ASTRALIS LTD.
                             SUBSCRIPTION AGREEMENT

      SUBSCRIPTION AGREEMENT made as of this 31st day of March, 2006 between
Astralis Ltd., a Delaware corporation with its principal offices at 75 Passaic
Avenue, Fairfield, New Jersey 07004 (the "Company") and the undersigned (the
"Subscriber").

            WHEREAS, the Company desires to issue (a) unsecured Convertible
Promissory Notes (the "Notes") in a private placement, convertible into shares
of Common Stock, $0.0001 par value per share (the "Common Stock") or other
securities of the Company on the terms and conditions set forth therein and (b)
warrants to purchase 2,777,778 shares of Common Stock (the "Warrants");

            WHEREAS, the Subscriber desires to acquire Notes and Warrants in the
principal amount as set forth on the signature page hereof;

            NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants hereinafter set forth, the parties hereto do hereby agree as
follows:

      I. SUBSCRIPTION FOR NOTES AND WARRANTS AND REPRESENTATIONS BY AND
                            COVENANTS OF SUBSCRIBER

            1.1 Subject to the terms and conditions hereinafter set forth, the
Subscriber hereby subscribes for and agrees to purchase from the Company such
principal amount of Notes and Warrants as is set forth upon the signature page
hereof, and the Company agrees to sell such Notes and Warrants to the Subscriber
subject to the Company's right to sell to the Subscriber such lesser amount of
Notes and Warrants as it may, in its sole discretion, deem necessary or
desirable. The purchase price is payable by certified or bank check or wire
transfer directly to the Company, contemporaneously with the execution and
delivery of this Subscription Agreement. Executed, definitive Notes and Warrants
will be delivered by the Company within ten (10) days following the consummation
of this offering as set forth in Article III hereof.

            1.2 THE SUBSCRIBER UNDERSTANDS, AND ACKNOWLEDGES THAT HE IS AWARE OF
THE FOLLOWING: (i) THE COMPANY HAS ALMOST NO FUNDS TO CONTINUE OPERATIONS AND
WILL BE DEPENDENT UPON THE SUBSCRIBER LOANS TO MAINTAIN ITS OPERATIONS; (ii)
EVEN IF THE COMPANY SELLS A SUBSTANTIAL AMOUNT OF NOTES AND WARRANTS, IT WILL
ONLY BE ABLE TO MAINTAIN ITS OPERATIONS FOR A LIMITED TIME FOLLOWING WHICH IT
WILL NEED TO IDENTIFY ALTERNATIVE SOURCES OF CAPITAL; (iii) FOLLOWING THE
FAILURE OF PHASE II CLINICAL TRIALS DURING 2005, THE COMPANY REDUCED ITS
OPERATIONS TO CONSERVE CAPITAL AND IS CAPABLE OF LIMITED DEVELOPMENT ACTIVITIES;
AND (iv) DURING THE LAST THREE MONTHS THE CHIEF EXECUTIVE OFFICER AND PRESIDENT
AND ONE MEMBER OF THE BOARD OF DIRECTORS RESIGNED FROM THE COMPANY. THE CURRENT
CHIEF FINANCIAL OFFICER IS ACTING AS INTERIM PRESIDENT. PLEASE REFER TO SCHEDULE
A ATTACHED HERETO FOR ADDITIONAL RISK FACTORS.



            1.3 The Subscriber recognizes that the purchase of Notes and
Warrants involves a high degree of risk in that (i) the Company has incurred
substantial losses, has never earned profits and have continuing losses; (ii)
the Company has had a history of cash flow shortfalls and has been and will
continue to be dependent upon loans and investments from affiliates and others
to continue its operations; (iii) an investment in the Company is highly
speculative and only investors who can afford the loss of their entire
investment should consider investing in the Company, the Notes and the Warrants;
(iv) he may not be able to liquidate his investment; (v) transferability of the
Notes and Warrants or the securities into which the Notes and the Warrants may
be converted is extremely limited; and (vi) an investor could sustain the loss
of his entire investment, as well as other risk factors as more fully set forth
and in the Company's filings with the Securities and Exchange Commission,
including its Annual Report on Form 10-KSB for the year ended December 31, 2004,
its quarterly report on Form 10-QSB for the three months ended September 30,
2005 (collectively referred to as the "Security Filings").

            1.4 The Subscriber represents that he is an "accredited investor" as
such term in defined in Rule 501 of Regulation D promulgated under the United
States Securities Act of 1933, as amended (the "Act"), by virtue of qualifying
under one of the criteria checked off on the signature page hereto, and that he
is able to bear the economic risk of an investment in the Notes and Warrants.

            1.5 The Subscriber acknowledges that he has prior investment
experience, including investment in non-listed and non-registered securities, or
he has employed the services of an investment advisor, attorney or accountant to
read all of the documents furnished or made available by the Company both to him
and to all other prospective investors in the Notes and Warrants and to evaluate
the merits and risks of such an investment on his behalf, and that he recognizes
the highly speculative nature of this investment.

            1.6 The Subscriber acknowledges receipt and careful review of this
Subscription Agreement and the attached copies of the Company's Securities
Filings attached hereto (the "Offering Documents") and hereby represents that he
has been furnished by the Company during the course of this transaction with all
information regarding the Company which he had requested or desired to know;
that all documents which could be reasonably provided have been made available
for his inspection and review; and that such information and documents have, in
his opinion, afforded the Subscriber with all of the same information that would
be provided him in a registration statement filed under the Act; that he has
been afforded the opportunity to ask questions of and receive answers from duly
authorized officers or other representatives of the Company concerning the terms
and conditions of the offering, and any additional information which he had
requested.


                                       2


            1.7 The Subscriber acknowledges that this offering of Notes and
Warrants may involve tax consequences, and that the contents of the Offering
Documents do not contain tax advice or information. The Subscriber acknowledges
that he must retain his own professional advisors to evaluate the tax and other
consequences of an investment in the Notes and Warrants.

            1.8 The Subscriber acknowledges that this offering of Notes and
Warrants has not been reviewed by the United States Securities and Exchange
Commission ("SEC") because of the Company's representations that this is
intended to be a nonpublic offering pursuant to Sections 4(2) or 3(b) of the
Act. The Subscriber represents that the Notes and Warrants and the securities
into which the Notes and Warrants may be converted are being purchased for his
own account, for investment and not for distribution or resale to others. The
Subscriber agrees that he will not sell or otherwise transfer such securities
unless they are registered under the Act or unless an exemption from such
registration is available.

            1.9 The Subscriber understands that the Notes and Warrants have not
been registered under Act by reason of a claimed exemption under the provisions
of the Act which depends, in part, upon his investment intention. In this
connection, the Subscriber understands that it is the position of the SEC that
the statutory basis for such exemption would not be present if his
representation merely meant that his present intention was to hold such
securities for a short period, such as the capital gains period of tax statutes,
for a deferred sale, for a market rise, assuming that a market develops, or for
any other fixed period. The Subscriber realizes that, in the view of the SEC, a
purchase now with an intent to resell would represent a purchase with an intent
inconsistent with his representation to the Company, and the SEC might regard
such a sale or disposition as a deferred sale to which such exemptions are not
available.

            1.10 The Subscriber understands that there is no public market for
the Notes and Warrants. The Subscriber understands that if the Notes and
Warrants are converted into Common Stock, Rule 144 (the "Rule") promulgated
under the Act requires, among other conditions, a one year holding period prior
to the resale (in limited amounts) of securities acquired in a non-public
offering without having to satisfy the registration requirements under the Act.
The Subscriber understands that the Company makes no representation or warranty
regarding its fulfillment in the future of any reporting requirements under the
Securities Exchange Act of 1934, as amended, or its dissemination to the public
of any current financial or other information concerning the Company, as is
required by the Rule as one of the conditions of its availability. The
Subscriber understands and hereby acknowledges that the Company is under no
obligation to register the Notes and Warrants or the securities issuable upon
conversion of the Notes and Warrants, under the Act. The Subscriber consents
that the Company may, if it desires, permit the transfer of the Notes and
Warrants or the securities issuable upon conversion of the Notes and Warrants,


                                       3


out of his name only when his request for transfer is accompanied by an opinion
of counsel reasonably satisfactory to the Company that neither the sale nor the
proposed transfer results in a violation of the Act or any applicable state
"blue sky" laws (collectively "Securities Laws"). The Subscriber agrees to hold
the Company and its directors, officers and controlling persons and their
respective heirs, representatives, successors and assigns harmless and to
indemnify them against all liabilities, costs and expenses incurred by them as a
result of any misrepresentation made by him contained herein including the
representation by the Subscriber as to his status as an Accredited Investor, or
any sale or distribution by the undersigned Subscriber in violation of any
Securities Laws.

            1.11 The Subscriber consents to the placement of a legend on any
certificate or other document evidencing the Notes and Warrants or the
securities issuable upon conversion of the Notes and Warrants, stating that they
have not been registered under the Act and setting forth or referring to the
restrictions on transferability and sale thereof.

            1.12 The Subscriber understands that the Company will review this
Subscription Agreement; and it is further agreed that the Company reserves the
unrestricted right to reject or limit any subscription and to close the offer at
any time.

            1.13 The Subscriber hereby represents that the address of Subscriber
furnished by him at the end of this Subscription Agreement is the undersigned's
principal residence if he is an individual or its principal business address if
it is a corporation or other entity.

            1.14 The Subscriber hereby represents that, except as set forth in
the Offering Documents, no representations or warranties have been made to the
Subscriber by the Company or any agent, employee or affiliate of the Company and
in entering into this transaction, the Subscriber is not relying on any
information, other than that contained in the Offering Documents and the results
of independent investigation by the Subscriber.

      II. REPRESENTATIONS BY THE COMPANY

            The Company represents and warrants to the Subscriber that prior to
the consummation of this offering and at the Closing Date:

            2.1 The Company is a corporation duly organized, existing and in
good standing under the laws of the State of Delaware and has the corporate
power to conduct the business which it conducts and proposes to conduct.

            2.2 The execution, delivery and performance of this Subscription
Agreement by the Company will have been duly approved by the Board of Directors
of the Company and all other actions required to authorize and effect the offer
and sale of the Notes and Warrants will have been duly taken and approved.


                                       4


            2.3 The Notes and Warrants have been duly and validly authorized and
when issued and paid for in accordance with the terms hereof, will be valid and
binding obligations of the Company enforceable in accordance with their
respective terms.

            2.4 The Company knows of no pending or threatened legal or
governmental proceedings to which the Company is a party which could materially
adversely affect the business, property, financial condition or operations of
the Company.

            2.5 The execution and delivery of this Subscription Agreement, the
issuance of the Notes and Warrants, and the incurrence of the obligations herein
and therein set forth and the consummation of the transactions herein or therein
contemplated, will not result in a violation of, or constitute a default under,
the certificate of incorporation or by-laws, in the performance or observance of
any material obligations, agreement, covenant or condition contained in any
material bond, debenture, note or other evidence of indebtedness or in any
material contract, indenture, mortgage, loan agreement, lease, joint venture or
other agreement or instrument to which the Company is a party or by which it or
any of its properties may be bound or in violation of any material order, rule,
regulation, writ, injunction, or decree of any government, governmental
instrumentality or court, domestic or foreign.

      III. TERMS OF SUBSCRIPTION

            3.1 The Company will accept subscriptions as they are received
without regard to any minimum amount or maximum amount.

      IV. REDEMPTION

            4.1 At any time after the date hereof, the Company may at its option
redeem all or a portion of the outstanding Notes at a price equal to (i) the
"Interest Amount", determined pursuant to this Article IV, of the principal
amount of the Notes to be prepaid, plus (ii) the principal amount of Notes to be
prepaid.

            4.2 The Interest Amount shall be equal to: (i) if such prepayment
occurs on or prior to the first anniversary of the date hereof, six percent (6%)
of the principal amount thereof; (ii) if such prepayment occurs after the first
anniversary of the date hereof and prior to the second anniversary of the date
hereof, twelve percent (12%) of the aggregate principal amount thereof; and
(iii) if such prepayment occurs after the second anniversary of the date hereof,
eighteen percent (18%) of the aggregate principal price thereof.

            4.3 The right of the Company to prepay the Notes pursuant to this
Article IV shall be conditioned upon the Company giving written notice of
prepayment to the Holders at least forty-five (45) days prior to the date upon
which the prepayment is to be made specifying (i) the aggregate principal amount
and the registered holder of each Note to be prepaid, (ii) the date of such


                                       5


prepayment, (iii) the accrued and unpaid interest (to and including the date
upon which the prepayment is to be made), (iv) that the prepayment is being made
pursuant to this Article IV and (v) the prepayment amount applicable to each
Note to be prepaid. Notice of prepayment having been so given, the aggregate
principal amount of Notes as so specified in such notice, together with any
applicable premiums set forth in this Article IV, shall become due and payable
on the specified prepayment date in proportion, as nearly as practicable, to the
respective unpaid principal amounts of such Notes.

      V. REGISTRATION RIGHTS

            5.1 For a period ending four years from the date hereof, the
Subscriber of the Notes, the Warrants, and the shares of Common Stock into or
for which the Note and Warrants are directly or indirectly convertible shall
have the right to cause the Company to register the shares of Common Stock
issuable upon conversion or exercise of the Notes or Warrants (the "Registrable
Securities") under the Act, as amended, at the Company's expense (exclusive of
underwriting discounts and commissions and fees of counsel to such Subscribers),
subject to certain restrictions.

            5.2 During the same period set forth above, the Subscribers of
Registrable Securities shall have the right, to participate on a "piggyback
basis" in a registration by the Company under the Act, subject to certain
restrictions, including underwriter hold-backs.

      VI. MISCELLANEOUS

            6.1 Any notice or other communication given hereunder shall be
deemed sufficient if in writing and sent by registered or certified mail, return
receipt requested, addressed to the Company, at its registered office, 75
Passaic Avenue, Fairfield, New Jersey 07004, Attention: Michael Garone, and to
the Subscriber at his address indicated on the last page of this Subscription
Agreement. Notices shall be deemed to have been given on the date of mailing,
except notices of change of address, which shall be deemed to have been given
when received.

            6.2 This Subscription Agreement shall not be changed, modified or
amended except by a writing signed by the parties to be charged, and this
Subscription Agreement may not be discharged except by performance in accordance
with its terms or by a writing signed by the party to be charged.

            6.3 This Subscription Agreement shall be binding upon and inure to
the benefit of the parties hereto and to their respective heirs, legal
representatives, successors and assigns. This Subscription Agreement sets forth
the entire agreement and understanding between the parties as to the subject
matter thereof and merges and supersedes all prior discussions, agreements and
understandings of any and every nature among them.


                                       6


            6.4 Notwithstanding the place where this Subscription Agreement may
be executed by any of the parties hereto, the parties expressly agree that all
the terms and provisions hereof shall be construed in accordance with and
governed by the laws of the State of New Jersey.

            6.5 This Subscription Agreement may be executed in counterparts.
Upon the execution and delivery of this Subscription Agreement by the
Subscriber, this Subscription Agreement shall become a binding obligation of the
Subscriber with respect to the purchase of Notes and Warrants as herein
provided; subject, however, to the right hereby reserved to the Company to enter
into the same agreements with other subscribers and to add and/or to delete
other persons as subscribers.

            6.6 The holding of any provision of this Subscription Agreement to
be invalid or unenforceable by a court of competent jurisdiction shall not
affect any other provision of this Subscription Agreement, which shall remain in
full force and effect.

            6.7 It is agreed that a waiver by either party of a breach of any
provision of this Subscription Agreement shall not operate, or be construed, as
a waiver of any subsequent breach by that same party.

            6.8 The parties agree to execute and deliver all such further
documents, agreements and instruments and take such other and further action as
may be necessary or appropriate to carry out the purposes and intent of this
Subscription Agreement.


                                       7


            IN WITNESS WHEREOF, the parties have executed this Subscription
Agreement as of the day and year first written above.

______________________________              ____________________________________
Signature of Subscriber(s)

______________________________              ____________________________________
Name of Subscriber(s)
  [please print]

______________________________              ____________________________________
Address of Subscriber(s)

______________________________              ____________________________________
Social Security or Taxpayer
Identification Number of Subscriber(s)

______________________________
Number of Notes Subscribed For

Subscription Accepted:

ASTRALIS LTD.

By:______________________________

Date:____________________________

By executing this Subscription Agreement, I represent that I am an Accredited
Investor as such term is defined by Rule 502 under the Securities Act of 1933
because I satisfy one or more of the following criteria:

      The following investors are Accredited Investors (please circle each
category applicable):

            (A) a natural person whose individual net worth, or joint net worth
      with that person's spouse, at the time of his purchase exceeds $1,000,000;

            (B) a natural person who had an individual income in excess $200,000
      in each of the two most recent years or joint income with that person's
      spouse in excess of $300,000 in each of those years and has a reasonable
      expectation of reaching the same income level in the current year;


                                       8


            (C) a bank as defined in Section 3(a)(2) of the Securities Act or a
      savings and loan association or other institution as defined in Section
      3(a)(5)(A) of the Securities Act, whether acting in its individual or
      fiduciary capacity; a broker or dealer registered pursuant to Section 15
      of the Securities Exchange Act of 1934; an insurance company as defined in
      Section 2(13) of the Securities Act; an investment company registered
      under the Investment Company Act of 1940 (the "1940 Act") or business
      development company as defined in Section 2(a)(48) of the 1940 Act; a
      Small Business Investment Company licensed by the U.S. Small Business
      Administration under Section 301(c) or (d) of the Small Business
      Investment Act of 1958; a plan established and maintained by a state, its
      political subdivisions, or any agency or instrumentality of a state or its
      political subdivisions, for the benefit of its employees if such plan has
      total assets in excess of $5,000,000; or an employee benefit plan within
      the meaning of the Employee Retirement Income Security Act of 1974
      ("ERISA"), if the investment decision is made by a plan fiduciary, as
      defined in Section 3(21) of ERISA, which fiduciary is either a bank,
      savings and loan association, insurance company or registered investment
      adviser, or if the employee benefit plan has total assets in excess of
      $5,000,000 or, if a self-directed plan, with investment decisions made
      solely by persons that are Accredited Investors (as listed in categories
      (A)-(G));

            (D) a private business development company as defined in Section
      202(a)(22) of the Investment Advisors Act of 1940;

            (E) an organization described in Section 501(c)(3) of the Internal
      Revenue Code of 1986, as amended, a corporation, Massachusetts or similar
      business trust, or a partnership, with total assets in excess of
      $5,000,000, and which was not formed for the specific purpose of acquiring
      the Shares;

            (F) a trust, with total assets in excess of $5,000,000 not formed
      for the specific purposes of acquiring the Shares whose purchase is
      directed by a person who has such knowledge and experience in financial
      and business matters that he is capable of evaluating the merits and risks
      of an investment in the Shares; or

            (G) an entity in which all of the equity owners are Accredited
      Investors (as listed in categories (A)-(F))


                                       9


                                   Schedule A

                                  RISK FACTORS

      We will need to obtain additional funds immediately to support our future
operation expenses. Our auditors have expressed uncertainty regarding our
ability to continue as a going concern.

      Based on our current plans, we believe that we have sufficient funds to
meet our operating expenses and capital requirements through approximately
December 2005. We will need to raise additional funds immediately to continue
our operations following that period. Furthermore, substantial additional funds
will be needed in order to fund our continued efforts to obtain FDA approval of
Psoraxine(R), especially given the failure of our Phase II study to meet its
primary endpoint. No assurance can be given that we will be able to obtain
financing, or successfully sell assets or stock, or, even if such transactions
are possible, that they will be on terms reasonable to us or that they will
enable us to satisfy our cash requirements. In addition, raising additional
funds by selling additional shares of our capital stock will dilute the
ownership interest of our stockholders. If we do not obtain additional funds
immediately we will have to cease operations. We are actively seeking sources of
financing. We are considering and will implement further dramatic cost reduction
measures to extend the availability of our capital. If we are able to identify
funds immediately, but not additional funds thereafter, we will likely be
required to eliminate programs, delay development of our products, alter our
business plans, or in the extreme situation, cease operations.

      As a result of our losses and the matters described in the preceding
paragraph, the Independent Auditors' Report on our financial statements includes
a paragraph indicating doubt about our ability to continue as a going concern.
The financial statements that accompany this report do not include any
adjustments that might be necessary if we are unable to continue as a going
concern.

      We have no sales; we will not have sales in the foreseeable future; we are
in an early stage of development and we may never sell products or become
profitable.

      We commenced our current operations in 2001 and such operations remain in
an early stage of development. We have no products approved for sale and
therefore, no means to generate revenue. We have not commercialized any
products, had no revenues and had incurred a cumulative net loss of
$52,856,552as of September 30, 2005 which has increased to date. The cumulative
net loss through September 30, 2005 includes non-cash preferred stock dividends
of $22,218,750. We expect that substantial losses will continue for the
foreseeable future. In order to obtain revenue from the sales of our product
candidate, Psoraxine(R), we must successfully develop, test, obtain regulatory
approval for, manufacture, market and eventually sell such product candidate.
Our expenses have consisted principally of costs incurred in research and
development and from general and administrative costs associated with our
operations. We expect our expenses to increase and to continue to incur
operating losses for the next several years as we continue our research and
development efforts for Psoraxine(R) and any subsequent product candidates.
Commercialization of any of our products will take a significant amount of time
and successful commercialization may not occur at all. As a result, we may never
become profitable.

      Psoraxine(R) may never be approved by the FDA because the results of our
Phase II study failed to meet its primary study endpoint.



      We have focused our development efforts to date on conducting clinical
trials for an immuno-stimulatory drug, Psoraxine(R), for the treatment of
psoriasis. We recently conducted a randomized, double-blinded,
placebo-controlled clinical study involving 120 patients with moderate to severe
psoriasis who received six (6) intramuscular injections of Psoraxine(R). The
primary endpoint of the study was a specified level of improvement of symptoms
measured in accordance with the Psoriasis Area and Severity Index, or PASI,
which is a measurement scale that ranks the severity of symptoms of patients
suffering from psoriasis. Our initial analysis of the preliminary data showed no
statistically significant improvement of those Phase II study patients who
received six injections of Psoraxine(R) for a twelve weeks treatment period
compared to patients taking a placebo.

      The failure of our Phase II study to meet its primary endpoint makes FDA
approval of Psoraxine(R) substantially more uncertain. To continue
Psoraxine(R)'s development and to obtain FDA approval to market Psoraxine(R), we
must analyze the data from the Phase II study to identify why the Phase II study
failed to meet its primary endpoint. We must then undertake additional Phase I
or Phase II clinical trials that are adjusted to account for the cause or causes
of the initial Phase II study's failure. Although we have already identified a
number of possible reasons for the failure to demonstrate efficacy in the recent
Phase II trial, and we have also developed a preliminary plan for new clinical
studies, there can be no guarantee that we will be able to identify with
certainty why our Phase II study failed to meet its primary endpoint and that we
will be able to make the needed adjustments for further Phase II studies to be
successful. There is also no guarantee that the FDA would approve Psoraxine(R)
even if we deem additional clinical trials to be successful.

      We have devoted most of our resources to the development of Psoraxine(R)
and our business is dependent on its success. In the United States, the
marketing of Psoraxine(R) depends on FDA approval of the product. Analyzing the
Phase II study data and conducting additional Phase II clinical trials will
delay FDA approval. We may also decide to discontinue further clinical trials of
Psoraxine(R), which would prevent us from obtaining FDA approval. If we are not
able to obtain FDA approval for Psoraxine(R), we would be unable to sell the
product.

      We may not be successful in the development and commercialization of
products.

      We may not develop products that prove to be safe and effective, that meet
applicable regulatory standards or that we can manufacture at reasonable costs
or market successfully. Successful products will require significant development
and investment, including testing, to demonstrate their safety and efficacy
prior to their commercialization. We have not proven our ability to develop and
commercialize products. We must conduct a substantial amount of additional
research and development before any regulatory authority will approve our
initial product candidate, Psoraxine(R). Our research and development and
clinical trials may not confirm the safety and efficacy of our products, in
which case regulatory authorities may not approve them. In addition, even if we
successfully complete our research and development efforts, Psoraxine(R) may not
perform in the manner we anticipate, and may not be accepted for use by the
public.

      Substantial additional funds and effort will be necessary for further
development and commercialization of Psoraxine(R).

      Our initial product candidate, Psoraxine(R), will require the commitment
of substantial resources to move it towards commercialization. Before obtaining
regulatory approvals for the commercial sale of Psoraxine(R), we must
demonstrate the safety and efficacy of our product candidate through preclinical
testing and clinical trials. Conducting clinical trials involves a lengthy,
expensive and uncertain process. Completion of clinical trials may take several


                                       11


years or more. The length of time generally varies substantially according to
the type, complexity, novelty and intended use of the product. If we or the U.S.
Food and Drug Administration believe that our clinical trials expose
participating patients to unacceptable health risks, we may suspend such trials.
We may encounter problems in our studies which will cause us or the FDA to delay
or suspend the studies. Some of the factors that may delay our commencement and
rate of completion of clinical trials include:

      o     ineffectiveness of the study compound, or perceptions by physicians
            that the compound will not successfully treat a particular
            indication;

      o     inability to manufacture sufficient quantities of compounds for use
            in clinical trials;

      o     failure of the FDA to approve our clinical trial protocols;

      o     slower than expected rate of patient recruitment;

      o     unforeseen safety issues; or

      o     government or regulatory delays.

      The failure of future clinical trials may harm our business, financial
condition and results of operations.

      Our potential therapeutic products face a lengthy and uncertain regulatory
process. If we do not obtain regulatory approval of our potential products, we
will not be able to commercialize these products.

      The FDA must approve any therapeutic product before it can be marketed in
the United States. Before we obtain FDA approval of a new drug application or
biologics license application, the product must undergo extensive testing,
including animal and human clinical trials, which can take many years and
requires substantial expenditure. Data obtained from such testing may be
susceptible to varying interpretations, which could delay, limit or prevent
regulatory approval. In addition, changes in regulatory policy for product
approval during the period of product development and regulatory agency review
of each submitted new drug application may cause delays or rejections. We must
devote a substantial amount of time and resources in the regulatory process in
order to obtain regulatory approval of our initial product candidate,
Psoraxine(R).

      Because our initial product candidate, Psoraxine(R), involves the
application of new technologies and may be used upon new therapeutic approaches,
government regulatory authorities may subject this product to more rigorous
review and may grant regulatory approvals more slowly for this product than for
products using more conventional technologies. We have not received approval
from the FDA to market or commercialize Psoraxine(R). The regulatory agencies of
foreign governments must also approve any therapeutic product we may develop
before the product can be sold in those countries. To date, although we have
obtained regulatory approval for clinical testing of Psoraxine(R) in Venezuela,
we have not sought, nor have we obtained, regulatory approval for the
commercialization of Psoraxine(R) in Venezuela because, among other things, we
do not have manufacturing facilities in that country and such facilities are
required by regulatory authorities in Venezuela before granting commercial
approval for a proposed drug.

      Even after investing significant time and resources, we may not obtain
regulatory approval for our product. If we do not receive regulatory approval,
we cannot sell the product. Even if we receive regulatory approval, this
approval may place limitations on the indicated uses for which we can market the
product. Further, after granting regulatory approval, regulatory authorities
subject a marketed product and its manufacturer to continual review, and
discovery of previously unknown problems with a product or manufacturer may
result in restrictions on the product, manufacturer and manufacturing facility,
including withdrawal of the product from the market. In certain countries,
regulatory agencies also set or approve prices.


                                       12


      Even if product candidates emerge successfully from clinical trials, we
may not be able to successfully manufacture, market and sell them.

      We have not successfully completed clinical trials of Psoraxine(R). If
Psoraxine(R) emerges successfully from clinical trials and obtains regulatory
approval, we will either commercialize products resulting from our proprietary
programs directly or through licensing arrangements with other companies. We
have no experience in manufacturing and marketing, and we currently do not have
the resources or capability to manufacture, market or sell our products on a
commercial scale. In order to commercialize Psoraxine(R) directly, we would need
to develop or obtain through outsourcing arrangements the capability to
manufacture, market and sell products. In addition, we currently do not have any
agreements for the marketing or sale of any of our products and we may not be
able to enter into such agreements on commercially reasonable terms, or at all.

      We license and do not own our intellectual property. Any inability to
protect our proprietary technologies adequately could harm our competitive
position.

      We license, and do not own, the intellectual property rights to
Psoraxine(R). Dr. Jose Antonio O'Daly is the owner of the patent for
Psoraxine(R). Under the terms of a license agreement and assignment of license
agreement, we have the right to use any patent issued pursuant to Dr. O'Daly's
patent application. We also have rights to other patents filed by Dr. O'Daly
under the terms of our employment agreement with him. Our success will depend in
part on our ability to obtain patents and maintain adequate protection of other
intellectual property for our technologies and products in the United States and
other countries. If we do not adequately protect our intellectual property,
competitors may be able to use our technologies and erode or negate our
competitive advantage. The laws of some foreign countries do not protect our
proprietary rights to the same extent as the laws of the United States, and we
may encounter significant problems in protecting our proprietary rights in these
foreign countries.

      The patent positions of biotechnology companies, including our patent
positions, involve complex legal and factual questions and, therefore, validity
and enforceability cannot be predicted with certainty. Patents may be
challenged, deemed unenforceable, invalidated or circumvented. We will be able
to protect our proprietary rights from unauthorized use by third parties only to
the extent that we cover our proprietary technologies with valid and enforceable
patents or we effectively maintain such proprietary technologies as trade
secrets. We will apply for patents covering both our technologies and product
candidates as we deem appropriate. However, we may fail to apply for patents on
important technologies or products in a timely fashion, or at all, and in any
event, the applications we do file may be challenged and may not result in
issued patents. Any future patents we obtain may not be sufficiently broad to
prevent others from practicing our technologies or from developing competing
products. Furthermore, others may independently develop similar or alternative
technologies or design around our patented technologies. In addition, others may
challenge or invalidate our patents, or our patents may fail to provide us with
any competitive advantages. If we encounter challenges to the use or validity of
any of our patents, resulting in litigation or administrative proceedings, we
would incur substantial costs and the diversion of management in defending the
patent. In addition, we do not control the patent prosecution of technology that
we license from others. Accordingly, we cannot exercise the same degree of
control over this intellectual property as we would over technology we own.


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      We rely upon trade secrets protection for our confidential and proprietary
information. We have taken measures to protect our proprietary information.
These measures may not provide adequate protection for our trade secrets or
other proprietary information. We seek to protect our proprietary information by
entering into confidentiality agreements with employees, collaborators and
consultants. Nevertheless, employees, collaborators or consultants may still
disclose our proprietary information, and we may not be able to meaningfully
protect our trade secrets. In addition, others may independently develop
substantially equivalent proprietary information or techniques or otherwise gain
access to our trade secrets.

      Many potential competitors, which have greater resources and experience
than we do, may develop products and technologies that could make ours obsolete.

      Companies in the biotechnology industry face rapid technological change in
a rapidly evolving field. Our future success will depend on our ability to
maintain a competitive position with respect to technological advances. Rapid
technological development by others may result in our products and technologies
becoming obsolete.

      We face, and will continue to face, intense competition from organizations
such as large biotechnology and pharmaceutical companies, as well as academic
and research institutions and government agencies. Our competitors may include
Biogen, Genentech/Xoma, Amgen, Wyeth, Abbott Laboratories and Novartis. These
organizations may develop technologies that provide superior alternatives to our
technologies. Further, our competitors may be more effective at implementing
their technologies to develop commercial products.

      Any products that we develop through our technologies will compete in
multiple, highly competitive markets. Many of the organizations competing with
us in the markets for such products have greater capital resources, research and
development and marketing staffs, facilities and capabilities, and greater
experience in obtaining regulatory approvals, product manufacturing and
marketing. Accordingly, our competitors may be able to develop technologies and
products more easily, which would render our technologies and products obsolete
and noncompetitive.

      If we lose our key personnel or fail to attract and retain additional
personnel, we may be unable to discover and develop our products.

      We depend on the services of Dr. Jose Antonio O'Daly, the Chairman of our
Board of Directors and our Chief Scientific Officer, the loss of whose services
would adversely impact the achievement of our objectives. We recently hired a
Chief Executive Officer and Chief Financial Officer. To execute our business
plan fully it is essential that we retain these executives. In addition,
recruiting and retaining qualified scientific personnel to perform future
research and development work will be critical to our success. Although we
believe we can successfully attract and retain qualified personnel, we face
intense competition for experienced scientists. Failure to attract and retain
skilled personnel would prevent us from pursuing collaborations and developing
our products and core technologies to the extent otherwise possible.

      Our planned activities will require additional expertise. These activities
will require the addition of new personnel, including management, and the
development of additional expertise by existing management personnel. The
inability to acquire or develop this expertise could impair the growth, if any,
of our business.


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      If we face claims in clinical trials of a drug candidate, these claims
will divert our management's time and we will incur litigation costs.

      We face an inherent business risk of clinical trial liability claims in
the event that the use or misuse of Psoraxine(R) results in personal injury or
death. We may experience clinical trial liability claims if our drug candidates
are misused or cause harm before regulatory authorities approve them for
marketing. Although, we currently maintain clinical liability insurance
coverage, it may not sufficiently cover any claims made against us and may not
be available in the future on acceptable terms, if at all. Any claims against
us, regardless of their merit, could strain our financial resources in addition
to consuming the time and attention of our management. Law suits for any
injuries caused by our products may result in liabilities that exceed our total
assets.

Some of our existing stockholders can exert control over us and many not make
decisions that further the best interests of all stockholders.

      Our officers, directors and principal stockholders (greater that 5%
stockholders) together control approximately 84% of our outstanding common
stock. As a result, these stockholders, if they act individually or together,
may exert a significant degree of influence over our management and affairs and
over matters requiring stockholder approval, including the election of directors
and approval of significant corporate transactions. Furthermore, the interests
of this concentration of ownership may not always coincide with our interests or
the interests of other stockholders and accordingly, they could cause us to
enter into transactions or agreements which we would not otherwise consider. In
addition, this concentration of ownership may delay or prevent a merger or
acquisition resulting in a change in control of us and might affect the market
price of our common stock, even when such a change in control may be in the best
interest of all stockholders.

      The market price of our common stock may be highly volatile.

      The market price of our common stock has been and will likely continue to
be highly volatile. From the date trading of our common stock commenced until
November 3, 2005, the range of our stock price has been between $.10 and $7.15.
Factors including announcements of technological innovations by us or other
companies, regulatory matters, new or existing products or procedures, concerns
about our financial position, operating results, government regulation, or
developments or disputes relating to agreements, patents or proprietary rights
may have a significant impact on the market price of our stock. In addition,
potential dilutive effects of future sales of shares of common stock by us, our
stockholders, or the holders of warrants and options, could have an adverse
effect on the price of our common stock.

      A large number of shares of our common stock may be sold in the market,
which may depress the market price of our common stock.

      Sales of substantial amounts of our common stock in the public market, or
the perception that these sales might occur, could materially and adversely
affect the market price of our common stock or our future ability to raise
capital through an offering of our equity securities. We have an aggregate of
91,454,873 shares of our common stock outstanding. If all options and warrants
currently outstanding to purchase shares of our common stock are exercised,
there will be approximately 140,150,339 shares of common stock outstanding. Of
the outstanding shares, up to 73,248,055 shares are freely tradable without
restriction or further registration under the Securities Act, unless the shares
are held by one of our "affiliates" as such term is defined in Rule 144 of the
Securities Act. The remaining shares may be sold only pursuant to a registration
statement under the Securities Act or an exemption from the registration
requirements of the Securities Act. The sale and distribution of these shares
may cause a decline in the market price of our common stock. In addition we will


                                       15


be obligated to file a registration statement within approximately 30 days of
the final closing of our private placement covering the resale of all shares
included therein, as well as the shares underlying the warrants. Certain
existing stockholders have the right to include their securities in such
registration statement.

      Our common stock qualifies as a "penny stock" under SEC rules which may
make it more difficult for our stockholders to resell their shares of our common
stock.

      Our common stock trades on the OTC Bulletin Board. As a result, the
holders of our common stock may find it more difficult to obtain accurate
quotations concerning the market value of the stock. Stockholders also may
experience greater difficulties in attempting to sell the stock than if it were
listed on a stock exchange or quoted on the Nasdaq National Market or the Nasdaq
Small-Cap Market. Because our common stock does not trade on a stock exchange or
on the Nasdaq National Market or the Nasdaq Small-Cap Market, and the market
price of the common stock is less than $5.00 per share, the common stock
qualifies as a "penny stock." SEC Rule 15g-9 under the Securities Exchange Act
of 1934 imposes additional sales practice requirements on broker-dealers that
recommend the purchase or sale of penny stocks to persons other than those who
qualify as an "established customer" or one "accredited investor." This includes
the requirement that a broker-dealer must make a determination on the
appropriateness of investments in penny stocks for the customer and must make
special disclosures to the customer concerning the risks of penny stocks.
Application of the penny stock rules to our common stock could adversely affect
the market liquidity of the shares, which in turn may affect the ability of
holders of our common stock to resell the stock.


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