USE OF PROCEEDS

We estimate that we will receive up to $9,200,000 in net proceeds from the sale of units in this offering if all of the units offered hereby are sold, based on an assumed price of $0.22 per unit (based upon the last reported sale price of our common stock on November 3, 2010) and after deducting estimated placement agent fees and estimated offering expenses payable by us. We will use the net proceeds from this offering to further clinical development of Duromist and our other product candidates, and for working capital and other general corporate purposes.

If a warrant holder elects to pay the exercise price, rather than exercising the warrants on a “cashless” basis, we may also receive proceeds from the exercise of warrants. We cannot predict when or if the warrants will be exercised. It is possible that the warrants may expire and may never be exercised.

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