rights.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The holders of outstanding shares of common stock are entitled to receive dividends out of
assets legally available therefor at such times and in such amounts as our Board of Directors may
from time to time determine. Holders of common stock will share equally on a per-share basis in any
dividend declared by our board of directors. We have not paid any dividends on our common stock and
do not anticipate paying any cash dividends on such stock in the foreseeable future.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Pursuant to the Merger Agreement, we assumed Winston&#146;s stock option plans. Prior to the
Merger, Winston had outstanding options to purchase 1,643,750 shares of Winston&#146;s common stock.
These options, as a result of the Merger, will represent options to purchase 29,013,848 shares of
our common stock.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Terms of the Series&nbsp;A and Series&nbsp;B Convertible Preferred Stock; Warrants</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Merger Agreement required us to issue shares of Series&nbsp;A and Series&nbsp;B Convertible
Preferred Stock to the holders of Winston Series&nbsp;A and Series&nbsp;B Preferred Stock, respectively, and
warrants to purchase Series&nbsp;A Preferred Stock to the holders of warrants to purchase Winston Series
A Preferred Stock. The terms of our Series&nbsp;A and Series&nbsp;B Convertible Preferred Stock include
payment of dividends on this preferred stock if we pay dividends on our common stock (based upon
the number of shares of common stock into which each share of preferred stock may be converted).
Liquidation distributions and distributions other than cash will be made on all shares, preferred
or common, on a pro rata basis. The voting rights of these preferred shares are equal to one vote
for each share of common stock into which each preferred share is convertible. Each of these
preferred shares may be converted at the option of the holder after the effective time of the
Merger, and will be automatically converted into 1,000 shares of our common stock (subject to
adjustment for stock splits, stock dividends, combinations, recapitalizations, reorganizations,
reclassifications or other similar events) approximately one year after issuance. The warrants are
exercisable for shares of the Company&#146;s Series&nbsp;A Preferred Stock at a price per share of $49.09.
</DIV>

<DIV align="left">
<A name="113"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">At the present time our shares are traded on the Over-the-Counter Bulletin Board, or OTCBB.
Our shares commenced trading on the OTCBB on February&nbsp;23, 2006 under the symbol GETR, and the
symbol was changed to GTRY following the reverse stock split in November&nbsp;2006.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->63<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following table sets forth, for the periods indicated, the range of high and low closing
bid prices for our common stock through June&nbsp;30, 2008 for the periods noted, as reported by the
National Quotations Bureau and the OTCBB. Quotations reflect inter-dealer prices, without retail
mark-up, markdown or commission and may not represent actual transactions.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Common Stock Closing Bid Fiscal Quarter Ended</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">High</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Low</TD>
    <TD>&nbsp;</TD>
</TR>

 <TR><TD align="center" valign="top">&nbsp;</TD></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD align="center" valign="top">&nbsp;</TD></TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">1st Quarter (beginning February&nbsp;23, 2006)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.024</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD align="center" valign="top">&nbsp;</TD></TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2nd Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.22</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.03</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD align="center" valign="top">&nbsp;</TD></TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">3rd Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.011</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD align="center" valign="top">&nbsp;</TD></TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">4th Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.55</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD align="center" valign="top">&nbsp;</TD></TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">1st Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3.41</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.36</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD align="center" valign="top">&nbsp;</TD></TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2nd Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.71</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.80</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD align="center" valign="top">&nbsp;</TD></TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">3rd Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.75</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD align="center" valign="top">&nbsp;</TD></TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">4th Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.75</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD align="center" valign="top">&nbsp;</TD></TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">1st Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.90</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.16</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD align="center" valign="top">&nbsp;</TD></TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2<SUP style="font-size: 85%; vertical-align: text-top">nd </SUP>Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.05</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD align="center" valign="top">&nbsp;</TD></TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">3<SUP style="font-size: 85%; vertical-align: text-top">rd</SUP> <SUP style="font-size: 85%; vertical-align: text-top"> </SUP>Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.60</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We have not paid any cash dividends on our common or preferred stock and do not anticipate
paying any such cash dividends in the foreseeable future. Earnings, if any, will be retained to
finance future growth. We may issue shares of our common stock and preferred stock in private or
public offerings to obtain financing, capital or to acquire other businesses that can improve our
performance and growth. Issuance or sales of substantial amounts of common stock could adversely
affect prevailing market prices in our common stock.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As of June&nbsp;30, 2008, there were approximately 430 beneficial owners of our common stock, with
18,332,896 shares issued and outstanding.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In November&nbsp;2006, we amended our Certificate of Incorporation. The amendment includes a
reverse stock split of one for fifteen. In connection with the split, we adjusted the par value of
our common stock from $.0001 to $.001. The foregoing table reflects the effects of this split.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->64<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">
<DIV align="left">
<A name="114"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>EQUITY COMPENSATION PLAN INFORMATION</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="43%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B> Number of securities</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>remaining available </B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>for future issuance </B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Number of securities</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>under equity </B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>to be issued upon</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Weighted average</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>compensation plans </B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>exercise of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>exercise price of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B> (excluding securities</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>outstanding options,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>outstanding options,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>reflected in column</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>warrants and rights</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>warrants and rights</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(a)</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(a)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(b)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(c)</B></TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->

<TR><TD align="left" valign="top">&nbsp;</TD></TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity compensation
plans approved by
security
holders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,013,848</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,791,133</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity compensation
plans not approved
by security
holders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

<DIV align="left">
<A name="115"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>RECENT SALES OF UNREGISTERED SECURITIES</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">See the information set forth in Item&nbsp;3.02 of this Current Report on Form 8-K which is
incorporated herein by reference.
</DIV>
<DIV align="left">
<A name="116"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>INDEMNIFICATION OF DIRECTORS AND OFFICERS</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Articles Thirteen and Fourteen of our Certificate of Incorporation provide that no director
shall be personally liable to the corporation or any of its stockholders for monetary damages for
breach of any fiduciary or other duty as a director; provided that this provision shall not
eliminate or limit the liability of a director (1)&nbsp;for any breach of the director&#146;s duty of loyalty
to the corporation or its stockholders, (2)&nbsp;for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, (3)&nbsp;under Section&nbsp;174 of the Delaware General
Corporate Law, referred to as the DGCL or (4)&nbsp;for any transaction from which the director derived
an improper personal benefit.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Section&nbsp;174 of the DGCL provides, among other things, that a director, who willfully or
negligently approves of an unlawful payment of dividends or an unlawful stock purchase or
redemption, may be held liable for such actions. A director who was either absent when the unlawful
actions were approved or dissented at the time may avoid liability by causing his or her dissent to
such actions to be entered in the books containing the minutes of the meetings of the Board of
Directors at the time such action occurred or immediately after such absent director receives
notice of the unlawful acts.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->65<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">
<DIV align="left">
<A name="117"></A>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Item&nbsp;3.02. Unregistered Sales of Equity Securities</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Reference is made to the disclosure made under Items 1.01 and 2.01 of this Current Report on
Form 8-K, which is incorporated herein by reference.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">For the year ended September&nbsp;30, 2004, the Company issued 86,711 shares of common stock to
investors and realized proceeds of $31,000. For the year ended September&nbsp;30, 2006 and 2005, the
Company issued 17,033 and 3,500 shares of common stock and realized proceeds of $24,042 and $5,250,
respectively.
</DIV>
<DIV align="left">
<A name="118"></A>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Item&nbsp;5.01. Changes in Control of Registrant</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As a result of the Merger, the Company experienced a change in control, with the former
stockholders of Winston acquiring control of the Company. Additionally, as a result of the Merger,
the Company ceased being a shell company. Reference is made to the disclosure made under Item&nbsp;2.01
of this Current Report on Form 8-K, which is incorporated herein by reference.
</DIV>
<DIV align="left">
<A name="119"></A>
</DIV>

<DIV align="left" style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="7%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>Item&nbsp;5.02.</B></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify"><B>Departure of Directors or Principal Officers; Election of Directors; Appointment of
Principal Officers</B></DIV></TD>
</TR>
</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Effective at the time of the Merger, Alan Jay Weisburg and Noah M. Silver resigned from the
Board of Directors. Reference is made to the disclosure made under Item&nbsp;2.01 and this Current
Report on Form 8-K, which is incorporated herein by reference.
</DIV>
<DIV align="left">
<A name="120"></A>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Item&nbsp;5.06. Change in Shell Company Status</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Pursuant to the Merger disclosed in Items 1.01 and 2.01 of this Current Report on Form 8-K,
the Company ceased being a shell company as of September&nbsp;25, 2008. Reference is made to the
disclosures set forth in Items 1.01 and 2.01 of this Current Report on Form 8-K, which disclosures
are incorporated herein by reference.
</DIV>
<DIV align="left">
<A name="121"></A>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Item&nbsp;9.01. Financial Statements and Exhibits</B>
</DIV>



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">(a)&nbsp;Financial Statements:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The audited Financial Statements of Winston for the years ended December&nbsp;31, 2007 and December
31, 2006 the accompanying notes thereto.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The unaudited Financial Statements of Winston for the six months ended June&nbsp;30, 2008 and the
accompanying notes thereto.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">(b)&nbsp;Pro Forma Financial Information:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The unaudited Pro-Forma Consolidated Statements of Operations for Winston for the year ended
December&nbsp;31, 2007 and the unaudited Pro-Forma Consolidated Balance Sheet as of December&nbsp;31, 2007.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->66<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The unaudited Pro-Forma Consolidated Statements of Operations for Winston for the six months
ended June&nbsp;30, 2008.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(c)
Exhibits</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="77%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
<DIV align="justify">Merger Agreement and Plan of Reorganization dated as of November&nbsp;13, 2007 by
and among Getting Ready Corporation, Winston Laboratories, Inc. and Winston Acquisition
Corp. (filed as Exhibit&nbsp;2.1 to the Company&#146;s Current Report on Form&nbsp;8-K dated November
13, 2007 and incorporated herein by reference).</DIV></DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2.2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV align="justify">First Amendment to Merger Agreement and Plan of Reorganization dated as of May
30, 2008 by and among Winston Laboratories, Inc., a Delaware corporation, Getting Ready
Corporation, a Delaware corporation, and Winston Acquisition Corp., a Delaware
corporation (filed as Exhibit&nbsp;2.1 to the Company&#146;s Current Report on Form&nbsp;8-K dated May
30, 2008 and incorporated herein by reference).</DIV></DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2.3</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV align="justify">Second Amendment to Merger Agreement and Plan of Reorganization dated as of
June&nbsp;23, 2008 by and among Winston Laboratories, Inc., a Delaware corporation, Getting
Ready Corporation, a Delaware corporation, and Winston Acquisition Corp., a Delaware
corporation (filed as Exhibit&nbsp;2.1 to the Company&#146;s Current Report on Form&nbsp;8-K dated
June&nbsp;23, 2008 and incorporated herein by reference).</DIV></DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV align="justify">Certificate of Incorporation (filed as Exhibit&nbsp;3.1A to the Company&#146;s
Registration Statement on Form&nbsp;SB-2 dated September&nbsp;15, 2004 and incorporated herein by
reference).</DIV></DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3.2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV align="justify">Certificate of Amendment of Certificate of Incorporation (filed as Exhibit&nbsp;3.1B
to the Company&#146;s Registration Statement on Form&nbsp;SB-2 dated September&nbsp;15, 2004 and
incorporated herein by reference).</DIV></DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3.3</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV align="justify">Certificate of Amendment of Certificate of Incorporation (filed as Exhibit&nbsp;1 to
the Company&#146;s Form&nbsp;PRE14C dated December&nbsp;7, 2007 and incorporated herein by reference).</DIV></DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3.4</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV align="justify">Certificate
of Amendment to Certificate of Incorporation (filed as Annex A to the
Company&#146;s DEF 14C dated September&nbsp;22, 2008 and incorporated
herein by reference).</DIV></DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>

<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3.5</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV align="justify">Certificate of Designation, Preferences and Rights of Series&nbsp;A Convertible
Preferred Stock of Getting Ready Corporation.</DIV></DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>

<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3.6</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV align="justify">Certificate of Designation, Preferences and Rights of Series&nbsp;B Convertible
Preferred Stock of Getting Ready Corporation.</DIV></DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3.7</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">By-laws.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">4.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV align="justify">Form of Common Stock Certificate.</DIV></DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">4.2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV align="justify">Form of Warrant to Purchase Series&nbsp;A Convertible Preferred Stock.</DIV></DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">4.3</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify"><DIV style="margin-left:0px; text-indent:-0px">Form of Lockup Agreement.</DIV></DIV></TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->67<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="77%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV align="justify">Voting Agreement dated as of September&nbsp;25, 2008 between Getting Ready
Corporation and certain stockholders of the Company.</DIV></DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV align="justify">Employment Agreement dated as of September&nbsp;25, 2008 between Getting Ready
Corporation and Joel E. Bernstein, M.D.</DIV></DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.3</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV align="justify">Secrecy, Invention and Non-Competition Agreement dated as of October&nbsp;5, 2007 by
and between Winston Laboratories, Inc. and Joel E. Bernstein, M.D.</DIV></DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.4</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV align="justify">Employment Letter Agreement dated October&nbsp;3, 2007 between Winston Laboratories,
Inc. and David Starr.</DIV></DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.5</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV align="justify">Secrecy, Invention and Non-Competition Agreement dated as of October&nbsp;3, 2007 by
and between Winston Laboratories, Inc. and David Starr.</DIV></DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.6</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV align="justify">Severance Agreement dated as of October&nbsp;8, 2003 between Winston Laboratories,
Inc. and Scott B. Phillips, M.D.</DIV></DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.7</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV align="justify">General Severance Letter Agreement dated January&nbsp;26, 2006 between Winston
Laboratories, Inc. and Scott B. Phillips, M.D.</DIV></DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.8</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV align="justify">Secrecy, Invention and Non-Competition Agreement dated as of October&nbsp;5, 2007 by
and between Winston Laboratories, Inc. and Scott B. Phillips, M.D.</DIV></DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.9</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV align="justify">Consultation Agreement dated September&nbsp;30, 2007 between Winston Laboratories,
Inc. and Jeffrey R. Bernstein, Ph.D.</DIV></DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.10</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV align="justify">Winston Laboratories, Inc. 1999 Stock Option Plan.</DIV></DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.11</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV align="justify">Winston Laboratories, Inc. Stock Option Plan for Non-Employee Directors.</DIV></DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">21.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV align="justify">Subsidiaries</DIV></DIV></TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>



<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->68<!-- /Folio -->
</DIV>



<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Index to Financial Statements</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>Winston Laboratories, Inc. and Subsidiaries</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="96%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Page</B></TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B><I>Audited Financial Statements as of and for the Years Ended December&nbsp;31, 2007 and 2006 </I></B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#300">Report of Independent Registered Public Accounting Firm </A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#301">Consolidated Balance Sheets </A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#302">Consolidated Statements of Operations </A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#303">Consolidated Statements of Stockholders&#146; Equity </A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#304">Consolidated Statements of Cash Flows </A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#305">Notes to Consolidated Financial Statements </A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B><I>Unaudited Financial Statements as of and for the Three Months and Six Months Ended
June&nbsp;30, 2008 and 2007 </I></B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-19</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#306">Consolidated Balance Sheet </A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-19</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#307">Consolidated Statements of Operations </A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-20</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#308">Consolidated Statements of Cash Flows </A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-21</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#309">Notes to Consolidated Financial Statements </A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-22</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B><I>Winston Laboratories, Inc. and Getting Ready Corporation </I></B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-26</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#310">Pro Forma Unaudited Balance Sheet as of June&nbsp;30, 2008 </A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-27</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#311">Pro Forma Unaudited Statements of Operations for the six months ended June&nbsp;30, 2008 </A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-28</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#312">Pro Forma Unaudited Statements of Operations for the year ended December&nbsp;31, 2007 </A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-29</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Notes to Pro Forma Unaudited Financial Statements </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-30</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-1<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">
<DIV align="left">
<A name="300"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Report of Independent Registered Public Accounting Firm</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">To the Board of Directors and Stockholders of Winston Laboratories, Inc. and Subsidiaries
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We have audited the consolidated balance sheets of Winston Laboratories, Inc. and Subsidiaries
as of December&nbsp;31, 2007 and 2006, and the related consolidated statements of operations,
stockholders&#146; equity and cash flows for the years then ended. These financial statements are the
responsibility of the Company&#146;s management. Our responsibility is to express an opinion on these
financial statements based on our audits.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In our opinion, the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Winston Laboratories, Inc. and Subsidiaries as of
December&nbsp;31, 2007 and 2006, and the results of their operations and their cash flows for the years
then ended, in conformity with U.S. generally accepted accounting principles.
</DIV>



<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>


    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">/s/ McGladrey &#038; Pullen, LLP
&nbsp;</TD>
    <TD valign="top">&nbsp;&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Chicago, Illinois<BR>
March&nbsp;12, 2008, except for Note M as to which the date is September&nbsp;25, 2008
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-2<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">



<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Winston Laboratories, Inc. and Subsidiaries</B>
</DIV>

<DIV align="left">
<A name="301"></A>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>CONSOLIDATED BALANCE SHEETS</B>

</DIV>
<DIV align="center" style="font-size: 10pt"><B>December&nbsp;31, 2007 and 2006</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>ASSETS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">CURRENT ASSETS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,481,611</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,312,345</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58,844</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Related party receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,785</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,509</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Prepaid and other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,073</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,699</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,554,469</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,444,397</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">PROPERTY AND EQUIPMENT, net of accumulated depreciation of $157,161 and
$150,896 at December&nbsp;31, 2007 and 2006, respectively</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,966</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,231</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">INTANGIBLE ASSETS, NET (Note E)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,714</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,535</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">OTHER ASSETS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,314</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,910</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:90px; text-indent:-15px"><B>TOTAL ASSETS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>4,591,463</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>1,522,073</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>LIABILITIES AND STOCKHOLDERS&#146; EQUITY</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">CURRENT LIABILITIES</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">491,560</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">272,446</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accrued expenses and other current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">254,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">227,653</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">745,810</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">500,099</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long Term Liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minority interest in subsidiary</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">183,920</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Commitments and Contingencies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total liabilities (Note K)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">745,810</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">684,019</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stockholders&#146; equity (Note K)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Preferred Stock, $.001 par value, 30,000,000 shares authorized in 2007:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Series&nbsp;A, Convertible 5,815,851 shares issued and outstanding at
December&nbsp;31, 2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,815</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Series&nbsp;B, Convertible 0 shares issued and outstanding at December
31, 2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Common stock, $.001 par value, 60,000,000 shares authorized 23,937,358 and
24,984,948 shares issued and outstanding at December&nbsp;31, 2007 and 2006,
respectively</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,936</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,984</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Additional paid-in capital</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,401,938</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,016,049</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accumulated deficit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(41,586,036</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(39,202,979</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Total stockholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,845,653</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">838,054</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:75px; text-indent:-15px"><B>TOTAL LIABILITIES AND STOCKHOLDERS&#146; EQUITY</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>4,591,463</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>1,522,073</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>See accompanying notes</B>

</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-3<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Winston Laboratories, Inc. and Subsidiaries</B>
</DIV>

<DIV align="left">
<A name="302"></A>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>CONSOLIDATED STATEMENTS OF OPERATIONS</B>

</DIV>
<DIV align="center" style="font-size: 10pt"><B>Years Ended December&nbsp;31, 2007 and 2006</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">REVENUE</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Royalty revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">800,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">294,453</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">EXPENSES</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Research and development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,939,429</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,279,672</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,281,612</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,154,309</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,087</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,563</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,231,128</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,449,544</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Loss from operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(2,431,128</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(2,155,091</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,733</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76,439</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,338</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">86,548</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48,071</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">162,987</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Loss from continuing operations before minority
interest and income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(2,383,057</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(1,992,104</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minority interest in loss of subsidiary</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(28,105</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Loss from continuing operations before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,383,057</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,020,209</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income Taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Current</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss from continuing operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,383,057</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,020,209</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Discontinued operations (Note J)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Gain on sale of Zostrix<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> product line, net of tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">675,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net loss from discontinued operations, net of tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(27,960</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Income from discontinued operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">647,040</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><B>NET LOSS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(2,383,057</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(1,373,169</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>See accompanying notes</B>

</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-4<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Winston Laboratories, Inc. and Subsidiaries</B>
</DIV>

<DIV align="left">
<A name="303"></A>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS&#146; EQUITY</B>

</DIV>
<DIV align="center" style="font-size: 10pt"><B>Years Ended December&nbsp;31, 2007 and 2006</B></DIV>


<DIV align="center">
<TABLE style="font-size: 8pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Additional</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Total</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Common Stock</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Preferred Stock</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Paid-in</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Accumulated</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Stockholder&#146;s</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Capital</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Deficit</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Equity</B></TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance at January&nbsp;1, 2006</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,984,948</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">24,984</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">40,009,988</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(37,829,810</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,205,162</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Compensation with respect
to non-employee stock
option grants</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,061</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,061</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,373,169</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,373,169</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance at December&nbsp;31,
2006</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,984,948</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,984</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,016,049</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(39,202,979</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">838,054</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Issuance of common stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">385,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">385</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">346,115</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">346,500</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchase and cancellation
of common stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,594,590</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,595</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(223,405</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(225,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Repurchase of Bioglan
Shares in Subsidiary and
Elimination of Minority
Interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">173,920</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">173,920</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Issuance of common stock
upon exercise of stock
options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">162,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">162</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">124,218</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">124,380</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Issuance of Series&nbsp;A
Convertible Preferred
Shares (net of costs of
$194,648)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,815,851</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5,815</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,799,537</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,805,352</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Compensation with respect
to employee and
non-employee stock option
grants</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">165,504</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">165,504</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,383,057</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,383,057</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance at December&nbsp;31,
2007</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,937,358</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">23,936</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,815,851</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5,815</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">45,401,938</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(41,586,036</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,845,653</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>See accompanying notes</B>

</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-5<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Winston Laboratories, Inc. and Subsidiaries</B>
</DIV>

<DIV align="left">
<A name="304"></A>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>CONSOLIDATED STATEMENTS OF CASH FLOWS</B>

</DIV>
<DIV align="center" style="font-size: 10pt"><B>Years Ended December&nbsp;31, 2007 and 2006</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash flows from operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,383,057</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,373,169</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,086</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,563</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Minority interest in loss of subsidiary</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,105</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock option expense for non-employee directors and employees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">165,504</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,061</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Gain on sale of Zostrix product line</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(675,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net loss from discontinued operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,960</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Changes in:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accounts receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,568</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(46,889</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Prepaid and other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,626</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,416</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,596</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accounts payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">219,114</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48,315</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accrued expenses and other current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,597</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(88,563</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash used in operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,871,966</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,034,201</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash flows from investing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Purchase of minority interest in subsidiary</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from sale of Zostrix product line</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">675,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Purchases of property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,173</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Purchases of intangibles</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(26,781</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by investing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">640,046</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash flows from financing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Purchase and cancellation of common stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(225,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Issuance of common stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">346,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Issuance of common stock upon exercise of stock options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">124,380</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Issuance of preferred stock, net of costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,805,352</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by financing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,051,232</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">NET INCREASE (DECREASE)&nbsp;IN CASH AND CASH EQUIVALENTS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,169,266</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,394,155</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents at beginning of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,312,345</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,706,500</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents at end of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,481,611</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,312,345</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Supplemental disclosures of cash flow information</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income taxes paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Supplemental disclosures of non-cash investing and financing
information</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Repurchase and elimination of minority interest in subsidiary</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">173,920</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>See accompanying notes</B>

</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-6<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Winston Laboratories, Inc. and Subsidiaries</B>
</DIV>

<DIV align="left">
<A name="305"></A>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B>

</DIV>
<DIV align="center" style="font-size: 10pt"><B>December&nbsp;31, 2007 and 2006</B></DIV>



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>NOTE A &#151; COMPANY FORMATION AND BACKGROUND</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Winston Laboratories, Inc. (&#147;Winston&#148;) is a research-based specialty pharmaceutical company
engaged in the discovery, development and commercialization of pain-management products.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Winston is the successor to a research and development partnership, Cisco Ltd. (&#147;Cisco&#148;)
formed in 1992 to develop a specific novel neuroactive compound, civamide. Civamide was discovered
and patented by Joel E. Bernstein, M.D., the managing general partner of Cisco and subsequently,
the founder and CEO of Winston. In 1997, Cisco became Winston Laboratories LLC, which in 1998
became a C Corporation. Winston&#146;s initial operating funds came from a rights offering in 1997 and
a private equity placement in 1998. In 1999, Winston sold approximately 19% of its common stock to
Bioglan Pharma Plc (&#147;Bioglan&#148;) for $25&nbsp;million; Bioglan&#146;s stake was subsequently reduced below 7%
when it did not participate in a 2004 Winston rights offering. In September&nbsp;2007, Winston
purchased all of the then outstanding ownership in Winston from Bioglan for $225,000. Subsequent
to this transaction, all of the then purchased shares were retired.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In 2000, Winston established a subsidiary, Rodlen Laboratories, Inc. (&#147;Rodlen,&#148; formerly
Oncovir Corporation), approximately 18% of which was sold to Bioglan for $13.3&nbsp;million in 2001. In
2002, Bioglan&#146;s stake in Rodlen was reduced below 3% as a result of Bioglan&#146;s election not to
participate in a Rodlen rights offering. The proceeds of this rights offering were used to acquire
the Zostrix<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> line of over-the-counter topical analgesics. Rodlen marketed the Zostrix<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> product
line until July&nbsp;2005, when it sold the product to Hi-Tech Pharmacal Co. (&#147;Hi-Tech&#148;). (See note J
below for additional information on this transaction.) In October&nbsp;2004, Rodlen launched another
topical analgesic, Axsain<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>, which it promoted to physicians and other health-care professionals.
In June&nbsp;2005, based on disappointing sales, Rodlen sharply reduced promotion of the Axsain<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> product
and in March&nbsp;2006, Rodlen discontinued selling this product altogether. Both Zostrix<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> and Axsain<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>
have been treated in the financial statements as discontinued operations (Note J). In February
2007, Rodlen licensed certain technology underlying the Axsain<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> product to Hi-Tech (Note C).
Rodlen operates as a &#147;virtual company&#148; with no employees of its own. Rodlen is consolidated into
the financial statements of Winston. In September&nbsp;2007, Winston purchased all of the then
outstanding ownership in Rodlen from Bioglan for $10,000. Subsequent to this transaction, all of
the then purchased shares were retired. On September&nbsp;21, 2007, Rodlen was merged into Winston.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In 2005, Winston established a wholly owned UK subsidiary, Winston Laboratories Limited (&#147;UK
Ltd.&#148;). UK Ltd. was established for the purposes of conducting work with European drug regulatory
authorities, who typically require a European entity. UK Ltd. has no employees or material assets.
The consolidated entity of Winston, Rodlen, and UK Ltd. is hereinafter referred to as the
&#147;Company.&#148;
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In November&nbsp;2007, the Company and a publicly-traded company with no active operations signed a
merger agreement (the &#147;Merger Agreement&#148;) (Note L) that is expected to close in the third quarter
of 2008 (&#147;Proposed Merger&#148;). As part of the transaction, an unrelated individual investor that is
also a significant investor in the publicly-traded company, and affiliates invested $5&nbsp;million in
the Company, with an additional $4&nbsp;million investment required by the Merger Agreement to be made
contemporaneously with the consummation of the Proposed Merger (Note K). Proceeds from the
transactions are expected to fund current operations of the Company, including certain costs
associated with upcoming regulatory applications and ongoing research programs.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>NOTE B &#151; SUMMARY OF ACCOUNTING POLICIES</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Principles of Consolidation</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The consolidated financial statements of the Company include the accounts of Winston and its
Subsidiaries, UK Ltd. and Rodlen. All intercompany balances and transactions have been eliminated.
Through September&nbsp;2007, Bioglan&#146;s interest in Rodlen is presented as minority interest in the
accompanying financial statements.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-7<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Winston Laboratories, Inc. and Subsidiaries</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>

</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Use of Estimates</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In preparing financial statements in conformity with accounting principles generally accepted
in the United States of America, management is required to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those estimates.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Cash and Cash Equivalents</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">For purposes of reporting cash flows, the Company considers all instruments with original
maturities of three months or less to be cash equivalents. Included in cash and cash equivalents
is a $1.5&nbsp;million certificate of deposit (COD), which carried an annual interest rate of 4.85% and
matured on February&nbsp;18, 2008.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Accounts Receivable</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Accounts receivable are carried at original amount due less an estimate made for doubtful
accounts. Accounts outstanding longer than the payment terms are considered past due. The Company
determines its allowances by considering a number of factors, including the length of time trade
accounts receivable are past due, the Company&#146;s previous loss history, the customer&#146;s current
ability to pay its obligation to the Company, projected returns based on historical trends and
anticipated events at particular customers, and the condition of the general economy and industry
as a whole. The Company writes off accounts receivable when they become uncollectible, and
payments subsequently received on such receivables are credited to the allowance for doubtful
accounts. The allowance for doubtful accounts was $0 at December&nbsp;31, 2007 and 2006, respectively.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Property and Equipment</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Property and equipment consists primarily of furniture and office equipment with estimated
lives of 3-7&nbsp;years. Depreciation is provided for in amounts sufficient to relate the cost of
depreciable assets to operations over their estimated service lives, principally on an accelerated
basis.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Impairment of Long-Lived Assets</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Company accounts for long-lived assets in accordance with the provisions of FAS No.&nbsp;144,
<I>Accounting for the Impairment or Disposal of Long-Lived Assets</I>. This Statement requires that
long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Recoverability of assets is measured
by a comparison of the carrying amount of an asset to future undiscounted cash flows expected to be
generated by the asset. If the carrying amount of an asset exceeds its estimated future cash
flows, an impairment charge is recognized by the amount by which the carrying amount of the asset
exceeds the fair value of the asset.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Fair Value of Financial Instruments</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The carrying amounts of financial instruments, including cash and cash equivalents, accounts
receivable and accounts payable approximate fair value due to the short term maturity of these
instruments.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Revenue Recognition</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Company records revenue from product sales when title and risk of ownership have been
transferred to the customer, typically upon delivery. Royalty revenues are recognized when
determinable, in accordance with the terms of the license agreement, generally upon receipt of cash
payment which is not refundable. Since the Company is not able to forecast product sales or
attainment of milestones by licensees, royalty payments that are based on product sales or
attainment of milestones by licensees are not determinable until the licensee has completed their
computation of the royalties due and/or remitted cash payment to the Company.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-8<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Winston Laboratories, Inc. and Subsidiaries</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>

</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Income Taxes</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Company files a consolidated tax return that includes all subsidiaries. Deferred income
taxes are recognized for the tax consequences in future years of differences between the tax bases
of assets and liabilities and their financial reporting amounts at each year-end, based on enacted
tax laws and statutory tax rates applicable to the periods in which the differences are expected to
affect taxable income. Valuation allowances are established when necessary to reduce deferred
income tax assets to the amount expected to be realized.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Stock-Based Compensation</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In December&nbsp;2004, the Financial Accounting Standards Board (&#147;FASB&#148;) issued Statement No.&nbsp;123
(revised 2004), <I>&#147;Share-Based Payment&#148; </I>(&#147;SFAS 123(R)&#148;). SFAS 123(R) requires that the compensation
cost relating to share-based payment transactions be recognized in financial statements, based on
the fair value of the instruments issued. SFAS 123(R) covers a wide range of share-based
compensation including stock options, restricted stock, performance-based awards, share
appreciation rights and employee share purchase plans. SFAS 123(R) replaces Statement No.&nbsp;123
(&#147;SFAS 123&#148;), <I>&#147;Accounting for Stock-Based Compensation,&#148; </I>and supersedes Accounting Principles Board
(&#147;APB&#148;) Opinion No.&nbsp;25, <I>&#147;Accounting for Stock Issued to Employees.&#148; </I>As originally issued in 1995,
SFAS 123 established as preferable the fair-value-based method of accounting for share-based
payment transactions. However, SFAS 123 permitted entities to continue to apply the guidance in
Opinion No.&nbsp;25, with appropriate footnote disclosure. Prior to January&nbsp;1, 2006, the Company
accounted for stock-based compensation arrangements using the intrinsic value method in accordance
with the provisions of APB Opinion No.&nbsp;25 and in compliance with the disclosure provisions of SFAS
123.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Company adopted SFAS 123(R) as of January&nbsp;1, 2006. Since the Company had previously used
the minimum value method for recognition and disclosure, SFAS 123(R) has been applied prospectively
for 2006. Hence, new awards of options, as well as any options modified, repurchased, or canceled
after January&nbsp;1, 2006 are accounted for under the provisions of SFAS 123(R), whereas awards
outstanding before that date continue to be accounted for using the accounting provisions
originally applied to these awards.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In conjunction with the Merger Agreement (Note L), the Company&#146;s Board of Directors voted to
accelerate the vesting of all unvested stock options as of October&nbsp;30, 2007. Accordingly, the
compensation expense associated with the acceleration of these stock options has been accounted for
under FAS 123(R) and reflected in the statement of operations for the year ended December&nbsp;31, 2007.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Research and Development Costs</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Research and development costs are charged to operations as incurred. Research and
development costs, as presented herein, include the salaries and related expenses of personnel
engaged in activities directly related to research and development activities, including
administrative personnel working in the clinical and operations areas of the Company. All other
salaries have been included in general and administrative expense. Research and development costs
totaled $1,939,429 and $1,279,672 in 2007 and 2006, respectively.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Recent Accounting Pronouncements</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In July&nbsp;2006, the Financial Accounting Standards Board (&#147;FASB&#148;) issued Interpretation No.&nbsp;48
(&#147;FIN 48&#148;), <I>Accounting for Uncertainty in Income Taxes </I>&#150; <I>an interpretation of FASB Statement </I>109.
FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise&#146;s
financial statements in accordance with FASB Statement No.&nbsp;109, <I>Accounting for Income Taxes</I>. FIN
48 prescribes a comprehensive model for recognizing, measuring, presenting and disclosing in the
financial statements tax positions taken or expected to be taken on a tax return. If there are
changes in net assets as a result of application of FIN 48 these will be accounted for as an
adjustment to the opening balance of retained earnings. Additional disclosures about the amounts
of such liabilities will be required also. In February&nbsp;2008, the FASB delayed the effective date
of FIN 48 for certain nonpublic enterprises to annual financial statements for fiscal years
beginning after December&nbsp;15, 2007. The Company will be required to adopt FIN 48 in its 2008 annual
financial statements. Management is currently assessing the impact of
FIN 48 on its consolidated financial position and results of operations and has not determined
if the adoption of FIN 48 will have a material effect on its financial statements.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-9<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Winston Laboratories, Inc. and Subsidiaries</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>

</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In September&nbsp;2006, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No.&nbsp;157, <I>Fair Value Measurements </I>(&#147;SFAS No.&nbsp;157&#148;). SFAS No.&nbsp;157 defines fair
value, establishes a framework for measuring fair value, and expands disclosures about fair value
measurement. SFAS No.&nbsp;157 also emphasizes that fair value is a market-based measurement, not an
entity-specific measurement, and sets out a fair value hierarchy with the highest priority being
quoted prices in active markets. Under SFAS No.&nbsp;157, fair value measurements are disclosed by
level within that hierarchy. This Statement is effective for fiscal years beginning after November
15, 2007. The Company is currently assessing the potential effect of SFAS No.&nbsp;157 on its financial
position, results of operations and cash flows.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In February&nbsp;2007, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No.&nbsp;159, <I>The Fair Value Option for Financial Assets and Financial Liabilities</I>
(&#147;SFAS No.&nbsp;159&#148;). SFAS No.159 permits companies to elect to follow fair value accounting for
certain financial assets and liabilities in an effort to mitigate volatility in earnings without
having to apply complex hedge accounting provisions. The standard also establishes presentation
and disclosure requirements designed to facilitate comparison between entities that choose
different measurement attributes for similar types of assets and liabilities. SFAS No.&nbsp;159 is
effective for fiscal years beginning after November&nbsp;15, 2007. The Company is currently evaluating
the impact of the adoption of SFAS No.&nbsp;159, if any, on its financial position, results of operation
and cashflows.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In December&nbsp;2007, the FASB issued Statement of Financial Accounting Standards No.&nbsp;141(R),
&#147;Business Combinations&#148; (FAS 141(R)). This Statement provides greater consistency in the accounting
and financial reporting for business combinations. FAS 141(R) establishes new disclosure
requirements and, among other things, requires the acquiring entity in a business combination to
record contingent consideration payable, to expense transaction costs, and to recognize all assets
acquired and liabilities assumed at acquisition-date fair value. This standard is effective for the
beginning of the Company&#146;s first fiscal year beginning after December&nbsp;15, 2008. FAS 141(R) will
have a significant impact on the accounting for future business combinations after the effective
date and will impact financial statements both on the acquisition date and subsequent periods.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In December&nbsp;2007, the FASB issued Statement of Financial Accounting Standards No.&nbsp;160,
&#147;Noncontrolling Interests in Consolidated Financial Statements&#148; (FAS 160). FAS 160 amends
Accounting Research Bulletin No.&nbsp;51, &#147;Consolidated Financial Statements&#148;, to establish accounting
and reporting standards for the minority or noncontrolling interests in a subsidiary or variable
interest entity and for the deconsolidation of a subsidiary or variable interest entity. Minority
interests will be recharacterized as noncontrolling interests and classified as a component of
equity. It also establishes a single method of accounting for changes in a parent&#146;s ownership
interest in a subsidiary and requires expanded disclosures. FAS 160 is effective for the beginning
of the Company&#146;s first fiscal year beginning after December&nbsp;15, 2008, and requires retroactive
adoption of the presentation and disclosure requirements for existing minority interests. The
Company does not expect the adoption of this standard to have a material impact on its financial
position or results of operations.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>NOTE C &#151; TECHNOLOGY LICENSE AGREEMENTS</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In February&nbsp;2006, the Company entered into a technology license agreement with Sirius
Laboratories, Inc. (&#147;Sirius&#148;). Several large stockholders in the Company had significant stock
holdings in Sirius until March&nbsp;10, 2006, when Sirius was acquired by DUSA Pharmaceuticals, Inc. Two
officers of the Company served on Sirius&#146; board of directors but resigned their directorships in
2007. Under the terms of the license agreement, the Company granted Sirius an exclusive license to
the proprietary rights of certain products (first marketed as Micanol<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> and then later as
Psoriatec<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>) containing the active pharmaceutical ingredient, anthralin. The agreement provided for
minimum annual royalties of $300,000 through February, 2008 and an option to purchase all right to
the product for $750,000. In January&nbsp;2008, the license agreement was extended until September&nbsp;30,
2008 by mutual consent and the extension and provides for a continuation of the 25% royalty on net
sales, but eliminates the minimum royalty and the
purchase option. Under the technology license agreement, the Company recorded royalty revenue
of $300,000 and $294,453 for the years ended December&nbsp;31, 2007 and 2006, respectively. The Company
had a receivable due from Sirius of $50,000 as of December&nbsp;31, 2007 and 2006, which is included in
accounts receivable in the balance sheet.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-10<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>



<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Winston Laboratories, Inc. and Subsidiaries</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>

</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In February&nbsp;2007, Rodlen licensed a patent and certain other technology to Hi-Tech Pharmacal
Co. (&#147;Hi-Tech&#148;) for cash consideration of two payments totaling $300,000, as well as a 10% royalty
on net sales of products sold by Hi-Tech that utilize the intellectual property licensed from
Rodlen for the remaining life of the related patent, reducing to 5% of net sales for four years
following the expiration of the patent. This patent and technology was used in the Axsain<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> product
discussed in Note J. Hi-Tech does not plan to use the patent and technology to produce or market
Axsain<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> and did not acquire the trademark. The Company recorded royalty revenues under this
agreement of $300,000 for the year ended December&nbsp;31, 2007.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On August&nbsp;14, 2007, the Company entered into an exclusive technology license agreement with
Exopharma, Inc., (&#147;Exopharma&#148;) an entity that is majority owned by the CEO of the Company and his
affiliates. Under the terms of the license agreement, the Company granted Exopharma an exclusive
license to the proprietary rights of certain products (&#8804; 0.025% civamide with the stated indication
of psoriasis of the skin). In exchange, Exopharma paid the Company a license fee of $100,000 and
is required to pay a 9% royalty on sales of the product. In addition, the agreement requires
Exopharma to pay the Company a non-refundable payment of $250,000 upon approval of a Marketing
Authorization by Exopharma on the product(s) described in the agreement.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On September&nbsp;19, 2007, the Company entered into an exclusive technology license agreement with
Opko Ophthalmologists, LLC., (&#147;OPKO&#148;). The CEO and Chairman of OPKO is also an investor in the
Company&#146;s Series&nbsp;A Convertible Preferred Stock Offering (Notes K and L). Under the terms of the
license agreement, the Company granted OPKO an exclusive license to the proprietary rights of
certain products (pharmaceutical compositions or preparations containing the active ingredient
civamide in formulations suitable for use in the therapeutic or preventative treatment of
ophthalmic conditions in humans). In exchange, OPKO paid the Company a license fee of $100,000 and
is required to pay a 10% royalty on sales of the product. In addition, the agreement requires OPKO
to pay the Company a non-refundable payment of $5,000,000 upon approval of a Marketing
Authorization by OPKO on the product described in the agreement.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>NOTE D &#151; RELATED-PARTY TRANSACTIONS</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In August&nbsp;2002, the Company reached an agreement with Elorac Limited (&#147;Elorac&#148;), an Illinois
partnership whose general partner is founder, president and CEO of the Company. Under this
agreement, the Company was to provide certain regulatory assistance to Elorac with regard to a
nicotinamide product, in exchange for fifty percent (50%) of the patent and proprietary rights in
the nicotinamide product. In December&nbsp;2002, Elorac sold the proprietary rights to the nicotinamide
product to Sirius, and in conjunction with this sale, received certain payments, of which the
Company received its pro-rata share. In 2006, in accordance with the December&nbsp;2002 agreement
between Elorac and Sirius and in connection to its acquisition by DUSA, Sirius made certain
payments to Elorac in relation to the nicotinamide product (one payment representing 5% of previous
year net sales, and another representing 25% of net proceeds received for the nicotinamide product
asset in the DUSA sale), and the Company received a total of $67,644 of such payments, in
accordance with its ownership stake in the product.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In 2006 and 2007, the Company assisted Packer&#146;s-Pine Corporation (&#147;Packer&#146;s&#148;) with
distribution of certain personal care products and administration. Packers is a corporation whose
chairman is founder, president and CEO of the Company and two directors of the Company serve on the
board of directors of Packer&#146;s. Under this arrangement, Packer&#146;s reimbursed the Company for direct
costs. The amount received by the Company from Packer&#146;s as a fee for performing this function
amounted to $0 and $3,317 during the years ended December&nbsp;31, 2007 and 2006, respectively. Amounts
due from Packer&#146;s of $5,554 and $16,167 as of December&nbsp;31, 2007 and 2006, respectively, are
included in related party receivables in the Company&#146;s balance sheet.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-11<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Winston Laboratories, Inc. and Subsidiaries</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>

</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In November&nbsp;2005, Winston spun off Gideon Pharmaceuticals, Inc. (&#147;Gideon&#148;). Gideon received
certain early-stage technologies not being actively developed by Winston, and all Winston
shareholders were offered the opportunity to purchase Gideon shares on a pro-rata basis. Not all
Winston shareholders purchased Gideon shares, but overlap in the shareholders of Winston and Gideon
is very significant. Gideon is an independent entity and not a subsidiary of Winston; however, as
part of the spin-off process, Winston did end up purchasing and maintaining a minority stake in
Gideon (approximately 10.7% ownership), for the purpose of preserving the rights of those option
holders in Winston prior to the Gideon spin-off. In particular, option holders in Winston prior to
the spin off of Gideon have, upon exercise of their Winston options, an opportunity to purchase a
pro-rata allotment of Gideon shares. During 2006, the Company undertook certain development
projects on behalf of Gideon, which were billed back to Gideon at cost. As of December&nbsp;31, 2006,
the Company had a receivable due from Gideon of $2,642, which was included in related party
receivables on the Company&#146;s balance sheet and was included in related party receivables on the
Company&#146;s balance sheet and was subsequently collected in full in 2007. In October&nbsp;2007, in
preparation for signing a merger agreement with Getting Ready Corporation (Note L), the Company&#146;s
Board of Directors voted to distribute the shares of Gideon owned by the Company on behalf of the
Winston option holders on a pro-rata basis to such option holders. As of December&nbsp;31, 2007,
Winston had no ownership stake in Gideon.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>NOTE E &#151; INTANGIBLE ASSETS</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Intangible assets by major asset class are as follows at December&nbsp;31, 2007 and 2006:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Patents and trademarks</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">40,575</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">40,575</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less accumulated amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(16,861</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(13,040</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">23,714</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">27,535</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Future annual amortization expense at December&nbsp;31, 2007, is as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="77%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,905</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,528</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,891</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2011</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,678</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2012</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,678</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Thereafter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,034</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">23,714</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-12<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Winston Laboratories, Inc. and Subsidiaries</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>

</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>NOTE F &#151; INCOME TAXES</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The provision for income taxes differs from the amount computed by applying the statutory
federal income tax rate of 34.0% to pre-tax loss as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Continuing Operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Tax benefit at U.S. federal statutory rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(810,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(687,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">State tax benefit, net of federal benefit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(115,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(98,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Change in valuation allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,020,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">690,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Permanent differences</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Research and development credits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(105,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">82,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Discontinued Operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Tax benefit at U.S. federal statutory rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">220,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">State tax benefit, net of federal benefit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Utilization of net operating loss carryforward</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(251,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax expense (benefit)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Company&#146;s deferred taxes consist of the following at December&nbsp;31, 2007 and 2006:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred tax assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net operating loss carryforward</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">14,701,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">13,650,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Research and development credits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,200,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,095,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Intangible</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,642,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,828,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Property and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total deferred tax assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,635,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,615,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Valuation allowance for deferred tax assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(17,635,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(16,615,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred taxes, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-13<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Winston Laboratories, Inc. and Subsidiaries</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>

</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">At December&nbsp;31, 2007, the Company had Federal and state net operating loss carryforwards of
approximately $37,888,000. The Federal and state loss carryforwards will begin expiring in 2018
and 2010, respectively, unless previously utilized. Pursuant to Internal Revenue Code Sections&nbsp;382
and 383, certain substantial changes in the Company&#146;s ownership may limit the amount of the net
operating loss carryforwards, which could be utilized to offset future taxable income and income
tax liabilities. The Company also had Federal research and development credit carryforwards of
approximately $1,200,000. The Company has provided a valuation allowance for the full amount of
its net deferred tax assets since realization of any future benefit from deductible temporary
differences, net operating loss and tax credit carryforwards is uncertain.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>NOTE G &#151; STOCK OPTION PLAN</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Company has adopted the 1999 Stock Option Plan, as amended (the &#147;1999 Plan&#148;), and the
Stock Option Plan for Non-Employee Directors, as amended (the &#147;Director Plan&#148;), collectively the
&#147;Plans.&#148; The Plans provide for the granting of incentive stock options to officers and other
employees of the Company, and non-qualified stock options to directors and consultants of the
Company. The total number of shares of common stock authorized for issuance under the Plans is
4,400,000. The options are exercisable at various dates and will expire no more than ten years
from their date of grant. The exercise price and the duration of each option are determined by the
Board of Directors. In the case of incentive stock options, the exercise price may not be less
than 100% of the fair market value of the Company&#146;s common stock at the date of grant. For holders
of more than 10% of the Company&#146;s total combined voting power of all classes of stock, incentive
stock options may not be granted at less than 110% of the fair market value of the Company&#146;s common
stock at the date of grant and for a term not to exceed five years.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Prior to 2006, in accordance with the provisions of SFAS 123, the Company elected to account
for stock-based compensation under the minimum value method of accounting prescribed by APB Opinion
No.&nbsp;25. Under APB Opinion No.&nbsp;25, generally, no cost is recorded for stock options issued to
employees unless the option price is below the fair market value at the time options are granted.
Effective January&nbsp;1, 2006, the Company adopted SFAS 123(R), whereby any new awards of options, as
well as any options modified, repurchased, or canceled after January&nbsp;1, 2006 are accounted for
under the provisions of <font style="white-space: nowrap">SFAS 123(R).</font>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The effect of adopting SFAS 123(R) was to increase the loss from continuing operations, loss
from continuing operations before income taxes and net loss by $6,061 for the year ended December
31, 2006. Share-based compensation is included in general and administrative expenses in the
statement of operations. The adoption of SFAS 123(R) did not affect the Company&#146;s cash flows from
operating activities or financing activities.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">SFAS 123(R) requires companies to estimate the fair value of share-based payment awards on the
date of grant using an option pricing model and to recognize this expense. Stock-based
compensation expense recognized for the years ended December&nbsp;31, 2007 and 2006 was $165,504 and
$6,061, respectively. Approximately $137,000 of the 2007 compensation expense relates to the
acceleration of vesting all unvested stock options for five employees in conjunction with the
Proposed Merger (Note L). This expense was calculated based on the Black-Scholes single-option
pricing model, using the following assumptions:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="1" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected dividend yield</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="center">0.00%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="center">0.00%</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected stock price volatility</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="center">75.00%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="center">76.40%</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Risk-free interest rate range</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD nowrap align="right">4.20% - 4.71%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD nowrap align="right">4.57% - 4.67%</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected life of options (years)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" nowrap align="center">5.75 years</TD>
    <TD>&nbsp;</TD>
    <TD colspan="1" nowrap align="center">5.75 years</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-14<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Winston Laboratories, Inc. and Subsidiaries</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>

</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The risk-free interest rate is based on the implied yield available on U.S. treasury
zero-coupon issues with an equivalent remaining term. Since the Company does not have sufficient
historical experience on which to estimate expected term, the simplified method was used to
generate the expected option life. Using the simplified
method, the expected term is calculated by taking the average of the vesting term and the
original contractual term. In a similar manner, the Company does not have a history of stock price
volatility, so it identified five appropriate comparables for use as a benchmark. These
comparables (three public companies and two private companies that filed for and later executed
initial public offerings) are in the same industry (specialty pharmaceuticals) and focused on
development of the same types of products (pain control and central nervous system) as the Company.
To generate the estimated stock price volatility shown above, a weighted average of the five
comparable companies&#146; expected volatility (which ranged from 56% to 88%) was employed for a period
equal to the expected life of the options.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following table summarizes stock option activity under the Plans during the years ended
December&nbsp;31, 2006 and 2007:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Weighted</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Weighted-</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Weighted-</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Average</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Average</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Average</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Aggregate</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Remaining</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Grant Date</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Intrinsic</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Contractual</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Price</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Fair Value</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Value</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Life (Years)</B></TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Outstanding at December&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,861,125</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.51</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Forfeitures</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(368,375</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.69</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Outstanding at December&nbsp;31, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,537,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.51</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(162,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.77</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Forfeitures</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(559,500</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Outstanding at December&nbsp;31, 2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,846,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">63,795</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.79</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Total unrecognized compensation cost for stock options as of December&nbsp;31, 2007 was $0. The
aggregate intrinsic value in the table above is before income taxes, based on the Company&#146;s
estimate of the fair value of a share of the Company&#146;s common stock of $0.75 at December&nbsp;31, 2007.
The aggregate intrinsic value of options outstanding and exercisable during 2007 is $63,795. Cash
proceeds received from the exercise of options for 2007 was $124,380. The total intrinsic value of
options exercised during 2007 was $1,200. The realized tax benefit from stock options and other
share-based payments for 2007 was $0, based on the Company&#146;s election of the &#147;with and without&#148;
approach.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>NOTE H &#151; 401(k) PLAN</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Company has adopted a qualified employee savings and retirement plan under Section 401(k)
of the U.S. Internal Revenue Code (the &#147;401(k) Plan&#148;). All of the Company&#146;s full-time employees
are eligible to participate in the 401(k) Plan by enrolling in the 401(k) Plan and electing to
reduce their current compensation by up to the statutorily prescribed annual limit, and having the
amount of the reduction contributed to the 401(k) Plan. The Company may also make discretionary
matching contributions to the 401(k) Plan for employees. The Company made discretionary matching
contributions to the 401(k) Plan of $28,023 and $30,692 in 2007 and 2006, respectively.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-15<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Winston Laboratories, Inc. and Subsidiaries</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>

</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>NOTE I &#151; COMMITMENTS AND CONTINGENCIES</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Company leases its facilities and certain equipment under operating leases that expire
through 2010. Future minimum operating lease payments at December&nbsp;31, 2007, are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="77%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">68,373</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,224</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,708</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Rental expense for the years ended December&nbsp;31, 2007 and 2006 was $123,121 and $143,197,
respectively.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>NOTE J &#151; DISCONTINUED OPERATIONS</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In July&nbsp;2005, Rodlen sold the Zostrix<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> product line to Hi-Tech Pharmacal Co. (&#147;Hi-Tech&#148;) for
upfront cash consideration of $4,000,000, plus four installment payments of up to $100,000, paid
quarterly starting October&nbsp;1, 2005. Management determined this product line asset group met the
criteria to be a component of a business and discontinued operations. The asset group was comprised
of trade receivables, inventory, trade payables and accrued expenses. From the upfront
consideration, $675,000 was placed into an interest-bearing escrow account, and its release to
Rodlen was contingent on the issuance of three new Zostrix-related trademarks by the United States
Patent and Trademark Office. In August&nbsp;2006, notices of allowance had been received for the three
new Zostrix-related trademarks, and $705,173 was released from escrow to Rodlen. Of this amount,
$675,000 was recorded as gain on the asset sale, and $30,173 was recorded as interest income in
2006.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In June&nbsp;2005, based on disappointing sales, Rodlen determined it would dispose of the Axsain<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>
product. Management determined this product line asset group met the criteria to be a component of
a business and discontinued operations. The asset group was comprised of trade receivables,
inventory, trade payables and accrued expenses. The asset group did not include the patents for the
Axsain<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> product or related technologies since these patents and technology were potentially usable
in other operations. In June&nbsp;2005, management sharply reduced promotion of the Axsain<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> product and
terminated its field sales operations. No buyer was located for the product line and in March&nbsp;2006,
Rodlen discontinued selling and manufacturing Axsain<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> altogether.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">For purposes of these financial statements, the Zostrix<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> and Axsain<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> businesses are presented
as discontinued operations for the year ending December&nbsp;31, 2006. Revenues included in the loss
from discontinued operations amounted to approximately $2,000 for the year ended December&nbsp;31, 2006.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>NOTE K &#151; PREFERRED STOCK AND WARRANTS</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In August&nbsp;2007, the Company&#146;s stockholders approved a charter amendment authorizing 30,000,000
shares of blank check preferred stock, par value $0.001 per share. In November&nbsp;2007, in connection
with the Proposed Merger, the Company&#146;s Board of Directors created two new series of preferred
stock, 10,000,000 shares designated as Series&nbsp;A Convertible Preferred Stock and 5,000,000 shares
designated as Series&nbsp;B Convertible Preferred Stock. The holders of Series&nbsp;A Convertible Preferred
Stock are entitled to convert on a one-for-one basis (subject to adjustment) to common stock
immediately upon the effective time of the Proposed Merger (Note L) and are required to convert on
a one-for-one basis (subject to adjustment) to common stock on November&nbsp;13, 2008 or upon a change
of control event as defined. The holders of Series&nbsp;A Convertible Preferred Stock are also entitled
to that number of votes equal to the largest number of whole shares of common stock into which such
holder&#146;s shares of Series&nbsp;A Convertible Preferred could be converted into common stock. Each
holder of Series&nbsp;A Convertible Preferred Stock shall be entitled to receive, on a pari passu basis,
dividends in cash out of any funds of the Company legally available when and at the time for
declaration of dividends by the Company, at the same time any dividends or other distributions will
be paid or declared and set apart for payment on any shares of common stock on the basis of the
largest number of whole shares of common stock into which such holder&#146;s shares of Series&nbsp;A
Convertible Preferred Stock could be converted. In the event of any liquidation, dissolution or
winding up, distribution to the holders of Series&nbsp;A Convertible Preferred Stock shall be made pro
rata in proportion to the shares of common stock held by common stock holders and the shares of
Series&nbsp;A Convertible Preferred Stock that could be converted to common stock.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-16<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Winston Laboratories, Inc. and Subsidiaries</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>

</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In conjunction with the Proposed Merger (Note L), on November&nbsp;13, 2007 an unrelated investor,
that is also a significant investor in the publicly-traded company &#150; and his affiliates purchased
5,815,851 shares of Series&nbsp;A Convertible Preferred Stock for a price of approximately $.8597 per
share. Provided that no party has breached the Series&nbsp;A Convertible Preferred Stock Agreement or
the Merger Agreement, the Series&nbsp;A Convertible Preferred Stock holders and the Company agreed that
on or prior to the closing of the Proposed Merger, the holders of Series&nbsp;A Convertible Preferred
Stock would purchase 4,187,413 shares of Series&nbsp;B Convertible Preferred Stock at a share price of
$.95524372, for a total purchase price of $4,000,000.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As part of the investment, the holders of the Series&nbsp;A Convertible Preferred Stock received
4,092,636 warrants to purchase additional Series&nbsp;A Convertible Preferred Stock for approximately
$.8597 per share. The warrants expire on November&nbsp;13, 2012 and have certain adjustment provisions
as defined in the related warrant agreements.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In the event that the Proposed Merger (Note L) is not consummated on or prior to May&nbsp;31, 2008,
then each holder of Series&nbsp;A Convertible Preferred Stock has the right, at its election (&#147;put
option&#148;), to cause the Company to repurchase its shares of Series&nbsp;A Convertible Preferred Stock at
a price equal to the $.8597 per share. The put option (Note M) is terminated under certain events
as defined in the Series&nbsp;A Securities Purchase Agreement. In accordance with the provisions of FAS
No.&nbsp;150, <I>Accounting for Certain Financial Instruments with Characteristics of both Liabilities and
Equity</I>, the Series&nbsp;A Convertible Preferred Stock is presented in the Equity section of the
accompanying balance sheet.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The holders of Series&nbsp;B Convertible Preferred Stock are entitled to convert on a one-for-one
basis (subject to adjustment) to common stock immediately upon the first anniversary of the Series
B Convertible Preferred Stock issuance date or upon a change of control event as defined in the
Merger Agreement. The holders of Series&nbsp;B Convertible Preferred Stock are also entitled to that
number of votes equal to the largest number of whole shares of common stock into which such
holder&#146;s shares of Series&nbsp;B Convertible Preferred Stock could be converted into common stock. Each
holder of Series&nbsp;B Convertible Preferred Stock, when and if issued shall be entitled to receive, on
a pari passu basis, dividends in cash out of any funds of the Company legally available when and at
the time for declaration of dividends by the Company, at the same time any dividends or other
distributions will be paid or declared and set apart for payment on any shares of common stock on
the basis of the largest number of whole shares of common stock into which such holder&#146;s shares of
Series&nbsp;B Convertible Preferred Stock could be converted. In the event of any liquidation,
dissolution or winding up, distribution to the holders of Series&nbsp;B Convertible Preferred Stock
shall be made pro rata in proportion to the shares of common stock held by common stock holders and
the shares of Series&nbsp;B Convertible Preferred Stock that could be converted to common stock.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>NOTE L &#151; PROPOSED MERGER</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On November&nbsp;13, 2007, the Company and Getting Ready Corporation, a publicly-traded company
with no active operations, signed a merger agreement (the &#147;Merger Agreement&#148;). The combined
company will be renamed Winston Pharmaceuticals, Inc. The Proposed Merger is expected to close in
the third quarter of 2008.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Under the terms of the Merger Agreement, each common share of the Company will be converted
into approximately 17.51 shares of common stock of Getting Ready, and each share of Series&nbsp;A and
Series&nbsp;B Convertible Preferred Stock of Winston Laboratories (Note K) will be converted into
approximately .01751 shares of convertible preferred stock of Getting Ready. The convertible
preferred stock of Getting Ready will have terms similar to the Company&#146;s Series&nbsp;A and Series&nbsp;B
Convertible Preferred Stock, except there will be no put option and each share
will be convertible into 1,000 shares of Getting Ready common stock. The Merger is subject to
customary covenants and several conditions. Upon consummation of the Proposed Merger, it is
expected that Getting Ready common stockholders will receive approximately 2.56% of the combined
company on a fully diluted basis. Series&nbsp;A Convertible Preferred stock holders (Note K) will also
receive five-year warrants entitling them to purchase up to 10% of the common equity of the
combined company on a fully diluted basis.
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-17<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Winston Laboratories, Inc. and Subsidiaries</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>

</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>NOTE M &#151; SUBSEQUENT EVENT</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On May&nbsp;30, 2008, the Company and Getting Ready Corporation executed the First Amendment to
Merger Agreement and Plan of Reorganization to extend the closing of the Proposed Merger to
November&nbsp;30, 2008. On June&nbsp;23, 2008 the Company and Getting Ready Corporation executed the Second
Amendment to Merger Agreement and Plan of Reorganization to modify certain closing conditions of
the Proposed Merger and subsequently on June&nbsp;24, 2008, the Company and the holders of Series&nbsp;A
Convertible Preferred Stock executed the First Amendment to Securities Purchase Agreement to
eliminate the put option.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On September&nbsp;25, 2008, the holders of Series&nbsp;A Convertible Preferred Stock and other investors
purchased 4,187,413 shares of Series&nbsp;B Convertible Preferred Stock at a share price of $.95524372
for a total purchase price of $4,000.000.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On September&nbsp;25, 2008, the merger with Getting Ready Corporation was consummated whereby:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">all of the issued and outstanding capital stock of the Company, consisting of
23,937,358 shares of common stock, par value $0.001 per share, 5,815,851 shares of the
Company&#146;s Series&nbsp;A Convertible Preferred Stock, par value $0.001 per share, and
4,187,413 shares of the Company&#146;s Series&nbsp;B Convertible Preferred Stock, par value
$0.001 per share, was exchanged for 422,518,545 shares of Getting Ready Corporation&#146;s
common stock, par value $0.001 per share (at an exchange ratio of 17.65101 shares of
Getting Ready Corporation common stock per share of the Company&#146;s common stock),
101,849 shares of Getting Ready Corporation&#146;s Series&nbsp;A Convertible Preferred Stock and
73,332 shares of Getting Ready Corporation&#146;s Series&nbsp;B Convertible Preferred Stock (at
an exchange ratio of .01751238 shares of Getting Ready Corporation preferred stock per
share of the Company&#146;s preferred stock);</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Getting Ready Corporation assumed the Company&#146;s stock option plans;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">The Company&#146;s outstanding 1,643,750 options to purchase 1,643,750 shares of the
Company&#146;s common stock were converted to options to purchase 29,013,848 shares of
Getting Ready Corporation&#146;s common stock; and</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">all outstanding warrants to purchase the Company&#146;s Series&nbsp;A Preferred Stock were
assumed by Getting Ready Corporation and converted into the right to acquire, expiring
November&nbsp;13, 2012, upon the exercise of such warrants, an aggregate of 71,672 shares of
Getting Ready Corporation&#146;s Series&nbsp;A Preferred Stock at a price per share of
$.859719348.</DIV></TD>
</TR>

</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-18<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>



<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">



<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Winston Laboratories, Inc. and Subsidiaries</B>
</DIV>

<DIV align="left">
<A name="306"></A>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>UNAUDITED CONSOLIDATED BALANCE SHEETS</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>June 30, 2008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>December 31, 2007</B></TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>ASSETS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">CURRENT ASSETS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,003,785</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,481,611</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,710</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Related party receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,073</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,785</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Prepaid and other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,819</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,073</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,067,387</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,554,469</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">PROPERTY AND EQUIPMENT, net of accumulated depreciation of $180,730
at June&nbsp;30, 2008 and $157,161 at December&nbsp;31, 2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,815</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,966</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">INTANGIBLE ASSETS, NET</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,492</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,714</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">OTHER ASSETS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,314</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,314</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>TOTAL ASSETS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>2,117,008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>4,591,463</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>LIABILITIES AND STOCKHOLDERS&#146; EQUITY</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">CURRENT LIABILITIES</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">782,883</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">491,560</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accrued expenses and other current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">255,190</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">254,250</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,038,073</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">745,810</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long Term Liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Commitments and Contingencies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,038,073</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">745,810</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stockholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Preferred Stock, $.001 par value, 30,000,000 shares authorized</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Series&nbsp;A, Convertible 5,815,851 shares issued and
outstanding at June&nbsp;30, 2008 and December&nbsp;31, 2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,815</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,815</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Series&nbsp;B, Convertible 0 shares issued and outstanding
at June&nbsp;30, 2008 and December&nbsp;31, 2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Common stock, $.001 par value, 60,000,000 shares authorized
and 23,937,358 shares issued and outstanding at June&nbsp;30, 2008
and at December&nbsp;31, 2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,936</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,936</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Additional paid-in capital</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,401,938</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,401,938</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accumulated deficit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(44,352,754</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(41,586,036</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total stockholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,078,935</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,845,653</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>TOTAL LIABILITIES AND STOCKHOLDERS&#146; EQUITY</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>2,117,008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>4,591,463</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>See accompanying notes</B>

</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-19<!-- /Folio -->
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">



<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Winston Laboratories, Inc. and Subsidiaries</B>
</DIV>

<DIV align="left">
<A name="307"></A>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Three Months ended June 30</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Six Months ended June 30</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">REVENUES</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>Royalty revenues</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">20,113</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">75,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">99,993</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">450,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">EXPENSES</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Research and development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,123,138</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">326,827</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,131,668</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">501,210</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">348,904</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">236,390</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">790,214</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">496,139</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,037</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,299</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,706</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,403</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,474,079</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">566,516</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,925,588</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,004,752</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Loss from operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,453,966</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(491,516</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,825,595</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(554,752</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,329</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,159</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57,694</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,552</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">806</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">522</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,183</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">845</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other income (expenses)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,135</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,681</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58,877</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,397</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Loss before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,435,831</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(475,835</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,766,718</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(534,355</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income Taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Current</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income Taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>NET LOSS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,435,831</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(475,835</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,766,718</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(534,355</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>See accompanying notes</B>

</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-20<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>


<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">



<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Winston Laboratories, Inc. and Subsidiaries</B>
</DIV>

<DIV align="left">
<A name="308"></A>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>UNAUDITED STATEMENTS OF CASH FLOWS</B>

</DIV>
<DIV align="center" style="font-size: 10pt"><B>Six Months Ended June&nbsp;30, 2008 and 2007</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash flows from operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,766,718</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(534,355</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,706</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,403</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock option expense for non-employee directors and employees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,584</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Changes in:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accounts receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,290</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,844</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Related party receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(19,288</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(29,174</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Prepaid and other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,746</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,375</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accounts payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">291,323</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(149,924</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accrued expenses and other current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">940</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(138,228</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash used in operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,461,493</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(799,475</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash flows from investing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchases of property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(14,603</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchases of intangibles assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,730</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash used in investing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(16,333</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash flows from financing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by financing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">NET INCREASE (DECREASE)&nbsp;IN CASH AND CASH EQUIVALENTS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,477,826</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(799,475</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents at beginning of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,481,611</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,312,345</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents at end of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,003,785</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">512,870</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Supplemental disclosures of cash flow information</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income taxes paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>See accompanying notes</B>

</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-21<!-- /Folio -->
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">



<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Winston Laboratories, Inc. and Subsidiaries</B>
</DIV>

<DIV align="left">
<A name="309"></A>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</B>

</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>NOTE A &#151; BASIS OF PRESENTATION</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The accompanying unaudited consolidated financial statements of Winston Laboratories, Inc. and
its wholly owned subsidiaries, Rodlen Laboratories, Inc. and Winston Laboratories Limited
(&#147;Winston&#148; or the &#147;Company&#148;) include all adjustments, consisting of normal recurring adjustments
and accruals, that in the opinion of the management of the Company are necessary for a fair
presentation of our financial position as of June&nbsp;30, 2008 and the results of operations and cash
flows for the three and six months ended June&nbsp;30, 2008 and 2007. These unaudited consolidated
financial statements do not include all of the information and footnotes required by United States
generally accepted accounting principles for complete financial statements and should be read in
conjunction with the Company&#146;s audited financial statements and the notes thereto for the year
ended December&nbsp;31, 2007.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Operating results for the three and six months ended June&nbsp;30, 2008 are not necessarily
indicative of the results to be achieved for the full year ending on December&nbsp;31, 2008.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In preparing financial statements in conformity with accounting principles generally accepted
in the United States of America, management is required to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those estimates.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>NOTE B &#151; RECENT ACCOUNTING PRONOUNCEMENTS</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In March&nbsp;2008, the FASB issued SFAS No.&nbsp;161, &#147;Disclosures about Derivative Instruments and
Hedging Activities &#150; An Amendment of FASB Statement No.&nbsp;133&#148; (or SFAS 161). His statement revises
the requirements for the disclosure of derivative instruments and hedging activities that include
the reasons a company uses derivative instruments, how derivative instruments and related hedged
items are accounted under SFAS 133 and how derivative instruments and related hedged items affect a
company&#146;s financial position, financial performance and cash flows. SFAS 161 will be effective in
the fourth quarter of fiscal 2009. The Company is currently evaluating the impact of adopting SFAS
161 and does not anticipate a material effect.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In July&nbsp;2006, the Financial Accounting Standards Board (&#147;FASB&#148;) issued Interpretation No.&nbsp;48
(&#147;FIN 48&#148;), Accounting for Uncertainty in Income Taxes &#151; an interpretation of FASB Statement 109.
FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise&#146;s
financial statements in accordance with FASB Statement No.&nbsp;109, Accounting for Income Taxes. FIN
48 prescribes a comprehensive model for recognizing, measuring, presenting and disclosing in the
financial statements tax positions taken or expected to be taken on a tax return. If there are
changes in net assets as a result of application of FIN 48 these will be accounted for as an
adjustment to the opening balance of retained earnings. Additional disclosures about the amounts
of such liabilities will be required also. In February&nbsp;2008, the FASB delayed the effective date
of FIN 48 for certain nonpublic enterprises to annual financial statements for fiscal years
beginning after December&nbsp;15, 2007. On April&nbsp;1, 2008, the Company adopted FIN 48 the result of
which did not have any material impact on its tax positions.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In September&nbsp;2006, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No.&nbsp;157, Fair Value Measurements (&#147;SFAS No.&nbsp;157&#148;). SFAS No.&nbsp;157 defines fair
value, establishes a framework for measuring fair value, and expands disclosures about fair value
measurement. SFAS No.&nbsp;157 also emphasizes that fair value is a market-based measurement, not an
entity-specific measurement, and sets out a fair value hierarchy with the highest priority being
quoted prices in active markets. Under SFAS No.&nbsp;157, fair value measurements are disclosed by
level within that hierarchy. This Statement is effective for fiscal years beginning after November
15, 2007. The adoption of SFAS 157 did not have a material impact on the Company&#146;s fair value
measurements.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-22<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Winston Laboratories, Inc. and Subsidiaries</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>

</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In February&nbsp;2007, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No.&nbsp;159, The Fair Value Option for Financial Assets and Financial Liabilities
(&#147;SFAS No.&nbsp;159&#148;). SFAS No.&nbsp;159 permits companies to elect to follow fair value accounting for
certain financial assets and liabilities in an effort to mitigate volatility in earnings without
having to apply complex hedge accounting provisions. The standard also establishes presentation
and disclosure requirements designed to facilitate comparison between entities that choose
different measurement attributes for similar types of assets and liabilities. SFAS No.&nbsp;159 is
effective for fiscal years beginning after November&nbsp;15, 2007. The adoption of SFAS 159 did not
have any impact on the Company&#146;s results of operations and financial position.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>NOTE C &#151; TECHNOLOGY LICENSE AGREEMENTS</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In February&nbsp;2006, the Company entered into a technology license agreement with Sirius
Laboratories, Inc. (&#147;Sirius&#148;). Several large stockholders in the Company had significant stock
holdings in Sirius until March&nbsp;10, 2006, when Sirius was acquired by DUSA Pharmaceuticals, Inc. Two
officers of the Company served on Sirius&#146; board of directors but resigned their directorships in
2007. Under the terms of the license agreement, the Company granted Sirius an exclusive license to
the proprietary rights of certain products (first marketed as Micanol<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> and then later as
Psoriatec<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>) containing the active pharmaceutical ingredient, anthralin. The agreement provided for
minimum annual royalties of $300,000 through February, 2008 and an option to purchase all right to
the product for $750,000. In January&nbsp;2008, the license agreement was extended until September&nbsp;30,
2008 by mutual consent and the extension and provides for a continuation of the 25% royalty on net
sales, but eliminates the minimum royalty and the purchase option. Under the technology license
agreement, the Company recorded royalty revenue of $4,400 and $75,000 for three months ended June
30, 2008 and 2007, respectively and $34,847 and $150,000 for the six months ended June&nbsp;30, 2008 and
2007, respectively.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In February&nbsp;2007, Rodlen licensed a patent and certain other technology to Hi-Tech Pharmacal
Co. (&#147;Hi-Tech&#148;) for cash consideration of two payments totaling $300,000, as well as a 10% royalty
on net sales of products sold by Hi-Tech that utilize the intellectual property licensed from
Rodlen for the remaining life of the related patent, reducing to 5% of net sales for four years
following the expiration of the patent. This patent and technology was used in the Axsain<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> product
discussed in Note J. Hi-Tech does not plan to use the patent and technology to produce or market
Axsain<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> and did not acquire the trademark. The Company recorded royalty revenues under this
agreement of $15,710 and $0 for the three months ended June&nbsp;30, 2008 and 2007, respectively and
$65,133 and $300,000 for the six months ended June&nbsp;30, 2008 and 2007, respectively.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>NOTE D &#151; RELATED-PARTY TRANSACTIONS</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In 2006 and 2007, the Company assisted Packer&#146;s-Pine Corporation (&#147;Packer&#146;s&#148;) with
distribution of certain personal care products and administration. Packers is a corporation whose
chairman is founder, president and CEO of the Company and two directors of the Company serve on the
board of directors of Packer&#146;s. Under this arrangement, Packer&#146;s reimbursed the Company for direct
costs. Amounts due from Packer&#146;s of $25,338 and $5,554 as of June&nbsp;30, 2008 and December&nbsp;31, 2007,
respectively, are included in related party receivables in the Company&#146;s balance sheet.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>NOTE E &#151; INCOME TAXES</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Due to the continuing operating losses, no tax benefit is being recorded. The Company
continues to provide a full valuation allowance for any future tax benefits resulting from the
Company&#146;s net operating losses.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-23<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Winston Laboratories, Inc. and Subsidiaries</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>

</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>NOTE F &#151; PROPOSED MERGER</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On November&nbsp;13, 2007, the Company and Getting Ready Corporation, a publicly-traded company
with no active operations, signed a merger agreement (the &#147;Merger Agreement&#148;). The combined
company will be renamed Winston Pharmaceuticals, Inc. The Proposed Merger is expected to close in
the third quarter of 2008.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Under the terms of the Merger Agreement, each common share of the Company will be converted
into approximately 17.51 shares of common stock of Getting Ready Corporation, and each share of
Series&nbsp;A and Series&nbsp;B Convertible Preferred Stock of Winston Laboratories will be converted into
approximately .01751 shares of convertible preferred stock of Getting Ready Corporation. The
convertible preferred stock of Getting Ready Corporation will have terms similar to the Company&#146;s
Series&nbsp;A and Series&nbsp;B Convertible Preferred Stock, except there will be no put option and each
share will be convertible into 1,000 shares of Getting Ready Corporation common stock. The Merger
is subject to customary covenants and several conditions. Upon consummation of the Proposed
Merger, it is expected that Getting Ready Corporation common stockholders will receive
approximately 2.56% of the combined company on a fully diluted basis. Series&nbsp;A Convertible
Preferred stock holders will also receive five-year warrants entitling them to purchase up to 10%
of the common equity of the combined company on a fully diluted basis.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>NOTE G &#151; STOCK OPTION PLAN</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Company did not grant any options from January&nbsp;1, 2008 through June&nbsp;30, 2008. On July&nbsp;28,
2008, 202,500 options were forfeited by a past Director of the Company whose right to exercise
these options lapsed.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>NOTE H &#151; SUBSEQUENT EVENT</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On May&nbsp;30, 2008, the Company and Getting Ready Corporation executed the First Amendment to
Merger Agreement and Plan of Reorganization to extend the closing of the Proposed Merger to
November&nbsp;30, 2008. On June&nbsp;23, 2008 the Company and Getting Ready Corporation executed the Second
Amendment to Merger Agreement and Plan of Reorganization to modify certain closing conditions of
the Proposed Merger and subsequently on June&nbsp;24, 2008, the Company and the holders of Series&nbsp;A
Convertible Preferred Stock executed the First Amendment to Securities Purchase Agreement to
eliminate the put option.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On September&nbsp;25, 2008, the holders of Series&nbsp;A Convertible Preferred Stock and other investors
purchased 4,187,413 shares of Series&nbsp;B Convertible Preferred Stock at a share price of $.95524372
for a total purchase price of $4,000,000.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-24<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Winston Laboratories, Inc. and Subsidiaries</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>

</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">On September&nbsp;25, 2008, the merger with Getting Ready Corporation was consummated whereby:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">all of the issued and outstanding capital stock of the Company, consisting of
23,937,358 shares of common stock, par value $0.001 per share, 5,815,851 shares of the
Company&#146;s Series&nbsp;A Convertible Preferred Stock, par value $0.001 per share, and
4,187,413 shares of the Company&#146;s Series&nbsp;B Convertible Preferred Stock, par value
$0.001 per share, was exchanged for 422,518,545 shares of Getting Ready Corporation&#146;s
common stock, par value $0.001 per share (at an exchange ratio of 17.65101 shares of
Getting Ready Corporation common stock per share of the Company&#146;s common stock),
101,849 shares of Getting Ready Corporation&#146;s Series&nbsp;A Convertible Preferred Stock and
73,332 shares of Getting Ready Corporation&#146;s Series&nbsp;B Convertible Preferred Stock (at
an exchange ratio of .01751238 shares of Getting Ready Corporation preferred stock per
share of the Company&#146;s preferred stock);</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Getting Ready Corporation assumed the Company&#146;s stock option plans;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">The Company&#146;s outstanding 1,643,750 options to purchase 1,643,750 shares of the
Company&#146;s common stock were converted to options to purchase 29,013,848 shares of
Getting Ready Corporation&#146;s common stock; and</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">all outstanding warrants to purchase the Company&#146;s Series&nbsp;A Preferred Stock were
assumed by Getting Ready Corporation and converted into the right to acquire, expiring
November&nbsp;13, 2012, upon the exercise of such warrants, an aggregate of 71,672 shares of
Getting Ready Corporation&#146;s Series&nbsp;A Preferred Stock at a price per share of
$.859719348.</DIV></TD>
</TR>

</TABLE>
</DIV>




<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-25<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">



<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Winston Laboratories, Inc. and Subsidiaries</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>Pro Forma Unaudited Financial Statements<BR>
As of June&nbsp;30, 2008<BR>
and<BR>
For the Six Months Ended June&nbsp;30, 2008 and the Year Ended December&nbsp;31, 2007</B>

</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following unaudited pro forma financial statements (&#147;pro forma statements&#148;) give effect to
the reverse acquisition of Winston Laboratories Inc. (&#147;Winston&#148;) by Winston Acquisition Corp., a
Delaware corporation and wholly owned subsidiary of the Getting Ready Corporation (&#147;Company&#148;) and
are based on the estimates and assumptions set forth herein and in the notes to such pro forma
statements.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On November&nbsp;13, 2007, the Company entered into a Merger Agreement and Plan of Reorganization
(the &#147;Merger Agreement&#148;) with Winston Laboratories, Inc. (&#147;Winston&#148;) and Winston Acquisition Corp.,
which is a wholly-owned subsidiary of the Company. Pursuant to the Merger Agreement, Winston
became a wholly-owned subsidiary of the Company (the &#147;Merger&#148;).
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Merger occurred on September&nbsp;25, 2008. The Merger was accounted for as a &#147;reverse
merger,&#148; since as a result of the Merger the shareholders of Winston will own a majority of the
outstanding shares of the common stock of the Company. Winston is deemed to be the acquirer in the
Merger for accounting purposes and, consequently, the assets and liabilities and the historical
operations that are reflected in the financial statements are those of Winston and are recorded at
the historical cost basis of Winston. As a result of the Merger, there was a change in control of
the Company.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following unaudited pro forma financial information gives effect to the above. The
unaudited pro forma financial information was prepared from (1)&nbsp;the Company&#146;s audited historical
financial statements included in the Company&#146;s Form&nbsp;10K for the period ended September&nbsp;30, 2007;
(2)&nbsp;Getting Ready Corporation&#146;s unaudited historical financial statements included in Getting Ready
Corporation&#146;s Form&nbsp;10Q for the period ended December&nbsp;31, 2007; (3)&nbsp;Getting Ready Corporation&#146;s
unaudited historical financial statements included in Getting Ready Corporation&#146;s Form&nbsp;10Q for the
period ended March&nbsp;31, 2008; (4)&nbsp;the Company&#146;s unaudited historical financial statements included
in the Company&#146;s Form&nbsp;10Q for the period ended June&nbsp;30, 2008; (5)&nbsp;Winston&#146;s audited historical
financial statements for the year ended December&nbsp;31, 2007; and (6)&nbsp;Winston&#146;s unaudited historical
financial statements for the three months ended June&nbsp;30, 2008.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The unaudited pro forma balance sheet at June&nbsp;30, 2008 assumes the effects of the Merger
occurred on June&nbsp;30, 2008. The unaudited pro forma statements of operations assume that the Merger
occurred on January&nbsp;1, 2007.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The unaudited pro forma statement of operations for the year ended December&nbsp;31, 2007 combines
the historical statements of operations of the Company and Winston for the year ended December&nbsp;31,
2007. The unaudited pro forma statement of operations for the six months ended June&nbsp;30, 2008
combines the historical statements of operations of the Company and of Winston for the six months
ended June&nbsp;30, 2008. The unaudited pro forma statements of operations assume that the Merger
occurred as of January&nbsp;1, 2007.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The unaudited pro forma financial information is presented for illustrative purposes only and
is not necessarily indicative of the operating results of financial position that would have
occurred if the transaction had been consummated at the date indicated, nor is it necessarily
indicative of the future operating results of financial position of the consolidated companies.
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-26<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>


<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left">
<A name="310"></A>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>Pro Forma Unaudited Balance Sheet<BR>
As of June&nbsp;30, 2008</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Pro Forma</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Winston</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Company</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Adjustments</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Pro Forma</B></TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>ASSETS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">CURRENT ASSETS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,003,785</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">928,077</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,750,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,681,862</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,710</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,710</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Related party receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,073</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,073</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Prepaid and other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,819</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,970</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,289</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,067,387</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">943,547</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,750,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,760,934</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">PROPERTY AND EQUIPMENT</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,815</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,815</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">INTANGIBLE ASSETS, NET</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,492</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,492</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">OTHER ASSETS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,314</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,314</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><B>TOTAL ASSETS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>2,117,008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>943,547</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>3,750,000</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>6,810,555</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>LIABILITIES AND STOCKHOLDERS&#146; EQUITY</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">CURRENT LIABILITIES</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">782,883</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">16,331</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">799,214</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accrued expenses and other current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">255,190</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">255,190</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,038,073</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,331</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,054,404</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long Term Liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Commitments and Contingencies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,038,073</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,331</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,054,404</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stockholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Preferred Stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Series&nbsp;A, Convertible</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,815</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,713</TD>
    <TD nowrap>)<SUP style="font-size: 85%; vertical-align: text-top">3</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Series&nbsp;B, Convertible</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">4,187</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">2,3</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">73</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Common stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,936</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">422,518</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">3</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">440,851</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(23,936</TD>
    <TD nowrap>)<SUP style="font-size: 85%; vertical-align: text-top">3</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Additional paid-in capital</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,401,938</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,316,594</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(250,000</TD>
    <TD nowrap>)<SUP style="font-size: 85%; vertical-align: text-top">1</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,667,879</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">3,995,813</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">2</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(412,691</TD>
    <TD nowrap>)<SUP style="font-size: 85%; vertical-align: text-top">3</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">23,936</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">3</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,407,711</TD>
    <TD nowrap>)<SUP style="font-size: 85%; vertical-align: text-top">3</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accumulated deficit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(44,352,754</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,407,711</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">1,407,711</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">3</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(44,352,754</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total stockholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,078,938</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">917,216</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,750,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,756,151</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>TOTAL LIABILITIES AND STOCKHOLDERS&#146; EQUITY</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>2,117,008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>943,547</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>3,750,000</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>6,810,555</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>See accompanying notes</B>

</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-27<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left">
<A name="311"></A>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>Pro Forma Unaudited Statement of Operations<BR>
For the Six months Ended June&nbsp;30, 2008</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Pro Forma</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Winston</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>GRC</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Adjustments</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Pro Forma</B></TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">REVENUE</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Royalty revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">99,993</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">99,993</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">EXPENSES</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Research and development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,131,668</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,131,668</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">790,214</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">128,310</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">918,524</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,706</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,706</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,925,588</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">128,310</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,053,898</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Loss from operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(2,825,595</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(128,310</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(2,953,905</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57,694</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,153</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">73,897</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,183</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,183</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58,877</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,153</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75,030</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Loss before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(2,766,718</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(112,157</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(2,878,875</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income Taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Current</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Deferred</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><B>NET LOSS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(2,766,718</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(112,157</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(2,878,875</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic and Dilutive Net Loss Per Share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.01</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted Average Shares Outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">440,851,441</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">4</SUP></TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>See accompanying notes</B>

</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-28<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">
<DIV align="left">
<A name="312"></A>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>Pro Forma Unaudited Statement of Operations<BR>
For the Year ended December&nbsp;31, 2007</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Pro Forma</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Winston</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>GRC</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Adjustments</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Pro Forma</B></TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">REVENUE</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Royalty revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">800,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">800,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">EXPENSES</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Research and development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,939,429</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,939,429</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,281,612</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">208,516</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,490,128</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,087</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,087</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,231,128</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">208,516</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,439,644</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Loss from operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,431,128</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(208,516</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,639,644</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,733</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,719</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">85,452</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,338</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,338</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48,071</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,719</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90,790</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loss before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(2,383,057</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(165,797</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(2,548,854</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income Taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Current</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><B>NET LOSS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(2,383,057</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(165,797</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(2,548,854</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic and Diluted Net Loss Per Share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.01</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic and Diluted Weighted Average
Shares Outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">440,851,441</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">4</SUP></TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>See accompanying notes</B>

</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-29<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>NOTE A &#151; Basis of Presentation</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Pro Forma Unaudited financial statements reflect the financial information, which gives
effect to the acquisition of all the outstanding common stock of Winston Laboratories, Inc.
(&#147;Winston&#148;) in exchange for 422,518,545 shares of the Getting Ready Corporation&#146;s (&#147;Company&#148;)
common stock, par value $0.001 per share (at an exchange ratio of 17.65101 shares of Company common
stock per share of Winston common stock), 101,849 shares of the Company&#146;s Series&nbsp;A Convertible
Preferred Stock and 73,332 shares of the Company&#146;s Series&nbsp;B Convertible Preferred Stock (at an
exchange ratio of .01751238 shares of Company preferred stock per share of Winston preferred
stock).
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Merger will be accounted for as a &#147;reverse merger&#148;, since as a result of the Merger the
shareholders of Winston will own a majority of the outstanding shares of the common stock of the
Company. Winston is deemed to be the acquirer in the Merger for accounting purposes and,
consequently, the assets and liabilities and the historical operations that will be reflected in
the financial statements will be those of Winston and will be recorded at the historical cost basis
of Winston. As a result of the Merger, there will be a change in control of the Company. The
Company will continue to be a &#147;smaller reporting company,&#148; as defined under the Securities Exchange
Act of 1934, as amended, following the Merger. Because the acquisition will be accounted for as a
reverse merger, there will be neither goodwill recognized nor any adjustments to the book value of
the net assets of Winston that would affect the Pro Forma Statements of Operations.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>NOTE B &#151; Adjustments</B>
</DIV>


<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">The decrease in cash and a corresponding charge to equity represent a $250,000
transaction fee payable to Lazard Freres &#038; Co. LLC upon a successful completion of the
merger.</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Prior to the consummation of the Merger 4,187,413 shares of the Winston Series
B Convertible Preferred Stock, par value $0.001 per share (&#147;Series&nbsp;B Preferred Stock&#148;)
will be issued to investors for $4,000,000. Of the $9,000,000 committed, Dr.&nbsp;Frost and
other investors purchased $5,000,000 of Winston stock and warrants on November&nbsp;13,
2007, and an additional $4,000,000 of Winston stock will be purchased prior to
consummation of the Merger by Frost Gamma Investments Trust and other investors,
including Glenn L. Halpryn, a director and a former officer of the
Company and Noah Silver, a former officer and director of the Company.</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Under the terms of the Merger Agreement, at the closing of the Merger, each
common share of Winston will be converted into approximately 17.65 shares of Company&#146;s
common stock. In addition, Winston&#146;s Series&nbsp;A Preferred Stock and Series&nbsp;B Preferred
Stock will be converted to 101,849 shares of the Company&#146;s Series&nbsp;A Convertible
Preferred Stock and 73,332 shares of the Company&#146;s Series&nbsp;B Convertible Preferred
Stock, respectively, at an exchange ratio of .01751238.</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Weighted average shares outstanding. The number of weighted average shares is
comprised of Getting Ready Corporation&#146;s number of weighted shares outstanding as of
June&nbsp;30, 2008 and December&nbsp;31, 2007 and the conversion (17.65101 to 1) of Winston&#146;s
weighted average shares outstanding for the same period.</DIV></TD>
</TR>

</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-30<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">


<DIV align="left">
<A name="122"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>SIGNATURES</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">Date: October 1, 2008      &nbsp;</TD>
    <TD colspan="3" align="left"><B>Getting Ready Corporation</B><BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/ Joel E. Bernstein, M.D.
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">CEO&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left">
<A name="123"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>EXHIBIT INDEX</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="77%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Exhibit No.</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Description</B></TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
<DIV align="justify">Merger Agreement and Plan of Reorganization dated as of November&nbsp;13, 2007 by
and among Getting Ready Corporation, Winston Laboratories, Inc. and Winston Acquisition
Corp. (filed as Exhibit&nbsp;2.1 to the Company&#146;s Current Report on Form&nbsp;8-K dated November
13, 2007 and incorporated herein by reference).</DIV></DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2.2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV align="justify">First Amendment to Merger Agreement and Plan of Reorganization dated as of May
30, 2008 by and among Winston Laboratories, Inc., a Delaware corporation, Getting Ready
Corporation, a Delaware corporation, and Winston Acquisition Corp., a Delaware
corporation (filed as Exhibit&nbsp;2.1 to the Company&#146;s Current Report on Form&nbsp;8-K dated May
30, 2008 and incorporated herein by reference).</DIV></DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2.3</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV align="justify">Second Amendment to Merger Agreement and Plan of Reorganization dated as of
June&nbsp;23, 2008 by and among Winston Laboratories, Inc., a Delaware corporation, Getting
Ready Corporation, a Delaware corporation, and Winston Acquisition Corp., a Delaware
corporation (filed as Exhibit&nbsp;2.1 to the Company&#146;s Current Report on Form&nbsp;8-K dated
June&nbsp;23, 2008 and incorporated herein by reference).</DIV></DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV align="justify">Certificate of Incorporation (filed as Exhibit&nbsp;3.1A to the Company&#146;s
Registration Statement on Form&nbsp;SB-2 dated September&nbsp;15, 2004 and incorporated herein by
reference).</DIV></DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3.2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV align="justify">Certificate of Amendment of Certificate of Incorporation (filed as Exhibit&nbsp;3.1B
to the Company&#146;s Registration Statement on Form&nbsp;SB-2 dated September&nbsp;15, 2004 and
incorporated herein by reference).</DIV></DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3.3</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV align="justify">Certificate of Amendment of Certificate of Incorporation (filed as Exhibit&nbsp;1 to
the Company&#146;s Form&nbsp;PRE14C dated December&nbsp;7, 2007 and incorporated herein by reference).</DIV></DIV></TD>
</TR>


<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>

<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3.4</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">Certificate
of Amendment to Certificate of Incorporation (filed as Annex A to the
Company&#146;s DEF 14C dated September&nbsp;22, 2008 and incorporated
herein by reference).</DIV></TD>
</TR>


<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3.5</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">Certificate of Designation, Preferences and Rights of Series&nbsp;A Convertible
Preferred Stock of Getting Ready Corporation.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3.6</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">Certificate of Designation, Preferences and Rights of Series&nbsp;B Convertible
Preferred Stock of Getting Ready Corporation.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3.7</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">By-laws.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">4.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">Form of Common Stock Certificate.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">4.2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">Form of Warrant to Purchase Series&nbsp;A Convertible Preferred Stock.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">4.3</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">Form of Lockup Agreement.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="77%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Exhibit No.</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Description</B></TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->

<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>

<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">Voting Agreement dated as of September&nbsp;25, 2008 between Getting Ready
Corporation and certain stockholders of the Company.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">Employment Agreement dated as of September&nbsp;25, 2008 between Getting Ready
Corporation and Joel E. Bernstein, M.D.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.3</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">Secrecy, Invention and Non-Competition Agreement dated as of October&nbsp;5, 2007 by
and between Winston Laboratories, Inc. and Joel E. Bernstein, M.D.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.4</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">Employment Letter Agreement dated October&nbsp;3, 2007 between Winston Laboratories,
Inc. and David Starr.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.5</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">Secrecy, Invention and Non-Competition Agreement dated as of October&nbsp;3, 2007 by
and between Winston Laboratories, Inc. and David Starr.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.6</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">Severance Agreement dated as of October&nbsp;8, 2003 between Winston Laboratories,
Inc. and Scott B. Phillips, M.D.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.7</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">General Severance Letter Agreement dated January&nbsp;26, 2006 between Winston
Laboratories, Inc. and Scott B. Phillips, M.D.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.8</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">Secrecy, Invention and Non-Competition Agreement dated as of October&nbsp;5, 2007 by
and between Winston Laboratories, Inc. and Scott B. Phillips, M.D.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>


<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.9</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">Consultation Agreement dated September&nbsp;30, 2007 between Winston Laboratories,
Inc. and Jeffrey R. Bernstein, Ph.D.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.10</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">Winston Laboratories, Inc. 1999 Stock Option Plan.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.11</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">Winston Laboratories, Inc. Stock Option Plan for Non-Employee Directors.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">21.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD valign="top"><DIV align="justify" style="margin-left:0px; text-indent:-0px">Subsidiaries</DIV></TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>



<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>


</BODY>
</HTML>
[{"type": "8-K", "sequence": "1", "filename": "c75577e8vk.htm", "description": "FORM 8-K", "secsgml_size_bytes": 853860}]
{"company-data": {"conformed-name": "GETTING READY CORP", "cik": "0001302554", "assigned-sic": "2834", "irs-number": "300132755"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-51314", "film-number": "081099941"}, "business-address": {"street1": "8990 WEMBLEY COURT", "city": "SARASOTA", "state": "FL", "zip": "34238", "phone": "941-966-6955"}, "mail-address": {"street1": "8990 WEMBLEY COURT", "city": "SARASOTA", "state": "FL", "zip": "34238"}}
Filed by Bowne Pure Compliance
Table of Contents
UNITED STATES
SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to
Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest
event reported): September 25, 2008
Getting Ready
Corporation
(Exact name of registrant as
specified in its charter)
Delaware
000-51314
30-0131755
(State or other Jurisdiction of Incorporation)
(Commission File Number)
(IRS Employer Identification No.)
100 North Fairway
Drive,
Suite 134
Vernon Hills, Illinois
60061
(Address of Principal Executive Offices)
(Zip Code)
Registrant's telephone number,
including area code:
(847) 362-8200
N/A
(Former name or former address if changed since last report.)
Check the appropriate box below if the
Form 8-K filing is intended to simultaneously satisfy the filing obligation of
the registrant under any of the following provisions:
o
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o
Soliciting material pursuant
to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule
14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule
13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Table of Contents
Item 1.01 Entry into a Material Definitive Agreement
3
Item 2.01 Completion of Acquisition or Disposition of Assets
4
DESCRIPTION OF OUR COMPANY
7
DESCRIPTION OF OUR BUSINESS
7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION
25
RISK FACTORS
38
MANAGEMENT
49
EXECUTIVE COMPENSATION
52
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
58
PRINCIPAL STOCKHOLDERS
61
WHERE YOU CAN OBTAIN ADDITIONAL INFORMATION
62
DESCRIPTION OF SECURITIES
63
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
63
EQUITY COMPENSATION PLAN INFORMATION
65
RECENT SALES OF UNREGISTERED SECURITIES
65
INDEMNIFICATION OF DIRECTORS AND OFFICERS
65
Item 3.02. Unregistered Sales of Equity Securities
66
Item 5.01. Changes in Control of Registrant
66
Item 5.02. Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers
66
Item 5.06. Change in Shell Company Status
66
Item 9.01. Financial Statements and Exhibits
66
Exhibit 3.5
Exhibit 3.6
Exhibit 3.7
Exhibit 4.1
Exhibit 4.2
Exhibit 4.3
Exhibit 10.1
Exhibit 10.2
Exhibit 10.3
Exhibit 10.4
Exhibit 10.5
Exhibit 10.6
Exhibit 10.7
Exhibit 10.8
Exhibit 10.9
Exhibit 10.10
Exhibit 10.11
Exhibit 21.1
Table of Contents
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Our business, financial condition, results of operations, cash flows and prospects, and the
prevailing market price and performance of our common stock, may be adversely affected by a number
of factors. Certain statements and information set forth in this Current Report on Form 8-K, as
well as other written or oral statements made from time to time by us or by our authorized
executive officers on our behalf, constitute "forward-looking statements" within the meaning of the
Federal Private Securities Litigation Reform Act of 1995. We intend for our forward-looking
statements to be covered by the safe harbor provisions for forward-looking statements contained in
the Private Securities Litigation Reform Act of 1995, and we set forth this statement and the risk
factors in this Current Report on Form 8-K in order to comply with such safe harbor provisions. You
should note that our forward-looking statements speak only as of the date of this Current Report on
Form 8-K or when made and we undertake no duty or obligation to update or revise our
forward-looking statements, whether as a result of new information, future events or otherwise.
Although we believe that the expectations, plans, intentions and projections reflected in our
forward-looking statements are reasonable, such statements are subject to known and unknown risks,
uncertainties and other factors that may cause our actual results, performance or achievements to
be materially different from any future results, performance or achievements expressed or implied
by the forward-looking statements. The risks, uncertainties and other factors that our stockholders
and prospective investors should consider are included under the heading "Risk Factors."
EXPLANATORY NOTE
This Current Report on Form 8-K is being filed in connection with a series of transactions
consummated by, and certain related events and actions taken by, Getting Ready Corporation.
This Current Report responds to the following items on Form 8-K:
Item 1.01 Entry into a Material Definitive Agreement.
Item 2.01 Completion of Acquisition or Disposition of Assets.
Item 3.02 Unregistered Sales of Equity Securities.
Item 5.01 Changes in Control of Registrant.
Item 5.02
Departure of Directors or Principal Officers; Election of
Directors; Appointment of Principal Officers.
Item 5.06 Change in Shell Company Status.
Item 9.01 Financial Statements and Exhibits.
2
Table of Contents
Item 1.01 Entry into a Material Definitive Agreement.
As used in this Current Report on Form 8-K, all references to the "Company", "Getting Ready
Corporation", "we", "our", and "us" or similar terms refer to Getting Ready Corporation, including
its predecessors and its subsidiaries. Information about the Company and the principal terms of
the merger are set forth below.
Effective November 13, 2007, the Company, entered into a definitive Merger Agreement and Plan
of Reorganization (the "Merger Agreement") with Winston Laboratories, Inc., a Delaware corporation
("Winston"), Winston Acquisition Corp., a Delaware corporation ("Merger Sub"), which is a
wholly-owned subsidiary of the Company. Pursuant to the Merger Agreement, on September 25, 2008,
Winston became a wholly-owned subsidiary of the Company (the "Merger"). Under the terms of the
Merger Agreement, at the closing of the Merger:
•
all of the issued and outstanding capital stock of Winston, consisting of 23,937,358
shares of common stock, par value $0.001 per share, 5,815,851 shares of the Winston
Series A Convertible Preferred Stock, par value $0.001 per share ("Series A Preferred
Stock"), and 4,187,413 shares of the Winston Series B Convertible Preferred Stock, par
value $0.001 per share ("Series B Preferred Stock"), was exchanged for 422,518,545
shares of the Company's common stock, par value $0.001 per share (at an exchange ratio
of 17.65101 shares of Company common stock per share of Winston common stock), 101,849
shares of the Company's Series A Convertible Preferred Stock and 73,332 shares of the
Company's Series B Convertible Preferred Stock (at an exchange ratio of .01751238
shares of Company preferred stock per share of Winston preferred stock);
•
the Company assumed Winston's stock option plans;
•
Winston's outstanding 1,643,750 options to purchase 1,643,750 shares of Winston's
common stock were converted to options to purchase 29,013,848 shares of the Company's
common stock; and
•
all outstanding warrants to purchase Winston Series A Preferred Stock were assumed
by the Company and converted into the right to acquire, expiring November 13, 2012,
upon the exercise of such warrants, an aggregate of 71,672 shares of the Company's
Series A Preferred Stock at a price per share of $49.09.
Prior to the closing of the Merger, the Company had 18,332,896 shares of common stock issued
and outstanding and, subsequent to the Merger, we had 440,851,441 shares of common stock issued and
outstanding. The Company had no shares of Series A or Series B Preferred Stock outstanding prior
to the Merger. The Merger was accounted for as a reverse merger for accounting purposes. Upon the
closing of the Merger on September 25, 2008, Winston became a wholly-owned subsidiary of the
Company.
3
Table of Contents
On November 13, 2007, Winston issued 5,815,851 shares of its Series A Preferred Stock and
warrants to purchase 4,092,636 shares of its Series A Preferred Stock, and on September 25, 2008,
4,187,413 shares of its Series B Preferred Stock, in two separate private placements to
investors for an aggregate purchase price of $9.0 million. All of the Winston shares issued
in these transactions were exchanged for shares of Series A and Series B Preferred Stock of the
Company and warrants to purchase the Company's Series A Preferred Stock pursuant to the Merger
Agreement.
Our issuance of the Company's securities to the shareholders of Winston in the Merger is
intended to be exempt from registration under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to Section 4(2) thereof or Rule 506 promulgated thereunder. As such,
the Company's shares of common stock and preferred stock issued in the Merger may not be offered or
sold unless they are registered under the Securities Act or an exemption from the registration
requirements of the Securities Act is available. No registration statement covering these
securities has been filed with the United States Securities and Exchange Commission (the
"Commission") or with any state securities commission in respect of the Merger.
Item 2.01 Completion of Acquisition or Disposition of Assets.
Overview
On November 13, 2007, we entered into the Merger Agreement with Winston and Merger Sub,
pursuant to which, upon completion of the Merger on September 25, 2008, Winston became our
wholly-owned subsidiary. A copy of the Merger Agreement is filed herewith as Exhibit 2.1.
Immediately following the closing of the Merger, we had outstanding 440,851,441 shares of common
stock, of which 4,864,328 shares of common stock constitutes our current "public float." Our Board
of Directors recommended and our stockholders approved, an amendment to our charter to increase the
number of authorized shares of Company Common Stock from 499,000,000 shares to 900,000,000 shares
to permit the conversion of all outstanding shares of the Company's preferred stock, including
shares of the Company's preferred stock underlying the Adjusted Parent Warrants (as such term is
defined in the Merger Agreement).
4
Table of Contents
General Changes Resulting from the Merger
We intend to carry on the business of Winston as our sole line of business and we have
retained all of Winston's management. We will relocate our executive offices to 100 North Fairway
Drive, Suite 134, Vernon Hills, Illinois 60061 and our telephone number will be (847) 362-8200. We
intend to change our name from Getting Ready Corporation to "Winston Pharmaceuticals, Inc.", and
have discontinued any and all prior business operations in favor of the business plan and
operations of Winston, which will be our only significant operations as a result of the Merger.
Our common stock is currently quoted on the OTC Bulletin Board, or OTCBB, sponsored by the
National Association of Securities Dealers, Inc. under the symbol "GTRY". The OTCBB is a network
of security dealers who buy and sell stock. The dealers are connected by a computer network that
provides information on current "bids" and "asks," as well as volume information. We anticipate we
will apply to change our symbol in the near future as a result of the change anticipated in the
Company's name to Winston Pharmaceuticals, Inc.
The Merger and the related transactions were approved by the boards of directors of each of
the Company and Winston on November 12, 2007, and by the requisite number of Winston stockholders
by written consent in lieu of a meeting on September 25, 2008.
Registration under Securities Act
Our issuance of securities to the shareholders of Winston in the Merger is intended to be
exempt from registration under the Securities Act of 1933, as amended (the "Securities Act"),
pursuant to Section 4(2) thereof or Rule 506 promulgated thereunder and, as such, our shares of
common stock and preferred stock issued in the Merger or pursuant to the warrants may not be
offered or sold unless they are registered under the Securities Act or an exemption from the
registration requirements of the Securities Act is available.
Accounting Treatment
The Merger was accounted for as a "reverse merger," since as a result of the Merger the
shareholders of Winston now own a majority of the outstanding shares of the common stock of the
Company. Winston is deemed to be the acquirer in the Merger for accounting purposes and,
consequently, the assets and liabilities and the historical operations that are reflected in the
financial statements are those of Winston and will be recorded at the historical cost basis of
Winston. As a result of the Merger, there was a change in control of the Company. The Company
will continue to be a "smaller reporting company", as defined under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), following the Merger.
Material Federal Income Tax Consequences
A Winston stockholder's receipt of our common stock in exchange for Winston common stock, our
preferred stock in exchange for Winston preferred stock, or our warrants in exchange for Winston
warrants in the Merger will generally be tax-free for U.S. federal income tax purposes. There will
be no U.S. federal income tax consequences to a holder of our stock as a result of the
Merger. The U.S. federal income tax consequences described above may not apply to some holders
of our stock or warrants.
5
Table of Contents
Amendment to Certificate of Incorporation
As of June 30, 2008, we had 18,332,896 shares of common stock outstanding and no shares of
preferred stock outstanding. We had a sufficient number of shares of common stock and preferred
stock authorized to complete the Merger. The preferred stock issued in conjunction with the Merger
is convertible into our common stock.
A previous amendment to our Certificate of Incorporation was filed with the State of Delaware
in 2004 to authorize the Company to issue "1,000,000 shares of blank check preferred stock." Prior
to the Merger, the Company had never issued any preferred stock. We amended our Certificate of
Incorporation on September 16, 2008, to:
(i)
increase the authorized number of shares of the Company's
common stock to have 900,000,000 shares of common stock authorized for
issuance;
(ii)
increase the authorized number of shares of preferred stock to
have 250,000,000 shares of preferred stock authorized for issuance; and
(iii)
to clarify the terms of the Company's preferred stock, to
specifically authorize the Company's Board of Directors to create separate
series of preferred stock and to fix and determine the terms thereof including
dividend or interest rates, conversion prices, voting rights, mandatory or
optional redemption provisions (including prices), and similar matters.
On September 24, 2008, the Company filed its Certificate of Designation, Preferences and
Rights of Series A Convertible Preferred Stock and Certificate of Designations, Preferences and
Rights of Series B Convertible Preferred Stock, which set forth respectively, the terms of the
Company's Series A and Series B Preferred Stock issued in conjunction with the Merger. See the
information set forth in this Current Report on Form 8-K under "Description of Securities".
Election to the Board of Directors
Immediately following the Merger, as described more fully below, the size of our Board of
Directors was increased to seven. Two directors of the Company, Alan Jay Weisburg and Noah M.
Silver resigned effective at the effective time of the Merger and on September 25, 2008, the
remaining directors, Glenn L. Halpryn and Curtis Lockshin, Ph.D. appointed Joel E. Bernstein, M.D.,
Neal S. Penneys, M.D., Ph.D., Scott B. Phillips, M.D., Robert A. Yolles and Subbarao Uppaluri,
Ph.D. to fill the vacancies on the Board of Directors.
Listing
We plan to file an initial listing application with the American Stock Exchange for inclusion
of our common stock on the American Stock Exchange. If approved, we will be subject to the
corporate governance provisions of the American Stock Exchange.
Prior to the Merger, the Company was a shell company as defined by the Securities Act. As a
result, the following information is provided in substantially the form it would be provided were
the registrant filing a Form 10.
6
Table of Contents
DESCRIPTION OF OUR COMPANY
Getting Ready Corporation was incorporated as a Delaware corporation in November 2002. The
Company attempted to open Mother Supercare Center, a one-stop destination for expectant and new
mothers. On September 1, 2006, the Company's management determined that it was no longer feasible
to operate or attempt to effect the Company's business plan. Since that date until the Merger,
Getting Ready Corporation's sole activity has been searching for a merger or acquisition candidate
with which it could combine.
Winston Laboratories, Inc. or Winston, a Delaware corporation, was incorporated in July 1998
as a specialty pharmaceutical company engaged in the discovery and development of products for pain
management.
DESCRIPTION OF OUR BUSINESS
As used herein, the terms "we," "our" and "us" refer to the operations of Winston historically,
as combined with the Company on a going-forward basis.
The following discussion should be read together with the information contained in the
financial statements and related notes included elsewhere in this Current Report on Form 8-K.
Description of Business
Winston Laboratories, Inc. or Winston, a Delaware corporation, was incorporated in July 1998
as a specialty pharmaceutical company engaged in the discovery and development of products for pain
management. Winston is a specialty pharmaceutical company engaged in the discovery and development
of products for pain management. Its core proprietary technology affects the functioning of
certain neurotransmitters that control and mediate pain transmission. Based on this technology,
Winston is developing products that reduce pain transmission from peripheral receptors along nerve
pathways to the brain. Winston focuses on major pain indications such as osteoarthritis, chronic
daily headache, migraine headache, and neuropathic pain syndromes, which have estimated worldwide
market sizes of $10 billion (Analyst Research), $5 billion (Analyst Research), $4 billion (Analyst
Research) and $4 billion (Datamonitor, Commercial Insight: Neuropathic Pain, July 2006),
respectively, as well as niche indications that have limited or no products currently available.
7
Table of Contents
Pain Management Market
Pain is a worldwide problem with serious health and economic consequences. The medical effort
to treat pain, known as pain management, addresses a large and under-served market. Pain in the
hospital is associated with increased length of stay, longer recovery times and poorer patient
outcomes, all of which have health care quality and cost implications. Decision Resources, an
international research/analyst firm estimates that the worldwide prescription market for pain drugs
totaled $27 billion in 2006. In the United States:
•
medical economists estimate that the economic impact of pain is approximately $100 billion annually
according to the 1998 "NIH Guide: New Directions in Research;"
•
Decision Resources estimates that nearly $17 billion was spent in 2006 on prescription pain drugs;
•
approximately 25 million Americans experience acute pain each year due to injury or surgery,
according to the American Pain Society, as published in 2006 by Medtech Insight (a division of
Windhover Information, Inc., that provides business information and intelligence on new trends,
technologies, and companies in the medical device, diagnostics, and biotech marketplace); and
•
approximately 50 million Americans suffer from chronic pain, according to the American Pain Society.
According to a 2004 Global Strategic Business Report by Global Industry Analysts, Inc., the
prescription pain management market is anticipated to grow at a compounded annual growth rate of 9
percent through 2010 due to a number of factors, including:
•
a rapidly aging population with an increasing need to address pain-related ailments;
•
longer survival times for patients with painful chronic conditions, such as cancer and AIDS;
•
patients' increased demand for effective pain relief; and
•
increasing recognition of the therapeutic and economic benefits of effective pain
management by physicians, other health care providers and payors.
Analgesic Drugs
Drugs that treat pain are referred to as analgesics, and the type of analgesic selected for
treatment depends principally upon the severity of the pain. For mild pain, weak analgesics such as
acetaminophen or non-steroidal anti-inflammatory drugs, or NSAIDs, such as ibuprofen are used. For
moderate pain, NSAIDs, weak opioids such as codeine or short-acting formulations of strong opioids
may be used. Severe pain requires strong opioids such as morphine, oxycodone, hydrocodone or
fentanyl.
Shortcomings of Current Pain Management
Despite widespread clinical use of drugs for pain, pain management remains less than optimal
due to a variety of factors, including:
•
Insufficient efficacy
. Opioids, the current standard of care for severe pain originating
from a painful stimulus, or nociceptive pain, reduce pain less than 50 percent in a majority of
situations. Neuropathic pain is difficult to treat with existing analgesics because of the
differing types of nerves and organs involved in, and types of injuries causing, this kind of pain.
Neuropathic pain does not respond to treatment with NSAIDs and responds poorly to treatment with
opioids at doses that do not impair the ability of patients to live reasonably active lifestyles.
8
Table of Contents
•
Lack of site specificity
. Most analgesics, including opioids and NSAIDs, are given orally or
by intravenous infusion and thereby subject the patient to high circulating concentrations of drug,
even though most types of pain are experienced in discrete parts of the body. Opioids must be
given by mouth or infusion because they provide pain relief by acting on nerves all over
the body: in the spinal cord, in the brain and at the site of injury. As a consequence,
opioids do not provide site-specific pain relief because their action is not targeted specifically
to the area of the body that is experiencing pain. Moreover, circulating drugs cause side effects
at parts of the body unrelated to the perception of pain. Although there are currently means of
delivering site-specific analgesia, such as by injection of short-acting anesthetics into joints
such as the ankle or knee, these techniques are reserved to provide relatively short-term
anesthesia prior to surgery and are not appropriate for long-term pain relief.
•
Occurrence of side effects.
NSAIDs may cause gastrointestinal ulcers, and between 10,000 and
20,000 patients die each year from gastrointestinal bleeding believed to be related to the use of
NSAIDs. Use of opioids is associated with nausea and vomiting in many patients. High-dose opioids
cause sedation and may also cause respiratory depression, or a decrease in the ability to breathe
spontaneously. Opioids used chronically can cause severe constipation that leads many patients to
stop using them, and opioids may sometimes cause severe itching. Drugs used to treat neuropathic
pain frequently cause sedation and problems with coordination.
•
Need for frequent dosing.
Drugs used to treat neuropathic pain require frequent dosing that
makes their use inconvenient, often leading to reduced patient compliance.
•
Slow onset of pain relief.
This slow onset, as well as poor efficacy, is due to the poor
penetration of skin by the anesthetics used in these products.
•
Potential to cause physical dependence.
Opioids, when used chronically, can cause physical
dependence. Fear of physical dependence often influences clinicians to prescribe less than adequate
doses of opioid analgesics. Similar fears lead many patients to refuse opioid analgesics.
Given doctors' and patients' desire to achieve adequate control of pain, and the significant
shortcomings associated with existing treatments, doctors and patients often struggle to find an
appropriate balance between pain relief and adverse side effects. With both over- and
under-treatment of pain, patients may be suffering unnecessarily, have poor quality of life and
have difficulty meeting their social, familial and work-related commitments.
Winston Product Pipeline
Winston has developed multiple proprietary formulations and uses of civamide and doxepin
hydrochloride, two agents that affect a variety of neuroactive chemical transmitters that convey
primary sensory input (e.g., pain) from the periphery to the central nervous system. Winston's
focus on neurotransmitter-active compounds has generated several of its most important product
candidates. A common feature of these product candidates is the use of an active ingredient that
depletes or interferes with the action of a neuroactive transmitter (e.g., substance P (SP),
calcitonin gene-related peptide (CGRP), histamine, serotonin), thereby decreasing the ability of
sensory fibers or nerve ganglia to transmit or receive sensory stimuli and mediate inflammatory
reactions. SP is believed to be the principal neurotransmitter of pain.
Civamide is a proprietary TRPV-1 (transient receptor potential vanilloid receptor) receptor
modulator, and doxepin hydrochloride is a potent histamine receptor blocker and serotonin reuptake
inhibitor. Civamide is being developed in several different dosage forms for a variety of
painful conditions. Doxepin is being developed in a nasal solution for prophylaxis and
treatment of chronic daily headache.
9
Table of Contents
Table
1: Winston's Current Compound Pipeline
LATE-STAGE PIPELINE
U.S.
Dosage
Development Status in
Market Size
Product/Compound
Form
Product Indication(s)
U.S.
, Canada and Europe
($MM)
Civamide
Topical (Cream)
•
Treatment of Osteoarthritis
•
MAA (EU) filed 1/08
5,000
•
File NDS (Canada) Q4 08
•
File NDA Q4 08
Civamide
Oral Capsule
•
Treatment of Chronic Neuropathic Pain
•
IND filed 5/08
3,000
•
Treatment of Cancer Pain
•
Phase I Q4 08
850
•
Treatment of Post-Surgical Pain
3,000
Civamide
Patch
•
Treatment of Neuropathic Pain
•
Phase I Q3 08
3,000
•
Start Phase II Q4 08
Civamide
Nasal Solution
•
Treatment of PHN of the Trigeminal Nerve
•
Phase II/III
50
•
Prophylaxis of Episodic Cluster Headache
•
Phase III
2,000
•
Treatment of Dry Eye
•
Start Phase II Q4 08
1,000
Doxepin
hydrochloride
Nasal Solution
•
Prophylaxis of Chronic Daily Headache
•
Phase IIa Completed
2,500
Civamide
Civamide, a synthetically produced, proprietary new chemical entity, is the active ingredient
in several of Winston's product candidates. Civamide produces analgesia by decreasing the activity
of sensory neurons. Civamide appears to affect preferentially type-C neurons by specific binding
to a membrane receptor, the TRPV-1 receptor, which is coupled to an action channel. The
specificity of civamide for type-C neurons limits its sensory effects to the inhibition of pain
transmission unlike local anesthetics, which act to block the activity of all sensory neurons,
thereby impairing all sensations including touch, pressure, heat, and vibration, in addition to
pain signals.
Initial applications of civamide cause a transient release of SP from type-C neurons and
probably account for the transient burning sensation that is often felt following initial
applications of civamide. Civamide has also been shown to inhibit the synthesis of SP and reduce
axonal transport of granules containing SP from the cell body to the nerve terminals. These
effects may likely contribute to the analgesic effects of civamide by reducing the amount of SP
available for release. The analgesic effect of civamide is completely reversible, since after
administration of civamide is discontinued, SP stores gradually return to normal and neuronal
sensitivity to noxious stimuli returns. However, in animal and human studies, civamide has a very
long duration of analgesic activity, with a single dose or one-week course of treatment providing
weeks of effective analgesic activity. In human studies to date, civamide has not exhibited
systemic toxicity. Because of these attributes, Winston believes civamide represents a clinically
significant treatment advance for a number of painful conditions, including headache pain,
arthritis pain, neuropathic pain and cancer pain.
10
Table of Contents
Winston has completed all clinical studies required for a new drug application (an "NDA")
submission to the Food and Drug Administration ("FDA") on Civamide Cream for osteoarthritis.
In a pivotal 695 patient Phase III trial in osteoarthritis, Civamide Cream demonstrated
statistically significant reductions in all three co-primary efficacy parameters. Winston
submitted Marketing Authorization Applications (MAA) in Europe for Civamide Cream in January 2008,
and anticipates approval in Europe during the first quarter, 2009. Winston intends to submit a new
drug submission ("NDS") in Canada in the fourth quarter of 2008 and an NDA 505(b)(2) in the United
States in the fourth quarter of 2008, with approval anticipated in the fourth quarter of 2009 in
Canada, and the fourth quarter of 2009 in the United States. Winston is currently in partnering
discussions with several pharmaceutical companies regarding marketing and distribution of Civamide
Cream in North America and Europe.
Formulation development for a civamide capsule and a civamide patch are nearing completion. An
investigational new drug application (an "IND") was filed in the second quarter of 2008 for the
civamide oral capsule for chronic neuropathic pain. A Phase II clinical trial for the civamide
patch for neuropathic pain (e.g. postherpetic neuralgia and painful diabetic neuropathy) will be
initiated in the third quarter of 2008.
The FDA approved a Special Protocol Assessment (an "SPA") for a Phase III pivotal study of
Civamide Nasal Solution for prophylaxis and treatment of episodic cluster headache. The SPA is a
process that provides for an official FDA evaluation of Phase III clinical study protocols. The
SPA provides trial sponsors with a binding written agreement that the design and analysis of the
studies are adequate to support a license application submission if the study is performed
according to the SPA and the results are successful. The FDA has agreed that if this pivotal study
is robustly positive, it would be the final study necessary to support approval of Civamide Nasal
Solution 0.01% for this indication. Civamide Nasal Solution has been studied in several additional
indications, and there is positive Phase II data for acute migraine treatment and for vasomotor
rhinitis. Civamide Nasal Solution has received orphan designation by FDA for treatment of PHN of
the trigeminal nerve. An orphan designation grants special status to a product to treat a rare
disease or condition upon request of a sponsor. This is a key designation as the marketing
application for a prescription drug product that has been designated as a drug for a rare disease
or condition is not subject to a prescription drug user fee unless the application includes an
indication for other than a rare disease or condition. The product also receives seven year market
exclusively and tax credits for the sponsor.
Doxepin
Winston is also developing doxepin hydrochloride, a potent histamine receptor blocker and
serotonin reuptake inhibitor as a nasal solution for the prophylaxis and treatment of chronic daily
headache, an indication for which there are no FDA-approved treatment options. There are
approximately 12 million patients in the United States with chronic daily headaches. This product
appears to interfere with the release/actions of histamine and serotonin as well as modulating
neuronal sodium ion channels involved in the pathogenesis of this disorder. A successful Phase IIa
trial of Doxepin Nasal Solution in this condition has been completed. Winston's next step in the
clinical development of Doxepin Nasal Solution is to conduct a Phase II/III study of longer
duration.
11
Table of Contents
Manufacturing and Raw Materials
All of Winston's manufacturing is performed under contract by outside vendors. Winston has
manufacturing agreements with DPT Laboratories, Ltd. and Patheon, Inc. to produce certain of its
development-stage products for clinical studies and, if approved, for commercial sale. Most of
Winston's development-stage products may be manufactured only at a site approved by the FDA
specifically for the individual product, as specified in the NDA for the product.
Winston believes that adequate and reliable sources of raw materials and manufacturing for all
the development-stage products are currently available. Winston currently relies on a limited
number of suppliers to provide raw materials and manufacture its finished products. Some of the
raw materials and finished drug products are purchased from only one supplier and, as a result,
Winston's operations may be adversely affected if certain suppliers are unable to provide raw
materials or to manufacture drug substance or finished products on its behalf, as outlined in the
"Risk Factors" section.
Sales and Marketing
Winston's goal is to continue to develop novel drugs that are more effective or safer than
drugs used today. Winston's strategy includes the following elements:
•
Winston intends to continue to outsource preclinical studies, clinical trials and
formulation and manufacturing activities. Winston believes outsourcing permits significant time
savings and allows for more efficient deployment of its resources.
•
Winston intends to license its lead products to medium to large pharmaceutical companies
with existing sales forces and marketing capabilities, specifically outside of the United States
where it currently does not have a sales and marketing infrastructure.
•
Winston will also consider building its own sales force when economics and other factors
indicate that this is a better strategy than out-licensing.
Intellectual Property
Winston attempts, to the extent practicable, to use patent protection in the commercialization
of its owned and licensed technology, e.g. civamide nasal solution for keratoconjunctivitis (dry
eye). Winston actively seeks patent protection for its proprietary technology in the United States
and, as appropriate and cost-effective, in other countries. Winston currently has three U.S.
issued patents and one pending U.S. application and numerous issued foreign patents. These patents
and patent applications are principally composition of matter and method of use claims. Upon
regulatory approval of any of Winston's patent-protected products, Winston plans to seek patent
extension, where available, under existing U.S. and foreign regulations permitting extension of a
pharmaceutical patent.
12
Table of Contents
In the United States, the Hatch-Waxman Act provides for patent term extension calculated as a
portion of time during which the drug was in clinical development or under review at the FDA with a
maximum extension of five years. Additionally, under the Hatch-Waxman Act, all new molecular
entities ("NMEs") such as civamide automatically receive five (5) years data exclusivity
upon approval. Winston believes that it is eligible for the full five-year patent term
extension period on patents covering civamide. Also, Winston expects to employ product life-cycle
management, including the development of new formulations, new indications, and other significant
product improvements, in order to maximize the value of its intellectual property.
Set forth below, please find a table of Winston's current trademarks:
ACTIVE TRADEMARKS
Trademark Name
Listed Owner
Actual Owner
Filed
Registered
Action Date
CIVANEX
2,729,437
Winston Labs
Winston Labs
February 16, 1999
June 24, 2003
June 24, 2009
MICANOL
3,283,446
Winston Labs
Winston Labs
March 27, 2003
August 21, 2007
August 21, 2013
WINSTON
LABORATORIES,
The Pain Company
2,856,161
Winston Labs
Winston Labs
October 13, 1999
June 22, 2004
June 22, 2010
WINSTON LABORATORIES
Winston Labs
Winston Labs
August 13, 1993
August 13, 2008
Illinois State
Trademark 73000
AXSAIN
2,925,798
Rodlen
Winston Labs
ZITHRANOL
Winston Labs
Winston Labs
January 18, 2008
ZITHRACORT
Winston Labs
Winston Labs
January 18, 2008
DURAPHEN
Winston Labs
Winston Labs
March 31, 2008
In addition to seeking the protection of patents, licenses and trademarks, Winston also relies
on unpatented proprietary technology and know-how to maintain its competitive position. To protect
its rights in these areas, Winston has a policy of requiring its employees, consultants, advisors,
prospective licensees and business partners to enter into confidentiality agreements.
13
Table of Contents
Competition
In general, a company's ability to compete successfully in the pharmaceutical industry is
based on: relative product performance (efficacy, safety, ease of use); price; acceptance by
physicians, patients, and third-party payers; marketing support and distribution; availability of
patent protection; and the ability to obtain and maintain FDA approval for testing, manufacturing
and marketing.
Winston's products and technologies face competition from various classes of drugs, currently
marketed and in development, across a range of therapeutic categories, from migraine headache to
neuropathic pain. For some niche indications, such as prophylaxis of episodic cluster headache and
PHN of the trigeminal nerve, there are no existing FDA-approved products, and Winston is not aware
of any other drugs presently in development for these conditions. A summary of what Winston
believes to be the competitive advantages of its major products is presented below:
Table 3: Competitive Advantages Summary
Competitive Advantages Summary
Winston Product
Indication
Competitor Product(s)
Winston's Competitive Advantages
Civamide Topical
(Cream) 0.075%
•
Osteoarthritis
Pain
•
Oral Cox-2 Inhibitors
(e.g., Celebrex
®
)
•
No Cardiovascular or GI Side Effects
•
Rheumatoid
Arthritis Pain
•
Oral NSAIDs (e.g., Mobic
®
, Naprosyn
®
)
•
No Safety Monitoring Required
•
No Drug Interaction
•
Topical NSAID's (e.g.,
Volteran
®
)
•
Can Be Used Adjunctively
•
Long-Lasting Effect after
Discontinuance
Civamide Oral Capsule
•
Cancer Pain
•
Neuropathic Pain
•
Cymbalta
®
•
Neurontin
®
/Lyrica
®
•
Opioids
•
Single Dose Provides
³
7 Days
Analgesia
•
No Addiction Potential
Civamide Patch
•
Neuropathic Pain
•
Lidoderm
®
Patch
•
No Cardiovascular or GI Side Effects
•
Osteoarthritis
Pain
•
No FDA-approved Patch
•
•
No Disposal Issues
•
See Also Civamide Cream Advantages
•
Neuropathic Pain
•
Neurontin
®
/ Lyrica
®
•
No Systemic Side Effects
•
Cymbalta
®
•
No Drug Interactions
Civamide Nasal
Solution 0.01%
•
Episodic Cluster
Headache
•
No FDA-approved
medication
•
No Systemic Side Effects
•
No Drug Interactions
Doxepin Nasal Solution
•
Chronic Daily
Headache
•
No FDA-approved medication
•
No Systemic Side Effects
•
No Drug Interactions
14
Table of Contents
Winston's primary competitors include: drug development companies focused on pain management,
such as Adolor Corporation, Anesiva, Inc., Neurogen Corporation, NeurogesX, Inc., NicOx S.A., Pain
Therapeutics, Inc., Pozen Inc., and Renovis, Inc.; mid-sized companies with significant pain
franchises, such as Alpharma, Inc., Endo Pharmaceuticals Holdings, Inc., King Pharmaceuticals,
Inc., Purdue Pharma LP, and Valeant Pharmaceuticals International; and very large, diversified
pharmaceutical companies including GlaxoSmithKline, Merck & Co., Inc., and Pfizer Inc.
For certain of Winston's products, particularly those targeting large markets and thus
requiring a very large sales force, Winston intends to collaborate with larger pharmaceutical
companies to market (and distribute) such products most effectively.
Government Regulation
Government authorities in the United States, at the federal, state, and local level, and other
countries extensively regulate, among other things, the safety, efficacy, research, development,
testing, manufacture, storage, record-keeping, labeling, promotion, advertising, distribution,
marketing and export and import of pharmaceutical products such as those Winston is developing.
United States Government Regulation
In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act
and implementing regulations. If Winston fails to comply with the applicable United States
requirements at any time during the product development process, clinical testing, and the approval
process or after approval, Winston may become subject to administrative or judicial sanctions.
These sanctions could include the FDA's refusal to approve pending applications, license suspension
or revocation, withdrawal of an approval, warning letters, product recalls, product seizures, total
or partial suspension of production or distribution, injunctions, fines, civil penalties or
criminal prosecution. Any agency enforcement action could have a material adverse effect on
Winston.
Winston's products are considered by the FDA to be drugs. The drugs are subject to FDA review
and approval or clearance. If the FDA denies approval or clearance of the drugs, Winston's ability
to market its products could be significantly delayed or precluded.
The steps required before a drug may be marketed in the United States include:
•
completion of preclinical laboratory tests, animal studies and formulation studies
under the FDA's good laboratory practices regulations;
•
submission to the FDA of an Investigational New Drug, or IND, application for human
clinical testing, which must become effective before human clinical trials may begin;
•
performance of adequate and well-controlled clinical trials to establish the safety
and efficacy of the product for each proposed indication;
•
submission to the FDA of an NDA;
15
Table of Contents
•
satisfactory completion of an FDA inspection of the manufacturing facility or
facilities at which the product is produced to assess compliance with current good
manufacturing practice, or cGMP; and
•
FDA review and approval of the NDA before any commercial marketing, sale or shipment
of the product.
Preclinical tests include laboratory evaluations of product chemistry, toxicity, and
formulation, as well as animal studies. The results of the preclinical tests, together with
manufacturing information and analytical data, are submitted to the FDA as part of an IND
application. The FDA requires a 30-day waiting period after the filing of each IND application
before clinical tests may begin, in order to ensure that human research subjects will not be
exposed to unreasonable health risks. An IND will automatically become effective 30 days after
receipt by the FDA, unless before that time the FDA has placed the IND on clinical hold. In that
case, the IND sponsor and the FDA must resolve any outstanding FDA concerns or questions before
clinical trials can proceed. Submission of an IND may result in the FDA not allowing clinical
trials to commence or not allowing the trial to commence on the terms originally specified in the
IND.
Clinical trials involve the administration of the investigational product to human subjects
under the supervision of qualified investigators. Clinical trials are conducted under protocols
detailing, among other things, the objectives of the study, the parameters to be used in monitoring
safety and the effectiveness criteria to be evaluated. Each protocol must be submitted to the FDA
as part of the IND. Each trial must be reviewed and approved by an independent Institutional
Review Board, or IRB, before it can begin and the trial is subject to IRB oversight. The FDA, the
IRB or Winston may discontinue a clinical trial at any time for various reasons, including a belief
that the subjects are being exposed to an unacceptable health risk. Clinical testing also must
satisfy extensive good clinical practice requirements and the requirements for informed consent.
Clinical trials typically are conducted in three sequential phases, but the phases may overlap
or be combined. Phase 1 trials usually involve the initial introduction of the investigational
drug into humans to evaluate the product's safety, dosage tolerance, pharmacodynamics, and, if
possible, to gain an early indication of its effectiveness.
Phase 2 trials usually involve controlled trials in a limited patient population to:
•
evaluate dosage tolerance and appropriate dosage;
•
identify possible adverse effects and safety risks; and
•
evaluate preliminarily the efficacy of the drug for specific indications.
Phase 3 trials usually further evaluate clinical efficacy and test further for safety in an
expanded patient population. Phase 1, Phase 2 and Phase 3 testing may not be completed successfully
within any specified period, if at all. Furthermore, the FDA or Winston may suspend or terminate
clinical trials at any time on various grounds, including a finding that the subjects or patients
are being exposed to an unacceptable health risk.
16
Table of Contents
Assuming successful completion of the required clinical testing, the results of the
preclinical studies and of the clinical studies, together with other detailed information,
including extensive manufacturing information and information on the composition of the product,
are submitted to the FDA in the form of an NDA requesting approval to market the product for one or
more specified indications. An NDA may also be submitted in the format of an electronic Common
Technical Document, or eCTD, which under ICH guidelines, is acceptable to the FDA and many foreign
regulatory authorities. The FDA reviews an NDA or eCTD to determine, among other things, whether a
product is safe and effective for its intended use.
Before approving an application, the FDA will inspect the facility or the facilities at which
the product is manufactured, and will not approve the product unless cGMP compliance is
satisfactory. FDA will also inspect the clinical sites at which the trials were conducted to
assess their compliance, and will not approve the product unless compliance with Good Clinical
Practice requirements is satisfactory. If the FDA determines the application demonstrates that the
product is safe and effective for the proposed indication and that the manufacturing process and
the manufacturing facilities are acceptable, the FDA will issue an approval letter. If the FDA
determines the application, manufacturing process or manufacturing facilities are not acceptable,
the FDA will outline the deficiencies in the submission and often will request additional testing
or information. Notwithstanding the submission of any requested additional information, the FDA
ultimately may decide that the application does not satisfy the regulatory criteria for approval
and may deny the application, limit the indication for which the drug is approved or require
additional post-approval testing in other requirements.
The testing and approval process requires substantial time, effort, and financial resources,
and each may take several years to complete. The FDA may not grant approval on a timely basis, or
at all. Winston may encounter difficulties or unanticipated costs in its efforts to secure
necessary governmental approvals, which could delay or preclude it from marketing its products.
The FDA may limit the indications for use or place other conditions on any approvals that could
restrict the commercial application of the products. After approval, certain changes to the
approved product, such as adding new indications, manufacturing changes, or additional
labeling claims are subject to further FDA review and approval.
If and when regulatory approval of a product is obtained, Winston will be required to comply
with a number of post-approval requirements. Winston also must comply with other regulatory
requirements, including cGMP regulations and adverse event reporting. Holders of an approved NDA
are required to report certain adverse reactions and production problems, if any, to the FDA, to
provide updated safety and efficacy information and to comply with requirements concerning
advertising and promotional labeling for their products. Also, quality control and manufacturing
procedures must continue to conform to cGMP after approval. The FDA periodically inspects
manufacturing facilities to assess compliance with cGMP. Accordingly, manufacturers must continue
to expend time, money, and effort in the area of production and quality control to maintain
compliance with cGMP and other aspects of regulatory compliance.
Winston uses, and will continue to use at least in the near term, third-party manufacturers to
produce its products in clinical and commercial quantities. Future FDA inspections may identify
compliance issues at its facilities or at the facilities of its contract manufacturers that may
disrupt production or distribution, or require substantial resources to correct. In addition,
discovery of problems with a product or the failure to comply with requirements may result in
restrictions on a product, manufacturer, or holder of an approved NDA, including withdrawal or
recall of the product from the market or other voluntary or FDA-initiated action that could delay
further marketing. Also, new government requirements may be established that could delay or prevent
regulatory approval of Winston's products under development.
17
Table of Contents
Foreign Regulation
In addition to regulations in the United States, Winston will be subject to a variety of
foreign regulations governing clinical trials and commercial sales and distribution of its
products. Whether or not Winston obtains FDA approval for a product, it must obtain approval of a
product by the comparable regulatory authorities of foreign countries before it can commence
clinical trials or marketing of the product in those countries. The approval process varies from
country to country, and the time may be longer or shorter than that required for FDA approval. The
requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement
vary greatly from country to country.
Under European Union regulatory systems, marketing authorizations may be submitted either
under a centralized or mutual recognition procedure. The centralized procedure provides for the
grant of a single marketing authorization that is valid for all European Union member states. The
mutual recognition procedure provides for mutual recognition of national approval decisions. Under
this procedure, the holder of a national marketing authorization may submit an application to the
remaining member states. Within 90 days of receiving the applications and assessment report, each
member state must decide whether to recognize approval.
In addition to regulations in Europe and the United States, Winston will be subject to a
variety of foreign regulations governing clinical trials and commercial distribution of its
products.
Employees
As of September 25, 2008, we had 13 full time employees, two of whom hold M.D. degrees and two
of whom hold other advanced degrees. Our employees are not represented by any collective bargaining
unit. We believe that we maintain good relations with our employees.
Description of Property
Winston maintains a 7,300 square foot leased office and warehouse facility in Vernon Hills,
Illinois (a suburb of Chicago), which serves as its headquarters. Although Winston believes this
facility is adequate for its business needs at this time, it is currently exploring other
facilities that will support Winston's growth plans.
Legal Proceedings
Winston is currently not subject to any material legal proceedings.
18
Table of Contents
SELECTED FINANCIAL DATA
The selected financial data for the fiscal years ended December 31, 2007 and 2006 was derived
from Winston's consolidated financial statements that have been audited by McGladrey & Pullen, LLP
for the fiscal years then ended. The information for the six months ended June 30, 2008 and 2007
was derived from Winston's unaudited consolidated financial data but, in the opinion of Winston's
management, reflects all adjustments (consisting of those of a normal recurring nature) necessary
for a fair presentation of the results for such periods. The selected financial information
presented below should be read in conjunction with Winston's audited consolidated financial
statements and related notes appearing in this Report beginning on page F-1. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" for a discussion of
Winston's financial condition and results of operations for the fiscal years ended December 31,
2007 and 2006 and for the six months ended June 30, 2008 and 2007.
Statement of Operations Data
Year Ended December 31,
Six Months Ended June 30,
2007
2006
2008
2007
Revenues
$
800,000
$
294,453
$
99,993
$
450,000
Operating expenses
3,231,128
2,449,544
2,925,588
1,004,752
Loss from operations
(2,431,128
)
(2,155,091
)
(2,825,595
)
(554,752
)
Interest income
42,733
76,439
57,694
19,552
Other income
5,338
86,548
1,183
845
Loss from continuing operations before minority
interest and income taxes
(2,383,057
)
(1,992,104
)
(2,766,718
)
(534,355
)
Minority interest in loss of subsidiary
—
(28,105
)
—
—
Loss from continuing operations before income taxes
(2,383,057
)
(2,020,209
)
(2,766,718
)
(534,355
)
Income taxes
—
—
—
—
Net loss from continuing operations
(2,383,057
)
(2,020,209
)
(2,766,718
)
(534,355
)
Income from discontinued operations
—
647,040
—
—
Net loss
$
(2,383,057
)
$
(1,373,169
)
$
(2,766,718
)
$
(534,355
)
Balance Sheet Data
As of June 30, 2008
As of December 31, 2007
Cash
$
2,003,785
$
4,481,611
Total assets
2,117,008
4,591,463
Accounts payable
782,883
491,560
Accrued expenses and other current
liabilities
255,190
254,250
Total liabilities
1,038,023
745,810
Stockholders' equity
1,078,935
3,845,653
19
Table of Contents
PRO FORMA SELECTED FINANCIAL DATA
SUPPLEMENTARY FINANCIAL INFORMATION
Winston Laboratories, Inc. and Subsidiaries
Pro Forma Unaudited Financial Statements
As of June 30, 2008
And
For the Six Months Ended June 30, 2008 and the Year Ended December 31, 2007
The following unaudited pro forma financial statements ("pro forma statements") give effect to
the reverse acquisition of Winston Laboratories Inc., ("Winston") by Winston Acquisition Corp., a
Delaware corporation and wholly owned subsidiary of Getting Ready Corporation ("Company") and are
based on the estimates and assumptions set forth herein and in the notes to such pro forma
statements.
On November 13, 2007, the Company entered into a Merger Agreement and Plan of Reorganization
(the "Merger Agreement") with Winston Laboratories, Inc. ("Winston") and Winston Acquisition Corp.,
which is a wholly-owned subsidiary of the Company. Pursuant to the Merger Agreement, Winston
became a wholly-owned subsidiary of the Company (the "Merger").
The Merger occurred on September 25, 2008. The Merger was accounted for as a "reverse
merger," since as a result of the Merger the shareholders of Winston own a majority of the
outstanding shares of the common stock of the Company. Winston is deemed to be the acquirer in the
Merger for accounting purposes and, consequently, the assets and liabilities and the historical
operations that will be reflected in the financial statements will be those of Winston and will be
recorded at the historical cost basis of Winston. As a result of the Merger, there was a change in
control of the Company.
The following unaudited pro forma financial information gives effect to the above. The
unaudited pro forma financial information was prepared from (1) the Company's audited historical
financial statements included in the Company's Form 10K for the period ended September 30, 2007;
(2) the Company's unaudited historical financial statements included in the Company's Form 10Q for
the period ended December 31, 2007; (3) the Company's unaudited historical financial statements
included in the Company's Form 10Q for the period ended March 31, 2008; (4) the Company's unaudited
historical financial statements included in the Company's Form 10Q for the period ended June 30,
2008; (5) Winston's audited historical financial statements for the year ended December 31, 2007;
and (6) Winston's unaudited historical financial statements for the six months ended June 30, 2008.
The unaudited pro forma balance sheet at June 30, 2008 assumes the effects if the Merger
occurred on June 30, 2008. The unaudited pro forma statements of operations assume that the Merger
occurred on January 1, 2007 (the beginning of Winston's most recently completed year).
The unaudited pro forma financial information is presented for illustrative purposes only and
is not necessarily indicative of the operating results or financial position that would have
occurred if the transaction had been consummated at the date indicated, nor is it necessarily
indicative of the future operating results or financial position of the consolidated companies.
20
Table of Contents
Winston Laboratories, Inc. and Subsidiaries
Pro Forma Unaudited Balance Sheet
As of June 30, 2008
Pro Forma
Winston
Company
Adjustments
Pro Forma
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
2,003,785
$
928,077
$
3,750,000
1,2
$
6,681,862
Accounts receivable
15,710
—
—
15,710
Related party receivable
34,073
—
—
34,073
Prepaid and other current assets
13,819
15,470
—
29,289
2,067,387
943,547
3,750,000
6,760,934
PROPERTY AND EQUIPMENT
21,815
—
—
21,815
INTANGIBLE ASSETS, NET
23,492
—
—
23,492
OTHER ASSETS
4,314
—
—
4,314
TOTAL ASSETS
$
2,117,008
$
943,547
$
3,750,000
$
6,810,555
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable
$
782,883
$
16,331
—
$
799,214
Accrued expenses and other current liabilities
255,190
—
—
255,190
Total current liabilities
1,038,073
16,331
—
1,054,404
Long Term Liabilities
—
—
—
—
Commitments and Contingencies
Total liabilities
1,038,073
16,331
—
1,054,404
Stockholders' equity
Preferred Stock
Series A, Convertible
5,815
—
(5,713
)
3
102
Series B, Convertible
—
—
4,187
2,3
73
Common stock
23,936
18,333
422,518
3
440,851
(23,936
)
3
Additional paid-in capital
45,401,938
2,316,594
(250,000
)
1
49,667,879
3,995,813
2
(412,691
)
3
23,936
3
(1,407,711
)
3
Accumulated deficit
(44,352,754
)
(1,407,711
)
1,407,711
3
(44,352,754
)
Total stockholders' equity
1,078,935
927,216
3,750,000
5,756,151
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
$
2,117,008
$
943,547
$
3,750,000
$
6,810,555
See accompanying notes
21
Table of Contents
Winston Laboratories, Inc. and Subsidiaries
Pro Forma Unaudited Statement of Operations
For the Six months ended June 30, 2008
Pro Forma
Winston
Company
Adjustments
Pro Forma
REVENUE
Royalty revenue
$
99,993
$
—
$
—
$
99,993
EXPENSES
Research and development
2,131,668
—
—
2,131,668
General and administrative
790,214
128,310
—
918,524
Depreciation and amortization
3,706
—
—
3,706
Total operating expenses
2,925,588
128,310
—
3,053,898
Loss from operations
(2,825,595
)
(128,310
)
—
(2,953,905
)
Interest income
57,694
16,153
—
73,847
Other income
1,183
—
—
1,183
58,877
16,153
—
75,030
Loss before income taxes
(2,766,718
)
(112,157
)
—
(2,878,875
)
Income Taxes
Current
—
—
—
—
Deferred
—
—
—
—
—
—
—
—
NET LOSS
$
(2,766,718
)
$
(112,157
)
$
—
$
(2,878,875
)
Basic and Diluted Net Loss Per Share
$
(0.01
)
Basic and Diluted Weighted Average
Shares Outstanding
440,851,441
4
See accompanying notes
22
Table of Contents
Winston Laboratories, Inc. and Subsidiaries
Pro Forma Unaudited Statement of Operations
For the Year ended December 31, 2007
Pro Forma
Winston
Company
Adjustments
Pro Forma
REVENUE
Royalty revenue
$
800,000
$
—
$
—
$
800,000
EXPENSES
Research and development
1,939,429
—
—
1,939,429
General and administrative
1,281,612
208,516
—
1,490,128
Depreciation and amortization
10,087
—
—
10,087
Total operating expenses
3,231,128
208,516
—
3,439,644
Loss from operations
(2,431,128
)
(208,516
)
—
(2,639,644
)
Interest income
42,733
42,719
—
85,452
Other income
5,338
—
5,338
48,071
42,719
—
90,790
Loss from continuing operations
before income tax
(2,383,057
)
(165,797
)
—
(2,548,854
)
Income Taxes
Current
—
—
—
—
Deferred
—
—
—
—
—
—
—
—
NET LOSS
$
(2,383,057
)
$
(165,797
)
$
—
$
(2,548,854
)
Basic and Dilutive Net Loss Per Share
$
(.01
)
Basic Weighted Average Shares Outstanding
440,851,441
4
See accompanying notes
23
Table of Contents
Winston Laboratories, Inc. and Subsidiaries
NOTES TO PRO FORMA UNAUDITED FINANCIAL STATEMENTS
NOTE A — Basis of Presentation
The Pro Forma Unaudited financial statements reflect the financial information, which gives effect
to the acquisition of all the outstanding common stock of Winston Laboratories, Inc. ("Winston") in
exchange for 422,518,545 shares of Getting Ready Corporation's ("Company") common stock, par value
$0.001 per share (at an exchange ratio of 17.65101 shares of Company common stock per share of
Winston common stock), 101,849 shares of the Company's Series A Convertible Preferred Stock and
73,332 shares of the Company's Series B Convertible Preferred Stock (at an exchange ratio of .01751238 shares of Company preferred stock per share of Winston preferred stock).
The Merger was accounted for as a "reverse merger," since as a result of the Merger the
shareholders of Winston own a majority of the outstanding shares of the common stock of the
Company. Winston is deemed to be the acquirer in the Merger for accounting purposes and,
consequently, the assets and liabilities and the historical operations that are reflected in the
financial statements are those of Winston and are recorded at the historical cost basis of Winston.
As a result of the Merger, there was a change in control of the Company. The Company will
continue to be a "smaller reporting company," as defined under the Securities Exchange Act of 1934,
as amended, following the Merger. Because the acquisition was accounted for as a reverse merger,
there was neither goodwill recognized nor any adjustments to the book value of the net assets of
Winston that would affect the Pro Forma Statements of Operations.
NOTE B — Adjustments
1.
The decrease in cash and a corresponding charge to equity represents a $250,000
transaction fee payable to Lazard Freres & Co. LLC upon a successful completion of the
merger.
2.
Prior to the consummation of the Merger, 4,187,413 shares of the Winston Series B
Convertible Preferred Stock, par value $0.001 per share ("Series B Preferred Stock"), were
issued to investors for $4,000,000. Of the $9,000,000 committed, Dr. Frost and other
investors purchased $5,000,000 of Winston stock and warrants on November 13, 2007, and an
additional $4,000,000 of Winston stock was purchased prior to
consummation of the Merger by Frost Gamma Investments Trust and other
investors, including Glenn L. Halpryn, a director and a former
officer of the Company, and
Noah Silver, a former officer
and director of the Company.
3.
Under the terms of the Merger Agreement, at the closing of the Merger, each common
share of Winston will be converted into approximately 17.65 shares of the Company's common
stock. In addition, Winston's Series A Preferred Stock and Series B Preferred Stock will
be converted to 101,849 shares of the Company's Series A Convertible Preferred Stock and
73,332 shares of the Company's Series B Convertible Preferred Stock, respectively, at an
exchange ratio of .01751238.
4.
Weighted average shares outstanding. The number of weighted average shares is
comprised of Getting Ready Corporation's number of weighted shares outstanding as of June
30, 2008 and December 31, 2007 and the conversion (17.65101 to 1) of Winston's weighted
average shares outstanding for the same period.
24
Table of Contents
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
THE FOLLOWING DISCUSSION SHOULD BE READ TOGETHER WITH THE INFORMATION CONTAINED IN THE
FINANCIAL STATEMENTS AND RELATED NOTES INCLUDED ELSEWHERE IN THIS CURRENT REPORT ON FORM 8-K.
This discussion should be read in conjunction with the audited consolidated financial
statements of Winston Laboratories, Inc. for the fiscal years ended December 31, 2007 and December
31, 2006 and unaudited consolidated financial statements of Winston Laboratories, Inc. for the
three and six month periods ended June 30, 2008 and June 30, 2007. This discussion contains
forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as
amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities
Litigation Reform Act of 1995, including statements regarding Winston's expected financial position
and business and financing plans. These statements involve risks and uncertainties. Winston's
actual results could differ materially from the results described in or implied by these
forward-looking statements as a result of various factors, including those discussed below and
elsewhere in this Current Report on Form 8-K, particularly under the headings "Forward Looking
Statements" and Risk Factors."
Overview
Winston is the successor to a research and development partnership, Cisco Ltd. ("Cisco")
formed in 1992 to develop a specific novel neuroactive compound, civamide. Civamide was discovered
and patented by Joel E. Bernstein, M.D., the managing general partner of Cisco and subsequently,
the founder and Chief Executive Officer, or CEO, of Winston. In 1997, Cisco became Winston
Laboratories LLC, which in 1998 was converted to a "C" Corporation. Winston's initial operating
funds were obtained from a rights offering in 1997 and a private equity placement in 1998. In
1999, Winston sold approximately 19% of its common stock to Bioglan Pharma Plc ("Bioglan") for $25
million; in 2004, Bioglan's stock ownership was subsequently reduced below 7% when it did not
participate in Winston's offering of additional shares of its common stock. In September 2007,
Winston purchased all of Bioglan's outstanding ownership in Winston from Bioglan for $225,000.
Subsequent to this transaction, Winston retired all of the shares purchased from Bioglan.
In 2000, Winston established a subsidiary, Rodlen Laboratories, Inc. ("Rodlen," formerly
Oncovir Corporation). In 2001, Bioglan purchased approximately 18% of Rodlen's outstanding common
stock for $13.3 million. In 2002, Bioglan's stock ownership in Rodlen was reduced below 3% as a
result of Bioglan's election not to participate in a Rodlen rights offering. The proceeds of this
rights offering were used to acquire the Zostrix
®
line of over-the-counter topical analgesics.
Rodlen marketed the Zostrix
®
product line until July 2005, when it sold the product to Hi-Tech
Pharmacal Co. ("Hi-Tech"). In October 2004, Rodlen launched the marketing and sale of another
topical analgesic, Axsain
®
, which it promoted to physicians and other health-care professionals.
In June 2005, based on disappointing sales, Rodlen sharply reduced promotion of the Axsain
®
product
and in March 2006, Rodlen discontinued selling this product altogether. In February 2007, Rodlen
licensed certain technology underlying the Axsain
®
product to Hi-Tech.
Rodlen operated as a "virtual company" with no employees of its own. From inception to
September, 2007, Rodlen was consolidated into the financial statements of Winston. In September
2007, Winston purchased all of the then outstanding ownership in Rodlen from Bioglan for $10,000.
Subsequent to this transaction, all of the shares purchased from Bioglan were retired. On
September 21, 2007, Rodlen was merged into Winston.
25
Table of Contents
In 2005, Winston established a wholly owned UK subsidiary, Winston Laboratories Limited ("UK
Ltd."). UK Ltd. was established for the purpose of conducting work with European drug regulatory
authorities, who typically require a European entity. UK Ltd. has no employees or material assets.
The consolidated entity of Winston, Rodlen, and UK Ltd. is hereinafter referred to as "Winston."
In November 2005, Winston spun off Gideon Pharmaceuticals, Inc. ("Gideon"). Gideon received
certain early-stage technologies not being actively developed by Winston, and all Winston
shareholders were offered the opportunity to purchase Gideon shares on a pro-rata basis. Not all
Winston shareholders purchased Gideon shares, but overlap in the shareholders of Winston and Gideon
is substantial. Gideon is an independent entity and not a subsidiary of Winston; however, as part
of the spin-off process, Winston did end up purchasing and maintaining a minority stake in Gideon
(approximately 10.7% ownership), for the purpose of preserving the rights of those option holders
in Winston prior to the Gideon spin-off. In particular, option holders in Winston prior to the
spin off of Gideon have, upon exercise of their Winston options, an opportunity to purchase a
pro-rata allotment of Gideon shares. During 2006, Winston undertook certain development projects
on behalf of Gideon, which were billed back to Gideon at cost. As of December 31, 2006, Winston
had a receivable due from Gideon of $2,642, which was included in related party receivables on
Winston's balance sheet and was subsequently collected in full in 2007. In October 2007, in
preparation for signing a merger agreement with the Company, Winston's Board of Directors voted to
distribute the shares of Gideon owned by Winston on behalf of the Winston option holders on a
pro-rata basis to such option holders. As of December 31, 2007, Winston had no ownership stake in
Gideon.
On January 30, 2006, Winston licensed to Sirius Laboratories, Inc., a company founded by Dr.
Bernstein, the rights to market products containing anthralin owned by Winston, including a
marketed 1% anthralin cream trade name Psoriatic
®
. The license had a two-year term which expired
on January 31, 2008 and provided for the following key terms: (i) a 25% royalty on net sales; (ii)
a $300,000 minimum royalty; and (iii) a $750,000 purchase option.
This agreement was assigned by Sirius to DUSA Pharmaceuticals, Inc. following DUSA's purchase
of Sirius. This license has been extended until September 30, 2008 by mutual written consent of
the parties and the extension provides for continuing of the 25% royalty on net sales but
eliminates the minimum royalty and purchase option.
On August 14, 2007, Winston entered into an exclusive technology license agreement with
Exopharma, Inc., now known as Elorac, Inc. ("Exopharma"). Under the terms of the license agreement,
Winston granted Exopharma an exclusive license to the proprietary rights of certain products (
£
0.025% civamide with the stated indication of psoriasis of the skin). In exchange, Exopharma paid
Winston a license fee of $100,000 and is required to pay a 9% royalty on sales of the product. In
addition, the agreement requires Exopharma to pay Winston a non-refundable
payment of $250,000 upon approval of a Marketing Authorization by Exopharma on the product(s)
described in the agreement.
26
Table of Contents
On September 19, 2007, Winston entered into an exclusive technology license agreement with
Opko Ophthalmologics, LLC, ("OPKO"). Under the terms of the license agreement, Winston granted OPKO
an exclusive license to the proprietary rights of certain products (pharmaceutical compositions or
preparations containing the active ingredient civamide in formulations suitable for use in the
therapeutic or preventative treatment of ophthalmic conditions in humans). In exchange, OPKO paid
Winston a license fee of $100,000 and is required to pay a 10% royalty on sales of the product. In
addition, the agreement requires OPKO to pay Winston a non-refundable payment of $5,000,000 upon
approval of a marketing authorization by OPKO on the product described in the agreement. Phillip
Frost, M.D. is the Chairman and Chief Executive Officer of OPKO's parent company, Opko Health, Inc.
("Opko Health"), and as of September 24, 2008 was the beneficial owner of 47.3% of Opko Health's
common stock. Dr. Frost is also the beneficial owner of 5,900,827 shares of (1.34%) the Company's
common stock, 99,812 shares of the Company's Series A Convertible Preferred Stock, 70,238 warrants
to purchase Series A Convertible Preferred Stock, and 36,666 shares of the Company's Series B
Convertible Preferred Stock. Furthermore, Subbarao Uppaluri, Ph.D., the Senior Vice President —
Chief Financial Officer of Opko Health, is the beneficial owner of 659,596 shares (0.39%) of the
Company's common stock, 1,019 shares of the Company's Series A Convertible Preferred Stock and 717
warrants to purchase Series A Convertible Preferred Stock and is a director of the Company.
Winston does not currently market any products. In the past, Winston has marketed certain
products, for the purpose of using the proceeds to help fund its research programs. Winston is
engaged in the development of innovative products for managing and alleviating pain. After
discontinuing the Zostrix
®
and Axsain
®
product lines, Winston has devoted most of its resources to
research and development, and these activities constitute the core of its business purpose.
Winston estimates that it has spent approximately 16,000 hours per year, during each of the years
2006 and 2007 on research and development activities. Winston has incurred significant operating
losses since the initiation of operations in 1997 and as of December 31, 2007, had an accumulated
deficit of approximately $41.6 million.
Research and Development, or R&D, expenses include costs associated with manufacturing,
formulation and development of Winston's product candidates. Also included in R&D expenses are
clinical trial costs, such as investigator payments, institutional review board costs, laboratory
costs, supplies, fees paid to contractors and travel. Salaries of R&D personnel are also included
in R&D expenses.
Winston's selling, general, and administrative, or SG & A, expenses consist primarily of
salaries and related expenses of non-R&D employees, facilities expenses, insurance, travel,
consulting fees, legal and professional fees, and general corporate expenses.
27
Table of Contents
Results of Operations
For the three months ended June 30, 2008 compared to three months ended June 30, 2007
Three Months Ended June 30,
2008
2007
REVENUES
$
20,113
$
75,000
EXPENSES
Research and development
1,123,138
326,827
General and administrative
348,904
236,390
Depreciation and amortization
2,037
3,299
Total Operating Expenses
1,474,079
566,516
Loss from Operations
(1,453,966
)
(491,516
)
Interest income
17,329
15,159
Other income
806
522
Other income (expenses)
18,135
15,681
Loss before income taxes
(1,435,831
)
(475,835
)
Income Taxes
Current
—
—
Deferred
—
—
Income Taxes
—
—
NET LOSS
$
(1,435,831
)
$
(475,835
)
License and royalty revenue for the three months ended June 30, 2008 decreased approximately
$55,000 to approximately $20,000 from approximately $75,000 for the same period in 2007. The
decrease is primarily due to a $75,000 minimum quarterly license revenue payment from DUSA received
in the second quarter of 2007 and $4,400 received from DUSA for the same period in 2008. The
$75,000 minimum quarterly license revenue payment was eliminated by mutual written consent of DUSA
and Winston, according to the extension agreement dated January 29, 2008. In addition,
approximately $15,000 received from Hi-Tech accounted for the remainder of license revenue for the
three month period ending June 30, 2008.
28
Table of Contents
R&D for the three months ended June 30, 2008 increased by approximately $796,000 to $1,123,000
from $327,000 for the same period in 2007, as a result of increased spending for the development of
oral capsule and patch.
Selling, general and administrative expenses for the three months ended June 30, 2008
increased by approximately $113,000 to approximately $349,000 from approximately $236,000 for the
same period in 2007. The increase is due largely to increased legal and accounting fees incurred
in preparation for the Merger with the Company.
Interest income increased by approximately $2,000 to approximately $17,000 for the three
months ended June 30, 2008 for the same period in 2007 due to increased amounts of funds on
deposit.
29
Table of Contents
Results of Operations
For the six months ended June 30, 2008 compared to six months ended June 30, 2007
Six Months Ended June 30,
2008
2007
REVENUES
$
99,993
$
450,000
EXPENSES
Research and development
2,131,668
501,210
General and administrative
790,214
496,139
Depreciation and amortization
3,706
7,403
Total Operating Expenses
2,925,588
1,004,752
Loss from Operations
(2,825,595
)
(554,752
)
Interest income
57,694
19,552
Other income
1,183
845
Other income (expenses)
58,877
20,397
Loss before income taxes
(2,766,718
)
(534,355
)
Income Taxes
Current
—
—
Deferred
—
—
Income Taxes
—
—
NET LOSS
$
(2,766,718
)
$
(534,355
)
License and royalty revenue for the six months ended June 30, 2008 decreased approximately
$350,000 to approximately $100,000 from $450,000 for the same period in 2007. The decrease is
primarily due to a $300,000 license revenue payment from Hi-Tech received in 2007 that was not
received for the same period in 2008. The decrease was also due to a change in terms of the
License Agreement with DUSA that included a $25,000 monthly minimum payment received in 2007 that
was not received for same period in 2008.
30
Table of Contents
R&D for the six months ended June 30, 2008 increased by approximately $1,631,000 to
approximately $2,132,000 from $501,000 for the same period in 2007, as a result of increased
spending on the various European regulatory filings, carcinogenicity study for the civamide cream
as well as spending on the development of oral capsule and patch.
Selling, general and administrative for the six months ended June 30, 2008 increased by
approximately $294,000 to approximately $790,000 from approximately $496,000 for the same period in
2007. The increase is due largely to increased legal and accounting fees incurred in preparation
for the Merger with the Company.
Interest income increased by approximately $38,000 to approximately $58,000 for the six months
ended June 30, 2008 for the same period in 2007 due to increased amounts of funds on deposit.
31
Table of Contents
For the Year Ended December 31, 2007 compared to Year Ended December 31, 2006
Year Ended December 31,
2007
2006
REVENUE
Royalty revenue
$
800,000
$
294,453
EXPENSES
Research and development
1,939,429
1,279,672
General and administrative
1,281,612
1,154,309
Depreciation and amortization
10,087
15,563
Total operating expenses
3,231,128
2,449,544
Loss from operations
(2,431,128
)
(2,155,091
)
Interest income
42,733
76,439
Other income
5,338
86,548
48,071
162,987
Loss from continuing operations before minority
interest and income taxes
(2,383,057
)
(1,992,104
)
Minority interest in loss of subsidiary
—
(28,105
)
Loss from continuing operations before income taxes
(2,383,057
)
(2,020,209
)
Income Taxes
Current
—
—
Deferred
—
—
—
—
Net loss from continuing operations
(2,383,057
)
(2,020,209
)
Discontinued operations (Note J)
Gain on sale of Zostrix
®
product line, net of tax
—
675,000
Net loss from discontinued operations, net of tax
—
(27,960
)
Income from discontinued operations
—
647,040
NET LOSS
$
(2,383,057
)
$
(1,373,169
)
License and royalty revenue for the year ended December 31, 2007 increased approximately
$506,000 to approximately $800,000 from approximately $294,000 for the year ended December 31,
2006. The increase is due to the licensing agreements with Hi-Tech, Exopharma and OPKO which did
not exist in 2006.
R&D expenses increased approximately $660,000 to approximately $1,940,000 in 2007, from
approximately $1,280,000 in 2006 as a result of increased spending on the various European
regulatory filings as well as a carcinogenicity study for the Civamide cream.
32
Table of Contents
Selling, general and administrative expenses increased approximately $128,000 to approximately
$1,282,000 in 2007, from approximately $1,154,000 in 2006 as a result of compensation expenses
related to the accelerated vesting of stock options.
Interest income decreased to approximately $33,000 in 2007, from approximately $76,000 in 2006
due to a reduced amount of funds on deposit.
Winston also realized approximately $647,000 in income from discontinued operations in 2006,
mainly from fulfilling the conditions for receipt of an escrow payment associated with the sale of
the Zostrix
®
product line to Hi-Tech.
Liquidity and Capital Resources
Since Winston's inception, it has financed its operations through the private placement of
equity securities and, to a lesser extent, through licensing revenues and product sales. Through
June 30, 2008, Winston has raised approximately $50 million from the private placement of Winston
and Rodlen common shares.
While the focus going forward is to improve our financial performance, we expect operating
losses and negative cash flow to continue for the foreseeable future. Winston anticipates that its
losses may increase from current levels because it expects to incur significant additional costs
and expenses related to being a public company, continuing its research and development activities,
filing with regulatory agencies (e.g. FDA) as well as developing new compounds and products,
advertising, marketing and promotional activities, all of which will involve employing additional
personnel as our business expands. Our ability to become profitable depends on our ability to
generate and sustain substantially higher revenue through new license and distribution agreements
while maintaining reasonable expense levels.
The bulk of Winston's expenditures are for operating activities. Winston's net cash used in
operating activities was $2 million for the year ended December 31, 2006, and $1.9 million for the
year ended December 31, 2007. These amounts were used to fund its operating losses for the
periods, adjusted for non-cash expenses and changes in operating assets and liabilities.
Winston's capital expenditures have historically been a small fraction of its overall
expenses, since it outsources manufacturing and other capital-intensive functions. The highest
annual amount of capital expenditures was $56,000 in the year ended December 31, 2004, reflecting
expenditures on computer equipment, phone equipment and furniture to support the field force and
increased headcount associated with the Axsain
®
launch. Winston does not anticipate making
significant capital expenditures in the near future.
Historically, Winston's investing activities have included the acquisition or purchase of
product rights, such as Psoriatec
®
in 2001 and Zostrix
®
in 2002, the divestment of product rights,
such as Zostrix
®
in 2005, and the acquisition or redemption of holdings in other companies, such as
the preferred shares in Ovation that Winston redeemed in 2005.
On November 13, 2007, Winston issued 5,815,851 shares of its Series A Preferred Stock and
warrants to purchase 4,092,636 shares of its Series A Preferred Stock in a private placement for an
aggregate purchase price of $5.0 million. Immediately prior to consummation of the
Merger, Winston issued 4,187,413 shares of its Series B Preferred Stock in a private placement
for an aggregate purchase price of $4.0 million. All of the Winston shares and warrants issued in
these transactions were exchanged for shares of Series A and B Preferred Stock of the Company and
warrants to purchase the Company's Series A Preferred Stock pursuant to the Merger Agreement.
33
Table of Contents
As of June 30, 2008, Winston had cash and cash equivalents of approximately $2.0 million. On
September 25, Winston received $4 million in a private placement in exchange for 4,187,413 shares
of its Series B Preferred Stock. Although we expect that our available funds and funds generated
from our operations will be sufficient to meet our anticipated needs for 12 months, we will need
and will seek to obtain additional capital to continue to operate and grow our business. Our cash
requirements may vary materially from those currently anticipated due to changes in our operations,
including our research and development, expansion of our personnel and the timing of our receipt of
license revenues. Our ability to obtain additional financing in the future will depend in part upon
the prevailing capital market conditions, as well as our business performance. There can be no
assurance that we will be successful in our efforts to arrange additional financing on terms
satisfactory to us or at all.
Off Balance Sheet Arrangements
Winston does not have any off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition, changes in financial condition,
revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Winston leases its facilities and certain equipment under operating leases that expire through
2010. Future minimum operating lease payments at December 31, 2007, are as follows:
2008
$
68,373
2009
13,224
2010
2,708
Rental expense for the years ended December 31, 2007 and 2006 was $123,121 and $143,197,
respectively.
Winston enters into contracts in the normal course of business with clinical research
organizations and clinical investigators, for third party manufacturing and formulation
development. These contracts generally provide for termination with notice, and therefore,
Winston's management believes that Winston's non-cancelable obligations under these agreements are
not material.
Critical Accounting Policies and Estimates
The critical accounting policies and procedures below should be read in conjunction with
Winston's audited financial statements and the notes thereto for the year ended December 31, 2007.
Below are Winston's critical accounting policies and procedures.
34
Table of Contents
Revenue Recognition
— Winston records revenue from product sales when title and risk of
ownership have been transferred to the customer, typically upon delivery. Royalty revenues are
recognized when determinable, in accordance with the terms of the license agreement, generally
upon receipt of cash payment which is not refundable. Since Winston is not able to forecast
product sales or attainment of milestones by licensees, royalty payments that are based on product
sales or attainment of milestones by licensees are not determinable until the licensee has
completed their computation of the royalties due and/or remitted cash payment to Winston.
Income Taxes
— Winston files a consolidated tax return that includes all subsidiaries.
Deferred income taxes are recognized for the tax consequences in future years of differences
between the tax bases of assets and liabilities and their financial reporting amounts at each
year-end, based on enacted tax laws and statutory tax rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances are established when
necessary to reduce deferred income tax assets to the amount expected to be realized.
Stock-Based Compensation
— In December 2004, the Financial Accounting Standards Board ("FASB")
issued Statement No. 123 (revised 2004), "Share-Based Payment" ("SFAS 123(R)"). SFAS 123(R)
requires that the compensation cost relating to share-based payment transactions be recognized in
financial statements, based on the fair value of the instruments issued. SFAS 123(R) covers a wide
range of share-based compensation including stock options, restricted stock, performance-based
awards, share appreciation rights and employee share purchase plans. SFAS 123(R) replaces
Statement No. 123 ("SFAS 123"), "Accounting for Stock-Based Compensation," and supersedes
Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees." As
originally issued in 1995, SFAS 123 established as preferable the fair-value-based method of
accounting for share-based payment transactions. However, SFAS 123 permitted entities to continue
to apply the guidance in Opinion No. 25, with appropriate footnote disclosure. Prior to January 1,
2006, Winston accounted for stock-based compensation arrangements using the intrinsic value method
in accordance with the provisions of APB Opinion No. 25 and in compliance with the disclosure
provisions of SFAS 123. Winston adopted SFAS 123(R) as of January 1, 2006. Since Winston had
previously used the minimum value method for recognition and disclosure, SFAS 123(R) has been
applied prospectively for 2006. Hence, new awards of options, as well as any options modified,
repurchased, or canceled after January 1, 2006 are accounted for under the provisions of SFAS
123(R), whereas awards outstanding before that date continue to be accounted for using the
accounting provisions originally applied to these awards. In conjunction with the Merger,
Winston's Board of Directors voted to accelerate the vesting of all unvested stock options as of
October 30, 2007. Accordingly, the compensation expense associated with the acceleration of these
stock options has been accounted for under FAS 123(R) and reflected in the statement of operations
for the year ended December 31, 2007.
Research and Development Costs
— Research and development costs are charged to operations as
incurred. Research and development costs, as presented herein, include the salaries and related
expenses of personnel engaged in activities directly related to research and development
activities, including administrative personnel working in the clinical and operations areas of
Winston. All other salaries have been included in general and administrative expense. Research
and development costs totaled $1,939,429 and $1,279,672 in 2007 and 2006, respectively, and
$2,131,668 and $501,210 for the six months ended June 30, 2008 and 2007, respectively.
35
Table of Contents
Recent Accounting Pronouncements
In July 2006, the Financial Accounting Standards Board ("FASB") issued Interpretation No. 48
("FIN 48"), Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement 109.
FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's
financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. FIN
48 prescribes a comprehensive model for recognizing, measuring, presenting and disclosing in the
financial statements tax positions taken or expected to be taken on a tax return. If there are
changes in net assets as a result of application of FIN 48 these will be accounted for as an
adjustment to the opening balance of retained earnings. Additional disclosures about the amounts
of such liabilities will be required also. In February 2008, the FASB delayed the effective date
of FIN 48 for certain nonpublic enterprises to annual financial statements for fiscal years
beginning after December 15, 2007. The adoption of FIN 48 did not have any material impact on the
Company's tax positions.
In September 2006, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 157, Fair Value Measurements ("SFAS No. 157"). SFAS No. 157 defines fair
value, establishes a framework for measuring fair value, and expands disclosures about fair value
measurement. SFAS No. 157 also emphasizes that fair value is a market-based measurement, not an
entity-specific measurement, and sets out a fair value hierarchy with the highest priority being
quoted prices in active markets. Under SFAS No. 157, fair value measurements are disclosed by
level within that hierarchy. This Statement is effective for fiscal years beginning after November
15, 2007. The adoption of SFAS 157 did not have a material impact on the Company's fair value
measurements.
In February 2007, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial Liabilities
("SFAS No. 159"). SFAS No. 159 permits companies to elect to follow fair value accounting for
certain financial assets and liabilities in an effort to mitigate volatility in earnings without
having to apply complex hedge accounting provisions. The standard also establishes presentation
and disclosure requirements designed to facilitate comparison between entities that choose
different measurement attributes for similar types of assets and liabilities. SFAS No. 159 is
effective for fiscal years beginning after November 15, 2007. The adoption of SFAS 159 did not
have any impact on the Company's results of operations and financial position.
In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141(R),
"Business Combinations" (FAS 141(R)). This Statement provides greater consistency in the accounting
and financial reporting for business combinations. FAS 141(R) establishes new disclosure
requirements and, among other things, requires the acquiring entity in a business combination to
record contingent consideration payable, to expense transaction costs, and to recognize all assets
acquired and liabilities assumed at acquisition-date fair value. This standard is effective for the
beginning of Winston's first fiscal year beginning after December 15, 2008. FAS 141(R) will have a
significant impact on the accounting for future business combinations after the effective date and
will impact financial statements both on the acquisition date and subsequent periods.
36
Table of Contents
In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160,
"Noncontrolling Interests in Consolidated Financial Statements" (FAS 160). FAS 160 amends
Accounting Research Bulletin No. 51, "Consolidated Financial Statements", to establish accounting
and reporting standards for the minority or noncontrolling interests in a subsidiary or variable
interest entity and for the deconsolidation of a subsidiary or variable interest entity. Minority
interests will be recharacterized as noncontrolling interests and classified as a component of
equity. It also establishes a single method of accounting for changes in a parent's ownership
interest in a subsidiary and requires expanded disclosures. FAS 160 is effective for the beginning
of Winston's first fiscal year beginning after December 15, 2008, and requires retroactive adoption
of the presentation and disclosure requirements for existing minority interests. Winston does not
expect the adoption of this standard to have a material impact on its financial position or results
of operations.
In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and
Hedging Activities — An Amendment of FASB Statement No. 133" (or SFAS 161). This statement revises
the requirements for the disclosure of derivative instruments and hedging activities that include
the reasons a company uses derivative instruments, how derivative instruments and related hedged
items are accounted under SFAS 133 and how derivative instruments and related hedged items affect a
company's financial position, financial performance and cash flows. SFAS 161 will be effective in
the fourth quarter of fiscal 2009. The Company is currently evaluating the impact of adopting SFAS
161 and does not anticipate a material effect.
37
Table of Contents
RISK FACTORS
This Report includes "forward-looking statements" within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended, including, in particular, certain statements about our
plans, strategies and prospects. Although we believe that our plans, intentions and expectations
reflected in or suggested by such forward-looking statements are reasonable, we cannot assure you
that such plans, intentions or expectations will be achieved. Important factors that could cause
our actual results to differ materially from our forward-looking statements include those set forth
in this Risk Factors section. All forward-looking statements attributable to us or any persons
acting on our behalf are expressly qualified in their entirety by the cautionary statements set
forth below.
If any of the following risks, or other risks not presently known to us or that we currently
believe to not be significant, develop into actual events, then our business, financial condition,
results of operations, cash flows or prospects could be materially adversely affected.
As used in this section, the terms "we," "our" and "us" refer to the operations of Winston
historically, as combined with the Company on a going-forward basis.
Risks Related to Our Company and its Business
We may be unable to fund our working capital needs
.
We have incurred significant operating losses since the initiation of operations in 1997 and,
as of June 30, 2008, had an accumulated deficit of approximately $44.3 million. In the near term,
we do not expect our revenues to be able to fund our expenditures on working capital and research
and development. As a result, our future is dependent upon our ability to obtain financing until
such point as the development of our products yields profitable operations. In the event that we
fail to raise sufficient capital, we may not be able to fund our research and development programs,
we may have to reduce or cease our business operations, and our stockholders may lose their
investment.
We may need to raise additional capital, which may not be available on acceptable terms, if at all.
We will need to raise additional capital during the next several years, to continue and expand
our research and development programs, to increase our sales and marketing activities, to acquire
or license new products and technologies in our therapeutic area, to extend and protect our
intellectual property assets, to make expenditures on physical and human capital needed to support
our operations or for other purposes.
To raise such capital, we may utilize a variety of channels, including the public equity
markets, additional private equity financings, collaborative arrangements and private debt
financings or the sale of certain property rights. If additional capital is raised through the
issuance of equity securities, our existing stockholders will experience dilution, and the new
securities may have rights, preferences or privileges senior to those of other holders. If we
raise additional capital through the issuance of debt securities, the debt securities may have
rights, preferences and privileges senior to those of holders of equity securities, and the terms
of that debt could impose restrictions on our operations.
38
Table of Contents
We cannot be assured that additional capital will be available on acceptable terms, if at all.
If adequate funds are not available, we may have to:
•
delay, reduce the scope of or eliminate one or more of our research and
development programs;
•
reduce or curtail the extent of our sales, marketing and promotional
activities; or
•
license or sell the rights to certain of our technologies or product candidates
on terms that are less favorable than might otherwise prevail.
We may be exposed to litigation relating to claims arising out of our products and operations that
could adversely affect our earnings.
From time to time, we may be exposed to litigation arising out of our products and operations.
The process of resolving matters through litigation is inherently uncertain, and it is possible
that the resolution of such matters will adversely affect us, our results of operations and our
financial condition. As of September 20, 2008, we are not engaged in any legal proceedings that
are expected individually or in the aggregate to have a material adverse effect on our financial
condition.
In order to become profitable and grow our business, we must successfully develop and commercialize
our new products. If we are unsuccessful in these endeavors, our ability to grow will be severely
limited.
Our future revenues and profitability depend, to a significant extent, on our ability to
commercialize new branded pharmaceutical products successfully. In order to be marketable, such
products must receive the necessary regulatory approvals. The products we are currently developing
may or may not receive the requisite regulatory approvals to permit their sale in the United States
and other important markets, such as Europe, Japan and Canada. The process of discovering,
developing, and commercializing new pharmaceuticals is costly, time-consuming, and unpredictable.
As a result, there is no assurance that any of our products will be successful in reaching the
market or in achieving significant market penetration, even if commercialized.
As we evolve from a company primarily involved in development to a company also involved in
commercialization, we may encounter difficulties in managing our growth and expanding our
operations successfully.
As we advance our product candidates through clinical trials, we will need to expand our
development, regulatory, manufacturing, marketing and sales capabilities or contract with third
parties to provide these capabilities for us. As our operations expand, we expect that we will
need to manage additional relationships with such third parties, as well as additional
collaborators and suppliers. Maintaining these relationships and managing our future growth will
impose significant added responsibilities on members of our management. We must be able to: manage
our development efforts effectively; manage our clinical trials effectively; hire, train and
integrate additional management, development, administrative and sales and marketing personnel;
improve our managerial, development, operational and finance systems; and expand our facilities,
all of which may impose a strain on our administrative and operational infrastructure.
39
Table of Contents
Furthermore, we may acquire additional businesses, products and/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. Our future financial performance
will depend, in part, on our ability to manage any future growth effectively and our ability to
integrate any acquired businesses. We may not be able to accomplish these tasks, and our failure
to accomplish any of them could prevent us from successfully growing our company.
We have a relatively small number of compounds under development, so the failure of any compound in
clinical trials could significantly impact our future potential for growth.
At present, our principal development programs involve two active pharmaceutical ingredients
in a variety of different formulations. If any of these compounds is determined to be unsafe or
ineffective in pain control or in other medical applications, our future sales, profitability, and
cash flows could be materially adversely affected.
If we are unable to demonstrate the safety and efficacy of our products through clinical trials, we
may be unable to commercialize our products.
Prior to obtaining regulatory approvals for the sale of a new prescription product, we must
demonstrate through preclinical studies and clinical trials that the product is safe and effective
for its intended use. The outcome of clinical trials is uncertain, and even promising results from
early-phase clinical studies may not accurately predict results in later, large-scale trials.
Failure to demonstrate safety and efficacy of our products would prevent us from obtaining
regulatory approvals that may be needed prior to commercialization.
Many factors can adversely affect the outcome of clinical trials. For instance, the rate of
patient enrollment sometimes delays completion of clinical studies. There is considerable
competition to enlist patients for clinical trials of products, and such competition may slow
clinical development of products, increase development costs and delay regulatory approvals.
Also, we rely on third-party independent investigators and other parties to help conduct our
clinical trials. To the extent that third-party expert clinical investigators, contractors or
clinical research organizations do not meet prescribed deadlines or follow the appropriate
regulatory guidelines, we may not be able to obtain required approvals and commercialize our drug
candidates on a timely basis, if at all.
The pharmaceutical industry is heavily regulated, which creates uncertainty about our ability to
bring new products to market.
Governmental authorities, principally the FDA in the United States, impose substantial
requirements on the testing, manufacture, labeling, sale, distribution, marketing, advertising and
promotion of pharmaceutical products.
The process of achieving FDA approval on an NDA is time-consuming, costly and complex. The
drug development and NDA approval process typically takes many years and usually costs tens of
millions of dollars, though the requisite time and expenses vary substantially depending on the
nature of the pharmaceutical product involved and its intended use. The FDA
may also act to change existing regulations or adopt new regulations that could delay the
approval of our new products, impose additional costs on our development programs, or negatively
impact the marketing of any products being marketed by us.
40
Table of Contents
Even if the FDA approves the NDA for a particular drug, it may not include all the uses for
which we seek to market the product. The FDA actively enforces regulations prohibiting marketing
of products for non-indicated uses and may impose significant penalties for inappropriate
marketing.
We cannot be assured that the FDA or other regulatory agencies will approve any of our
products on a timely basis, if at all, or that, if granted, regulatory approval will not entail
restricting the indicated uses for which we may market our products, which could limit the
potential market for the products. Any failure to obtain regulatory approval or delays in
obtaining such approval could adversely impact our ability to market our products and, thereby, to
generate revenue, income, and cash flow.
The FDA regulates the manufacturing facilities and procedures of all pharmaceutical products
made in the United States or for sale in the United States. Such facilities must be registered
with the FDA and all products made in such facilities must be manufactured in accordance with
"current good manufacturing practices" (cGMPs) as stipulated by the FDA. Compliance with cGMP
regulations is costly, and even though we use third-party manufacturers, we are responsible for
ensuring that our products meet the requirements of cGMPs. The FDA periodically inspects
third-party manufacturing facilities to ensure compliance with cGMPs, and it may impose substantial
penalties, including recall or withdrawal of product approvals, if regulatory standards are not
met. Our business could be materially adversely impacted if the FDA determined that the approved
manufacturing facility for a particular drug was not in compliance with cGMPs.
Failure to obtain regulatory approval in foreign jurisdictions will prevent us from marketing our
products abroad.
We intend to market our products in international markets. In order to market our products in
the European Community and many other foreign jurisdictions, we must obtain separate regulatory
approvals. The approval procedures vary among countries and can involve additional testing, and
the time required to obtain approval may differ from that required to obtain FDA approval. The
foreign regulatory approval process may include all of the risks associated with obtaining FDA
approval, in addition to other risks. We may not obtain foreign regulatory approvals on a timely
basis, if at all. Importantly, approval by the FDA does not ensure approval by regulatory
authorities in other countries, and approval by one foreign regulatory authority does not ensure
approval by regulatory authorities in other foreign countries or by the FDA. We may not be able to
file for regulatory approvals and may not receive necessary approvals to commercialize our products
in any market. Failure to obtain such regulatory approval would have a material adverse effect on
our business, financial condition and results of operations.
41
Table of Contents
Our current and future clinical trials may not begin on time or at all, and may not be completed on
schedule or at all.
In order to test our proposed products, we will need to work closely with the FDA to outline
necessary protocol design, as well as the appropriate regulatory pathways for the approval of these
products. The timing and approval of our protocol designs may be delayed as the FDA may be slow in
evaluating our protocols or may impose additional requirements.
Moreover, clinical trials may require the enrollment of large numbers of patients, and
suitable patients may be difficult to identify and recruit. Patient enrollment in clinical trials
and completion of patient follow-up in clinical trials depends on many factors, including the size
of the patient population, the nature of the trial protocol, the proximity of patients to clinical
sites and eligibility criteria for the study of patient compliance. For example, patients may be
discouraged from enrolling in our clinical trials if the trial protocol requires them to undergo
extensive procedures to assess the effectiveness or accuracy of our proposed products, or they may
be persuaded to participate in contemporaneous trials of competitive products. Delays in patient
enrollment or failure of patients to continue to participate in a study may cause an increase in
costs and delays or result in the failure of the trial. In addition, the results of previous
clinical trials may not be predictive of future results.
Independent clinical investigators and contract research organizations that we engage to conduct
our clinical trials may not be diligent, careful or timely. In the past, we have encountered such
delays.
We will depend on independent clinical investigators to conduct our clinical trials. Contract
research organizations may also assist us in the collection and analysis of data. These
investigators and contract research organizations will not be our employees and we will not be able
to control, other than by contract, the amount of resources, including time, that they devote to
products that we develop. If independent investigators fail to devote sufficient resources to the
development of product candidates, or if their performance is substandard, it will delay the
approval and commercialization of any products that we develop. In the past, we have experienced
such delays. Further, the FDA requires that we comply with standards, commonly referred to as good
clinical practice, for conducting, recording and reporting clinical trials to assure that data and
reported results are credible and accurate and that the rights, integrity and confidentiality of
trial subjects are protected. If our independent clinical investigators and contract research
organizations fail to comply with good clinical practice, the results of our clinical trials could
be called into question and the clinical development of our product candidates could be delayed.
Failure of clinical investigators or contract research organizations to meet their obligations to
us or comply with good clinical practice procedures could adversely affect the clinical development
of our product candidates and harm our business.
42
Table of Contents
There is no guarantee that, if approved, our products will gain market acceptance, and this may
negatively impact our revenues, profitability, and cash flows.
Even after obtaining the necessary regulatory approvals, our products may or may not be
favorably received in the marketplace. A number of factors may limit the market acceptance of our
products, including but not limited to:
•
the timing of regulatory approvals relative to those of competitive products;
•
any restrictions on the use or marketing of our products;
•
access to third-party reimbursement for our products;
•
the availability of alternative products; and
•
the performance of our sales and marketing initiatives or those by third-party
distributors or agents.
Due to the competitive nature of the pharmaceutical business, there is no guarantee that
approved products will necessarily earn returns commensurate with their development costs.
We face intense competition.
The pharmaceutical industry is intensely competitive, and our competitors include large, fully
integrated pharmaceutical companies, specialty pharmaceutical companies, biotechnology enterprises,
universities and public and private research institutions. Most of these entities have
substantially greater financial resources than us, so they may be able to make larger investments
in research and development, undertake more extensive marketing campaigns and achieve more
substantial economies of scale in activities, such as manufacturing and sales promotion.
Competitors may succeed in developing and commercializing products earlier than us.
Competitors may develop products or technologies that are superior to those that we are developing,
and render our product candidates or technologies obsolete or uneconomical. Competitors may
develop generic alternatives to our products, and even if such generics are not identical or
therapeutically equivalent to our products, they may capture significant market share at our
expense. Under any of these scenarios, our business, operating results and financial condition
might suffer in a material and adverse way.
We are dependent on outside contractors for the manufacture of our products.
All of our products are currently manufactured by third-party contractors pursuant to
contractual arrangements. We rely on our third-party manufacturers to maintain compliance with FDA
regulations and those of other government authorities. If these manufacturing facilities are found
to be in significant non-compliance, they could be forced to curtail operations, which could cause
supply disruptions that negatively impact our business.
Our reliance on third-party manufacturers also limits our ability to control the manufacturing
process and related costs. The production of our products must also occur in a highly controlled,
clean environment to minimize particles and other yield- and quality-limiting contaminants. In
spite of stringent quality controls, weaknesses in process control or minute impurities in
materials may cause a substantial percentage of defective products in a lot. If we are not able to
maintain stringent quality controls, or if contamination problems arise, our clinical development
and commercialization efforts could be delayed, which would harm our business and our results of
operations. Margins and profitability may be adversely impacted by increases in the
prices we pay to our contract manufacturers or by manufacturing problems that cause
interruptions in the supply of our products or necessitate recalls of marketed products.
43
Table of Contents
If we cannot obtain sufficient raw materials or finished products from key suppliers that in some
cases may be the only source of such materials or products, we may face supply disruptions and
additional manufacturing expenses that could adversely affect our business.
The FDA requires pharmaceutical manufacturers to identify in their NDAs the suppliers of all
the raw materials, especially the active pharmaceutical ingredient, as well as the suppliers of the
finished drug product. To the extent practicable, we will attempt to identify in each NDA multiple
suppliers for the active ingredient and finished drug product. However, many products and raw
materials are available only from a single source and, even where multiple sources exist, we may be
reliant on a single manufacturer for raw materials and/or finished products.
To the extent raw materials for a particular product become unavailable from an approved
supplier, any difficulties experienced by our suppliers cannot be resolved, extensions of our key
supply agreements cannot be negotiated within a reasonable time or on commercially reasonable
terms, or an existing supplier should lose its regulatory status as an approved source, we would
attempt to locate a qualified alternative. However, typically when a manufacturing source needs to
be replaced, long lead times are necessary to find another viable manufacturer and transfer the
required know-how. In such an event, we would be required to qualify a new supplier with the FDA.
Hence, replacement of any manufacturing source may be time-consuming and expensive, and may result
in an adverse impact on our business.
We currently have limited marketing staff and no sales or distribution organization. If we are
unable to develop our sales and marketing and distribution capability on our own or through
collaborations with marketing partners, we will not be successful in commercializing our product
candidates.
We currently have limited marketing and no sales or distribution capabilities. If our product
candidates are approved, we intend to establish our sales and marketing organization with technical
expertise and supporting distribution capabilities to commercialize our product candidates, which
will be expensive and time consuming. Any failure or delay in the development of our internal
sales, marketing and distribution capabilities would adversely impact the commercialization of
these products. With respect to our existing and future product candidates, we may choose to
collaborate with third parties that have direct sales forces and established distribution systems,
either to augment our own sales force and distribution systems or in lieu of our own sales force
and distribution systems. To the extent that we enter into co-promotion or other licensing
arrangements, our product revenue is likely to be lower than if we directly marketed or sold our
products. In addition, any revenue we receive will depend in whole or in part upon the efforts of
such third parties, which may not be successful. If we are unable to enter into such arrangements
on acceptable terms or at all, we may not be able to successfully commercialize our existing and
future product candidates. If we are not successful in commercializing our existing and future
product candidates, either on our own or through collaborations with one or more third parties, our
future product revenue will suffer and we may incur significant additional losses.
44
Table of Contents
We face uncertainty surrounding pharmaceutical pricing and health care reform.
Government, private insurers and other third-party payers are increasingly attempting to
contain or reduce the costs of health care, including the costs and reimbursement rates for
pharmaceuticals, through various means. If government, insurance companies and other significant
third-party payers do not provide adequate coverage and reimbursement for users of our products,
acceptance of our products in the market could be adversely affected. To the extent that health
care reform legislation or developments in the private health care system act to depress
pharmaceutical prices and reduce demand, our business, results of operations, and financial
condition could suffer.
We must protect our proprietary technologies and intellectual property rights, and we cannot be
certain of their confidentiality and protection.
In the pharmaceutical industry, it is crucial to obtain patent and trade secret protection for
new technologies, products and processes. Our success will depend, in part, on our ability to
obtain and enforce our exclusive rights to our product candidates, technologies and processes under
the patent laws of the United States and those of other countries. In addition, we must operate in
a way that does not infringe or violate the patent, trade secret and other intellectual property
rights of other parties.
We currently have a number of U.S. and foreign patents issued and pending. We cannot be sure
that we will receive patents for any of our pending patent applications or any patent applications
we may file in the future. If our current and future patent applications are not approved or, if
approved, are not upheld in a court of law if challenged, it may reduce our ability to
competitively exploit our products. Our policy is to seek patent protection and enforce the
intellectual property rights that we own and license. Litigation to establish the validity of
patents, to assert patent infringement claims against others or to defend against patent
infringement claims of others is expensive and time-consuming, even if the outcome is favorable to
us. Also, such patents may or may not provide competitive advantages for their respective products
or they may be challenged or circumvented by our competitors, in which case our ability to
commercially market these products could be diminished.
We also rely upon trade secrets, know-how and other confidential information in the operation
of our business. Although we attempt to protect our proprietary technologies and knowledge by
means of confidentiality agreements with our employees, consultants, contractors, prospective
licensees and business partners, there is no certainty that these agreements will not be breached
or that we would have adequate remedies for any breach.
45
Table of Contents
Third parties may claim that we infringe on their proprietary rights and may prevent us from
manufacturing and selling some of our products.
The manufacture, use and sale of new products that are the subject of conflicting patent
rights have been the subject of substantial litigation in the pharmaceutical industry. These
lawsuits relate to the validity and infringement of patent or proprietary rights of third parties.
We may have to defend against claims that we violated patents or proprietary rights of third
parties. This is especially true in the case of brand new products where a competitor has obtained
patents for
similar products. Litigation may be costly and time-consuming, and could divert the attention
of our management and technical personnel. In addition, if we infringe on the rights of others, we
could lose our rights to develop or manufacture products or could be required to pay monetary
damages or royalties to license proprietary rights from third parties. Although the parties to
patent and intellectual property disputes in the pharmaceutical industry have often settled their
disputes through licensing or similar arrangements, the costs associated with these arrangements
may be substantial and could include ongoing royalties. Furthermore, we cannot be certain that the
necessary license would be available to us on commercially reasonable terms, if at all. As a
result, an adverse determination in a judicial or administrative proceeding or the failure to
obtain necessary licenses could prevent us from manufacturing and selling a number of our products,
which could harm business, financial condition, results of operations and cash flows.
We may face product liability claims or product recalls.
Our business exposes us to potential liability risks that arise from the testing,
manufacturing and sale of our products. Although we currently maintain product liability
insurance, there is no guarantee that such insurance is sufficient in amount or scope against
potential liability claims. Product liability claims may also generate adverse publicity that
negatively impacts our business. In addition, product liability insurance is becoming increasingly
expensive, so we may not be able to obtain or maintain product liability insurance on acceptable
terms or with adequate coverage, and this could inhibit our ability to market potential products.
Additionally, if products marketed by us do not meet approved specifications or are deemed by
the relevant regulatory agencies not to be marketable for some reason, we may need to recall such
products, which would result in adverse publicity, recall costs and revenue impairment.
We may not be able to consummate collaborative sales or licensing agreements with other parties,
and there is no assurance, that if consummated, any such agreements will be successful.
As part of our strategy, we intend to pursue collaborative agreements with larger
pharmaceutical companies. For certain products in development, where the target physician market
is large and diffuse, an extensive sales force would be needed to achieve significant market
penetration. In such cases, it would be desirable for us to have a large marketing partner. For
other geographic territories, we plan on out-licensing the marketing rights to our products to
other companies that have existing sales and marketing operations within those territories.
Our management has devoted, and will continue to devote, significant efforts to pursuing
collaborative agreements with other companies, but there is no assurance that we will be able to
execute any such agreements. In addition, even if we are able to enter into collaborative
arrangements with other companies, there is no guarantee that such arrangements will be successful.
We face risks from expanding operations and management of growth.
To execute our strategic plan successfully over the next few years, we must achieve rapid
growth, which will place significant strain on our financial, managerial and operational resources.
To manage this growth effectively, we must continue to improve and expand our operational
capabilities, infrastructure and human resources, while preserving our financial wherewithal.
Failure to manage growth effectively could negatively impact our business, results of
operations and financial condition.
46
Table of Contents
If we are unable to retain our key personnel, or to attract and retain qualified personnel, our
business could be harmed.
Our success is highly dependent on the talents and contributions of our senior management and
scientific team. The loss of the services of key personnel or the failure to recruit and retain
additional personnel with the requisite qualifications could have a material adverse effect on our
business. In addition, we face substantial competition for qualified personnel from other
pharmaceutical companies and we may be unable to attract and recruit the personnel necessary for
the future development of our business. Other than Dr. Bernstein, we do not have any employment
agreements with our key personnel and cannot give any assurances that we will be able to attract
and retain key personnel. We do not carry key-man life insurance on any of our officers.
Our future operating and financial results could differ significantly from the financial
projections.
Any financial projections included herein are based on assumptions made by us without the
benefit of significant operating history under our current business model and prior to the
introduction to any of our newly developed products. Such projections are included solely to give
prospective investors information concerning our estimates of future operating results based on
these assumptions. Although we believe that such assumptions are reasonable as of the date hereof,
there can be no assurance that such assumptions will prove to be correct or that projected results
will be achieved. Actual results will vary from the projected results, and such variations may be
material and adverse. We reserve the right to conduct business in a manner different from that set
forth in the assumptions as changing circumstances require. The financial projections have not
been prepared or compiled by any accounting firm.
Risks Related to Our Common Stock
There is not now, and there may not ever be, an active market for our shares of common stock.
Although our common stock may be quoted on the OTC Bulletin Board, trading may be extremely
sporadic. For example, several days may pass before any shares may be traded. There can be no
assurance that following the Merger, a more active market for our common stock will develop. If a
public market for our common stock does not develop, shareholders may not be able to re-sell the
shares of our common stock that they own and may lose all of their investment.
In addition, approximately 68% of the outstanding shares of our common stock (including
outstanding shares of our preferred stock on an as converted basis) are subject to lockup
agreements which limit sales for a two-year period. These factors may result in lower prices for
our common stock than might otherwise be obtained and could also result in a larger spread between
the bid and ask prices for our common stock. In addition, without a large float, our common stock
is less liquid than the stock of companies with broader public ownership and, as a result, the
trading prices of our common stock may be more volatile. In the absence of an active public
trading market, an investor may be unable to liquidate his investment in our common stock. Trading
of a relatively small volume of our common stock may have a greater impact on the
trading price of our stock than would be the case if our public float were larger. We cannot
predict the prices at which our common stock will trade in the future.
47
Table of Contents
As we have become public by means of a reverse merger, we may not be able to attract the attention
of major brokerage firms.
There may be risks associated with Winston's becoming public through a "reverse merger."
Securities analysts of major brokerage firms may not provide coverage of us. No assurance can be
given that brokerage firms will, in the future, assign analysts to cover us or want to conduct any
secondary offerings on our behalf.
Sales of a substantial number of shares of our common stock may cause the price of our common stock
to decline.
Should a market develop and our stockholders sell substantial amounts of our common stock in
the public market, shares sold at a price below the current market price at which the common stock
is trading will cause that market price to decline. Moreover, the offer or sale of a large number
of shares at any price may cause the market price to fall. These sales also may make it more
difficult for us to sell equity or equity-related securities in the future at a time and price that
we deem reasonable or appropriate.
There may be issuances of shares of preferred stock in the future.
Our Board of Directors could authorize the issuance of a series of preferred stock that would
grant holders preferred rights to our assets upon liquidation, the right to receive dividends
before dividends would be declared to common stockholders, and the right to the redemption of such
shares, possibly together with a premium, prior to the redemption of the common stock. To the
extent that we do issue preferred stock, the rights of holders of preferred stock and common stock
could be impaired thereby, including without limitation, with respect to liquidation.
Additional stock offerings may dilute current stockholders
.
Given our plans and our expectation that we may need additional capital and personnel, we may
need to issue additional shares of capital stock or securities convertible or exercisable for
shares of capital stock, including preferred stock, options or warrants. The issuance of additional
capital stock may dilute the ownership of our current stockholders.
Our common stock may be considered a "penny stock."
The SEC has adopted regulations which generally define "penny stock" to be an equity security
that has a market price of less than $5.00 per share, subject to specific exemptions. Following
the Merger, the market price of our common stock may be less than $5.00 per share and therefore may
be a "penny stock." Brokers and dealers effecting transactions in "penny stock" must disclose
certain information concerning the transaction, obtain a written agreement from the purchaser and
determine that the purchaser is reasonably suitable to purchase the securities. These rules may
restrict the ability of brokers or dealers to sell our common stock and may affect our
shareholders' ability to sell shares.
48
Table of Contents
We have never declared or paid dividends on our capital stock and we do not anticipate paying any
cash dividends in the foreseeable future.
We have never declared or paid dividends on our common stock and we do not anticipate paying
any cash dividends in the foreseeable future. We currently intend to retain future earnings, if
any, to fund the development and growth of our business. Except for the rights of holders of
shares of preferred stock that are authorized and issued to receive dividends, any future
determination to pay dividends will be at the discretion of our Board of Directors and will be
dependent upon our financial condition, operating results, capital requirements, applicable
contractual restrictions and other such factors as our Board of Directors may deem relevant.
MANAGEMENT
Prior to the Merger, the Company did not have any paid employees. As of September 25, 2008,
Winston employed thirteen full-time individuals, two of whom hold M.D. degrees and two of whom hold
an advanced degree. Most of Winston's management and professional employees have substantial prior
experience with other pharmaceutical, biotechnology or medical products and service companies.
Winston expects to increase its employee census over the next two years, principally due to an
expansion in its ongoing research programs. None of Winston's employees is a member of a labor
union. Winston believes that it maintains good relations with its employees.
The table and text below provide certain descriptive information about our senior management
and directors following the Merger.
Name
Age
Position
Joel E. Bernstein, M.D.
65
President and Chief Executive Officer; Director
Scott B. Phillips, M.D.
48
Senior Vice President, Scientific Affairs; Director
David Starr
38
Vice President, Chief Financial Officer
Curtis Lockshin, Ph.D.
48
Director
Robert A. Yolles
68
Director
Glenn L. Halpryn
48
Director
Neal S. Penneys, M.D., Ph.D.
66
Director
Subbarao Uppaluri, Ph.D.
59
Director
Executive Officers
Joel E. Bernstein, M.D.
is Winston's founder and has served as Winston's Chief Executive
Officer, and as a director since 2002. Following the Merger, Dr. Bernstein will also serve as the
Company's President and Chief Executive Officer. Before founding Winston, Dr. Bernstein was the
founder, Chairman, and Chief Executive Officer of GenDerm Corporation, a pharmaceutical company
that was acquired by Medicis Pharmaceutical Corporation in 1997. Previously, Dr. Bernstein was
head of dermatopharmacology at Northwestern University Medical School and the University of Chicago
Pritzker School of Medicine. Dr. Bernstein has also held senior scientific positions at Abbott
Laboratories and Schering-Plough Corporation. He has authored more than 125 scientific
publications and holds over 150 patents. Dr. Bernstein received a B.A. from Carleton College and
an M.D. from the University of Chicago Pritzker School of Medicine, where he received the Roche
Award for ranking first in his class. He
completed specialty training programs in both dermatology and clinical pharmacology at the
University of Chicago. Dr. Bernstein is a past president of the University of Chicago Medical and
Biological Alumni Association. In 1988, he was chosen as the Illinois high-tech entrepreneur of
the year by KPMG and the State of Illinois. Dr. Bernstein was also the founder and non-executive
chairman of Sirius Laboratories, Inc., a dermatologic products company acquired in 2006 by DUSA
Pharmaceuticals.
49
Table of Contents
Scott B. Phillips, M.D.
is Winston's Senior Vice President, Scientific Affairs since April
1999. Previously Director of Drug Discovery at GenDerm Corporation, Dr. Phillips has 15 years of
experience in the pharmaceutical industry. In addition, he has been Chief of the Clinical
Investigations Unit at Harvard Medical School and Clinical Assistant Professor of Dermatology and
Medicine at the University of Chicago Pritzker School of Medicine. He received a B.A. in biology
from Cornell University and an M.D. from Harvard University.
David Starr
is Winston's Vice President and Chief Financial Officer since November 2007. From
August 2005 to October 2007, Mr. Starr was a Chief Financial Officer of DayOne Health, which set up
and managed bariatric surgery programs for ambulatory surgery centers. From October 2003 to August
2005, Mr. Starr was a Chief Financial Officer and Director of Operations Research of MSO Medical, a
national obesity disease management company serving hospitals with a proprietary version of the
gastric bypass surgery. From March 1998 to September 2003, Mr. Starr served in senior management
positions at several technology companies. From September 1991 to March 1998, Mr. Starr was an
audit manager with Arthur Andersen's Enterprise Group. Mr. Starr has an MBA from Northwestern's
Kellogg Graduate School of Business and a BS in Accounting from Indiana University, Bloomington.
Outside Directors
Curtis Lockshin
,
Ph.D.
Since 2003, Dr. Lockshin has been an independent pharmaceutical and
life sciences consultant, focused on small companies that seek to leverage their technology assets
inside healthcare, biotechnology and security sectors. At Sepracor Inc. from 1998 to 2002, as a
Scientist, Associate Director, and Director of Discovery Biology & Informatics, Dr. Lockshin was
instrumental in establishing the New Leads program, which delivered novel chemical entities into
the preclinical pipeline. In 2002-2003, while Director of Discovery Biology at Beyond Genomics,
Inc., Dr. Lockshin co-developed strategies for utilizing proprietary technology platforms in
clinical trial optimization and prediction of off-target drug activities. Since 2004, Dr. Lockshin
has served on the Board of Directors of the Ruth K. Broad Biomedical Research Foundation, a Duke
University support corporation, which supports basic research related to Alzheimer's disease and
neurodegeneration via intramural, extramural, and international grants. Dr. Lockshin has been a
director of clickNsettle.com, Inc. since September 2007. Dr. Lockshin is a co-inventor on several
U.S. patents and applications covering pharmaceuticals, biomaterials, and optics for remote
biochemical sensing. He holds a Bachelor's degree in Life Sciences and a Ph.D. in Biological
Chemistry, both from the Massachusetts Institute of Technology.
Robert A. Yolles, J.D
., is Winston's Chairman of the Board and a retired partner of the
international law firm Jones Day. While a partner, he served as the chair of the Firm's domestic
and international finance practices and, previously, co-chair of the Firm's corporate practice. He
received a B.A. and J.D. from Northwestern University.
50
Table of Contents
Glenn L. Halpryn
.
Mr. Halpryn was Chairman of the Board and Chief Executive Officer of
clickNsettle.com, Inc., a public company, from September 2007 until September 2008 when
clickNsettle.com, Inc. merged with Cardo Medical, LLC. Mr. Halpryn has been Chairman of the Board
and Chief Executive Officer of Quikbyte Software, Inc. since July 2008. Mr. Halpryn is also Chief
Executive Officer and a director of Transworld Investment Corporation ("TIC"), serving in such
capacity since June 2001. Since 2000, Mr. Halpryn has been an investor and the managing member of
investor groups that
were joint venture partners in 26 land acquisition and development projects with one of the
largest home builders in the country. From 1984 to June 2001, Mr. Halpryn served as Vice
President/Treasurer of TIC. From 1999, Mr. Halpryn also served as Vice President of Ivenco, Inc.
("Ivenco") until Ivenco's merger into TIC in June 2001. In addition, since 1984, Mr. Halpryn has
been engaged in real estate investment and development activities. From April 1988 through June
1998, Mr. Halpryn was Vice Chairman of Central Bank, a Florida state-chartered bank. Since June
1987, Mr. Halpryn has been the President of and beneficial holder of stock of United Security
Corporation ("United Security"), a broker-dealer registered with the NASD. From June 1992 through
May 1994, Mr. Halpryn served as the Vice President, Secretary-Treasurer of Frost Hanna Halpryn
Capital Group, Inc., a "blank check" company whose business combination was effected in May 1994
with Sterling Healthcare Group, Inc. From June 1995 through October 1996, Mr. Halpryn served as a
member of the Board of Directors of Sterling Healthcare Group, Inc. Since October 2002, Mr.
Halpryn has been a director of Ivax Diagnostics, Inc., a publicly held corporation, and is a member
of its audit committee and chairman of its compensation committee.
Neal S. Penneys, M.D., Ph.D.
,
is currently a dermatopathologist with AmeriPath, American
Laboratories, Fort Lauderdale, Florida. Prior to joining AmeriPath, from 1999-2001 Dr. Penneys
served as Associate Dean, Chief Operating Officer, Saint Louis University Health Sciences Center,
and from 1995-1999 as Chairperson, Department of Dermatology, Saint Louis University School of
Medicine. Dr. Penneys has served on many Boards, including those of the Association of Professors
of Dermatology, the American Society of Dermatopathology, GenDerm Corporation and Sirius
Laboratories, Inc. He was a senior consultant to the FDA from 1989-2006, and from 1985-2004 served
on several FDA Advisory Panels including those for Dermatologic Drugs and for Orphan Drugs. Dr.
Penneys received a B.A. from Franklin and Marshall College, a M.D. from the University of
Pennsylvania, a Ph.D. from the University of Miami, and an M.B.A. from St. Louis University.
Subbarao Uppaluri, Ph.D., CFA.
Dr. Uppaluri has served as the Chief Financial Officer of Opko
Health, Inc. (formerly known as eXegenics Inc.) since the consummation of its acquisitions of
Acuity Pharmaceuticals Inc. and Froptix Corporation on March 27, 2007. He is also a member of The
Frost Group. Dr. Uppaluri served as the Vice President, Strategic Planning and Treasurer of IVAX
from February 1997 until December 2006. Before joining IVAX, from 1987 to August 1996, Dr. Uppaluri
was Senior Vice President, Senior Financial Officer and Chief Investment Officer with
Intercontinental Bank, a publicly traded commercial bank in Florida. In addition, he served in
various positions, including Senior Vice President, Chief Investment Officer and Controller, at
Peninsula Federal Savings & Loan Association, a publicly traded Florida savings & loan, from
October 1983 to 1987. His prior employment, during 1974 to 1983, included engineering, marketing
and research positions with multinational companies and research institutes in India and the United
States. In addition to serving as a director of Opko, Dr. Uppaluri currently serves on the Board
of Directors of Ideation Acquisition Corp. (AMEX: IDI), a special purpose acquisition company
formed for the purpose of acquiring a business in the digital media sector, and Longfoot
Communications Corp. (OTCBB: LGFC), a public shell company that recently completed a merger with
Kidville Holdings, LLC, an operator of upscale learning and play facilities for children. Dr.
Uppaluri holds a B.S. and M.S. in Engineering from Andhra University in India and an M.B.A. and
Ph.D. in Finance from Indiana University.
51
Table of Contents
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information concerning the compensation paid by Winston and the
Company, respectively, during the fiscal years ended December 31, 2007 and 2006 to the chief
executive officers and other executive officers whose salary and bonus for the year exceeded
$100,000 and who served as an executive officer of each of the respective companies as of, or
during the fiscal year ended, December 31, 2007 (each, a "Named Executive Officer").
Option
All Other
Total
Salary
Awards
Compensation
Compensation
Name and Principal Position
Year
($)
($)
(1)
($)
(2)
($)
Joel E. Bernstein, M.D.
2007
235,000
38,158
17,986
291,139
President and Chief
2006
232,083
0
16,629
248,712
Executive Officer of
Winston; Director of Winston
Scott B. Phillips, M.D.
2007
210,000
73,695
16,728
300,423
Senior Vice President,
2006
207,500
0
15,763
223,263
Scientific Affairs of
Winston
Jeffrey R. Bernstein,Ph.D.
(3)
2007
116,250
0
7,448
123,698
Senior Vice President and
2006
152,916
0
10,515
163,431
Chief Operating Officer of
Winston
Glenn L. Halpryn
(4)
0
0
0
0
Director of the Company;
0
0
0
0
Former Chief Executive
Officer of the Company
(1)
Represents the expense to Winston pursuant to FAS 123R for the respective
year for restricted stock options granted as long term incentive pursuant to 2007
Option Plan. No options were granted to the above officers for fiscal years 2007 and
2006.
(2)
Drs. Joel and Jeffrey Bernstein and Dr. Phillips received additional
compensation in 2007 and 2006, comprised of the following components: 401(k) matching
contributions in 2007 in amounts of $7,050, $3,100 and $6,300, respectively, and in
2006 of $6,600, $4,588 and $6,225, respectively; and insurance premium payments in 2007
in amounts of $10,936, $4,348 and $10,428, respectively, and in 2006 of $10,029, $5,928
and $9,538, respectively.
(3)
On September 30, 2007, Jeffrey Bernstein resigned as Senior Vice President
and Chief Operating Officer of Winston, and entered into a consulting agreement with
Winston.
(4)
Mr. Halpryn served as Chief Executive Officer and Director of the Company
until the date of the Merger, when he resigned from his executive role, but remains on
the Board. Mr. Halpryn received no compensation in 2006 or 2007 in connection with his
service as an officer.
52
Table of Contents
Outstanding Equity Awards at Fiscal Year-End
The following table provides information regarding exercisable and unexercisable option and stock
awards held by the Named Executive Officers as of December 31, 2007.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
Number of Securities
Underlying
Option
Option
Unexercised Options
Exercise
Expiration
Name
(#) Exercisable
(1) (2)
Price ($)
(2)
Date
Joel E. Bernstein, M.D.
1,853,356
0.05
1/12/2009
5,295,303
0.05
4/6/2010
Scott B. Phillips, M.D.
1,270,873
0.04
5/3/2009
3,177,182
0.04
10/18/2009
1,641,544
0.04
12/10/2012
1,853,356
0.04
1/12/2014
5,295,303
0.04
4/6/2015
Jeffrey R. Bernstein, Ph.D.
794,295
0.04
2/1/2009
397,148
0.04
2/1/2010
132,383
0.04
2/1/2011
264,765
0.04
2/1/2011
(1)
In conjunction with the Merger, Winston's Board of Directors voted to
accelerate the vesting of all unvested stock options as of October 30, 2007.
(2)
The number of options exercisable and the exercise prices set forth in the
table have been adjusted to reflect the conversion in connection with the Merger.
Each option to purchase a share of Winston's common stock was converted into an
option to purchase approximately 17.65 shares of common stock of the Company. The
exercise price of each option to purchase shares of the Company's common stock was
determined by dividing the pre-conversion, option exercise price by approximately
17.65 and rounding up to the nearest whole cent.
Employment and Consulting Agreements; Termination, Severance and Change-in-Control Matters
The Company and Winston have entered into (or will enter into in connection with the Merger)
certain employment, severance and/or consulting agreements with certain of our Named Executive
Officers (after the Merger) and former Named Executive Officers. Such agreements are summarized
below. Such summaries are intended solely as a synopsis of the material terms of such agreements
and are qualified in their entirety by the terms and provisions of such agreements.
Joel E. Bernstein, M.D. Employment Agreement
In connection with the Merger, we have entered into an employment agreement with Dr. Joel
Bernstein, effective on the date of the Merger. The agreement provides that Dr. Bernstein will
serve as President and Chief Executive Officer, or Vice Chairman in the event that the Board hires
a new Chief Executive, for a term of two years. His base salary under the agreement is $260,000
for the first year of the agreement and $280,000 for the second. Dr. Bernstein will be eligible to
receive bonuses in such amounts and in such form as may be determined by the Board if awarded by
the Board, as well as medical insurance, life insurance, 401(k) participation and six weeks of
vacation annually.
53
Table of Contents
Under the agreement, Dr. Bernstein is allowed to pursue other employment during the period he is
employed by us, provided he devotes at least 60% of his working time to us. He has also assigned
to Winston all patents relating to pharmaceutical products that he invents following the date of
the agreement, except those related to dermatological and ophthalmic products.
The agreement provides that we may terminate Dr. Bernstein for any reason; however, if such
termination is not due to Cause, death or Disability, we will be required to pay the following:
•
the base salary in effect on the date of termination for the twelve months
following termination;
•
life insurance benefits, to the same extent as provided to similarly situated
employees, for the twelve months following termination;
•
medical insurance continuation coverage under COBRA up to twelve months
following termination; and
•
all benefits not fully vested will vest on the date of termination.
Dr. Bernstein will not be entitled to any such compensation or benefits if he breaches any of the
covenants in the agreement relating to the protection of confidential information, non-disclosure,
non-competition and non-solicitation. He will also not be entitled to any compensation or other
benefits under the Agreement if his employment is terminated for Cause.
As used in Dr. Bernstein's employment agreement, the following terms have the following
definitions:
"
Cause
" means the following: (i) the conviction of Dr. Bernstein of, or the entry
of a plea of guilty or nolo contendere by Dr. Bernstein to, any misdemeanor involving moral
turpitude or any felony; (ii) fraud, misappropriation or embezzlement by Dr. Bernstein with
respect to the Company or any subsidiary or affiliate thereof, including without limitation
Winston; (iii) Dr. Bernstein's willful failure, gross negligence or gross misconduct in the
performance of his assigned duties for the Company or any subsidiary or affiliate thereof,
including without limitation Winston; (iv) Dr. Bernstein's material breach of a fiduciary
duty to the Company or any subsidiary or affiliate thereof, including without limitation
Winston; (v) any wrongful act or omission of Dr. Bernstein not at the express direction of
the Board of Directors of the Company or any subsidiary or affiliate thereof, including
without limitation Winston, that reflects materially and adversely on the integrity and
reputation for honesty and fair dealing of the Company or any subsidiary or affiliate
thereof, including without limitation Winston, or has a material detrimental effect on the
Company's financial condition, position or business, or the financial condition, position or
business of any subsidiary or affiliate thereof, including without limitation Winston; or
(vi) the breach by Dr. Bernstein of any material term of his employment agreement
(
provided
that in the case of clauses (iii),(iv),(v) and (vi) (but excluding
breaches of Section 6 or 7 (i.e., confidentiality, non-solicitation and non-competition
provisions), the Company shall have provided Dr. Bernstein with written notice of the acts,
breaches or other events that would otherwise constitute "Cause" thereunder and Dr.
Bernstein shall have failed to cure or remedy such acts, breaches or other events within ten
(10) days following receipt of such notice, and
provided
further
that the
failure of the Company or any subsidiary to achieve any financial objective shall not serve
as the basis for Cause hereunder).
54
Table of Contents
"
Disability
" means the incapacity of Dr. Bernstein due to physical or mental illness
where Dr. Bernstein has been unable to perform his duties during the preceding 90 days, or
where said incapacity has been determined to exist or have existed such that he is or was
unable to perform his previously assigned duties, and that such incapacity continued, has
continued and/or will continue for such period of time for at least 90 days during any
consecutive 365 day period by either (i) the liability insurance carrier for the Company or
its subsidiaries or (ii) the concurring opinions of two board certified, licensed physicians
(as selected one by the Company and one by Dr. Bernstein);
provided
that Dr.
Bernstein shall, within 15 days after the written request of the Company or any subsidiary
or affiliate thereof, including without limitation Winston, submit to a physical and/or
mental examination for purposes of determining Disability.
Scott B. Phillips, M.D. — Severance Agreements
Winston has entered into two separate agreements dated as of October 8, 2003 (the "Phillips
Change in Control Agreement") and January 26, 2006 (the "Phillips Severance Letter", and
collectively with the Change in Control Agreement, the "Phillips Severance Agreements") with Scott
B. Phillips, its Senior Vice President and Chief Scientific Officer, which together outline the
terms upon which Dr. Phillips' employment with Winston may be terminated and the conditions upon
which certain severance payments will be made to Dr. Phillips in the event of such termination,
including termination of his employment in connection with a change in control of Winston.
Pursuant to the terms of the Phillips Severance Letter, Winston may terminate Dr. Phillips'
employment at any time upon thirty (30) days written notice. Dr. Phillips may terminate his
employment with Winston at any time upon fourteen (14) days written notice. If Dr. Phillips'
employment is terminated by Winston, then Dr. Phillips is entitled to receive by reason of such
termination his base salary and life insurance benefits in effect at the time of such termination
for an additional six (6) months from the termination date. Any COBRA benefits shall begin at the
conclusion of such six (6) month period. All other benefits that are not fully vested on the
termination date shall cease and be extinguished on such date. If Dr. Phillips terminates his
employment for any reason, all salary and benefits that are not fully-vested, including any and all
unvested bonuses, shall cease and be extinguished on the termination date.
Pursuant to the terms of the Phillips Change in Control Agreement, in the event Dr. Phillips'
employment with Winston is terminated by Winston following a change in control of Winston, Dr.
Phillips shall be entitled to receive the following severance compensation ("Change in Control
Severance"): (i) a lump-sum severance payment equal to two times his annual salary at the highest
rate in effect at any time prior to such termination, plus incentive pay in an amount not less than
the highest incentive, bonus or other cash payment made to Dr. Phillips in addition to his salary
in any of the three years immediately preceding the year in which the change in control occurred
and (ii) for a period of twenty-four (24) months following the termination date, welfare benefits
(but excluding stock option, stock purchase, stock appreciation and similar compensatory benefits)
substantially similar to those which Dr. Phillips was entitled to receive immediately prior to the
termination date, reduced to the extent comparable welfare benefits are actually received by Dr.
Phillips from another employer during such period.
55
Table of Contents
Dr. Phillips shall also be entitled to receive Change in Control Severance following a change
in control of Winston, if he terminates his employment following: (i) failure by Winston to elect
or re-elect Dr. Phillips to the position (or a substantially equivalent position) he held
immediately prior to the change in control, or the removal of Dr. Phillips as a director of Winston
if he was a director immediately prior to the change in control; (ii) a significant adverse change
in the nature or scope of Dr. Phillips' duties, or a reduction in his base pay, incentive pay or
benefits; (iii) a good faith determination by Dr. Phillips that a change in circumstances (e.g. a
change in the scope of business or Dr. Phillips' responsibilities) has occurred following a change
in control; (iv) the liquidation, dissolution, merger, consolidation, or reorganization or sale of
substantially all of Winston's assets, unless the successor assumes all duties and obligations
under the Phillips Change in Control Severance Agreement; (v) the relocation of Winston's principal
executive offices or of Dr. Phillips' principal location of work in excess of 25 miles from the
location thereof immediately prior to the change in control, or the requirement that Dr. Phillips
travel away from his office in the course of discharging his duties to Winston at least 20% more
often than was required immediately prior to the change in control; and (vi) the material breach of
the Phillips Change in Control Agreement by Winston or its successor.
Dr. Phillips will not be entitled to receive Change in Control Severance if his employment is
terminated for Cause or due to Dr. Phillips' death or permanent disability.
As used in the Phillips Change in Control Agreement, "Cause" means:
(i)
an intentional act of fraud, embezzlement or theft in connection with Dr.
Phillips' duties or in the course of his employment with Winston or a subsidiary
thereof;
(ii)
intentional wrongful damage to the property of Winston or a subsidiary thereof;
(iii)
intentional wrongful disclosure of secret processes or confidential
information of Winston or a subsidiary thereof; or
(iv)
intentional wrongful engagement by Dr. Phillips in the management of any
business enterprise that engages in substantial and direct competition with Winston and
such enterprise's sales of any product or service competitive with any of Winston's
products or services amounted to 10% of the net sales of such enterprise and of Winston
for their respective most recently-completed fiscal years.
Jeffrey R. Bernstein, Ph.D. — Consulting Agreement
On September 30, 2007, Dr. Jeffrey Bernstein resigned as Senior Vice President and Chief
Operating Officer of Winston, and entered into a consulting agreement with that company, effective
as of October 1, 2007. Dr. Bernstein's responsibilities as set forth in his consulting agreement
include assisting with the Merger, interfacing with various of Winston's service providers, aiding
in the completion of audits of Winston's financial statements for fiscal years 2006 and 2007, and
working with Winston's new Chief Financial Officer, David Starr. Pursuant to the terms of his
consulting agreement, Winston agreed to compensate Dr. Bernstein at a rate of $150 per hour.
Further, Winston, agreed to reimburse Dr. Bernstein for all reasonable out-of-pocket expenses
incurred in the course of his services to Winston, including, but not limited to, reasonable
expenses related to travel, telephone, postage, and office supplies. The consulting
agreement is terminable by either Dr. Bernstein or by Winston upon thirty (30) days notice to
the other party.
56
Table of Contents
Compensation of Directors
The following table provides information regarding compensation of directors for the year ended
December 31, 2007.
Option
Fees earned or
Awards
Total
Name
Paid in Cash($)
($)
(1)
($)
Ronald H. Abrahams
2,500
14,235
16,735
Robert A. Yolles
2,500
14,385
16,885
Jeffrey R. Bernstein Ph.D.
(2)
625
0
625
Glenn L. Halpryn
2,400
0
2,400
Alan Jay Weisberg
2,400
0
2,400
Noah M. Silver
2,400
0
2,400
Curtis Lockshin Ph.D.
2,400
0
2,400
(1)
In connection with the Merger, each option to purchase a share of
common stock of Winston was converted into options to purchase approximately
17.51 shares of common stock of the Company. As of December 31, 2007, the
aggregate number of as-converted option awards outstanding for each of Ronald H.
Abrahams, Robert A. Yolles and Jeffrey R. Bernstein, was 3,574,330, 2,250,504,
1,588,591, respectively. On July 28, 2008, all 3,574,330 options of Robert H.
Abrahams expired.
(2)
On September 30, 2007, Jeffrey Bernstein resigned as Senior Vice
President and Chief Operating Officer, and entered into a consulting agreement
with Wionston. Since Mr. Bernstein was no longer an employee as of such date,
he began receiving compensation as a member of the Board.
Winston Directors
Each of Winston's non-employee directors receives $625 a quarter for service on the Board and
15,000 stock options, awarded annually around the time of its annual meeting. Directors do not
receive additional compensation for service on any committees or for attendance at meetings.
Directors who are also Winston employees do not receive compensation for their service on the
Board.
Getting Ready Corporation Directors
Each of the Company's directors receives $400 for attendance at each meeting of the Board.
57
Table of Contents
Compensation of Directors Following the Merger
The compensation of the directors following the Merger has not been determined at this time,
however it is anticipated that they will receive compensation in an amount greater than the
compensation received by Winston's directors prior to the Merger.
Independence of Directors
The Board has determined that the following individuals are independent as defined by the listing
standards of the Nasdaq Stock Market: Messrs. Yolles, Penneys and Halpryn and Drs. Lockshin and
Uppaluri. In reaching this conclusion, the Board considered family and employment relationships
that such directors have with the members of the Board.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Opko License
On September 19, 2007, Winston entered into an exclusive technology license agreement with
Opko Ophthalmologics, LLC ("OPKO"). Under the terms of the license agreement, Winston granted OPKO
an exclusive license to the proprietary rights of certain products (pharmaceutical compositions or
preparations containing the active ingredient civamide in formulations suitable for use in the
therapeutic or preventative treatment of ophthalmic conditions in humans). In exchange, OPKO paid
Winston a license fee of $100,000 and is required to pay a 10% royalty on sales of the product. In
addition, the agreement requires OPKO to pay Winston a non-refundable payment of $5,000,000 upon
approval of a marketing authorization by OPKO on the product described in the agreement. Phillip
Frost, M.D. is the Chairman and Chief Executive Officer of OPKO's parent company, Opko Health, Inc.
("Opko Health"), and as of September 24, 2008 was the beneficial owner of 47.3% of Opko Health's
common stock. Dr. Frost is also the beneficial owner of 5,900,827 shares of (1.34%) the Company's
common stock, 99,812 shares of the Company's Series A Convertible Preferred Stock, 70,238 warrants
to purchase Series A Convertible Preferred Stock, and 36,666 shares of the Company's Series B
Convertible Preferred Stock. Furthermore, Subbarao Uppaluri, Ph.D., the Senior Vice President -
Chief Financial Officer of Opko Health, is the beneficial owner of 659,596 shares (0.39%) of the
Company's common stock, 1,019 shares of the Company's Series A Convertible Preferred Stock and 717
warrants to purchase Series A Convertible Preferred Stock and is a director of the Company.
Exopharma License
On August 14, 2007, Winston entered into an exclusive technology license agreement with
Exopharma, Inc., now known as Elorac, Inc. ("Exopharma"), an entity that is controlled by Dr.
Bernstein, CEO of Winston and the Company (following the Merger). Under the terms of the license
agreement, Winston granted Exopharma an exclusive license to the proprietary rights of certain
products (≤ 0.025% civamide with the stated indication of psoriasis of the skin). In exchange,
Exopharma paid Winston a license fee of $100,000 and is required to pay a 9% royalty on sales of
the product. In addition, the agreement requires Exopharma to pay Winston a non-refundable payment
of $250,000 upon approval of a Marketing Authorization by Exopharma on the product(s) described in
the agreement.
58
Table of Contents
Gideon Pharmaceuticals, Inc.
In November 2005, Winston spun off Gideon Pharmaceuticals, Inc. ("Gideon"). Gideon received
certain early-stage technologies not being actively developed by Winston, and all Winston
shareholders were offered the opportunity to purchase Gideon shares on a pro-rata basis. Not all
Winston shareholders purchased Gideon shares, but overlap in the shareholders of Winston and Gideon
is very significant. Gideon is an independent entity and not a subsidiary of Winston; however, as
part of the spin-off process, Winston did end up purchasing and maintaining a minority stake in
Gideon (approximately 10.7% ownership), for the purpose of preserving the rights of those option
holders in Winston prior to the Gideon spin-off. In particular, option holders in Winston prior to
the spin off of Gideon have, upon exercise of their Winston options, an opportunity to purchase a
pro-rata allotment of Gideon shares. During 2006, Winston undertook certain development projects
on behalf of Gideon, which were billed back to Gideon at cost. As of December 31, 2006, Winston
had a receivable due from Gideon of $2,642, which was was included in related party receivables on
Winston's balance sheet and was subsequently collected in full in 2007. In October 2007, in
preparation for signing a merger agreement with the Company, the Winston's Board of Directors voted
to distribute the shares of Gideon owned by Winston on behalf of the Winston option holders on a
pro-rata basis to such option holders. As of December 31, 2007, Winston had no ownership stake in
Gideon.
Sirius (DUSA) License
On January 30, 2006, Winston licensed to Sirius Laboratories, Inc., a company founded by Dr.
Bernstein, the rights to market products containing anthralin owned by Winston, including a
marketed 1% anthralin cream trade name Psoriatic
®
. The license had a two-year term
which expired on January 31, 2008 and provided for the following key terms: (i) a 25% royalty on
net sales; (ii) a $300,000 minimum royalty; and (iii) a $750,000 purchase option.
This agreement was assigned by Sirius to DUSA Pharmaceuticals, Inc. following DUSA's purchase
of Sirius. This license has been extended until September 30, 2008 by mutual written consent of
the parties and the extension provides for continuing of the 25% royalty on net sales but
eliminates the minimum royalty and purchase option. Under the technology license agreement,
Winston recorded royalty revenue of $34,847 and $150,000 for the six months ended June 30, 2008 and
2007, respectively.
Packer's-Pine Corporation
In 2006 and 2007, Winston assisted Packer's-Pine Corporation ("Packer's") with distribution of
certain personal care products and administration. Packer's is a corporation whose chairman is
Joel E. Bernstein, M.D., president and CEO of the Company following the Merger, and two directors
of the Company following the Merger serve on the board of directors of Packer's. Under this
arrangement, Packer's reimbursed Winston for direct costs. The amount received by Winston from
Packer's as a fee for performing this function amounted to $0 and $3,317 during the years ended
December 31, 2007 and 2006, respectively and was $0 for the six month period ended June 30, 2008
and June 30, 2007. Amounts due from Packer's of $5,554 and $16,167 as of December 31, 2007 and
2006, respectively, are included in related party receivables in Winston's balance sheet. In March
2008, Packer's merged into Exopharma, Inc., now known as Elorac, Inc.
59
Table of Contents
Consulting Agreement with Jeffrey Bernstein
Please see the description of Dr. Jeffrey Bernstein's consulting agreement in the section
above entitled "Executive Compensation—Employment and Consulting Agreements; Termination,
Severance and Change-in-Control Matters."
Sales of Stock of Getting Ready Corporation
On December 4, 2006, investors, including Glenn L. Halpryn of Miami, Florida, and Steven Jerry
Glauser of Denver, Colorado, purchased an aggregate of 89% of the outstanding common stock of the
Company from 45 shareholders. The Company's former chief executive officer assumed the Company's
liabilities in connection with the sale of his shares. In addition to purchasing the shares, the
investors contributed an aggregate of $699,405 in working capital to the Company in exchange for
shares of its common stock in a private placement. Following the transaction, the investors then
beneficially owned an aggregate of 93.3% of the outstanding shares of the Company.
On March 21, 2007, the Company sold 9,349,777 shares of its restricted common stock to a group
of investors led by Dr. Phillip Frost (the "Frost Investors"). The Frost Investors paid the
Company $567,000 for the shares, which amount was approximately equal to the Company's cash on hand
on the purchase date. After the purchase, the Frost Investors beneficially owned 51% of the
Company's outstanding shares and now control the Company. Prior to the Merger, Dr. Frost was the
beneficial owner of 5,699,533 shares of Winston Series A Preferred Stock, 4,010,784 warrants to
purchase Winston's Series A Convertible Preferred Stock and 2,093,706 shares of Winston Series B
Preferred Stock.
Sales of Winston Stock for Bioglan Purchasers
In September 2007, Winston purchased all of the then outstanding ownership in Winston from
Bioglan for $225,000. Winston also purchased all of the then outstanding ownership in Rodlen from
Bioglan for $10,000. Subsequent to this transaction, Rodlen was merged into Winston on September
21, 2007. Both of these purchases were financed by the sale of 385,000 shares of Winston common
stock to seven existing stockholders or option holders of Winston for an aggregate purchase price
of $346,500.
60
Table of Contents
PRINCIPAL STOCKHOLDERS
Our voting securities consist of our common stock, par value $0.001 per share, of which
440,851,441 shares are outstanding, our Series A Convertible Preferred Stock, of which 101,849
shares are outstanding, and our Series B Convertible Preferred Stock, of which 73,332 shares are
outstanding. The holders of our voting securities are entitled to one vote for each outstanding
share on all matters submitted to our stockholders. The following tables contain information
regarding record ownership of our common stock as of September 25, 2008 held by:
•
persons who own beneficially more than 5% of our outstanding voting securities,
•
our directors,
•
named executive officers, and
•
all of our directors and officers as a group.
Management and Directors:
Shares Beneficially Owned
Percentage Ownership
Joel E. Bernstein, M.D.(1)
211,222,541
29.47
%
Scott B. Phillips, M.D.(2)
17,223,361
2.4
%
David Starr
0
*
Curtis Lockshin, Ph.D.
10,000
*
Robert A. Yolles(3)
3,221,309
*
Glenn L. Halpryn
2,839,539
*
Neal Penneys, M.D., Ph.D.
3,494,900
*
Subbarao Uppaluri, Ph.D.(4)
2,394,810
*
All officers and directors
As a group (8 people)
240,406,461
33.54
%
5% Stockholders
Shares Beneficially Owned
Percentage Ownership
Frost Gamma Investments
Trust(5)(6)
212,617,389
29.67
%
Jeffrey Bernstein(7)
42,897,197
5.99
%
David Bernstein
39,851,038
5.56
%
Rebecca Zelken
39,851,038
5.56
%
*
Less than 1%.
(1)
Includes 7,148,659 shares of common stock underlying options. Also includes 101,675,095
shares of common stock that will be beneficially owned by Dr. Bernstein's wife, with respect
to which Dr. Bernstein disclaims any beneficial ownership.
(2)
Includes 13,238,258 shares of common stock underlying options.
(3)
Includes 2,250,504 shares of common stock underlying options.
(4)
Includes 1,018,503 shares of common stock underlying Series A Convertible Preferred Stock and
716,712 shares of common stock underlying warrants to purchase Series A Convertible Preferred
Stock.
(5)
Includes 99,812,388 shares of common stock underlying Series A Convertible Preferred Stock
and 70,238,374 shares of common stock underlying warrants to purchase Series A Convertible
Preferred Stock and 36,665,775 shares of common stock underlying Series B Convertible
Preferred Stock.
(6)
As the sole trustee of the Frost Gamma Investments Trust, Dr. Phillip Frost may be deemed the
beneficial owner of all shares owned by the trust by virtue of his power to vote or direct the
vote of such shares or to dispose or direct the disposition of such shares owned by the trust.
(7)
Includes 1,588,591 shares of common stock underlying options.
61
Table of Contents
WHERE YOU CAN OBTAIN ADDITIONAL INFORMATION
We are required to file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the SEC's public reference
rooms at 100 F Street, N.E, Washington, D.C. 20549. You may also obtain copies of the documents at
prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Room
1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more information on the
operation of the public reference rooms. Copies of our SEC filings are also available to the
public from the SEC's web site at www.sec.gov.
62
Table of Contents
DESCRIPTION OF SECURITIES
Terms of Common Stock; Options
We currently have 900,000,000 shares of common stock, par value $0.001 per share, authorized
for issuance, of which 440,851,441 shares were issued and outstanding immediately following the
Merger.
Upon liquidation, dissolution or winding up of the corporation, the holders of common stock
are entitled to share ratably in all net assets available for distribution to stockholders after
payment to creditors. The common stock is not convertible or redeemable and has no preemptive,
subscription or conversion rights. Each outstanding share of common stock is entitled to one vote
on all matters submitted to a vote of stockholders. There are no cumulative voting rights.
The holders of outstanding shares of common stock are entitled to receive dividends out of
assets legally available therefor at such times and in such amounts as our Board of Directors may
from time to time determine. Holders of common stock will share equally on a per-share basis in any
dividend declared by our board of directors. We have not paid any dividends on our common stock and
do not anticipate paying any cash dividends on such stock in the foreseeable future.
Pursuant to the Merger Agreement, we assumed Winston's stock option plans. Prior to the
Merger, Winston had outstanding options to purchase 1,643,750 shares of Winston's common stock.
These options, as a result of the Merger, will represent options to purchase 29,013,848 shares of
our common stock.
Terms of the Series A and Series B Convertible Preferred Stock; Warrants
The Merger Agreement required us to issue shares of Series A and Series B Convertible
Preferred Stock to the holders of Winston Series A and Series B Preferred Stock, respectively, and
warrants to purchase Series A Preferred Stock to the holders of warrants to purchase Winston Series
A Preferred Stock. The terms of our Series A and Series B Convertible Preferred Stock include
payment of dividends on this preferred stock if we pay dividends on our common stock (based upon
the number of shares of common stock into which each share of preferred stock may be converted).
Liquidation distributions and distributions other than cash will be made on all shares, preferred
or common, on a pro rata basis. The voting rights of these preferred shares are equal to one vote
for each share of common stock into which each preferred share is convertible. Each of these
preferred shares may be converted at the option of the holder after the effective time of the
Merger, and will be automatically converted into 1,000 shares of our common stock (subject to
adjustment for stock splits, stock dividends, combinations, recapitalizations, reorganizations,
reclassifications or other similar events) approximately one year after issuance. The warrants are
exercisable for shares of the Company's Series A Preferred Stock at a price per share of $49.09.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
At the present time our shares are traded on the Over-the-Counter Bulletin Board, or OTCBB.
Our shares commenced trading on the OTCBB on February 23, 2006 under the symbol GETR, and the
symbol was changed to GTRY following the reverse stock split in November 2006.
63
Table of Contents
The following table sets forth, for the periods indicated, the range of high and low closing
bid prices for our common stock through June 30, 2008 for the periods noted, as reported by the
National Quotations Bureau and the OTCBB. Quotations reflect inter-dealer prices, without retail
mark-up, markdown or commission and may not represent actual transactions.
Common Stock Closing Bid Fiscal Quarter Ended
High
Low
2006
1st Quarter (beginning February 23, 2006)
$
0.024
$
0.00
2nd Quarter
0.22
0.03
3rd Quarter
0.07
0.011
4th Quarter
1.55
0.00
2007
1st Quarter
$
3.41
$
0.36
2nd Quarter
3.71
1.80
3rd Quarter
3.10
1.75
4th Quarter
3.10
1.75
2008
1st Quarter
$
2.90
$
1.16
2
nd
Quarter
1.50
1.05
3
rd
Quarter
1.15
0.60
We have not paid any cash dividends on our common or preferred stock and do not anticipate
paying any such cash dividends in the foreseeable future. Earnings, if any, will be retained to
finance future growth. We may issue shares of our common stock and preferred stock in private or
public offerings to obtain financing, capital or to acquire other businesses that can improve our
performance and growth. Issuance or sales of substantial amounts of common stock could adversely
affect prevailing market prices in our common stock.
As of June 30, 2008, there were approximately 430 beneficial owners of our common stock, with
18,332,896 shares issued and outstanding.
In November 2006, we amended our Certificate of Incorporation. The amendment includes a
reverse stock split of one for fifteen. In connection with the split, we adjusted the par value of
our common stock from $.0001 to $.001. The foregoing table reflects the effects of this split.
64
Table of Contents
EQUITY COMPENSATION PLAN INFORMATION
Number of securities
remaining available
for future issuance
Number of securities
under equity
to be issued upon
Weighted average
compensation plans
exercise of
exercise price of
(excluding securities
outstanding options,
outstanding options,
reflected in column
warrants and rights
warrants and rights
(a)
(a)
(b)
(c)
Equity compensation
plans approved by
security
holders
29,013,848
$
0.04
45,791,133
Equity compensation
plans not approved
by security
holders
RECENT SALES OF UNREGISTERED SECURITIES
See the information set forth in Item 3.02 of this Current Report on Form 8-K which is
incorporated herein by reference.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Articles Thirteen and Fourteen of our Certificate of Incorporation provide that no director
shall be personally liable to the corporation or any of its stockholders for monetary damages for
breach of any fiduciary or other duty as a director; provided that this provision shall not
eliminate or limit the liability of a director (1) for any breach of the director's duty of loyalty
to the corporation or its stockholders, (2) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, (3) under Section 174 of the Delaware General
Corporate Law, referred to as the DGCL or (4) for any transaction from which the director derived
an improper personal benefit.
Section 174 of the DGCL provides, among other things, that a director, who willfully or
negligently approves of an unlawful payment of dividends or an unlawful stock purchase or
redemption, may be held liable for such actions. A director who was either absent when the unlawful
actions were approved or dissented at the time may avoid liability by causing his or her dissent to
such actions to be entered in the books containing the minutes of the meetings of the Board of
Directors at the time such action occurred or immediately after such absent director receives
notice of the unlawful acts.
65
Table of Contents
Item 3.02. Unregistered Sales of Equity Securities
Reference is made to the disclosure made under Items 1.01 and 2.01 of this Current Report on
Form 8-K, which is incorporated herein by reference.
For the year ended September 30, 2004, the Company issued 86,711 shares of common stock to
investors and realized proceeds of $31,000. For the year ended September 30, 2006 and 2005, the
Company issued 17,033 and 3,500 shares of common stock and realized proceeds of $24,042 and $5,250,
respectively.
Item 5.01. Changes in Control of Registrant
As a result of the Merger, the Company experienced a change in control, with the former
stockholders of Winston acquiring control of the Company. Additionally, as a result of the Merger,
the Company ceased being a shell company. Reference is made to the disclosure made under Item 2.01
of this Current Report on Form 8-K, which is incorporated herein by reference.
Item 5.02.
Departure of Directors or Principal Officers; Election of Directors; Appointment of
Principal Officers
Effective at the time of the Merger, Alan Jay Weisburg and Noah M. Silver resigned from the
Board of Directors. Reference is made to the disclosure made under Item 2.01 and this Current
Report on Form 8-K, which is incorporated herein by reference.
Item 5.06. Change in Shell Company Status
Pursuant to the Merger disclosed in Items 1.01 and 2.01 of this Current Report on Form 8-K,
the Company ceased being a shell company as of September 25, 2008. Reference is made to the
disclosures set forth in Items 1.01 and 2.01 of this Current Report on Form 8-K, which disclosures
are incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits
(a) Financial Statements:
The audited Financial Statements of Winston for the years ended December 31, 2007 and December
31, 2006 the accompanying notes thereto.
The unaudited Financial Statements of Winston for the six months ended June 30, 2008 and the
accompanying notes thereto.
(b) Pro Forma Financial Information:
The unaudited Pro-Forma Consolidated Statements of Operations for Winston for the year ended
December 31, 2007 and the unaudited Pro-Forma Consolidated Balance Sheet as of December 31, 2007.
66
Table of Contents
The unaudited Pro-Forma Consolidated Statements of Operations for Winston for the six months
ended June 30, 2008.
(c)
Exhibits
2.1
Merger Agreement and Plan of Reorganization dated as of November 13, 2007 by
and among Getting Ready Corporation, Winston Laboratories, Inc. and Winston Acquisition
Corp. (filed as Exhibit 2.1 to the Company's Current Report on Form 8-K dated November
13, 2007 and incorporated herein by reference).
2.2
First Amendment to Merger Agreement and Plan of Reorganization dated as of May
30, 2008 by and among Winston Laboratories, Inc., a Delaware corporation, Getting Ready
Corporation, a Delaware corporation, and Winston Acquisition Corp., a Delaware
corporation (filed as Exhibit 2.1 to the Company's Current Report on Form 8-K dated May
30, 2008 and incorporated herein by reference).
2.3
Second Amendment to Merger Agreement and Plan of Reorganization dated as of
June 23, 2008 by and among Winston Laboratories, Inc., a Delaware corporation, Getting
Ready Corporation, a Delaware corporation, and Winston Acquisition Corp., a Delaware
corporation (filed as Exhibit 2.1 to the Company's Current Report on Form 8-K dated
June 23, 2008 and incorporated herein by reference).
3.1
Certificate of Incorporation (filed as Exhibit 3.1A to the Company's
Registration Statement on Form SB-2 dated September 15, 2004 and incorporated herein by
reference).
3.2
Certificate of Amendment of Certificate of Incorporation (filed as Exhibit 3.1B
to the Company's Registration Statement on Form SB-2 dated September 15, 2004 and
incorporated herein by reference).
3.3
Certificate of Amendment of Certificate of Incorporation (filed as Exhibit 1 to
the Company's Form PRE14C dated December 7, 2007 and incorporated herein by reference).
3.4
Certificate
of Amendment to Certificate of Incorporation (filed as Annex A to the
Company's DEF 14C dated September 22, 2008 and incorporated
herein by reference).
3.5
Certificate of Designation, Preferences and Rights of Series A Convertible
Preferred Stock of Getting Ready Corporation.
3.6
Certificate of Designation, Preferences and Rights of Series B Convertible
Preferred Stock of Getting Ready Corporation.
3.7
By-laws.
4.1
Form of Common Stock Certificate.
4.2
Form of Warrant to Purchase Series A Convertible Preferred Stock.
4.3
Form of Lockup Agreement.
67
Table of Contents
10.1
Voting Agreement dated as of September 25, 2008 between Getting Ready
Corporation and certain stockholders of the Company.
10.2
Employment Agreement dated as of September 25, 2008 between Getting Ready
Corporation and Joel E. Bernstein, M.D.
10.3
Secrecy, Invention and Non-Competition Agreement dated as of October 5, 2007 by
and between Winston Laboratories, Inc. and Joel E. Bernstein, M.D.
10.4
Employment Letter Agreement dated October 3, 2007 between Winston Laboratories,
Inc. and David Starr.
10.5
Secrecy, Invention and Non-Competition Agreement dated as of October 3, 2007 by
and between Winston Laboratories, Inc. and David Starr.
10.6
Severance Agreement dated as of October 8, 2003 between Winston Laboratories,
Inc. and Scott B. Phillips, M.D.
10.7
General Severance Letter Agreement dated January 26, 2006 between Winston
Laboratories, Inc. and Scott B. Phillips, M.D.
10.8
Secrecy, Invention and Non-Competition Agreement dated as of October 5, 2007 by
and between Winston Laboratories, Inc. and Scott B. Phillips, M.D.
10.9
Consultation Agreement dated September 30, 2007 between Winston Laboratories,
Inc. and Jeffrey R. Bernstein, Ph.D.
10.10
Winston Laboratories, Inc. 1999 Stock Option Plan.
10.11
Winston Laboratories, Inc. Stock Option Plan for Non-Employee Directors.
21.1
Subsidiaries
68
Table of Contents
Index to Financial Statements
Winston Laboratories, Inc. and Subsidiaries
Page
Audited Financial Statements as of and for the Years Ended December 31, 2007 and 2006
F-2
Report of Independent Registered Public Accounting Firm
F-2
Consolidated Balance Sheets
F-3
Consolidated Statements of Operations
F-4
Consolidated Statements of Stockholders' Equity
F-5
Consolidated Statements of Cash Flows
F-6
Notes to Consolidated Financial Statements
F-7
Unaudited Financial Statements as of and for the Three Months and Six Months Ended
June 30, 2008 and 2007
F-19
Consolidated Balance Sheet
F-19
Consolidated Statements of Operations
F-20
Consolidated Statements of Cash Flows
F-21
Notes to Consolidated Financial Statements
F-22
Winston Laboratories, Inc. and Getting Ready Corporation
F-26
Pro Forma Unaudited Balance Sheet as of June 30, 2008
F-27
Pro Forma Unaudited Statements of Operations for the six months ended June 30, 2008
F-28
Pro Forma Unaudited Statements of Operations for the year ended December 31, 2007
F-29
Notes to Pro Forma Unaudited Financial Statements
F-30
F-1
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Winston Laboratories, Inc. and Subsidiaries
We have audited the consolidated balance sheets of Winston Laboratories, Inc. and Subsidiaries
as of December 31, 2007 and 2006, and the related consolidated statements of operations,
stockholders' equity and cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Winston Laboratories, Inc. and Subsidiaries as of
December 31, 2007 and 2006, and the results of their operations and their cash flows for the years
then ended, in conformity with U.S. generally accepted accounting principles.
/s/ McGladrey & Pullen, LLP
Chicago, Illinois
March 12, 2008, except for Note M as to which the date is September 25, 2008
F-2
Table of Contents
Winston Laboratories, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
December 31, 2007 and 2006
2007
2006
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
4,481,611
$
1,312,345
Accounts receivable
50,000
58,844
Related party receivable
14,785
28,509
Prepaid and other current assets
8,073
44,699
4,554,469
1,444,397
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $157,161 and
$150,896 at December 31, 2007 and 2006, respectively
8,966
15,231
INTANGIBLE ASSETS, NET (Note E)
23,714
27,535
OTHER ASSETS
4,314
34,910
TOTAL ASSETS
$
4,591,463
$
1,522,073
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable
$
491,560
$
272,446
Accrued expenses and other current liabilities
254,250
227,653
Total current liabilities
745,810
500,099
Long Term Liabilities
—
—
Minority interest in subsidiary
—
183,920
Commitments and Contingencies
Total liabilities (Note K)
745,810
684,019
Stockholders' equity (Note K)
Preferred Stock, $.001 par value, 30,000,000 shares authorized in 2007:
Series A, Convertible 5,815,851 shares issued and outstanding at
December 31, 2007
5,815
—
Series B, Convertible 0 shares issued and outstanding at December
31, 2007
—
—
Common stock, $.001 par value, 60,000,000 shares authorized 23,937,358 and
24,984,948 shares issued and outstanding at December 31, 2007 and 2006,
respectively
23,936
24,984
Additional paid-in capital
45,401,938
40,016,049
Accumulated deficit
(41,586,036
)
(39,202,979
)
Total stockholders' equity
3,845,653
838,054
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
4,591,463
$
1,522,073
See accompanying notes
F-3
Table of Contents
Winston Laboratories, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31, 2007 and 2006
2007
2006
REVENUE
Royalty revenue
$
800,000
$
294,453
EXPENSES
Research and development
1,939,429
1,279,672
General and administrative
1,281,612
1,154,309
Depreciation and amortization
10,087
15,563
Total operating expenses
3,231,128
2,449,544
Loss from operations
(2,431,128
)
(2,155,091
)
Interest income
42,733
76,439
Other income
5,338
86,548
48,071
162,987
Loss from continuing operations before minority
interest and income taxes
(2,383,057
)
(1,992,104
)
Minority interest in loss of subsidiary
—
(28,105
)
Loss from continuing operations before income taxes
(2,383,057
)
(2,020,209
)
Income Taxes
Current
—
—
Deferred
—
—
—
—
Net loss from continuing operations
(2,383,057
)
(2,020,209
)
Discontinued operations (Note J)
Gain on sale of Zostrix
®
product line, net of tax
—
675,000
Net loss from discontinued operations, net of tax
—
(27,960
)
Income from discontinued operations
—
647,040
NET LOSS
$
(2,383,057
)
$
(1,373,169
)
See accompanying notes
F-4
Table of Contents
Winston Laboratories, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Years Ended December 31, 2007 and 2006
Additional
Total
Common Stock
Preferred Stock
Paid-in
Accumulated
Stockholder's
Shares
Amount
Shares
Amount
Capital
Deficit
Equity
Balance at January 1, 2006
24,984,948
$
24,984
$
40,009,988
$
(37,829,810
)
$
2,205,162
Compensation with respect
to non-employee stock
option grants
6,061
$
6,061
Net loss
(1,373,169
)
$
(1,373,169
)
Balance at December 31,
2006
24,984,948
24,984
40,016,049
(39,202,979
)
$
838,054
Issuance of common stock
385,000
385
346,115
$
346,500
Purchase and cancellation
of common stock
(1,594,590
)
(1,595
)
(223,405
)
$
(225,000
)
Repurchase of Bioglan
Shares in Subsidiary and
Elimination of Minority
Interest
173,920
$
173,920
Issuance of common stock
upon exercise of stock
options
162,000
162
124,218
$
124,380
Issuance of Series A
Convertible Preferred
Shares (net of costs of
$194,648)
5,815,851
$
5,815
4,799,537
$
4,805,352
Compensation with respect
to employee and
non-employee stock option
grants
165,504
$
165,504
Net loss
(2,383,057
)
$
(2,383,057
)
Balance at December 31,
2007
23,937,358
$
23,936
5,815,851
$
5,815
$
45,401,938
$
(41,586,036
)
$
3,845,653
See accompanying notes
F-5
Table of Contents
Winston Laboratories, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2007 and 2006
2007
2006
Cash flows from operating activities
Net loss
$
(2,383,057
)
$
(1,373,169
)
Depreciation and amortization
10,086
15,563
Minority interest in loss of subsidiary
—
28,105
Stock option expense for non-employee directors and employees
165,504
6,061
Gain on sale of Zostrix product line
—
(675,000
)
Net loss from discontinued operations
—
27,960
Changes in:
Accounts receivable
22,568
(46,889
)
Prepaid and other current assets
36,626
23,416
Other assets
30,596
—
Accounts payable
219,114
48,315
Accrued expenses and other current liabilities
26,597
(88,563
)
Net cash used in operating activities
(1,871,966
)
(2,034,201
)
Cash flows from investing activities
Purchase of minority interest in subsidiary
(10,000
)
—
Proceeds from sale of Zostrix product line
—
675,000
Purchases of property, plant and equipment
—
(8,173
)
Purchases of intangibles
—
(26,781
)
Net cash provided by investing activities
(10,000
)
640,046
Cash flows from financing activities
Purchase and cancellation of common stock
(225,000
)
—
Issuance of common stock
346,500
—
Issuance of common stock upon exercise of stock options
124,380
—
Issuance of preferred stock, net of costs
4,805,352
—
Net cash provided by financing activities
5,051,232
—
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
3,169,266
(1,394,155
)
Cash and cash equivalents at beginning of year
1,312,345
2,706,500
Cash and cash equivalents at end of year
$
4,481,611
$
1,312,345
Supplemental disclosures of cash flow information
Interest paid
$
—
$
—
Income taxes paid
$
—
$
—
Supplemental disclosures of non-cash investing and financing
information
Repurchase and elimination of minority interest in subsidiary
$
173,920
$
—
See accompanying notes
F-6
Table of Contents
Winston Laboratories, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007 and 2006
NOTE A — COMPANY FORMATION AND BACKGROUND
Winston Laboratories, Inc. ("Winston") is a research-based specialty pharmaceutical company
engaged in the discovery, development and commercialization of pain-management products.
Winston is the successor to a research and development partnership, Cisco Ltd. ("Cisco")
formed in 1992 to develop a specific novel neuroactive compound, civamide. Civamide was discovered
and patented by Joel E. Bernstein, M.D., the managing general partner of Cisco and subsequently,
the founder and CEO of Winston. In 1997, Cisco became Winston Laboratories LLC, which in 1998
became a C Corporation. Winston's initial operating funds came from a rights offering in 1997 and
a private equity placement in 1998. In 1999, Winston sold approximately 19% of its common stock to
Bioglan Pharma Plc ("Bioglan") for $25 million; Bioglan's stake was subsequently reduced below 7%
when it did not participate in a 2004 Winston rights offering. In September 2007, Winston
purchased all of the then outstanding ownership in Winston from Bioglan for $225,000. Subsequent
to this transaction, all of the then purchased shares were retired.
In 2000, Winston established a subsidiary, Rodlen Laboratories, Inc. ("Rodlen," formerly
Oncovir Corporation), approximately 18% of which was sold to Bioglan for $13.3 million in 2001. In
2002, Bioglan's stake in Rodlen was reduced below 3% as a result of Bioglan's election not to
participate in a Rodlen rights offering. The proceeds of this rights offering were used to acquire
the Zostrix
®
line of over-the-counter topical analgesics. Rodlen marketed the Zostrix
®
product
line until July 2005, when it sold the product to Hi-Tech Pharmacal Co. ("Hi-Tech"). (See note J
below for additional information on this transaction.) In October 2004, Rodlen launched another
topical analgesic, Axsain
®
, which it promoted to physicians and other health-care professionals.
In June 2005, based on disappointing sales, Rodlen sharply reduced promotion of the Axsain
®
product
and in March 2006, Rodlen discontinued selling this product altogether. Both Zostrix
®
and Axsain
®
have been treated in the financial statements as discontinued operations (Note J). In February
2007, Rodlen licensed certain technology underlying the Axsain
®
product to Hi-Tech (Note C).
Rodlen operates as a "virtual company" with no employees of its own. Rodlen is consolidated into
the financial statements of Winston. In September 2007, Winston purchased all of the then
outstanding ownership in Rodlen from Bioglan for $10,000. Subsequent to this transaction, all of
the then purchased shares were retired. On September 21, 2007, Rodlen was merged into Winston.
In 2005, Winston established a wholly owned UK subsidiary, Winston Laboratories Limited ("UK
Ltd."). UK Ltd. was established for the purposes of conducting work with European drug regulatory
authorities, who typically require a European entity. UK Ltd. has no employees or material assets.
The consolidated entity of Winston, Rodlen, and UK Ltd. is hereinafter referred to as the
"Company."
In November 2007, the Company and a publicly-traded company with no active operations signed a
merger agreement (the "Merger Agreement") (Note L) that is expected to close in the third quarter
of 2008 ("Proposed Merger"). As part of the transaction, an unrelated individual investor that is
also a significant investor in the publicly-traded company, and affiliates invested $5 million in
the Company, with an additional $4 million investment required by the Merger Agreement to be made
contemporaneously with the consummation of the Proposed Merger (Note K). Proceeds from the
transactions are expected to fund current operations of the Company, including certain costs
associated with upcoming regulatory applications and ongoing research programs.
NOTE B — SUMMARY OF ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements of the Company include the accounts of Winston and its
Subsidiaries, UK Ltd. and Rodlen. All intercompany balances and transactions have been eliminated.
Through September 2007, Bioglan's interest in Rodlen is presented as minority interest in the
accompanying financial statements.
F-7
Table of Contents
Winston Laboratories, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Use of Estimates
In preparing financial statements in conformity with accounting principles generally accepted
in the United States of America, management is required to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
For purposes of reporting cash flows, the Company considers all instruments with original
maturities of three months or less to be cash equivalents. Included in cash and cash equivalents
is a $1.5 million certificate of deposit (COD), which carried an annual interest rate of 4.85% and
matured on February 18, 2008.
Accounts Receivable
Accounts receivable are carried at original amount due less an estimate made for doubtful
accounts. Accounts outstanding longer than the payment terms are considered past due. The Company
determines its allowances by considering a number of factors, including the length of time trade
accounts receivable are past due, the Company's previous loss history, the customer's current
ability to pay its obligation to the Company, projected returns based on historical trends and
anticipated events at particular customers, and the condition of the general economy and industry
as a whole. The Company writes off accounts receivable when they become uncollectible, and
payments subsequently received on such receivables are credited to the allowance for doubtful
accounts. The allowance for doubtful accounts was $0 at December 31, 2007 and 2006, respectively.
Property and Equipment
Property and equipment consists primarily of furniture and office equipment with estimated
lives of 3-7 years. Depreciation is provided for in amounts sufficient to relate the cost of
depreciable assets to operations over their estimated service lives, principally on an accelerated
basis.
Impairment of Long-Lived Assets
The Company accounts for long-lived assets in accordance with the provisions of FAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets
. This Statement requires that
long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Recoverability of assets is measured
by a comparison of the carrying amount of an asset to future undiscounted cash flows expected to be
generated by the asset. If the carrying amount of an asset exceeds its estimated future cash
flows, an impairment charge is recognized by the amount by which the carrying amount of the asset
exceeds the fair value of the asset.
Fair Value of Financial Instruments
The carrying amounts of financial instruments, including cash and cash equivalents, accounts
receivable and accounts payable approximate fair value due to the short term maturity of these
instruments.
Revenue Recognition
The Company records revenue from product sales when title and risk of ownership have been
transferred to the customer, typically upon delivery. Royalty revenues are recognized when
determinable, in accordance with the terms of the license agreement, generally upon receipt of cash
payment which is not refundable. Since the Company is not able to forecast product sales or
attainment of milestones by licensees, royalty payments that are based on product sales or
attainment of milestones by licensees are not determinable until the licensee has completed their
computation of the royalties due and/or remitted cash payment to the Company.
F-8
Table of Contents
Winston Laboratories, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Income Taxes
The Company files a consolidated tax return that includes all subsidiaries. Deferred income
taxes are recognized for the tax consequences in future years of differences between the tax bases
of assets and liabilities and their financial reporting amounts at each year-end, based on enacted
tax laws and statutory tax rates applicable to the periods in which the differences are expected to
affect taxable income. Valuation allowances are established when necessary to reduce deferred
income tax assets to the amount expected to be realized.
Stock-Based Compensation
In December 2004, the Financial Accounting Standards Board ("FASB") issued Statement No. 123
(revised 2004),
"Share-Based Payment"
("SFAS 123(R)"). SFAS 123(R) requires that the compensation
cost relating to share-based payment transactions be recognized in financial statements, based on
the fair value of the instruments issued. SFAS 123(R) covers a wide range of share-based
compensation including stock options, restricted stock, performance-based awards, share
appreciation rights and employee share purchase plans. SFAS 123(R) replaces Statement No. 123
("SFAS 123"),
"Accounting for Stock-Based Compensation,"
and supersedes Accounting Principles Board
("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees."
As originally issued in 1995,
SFAS 123 established as preferable the fair-value-based method of accounting for share-based
payment transactions. However, SFAS 123 permitted entities to continue to apply the guidance in
Opinion No. 25, with appropriate footnote disclosure. Prior to January 1, 2006, the Company
accounted for stock-based compensation arrangements using the intrinsic value method in accordance
with the provisions of APB Opinion No. 25 and in compliance with the disclosure provisions of SFAS
123.
The Company adopted SFAS 123(R) as of January 1, 2006. Since the Company had previously used
the minimum value method for recognition and disclosure, SFAS 123(R) has been applied prospectively
for 2006. Hence, new awards of options, as well as any options modified, repurchased, or canceled
after January 1, 2006 are accounted for under the provisions of SFAS 123(R), whereas awards
outstanding before that date continue to be accounted for using the accounting provisions
originally applied to these awards.
In conjunction with the Merger Agreement (Note L), the Company's Board of Directors voted to
accelerate the vesting of all unvested stock options as of October 30, 2007. Accordingly, the
compensation expense associated with the acceleration of these stock options has been accounted for
under FAS 123(R) and reflected in the statement of operations for the year ended December 31, 2007.
Research and Development Costs
Research and development costs are charged to operations as incurred. Research and
development costs, as presented herein, include the salaries and related expenses of personnel
engaged in activities directly related to research and development activities, including
administrative personnel working in the clinical and operations areas of the Company. All other
salaries have been included in general and administrative expense. Research and development costs
totaled $1,939,429 and $1,279,672 in 2007 and 2006, respectively.
Recent Accounting Pronouncements
In July 2006, the Financial Accounting Standards Board ("FASB") issued Interpretation No. 48
("FIN 48"),
Accounting for Uncertainty in Income Taxes
–
an interpretation of FASB Statement
109.
FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's
financial statements in accordance with FASB Statement No. 109,
Accounting for Income Taxes
. FIN
48 prescribes a comprehensive model for recognizing, measuring, presenting and disclosing in the
financial statements tax positions taken or expected to be taken on a tax return. If there are
changes in net assets as a result of application of FIN 48 these will be accounted for as an
adjustment to the opening balance of retained earnings. Additional disclosures about the amounts
of such liabilities will be required also. In February 2008, the FASB delayed the effective date
of FIN 48 for certain nonpublic enterprises to annual financial statements for fiscal years
beginning after December 15, 2007. The Company will be required to adopt FIN 48 in its 2008 annual
financial statements. Management is currently assessing the impact of
FIN 48 on its consolidated financial position and results of operations and has not determined
if the adoption of FIN 48 will have a material effect on its financial statements.
F-9
Table of Contents
Winston Laboratories, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
In September 2006, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 157,
Fair Value Measurements
("SFAS No. 157"). SFAS No. 157 defines fair
value, establishes a framework for measuring fair value, and expands disclosures about fair value
measurement. SFAS No. 157 also emphasizes that fair value is a market-based measurement, not an
entity-specific measurement, and sets out a fair value hierarchy with the highest priority being
quoted prices in active markets. Under SFAS No. 157, fair value measurements are disclosed by
level within that hierarchy. This Statement is effective for fiscal years beginning after November
15, 2007. The Company is currently assessing the potential effect of SFAS No. 157 on its financial
position, results of operations and cash flows.
In February 2007, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 159,
The Fair Value Option for Financial Assets and Financial Liabilities
("SFAS No. 159"). SFAS No.159 permits companies to elect to follow fair value accounting for
certain financial assets and liabilities in an effort to mitigate volatility in earnings without
having to apply complex hedge accounting provisions. The standard also establishes presentation
and disclosure requirements designed to facilitate comparison between entities that choose
different measurement attributes for similar types of assets and liabilities. SFAS No. 159 is
effective for fiscal years beginning after November 15, 2007. The Company is currently evaluating
the impact of the adoption of SFAS No. 159, if any, on its financial position, results of operation
and cashflows.
In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141(R),
"Business Combinations" (FAS 141(R)). This Statement provides greater consistency in the accounting
and financial reporting for business combinations. FAS 141(R) establishes new disclosure
requirements and, among other things, requires the acquiring entity in a business combination to
record contingent consideration payable, to expense transaction costs, and to recognize all assets
acquired and liabilities assumed at acquisition-date fair value. This standard is effective for the
beginning of the Company's first fiscal year beginning after December 15, 2008. FAS 141(R) will
have a significant impact on the accounting for future business combinations after the effective
date and will impact financial statements both on the acquisition date and subsequent periods.
In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160,
"Noncontrolling Interests in Consolidated Financial Statements" (FAS 160). FAS 160 amends
Accounting Research Bulletin No. 51, "Consolidated Financial Statements", to establish accounting
and reporting standards for the minority or noncontrolling interests in a subsidiary or variable
interest entity and for the deconsolidation of a subsidiary or variable interest entity. Minority
interests will be recharacterized as noncontrolling interests and classified as a component of
equity. It also establishes a single method of accounting for changes in a parent's ownership
interest in a subsidiary and requires expanded disclosures. FAS 160 is effective for the beginning
of the Company's first fiscal year beginning after December 15, 2008, and requires retroactive
adoption of the presentation and disclosure requirements for existing minority interests. The
Company does not expect the adoption of this standard to have a material impact on its financial
position or results of operations.
NOTE C — TECHNOLOGY LICENSE AGREEMENTS
In February 2006, the Company entered into a technology license agreement with Sirius
Laboratories, Inc. ("Sirius"). Several large stockholders in the Company had significant stock
holdings in Sirius until March 10, 2006, when Sirius was acquired by DUSA Pharmaceuticals, Inc. Two
officers of the Company served on Sirius' board of directors but resigned their directorships in
2007. Under the terms of the license agreement, the Company granted Sirius an exclusive license to
the proprietary rights of certain products (first marketed as Micanol
®
and then later as
Psoriatec
®
) containing the active pharmaceutical ingredient, anthralin. The agreement provided for
minimum annual royalties of $300,000 through February, 2008 and an option to purchase all right to
the product for $750,000. In January 2008, the license agreement was extended until September 30,
2008 by mutual consent and the extension and provides for a continuation of the 25% royalty on net
sales, but eliminates the minimum royalty and the
purchase option. Under the technology license agreement, the Company recorded royalty revenue
of $300,000 and $294,453 for the years ended December 31, 2007 and 2006, respectively. The Company
had a receivable due from Sirius of $50,000 as of December 31, 2007 and 2006, which is included in
accounts receivable in the balance sheet.
F-10
Table of Contents
Winston Laboratories, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
In February 2007, Rodlen licensed a patent and certain other technology to Hi-Tech Pharmacal
Co. ("Hi-Tech") for cash consideration of two payments totaling $300,000, as well as a 10% royalty
on net sales of products sold by Hi-Tech that utilize the intellectual property licensed from
Rodlen for the remaining life of the related patent, reducing to 5% of net sales for four years
following the expiration of the patent. This patent and technology was used in the Axsain
®
product
discussed in Note J. Hi-Tech does not plan to use the patent and technology to produce or market
Axsain
®
and did not acquire the trademark. The Company recorded royalty revenues under this
agreement of $300,000 for the year ended December 31, 2007.
On August 14, 2007, the Company entered into an exclusive technology license agreement with
Exopharma, Inc., ("Exopharma") an entity that is majority owned by the CEO of the Company and his
affiliates. Under the terms of the license agreement, the Company granted Exopharma an exclusive
license to the proprietary rights of certain products (≤ 0.025% civamide with the stated indication
of psoriasis of the skin). In exchange, Exopharma paid the Company a license fee of $100,000 and
is required to pay a 9% royalty on sales of the product. In addition, the agreement requires
Exopharma to pay the Company a non-refundable payment of $250,000 upon approval of a Marketing
Authorization by Exopharma on the product(s) described in the agreement.
On September 19, 2007, the Company entered into an exclusive technology license agreement with
Opko Ophthalmologists, LLC., ("OPKO"). The CEO and Chairman of OPKO is also an investor in the
Company's Series A Convertible Preferred Stock Offering (Notes K and L). Under the terms of the
license agreement, the Company granted OPKO an exclusive license to the proprietary rights of
certain products (pharmaceutical compositions or preparations containing the active ingredient
civamide in formulations suitable for use in the therapeutic or preventative treatment of
ophthalmic conditions in humans). In exchange, OPKO paid the Company a license fee of $100,000 and
is required to pay a 10% royalty on sales of the product. In addition, the agreement requires OPKO
to pay the Company a non-refundable payment of $5,000,000 upon approval of a Marketing
Authorization by OPKO on the product described in the agreement.
NOTE D — RELATED-PARTY TRANSACTIONS
In August 2002, the Company reached an agreement with Elorac Limited ("Elorac"), an Illinois
partnership whose general partner is founder, president and CEO of the Company. Under this
agreement, the Company was to provide certain regulatory assistance to Elorac with regard to a
nicotinamide product, in exchange for fifty percent (50%) of the patent and proprietary rights in
the nicotinamide product. In December 2002, Elorac sold the proprietary rights to the nicotinamide
product to Sirius, and in conjunction with this sale, received certain payments, of which the
Company received its pro-rata share. In 2006, in accordance with the December 2002 agreement
between Elorac and Sirius and in connection to its acquisition by DUSA, Sirius made certain
payments to Elorac in relation to the nicotinamide product (one payment representing 5% of previous
year net sales, and another representing 25% of net proceeds received for the nicotinamide product
asset in the DUSA sale), and the Company received a total of $67,644 of such payments, in
accordance with its ownership stake in the product.
In 2006 and 2007, the Company assisted Packer's-Pine Corporation ("Packer's") with
distribution of certain personal care products and administration. Packers is a corporation whose
chairman is founder, president and CEO of the Company and two directors of the Company serve on the
board of directors of Packer's. Under this arrangement, Packer's reimbursed the Company for direct
costs. The amount received by the Company from Packer's as a fee for performing this function
amounted to $0 and $3,317 during the years ended December 31, 2007 and 2006, respectively. Amounts
due from Packer's of $5,554 and $16,167 as of December 31, 2007 and 2006, respectively, are
included in related party receivables in the Company's balance sheet.
F-11
Table of Contents
Winston Laboratories, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
In November 2005, Winston spun off Gideon Pharmaceuticals, Inc. ("Gideon"). Gideon received
certain early-stage technologies not being actively developed by Winston, and all Winston
shareholders were offered the opportunity to purchase Gideon shares on a pro-rata basis. Not all
Winston shareholders purchased Gideon shares, but overlap in the shareholders of Winston and Gideon
is very significant. Gideon is an independent entity and not a subsidiary of Winston; however, as
part of the spin-off process, Winston did end up purchasing and maintaining a minority stake in
Gideon (approximately 10.7% ownership), for the purpose of preserving the rights of those option
holders in Winston prior to the Gideon spin-off. In particular, option holders in Winston prior to
the spin off of Gideon have, upon exercise of their Winston options, an opportunity to purchase a
pro-rata allotment of Gideon shares. During 2006, the Company undertook certain development
projects on behalf of Gideon, which were billed back to Gideon at cost. As of December 31, 2006,
the Company had a receivable due from Gideon of $2,642, which was included in related party
receivables on the Company's balance sheet and was included in related party receivables on the
Company's balance sheet and was subsequently collected in full in 2007. In October 2007, in
preparation for signing a merger agreement with Getting Ready Corporation (Note L), the Company's
Board of Directors voted to distribute the shares of Gideon owned by the Company on behalf of the
Winston option holders on a pro-rata basis to such option holders. As of December 31, 2007,
Winston had no ownership stake in Gideon.
NOTE E — INTANGIBLE ASSETS
Intangible assets by major asset class are as follows at December 31, 2007 and 2006:
2007
2006
Patents and trademarks
$
40,575
$
40,575
Less accumulated amortization
(16,861
)
(13,040
)
$
23,714
$
27,535
Future annual amortization expense at December 31, 2007, is as follows:
2008
$
3,905
2009
3,528
2010
2,891
2011
2,678
2012
2,678
Thereafter
8,034
$
23,714
F-12
Table of Contents
Winston Laboratories, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
NOTE F — INCOME TAXES
The provision for income taxes differs from the amount computed by applying the statutory
federal income tax rate of 34.0% to pre-tax loss as follows:
2007
2006
Continuing Operations
Tax benefit at U.S. federal statutory rate
$
(810,000
)
$
(687,000
)
State tax benefit, net of federal benefit
(115,000
)
(98,000
)
Change in valuation allowance
1,020,000
690,000
Permanent differences
1,000
11,000
Research and development credits
(105,000
)
82,000
Other, net
9,000
2,000
0
0
Discontinued Operations
Tax benefit at U.S. federal statutory rate
0
220,000
State tax benefit, net of federal benefit
0
31,000
Utilization of net operating loss carryforward
0
(251,000
)
0
0
Income tax expense (benefit)
$
—
$
—
The Company's deferred taxes consist of the following at December 31, 2007 and 2006:
2007
2006
Deferred tax assets
Net operating loss carryforward
$
14,701,000
$
13,650,000
Research and development credits
1,200,000
1,095,000
Intangible
1,642,000
1,828,000
Property and equipment
22,000
21,000
Other
70,000
21,000
Total deferred tax assets
17,635,000
16,615,000
Valuation allowance for deferred tax assets
(17,635,000
)
(16,615,000
)
Deferred taxes, net
$
—
$
—
F-13
Table of Contents
Winston Laboratories, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
At December 31, 2007, the Company had Federal and state net operating loss carryforwards of
approximately $37,888,000. The Federal and state loss carryforwards will begin expiring in 2018
and 2010, respectively, unless previously utilized. Pursuant to Internal Revenue Code Sections 382
and 383, certain substantial changes in the Company's ownership may limit the amount of the net
operating loss carryforwards, which could be utilized to offset future taxable income and income
tax liabilities. The Company also had Federal research and development credit carryforwards of
approximately $1,200,000. The Company has provided a valuation allowance for the full amount of
its net deferred tax assets since realization of any future benefit from deductible temporary
differences, net operating loss and tax credit carryforwards is uncertain.
NOTE G — STOCK OPTION PLAN
The Company has adopted the 1999 Stock Option Plan, as amended (the "1999 Plan"), and the
Stock Option Plan for Non-Employee Directors, as amended (the "Director Plan"), collectively the
"Plans." The Plans provide for the granting of incentive stock options to officers and other
employees of the Company, and non-qualified stock options to directors and consultants of the
Company. The total number of shares of common stock authorized for issuance under the Plans is
4,400,000. The options are exercisable at various dates and will expire no more than ten years
from their date of grant. The exercise price and the duration of each option are determined by the
Board of Directors. In the case of incentive stock options, the exercise price may not be less
than 100% of the fair market value of the Company's common stock at the date of grant. For holders
of more than 10% of the Company's total combined voting power of all classes of stock, incentive
stock options may not be granted at less than 110% of the fair market value of the Company's common
stock at the date of grant and for a term not to exceed five years.
Prior to 2006, in accordance with the provisions of SFAS 123, the Company elected to account
for stock-based compensation under the minimum value method of accounting prescribed by APB Opinion
No. 25. Under APB Opinion No. 25, generally, no cost is recorded for stock options issued to
employees unless the option price is below the fair market value at the time options are granted.
Effective January 1, 2006, the Company adopted SFAS 123(R), whereby any new awards of options, as
well as any options modified, repurchased, or canceled after January 1, 2006 are accounted for
under the provisions of
SFAS 123(R).
The effect of adopting SFAS 123(R) was to increase the loss from continuing operations, loss
from continuing operations before income taxes and net loss by $6,061 for the year ended December
31, 2006. Share-based compensation is included in general and administrative expenses in the
statement of operations. The adoption of SFAS 123(R) did not affect the Company's cash flows from
operating activities or financing activities.
SFAS 123(R) requires companies to estimate the fair value of share-based payment awards on the
date of grant using an option pricing model and to recognize this expense. Stock-based
compensation expense recognized for the years ended December 31, 2007 and 2006 was $165,504 and
$6,061, respectively. Approximately $137,000 of the 2007 compensation expense relates to the
acceleration of vesting all unvested stock options for five employees in conjunction with the
Proposed Merger (Note L). This expense was calculated based on the Black-Scholes single-option
pricing model, using the following assumptions:
2007
2006
Expected dividend yield
0.00%
0.00%
Expected stock price volatility
75.00%
76.40%
Risk-free interest rate range
4.20% - 4.71%
4.57% - 4.67%
Expected life of options (years)
5.75 years
5.75 years
F-14
Table of Contents
Winston Laboratories, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The risk-free interest rate is based on the implied yield available on U.S. treasury
zero-coupon issues with an equivalent remaining term. Since the Company does not have sufficient
historical experience on which to estimate expected term, the simplified method was used to
generate the expected option life. Using the simplified
method, the expected term is calculated by taking the average of the vesting term and the
original contractual term. In a similar manner, the Company does not have a history of stock price
volatility, so it identified five appropriate comparables for use as a benchmark. These
comparables (three public companies and two private companies that filed for and later executed
initial public offerings) are in the same industry (specialty pharmaceuticals) and focused on
development of the same types of products (pain control and central nervous system) as the Company.
To generate the estimated stock price volatility shown above, a weighted average of the five
comparable companies' expected volatility (which ranged from 56% to 88%) was employed for a period
equal to the expected life of the options.
The following table summarizes stock option activity under the Plans during the years ended
December 31, 2006 and 2007:
Weighted
Weighted-
Weighted-
Average
Average
Average
Aggregate
Remaining
Exercise
Grant Date
Intrinsic
Contractual
Shares
Price
Fair Value
Value
Life (Years)
Outstanding at December 31, 2005
2,861,125
$
0.74
Granted
45,000
0.75
$
0.51
Exercised
—
—
Forfeitures
(368,375
)
0.69
Outstanding at December 31, 2006
2,537,750
$
0.74
Granted
30,000
0.75
$
0.51
Exercised
(162,000
)
0.77
Forfeitures
(559,500
)
0.75
Outstanding at December 31, 2007
1,846,250
$
0.74
$
63,795
5.79
Total unrecognized compensation cost for stock options as of December 31, 2007 was $0. The
aggregate intrinsic value in the table above is before income taxes, based on the Company's
estimate of the fair value of a share of the Company's common stock of $0.75 at December 31, 2007.
The aggregate intrinsic value of options outstanding and exercisable during 2007 is $63,795. Cash
proceeds received from the exercise of options for 2007 was $124,380. The total intrinsic value of
options exercised during 2007 was $1,200. The realized tax benefit from stock options and other
share-based payments for 2007 was $0, based on the Company's election of the "with and without"
approach.
NOTE H — 401(k) PLAN
The Company has adopted a qualified employee savings and retirement plan under Section 401(k)
of the U.S. Internal Revenue Code (the "401(k) Plan"). All of the Company's full-time employees
are eligible to participate in the 401(k) Plan by enrolling in the 401(k) Plan and electing to
reduce their current compensation by up to the statutorily prescribed annual limit, and having the
amount of the reduction contributed to the 401(k) Plan. The Company may also make discretionary
matching contributions to the 401(k) Plan for employees. The Company made discretionary matching
contributions to the 401(k) Plan of $28,023 and $30,692 in 2007 and 2006, respectively.
F-15
Table of Contents
Winston Laboratories, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
NOTE I — COMMITMENTS AND CONTINGENCIES
The Company leases its facilities and certain equipment under operating leases that expire
through 2010. Future minimum operating lease payments at December 31, 2007, are as follows:
2008
$
68,373
2009
13,224
2010
2,708
Rental expense for the years ended December 31, 2007 and 2006 was $123,121 and $143,197,
respectively.
NOTE J — DISCONTINUED OPERATIONS
In July 2005, Rodlen sold the Zostrix
®
product line to Hi-Tech Pharmacal Co. ("Hi-Tech") for
upfront cash consideration of $4,000,000, plus four installment payments of up to $100,000, paid
quarterly starting October 1, 2005. Management determined this product line asset group met the
criteria to be a component of a business and discontinued operations. The asset group was comprised
of trade receivables, inventory, trade payables and accrued expenses. From the upfront
consideration, $675,000 was placed into an interest-bearing escrow account, and its release to
Rodlen was contingent on the issuance of three new Zostrix-related trademarks by the United States
Patent and Trademark Office. In August 2006, notices of allowance had been received for the three
new Zostrix-related trademarks, and $705,173 was released from escrow to Rodlen. Of this amount,
$675,000 was recorded as gain on the asset sale, and $30,173 was recorded as interest income in
2006.
In June 2005, based on disappointing sales, Rodlen determined it would dispose of the Axsain
®
product. Management determined this product line asset group met the criteria to be a component of
a business and discontinued operations. The asset group was comprised of trade receivables,
inventory, trade payables and accrued expenses. The asset group did not include the patents for the
Axsain
®
product or related technologies since these patents and technology were potentially usable
in other operations. In June 2005, management sharply reduced promotion of the Axsain
®
product and
terminated its field sales operations. No buyer was located for the product line and in March 2006,
Rodlen discontinued selling and manufacturing Axsain
®
altogether.
For purposes of these financial statements, the Zostrix
®
and Axsain
®
businesses are presented
as discontinued operations for the year ending December 31, 2006. Revenues included in the loss
from discontinued operations amounted to approximately $2,000 for the year ended December 31, 2006.
NOTE K — PREFERRED STOCK AND WARRANTS
In August 2007, the Company's stockholders approved a charter amendment authorizing 30,000,000
shares of blank check preferred stock, par value $0.001 per share. In November 2007, in connection
with the Proposed Merger, the Company's Board of Directors created two new series of preferred
stock, 10,000,000 shares designated as Series A Convertible Preferred Stock and 5,000,000 shares
designated as Series B Convertible Preferred Stock. The holders of Series A Convertible Preferred
Stock are entitled to convert on a one-for-one basis (subject to adjustment) to common stock
immediately upon the effective time of the Proposed Merger (Note L) and are required to convert on
a one-for-one basis (subject to adjustment) to common stock on November 13, 2008 or upon a change
of control event as defined. The holders of Series A Convertible Preferred Stock are also entitled
to that number of votes equal to the largest number of whole shares of common stock into which such
holder's shares of Series A Convertible Preferred could be converted into common stock. Each
holder of Series A Convertible Preferred Stock shall be entitled to receive, on a pari passu basis,
dividends in cash out of any funds of the Company legally available when and at the time for
declaration of dividends by the Company, at the same time any dividends or other distributions will
be paid or declared and set apart for payment on any shares of common stock on the basis of the
largest number of whole shares of common stock into which such holder's shares of Series A
Convertible Preferred Stock could be converted. In the event of any liquidation, dissolution or
winding up, distribution to the holders of Series A Convertible Preferred Stock shall be made pro
rata in proportion to the shares of common stock held by common stock holders and the shares of
Series A Convertible Preferred Stock that could be converted to common stock.
F-16
Table of Contents
Winston Laboratories, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
In conjunction with the Proposed Merger (Note L), on November 13, 2007 an unrelated investor,
that is also a significant investor in the publicly-traded company – and his affiliates purchased
5,815,851 shares of Series A Convertible Preferred Stock for a price of approximately $.8597 per
share. Provided that no party has breached the Series A Convertible Preferred Stock Agreement or
the Merger Agreement, the Series A Convertible Preferred Stock holders and the Company agreed that
on or prior to the closing of the Proposed Merger, the holders of Series A Convertible Preferred
Stock would purchase 4,187,413 shares of Series B Convertible Preferred Stock at a share price of
$.95524372, for a total purchase price of $4,000,000.
As part of the investment, the holders of the Series A Convertible Preferred Stock received
4,092,636 warrants to purchase additional Series A Convertible Preferred Stock for approximately
$.8597 per share. The warrants expire on November 13, 2012 and have certain adjustment provisions
as defined in the related warrant agreements.
In the event that the Proposed Merger (Note L) is not consummated on or prior to May 31, 2008,
then each holder of Series A Convertible Preferred Stock has the right, at its election ("put
option"), to cause the Company to repurchase its shares of Series A Convertible Preferred Stock at
a price equal to the $.8597 per share. The put option (Note M) is terminated under certain events
as defined in the Series A Securities Purchase Agreement. In accordance with the provisions of FAS
No. 150,
Accounting for Certain Financial Instruments with Characteristics of both Liabilities and
Equity
, the Series A Convertible Preferred Stock is presented in the Equity section of the
accompanying balance sheet.
The holders of Series B Convertible Preferred Stock are entitled to convert on a one-for-one
basis (subject to adjustment) to common stock immediately upon the first anniversary of the Series
B Convertible Preferred Stock issuance date or upon a change of control event as defined in the
Merger Agreement. The holders of Series B Convertible Preferred Stock are also entitled to that
number of votes equal to the largest number of whole shares of common stock into which such
holder's shares of Series B Convertible Preferred Stock could be converted into common stock. Each
holder of Series B Convertible Preferred Stock, when and if issued shall be entitled to receive, on
a pari passu basis, dividends in cash out of any funds of the Company legally available when and at
the time for declaration of dividends by the Company, at the same time any dividends or other
distributions will be paid or declared and set apart for payment on any shares of common stock on
the basis of the largest number of whole shares of common stock into which such holder's shares of
Series B Convertible Preferred Stock could be converted. In the event of any liquidation,
dissolution or winding up, distribution to the holders of Series B Convertible Preferred Stock
shall be made pro rata in proportion to the shares of common stock held by common stock holders and
the shares of Series B Convertible Preferred Stock that could be converted to common stock.
NOTE L — PROPOSED MERGER
On November 13, 2007, the Company and Getting Ready Corporation, a publicly-traded company
with no active operations, signed a merger agreement (the "Merger Agreement"). The combined
company will be renamed Winston Pharmaceuticals, Inc. The Proposed Merger is expected to close in
the third quarter of 2008.
Under the terms of the Merger Agreement, each common share of the Company will be converted
into approximately 17.51 shares of common stock of Getting Ready, and each share of Series A and
Series B Convertible Preferred Stock of Winston Laboratories (Note K) will be converted into
approximately .01751 shares of convertible preferred stock of Getting Ready. The convertible
preferred stock of Getting Ready will have terms similar to the Company's Series A and Series B
Convertible Preferred Stock, except there will be no put option and each share
will be convertible into 1,000 shares of Getting Ready common stock. The Merger is subject to
customary covenants and several conditions. Upon consummation of the Proposed Merger, it is
expected that Getting Ready common stockholders will receive approximately 2.56% of the combined
company on a fully diluted basis. Series A Convertible Preferred stock holders (Note K) will also
receive five-year warrants entitling them to purchase up to 10% of the common equity of the
combined company on a fully diluted basis.
F-17
Table of Contents
Winston Laboratories, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
NOTE M — SUBSEQUENT EVENT
On May 30, 2008, the Company and Getting Ready Corporation executed the First Amendment to
Merger Agreement and Plan of Reorganization to extend the closing of the Proposed Merger to
November 30, 2008. On June 23, 2008 the Company and Getting Ready Corporation executed the Second
Amendment to Merger Agreement and Plan of Reorganization to modify certain closing conditions of
the Proposed Merger and subsequently on June 24, 2008, the Company and the holders of Series A
Convertible Preferred Stock executed the First Amendment to Securities Purchase Agreement to
eliminate the put option.
On September 25, 2008, the holders of Series A Convertible Preferred Stock and other investors
purchased 4,187,413 shares of Series B Convertible Preferred Stock at a share price of $.95524372
for a total purchase price of $4,000.000.
On September 25, 2008, the merger with Getting Ready Corporation was consummated whereby:
•
all of the issued and outstanding capital stock of the Company, consisting of
23,937,358 shares of common stock, par value $0.001 per share, 5,815,851 shares of the
Company's Series A Convertible Preferred Stock, par value $0.001 per share, and
4,187,413 shares of the Company's Series B Convertible Preferred Stock, par value
$0.001 per share, was exchanged for 422,518,545 shares of Getting Ready Corporation's
common stock, par value $0.001 per share (at an exchange ratio of 17.65101 shares of
Getting Ready Corporation common stock per share of the Company's common stock),
101,849 shares of Getting Ready Corporation's Series A Convertible Preferred Stock and
73,332 shares of Getting Ready Corporation's Series B Convertible Preferred Stock (at
an exchange ratio of .01751238 shares of Getting Ready Corporation preferred stock per
share of the Company's preferred stock);
•
Getting Ready Corporation assumed the Company's stock option plans;
•
The Company's outstanding 1,643,750 options to purchase 1,643,750 shares of the
Company's common stock were converted to options to purchase 29,013,848 shares of
Getting Ready Corporation's common stock; and
•
all outstanding warrants to purchase the Company's Series A Preferred Stock were
assumed by Getting Ready Corporation and converted into the right to acquire, expiring
November 13, 2012, upon the exercise of such warrants, an aggregate of 71,672 shares of
Getting Ready Corporation's Series A Preferred Stock at a price per share of
$.859719348.
F-18
Table of Contents
Winston Laboratories, Inc. and Subsidiaries
UNAUDITED CONSOLIDATED BALANCE SHEETS
June 30, 2008
December 31, 2007
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
2,003,785
$
4,481,611
Accounts receivable
15,710
50,000
Related party receivable
34,073
14,785
Prepaid and other current assets
13,819
8,073
2,067,387
4,554,469
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $180,730
at June 30, 2008 and $157,161 at December 31, 2007
21,815
8,966
INTANGIBLE ASSETS, NET
23,492
23,714
OTHER ASSETS
4,314
4,314
TOTAL ASSETS
$
2,117,008
$
4,591,463
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable
$
782,883
$
491,560
Accrued expenses and other current liabilities
255,190
254,250
Total current liabilities
1,038,073
745,810
Long Term Liabilities
—
—
Commitments and Contingencies
Total liabilities
1,038,073
745,810
Stockholders' equity
Preferred Stock, $.001 par value, 30,000,000 shares authorized
Series A, Convertible 5,815,851 shares issued and
outstanding at June 30, 2008 and December 31, 2007
5,815
5,815
Series B, Convertible 0 shares issued and outstanding
at June 30, 2008 and December 31, 2007
—
—
Common stock, $.001 par value, 60,000,000 shares authorized
and 23,937,358 shares issued and outstanding at June 30, 2008
and at December 31, 2007
23,936
23,936
Additional paid-in capital
45,401,938
45,401,938
Accumulated deficit
(44,352,754
)
(41,586,036
)
Total stockholders' equity
1,078,935
3,845,653
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
2,117,008
$
4,591,463
See accompanying notes
F-19
Table of Contents
Winston Laboratories, Inc. and Subsidiaries
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months ended June 30
Six Months ended June 30
2008
2007
2008
2007
REVENUES
Royalty revenues
$
20,113
$
75,000
$
99,993
$
450,000
EXPENSES
Research and development
1,123,138
326,827
2,131,668
501,210
General and administrative
348,904
236,390
790,214
496,139
Depreciation and amortization
2,037
3,299
3,706
7,403
Total operating expenses
1,474,079
566,516
2,925,588
1,004,752
Loss from operations
(1,453,966
)
(491,516
)
(2,825,595
)
(554,752
)
Interest income
17,329
15,159
57,694
19,552
Other income
806
522
1,183
845
Other income (expenses)
18,135
15,681
58,877
20,397
Loss before income taxes
(1,435,831
)
(475,835
)
(2,766,718
)
(534,355
)
Income Taxes
Current
—
—
—
—
Deferred
—
—
—
—
Income Taxes
—
—
—
—
NET LOSS
$
(1,435,831
)
$
(475,835
)
$
(2,766,718
)
$
(534,355
)
See accompanying notes
F-20
Table of Contents
Winston Laboratories, Inc. and Subsidiaries
UNAUDITED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 2008 and 2007
2008
2007
Cash flows from operating activities
Net loss
$
(2,766,718
)
$
(534,355
)
Depreciation and amortization
3,706
7,403
Stock option expense for non-employee directors and employees
—
1,584
Changes in:
Accounts receivable
34,290
8,844
Related party receivable
(19,288
)
(29,174
)
Prepaid and other current assets
(5,746
)
12,375
Other assets
—
22,000
Accounts payable
291,323
(149,924
)
Accrued expenses and other current liabilities
940
(138,228
)
Net cash used in operating activities
(2,461,493
)
(799,475
)
Cash flows from investing activities
Purchases of property, plant and equipment
(14,603
)
—
Purchases of intangibles assets
(1,730
)
—
Net cash used in investing activities
(16,333
)
—
Cash flows from financing activities
—
Net cash provided by financing activities
—
—
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(2,477,826
)
(799,475
)
Cash and cash equivalents at beginning of period
4,481,611
1,312,345
Cash and cash equivalents at end of period
$
2,003,785
$
512,870
Supplemental disclosures of cash flow information
Interest paid
$
—
$
—
Income taxes paid
$
—
$
—
See accompanying notes
F-21
Table of Contents
Winston Laboratories, Inc. and Subsidiaries
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE A — BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Winston Laboratories, Inc. and
its wholly owned subsidiaries, Rodlen Laboratories, Inc. and Winston Laboratories Limited
("Winston" or the "Company") include all adjustments, consisting of normal recurring adjustments
and accruals, that in the opinion of the management of the Company are necessary for a fair
presentation of our financial position as of June 30, 2008 and the results of operations and cash
flows for the three and six months ended June 30, 2008 and 2007. These unaudited consolidated
financial statements do not include all of the information and footnotes required by United States
generally accepted accounting principles for complete financial statements and should be read in
conjunction with the Company's audited financial statements and the notes thereto for the year
ended December 31, 2007.
Operating results for the three and six months ended June 30, 2008 are not necessarily
indicative of the results to be achieved for the full year ending on December 31, 2008.
In preparing financial statements in conformity with accounting principles generally accepted
in the United States of America, management is required to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those estimates.
NOTE B — RECENT ACCOUNTING PRONOUNCEMENTS
In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and
Hedging Activities – An Amendment of FASB Statement No. 133" (or SFAS 161). His statement revises
the requirements for the disclosure of derivative instruments and hedging activities that include
the reasons a company uses derivative instruments, how derivative instruments and related hedged
items are accounted under SFAS 133 and how derivative instruments and related hedged items affect a
company's financial position, financial performance and cash flows. SFAS 161 will be effective in
the fourth quarter of fiscal 2009. The Company is currently evaluating the impact of adopting SFAS
161 and does not anticipate a material effect.
In July 2006, the Financial Accounting Standards Board ("FASB") issued Interpretation No. 48
("FIN 48"), Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement 109.
FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's
financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. FIN
48 prescribes a comprehensive model for recognizing, measuring, presenting and disclosing in the
financial statements tax positions taken or expected to be taken on a tax return. If there are
changes in net assets as a result of application of FIN 48 these will be accounted for as an
adjustment to the opening balance of retained earnings. Additional disclosures about the amounts
of such liabilities will be required also. In February 2008, the FASB delayed the effective date
of FIN 48 for certain nonpublic enterprises to annual financial statements for fiscal years
beginning after December 15, 2007. On April 1, 2008, the Company adopted FIN 48 the result of
which did not have any material impact on its tax positions.
In September 2006, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 157, Fair Value Measurements ("SFAS No. 157"). SFAS No. 157 defines fair
value, establishes a framework for measuring fair value, and expands disclosures about fair value
measurement. SFAS No. 157 also emphasizes that fair value is a market-based measurement, not an
entity-specific measurement, and sets out a fair value hierarchy with the highest priority being
quoted prices in active markets. Under SFAS No. 157, fair value measurements are disclosed by
level within that hierarchy. This Statement is effective for fiscal years beginning after November
15, 2007. The adoption of SFAS 157 did not have a material impact on the Company's fair value
measurements.
F-22
Table of Contents
Winston Laboratories, Inc. and Subsidiaries
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
In February 2007, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial Liabilities
("SFAS No. 159"). SFAS No. 159 permits companies to elect to follow fair value accounting for
certain financial assets and liabilities in an effort to mitigate volatility in earnings without
having to apply complex hedge accounting provisions. The standard also establishes presentation
and disclosure requirements designed to facilitate comparison between entities that choose
different measurement attributes for similar types of assets and liabilities. SFAS No. 159 is
effective for fiscal years beginning after November 15, 2007. The adoption of SFAS 159 did not
have any impact on the Company's results of operations and financial position.
NOTE C — TECHNOLOGY LICENSE AGREEMENTS
In February 2006, the Company entered into a technology license agreement with Sirius
Laboratories, Inc. ("Sirius"). Several large stockholders in the Company had significant stock
holdings in Sirius until March 10, 2006, when Sirius was acquired by DUSA Pharmaceuticals, Inc. Two
officers of the Company served on Sirius' board of directors but resigned their directorships in
2007. Under the terms of the license agreement, the Company granted Sirius an exclusive license to
the proprietary rights of certain products (first marketed as Micanol
®
and then later as
Psoriatec
®
) containing the active pharmaceutical ingredient, anthralin. The agreement provided for
minimum annual royalties of $300,000 through February, 2008 and an option to purchase all right to
the product for $750,000. In January 2008, the license agreement was extended until September 30,
2008 by mutual consent and the extension and provides for a continuation of the 25% royalty on net
sales, but eliminates the minimum royalty and the purchase option. Under the technology license
agreement, the Company recorded royalty revenue of $4,400 and $75,000 for three months ended June
30, 2008 and 2007, respectively and $34,847 and $150,000 for the six months ended June 30, 2008 and
2007, respectively.
In February 2007, Rodlen licensed a patent and certain other technology to Hi-Tech Pharmacal
Co. ("Hi-Tech") for cash consideration of two payments totaling $300,000, as well as a 10% royalty
on net sales of products sold by Hi-Tech that utilize the intellectual property licensed from
Rodlen for the remaining life of the related patent, reducing to 5% of net sales for four years
following the expiration of the patent. This patent and technology was used in the Axsain
®
product
discussed in Note J. Hi-Tech does not plan to use the patent and technology to produce or market
Axsain
®
and did not acquire the trademark. The Company recorded royalty revenues under this
agreement of $15,710 and $0 for the three months ended June 30, 2008 and 2007, respectively and
$65,133 and $300,000 for the six months ended June 30, 2008 and 2007, respectively.
NOTE D — RELATED-PARTY TRANSACTIONS
In 2006 and 2007, the Company assisted Packer's-Pine Corporation ("Packer's") with
distribution of certain personal care products and administration. Packers is a corporation whose
chairman is founder, president and CEO of the Company and two directors of the Company serve on the
board of directors of Packer's. Under this arrangement, Packer's reimbursed the Company for direct
costs. Amounts due from Packer's of $25,338 and $5,554 as of June 30, 2008 and December 31, 2007,
respectively, are included in related party receivables in the Company's balance sheet.
NOTE E — INCOME TAXES
Due to the continuing operating losses, no tax benefit is being recorded. The Company
continues to provide a full valuation allowance for any future tax benefits resulting from the
Company's net operating losses.
F-23
Table of Contents
Winston Laboratories, Inc. and Subsidiaries
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
NOTE F — PROPOSED MERGER
On November 13, 2007, the Company and Getting Ready Corporation, a publicly-traded company
with no active operations, signed a merger agreement (the "Merger Agreement"). The combined
company will be renamed Winston Pharmaceuticals, Inc. The Proposed Merger is expected to close in
the third quarter of 2008.
Under the terms of the Merger Agreement, each common share of the Company will be converted
into approximately 17.51 shares of common stock of Getting Ready Corporation, and each share of
Series A and Series B Convertible Preferred Stock of Winston Laboratories will be converted into
approximately .01751 shares of convertible preferred stock of Getting Ready Corporation. The
convertible preferred stock of Getting Ready Corporation will have terms similar to the Company's
Series A and Series B Convertible Preferred Stock, except there will be no put option and each
share will be convertible into 1,000 shares of Getting Ready Corporation common stock. The Merger
is subject to customary covenants and several conditions. Upon consummation of the Proposed
Merger, it is expected that Getting Ready Corporation common stockholders will receive
approximately 2.56% of the combined company on a fully diluted basis. Series A Convertible
Preferred stock holders will also receive five-year warrants entitling them to purchase up to 10%
of the common equity of the combined company on a fully diluted basis.
NOTE G — STOCK OPTION PLAN
The Company did not grant any options from January 1, 2008 through June 30, 2008. On July 28,
2008, 202,500 options were forfeited by a past Director of the Company whose right to exercise
these options lapsed.
NOTE H — SUBSEQUENT EVENT
On May 30, 2008, the Company and Getting Ready Corporation executed the First Amendment to
Merger Agreement and Plan of Reorganization to extend the closing of the Proposed Merger to
November 30, 2008. On June 23, 2008 the Company and Getting Ready Corporation executed the Second
Amendment to Merger Agreement and Plan of Reorganization to modify certain closing conditions of
the Proposed Merger and subsequently on June 24, 2008, the Company and the holders of Series A
Convertible Preferred Stock executed the First Amendment to Securities Purchase Agreement to
eliminate the put option.
On September 25, 2008, the holders of Series A Convertible Preferred Stock and other investors
purchased 4,187,413 shares of Series B Convertible Preferred Stock at a share price of $.95524372
for a total purchase price of $4,000,000.
F-24
Table of Contents
Winston Laboratories, Inc. and Subsidiaries
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
On September 25, 2008, the merger with Getting Ready Corporation was consummated whereby:
•
all of the issued and outstanding capital stock of the Company, consisting of
23,937,358 shares of common stock, par value $0.001 per share, 5,815,851 shares of the
Company's Series A Convertible Preferred Stock, par value $0.001 per share, and
4,187,413 shares of the Company's Series B Convertible Preferred Stock, par value
$0.001 per share, was exchanged for 422,518,545 shares of Getting Ready Corporation's
common stock, par value $0.001 per share (at an exchange ratio of 17.65101 shares of
Getting Ready Corporation common stock per share of the Company's common stock),
101,849 shares of Getting Ready Corporation's Series A Convertible Preferred Stock and
73,332 shares of Getting Ready Corporation's Series B Convertible Preferred Stock (at
an exchange ratio of .01751238 shares of Getting Ready Corporation preferred stock per
share of the Company's preferred stock);
•
Getting Ready Corporation assumed the Company's stock option plans;
•
The Company's outstanding 1,643,750 options to purchase 1,643,750 shares of the
Company's common stock were converted to options to purchase 29,013,848 shares of
Getting Ready Corporation's common stock; and
•
all outstanding warrants to purchase the Company's Series A Preferred Stock were
assumed by Getting Ready Corporation and converted into the right to acquire, expiring
November 13, 2012, upon the exercise of such warrants, an aggregate of 71,672 shares of
Getting Ready Corporation's Series A Preferred Stock at a price per share of
$.859719348.
F-25
Table of Contents
Winston Laboratories, Inc. and Subsidiaries
Pro Forma Unaudited Financial Statements
As of June 30, 2008
and
For the Six Months Ended June 30, 2008 and the Year Ended December 31, 2007
The following unaudited pro forma financial statements ("pro forma statements") give effect to
the reverse acquisition of Winston Laboratories Inc. ("Winston") by Winston Acquisition Corp., a
Delaware corporation and wholly owned subsidiary of the Getting Ready Corporation ("Company") and
are based on the estimates and assumptions set forth herein and in the notes to such pro forma
statements.
On November 13, 2007, the Company entered into a Merger Agreement and Plan of Reorganization
(the "Merger Agreement") with Winston Laboratories, Inc. ("Winston") and Winston Acquisition Corp.,
which is a wholly-owned subsidiary of the Company. Pursuant to the Merger Agreement, Winston
became a wholly-owned subsidiary of the Company (the "Merger").
The Merger occurred on September 25, 2008. The Merger was accounted for as a "reverse
merger," since as a result of the Merger the shareholders of Winston will own a majority of the
outstanding shares of the common stock of the Company. Winston is deemed to be the acquirer in the
Merger for accounting purposes and, consequently, the assets and liabilities and the historical
operations that are reflected in the financial statements are those of Winston and are recorded at
the historical cost basis of Winston. As a result of the Merger, there was a change in control of
the Company.
The following unaudited pro forma financial information gives effect to the above. The
unaudited pro forma financial information was prepared from (1) the Company's audited historical
financial statements included in the Company's Form 10K for the period ended September 30, 2007;
(2) Getting Ready Corporation's unaudited historical financial statements included in Getting Ready
Corporation's Form 10Q for the period ended December 31, 2007; (3) Getting Ready Corporation's
unaudited historical financial statements included in Getting Ready Corporation's Form 10Q for the
period ended March 31, 2008; (4) the Company's unaudited historical financial statements included
in the Company's Form 10Q for the period ended June 30, 2008; (5) Winston's audited historical
financial statements for the year ended December 31, 2007; and (6) Winston's unaudited historical
financial statements for the three months ended June 30, 2008.
The unaudited pro forma balance sheet at June 30, 2008 assumes the effects of the Merger
occurred on June 30, 2008. The unaudited pro forma statements of operations assume that the Merger
occurred on January 1, 2007.
The unaudited pro forma statement of operations for the year ended December 31, 2007 combines
the historical statements of operations of the Company and Winston for the year ended December 31,
2007. The unaudited pro forma statement of operations for the six months ended June 30, 2008
combines the historical statements of operations of the Company and of Winston for the six months
ended June 30, 2008. The unaudited pro forma statements of operations assume that the Merger
occurred as of January 1, 2007.
The unaudited pro forma financial information is presented for illustrative purposes only and
is not necessarily indicative of the operating results of financial position that would have
occurred if the transaction had been consummated at the date indicated, nor is it necessarily
indicative of the future operating results of financial position of the consolidated companies.
F-26
Table of Contents
Pro Forma Unaudited Balance Sheet
As of June 30, 2008
Pro Forma
Winston
Company
Adjustments
Pro Forma
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
2,003,785
$
928,077
$
3,750,000
$
6,681,862
Accounts receivable
15,710
—
—
15,710
Related party receivable
34,073
—
—
34,073
Prepaid and other current assets
13,819
15,970
—
29,289
2,067,387
943,547
3,750,000
6,760,934
PROPERTY AND EQUIPMENT
21,815
—
—
21,815
INTANGIBLE ASSETS, NET
23,492
—
—
23,492
OTHER ASSETS
4,314
—
—
4,314
TOTAL ASSETS
$
2,117,008
$
943,547
$
3,750,000
$
6,810,555
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable
$
782,883
$
16,331
—
$
799,214
Accrued expenses and other current liabilities
255,190
—
—
255,190
Total current liabilities
1,038,073
16,331
—
1,054,404
Long Term Liabilities
—
—
—
—
Commitments and Contingencies
Total liabilities
1,038,073
16,331
—
1,054,404
Stockholders' equity
Preferred Stock
Series A, Convertible
5,815
—
(5,713
)
3
102
Series B, Convertible
—
—
4,187
2,3
73
Common stock
23,936
18,333
422,518
3
440,851
(23,936
)
3
Additional paid-in capital
45,401,938
2,316,594
(250,000
)
1
49,667,879
3,995,813
2
(412,691
)
3
23,936
3
(1,407,711
)
3
Accumulated deficit
(44,352,754
)
(1,407,711
)
1,407,711
3
(44,352,754
)
Total stockholders' equity
1,078,938
917,216
3,750,000
5,756,151
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
2,117,008
$
943,547
$
3,750,000
$
6,810,555
See accompanying notes
F-27
Table of Contents
Pro Forma Unaudited Statement of Operations
For the Six months Ended June 30, 2008
Pro Forma
Winston
GRC
Adjustments
Pro Forma
REVENUE
Royalty revenue
$
99,993
$
—
$
—
$
99,993
EXPENSES
Research and development
2,131,668
—
—
2,131,668
General and administrative
790,214
128,310
—
918,524
Depreciation and amortization
3,706
—
—
3,706
Total operating expenses
2,925,588
128,310
—
3,053,898
Loss from operations
(2,825,595
)
(128,310
)
—
(2,953,905
)
Interest income
57,694
16,153
—
73,897
Other income
1,183
—
—
1,183
58,877
16,153
—
75,030
Loss before income taxes
(2,766,718
)
(112,157
)
—
(2,878,875
)
Income Taxes
Current
—
—
—
—
Deferred
—
—
—
—
—
—
—
—
NET LOSS
$
(2,766,718
)
$
(112,157
)
$
—
$
(2,878,875
)
Basic and Dilutive Net Loss Per Share
(0.01
)
Weighted Average Shares Outstanding
440,851,441
4
See accompanying notes
F-28
Table of Contents
Pro Forma Unaudited Statement of Operations
For the Year ended December 31, 2007
Pro Forma
Winston
GRC
Adjustments
Pro Forma
REVENUE
Royalty revenue
$
800,000
$
—
$
—
$
800,000
EXPENSES
Research and development
1,939,429
—
—
1,939,429
General and administrative
1,281,612
208,516
—
1,490,128
Depreciation and amortization
10,087
—
—
10,087
Total operating expenses
3,231,128
208,516
—
3,439,644
Loss from operations
(2,431,128
)
(208,516
)
—
(2,639,644
)
Interest income
42,733
42,719
85,452
Other income
5,338
5,338
48,071
42,719
—
90,790
Loss before income taxes
(2,383,057
)
(165,797
)
—
(2,548,854
)
Income Taxes
Current
—
—
—
—
Deferred
—
—
—
—
—
—
—
—
NET LOSS
$
(2,383,057
)
$
(165,797
)
$
—
$
(2,548,854
)
Basic and Diluted Net Loss Per Share
$
(0.01
)
Basic and Diluted Weighted Average
Shares Outstanding
440,851,441
4
See accompanying notes
F-29
Table of Contents
NOTE A — Basis of Presentation
The Pro Forma Unaudited financial statements reflect the financial information, which gives
effect to the acquisition of all the outstanding common stock of Winston Laboratories, Inc.
("Winston") in exchange for 422,518,545 shares of the Getting Ready Corporation's ("Company")
common stock, par value $0.001 per share (at an exchange ratio of 17.65101 shares of Company common
stock per share of Winston common stock), 101,849 shares of the Company's Series A Convertible
Preferred Stock and 73,332 shares of the Company's Series B Convertible Preferred Stock (at an
exchange ratio of .01751238 shares of Company preferred stock per share of Winston preferred
stock).
The Merger will be accounted for as a "reverse merger", since as a result of the Merger the
shareholders of Winston will own a majority of the outstanding shares of the common stock of the
Company. Winston is deemed to be the acquirer in the Merger for accounting purposes and,
consequently, the assets and liabilities and the historical operations that will be reflected in
the financial statements will be those of Winston and will be recorded at the historical cost basis
of Winston. As a result of the Merger, there will be a change in control of the Company. The
Company will continue to be a "smaller reporting company," as defined under the Securities Exchange
Act of 1934, as amended, following the Merger. Because the acquisition will be accounted for as a
reverse merger, there will be neither goodwill recognized nor any adjustments to the book value of
the net assets of Winston that would affect the Pro Forma Statements of Operations.
NOTE B — Adjustments
1.
The decrease in cash and a corresponding charge to equity represent a $250,000
transaction fee payable to Lazard Freres & Co. LLC upon a successful completion of the
merger.
2.
Prior to the consummation of the Merger 4,187,413 shares of the Winston Series
B Convertible Preferred Stock, par value $0.001 per share ("Series B Preferred Stock")
will be issued to investors for $4,000,000. Of the $9,000,000 committed, Dr. Frost and
other investors purchased $5,000,000 of Winston stock and warrants on November 13,
2007, and an additional $4,000,000 of Winston stock will be purchased prior to
consummation of the Merger by Frost Gamma Investments Trust and other investors,
including Glenn L. Halpryn, a director and a former officer of the
Company and Noah Silver, a former officer and director of the Company.
3.
Under the terms of the Merger Agreement, at the closing of the Merger, each
common share of Winston will be converted into approximately 17.65 shares of Company's
common stock. In addition, Winston's Series A Preferred Stock and Series B Preferred
Stock will be converted to 101,849 shares of the Company's Series A Convertible
Preferred Stock and 73,332 shares of the Company's Series B Convertible Preferred
Stock, respectively, at an exchange ratio of .01751238.
4.
Weighted average shares outstanding. The number of weighted average shares is
comprised of Getting Ready Corporation's number of weighted shares outstanding as of
June 30, 2008 and December 31, 2007 and the conversion (17.65101 to 1) of Winston's
weighted average shares outstanding for the same period.
F-30
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: October 1, 2008
Getting Ready Corporation
By:
/s/ Joel E. Bernstein, M.D.
CEO
Table of Contents
EXHIBIT INDEX
Exhibit No.
Description
2.1
Merger Agreement and Plan of Reorganization dated as of November 13, 2007 by
and among Getting Ready Corporation, Winston Laboratories, Inc. and Winston Acquisition
Corp. (filed as Exhibit 2.1 to the Company's Current Report on Form 8-K dated November
13, 2007 and incorporated herein by reference).
2.2
First Amendment to Merger Agreement and Plan of Reorganization dated as of May
30, 2008 by and among Winston Laboratories, Inc., a Delaware corporation, Getting Ready
Corporation, a Delaware corporation, and Winston Acquisition Corp., a Delaware
corporation (filed as Exhibit 2.1 to the Company's Current Report on Form 8-K dated May
30, 2008 and incorporated herein by reference).
2.3
Second Amendment to Merger Agreement and Plan of Reorganization dated as of
June 23, 2008 by and among Winston Laboratories, Inc., a Delaware corporation, Getting
Ready Corporation, a Delaware corporation, and Winston Acquisition Corp., a Delaware
corporation (filed as Exhibit 2.1 to the Company's Current Report on Form 8-K dated
June 23, 2008 and incorporated herein by reference).
3.1
Certificate of Incorporation (filed as Exhibit 3.1A to the Company's
Registration Statement on Form SB-2 dated September 15, 2004 and incorporated herein by
reference).
3.2
Certificate of Amendment of Certificate of Incorporation (filed as Exhibit 3.1B
to the Company's Registration Statement on Form SB-2 dated September 15, 2004 and
incorporated herein by reference).
3.3
Certificate of Amendment of Certificate of Incorporation (filed as Exhibit 1 to
the Company's Form PRE14C dated December 7, 2007 and incorporated herein by reference).
3.4
Certificate
of Amendment to Certificate of Incorporation (filed as Annex A to the
Company's DEF 14C dated September 22, 2008 and incorporated
herein by reference).
3.5
Certificate of Designation, Preferences and Rights of Series A Convertible
Preferred Stock of Getting Ready Corporation.
3.6
Certificate of Designation, Preferences and Rights of Series B Convertible
Preferred Stock of Getting Ready Corporation.
3.7
By-laws.
4.1
Form of Common Stock Certificate.
4.2
Form of Warrant to Purchase Series A Convertible Preferred Stock.
4.3
Form of Lockup Agreement.
Table of Contents
Exhibit No.
Description
10.1
Voting Agreement dated as of September 25, 2008 between Getting Ready
Corporation and certain stockholders of the Company.
10.2
Employment Agreement dated as of September 25, 2008 between Getting Ready
Corporation and Joel E. Bernstein, M.D.
10.3
Secrecy, Invention and Non-Competition Agreement dated as of October 5, 2007 by
and between Winston Laboratories, Inc. and Joel E. Bernstein, M.D.
10.4
Employment Letter Agreement dated October 3, 2007 between Winston Laboratories,
Inc. and David Starr.
10.5
Secrecy, Invention and Non-Competition Agreement dated as of October 3, 2007 by
and between Winston Laboratories, Inc. and David Starr.
10.6
Severance Agreement dated as of October 8, 2003 between Winston Laboratories,
Inc. and Scott B. Phillips, M.D.
10.7
General Severance Letter Agreement dated January 26, 2006 between Winston
Laboratories, Inc. and Scott B. Phillips, M.D.
10.8
Secrecy, Invention and Non-Competition Agreement dated as of October 5, 2007 by
and between Winston Laboratories, Inc. and Scott B. Phillips, M.D.
10.9
Consultation Agreement dated September 30, 2007 between Winston Laboratories,
Inc. and Jeffrey R. Bernstein, Ph.D.
10.10
Winston Laboratories, Inc. 1999 Stock Option Plan.
10.11
Winston Laboratories, Inc. Stock Option Plan for Non-Employee Directors.
21.1
Subsidiaries