12.

Impairment of License:

The Company holds patents and patent applications for the Bioral^® (cochleate) drug delivery technology, and is the worldwide, exclusive licensee of the technology pursuant to licensing agreements with UMDNJ and Albany Medical College (the "Bioral^® License Agreements"). Since 2004, the Company's development and commercialization activities have focused increasingly (and from 2009 through 2011, almost exclusively) on its BEMA^® delivery technology and related products and product candidates. The most advanced development of the Bioral^® technology was a Phase 1 study performed with Bioral^® Amphotericin B, on which preliminary results were reported in February 2009. Regarding the most recent developments with the Bioral^® platform, on January 20, 2009, the Company entered into a Research Collaboration and License Agreement with the Drugs for Neglected Diseases initiative ("DNDi"), a not-for-profit foundation, for the development and distribution of Bioral^® Amphotericin B for Visceral Leishmaniasis, and on October 6, 2009, the Company announced it was awarded a $1.3 million grant from the Walter Reed Army Institute of Research ("WRAIR") to support the clinical study of Bioral^® Amphotericin B in the treatment of Cutaneous Leishmaniasis. Both infections are typically found in third world countries.

During the period ended June 30, 2010, an animal study undertaken by DNDi was found to be marginally positive, but treatment of the infection did not warrant further consideration with Bioral^® Amphotericin B. Also during the period ended June 30, 2010, the Company elected not to pursue the application of Bioral^® Amphotericin B for the treatment of Cutaneous Leishmaniasis, and as such to not continue the WRAIR agreement, which was terminated. Accordingly, the aforementioned initial $50,000 funded by WRAIR was refunded in July 2010 and is included in General and Administrative expenses in the Condensed consolidated statements of income. In addition, as previously reported, in September 2009 the Company vacated its Newark, New Jersey research facility (where research on the Bioral^® technology was being undertaken) and terminated its relationship with Dr. Raphael Mannino, the Company's then Chief Scientific Officer and the inventor of many of the patents directed to the cochleate technology. The Company dedicated very limited resources to the Bioral^® platform during the first half of 2010. The Bioral^® platform and its associated intellectual property are presently being reviewed for potential strategic, commercial, licensing and divestiture opportunities.

As a result of these developments, at June 30, 2010, the Company performed an impairment test on the carrying value of the Bioral^® License Agreements and determined an impairment charge for the full unamortized carrying value of approximately $0.2 million was warranted. The amount is shown in the accompanying consolidated statement of operations as impairment of intangible license. There were no impairments during the year ended 2011.