UNITED STATES ~~SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549~~

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~August~~November 3130, 2012

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to________________

Commission file number 000-54455

KEDEM PHARMACEUTICALS INC. ~~(Exact name of registrant as specified in its charter)~~

(Exact name of registrant as specified in its charter)

Nevada		98-0633727
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

8755 Ash Street, Suite 1 Vancouver, British Columbia, Canada		V6P 6T3
(Address of principal executive offices)		(Zip Code)

(604) 324-4844 ~~(Registrant’s telephone number, including area code)~~

~~885 West~~(Registrant’s ~~Georgia~~telephone ~~Street~~number, including ~~Suite~~area ~~1500~~code)

Vancouver, British Columbia, Canada V6C 3E8 (Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was require to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (of for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]

Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

~~Yes[ ] No~~As of ~~[X]~~December 31, 2012, the registrant’s outstanding common stock consisted of 25,393,124 shares.

As of October 15, 2012, the registrant’s outstanding common stock consisted of 21,593,124 shares.

TABLE OF CONTENTS

~~PART I – FINANCIAL INFORMATION~~	PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS		3
ITEM 1.	FINANCIAL STATEMENTS	3
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		4
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	4
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		11
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	12
ITEM 4. CONTROLS AND PROCEDURES		11
ITEM 4.	CONTROLS AND PROCEDURES	13
~~PART II – OTHER INFORMATION~~	PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS		13
ITEM 1.	LEGAL PROCEEDINGS	14
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		13
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	14
ITEM 3. DEFAULTS UPON SENIOR SECURITIES		13
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	14
ITEM 4. MINE SAFETY DISCLOSURES		13
ITEM 4.	MINE SAFETY DISCLOSURES	14
ITEM 5. OTHER INFORMATION		13
ITEM 5.	OTHER INFORMATION	14
ITEM 6. EXHIBITS		13
ITEM 6.	EXHIBITS	14

ITEM 1. FINANCIAL STATEMENTS

Kedem Pharmaceuticals Inc.

(A Development Stage Company)

~~August 31~~November 30, 2012

	Index	~~Index~~
Consolidated Balance Sheets	F-1	~~F-1~~
Consolidated Statements of Operations	F-2	~~F-2~~
Consolidated Statements of Cash Flows	F-3	~~F-3~~
Consolidated Statement of Stockholders’ Deficit	F-4	~~F-4~~
Notes to the Consolidated Financial Statements	F-5	~~F-6~~

Kedem Pharmaceuticals Inc.

(A Development Stage Company)

Consolidated Balance Sheets (Unaudited)

(Expressed in US Dollars)

	August 31, 2012			May 31, 2012
	November 30, 2012			May 31, 2012
	(unaudited)			(audited)
	$			$
ASSETS
Current Assets
Cash and cash equivalents		~~236~~54,~~779~~166			294,936
GST/HST receivable		110,987			110,070
HST receivable		37,214			110,070
Prepaid expenses		84,~~720~~473			11,664
		356,486			416,670
		95,853			416,670
Property, Plant and Equipment
Laboratory equipment		~~218~~27,~~861~~928			493,986
Accumulated depreciation		(345,~~994~~244	)		(67,571	)
Computer hardware		16,035			16,035
Accumulated depreciation		(11,~~470~~984	)		(11,105	)
Office furniture and fixtures		78,~~009~~405			6,283
Accumulated depreciation		(34,~~814~~026	)		(3,718	)
Office machines and equipment		2,489			2,489
Accumulated depreciation		(~~677~~768	)		(653	)
Leasehold improvements		32,184			32,184
Accumulated depreciation		(45,~~303~~697	)		(3,551	)
		221,320			464,379
		59,322			464,379
Intangible Assets
Patents and medical licenses - Net		2			2
Deferred finance charges - Net (Note 6)		~~218~~203,~~948~~672			234,227
		218,950			234,229
		203,674			234,229
Total Assets		~~796~~358,~~756~~849			1,115,278
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable		~~325~~309,~~810~~448			299,214
Accrued liabilities (Note 3)		~~599~~625,~~304~~502			424,616
Convertible debt and accrued interest (Note 4)		34,~~932~~164,~~036~~998			3,674,135
Due to related party		–			4
		4,857,150			4,397,969
		5,099,948			4,397,969
Stockholders’ Deficit
Common Stock: 50,000,000 shares authorized $0.0001 par value, 18,193,124 shares issued and outstanding (May 31, 2012 – 13,723,124)(a)		1,820			1,373
Common Stock: 50,000,000 shares authorized $0.0001 par value, 25,393,124 shares issued and outstanding (May 31, 2012 – 13,723,124)		2,540			1,373
Series “A” Preferred Stock: 10,000,000 shares authorized $0.0001 par value, 6,800,000 shares issued and outstanding (May 31, 2012 – 6,800,000) (Note 8)		680			680
Additional Paid-In Capital		9,~~329~~419,~~788~~653			9,206,663
Donated Capital		2,474,000			2,474,000
Accumulated other comprehensive income		(2,407	)		3,819
Deficit accumulated during the development stage		(1516,~~864~~635,~~275~~565	)		(14,969,226	)
		(4,060,394	)		(3,282,691	)
		(4,741,099	)		(3,282,691	)
Total Liabilities and Stockholders’ Deficit		~~796~~358,~~756~~849			1,115,278

(a) The Company completed a 1 for 20 reverse split of its common stock on November 7, 2011. See Note 2.

(The accompanying notes are an integral part of these consolidated financial statements)

F-1

Kedem Pharmaceuticals Inc.

(A Development Stage Company)

Consolidated Statements of Operations (Unaudited)

(Expressed in US Dollars)

							~~Accumulated from~~						Accumulated from
	Three Months Ended August 31, 2012			Three Months Ended August 31, 2011			April 25, 2006 (Date of inception) to August 31, 2012
	Three Months Ended November 30, 2012			Three Months Ended November 30, 2011			Six Months Ended November 30, 2012			Six Months Ended November 30, 2011			April 25, 2006 (Date of inception) to November 30, 2012
	$			$			$			$			$
Revenue	–	–		–	–		–	–		–			–
Expenses
Amortization		–			10,026			~~44,972~~–			20,052			44,972
Depreciation		189,~~676~~228			718,~~837~~772			~~138~~27,~~567~~904			26,609			147,795
General and administrative		529,~~751~~656			~~125~~95,~~987~~969			162,~~008,169~~407			221,956			1,017,825
Professional fees:
Stock-based compensation		97,~~360~~020			612,~~511~~137			~~320~~16,~~756~~380			18,648			327,776
Incurred		2146,~~786~~723			3972,~~587~~230			~~820~~68,~~402~~509			111,817			867,125
Research and development		~~116~~103,~~926~~172			~~354~~270,~~259~~638			2220,~~143,733~~098			624,897			2,246,905
Salaries and wages:
Stock-based compensation		51,477			3567,~~815~~211			~~965~~102,~~904~~954			103,026			1,017,381
Incurred		142,~~679~~882			~~145~~141,~~204~~758			1285,~~467,348~~561			286,962			1,610,230
Write-off of licensing costs		–			–			~~9,769~~–			–			9,769
Total Expenses		~~413~~370,~~655~~158			~~725~~688,~~226~~741			6783,~~919,620~~813			1,413,967			7,289,778
Net Loss Before Other Income or Expense		(~~413~~370,~~655~~158	)		(~~725~~688,~~226~~741	)		(6783,~~919,620~~813	)		(1,413,967	)		(7,289,778	)
Other Income or Expense
Gain on settlement of payable		–			–			~~60,000~~–			–			60,000
Loss on disposal of equipment		–(28,285	)		–(33,708	)		(9328,~~680~~285	)		(33,708	)		(121,965	)
Loss on extinguishment of debt (Note 4)		–			–(970,390	)		~~(970,390~~–	)		(970,390	)		(970,390	)
Interest expense		(~~337~~280,~~398~~725	)		(~~879~~642,~~789~~032	)		(4618,~~678,303~~123	)		(1,521,821	)		(4,959,028	)
Financing charges		–			–			~~(251,940~~–	)		–			(251,940	)
Impairment loss on intangible assets		–			–			~~(240,629~~–	)		–			(240,629	)
Write-off of intangible assets		–			–			~~(21,596~~–	)		–			(21,596	)
Total Other Income or Expense		(~~337~~309,~~398~~010	)		(~~879~~1,~~789~~646,130	)		(6646,~~196,538~~408	)		(2,525,919	)		(6,505,548	)
Net Loss		(~~751~~679,~~053~~168	)		(12,~~605~~334,~~015~~871	)		(131,~~116~~430,~~158~~221	)		(3,939,886	)		(13,795,326	)
Other Comprehensive Income
Foreign currency translation adjustment		~~(6,226~~–	)		~~(14,820~~–	)		(26,~~407~~226	)		(14,820	)		(2,407	)
Comprehensive Loss		(~~757~~679,~~279~~168	)		(12,~~619~~334,~~835~~871	)		(131,~~118~~436,~~565~~447	)		(3,954,706	)		(13,797,733	)
Net Loss Per Share – Basic and Diluted (b)		(0.05	)		(0.18	)		–
Net Loss Per Share – Basic and Diluted		(0.03	)		(0.25	)		(0.06	)		(0.42	)		–
Weighted Average Shares Outstanding (b)		15,633,885			9,027,312			–
Weighted Average Shares Outstanding		22,238,179			9,295,512			22,238,179			9,295,512			–

(b) Earnings per share and weighted average shares outstanding figures have been adjusted in the current period, and retroactively adjusted in prior periods, to reflect the 1 for 20 reverse split of common stock effective November 7, 2011. See Note 2.

(The accompanying notes are an integral part of these consolidated financial statements)

F-2

Kedem Pharmaceuticals Inc.

(A Development Stage Company)

Consolidated Statements of Cash Flows (Unaudited)

(Expressed in US Dollars)

~~Accumulated from~~

Accumulated from

Three MonthsEndedAugust 31, 2012

Three MonthsEndedAugust 31, 2011

April 25, 2006 (Date of inception)to August 31, 2012

Three Months Ended November 30, 2012

Three Months Ended November 30, 2011

Six Months Ended November 30, 2012

Six Months Ended November 30, 2011

April 25, 2006 (Date of inception) to November 30, 2012

Operating Activities

Comprehensive loss

(~~757~~679,~~279~~168

)

(12,~~619~~334,~~835~~871

)

(131,~~118~~436,~~565~~447

)

(3,954,706

)

(13,797,733

)

Adjustment to reconcile net loss to net cash used in operating activities:

Donated services

–

~~24,000~~–

–

24,000

Amortization

–

10,026

~~44,972~~–

20,052

44,972

Depreciation

189,~~676~~228

718,~~837~~772

~~138~~27,~~567~~904

26,609

147,795

Write-off of licensing costs

–

~~9,769~~–

–

9,769

Gain on settlement of payable

–

~~(60,000~~–

)

–

(60,000

)

Loss on extinguishment of debt

–

–970,390

~~970,390~~–

970,390

Loss on disposal of equipment

–28,285

–33,708

9328,~~680~~285

33,708

121,965

Financing charges

–

~~251,940~~–

–

251,940

Impairment loss on intangible assets

–

~~240,629~~–

–

240,629

Write-off of intangible assets

–

~~21,596~~–

–

21,596

Interest expense on convertible debt and amortization of deferred finance charges

~~336~~280,~~801~~326

~~877~~638,~~987~~953

4617,~~627,937~~127

1,516,940

4,908,263

Stock-based compensation

6058,~~837~~497

4279,~~326~~348

1119,~~286,660~~334

121,674

1,345,157

Foreign currency translation adjustment

6,226

14,820

28,008

Foreign currency

–

6,226

14,820

28,008

Change in operating assets and liabilities:

GST/HST receivable

~~(917~~73,773

)

(3624,~~510~~937

)

~~(78~~72,~~258~~856

)

(61,447

)

(4,485

)

Prepaid expenses

24,~~944~~247

(2482,~~775~~822

)

(17,~~643~~191

)

(107,597

)

2,604

Accounts payable and accrued liabilities

~~184~~19,~~438~~611

92(24,~~375~~901

)

~~819~~204,~~268~~049

67,474

825,035

Net Cash Used In Operating Activities

(~~148~~205,~~274~~201

)

(~~635~~716,~~749~~334

)

(4353,~~701,050~~475

)

(1,352,083

)

(4,920,095

)

Investing Activities

Cash acquired on investment in Posh

–

~~61,649~~–

–

61,649

Credit on purchased equipment

–

~~15,000~~–

–

15,000

Equipment purchased

(~~726~~1,396

)

(~~105~~86,~~876~~134

)

(~~683~~2,~~695~~122

)

(192,010

)

(685,091

)

Proceeds from sale of equipment

9023,~~847~~984

–

90114,~~847~~831

–

128,675

Website development costs

–

~~(2,509~~–

)

–

(2,509

)

Patents and medical licenses

–

~~(292,662~~–

)

–

(292,662

)

Net Cash Used in Investing Activities

9022,~~121~~588

(~~105~~86,~~876~~134

)

~~(811~~112,~~370~~709

)

(192,010

)

(774,938

)

Financing Activities

Payment of share offering costs

–

~~(28,400~~–

)

–

(28,400

)

Advances from (repayments to) shareholders

–

~~(99~~40,~~636~~742

)

–

(58,894

)

–

Advances from (repayments to) a related party

(4–

)

~~(14~~–

)

~~125,388~~(4

)

(14

)

125,388

Proceeds from issuance of common stock

–

~~1,910,018~~–

–

1,910,018

Proceeds from convertible debt

–

~~750~~250,000

~~3,888,339~~–

1,000,000

3,888,339

Proceeds (repayments) of loan payable

–

Deferred charges

–

~~(146,146~~–

)

–

(146,146

)

Net Cash Provided by Financing Activities

(4–

)

~~650~~290,~~350~~742

~~5,749,199~~(4

)

(941,092

)

5,749,199

Increase (decrease) in Cash

(58182,~~157~~613

)

(91511,~~275~~726

)

~~236~~(240,~~779~~770

)

(603,001

)

54,166

Cash – Beginning of Period

~~294~~236,~~936~~779

1,~~485~~393,~~191~~916

–294,936

1,485,191

–

Cash – End of Period

~~236~~54,~~779~~166

1882,~~393,916~~190

~~236~~54,~~779~~166

882,190

54,166

Supplemental Disclosures

Interest paid

–

1,~~802~~383

~~3,107~~–

3,185

3,107

Income taxes paid

–

Non-cash Financing Transactions

Payables settled with common stock

–

~~343,600~~–

–

343,600

Payables settled with series “A” preferred stock

–

154,000

Payables settled with Series “A” Preferred stock

–

100,000

–

154,000

Common stock issued for shares of Posh

–

~~400~~–

–

400

Shares issued in settlement of advances from related party

–

~~116,000~~–

–

116,000

Shares issued in partial settlement of convertible debt

6232,~~735~~088

~~527~~252,~~640~~887

294,~~584,390~~823

780,527

2,616,488

Warrants issued for deferred finance costs

–

~~241,404~~–

~~1,389,154~~–

241,404

1,389,154

Shares issued for deferred finance costs

–

~~252,000~~–

–

252,000

(The accompanying notes are an integral part of these consolidated financial statements)

F-3

Kedem Pharmaceuticals Inc.

(A Development Stage Company)

Consolidated Statement of Stockholders’ Deficit (Unaudited)

(Expressed in US Dollars)

Preferred Series “A”Stock

Additional

AccumulatedOther

Deficit AccumulatedDuring the

Preferred Series “A” Stock

Additional

Accumulated Other

Deficit Accumulated During the

Amount

Paid-In Capital

Donated Capital

Comprehensive Income

Development Stage

Total

Balance – May 31, 2008

60,522,000

6,052

–

17,698

18,750

–

(135,382

)

(92,882

)

Donated services and rent

–

5,250

–

5,250

Sep 30, 2008 – common shares issued at $0.0001 per share in loan settlement

10,000,000

1,000

–

2,499,000

–

(2,499,000

)

1,000

Sep 30, 2008 – common shares returned to treasury

(9,800,000

)

(980

)

–

(2,449,020

)

2,450,000

–

Jan 20, 2009 – common shares issued at $0.25 per share in loan settlement

460,000

–

114,954

–

115,000

Jan 20, 2009 – common shares issued for cash at $0.25 per share

1,540,000

154

–

384,846

–

385,000

Foreign currency translation adjustment

–

41,632

–

41,632

Net loss for the year

–

(173,259

)

(173,259

)

Balance – May 31, 2009

62,722,000

6,272

–

567,478

2,474,000

41,632

(2,807,641

)

281,741

Oct 28, 2009 – common shares issued for cash at $0.75 per share (Note 6)

133,333

–

99,987

–

100,000

Oct 28, 2009 – common shares issued for cash at $0.75 per share (Note 6)

666,667

–

499,933

–

500,000

Dec 8, 2009 – common shares issued for cash at $0.75 per share (Note 6)

533,333

–

392,815

–

392,868

Dec 11, 2009 – share exchange with Posh

4,000,000

400

–

(105,121

)

(104,721

)

Apr 7, 2010 – common shares issued for cash at $0.80 per share

625,000

–

479,937

–

480,000

Cashless exercise of warrants

191,613

–

Convertible debenture financing

–

1,231,983

–

1,231,983

Beneficial conversion feature related to convertible debenture

–

63,267

–

63,267

Foreign currency translation adjustment

–

(16,031

)

–

(16,031

)

Stock-based compensation

–

521,377

–

521,377

Net loss for the period

–

(2,177,023

)

(2,177,023

)

Balance – May 31, 2010 (previously reported)

68,871,946

6,868

–

3,856,777

2,474,000

25,601

(5,089,785

)

1,273,461

Correction of convertible debenture

–

(400,000

)

–

(400,000

)

Adjustment to discount amortization

–

154,514

Adjustment to salary expense

–

85,429

Adjustment to accrued interest expense

–

(41,802

)

(41,802

)

Balance – May 31, 2010 (as restated)

68,871,946

6,868

–

3,456,777

2,474,000

25,601

(4,891,644

)

1,071,602

Commitment shares issued

600,000

–

251,940

–

252,000

Share issuance costs

–

(312,000

)

–

(312,000

)

Write-off of share issuance costs

–

251,940

–

251,940

Oct 4, 2010 – common shares issued for services

230,000

–

19,077

–

19,100

Jan 1, 2011 – common shares issued for services

250,000

–

12,475

–

12,500

Cashless exercise of warrants

163,226

–

Common shares for note conversion

44,470,387

4,447

–

1,500,306

–

1,504,753

Beneficial conversion feature convertible debenture

–

1,502,645

–

1,502,645

Cashless exercise of warrants related to convertible debenture

52,397,633

5,240

–

(5,240

)

–

Foreign currency translation adjustment

–

(6,962

)

–

(6,962

)

Stock-based compensation

–

461,098

–

461,098

Net loss for the period

–

(4,171,986

)

(4,171,986

)

Balance – May 31, 2011

166,983,192

16,663

–

7,139,018

2,474,000

18,639

(9,063,630

)

584,690

Common shares issued on convertible debt (Note 4)

42,505,900

4,250

–

784,714

–

788,964

Series “A” Preferred shares issued (Note 8)

–

6,800,000

680

153,320

–

154,000

Jun 22, 2011 – common shares issued for services

250,000

–

(25

)

–

Issuance costs re: warrants on convertible note (Note 6)

–

241,404

–

241,404

Beneficial conversion features on convertible debt (Note 4)

–

625,319

–

625,319

Adjustment re: 1 for 20 reverse stock split, November 7, 2011 (Note 2)

(196,015,968

)

(19,565

)

–

19,565

–

Foreign currency translation adjustment

–

(14,820

)

–

(14,820

)

Stock-based compensation

–

243,348

–

243,348

Net loss for the period

–

(5,905,596

)

(5,905,596

)

Balance – May 31, 2012

13,723,124

1,373

6,800,000

680

9,206,663

2,474,000

3,819

(14,969,226

)

(3,282,691

)

Common shares issued on convertible debt (Note 4)

11,670,000

1,167

–

93,656

–

94,823

Foreign currency translation adjustment

–

(6,226

)

–

(6,226

)

Stock-based compensation

–

119,334

–

119,334

Loss on related party transaction (Note 5e)

–

(236,118

)

(236,118

)

Net loss for the period

–

(1,430,221

)

(1,430,221

)

Balance – November 30, 2012

25,393,124

2,540

6,800,000

680

9,419,653

2,474,000

(2,407

)

(16,635,565

)

(4,741,099

)

(The accompanying notes are an integral part of these consolidated financial statements)

F-4

Kedem Pharmaceuticals Inc.

(A Development Stage Company)

Consolidated Statement of Stockholders’ Deficit (Unaudited)

(Expressed in US Dollars)

Balance – May 31, 2011	166,983,192		16,663		–	–	7,139,018		2,474,000	18,639		(9,063,630	)	584,690
Common shares issued on convertible debt (see Note 4)	42,505,900		4,250		–	–	784,714		–	–		–		788,964
Series “A” Preferred shares issued (Note 8)	–		–		6,800,000	680	153,320		–	–		–		154,000
Jun 22, 2011 – common shares issued for services	250,000		25		–	–	(25	)	–	–		–		–
Issuance costs re: warrants on convertible note (Note 6)	–		–		–	–	241,404		–	–		–		241,404
Beneficial conversion features on convertible debt (see Note 4)	–		–		–	–	625,319		–	–		–		625,319
Adjustment re: 1 for 20 reverse stock split, November 7, 2011 (c)	(196,015,968	)	(19,565	)	–	–	19,565		–	–		–		–
Foreign currency translation adjustment	–		–		–	–	–		–	(14,820	)	–		(14,820	)
Stock-based compensation	–		–		–	–	243,348		–	–		–		243,348
Net loss for the period	–		–		–	–	–		–	–		(5,905,596	)	(5,905,596	)
Balance – May 31, 2012	13,723,124		1,373		6,800,000	680	9,206,663		2,474,000	3,819		(14,969,226	)	(3,282,691	)
Common shares issued on convertible debt (see Note 4)	4,470,000		447		–	–	62,288		–	–		–		62,735
Foreign currency translation adjustment	–		–		–	–	–		–	(6,226	)	–		(6,226	)
Stock-based compensation	–		–		–	–	60,837		–	–		–		60,837
Loss on related party transaction (Note 5e)	–		–		–	–	–		–	–		(143,996	)	(143,996	)
Net loss for the period	–		–		–	–	–		–	–		(751,053	)	(751,053	)
Balance – August 31, 2012	18,193,124		1,820		6,800,000	680	9,329,788		2,474,000	(2,407	)	(15,864,275	)	(4,060,394	)

(The accompanying notes are an integral part of these consolidated financial statements)

F-5

Kedem Pharmaceuticals Inc.

(A Development Stage Company)

Notes to the Consolidated Financial Statements (Unaudited)

~~August 31~~November 30, 2012

1. Development Stage Company

1.		Development Stage Company

		Kedem Pharmaceuticals Inc. (the “Company”) was incorporated in the State of Nevada on April 25, 2006 under the name Acting Scout Inc. The Company changed its name to Goldtown Investments Corp. on September 20, 2007 and on October 6, 2008 changed its name to Global Health Ventures Inc. On September 23, 2011, the Company completed a merger with its wholly-owned subsidiary, Kedem Pharmaceuticals Inc., and formally assumed the subsidiary’s name by filing Articles of Merger with the Nevada Secretary of State. The Company is located in British Columbia, Canada. The Company is a development stage specialty pharmaceutical company that is in the business of acquiring and licensing current outstanding and promising healthcare related technologies for further development and re-licensing to major pharmaceutical companies. The Company is a Development Stage Company, as defined under Accounting Standards Codification (“ASC”) 915, “Development Stage Entities”.

		These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has not generated significant revenues since inception and has never paid any dividends and is unlikely to pay dividends or generate significant earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations and the attainment of profitable operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. As at November 30, 2012, the Company has never generated any significant revenue and has accumulated losses of $16,635,565 since inception. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

2.(i)		Changes in Presentation

Kedem Pharmaceuticals Inc. (the “Company”) was incorporated in the State of Nevada on April 25, 2006 under the name Acting Scout Inc. The Company changed its name to Goldtown Investments Corp. on September 20, 2007 and on October 6, 2008 changed its name to Global Health Ventures Inc. On September 23, 2011, the Company completed a merger with its wholly-owned subsidiary, Kedem Pharmaceuticals Inc., and formally assumed the subsidiary’s name by filing Articles of Merger with the Nevada Secretary of State. The Company is located in British Columbia, Canada. The Company is a development stage specialty pharmaceutical company that is in the business of acquiring and licensing current outstanding and promising healthcare related technologies for further development and re-licensing to major pharmaceutical companies. The Company is a Development Stage Company, as defined under Accounting Standards Codification (“ASC”) 915 “Development Stage Entities”.

These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has not generated significant revenues since inception and has never paid any dividends and is unlikely to pay dividends or generate significant earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations and the attainment of profitable operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. As at August 31, 2012, the Company has never generated any significant revenue and has accumulated losses of $15,864,275 since inception. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company’s common stock trades on the OTC Markets Group’s OTCQB under the symbol “KDMP”.

2.(i) Changes in Presentation

Name Change

		On September 23, 2011, the Company completed a merger with its wholly owned subsidiary, Kedem Pharmaceuticals, Inc., and formally assumed the subsidiary’s name by filing Articles of Merger with the Nevada Secretary of State. The subsidiary was incorporated entirely for the purpose of effecting the name change and the merger did not affect the Company’s Articles of Incorporation or corporate structure in any other way.

The name change became effective in the market at the open of business on November 7, 2011. At that time, the Company’s common stock became eligible for quotation on the Over the Counter Bulletin Board under the name Kedem Pharmaceuticals Inc. and the trading symbol “GHLVD”. On December 20, 2011, the trading symbol changed permanently to “KDMP.”.

	b)	Reverse Stock Split

On September 26, 2011, the directors authorized a 1 for 20 reverse split of the Company’s common stock and effected a corresponding decrease in its authorized share capital by filing of a Certificate of Change with the Nevada Secretary of State. The reverse stock split became effective in the market at the open of business on November 7, 2011. Par value of the common stock of $0.0001 remains unchanged. ~~Share~~All share and per share amounts reflected throughout these consolidated financial statements and related notes have been adjusted to reflect the reverse stock split.

2.(ii)

Summary of Significant Accounting Policies

a) Basis of Presentation These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”), and are expressed in U.S. dollars. These consolidated financial statements include the accounts of the Company, its wholly owned subsidiary, Posh Cosmeceuticals Ltd. (“Posh”), and its inactive wholly-owned subsidiary, Global Health (BC) Ventures Inc.

These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”), and are expressed in U.S. dollars. These consolidated financial statements include the accounts of the Company, its wholly owned subsidiary, Posh Cosmeceuticals Ltd. (“Posh”), and its inactive whollyF-~~owned subsidiary, Global Health (BC) Ventures Inc.~~5

F-6

Kedem Pharmaceuticals Inc.

(A Development Stage Company)

Notes to the Consolidated Financial Statements (Unaudited)

~~August 31~~November 30, 2012

Summary of Significant Accounting Policies (continued)

b) Interim Financial Statements These interim unaudited financial statements have been prepared on the same basis as the annual financial statements and in the opinion of management, reflect all adjustments necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period. These financial statements should be used in conjunction with the Company’s annual audited financial statements. c) Use of Estimates The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to the deferred income tax asset valuation allowance, depreciation of property, plant and equipment, stock based compensation, convertible debt, and valuation of patents and medical licenses. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. d) Basic and Diluted Net Income (loss) Per Share The Company computes net income (loss) per share in accordance with ASC 260, “Earnings per Share”. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive. All EPS calculations presented give effect to the reverse stock split. e) Revenue Recognition The Company recognizes revenue in accordance with ASC 605, “Revenue Recognition”. The Company has never generated any revenue since inception. f) Comprehensive Loss ASC 220, “Comprehensive Income”, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. g) Cash and Cash Equivalents The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.

These interim unaudited financial statements have been prepared on the same basis as the annual financial statements and in the opinion of management, reflect all adjustments necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period. These financial statements should be used in conjunction with the Company’s annual audited financial statements.F-6

c) Use of Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to the deferred income tax asset valuation allowance, depreciation of property, plant and equipment, stock based compensation, convertible debt, and valuation of patents and medical licenses. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

d) Basic and Diluted Net Income (loss) Per Share

The Company computes net income (loss) per share in accordance with ASC 260, “Earnings per Share”. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive. All EPS calculations presented give effect to the reverse stock split.

e) Revenue Recognition

The Company recognizes revenue in accordance with ASC 605, “Revenue Recognition”. The Company has never generated any revenue since inception.

f) Comprehensive Loss

ASC 220, “Comprehensive Income”, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements.

g) Cash and Cash Equivalents

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.

F-7

Kedem Pharmaceuticals Inc.

(A Development Stage Company)

Notes to the Consolidated Financial Statements (Unaudited)

~~August 31~~November 30, 2012

Summary of Significant Accounting Policies (continued)

h) Property, Plant and Equipment Property, plant and equipment are recorded at cost. Depreciation is provided annually at rates calculated to write off the assets over their estimated useful lives as follows:

Property, plant and equipment are recorded at cost. Depreciation is provided annually at rates calculated to write off the assets over their estimated useful lives as follows:

Laboratory equipment	20%	diminishing balance
Computer hardware	45%	diminishing balance
Office furniture and fixtures	20%	diminishing balance
Office machines and equipment	20%	diminishing balance
Leasedhold improvements	straight-line over the term of the lease

Laboratory equipment		20% diminishing balance
Computer hardware		45% diminishing balance
Office furniture and fixtures		20% diminishing balance
Office machines and equipment		20% diminishing balance
Leasehold improvements		straight-line over the term of the lease

In the year of acquisition, these rates are reduced by one-half.

i) Medical Technology Licenses Intangible assets are recorded at cost. The Company amortizes the cost of acquired medical technology licenses over the lesser of the license term or the estimated period of benefit. The term of the current medical license is the later of the date on which all the licensed patents have expired or been revoked without a right of further appeal, and the date on which the marketing for the license agreements and the licenses granted under the agreement is seized. The medical technology licenses are being amortized straight-line over seven years. The Company amortizes the cost of its patent balance straight line over its estimated period of benefit of 20 years. The Company assesses the realizability of its intangible assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If an impairment review is triggered, the Company evaluates the carrying value of intangible assets based on estimated undiscounted future cash flows in accordance with ASC 360, “Property, Plant and Equipment”. j) Long-Lived Assets In accordance with ASC 360, “Property, Plant and Equipment”, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value. k) Financial Instruments The Company’s financial instruments consist of cash and cash equivalents, accounts payable and accrued liabilities and convertible debt and accrued interest. The fair value of the financial instruments cash and cash equivalents and accounts payable and accrued liabilities were estimated to approximate their carrying values due to the immediate or short-term maturity of these financial instruments. The carrying value of the Company’s convertible debt and accrued interest approximates its fair value based on current market borrowing rates. Accordingly, the convertible debt and accrued interest is classified as “Level 2” in the fair value hierarchy. The Company’s operations are in Canada and the United States, resulting in exposure to market risks from changes in foreign currency rates. The financial risk is the risk to the Company’s operations that arise from fluctuations in foreign exchange rates and the degree of volatility of these rates. Currently, the Company does not use derivative instruments to reduce its exposure to foreign currency risk.

Intangible assets are recorded at cost. The Company amortizes the cost of acquired medical technology licenses over the lesser of the license term or the estimated period of benefit. The term of the current medical license is the later of the date on which all the licensed patents have expired or been revoked without a right of further appeal, and the date on which the marketing for the license agreements and the licenses granted under the agreement is seized. The medical technology licenses are being amortized straightF-~~line over seven years. The Company amortizes the cost of its patent balance straight line over its estimated period of benefit of twenty years.~~7

The Company assesses the realizability of its intangible assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If an impairment review is triggered, the Company evaluates the carrying value of intangible assets based on estimated undiscounted future cash flows in a accordance with ASC 360, “Property, Plant and Equipment”.

j) Long-Lived Assets

In accordance with ASC 360, “Property, Plant and Equipment”, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life.

Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.

k) Financial Instruments

The Company’s financial instruments consist of cash and cash equivalents, accounts payable and accrued liabilities and convertible debt and accrued interest. The fair value of financial instruments cash and cash equivalents and accounts payable and accrued liabilities were estimated to approximate their carrying values due to the immediate or short-term maturity of these financial instruments. The carrying value of the Company’s long-term convertible debt and accrued interest approximates its fair value based on current market borrowing rates. Accordingly, the long-term convertible debt and accrued interest is classified as “Level 2” in the fair value hierarchy.

The Company’s operations are in Canada and the United States, resulting in exposure to market risks from changes in foreign currency rates. The financial risk is the risk to the Company’s operations that arise from fluctuations in foreign exchange rates and the degree of volatility of these rates. Currently, the Company does not use derivative instruments to reduce its exposure to foreign currency risk.

F-8

Kedem Pharmaceuticals Inc.

(A Development Stage Company)

Notes to the Consolidated Financial Statements (Unaudited)

~~August 31~~November 30, 2012

Summary of Significant Accounting Policies (continued)

l) Income Taxes The Company follows the asset and liability method of accounting for income taxes. Under this method, current taxes are recognized for the estimated income taxes payable for the current period. Deferred income taxes are provided for based on the estimated future tax effects of temporary differences between financial statement carrying amounts of assets and liabilities and their respective tax bases as well as the benefit of losses available to be carried forward to future years for tax purposes. Deferred tax assets and liabilities are measured using enacted tax rates that are expected to apply to taxable income in the years in which those temporary differences are expected to be covered or settled. The effect of deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. A valuation allowance is recorded for deferred tax assets when it is more likely than not that such deferred tax assets will not be realized. m) Foreign Currency Translation The functional currency of the Company is the Canadian dollar with the reported amounts being stated in United States dollars. In accordance with ASC 830, “Foreign Currency Matters”, assets and liabilities are translated at the rates of exchange at the balance sheet dates. Income and expense items are translated at average annual rates of exchange. Foreign currency translation gains and losses are recognized in the statement of operations. Foreign currency translation adjustments are included in accumulated other comprehensive income (loss), a separate component of stockholders’ equity (deficit). n) Research and development costs Research costs are expensed in the period incurred. Development costs are expensed in the period incurred unless the Company believes a development project meets generally accepted accounting criteria for deferral and amortization. No such costs have been deferred as at November 30, 2012 and 2011. o) Stock-based Compensation In accordance with ASC 718, “Stock Compensation”, the Company accounts for share-based payments using the fair value method. Shares of common stock issued to third parties for non-cash consideration are valued based on the fair market value of the services provided, or the fair market value of the common stock on the measurement date, whichever is more readily determinable. Recent and Future Accounting Pronouncements No recent or future pronouncements issued by the Financial Accounting Standards Board, or other authoritative accounting standard groups with current or future effective dates, are assessed as being currently applicable, or are expected to have a material impact to the future financial statements of the Company.

The Company follows the asset and liability method of accounting for income taxes. Under this method, current taxes are recognized for the estimated income taxes payable for the current period.

Deferred income taxes are provided for based on the estimated future tax effects of temporary differences between financial statement carrying amounts of assets and liabilities and their respective tax bases as well as the benefit of losses available to be carried forward to future years for tax purposes.

Deferred tax assets and liabilities are measured using enacted tax rates that are expected to apply to taxable income in the years in which those temporary differences are expected to be covered or settled. The effect of deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. A valuation allowance is recorded for deferred tax assets when it is more likely than not that such deferred tax assets will not be realized.

m) Foreign Currency Translation

The functional currency of the Company is the Canadian dollar with the reported amounts being stated in United States dollars. In accordance with ASC 830, “Foreign Currency Matters”, assets and liabilities are translated at the rates of exchange at the balance sheet dates. Income and expense items are translated at average annual rates of exchange. Foreign currency translation gains and losses are recognized in the statement of operations. Foreign currency translation adjustments are included in accumulated other comprehensive income (loss), a separate component of stockholders’ equity.

n) Research and development costs

Research costs are expensed in the period incurred. Development costs are expensed in the period incurred unless the Company believes a development project meets generally accepted accounting criteria for deferral and amortization. No such costs have been deferred as at August 31, 2012 and 2011.

o) Stock-based Compensation

In accordance with ASC 718, “Stock Compensation”, the Company accounts for share-based payments using the fair value method. Shares of common stock issued to third parties for non-cash consideration are valued based on the fair market value of the services provided, or the fair market value of the common stock on the measurement date, whichever is more readily determinable.

Recent and Future Accounting Pronouncements

No recent or future pronouncements issued by the Financial Accounting Standards Board, or other authoritative accounting standard groups with current or future effective dates, are assessed as being currently applicable, or are expected to have a material impact to the future financial statements of the Company.

Accrued Liabilities

	August 31, 2012 (unaudited) $		May 31, 2012 (audited) $
	November 30, 2012		May 31, 2012
	(unaudited)$		(audited)$
Professional fees		15,000		35,000
Research and development		8332,~~333~~963		33,333
Salaries		~~476~~570,~~911~~804		353,154
Other		246,~~060~~735		3,129
		599,304		424,616
		625,502		424,616

F-98

Kedem Pharmaceuticals Inc.

(A Development Stage Company)

Notes to the Consolidated Financial Statements (Unaudited)

~~August 31~~November 30, 2012

4. Convertible Debt

4.		Convertible Debt

		On March 19, 2010, the Company sold to one investor (the “Lender”) a $4,200,000 convertible debenture (the “Debenture”) due March 18, 2014, unless converted in accordance with the repayment terms prior to such date. The Debenture bore interest at a rate of 12% per annum payable on maturity, was unsecured and ranked equally to any of the Company’s existing and future unsecured debts.

		The Debenture was sold with a 25% discount from face value for a net book value of $3,150,000. The $3,150,000 consisted of cash of $400,000 paid at closing and 11 investor notes in the amount of $250,000 each. The investor notes were mandatorily pre-payable in sequence, at the rate of one note per month commencing on the seven month anniversary of the closing date.

		Beginning six months from the closing date, the Lender could require the Company to repay the principal amount of the Debenture plus accrued interest, in full or in part, in fully-paid and non-assessable shares of the Company’s common stock at a rate per share equal to the market price as calculated under the Securities Purchase Agreement governing the Debenture (the “Agreement”). The Lender was not permitted to deliver a request for repayment where the dollar amount of the request for repayment would exceed 125% of the amount outstanding under the Debenture. In September 2010, the conversion price was amended, providing for an additional 10% discount to the market price as defined under the Agreement.

		Events of default under the terms of the Agreement included the following:

On March 19, 2010, the Company sold to one investor (the “Lender”) a $4,200,000 convertible debenture (the “Debenture”) due March 18, 2014, unless converted in accordance with the repayment terms prior to such date. The Debenture bore interest at a rate of 12% per annum payable on maturity, was unsecured and ranked equally to any of the Company’s existing and future unsecured debts.

	a)	Default of payment of interest or principal or any amount due under the Agreement;
	b)	Material default, misrepresentation, or material breach of the covenants described in the Agreement;
	c)	Any transfer, conveyance, or assignment of substantial Company or subsidiary assets;
	d)	Any money judgment, writ of warrant or attachment, or similar process against the Company in excess of $100,000;
	e)	Failure to issue common stock within five business days of receipt of a written request for repayment of outstanding amounts in common stock;
	f)	The average dollar volume of common stock for any consecutive 10 day trading period falling below $40,000 per day;
	g)	Control of the whole or a substantial portion of the Company by any governmental agencies;
	h)	Order by a court adjudging the Company bankrupt or insolvent, or seeking reorganization;
	i)	Failure of the Company to continually maintain its status as a reporting company under federal securities laws or as a DWAC eligible issuer; and
	j)	Failure to timely file reports required to be filed with the SEC.

	Upon occurrence of one of the above events, the amount due under the Debenture would be immediately due and payable at the rate of 110% of the sum of the principal outstanding immediately prior to the event of default and all interest, fees, costs and penalties. These amounts were to accrue interest at the rate of 12% per annum until payment.

	On July 16, 2010, the Company had an event of default under the terms of the Debenture. The Lender waived the default, and in exchange, raised the interest rate on the Debenture from 6% per annum to 9% per annum.

	On September 2, 2010, the Company had an event of default under the terms of the Debenture. The Lender waived the default, and in exchange, raised the interest rate on the Debenture from 9% per annum to 12% per annum and negotiated a 10% discount on the market price as defined under the Agreement for all conversions of the Debenture into common stock.

	On September 19, 2011, the Company had an event of default under the terms of the Debenture. As a result of the default a forbearance agreement and exchange agreement were entered into by the Company and the Lender.

The Debenture was sold with a 25% discount from face value for a net book value of $3,150,000. The $3,150,000 consisted of cash of $400,000 paid at closing and 11 investor notes in the amount of $250,000 each. The investor notes were mandatorily preF-payable in sequence, at the rate of one note per month commencing on the seven month anniversary of the closing date. As at October 27, 2011, all 11 investor notes payable under the Debenture had been received by the Company.9

Beginning six months from the closing date, the Lender could require the Company to repay the principal amount of the Debenture plus accrued interest, in full or in part, in fully-paid and non-assessable shares of the Company’s common stock at a rate per share equal to the market price as calculated under the Securities Purchase Agreement governing the Debenture (the “Agreement”). The Lender was not permitted to deliver a request for repayment where the dollar amount of the request for repayment would exceed 125% of the amounts outstanding under the Debenture. In September 2010, the conversion price was amended, providing for an additional 10% discount to the market price as defined under the Agreement.

Events of default under the terms of the Agreement included the following:

a) Default of payment of interest or principal or any amount due under the Agreement;

b) Material default, misrepresentation, or material breach of the covenants described in the Agreement;

c) Any transfer, conveyance, or assignment of substantial Company or subsidiary assets;

d) Any money judgment, writ of warrant or attachment, or similar process against the Company in excess of $100,000;

e) Failure to issue common stock within five business days of receipt of a written request for repayment of outstanding amounts in common stock;

f) The average dollar volume of common stock for any consecutive 10 day trading period falling below $40,000 per day;

g) Control of the whole or a substantial portion of the Company by any governmental agencies;

h) Order by a court adjudging the Company bankrupt or insolvent, or seeking reorganization;

i) Failure of the Company to continually maintain its status as a reporting company under federal securities laws or as a DWAC eligible issuer; and

j) Failure to timely file reports required to be filed with the SEC.

Upon occurrence of one of the above events, the amount due under the Debenture would be immediately due and payable at the rate of 110% of the sum of the principal outstanding immediately prior to the event of default and all interest, fees, costs and penalties. These amounts were to accrue interest at the rate of 12% per annum until payment.

F-10

Kedem Pharmaceuticals Inc.

(A Development Stage Company)

Notes to the Consolidated Financial Statements (Unaudited)

~~August 31~~November 30, 2012

4. Convertible Debt (continued)

4.		Convertible Debt (continued)

		Pursuant to the exchange agreement, the Lender and the Company exchanged the Debenture (the “Note Exchange”) for a new secured convertible promissory note having a principal balance equal to the outstanding principal balance of the Debenture plus the sum of all accrued and unpaid interest, penalties, fees and adjustments owed under the Debenture as of October 27, 2011 minus $25,000 forgiven by the Lender. In accordance with ASC 470-50-40-4, the difference between the acquisition price of the debt and the net carrying amount of the Debenture as at October 27, 2011 was expensed in the period as a loss on extinguishment of debt. The liability under the Debenture was extinguished as a result of the Note Exchange. The new secured convertible promissory note received by the Company is secured by all the assets of the Company, bears interest at a rate of 12% per annum, and has a maturity date of September 18, 2014. The new note contains a discount of $Nil. As at the date of exchange, all investor notes payable relating to the new note had been received.

		On June 16, 2011, the Company sold to the Lender a convertible note (the “Note”) in the amount of $4,338,833. The Note was sold with a 25% discount from face value for a net book value of $3,250,000, consisting of an initial cash payment of $250,000 paid at closing and 12 investor notes in the amount of $250,000 each. The Note matures in 48 months and bears interest at a rate of 6% per annum while each investor note matures in 50 months and bears interest at the rate of 5% per annum. In the event of a default, the outstanding balance of the Note will accrue interest at the rate of 12% per annum. Events of default under the terms of the Note and Warrant Purchase Agreement governing the Note (the “Note Agreement”) include the following:

On July 16, 2010, the Company had an event of default under the terms of the Debenture. The Lender waived the default, and in exchange, raised the interest rate on the Debenture from 6% per annum to 9% per annum.

	a)	Failure to make payments of costs, fees, interest, principal, or other amount due under the Note Agreement;
	b)	Failure to transfer or pledge the investor notes;
	c)	Failure to deliver conversion shares or shares of common stock to be delivered upon exercise of the warrants;
	d)	Breach of any covenant, obligation, condition or agreement contained in the Note or any of the other transaction documents;
	e)	Falsification of any representations and warranties made or furnished by or on behalf of the Company to the Lender in writing;
	f)	Failure to pay debts and/or voluntary bankruptcy;
	g)	Involuntary bankruptcy;
	h)	If any governmental or regulatory authority takes on or institutes any action that will materially affect the Company’s financial condition, operations or ability to pay or perform the Company’s obligations under the Note; and
	i)	Failure to maintain authorized but unissued shares of common stock equal to at least 200% of the number of shares of common stock that would be needed to fully convert the Note and exercise the warrants at any given time after the date that is 30 days from the date of the Note.

	The Lender has the right to convert the outstanding balance of the Note, in whole or in part, into shares of the Company’s common stock which will be valued at the market value. As part of the transaction, the Lender also acquired warrants to purchase shares of the Company’s common stock equal to $250,000, exercisable until June 30, 2016.

	On September 19, 2011, the Company had an event of default under the terms of the Note. As a result of the event of default, the Company and the Lender entered into a forbearance agreement, whereby the Lender agreed to extend the original maturity date of the Note by six months, to increase the interest rate from 6% to 12%, to refrain and forbear temporarily from exercising and enforcing any of its remedies against the Company resulting from the event of default, and to reduce the outstanding balance of the Note by $25,000, net of $10,000 of legal fees relating to the modification of the Note, which net reduced the principal of the Note from $4,338,833 to $4,323,833.

On September 2, 2010, the Company had an event of default under the terms of the Debenture. The Lender waived the default, and in exchange, raised the interest rate on the Debenture from 9% per annum to 12% per annum and negotiated a F-10~~% discount on the market price as defined under the Agreement for all conversions of the Debenture into common stock.~~

On September 19, 2011, the Company had an event of default under the terms of the Debenture, as the Company did not maintain its DWAC eligibility. As a result of the default a forbearance agreement and exchange agreement was entered into by the Company and the Lender.

Pursuant to the exchange agreement, the Lender and the Company exchanged the Debenture (the “Note Exchange”) for a new secured convertible promissory note having a principal balance equal to the outstanding principal balance of the Debenture plus the sum of all accrued and unpaid interest, penalties, fees and adjustments owed under the Debenture as of October 27, 2011 minus $25,000 forgiven by the Lender. In accordance with ASC 470-50-40-4, the difference between the acquisition price of the debt and the net carrying amount of the Debenture as at October 27, 2011 was expensed in the period as a loss on extinguishment of debt. The liability under the Debenture was extinguished as a result of the Note Exchange. The new secured convertible promissory note received by the Company is secured by all the assets of the Company, bears interest at a rate of 12% per annum, and has a maturity date of September 18, 2014. The new note contains a discount of $Nil. As at the date of exchange, all investor notes payable relating to this modified note had been received.

On June 16, 2011, the Company sold to the Lender a convertible note (the “Note”) in the amount of $4,338,833. The Note was sold with a 25% discount from face value for a net book value of $3,250,000, consisting of an initial cash payment of $250,000 paid at closing and 12 investor notes in the amount of $250,000 each. The Note matures in 48 months and bears interest at a rate of 6% per annum while each investor note matures in 50 months and bears interest at the rate of 5% per annum. In the event of a default, the outstanding balance of the Note will accrue interest at the rate of 12% per annum. Events of default under the terms of the Note and Warrant Purchase Agreement governing the Note (the “Note Agreement”) include the following:

a) Failure to make payments of costs, fees, interest, principal, or other amount due under the Note Agreement;

b) Failure to transfer or pledge the investor notes;

c) Failure to deliver conversion shares or shares of common stock to be delivered upon exercise of the warrants;

d) Breach of any covenant, obligation, condition or agreement contained in the Note or any of the other transaction documents;

e) Falsification of any representations and warranties made or furnished by or on behalf of the Company to the Lender in writing;

f) Failure to pay debts and/or voluntary bankruptcy;

g) Involuntary bankruptcy;

h) If any governmental or regulatory authority takes on or institutes any action that will materially affect the Company’s financial condition, operations or ability to pay or perform the Company’s obligations under the Note; and

i) Failure to maintain authorized but unissued shares of common stock equal to at least 200% of the number of shares of common stock that would be needed to fully convert the Note and exercise the warrants at any given time after the date that is 30 days from the date of the Note.

The Lender has the right to convert the outstanding balance of the Note, in whole or in part, into shares of the Company’s common stock which will be valued at the market value. As part of the transaction, the Lender also acquired warrants to purchase shares of the Company’s common stock equal to $250,000, exercisable until June 30, 2016.

F-11

Kedem Pharmaceuticals Inc.

(A Development Stage Company)

Notes to the Consolidated Financial Statements (Unaudited)

~~August 31~~November 30, 2012

Convertible Debt (continued)

On September 19, 2011, the Company had an event of default under the terms of the Note. As a result of the event of default, the Company and the Lender entered into a forbearance agreement, whereby the Lender agreed to extend the original maturity date of the Note by six months, to increase the interest rate from 6% to 12%, to refrain and forbear temporarily from exercising and enforcing any of its remedies against the Company resulting from the event of default, and to reduce the outstanding balance of the Note by $25,000, net of $10,000 of legal fees relating to the modification of the Note, which net reduced the principal of the Note from $4,338,833 to $4,323,833.

Under the terms of the forbearance agreement the modified Note is secured by all the assets of the Company, the share reserve under the Note was amended to be such number of shares necessary to effect the full conversion of the Note and the exercise of the warrants, and a cross default clause was added, whereby a breach or default by the Company of any covenant or term of condition contained in (i) the Note, (ii) any of the other loan documents or (iii) any other agreements, as defined in the forbearance agreement, shall, at the option of the Lender, be considered a default under the Note, in which event the Lender shall be entitled to apply all rights and remedies of the Lender under the terms of the Note Agreement and the Note.

During the 12 month period ended May 31, 2012, the Company received the $250,000 initial cash payment on the Note and two of the 12 investor notes. During the ~~three~~six month period ended ~~August~~November 3130, 2012, the Company did not receive any of the investor notes from the Lender. During the 12 month period ended May 31, 2012, the Company recorded amortization of the debt discount on the Note of $408,528, which was charged to interest expense. During the ~~three~~six month period ended ~~August~~November 3130, 2012, the Company recorded amortization of the debt discount on the Note of $~~104~~148,~~752~~944, which was charged to interest expense.

The Company has separately accounted for the liability and equity components of the Debenture and the Note by allocating the proceeds from the issuance of the instruments between the liability component and the beneficial conversion feature, or equity component.

Based on this calculation, as at May 31, 2012, $1,788,359 relating to the Debenture was allocated to equity for the beneficial conversion feature ($1,502,645 allocated to equity for the beneficial conversion feature for the 12 months ended May 31, 2011, and $285,714 allocated to equity for the beneficial conversion feature for the 12 months ended May 31, 2012 before default and the exchange for the new secured promissory note occurred). $Nil has been allocated to equity for the beneficial conversion feature for the new secured convertible promissory note, ~~exchanged~~received in exchange for the Debenture on October 27, 2011, and $339,605 has been allocated to the equity component for the beneficial conversion feature on the Note, as modified, for the 12 month period ended May 31, 2012.

Based on this calculation, for the ~~three~~six months ended ~~August~~November 3130, 2012, $Nil was allocated to equity for the beneficial conversion feature of the new secured convertible promissory note and the Note (collectively, the “Notes”), as no investor notes were received by the Company induring the ~~three~~six month period ended ~~August~~November 3130, 2012.

Prior to the date of cancellation of the Debenture on October 27, 2011, on a cumulative basis up to this date, $2,533,331 of the principal and accrued interest was converted into shares of the Company’s common stock by the Lender. During the 12 month period ended May 31, 2012, prior to the cancellation and exchange of the Debenture, the Lender converted $660,115 of the interest and principal into 2,705,000 ~~(post reverse-split)~~ shares of the Company’s common stock, and subsequent to the date of the exchange, the Lender converted $124,599 of the new secured convertible promissory note interest into 2,655,900 shares of the Company’s common stock, for a total of $784,714 of principal and interest converted during the 12 months ended May 31, 2012.

During the ~~three~~six month period ending ~~August~~November 3130, 2012, $6294,~~735~~823 of accrued interest on the new secured convertible promissory note, received in exchange for the Debenture on October 27, 2011, was converted tointo ~~equity~~11,670,000 byshares of the Company’s common stock by the Lender. During the same period, $Nil of principal and accrued interest was converted to equity by the Lender on the Note, as modified.

F-For the 12 month period ended May 31, 2012, a total of $2,224,082 was expensed to the income statement, (inclusive of the interest expense on the outstanding balance of the Notes, amortization of deferred cash and non-cash costs relating to the Notes, and amortization of the discount on the Note, as modified, as well as amortization of the discount on the Debenture, before its cancellation on October 27, 2011).

F-11

Kedem Pharmaceuticals Inc.

(A Development Stage Company)

Notes to the Consolidated Financial Statements (Unaudited)

~~August 31~~November 30, 2012

4. Convertible Debt (continued)

4.		Convertible Debt (continued)

		For the six month period ended November 30, 2012, a total of $617,127 of interest was expensed to the income statement (inclusive of interest expense of the outstanding balance of the Notes, amortization of deferred cash and non-cash deferred financing costs relating to the Notes (see Note 6), and amortization of the discount on the Note, as modified). For the six month period ended November 30, 2011, $1,518,646 of interest was expensed to the income statement (inclusive of interest expense on the outstanding balance of the Debenture, new secured convertible promissory note and the Note, as modified, amortization of deferred financing costs, and amortization of the debt discount on the Note, as modified).

		The following table presents the cumulative totals of both remaining instruments: the Note issued June 16, 2011 and modified on October 27, 2011, and the new secured convertible promissory note received in exchange for the Debenture on October 27, 2011.

For the 12 month period ended May 31, 2012, a total of $2,224,082 was expensed to the income statement, (inclusive of the interest expense on the outstanding balance of the Notes, amortization of deferred cash and non-cash costs relating to the Notes, and amortization of the discount on the Note, as modified, as well as amortization of the discount on the Debenture, before its cancellation on October 27, 2011).

	November 30, 2012			May 31, 2012
	(unaudited) $			(audited) $

Principal of liability component outstanding and accrued interest		4,197,246			3,855,328
Unamortized discount		(32,248	)		(181,193	)
Net carrying amount		4,164,998			3,674,135

For the three month period ended August 31, 2012, a total of $336,801 of interest was expensed to the income statement, (inclusive of interest expense of the outstanding balance of the Notes, amortization of deferred cash and non-cash deferred financing costs relating to the Notes, (see Note 6) and amortization of the discount on the Note, as modified).

The following table presents the cumulative totals of both remaining instruments: the Note issued June 16, 2011 and modified on October 27, 2011, and the new secured convertible promissory note received in exchange for the Debenture on October 27, 2011.

	August 31, 2012(unaudited)$			May 31, 2012(audited)$
Principal of liability component outstanding and accrued interest		4,008,476			3,855,328
Unamortized discount		(76,440	)		(181,193	)
Net carrying amount		3,932,036			3,674,135

Related Party Transactions

a) As of ~~August~~November 3130, 2012, included in accrued liabilities (see Note 3) is $~~476~~570,~~911~~804 (May 31, 2012 – $353,154) for salaries owed to the President of the Company.

b) During the ~~three~~six month period ended ~~August~~November 3130, 2012, the Company incurred $613,~~527~~211 of rent expense to a company related to the President of the Company for rent of office and laboratory space (~~three~~six month period ended ~~August~~November 3130, 2011 – $814,~~118),~~614 of rent expense incurred to atwo ~~company~~companies related to the President of the Company for rent of office and laboratory space). As at ~~August~~November 3130, 2012, $29,~~484~~970 (May 31, 2012 – $4,~~293~~923) of rent payable to Globe Laboratories Inc. (“Globe”), a company controlled by an individual related to the President of the Company, is included in accounts payable and accrued liabilities.

c) On March 15, 2009, the Company entered into a research contract with Globe to engage Globe for research on the sublingual technologies developed by Globe. The Company agreed to pay $50,000 per quarter to Globe from April 1, 2009 until the technology is put into commercial production, or the technologies are sold or sublicensed. ToAs ~~date~~of November 30, 2012, $~~683~~733,333 in research costs have been accrued under this agreement, of which $~~600~~700,~~000~~370 has been paid to Globe. During the six month period ended November 30, 2012, the Company incurred an additional $63,853 of research and development expense (six month period ended November 30, 2011 – $160,973) for costs incurred to Globe outside the scope of the research contract. As at November 30, 2012, $5,411 (May 31, 2012 – $Nil) of trade amounts payable for research owing to Globe is included in accounts payable and accrued liabilities.

d) During the ~~three~~six month period ended ~~August~~November 3130, 2012, the Company paid $Nil (~~three~~six month period ended ~~August~~November 3130, 2011 – $36,000) to a director of the Company for consulting services.

e) During the ~~three~~six month period ended ~~August~~November 3130, 2012 the ~~company~~Company incurred a loss on sale of equipment of $~~143~~236,~~996~~118 (~~three~~six month period ended ~~August~~November 3130, 2011 – $Nil) to a ~~Company~~company with a shareholder related to the President of the Company.

f) Effective December 11, 2009, the Company issued an aggregate of 4,000,000 shares of its common stock to the shareholders of Posh, a company controlled by the President of the Company, pursuant to a share exchange agreement dated June 12, 2009. The Company issued the securities to 27 nonF-U.S. persons (as that term is defined in Regulation S under the Securities Act of 1933) in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933. Due to the fact that the two companies were not dealing at arm’s length, and due to the transaction not being in the normal course of business, the transaction was recorded at the carrying value of the company acquired.12

F-13

Kedem Pharmaceuticals Inc.

(A Development Stage Company)

Notes to the Consolidated Financial Statements (Unaudited)

~~August 31~~November 30, 2012

Related Party Transactions (continued)

f) Effective December 11, 2009, the Company issued an aggregate of 4,000,000 shares of its common stock to the shareholders of Posh, a company controlled by the President of the Company, pursuant to a share exchange agreement dated June 12, 2009. The Company issued the securities to 27 non-U.S. persons (as that term is defined in Regulation S under the Securities Act of 1933) in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933. Due to the fact that the two companies were not dealing at arm’s length, and due to the transaction not being in the normal course of business, the transaction was recorded at the carrying value of the company acquired. The following table sets forth the allocation of the purchase price for the investment in Posh:

Working capital acquired	$	(205,685	)
Property, plant and equipment		9,916
Patents and rights		22,557
Other long-term assets		68,492
	$	(104,720	)

Consideration:
Common stock of the Company	$	(400	)
Related party adjustment on purchase charged to deficit		105,120
	$	104,720

6. Deferred Financing Costs

6.		Deferred Financing Costs

		On March 19, 2010, the Company sold to one investor a $4,200,000 convertible debenture due March 18, 2014. As part of the Debenture financing the Company issued share purchase warrants to purchase up to $800,000 worth of common stock and also issued warrants to purchase 100,000 shares of common stock (on a pre-reverse split basis) as a finder’s fee.

		These warrants were valued at the date of issue of the Debenture, March 19, 2010, using the Black-Scholes model utilizing the following assumptions:

On March 19, 2010, the Company sold to one investor a $4,200,000 convertible debenture due March 18, 2014. As part of the Debenture financing the Company issued share purchase warrants to purchase up to $800,000 worth of common stock and also issued warrants to purchase 100,000 shares of common stock (on a pre-reverse split basis) as a finder’s fee.

These warrants were valued at the date of issue of the Debenture, March 19, 2010, using the Black-Scholes model utilizing the following assumptions:

Risk-free interest rate	2.85	%
Expected term to exercise	4 years
Expected volatility of	253	%
Expected dividend yield	0	%

Based on this calculation $895,250 was recorded as a deferred financing cost on the Debenture and amortized over the term of the Debenture of 48 months and charged to interest expense. On October 27, 2011, pursuant to an exchange agreement with the Lender, the Lender cancelled the Debenture, and issued a new secured convertible promissory note in its place. The remaining balance of unamortized deferred financing costs of $638,209 were expensed on the date of cancellation of the Debenture and categorized on the income statement as loss on extinguishment of debt. As at ~~August~~November 3130, 2012, the balance of deferred financing costs relating to the ~~Debenture~~ Debenture on the balance sheet is $Nil.

On June 16, 2011, the Company sold to one investor a $4,338,833 convertible note (subsequently reduced to $4,323,833, per the October 27, 2011 modification, see Note 4) due June 16, 2015. As part of the Note financing the Company also issued warrants to purchase shares of the Company’s common stock equal to $250,000.

~~These warrants were valued at the date of issue of the Note, June 16, 2011, using the Black~~F-~~Scholes model utilizing the following assumptions:~~13

Risk-free interest rate	1.49	%
Expected term to exercise	4.79 years
Expected volatility of	208	%
Expected dividend yield	0	%

Based on this calculation $241,404 was recorded as a deferred financing cost on the Note and is being amortized over the remaining term of the warrants, expiring June 30, 2016, and charged to interest expense. For the three months ended August 31, 2012, amortization of the non-cash warrants costs and direct cash costs incurred relating to the modified June 16, 2011 Note total $15,277 (three month period ended August 31, 2011, $79,361).

F-14

Kedem Pharmaceuticals Inc.

(A Development Stage Company)

Notes to the Consolidated Financial Statements (Unaudited)

~~August 31~~November 30, 2012

6. Deferred Financing Costs (continued) These warrants were valued at the date of issue of the Note, June 16, 2011, using the Black-Scholes model utilizing the following assumptions:

As at August 31, 2012, all deferred financing costs on the balance sheet relate to the Note, as modified.

Risk-free interest rate	1.49	%
Expected term to exercise	4.79 years
Expected volatility of	208	%
Expected dividend yield	0	%

	August 31, 2012(unaudited)$			May 31, 2012(audited)$
Deferred financing costs		288,372			288,372
Accumulated amortization		(69,424	)		(54,145	)
Net carrying amount		218,948			234,227

		Based on this calculation $241,404 was recorded as a deferred financing cost on the Note and is being amortized over the remaining term of the warrants, expiring June 30, 2016, and charged to interest expense. For the six months ended November 30, 2012, amortization of the non-cash warrants costs and direct cash costs incurred relating to the modified Note total $30,554 (six month period ended November 30, 2011, amortization of the non-cash warrant costs and direct cash costs incurred related to both financings totaled $137,883).

		As at November 30, 2012, all deferred financing costs on the balance sheet relate to the Note, as modified.

7. Income Taxes

	November 30, 2012			May 31, 2012
	(unaudited) $			(audited) $

Deferred financing costs		288,372			288,372
Accumulated amortization		(84,700	)		(54,145	)

Net carrying amount		203,672			234,227

7. Income Taxes The Company accounts for income taxes using the liability method of tax allocation. Deferred income taxes are recognized for the future income tax consequences attributable to differences between the carrying values of assets and liabilities and their respective income tax bases. Deferred income tax assets are evaluated periodically and if realization is not considered likely, a valuation allowance is provided.

Deferred tax assets and liabilities

	August 31, 2012(unaudited)$			May 31, 2012(audited)$
	November 30, 2012			May 31, 2012
Property and equipment		19,340			30,309
	(unaudited) $			(audited) $
Property and equipment		9,701			30,309
Intangible assets		878			878
Operating loss carry forwards		4,~~495~~706,~~300~~251			3,660,867
Valuation allowance		(4,~~515~~716,~~518~~830	)		(3,692,054	)
Net future tax asset		–			–

Management believes that it is not likely that it will create sufficient taxable income sufficient to realize its deferred tax assets.

~~b) Loss carryforwards~~F-14

The Company has estimated accumulated non-capital losses of approximately $12,843,715 which will expire as follows:

2028		61,174
2029		2,600,315
2030		1,684,864
2031		3,518,100
2032		4,288,510
2033		690,752
	$	12,843,715

F-15

Kedem Pharmaceuticals Inc.

(A Development Stage Company)

Notes to the Consolidated Financial Statements (Unaudited)

~~August 31~~November 30, 2012

87. ~~Series~~Income ~~“A”~~Taxes ~~Preferred Stock~~(continued)

~~On June~~b) ~~15,~~Loss ~~2011,~~carryforwards ~~the~~The Company ~~filed~~has aestimated ~~Certificate~~accumulated ofnon-capital ~~Designation~~losses ~~with the Nevada Secretary~~ of ~~State~~approximately ~~to designate 10~~$13,~~000~~450,~~000~~426 ~~shares of~~which ~~the~~will ~~Company’s~~expire ~~authorized but unissued preferred stock~~ as Series “A” Preferred Stock. The Series “A” Preferred Stock ranks senior to any other series of preferred stock and common stock of the Company, has a par value $0.0001 per share, and carries with it the right to convert all or a portion of such stock into common stock. Each share of Series “A” Preferred Stock has voting rights and carries a voting weight equal to one hundred shares of common stock. Holders of Series “A” Preferred Stock are entitled to receive any declared dividends and holders of shares of common stock and Series “A” Preferred Stock can vote together as a single class.follows:

On June 15, 2011, 1,800,000 shares of the Company’s Series “A” Preferred Stock were issued to the President of the Company, pursuant to a debt conversion agreement, where the President converted $54,000 of debt into 1,800,000 shares, at a price of $0.03 per share.

2028		65,168
2029		2,600,315
2030		1,684,864
2031		3,518,100
2032		4,288,510
2033		1,293,469
	$	13,450,426

On September 15, 2011, 5,000,000 shares of the Company’s Series “A” Preferred Stock were issued to the President of the Company, pursuant to a debt conversion agreement, where the President converted $100,000 of debt into 5,000,000 shares, at a price of $0.02 per share.

8.		Series “A” Preferred Stock

		On June 15, 2011, the Company filed a Certificate of Designation with the Nevada Secretary of State to designate 10,000,000 shares of the Company’s authorized but unissued preferred stock as Series “A” Preferred Stock. The Series “A” Preferred Stock ranks senior to any other series of preferred stock and common stock of the Company, has a par value $0.0001 per share, and carries with it the right to convert all or a portion of such stock into common stock. Each share of Series “A” Preferred Stock has voting rights and carries a voting weight equal to one hundred shares of common stock. Holders of Series “A” Preferred Stock are entitled to receive any declared dividends and holders of shares of common stock and Series “A” Preferred Stock can vote together as a single class.

		On June 15, 2011, 1,800,000 shares of the Company’s Series “A” Preferred Stock were issued to the President of the Company, pursuant to a debt conversion agreement, where the President converted $54,000 of debt into 1,800,000 shares, at a price of $0.03 per share.

		On September 15, 2011, 5,000,000 shares of the Company’s Series “A” Preferred Stock were issued to the President of the Company, pursuant to a debt conversion agreement, where the President converted $100,000 of debt into 5,000,000 shares, at a price of $0.02 per share.

		As at November 30, 2012, 6,800,000 (May 31, 2012 – 6,800,000) shares are issued and outstanding, at a par value of $0.0001.

9.		Warrants

		In March 2010, pursuant to the Company signing an agreement with one investor for a convertible debenture for the principal amount of $4,200,000, the investor and other parties pursuant to the agreement were granted 1,805,991 warrants exercisable to acquire 1,805,991 shares of the Company’s common stock at prices ranging between $0.50 and $1.00 per share, expiring between March 16, 2015 and May 28, 2015. In fiscal 2011, 1,105,991 of the warrants with an exercise price of $1.00 per share were exercised. At November 30, 2012, 700,000 (35,000 post-reverse stock split) (May 31, 2012 – 700,000 (35,000 post-reverse stock split)) warrants were still outstanding.

		On June 16, 2011, pursuant to the Company signing an agreement with one investor for a convertible note for the principal amount of $4,338,833, the investor was granted warrants exercisable to acquire shares of the Company’s common stock equal to $250,000. As at November 30, 2012, 6,250,000 (312,500 post-reverse stock split) (May 31, 2012 – 6,250,000 (312,500 post-reverse stock split)) warrants totaling $250,000 were still outstanding.

~~As at August 31, 2012, 6,800,000 (May 31, 2012 – 6,800,000) shares are issued and outstanding, at a par value of $0.0001.~~F-15

9. Warrants

In March 2010, pursuant to the Company signing an agreement with one investor for a convertible debenture for the principal amount of $4,200,000, the investor and other parties pursuant to the agreement were granted 1,805,991 warrants exercisable to acquire 1,805,991 shares of the Company’s common stock at prices ranging between $0.50 and $1.00 per share, expiring between March 16, 2015 and May 28, 2015. In fiscal 2011, 1,105,991 of the warrants with an exercise price of $1.00 per share were exercised. At August 31, 2012, 700,000 (35,000 post reverse stock split) (May 31, 2012 – 700,000 (35,000 post reverse stock split)) warrants were still outstanding.

On June 16, 2011, pursuant to the Company signing an agreement with one investor for a convertible note for the principal amount of $4,338,833, the investor was granted warrants exercisable to acquire shares of the Company’s common stock equal to $250,000. As at August 31, 2012, 6,250,000 (312,500 post-reverse stock split) (May 31, 2012 – 6,250,000 (312,500 post-reverse stock split)) warrants totaling $250,000 were still outstanding.

A summary of share purchase warrants outstanding is presented below:

	Number ofWarrants		WeightedAverageExercise Price
Warrants outstanding at June 1, 2012		347,500		Note A
Expired		–		–
Exercised		–		–
Issued		–		–
Warrants outstanding at August 31, 2012		347,500		Note A

Note A: Per the terms of the Note Agreement, the exercise price of the warrants granted June 16, 2011 is defined as the lesser of:

(i) 100% of the average closing bid price for the three trading days with the lowest bid price reported by Bloomberg during the 20 trading days immediately prior to the exercise date; provided, however, that in the event the exercise price would be at any time be equal to less than $1.00 per share of common stock, the term 100% in the forgoing clause shall be replaced by 80% or;

(ii) $2.00 per share of common stock.

F-16

Kedem Pharmaceuticals Inc.

(A Development Stage Company)

Notes to the Consolidated Financial Statements (Unaudited)

~~August 31~~November 30, 2012

109. ~~Stock~~Warrants ~~Options~~(continued) A summary of share purchase warrants outstanding is presented below:

On June 29, 2009, the Company granted 100,000 options to directors and officers of the Company. On November 12, 2010, the Company cancelled these options and reissued 260,000 options to directors and officers of the Company. Pursuant to ASC 718-20-35-8, cancellations with concurrent grants of replacement awards are treated as a modification of the terms of the cancelled award. As a result, compensation costs recorded subsequent to modification include the grant date fair value of the original award under the old plan, recognized as compensation costs ratably over the vesting period of the replacement options issued under the new plan, and the incremental cost resulting from the modification.

	Number of Warrants		Weighted Average Exercise Price
Warrants outstanding at June 1, 2012		347,500		Note A
Expired		–		–
Exercised		–		–
Issued		–		–
Warrants outstanding at November 30, 2012		347,500		Note A

~~For the~~Note ~~three~~A: ~~months~~Per ~~ending~~the ~~August~~terms ~~31,~~of ~~2012,~~the ~~compensation~~Note ~~cost~~Agreement, ~~recorded~~the ~~totalled~~exercise ~~$60,837~~price ~~(three~~of ~~month~~the ~~period~~warrants ~~ended~~granted ~~August~~June 3116, 2011 – ~~$42,326).~~is ~~The~~defined ~~replacement~~as ~~options~~the ~~are~~lesser ~~exercisable~~of: in(i) ~~full~~100% ~~over~~of the ~~course~~average ofclosing ~~five~~bid ~~years~~price ~~from~~for ~~date~~the ofthree ~~grant,~~trading days with ~~4% of~~ the ~~total~~lowest ~~number~~bid ofprice ~~options~~reported ~~granted~~by toBloomberg during the ~~optionee~~20 ~~vesting~~trading ~~each~~days ~~month~~immediately onprior ato ~~monthly~~the ~~basis~~exercise ~~beginning~~date; onprovided, ~~the~~however, ~~first~~that ~~day~~in of the ~~month following~~event the ~~date~~exercise ofprice ~~grant,~~would ~~until~~be ~~the~~at ~~option~~any istime ~~fully~~be ~~vested~~equal to less than $1.00 Asper share of ~~August~~common 31stock, ~~2012,~~the ~~218,400~~term of100% in the ~~options~~forgoing ~~under~~clause ~~the~~shall ~~new~~be ~~plan had~~replaced ~~vested~~by ~~and~~80% ~~41,600~~or; ~~were~~(ii) ~~nonvested~~$2.00 per share of common stock.

A summary of stock options outstanding is presented below:

10.		Stock Options

		On June 29, 2009, the Company granted 100,000 options to directors and officers of the Company. On November 12, 2010, the Company cancelled these options and reissued 260,000 options to directors and officers of the Company. Pursuant to ASC 718-20-35-8, cancellations with concurrent grants of replacement awards are treated as a modification of the terms of the cancelled award. As a result, compensation costs recorded subsequent to modification include the grant date fair value of the original award under the old plan, recognized as compensation costs ratably over the vesting period of the replacement options issued under the new plan, and the incremental cost resulting from the modification.

		For the six months ending November 30, 2012, compensation cost recorded totaled $119,334 (six month period ended November 30, 2011 – $121,674). The replacement options are exercisable in full over the course of five years from date of grant, with 4% of the total number of options granted to the optionee vesting each month on a monthly basis beginning on the first day of the month following the date of grant, until the option is fully vested.

		On October 16, 2012, a director of the Company resigned and his 20,000 options expired on November 16, 2012 (30 days after the date of resignation) in accordance with the terms of his stock option agreement. As of November 30, 2012, 230,400 of the options under the new plan had vested and 9,600 were non-vested.

		A summary of stock options outstanding is presented below:

		Number ofOptions (d)			Weighted Average Exercise Price (d)
	Number of Options			Weighted Average Exercise Price
Options outstanding at June 1, 2012		260,000	~~260,000~~	$	$1.40	~~1.40~~
Granted		–	–		–	–
Exercised		–	–		–	–
Cancelled			–			–
Expired		(20,000	)		–
Options outstanding at August 31, 2012			260,000		$	1.40
Options outstanding at November 30, 2012		240,000		$	1.40

~~(d) All per share information has been adjusted retroactively to reflect the 1 for 20 reverse split of the Company’s common stock that occurred on November 7, 2011.~~F-16

The Company has estimated the fair value of each option under the new stock option plan on the date of grant, and at fiscal quarters ended subsequent to the date of modification of November 12, 2010, using the Black-Scholes Options Pricing Model with the following weighted average assumptions:

	August 31, 2012			May 31, 2012
Risk-free interest rate		1.52	%		1.52	%
Expected life of options		3.25 years			3.5 years
Expected volatility in the market price of the shares		426	%		396	%
Expected dividend yield		0.0	%		0.0	%

11. Fair Value Measures

ASC 820, “Fair Value Measurements and Disclosures”, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

F-17

Kedem Pharmaceuticals Inc.

(A Development Stage Company)

Notes to the Consolidated Financial Statements (Unaudited)

~~August 31~~November 30, 2012

1110. ~~Fair~~Stock ~~Value~~Options ~~Measures~~ (continued) The Company has estimated the fair value of each option under the new stock option plan on the date of grant, and at fiscal quarters ended subsequent to the date of modification of November 12, 2010, using the Black-Scholes Options Pricing Model with the following weighted average assumptions:

Level 2

	November 30, 2012			May 31, 2012
Risk-free interest rate		1.52	%		1.52	%
Expected life of options		3 years			3.5 years
Expected volatility in the market price of the shares		426	%		396	%
Expected dividend yield		0.0	%		0.0	%

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

11.		Fair Value Measures

		ASC 820, “Fair Value Measurements and Disclosures”, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

		Level 1

		Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

		Level 2

		Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

		Level 3

		Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

		The Company’s financial instruments consist principally of cash and cash equivalents, accounts payable and accrued liabilities, and convertible debt and accrued interest.

		Pursuant to ASC 820, “Fair Value Measurements and Disclosures”, the fair value of the Company’s cash and cash equivalents is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The Company believes that the recorded values of its financial instruments accounts payable and accrued liabilities, approximate their current values because of their nature and respective maturity dates or durations. The Company’s convertible debt and accrued interest is classified as “Level 2” in the fair value hierarchy. The Company believes that the carrying value of the convertible debt and accrued interest approximates its fair value based on current market borrowing rates.

~~Level 3~~F-17

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company’s financial instruments consist principally of cash and cash equivalents, accounts payable and accrued liabilities, and convertible debt and accrued interest.

Pursuant to ASC 820, “Fair Value Measurements and Disclosures”, the fair value of the Company’s cash and cash equivalents is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The Company believes that the recorded values of its financial instruments accounts payable and accrued liabilities, approximate their current values because of their nature and respective maturity dates or durations. The Company’s convertible debt and accrued interest is classified as “Level 2” in the fair value hierarchy. The Company believes that the carrying value of the convertible debt and accrued interest approximates its fair value based on current market borrowing rates.

12. Subsequent Events

Subsequent to August 31, 2012, pursuant to the Note, the Lender converted approximately $22,069 of the Note, including principal and interest, into 3,400,000 shares of the Company’s common stock.

F-18

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

As used in this quarterly report, the terms “we”, “us”, “our”, and the “Company” mean Kedem Pharmaceuticals Inc. and its subsidiaries, unless otherwise indicated. All financial information in this report is presented in U.S. dollars, unless otherwise indicated.

Forward-Looking Information

The statements in this report that are not reported financial results or other historical information are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. These statements appear in a number of different places in this report and can be identified by words such as “estimates”, “projects”, “expects”, “intends”, “believes”, “plans”, or their negatives or other comparable words. Also look for discussions of strategy that involve risks and uncertainties. Forward-looking statements include, among others, statements regarding the development of our products, our proposed markets and our business plans.

You are cautioned that any such forward-looking statements are not guarantees and may involve risks and uncertainties. Our actual results may differ materially from those in the forward-looking statements due to risks facing us or due to actual facts differing from the assumptions underlying our estimates. Some of these risks and assumptions include those set forth in reports and other documents we have filed with or furnished to the United States Securities and Exchange Commission (the “SEC”). We advise you that these cautionary remarks expressly qualify in their entirety all forward-looking statements attributable to us or persons acting on our behalf. Unless required by law, we do not assume any obligation to update forward-looking statements based on unanticipated events or changed expectations. However, you should carefully review the reports and other documents we file from time to time with the SEC.

Business Overview

We are a specialty pharmaceutical company that develops advanced next-generation drugs to displace current “blockbuster” drugs upon their loss of patent protection. Our core strength is our exclusive access to sublingual platform technology. This technology provides the foundation to design unique pharmaceuticals with properties that result in a market advantage through faster onset of action, increased availability, lower dosage, improved safety, fewer or less severe side effects, reduced dosing regiments, safer systems, taste masking and others. We believe these advantages will enable our products to establish themselves quickly in the market by displacing existing products in a relatively short period of time. Our lifestyle products are related to male sexual enhancement, anti-addiction and energy boosters. Our therapeutic products are related to weight loss and pulmonary disease management. We work with products that are already approved by the U.S. Food and Drug Administration (the “FDA”), but require better or faster absorption.

We also plan to reformulate existing products that currently have considerable side effects when manufactured with their current chemical formulation. We intend to develop these new products internally or license them from other pharmaceutical companies. We expect to have several products under development and we plan to bring them to the stages of partnership and co-marketing. Our most advanced product, X-Excite, has been contracted out to a manufacturing company in Romania to produce exclusively for the European market. This product has been manufactured and sent to a hospital in Bulgaria for human clinical trials. The clinical trials are supervised by Clinical Investigation Limited, a contract research organization incorporated in the United Kingdom.

We are a multi-product company. Our current portfolio of products includes:

X-Excite (male sexual enhancement drug)

Relax-B (anti-stress drug)

Nico-Z (nicotine replacement product)

V-Energy (energy booster product)

T-Slim (appetite suppressor drug)

X-Excite

X-Excite is a development stage sublingual formulation of sildenafil. Sildenafil is registered under the trade name of Viagra® and is currently marketed by Pfizer under patent protection until 2012/2013 (depending on the jurisdiction). Viagra® (sildenafil citrate) is indicated for the treatment of erectile dysfunction, which is the inability to achieve or maintain a penile erection sufficient for satisfactory sexual performance.

Relax-B

This product utilizes propranolol as its active ingredient. Propranolol is an FDA approved drug for hypertension and anxiety attack prescribed worldwide. When it is used at a low dose, the product has a relaxant property and can reduce stress and anxiety. We have formulated propranolol to absorb sublingually and have used taste masking products to reduce the taste. Our plan is to develop this product once we secure further financing.

Nico-Z

Nico-Z is a sublingual formulation of nicotine designed for cigarette replacement. We are using a small dose of nicotine (about five times less than commercial nicotine) and plan to achieve a higher concentration of nicotine in the blood in a much shorter time span. The rapid absorption of nicotine will be beneficial for individuals craving cigarette or tobacco products. Nico-Z is not designed for smoking cessation.

V-Energy

This product is a sublingual formulation of vitamin B6/B12. Vitamin B6/B12 is a stimulus and anti-tiredness compound. This product is reported to be a stimulant several times more powerful than caffeine, yet does not produce the side effects of caffeine such as an increased heart rate and sleeping disorders. Vitamin B6/B12 is often used in cancer patients to help them be less tired and more energetic. Currently, vitamin B6/B12 is administered by injection or taken orally. Injection is not a convenient way for drug delivery and also carries certain risks including infection. A sublingual formulation would therefore likely be the most convenient and acceptable route of administration.

T-Slim

T-Slim is a novel formulation of catechin. Catechin is a flavonoid that is found in higher plants and green tea. Catechin is a major component in reducing appetite but has a poor oral absorption rate. A sublingual formulation should result in increased availability, thus, it would be most beneficial if used whenever a person feels hungry to reduce their desire for food appreciably.

Our primary research has been focused on developing our new formulation of drug delivery technology. We continue to improve drug bioavailability and formulations to maximize absorption. During the next 12 months, we intend to work on the formulation of our drugs, including the study and investigation of the rate of absorption into the blood stream. Further, we intend to evaluate the dose ratio between active chemicals and other ingredients. Our aim is to improve drug availability and maximize absorption, and we also intend to set out a formula for drug to body mass ratio. We plan to conduct research on other ingredients which can be used to enhance skin penetration.

The following sets forth information relating to the stage of development of our products:

Product	Stage of Development	Approximate Marketing Date
X-Excite	Clinical Phase I	2013
Relax-B	Filing for Phase I	2014
Nico-Z	Research	2016
V-Energy	Research	2016
T-Slim	Research	2016

X-Excite is our most advanced product and has been contracted out to a manufacturing company in Romania to produce exclusively for the European market. The product was manufactured in accordance with European regulatory guidelines and was sent to a hospital in Bulgaria for Phase I human clinical trials. The clinical trials were supervised by Clinical Investigation Limited, a contract research organization incorporated in the United Kingdom. The data from the clinical trials met our expectations and we plan to proceed with Phase I trials in North America in 2013. Phase III clinical trials of X-Excite are planned for 2014. We do not anticipate any hindrances to the progress of this product.

We plan to file to conduct Phase I clinical trials for Relax-B in 2015. Our remaining products are in the early stages of development and we are conducting research for their development.

License Agreement

On March 15, 2009, we entered into a research contract with Globe Laboratories Inc., a company incorporated in British Columbia, Canada and controlled by an individual related to Hassan Salari, our officer and director, to engage Globe to conduct research on the sublingual technologies developed by Globe.

On March 15, 2010, we entered into a License Agreement with Globe pursuant to which we acquired the exclusive use of Globe’s sublingual technology for drug delivery for our products. We agreed to pay $50,000 per quarter to Globe from April 1, 2009 until the technology is put into commercial production, or the technologies are sold or sublicensed. In addition, for each product we develop using the same formulation, we agreed to pay to Globe the following fees:

$25,000 upon the commencement of Phase I (drug safety and tolerability study);

$250,000 upon the completion of Phase I;

$1,000,000 upon the completion of Phase III (or similarly approved trials, such as 505(b)2) (drug concentration measurement in comparison to the existing formula);

$3,500,000 upon the first anniversary of sale; and

2% of the net sales of all products licensed to us by Globe (the “Royalty Payments”).

All payments under the License Agreement are due within 30 days of such milestone, excluding the Royalty Payments, which are due 60 days following the end of the fiscal quarter in which the sales occur.

Plan of Operations

Our plan of operations over the next 12 months is to work on the formulation of our drugs. We anticipate that we will require approximately $2.386 million to pursue our plans over the next 12 months. We plan to obtain the necessary funds from equity or debt financings, as required. However, there can be no assurance that we will be able to obtain the additional financing required, or any at all. If we are not able to obtain additional financing, we may be required to scale back our plans or eliminate them altogether. There can be no assurance that we will achieve all of our plans, or any of them. Our expenditures for the next 12 months, excluding the cost of clinical trials, include:

Description	Our Cost to Complete ($)
Equipment		50,000
Leasehold improvement / rent		50,000
Research (1)		1,000,000
Packaging		200,000
Wages		536,000
Professional fees		300,000
Travel		100,000
Overhead		50,000
Administration		100,000
Total		2,386,000

(1) Includes the cost of conducting clinical trials, formulation research and a quarterly payment of $50,000 to Globe.

Results of Operations

The following discussion and analysis of our results of operations and financial condition for the three and six months ended ~~August 31~~November 30, 2012 should be read in conjunction with our interim consolidated financial statements and the related notes thereto included in this quarterly report, as well as our most recent annual report on Form 10-K for the fiscal year ended May 31, 2012.

Revenues

We have not generated any revenues from our inception on April 25, 2006 to ~~August~~November 3130, 2012. We do not anticipate generating any ~~revenues~~ revenues until we have developed our products to the point where they are suitable for commercial production. In order to generate revenues, we will incur substantial expenses in the development of our business and current products and the location and acquisition of of new healthcare technologies. We therefore expect to incur significant losses for the foreseeable future. We recognize that if if we are unable to generate significant revenues from our activities, our entire business may fail. There is no history upon ~~which~~ which to base any assumption as to the likelihood that we will be successful in our plan of operations, and we can provide no ~~assurance~~ assurance to investors that we will generate any operating revenues or achieve profitable operations.

Expenses

~~During~~For the ~~three~~Three ~~months~~Months ~~ended~~Ended ~~August~~November 3130, 2012, we incurred $413,655 in total operating expenses, including $116,926 in research and development costs, $194,156 in salaries and wages, $31,146 in professional fees, $52,751 in general and administrative expenses and $18,676 in depreciation expenses. During the three months ended August 31, 2011, we incurred total operating expenses of $725,226, including $354,259 in research and development costs, $181,019 in salaries and wages, $46,098 in professional fees, $125,987 in general and administrative expenses, $7,837 in depreciation expenses and $10,026 in amortization expenses. The decrease in our total expenses between the two periods was primarily due to significant decreases in our research and development expenses and general and administrative expenses, which were in turn attributable to an overall decrease in our operations.

~~From~~During ~~our~~the ~~inception~~three onmonths ~~April~~ended ~~25,~~November ~~2006 to August 31~~30, 2012, we incurred $6370,~~919,620~~158 in total operating expenses, including $2103,~~143~~172 in research and development costs,~~733~~ $194,359 in salaries and wages, $53,743 in professional fees, $9,656 in general and administrative expenses and $9,228 in depreciation expenses. During the three months ended November 30, 2011, we incurred total expenses of $688,741, including $270,368 in research and development costs, $2208,~~433,252~~969 in salaries and wages, $184,~~141,158~~367 in professional fees, $195,~~008,169~~969 in ~~general~~ general and administrative expenses, $~~138~~18,~~567~~772 in depreciation expenses and $4410,~~972~~026 in amortization expenses. The decrease in our total operating expenses between the two periods was primarily due to significant decreases in our research and development costs, professional fees and general and administrative expenses, all of which were attributable to an overall decrease in our operations.

Our general and administrative expenses consisted of rent, travel, advertising and promotion, office maintenance, communication expenses and courier and postage costs. Our general and administrative expenses decreased by $7386,~~236~~313 during the three months ended ~~August 31~~November 30, 2012 compared to the same period in 2011 ~~largely~~due asto ~~a result of~~ the decrease in our overall operations as described above, and particularly, decreases ~~a decrease~~ in our travel and advertising and promotion expenses. Our research and development costs also decreased by $~~237~~167,~~333~~ 466 between the two periods ~~primarily~~largely ~~because~~as a result of a decrease in our purchases of raw materials for conducting research on our products~~. In contrast~~, while our ~~salaries~~professional ~~and~~fees ~~wages~~decreased ~~increased~~ by $1330,~~137~~624 ~~because~~primarily ofdue anto ~~increase~~a decrease in ~~both~~our ~~personnel~~legal ~~and stock-based~~fees. ~~compensation expense over the prior comparative quarter~~However, ~~while~~ our ~~professional~~salaries ~~fees~~and ~~decreased by $14,952 primarily~~wages ~~due~~were torelatively aconsistent ~~decrease~~between inthe ~~our~~two ~~legal fees~~periods.

During the three months ended ~~August~~November 3130, 2012, we incurred a net loss from operations of $~~413~~370,~~655~~158, compared to a net loss from operations of $~~725~~688,~~226~~741 during the three months ended ~~August~~November 3130, 2011. We also incurred $~~337~~280,~~398~~725 in interest expense and $28,285 in loss on the disposal of equipment during our most recent fiscal quarter, whereas we incurred $~~879~~642,~~789~~032 in interest expense, $970,390 in loss on the extinguishment of debt and $33,708 in loss on the disposal of equipment during the same period in our prior fiscal year. The decrease in our interest expense between the two quarters was primarily due to decreases in the amortization expense of the deferred finance costs and amortization of the discount on a convertible debenture we issued in March 2010, both of which were charged to interest expense. That debenture was cancelled on October 27, 2011 and subsequently replaced with a new secured convertible promissory note on the same date without an associated discount or deferred financing charge balance. The terms of the debenture and note are described more fully in ~~Notes~~Note 4 and Note 6 of the notes to our interim consolidated financial statements included elsewhere in this quarterly report.

~~From our inception on April 25, 2006 to August~~For ~~31, 2012, we incurred a net loss from operations of $6,919,620, as well as $4,678,303 in interest expense, $970,390 in loss on~~ the ~~extinguishment~~Six ofMonths ~~debt,~~Ended ~~$93,680~~November ~~in loss on the disposal of equipment~~30, ~~$251,940 in financing charges, $240,629 in impairment loss on intangible assets and a $21,596 write-off of intangible assets, all of which were offset by a $60,000 gain on the settlement of a payable.~~2012

During the six months ended November 30, 2012, we incurred $783,813 in total operating expenses, including $220,098 in research and development costs, $388,515 in salaries and wages, $84,889 in professional fees, $62,407 in general and administrative expenses and $27,904 in depreciation expenses. During the same period in 2011, we incurred total operating expenses of $1,413,967, including $624,897 in research and development costs, $389,988 in salaries and wages, $130,465 in professional fees, $221,956 in general and administrative expenses, $26,609 in depreciation expenses and $20,052 in amortization expenses. The decrease in our total expenses between the two periods was primarily due to decreases of $404,799 in our research and development costs, $45,576 in our professional fees and $159,549 in our general and administrative expenses, all of which were attributable to an overall decrease in our operations as described above. However, our salaries and wages were relatively consistent between the two periods.

During the six months ended November 30, 2012, we incurred a net loss from operations of $783,813, compared to a net loss from operations of $1,413,967 during the six months ended November 30, 2011. We also incurred $618,123 in interest expense and a $28,285 loss on the disposal of equipment during our most recent six-month period, whereas we incurred $1,521,821 in interest expense, a $970,390 loss on the extinguishment of debt and a $33,708 loss on the disposal of equipment during the same period in our prior fiscal year. As described above, the decrease in our interest expense corresponds directly to a decrease in the amortization expense of the deferred finance costs and amortization of the discount on a convertible debenture we issued in March 2010, both of which were charged to interest expense. That debenture was cancelled on October 27, 2011 and subsequently replaced with a new secured convertible promissory note on the same date without an associated discount or deferred financing charge balance. The terms of the debenture and note are described more fully in Notes 4 and 6 of the notes to our interim consolidated financial statements included elsewhere in this quarterly report.

From April 25, 2006 (Date of Inception) to November 30, 2012

From our inception on April 25, 2006 to November 30, 2012, we incurred $7,289,778 in total operating expenses, including $2,246,905 in research and development costs, $2,627,611 in salaries and wages, $1,194,901 in professional fees, $1,017,825 in general and administrative expenses, $147,795 in depreciation expenses and $44,972 in amortization expenses. From our inception on April 25, 2006 to November 30, 2012, we incurred a net loss from operations of $7,289,778, as well as $4,959,028 in interest expense, a $970,390 loss on the extinguishment of debt, $251,940 in financing charges, a $240,629 impairment loss on intangible assets and a $121,965 loss on the disposal of equipment, all of which were offset by a $60,000 gain on the settlement of a payable.

Net Loss

During the three months ended ~~August~~November 3130, 2012, we incurred a net and comprehensive loss of $~~751~~679,~~053~~168, compared to a net and comprehensive loss of $12,~~605~~334,~~015~~871 during the three months ended ~~August~~November 3130, 2011. Our net loss per share ~~during these periods~~ was $0.0503 and $0.~~18,~~25 for these periods, respectively.

~~From~~During ~~our~~the ~~inception~~six onmonths ~~April~~ended ~~25,~~November ~~2006 to August 31~~30, 2012, we incurred a net loss of $131,~~116~~430,~~158~~221 and a comprehensive loss of $1,436,447, compared to a net loss of $3,939,886 and a comprehensive loss of $3,954,706 during the six months ended November 30, 2011. Our net loss per share was $0.06 and $0.42 for these periods, respectively.

From our inception on April 25, 2006 to November 30, 2012, we incurred a net loss of $13,795,326.

Liquidity and Capital Resources

As of ~~August~~November 3130, 2012 we had $~~236~~54,~~779~~166 in cash and cash equivalents, $~~796~~358,~~756~~849 in total assets, $45,~~857~~099,~~150~~948 in total liabilities and a working capital deficit of $45,~~500~~004,~~664~~095. As of ~~August~~November 3130, 2012 we had an accumulated deficit of $1516,~~864~~635,~~275~~565.

To date, we have experienced negative cash flows from operations and we have been dependent on sales of our equity securities and debt financing to meet our cash requirements. We expect this situation to continue for the foreseeable future, and we anticipate that we will experience negative cash flows during our fiscal year ended May 31, 2013. Accordingly, our ability to generate any revenues continues to be uncertain.

9For the Three Months Ended November 30, 2012

During the three months ended ~~August~~November 3130, 2012, we spent $~~148~~205,~~274~~201 in cash on operating activities, compared to $~~635~~716,~~749~~334 in cash spending on operating activities during the three months ended ~~August~~November 3130, 2011. The decrease in our cash spending on operating activities during our most recent fiscal quarter was primarily attributable to the decrease in our net loss as described above, as well as a number of adjustments to reconcile our net loss to cash spending on operating activities, notably in the categories of ~~interest~~loss on the extinguishment of debt and interest expense on our convertible debt and amortization of deferred finance ~~costs charged to interest expense~~charges.

We received $90,121 in cash from investing activities during the three months ended August 31, 2012, compared to cash spending of $105,876 on investing activities during the same period in our prior fiscal year. The decrease in our cash spending on investing activities between the two periods was entirely due to the $90,847 in proceeds we received from the sale of equipment combined with the decrease in our purchases of equipment from $105,876 to $726.10

~~During~~We received $22,588 in cash from investing activities during the three months ended ~~August~~November 3130, 2012, wecompared ~~spent~~to $4cash inspending of ~~net~~$86,134 ~~cash~~ on ~~financing~~investing activities, ~~all~~during ofthe ~~which~~same ~~was~~period in ~~the~~our ~~form~~prior offiscal ~~repayments to a related party~~year. ~~During~~The ~~the~~decrease ~~three months ended August 31, 2011, we received $650,350~~ in our cash ~~from~~spending ~~financing~~on investing activities, ~~substantially all~~between ofthe ~~which~~two periods was ~~attributable~~entirely due to ~~proceeds~~the ~~from~~decrease ~~previous~~in ~~issuances~~our purchases of ~~convertible~~equipment ~~debt.~~from ~~Since our inception~~$86,134 weto ~~have received~~ $31,~~888,339 in~~396 ~~proceeds from convertible debt~~ and the $123,~~910,018~~984 in proceeds we received from the ~~issuance~~sale of ~~our common stock~~equipment.

During the three months ended ~~August~~November 3130, 2012, we ~~incurred~~did anot ~~comprehensive~~receive ~~loss~~any net cash from financing activities, whereas we received $290,742 in net cash from financing activities during the three months ended November 30, 2011, including $250,000 in proceeds from previous issuances of convertible debt. Since our inception, we have received $~~757~~3,~~279~~888,339 in proceeds from convertible debt and $1,910,018 from the issuance of our common stock.

For the Six Months Ended November 30, 2012

During the six months ended November 30, 2012, we spent $353,475 in cash on operating activities, compared to $1,352,083 in cash spending on operating activities during the six months ended November 30, 2011. The decrease in our cash spending on operating activities during the most recent period was primarily attributable to the decrease in our net loss as described above and decreases in our GST/HST receivable and prepaid expenses, which were counterbalanced to some extent by a number of adjustments to reconcile our net loss to cash spending on operating activities, significantly in the categories of loss on the extinguishment of debt and interest and interest expense on our convertible debt and amortization of deferred finance charges.

We spent $112,709 in cash on investing activities during the six months ended November 30, 2012, compared to cash spending of $192,010 on investing activities during the same period in our prior fiscal year. The decrease in our cash spending on investing activities during the recent period was entirely due to the decrease in our purchases on equipment from $192,010 to $2,122 and the $114,831 in proceeds we received from the sale of equipment.

During the six months ended November 30, 2012, we spent $4 in net cash on financing activities, all of which was in the form of repayments to a related party. During the six months ended November 30, 2011, we received $941,092 in cash from financing activities, including $1,000,000 in proceeds from previous issuances of convertible debt as offset by $58,894 in repayments to shareholders and $14 in repayments to a related party.

Our net cash position decreased by $182,613 during the three months ended November 30, 2012, from $236,779 to $54,166.

We estimate that our working capital requirements and projected operating expenses for the next 12 months will be approximately $2,386,000 as described in the “Plan of Operations” section, above. We do not currently have sufficient cash resources to meet our operating expenses for the next 12 months, so we plan to raise additional funds through the issuance of equity securities or through debt financing. There are no assurances that we will be able to obtain the funds required for our continued operation. If we are not able to obtain additional financing on a timely basis, we will not be able to meet our obligations as they become due and we will be forced to scale down or perhaps even cease our business. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders, while obtaining commercial loans, assuming that such loans are available, would increase our liabilities and future cash commitments.

Going Concern

Our financial statements for the three and six months ended ~~August~~November 3130, 2012 have been prepared on a going concern basis and Note 1 to the financial statements identifies issues that raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.

We do not anticipate generating positive internal operating cash flow until we are able to generate substantial revenues from the commercialization of our products, and there is no assurance that we will achieve profitable operations in the future. We have historically financed our operations primarily through cash flows generated from the sale of our equity securities and through cash infusions from officers and affiliates in exchange for debt and/or common stock. No officer or affiliate has made any commitment or is obligated to continue to provide cash through loans or purchases of equity.

We intend to meet the balance of our cash requirements for the next 12 months through a combination of debt financing and equity financing through private placements. Currently we are active in contacting broker/dealers in Canada and elsewhere regarding possible financing arrangements. However, we do not currently have any arrangements in place to complete any further private placement financings and there is no assurance that we will be successful in completing any such financings. If we are unsuccessful in raising sufficient funds through our capital raising efforts, we may review other financing options.

To date, we have not generated any revenues and have incurred significant operating losses from operations. Since we anticipate expanding our operational activities in the future, we may continue to experience net negative cash flows from operations and may be required to obtain additional financing to fund our operations through offerings of equity securities and bank borrowings to the extent necessary to provide working capital. Our continuation as a going concern is dependent upon our ability to generate sufficient cash flow from stockholders or other outside sources to sustain operations and meet our obligations on a timely basis and ultimately to attain profitability.

Off-Balance Sheet Arrangements

As of ~~August~~November 3130, 2012, we had no 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 that are material to investors.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our management, with the participation and under the supervision of our ~~Principal~~Chief Executive Officer and ~~Principal~~Chief Financial Officer, ~~evaluated~~ evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this quarterly report. The term “disclosure controls and procedures”, as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the ~~SEC~~Securities and Exchange Commission. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

11During the course of the preparation of our financial statements for the period ended November 30, 2012, our Chief Executive Officer and Chief Financial Officer identified a material weakness in our internal controls and disclosure controls and procedures. A material weakness is a deficiency, or combination of deficiencies, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Based on the assessment of the effectiveness of disclosure controls and procedures as of November 30, 2012, the following deficiencies were identified:

During the course of the preparation of our financial statements for the three months ended August 31, 2012, our Principal Executive Officer and Principal Financial Officer identified material weaknesses in our internal controls and disclosure controls and procedures. A material weakness is a deficiency, or combination of deficiencies, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Based on the assessment of the effectiveness of our disclosure controls and procedures as of August 31, 2012, the following deficiencies were identified:

Lack of segregation of duties/management override – in common with businesses that have few employees, there exists a weakness as one person performs many different functions; and

Financial reporting deficiencies – certain accounting entries and related reporting of transactions were inadvertently not properly recorded in the past.

Management plans to remediate many of these deficiencies by engaging an accountant (other than our independent auditors) to prepare our financial statements on our behalf going forward. In addition, management plans to work with such accountant in evaluating or proceeding with any potential acquisitions. Also, management is currently considering additional remediation plans with respect to the above.

Accordingly, our management concluded that our disclosure controls and procedures as of ~~August~~November 3130, 2012 were not effective.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

1213

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are not a party to any material pending legal proceedings and are not aware of any legal proceedings that have been ~~threatened~~ threatened against us or any of our subsidiaries, or of which any of our property is the subject. None of our directors, officers, affiliates, any owner of record or beneficially of more than 5% of our voting securities, or any associate of any such director, officer, affiliate or ~~security~~securityholder ~~holder~~ are (i) a party adverse to us in any legal proceedings, or (ii) have a material interest adverse to us in any legal proceedings.

ITEM 1A. RISK FACTORS

Not applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

There have been no sales of our equity securities during the period covered by this quarterly report that have not been previously reported.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit Number		Description of Exhibit

3.1		Articles of Incorporation (incorporated by reference from our Form SB-2 Registration Statement, as amended, originally filed on October 6, 2006)

3.2		Bylaws (incorporated by reference from our Form SB-2 Registration Statement, as amended, originally filed on October 6, 2006)

3.3		Certificate of Amendment filed with the Secretary of State of Nevada on September 10, 2007 (incorporated by reference from our Form 10-QSB filed on October 15, 2007)

3.4		Certificate of Amendment filed with the Secretary of State of Nevada on September 20, 2007 (incorporated by reference from our Form 10-QSB filed on October 15, 2007)
3.5		Certificate of Change filed with the Secretary of State of Nevada on September 20, 2007 (incorporated by reference from our Form 10-QSB filed on October 15, 2007)
3.6		Certificate of Merger filed with the Secretary of State of Nevada on October 6, 2008 (incorporated by reference from our Form 8-K filed on October 27, 2008)
3.7		Certificate of Designation filed with the Secretary of State of Nevada on June 15, 2011 (incorporated by reference from our Form 8-K filed on July 8, 2011)
3.8		Certificate of Amendment filed with the Secretary of State of Nevada on June 17, 2011 (incorporated by reference from our Form 8-K filed on July 8, 2011)
3.9		Amended and Restated Bylaws dated June 16, 2011 (incorporated by reference from our Form 8-K filed on July 8, 2011)
10.1		Share Cancellation Agreement with Blair Law dated October 2, 2007 (incorporated by reference from our Form 10-K filed on September 12, 2008)
10.2		Return to Treasury Agreement dated September 29, 2008 with Blair Law (incorporated by reference from our Form 8-K filed on October 2, 2008)
10.3		Return to Treasury Agreement dated September 29, 2008 with Blair Law Casting Corp. (incorporated by reference from our Form 8-K filed on October 2, 2008)
10.4		Research Agreement with Globe Laboratories Inc. dated March 15, 2009 (incorporated by reference from our Form 10-Q filed on April 14, 2009)
10.5		Form of Securities Purchase Agreement with St. George Investments LLC (incorporated by reference from our Form 8-K filed on March 25, 2010)
10.6		Form of Debenture with St. George Investments LLC (incorporated by reference from our Form 8-K filed on March 25, 2010)
10.7		Form of Pledge Agreement with St. George Investments LLC (incorporated by reference from our Form 8-K filed on March 25, 2010)
10.8		Form of Secured Purchase Note with St. George Investments LLC (incorporated by reference from our Form 8-K filed on March 25, 2010)

10.9		Form of Warrant with St. George Investments LLC (incorporated by reference from our Form 8-K filed on March 25, 2010)
3.4		Certificate of Amendment filed with the Secretary of State of Nevada on September 20, 2007 (incorporated by reference from our Form 10-QSB filed on October 15, 2007)
10.10		Form of Escrow Agreement with St. George Investments LLC (incorporated by reference from our Form 8-K filed on March 25, 2010)
3.5		Certificate of Change filed with the Secretary of State of Nevada on September 20, 2007 (incorporated by reference from our Form 10-QSB filed on October 15, 2007)
10.11		Purchase Agreement with Lincoln Park Capital Fund LLC (incorporated by reference from our Form 8-K filed on May 28, 2010)
3.6		Certificate of Merger filed with the Secretary of State of Nevada on October 6, 2008 (incorporated by reference from our Form 8-K filed on October 27, 2008)
10.12		Registration Rights Agreement with Lincoln Park Capital Fund LLC (incorporated by reference from our Form 8-K filed on May 28, 2010)
3.7		Certificate of Designation filed with the Secretary of State of Nevada on June 15, 2011 (incorporated by reference from our Form 8-K filed on July 8, 2011)
10.13		Note and Warrant Purchase Agreement with the Investor dated June 16, 2011 (incorporated by reference from our Form 8-K filed on July 8, 2011)
3.8		Certificate of Amendment filed with the Secretary of State of Nevada on June 17, 2011 (incorporated by reference from our Form 8-K filed on July 8, 2011)
10.14		Secured Convertible Promissory Note issued to the Investor dated June 16, 2011 (incorporated by reference from our Form 8-K filed on July 8, 2011)
3.9		Amended and Restated Bylaws dated June 16, 2011 (incorporated by reference from our Form 8-K filed on July 8, 2011)
10.15		Warrant to Purchase Shares of Common Stock granted to the Investor dated June 16, 2011 (incorporated by reference from our Form 8-K filed on July 8, 2011)
10.1		Share Cancellation Agreement with Blair Law dated October 2, 2007 (incorporated by reference from our Form 10-K filed on September 12, 2008)
10.16		Security Agreement with the Investor dated June 16, 2011 (incorporated by reference from our Form 8-K filed on July 8, 2011)
10.2		Return to Treasury Agreement dated September 29, 2008 with Blair Law (incorporated by reference from our Form 8-K filed on October 2, 2008)
10.17		Letter of Credit Agreement with the Investor dated June 16, 2011 (incorporated by reference from our Form 8-K filed on July 8, 2011)
10.3		Return to Treasury Agreement dated September 29, 2008 with Blair Law Casting Corp. (incorporated by reference from our Form 8-K filed on October 2, 2008)
10.18		Escrow Agreement with the Investor and the Escrow Agent dated June 16, 2011 (incorporated by reference from our Form 8-K filed on July 8, 2011)
10.4		Research Agreement with Globe Laboratories Inc. dated March 15, 2009 (incorporated by reference from our Form 10-Q filed on April 14, 2009)
10.19		Form of Secured Buyer Note issued by the Investor dated June 16, 2011 (incorporated by reference from our Form 8-K filed on July 8, 2011)
10.5		Form of Securities Purchase Agreement with St. George Investments LLC (incorporated by reference from our Form 8-K filed on March 25, 2010)
10.20		Forbearance Agreement with the Investor dated October 27, 2011 (incorporated by reference from our Form 8-K filed on November 4, 2011)
10.6		Form of Debenture with St. George Investments LLC (incorporated by reference from our Form 8-K filed on March 25, 2010)
10.21		Exchange Agreement with the Investor dated October 27, 2011 (incorporated by reference from our Form 8-K filed on November 4, 2011)
10.7		Form of Pledge Agreement with St. George Investments LLC (incorporated by reference from our Form 8-K filed on March 25, 2010)
10.22		Secured Convertible Promissory Note dated October 27, 2011 (incorporated by reference from our Form 8-K filed on November 4, 2011)
10.8		Form of Secured Purchase Note with St. George Investments LLC (incorporated by reference from our Form 8-K filed on March 25, 2010)
10.23		Security Agreement with the Investor dated October 27, 2011 (incorporated by reference from our Form 8-K filed on November 4, 2011)
10.24		Judgment by Confession dated October 27, 2011 (incorporated by reference from our Form 8-K filed on November 4, 2011)

10.9		Form of Warrant with St. George Investments LLC (incorporated by reference from our Form 8-K filed on March 25, 2010)
10.10		Form of Escrow Agreement with St. George Investments LLC (incorporated by reference from our Form 8-K filed on March 25, 2010)
10.11		Purchase Agreement with Lincoln Park Capital Fund LLC (incorporated by reference from our Form 8-K filed on May 28, 2010)
10.12		Registration Rights Agreement with Lincoln Park Capital Fund LLC (incorporated by reference from our Form 8-K filed on May 28, 2010)
10.13		Note and Warrant Purchase Agreement with the Investor dated June 16, 2011 (incorporated by reference from our Form 8-K filed on July 8, 2011)
10.14		Secured Convertible Promissory Note issued to the Investor dated June 16, 2011 (incorporated by reference from our Form 8-K filed on July 8, 2011)
10.15		Warrant to Purchase Shares of Common Stock granted to the Investor dated June 16, 2011 (incorporated by reference from our Form 8-K filed on July 8, 2011)
10.16		Security Agreement with the Investor dated June 16, 2011 (incorporated by reference from our Form 8-K filed on July 8, 2011)
10.17		Letter of Credit Agreement with the Investor dated June 16, 2011 (incorporated by reference from our Form 8-K filed on July 8, 2011)
10.18		Escrow Agreement with the Investor and the Escrow Agent dated June 16, 2011 (incorporated by reference from our Form 8-K filed on July 8, 2011)
10.19		Form of Secured Buyer Note issued by the Investor dated June 16, 2011 (incorporated by reference from our Form 8-K filed on July 8, 2011)
10.20		Forbearance Agreement with the Investor dated October 27, 2011 (incorporated by reference from our Form 8-K filed on November 4, 2011)
10.21		Exchange Agreement with the Investor dated October 27, 2011 (incorporated by reference from our Form 8-K filed on November 4, 2011)
10.22		Secured Convertible Promissory Note dated October 27, 2011 (incorporated by reference from our Form 8-K filed on November 4, 2011)
10.23		Security Agreement with the Investor dated October 27, 2011 (incorporated by reference from our Form 8-K filed on November 4, 2011)
10.24		Judgment by Confession dated October 27, 2011 (incorporated by reference from our Form 8-K filed on November 4, 2011)
10.25		Forbearance Agreement with the Investor dated October 27, 2011 (incorporated by reference from our Form 8-K filed on November 4, 2011)
10.26		Judgment by Confession dated October 27, 2011 (incorporated by reference from our Form 8-K filed on November 4, 2011)
10.27		Security Agreement with the Investor dated October 27, 2011 (incorporated by reference from our Form 8-K filed on November 4, 2011)
14.1		Code of Ethics (incorporated by reference from our Form 10-K filed on August 4, 2009)
31.1*		Certification of Principal Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*		Certification of Principal Financial Officer and Principal Accounting Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*		Certification of Principal Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*		Certification of Principal Financial Officer and Principal Accounting Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.1		Audit Committee Charter (incorporated by reference from our Form 10-K filed on August 4, 2009)

101.INS*		XBRL Instance Document
101.SCH*		XBRL Taxonomy Extension Schema Document
101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*		XBRL Taxonomy Extension Labels Linkbase Document
101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document
101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

10.26		Judgment by Confession dated October 27, 2011 (incorporated by reference from our Form 8-K filed on November 4, 2011)

10.27		Security Agreement with the Investor dated October 27, 2011 (incorporated by reference from our Form 8-K filed on November 4, 2011)

14.1		Code of Ethics (incorporated by reference from our Form 10-K filed on August 4, 2009)

31.1*		Certification of Principal Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*		Certification of Principal Financial Officer and Principal Accounting Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*		Certification of Principal Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*		Certification of Principal Financial Officer and Principal Accounting Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

99.1		Audit Committee Charter (incorporated by reference from our Form 10-K filed on August 4, 2009)

101.INS*		XBRL Instance Document

101.SCH*		XBRL Taxonomy Extension Schema Document

101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*		XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

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 15, 2012	KEDEM PHARMACEUTICALS INC.
Date: December 31, 2012	KEDEM PHARMACEUTICALS INC.
	By:	/s/ Hassan Salari
		Hassan Salari
		President, Chief Executive Officer, Secretary, Treasurer, Director (Principal Executive Officer)

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