UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2009

o		TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File No. 000-51314

Winston Pharmaceuticals, Inc.

(Name of registrant as specified in its charter)

Delaware		30-0132755
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
100 North Fairway Drive, Suite 134 Vernon Hills, IL		60061
(Address of principal executive offices)		(Zip Code)

Issuer’s telephone number (847) 362-8200

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered pursuant to Section 12(g) of the Act:

Title of each class:
Common Stock, $.001 par value per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ

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

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 (or for such shorter period that the registrant was required to submit and post such files) (the Registrant is not yet required to submit Interactive Data). Yes o No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained in this herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

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.

o Large Accelerated Filer		o Accelerated Filer		o Non-accelerated Filer		þ Smaller reporting company

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

As of March 1, 2010, 77,408,893 shares of the registrant’s Common Stock were outstanding. As of June 30, 2009, the aggregate market value of the registrant’s Common Stock held by non-affiliates of the registrant (without admitting that such person whose shares are not included in such calculation is an affiliate) was $12,326,041 based on the last sale price as reported on the over-the-counter bulletin board on such date.

Document incorporated by reference: None

 

 

WINSTON PHARMACEUTICALS, INC.
FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2009

INDEX

		Page
PART I
Item 1. Business			1
Item 1A. Risk Factors			16
Item 1B. Unresolved Staff Comments			16
Item 2. Properties			16
Item 3. Legal Proceedings			16
Item 4. Removed and Reserved			16
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			17
Item 6. Selected Financial Data			18
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations			18
Item 7A. Quantitative and Qualitative Disclosures About Market Risk			28
Item 8. Financial Statements and Supplementary Data			28
Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure			28
Item 9A(T). Controls and Procedures			28
Item 9B. Other Information			29
PART III
Item 10. Directors, Executive Officers and Corporate Governance			30
Item 11. Executive Compensation			33
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			37
Item 13. Certain Relationships and Related Transactions, and Director Independence			40
Item 14. Principal Accounting Fees and Services			42
PART IV
Item 15. Exhibits, Financial Statement Schedules			43
Index to Financial Statements			F-1
Exhibit 21.1
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

PART I

Item 1. Business

Cautionary Note Regarding Forward Looking Statements

This Annual Report on Form 10-K contains certain statements that are “forward-looking” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995, including statements regarding our expected financial position and business and financing plans. These forward looking statements and other information are based on our beliefs as well as assumptions made by us using information currently available.

The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “will,” “should” and similar expressions, as they relate to us, are intended to identify forward-looking statements. Such statements reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected, intended or using other similar expressions.

We are making investors aware that such forward-looking statements, because they relate to future events, are by their very nature subject to many important factors that could cause actual results to differ materially from those contemplated by the forward-looking statements contained in this Report on Form 10-K. For example, we may encounter competitive, technological, pharmacological, financial and business challenges making it more difficult than expected to continue to develop and market our products; the market may not accept our existing and future products; we may not be able to retain our customers; we may be unable to retain existing key management personnel; and there may be other material adverse changes in our operations or business. In addition, assumptions relating to budgeting, marketing, product development and other management decisions are subjective in many respects and thus susceptible to interpretations and periodic revisions based on actual experience and business developments, the impact of which may cause us to alter our marketing, expenditure or other budgets, which may in turn affect our financial position and results of operations. For all of these reasons, the reader is cautioned not to place undue reliance on forward-looking statements contained herein, which speak only as of the date hereof. We assume no responsibility to update any forward-looking statements as a result of new information, future events, or otherwise, except as required by law.

Going Concern Audit Opinion

As described herein under Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and the Financial Statements filed as part of this Form 10-K, the Report of Independent Registered Public Accounting Firm contains an emphasis of matter paragraph which indicates that there is substantial doubt about the Company’s ability to continue as a going concern. As described herein under Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources, the Company plans to raise additional funds early in the second quarter of 2010 in order to support its operations through December 31, 2010.

Executive Overview

On September 25, 2008, Getting Ready Corporation (the “Company”) completed its merger transaction (the “Merger”) with Winston Laboratories, Inc., a Delaware corporation (“Winston Labs”), by merging the Company’s wholly-owned subsidiary into Winston Labs. The Company is carrying on the business of Winston Labs as its sole line of business and it has retained all of Winston Labs’s management. The Merger was accounted for as a reverse merger for accounting purposes with Winston as the accounting acquirer. Effective as of November 17, 2008, the Company changed its name to Winston Pharmaceuticals, Inc. Unless the context otherwise requires, all references to “we,” “us,” “our” or the “Company” shall mean the Company and Winston Labs, collectively.

Our common stock is currently quoted on the OTC Bulletin Board, or OTCBB, sponsored by the National Association of Securities Dealers, Inc. under the symbol “WPHM.” The OTCBB is a network of security dealers who buy and sell stock. The dealers are connected by a computer network that provides information on current “bids” and “asks,” as well as volume information.

Winston Labs was incorporated in July 1998 as a specialty pharmaceutical company and is engaged in the discovery and development of products for pain management. Its core proprietary technology affects the functioning of certain neurotransmitters that control and mediate pain transmission. Based on this technology, We are developing products that reduce pain transmission from peripheral receptors along nerve pathways to the brain. We focus on major pain indications such as neuropathic pain syndromes, chronic daily headache, migraine headache, and osteoarthritis, which have estimated worldwide market sizes of $4 billion (Datamonitor, Commercial Insight: Neuropathic Pain, July 2006), $5 billion (Analyst Research), $4 billion (Analyst Research) and $10 billion (Analyst Research), respectively, as well as niche indications that have limited or no products currently available.

Pain Management Market

Pain is a significant, costly, and growing health care issue. In the United States, 76.5 million Americans (26% of adults age 20 or older) reported a problem with pain lasting for more than 24 hours. The majority of adults in the United States (57% or 170 million) have experienced chronic or recurrent pain in the past year. The economic cost of pain, including health care costs as well as lost productivity due to pain, is estimated at $100 billion annually in the United States. Some $61 billion of this amount is lost productivity attributable to pain, with an average loss of five hours per week for workers experiencing reduced performance or work absences. Among pain conditions, headache is the primary reason for lost productive time.

The market for pain management products is large. According to IMS Health data, the total U.S. market for prescription pain management pharmaceuticals, including those for arthritis or headache pain, exceeded $25 billion in 2008 (at a compound annual growth rate of 4% between 2003 and 2008). Seven (7) of the top 50 prescription drugs ranked by worldwide sales in 2008 had pain management indications.

Recent developments regarding serious side effects of certain non-steroidal anti-inflammatory drugs (NSAIDs), coupled with the removal of several COX-2 inhibitors from the market and a focus on the hepatoxicity of acetaminophen and acetaminophen/opiate combinations, along with the FDA’s subsequent attention to this matter, have created significant market opportunities for alternative pain therapy medications and has generated a heightened consumer caution and wariness of current marketed products. Similarly, potential for abuse of some existing prescription medications for moderate-to-severe pain, such as opioid-based analgesics, establishes a need among consumers for medications with less risk for addiction.

We believe that as recognition of the importance of pain diagnosis and treatment becomes greater, and as the FDA continues to issue health advisories and tighten restrictions on marketed opioids and NSAIDs including acetaminophen, the increasing need for effective pain medications with fewer side effects and less dependency concerns will create significant market opportunities for new products.

Several trends are also expected to drive growth and create opportunities for new products for pain management:

Aging of the population

The populations in the United States, Europe, and Japan are aging rapidly. By 2025, it is estimated that in the United States, one in four people will be 60 years of age or older (versus one in six in 2000). In Europe and Japan, the aging of the population is expected to be even more pronounced. As people age, they tend to be afflicted with more chronic pain conditions and to undergo more surgical procedures which require postoperative pain control.

Greater recognition of the importance of pain diagnosis and treatment

Medical and health care practitioners are increasingly aware of the importance of diagnosing and treating pain. Whereas pain may have once been considered a natural or inevitable consequence of aging or certain medical conditions, it is now considered a patient’s “fifth vital sign,” which is essential to monitor and treat. The Joint Commission on Accreditation of Healthcare Organizations has established standards that require health care facilities to assess and treat pain.

Significant unmet medical needs in pain management

Almost 50% of those surveyed said their pain is not under control. More than 75% of those surveyed strongly agreed that new options are needed to treat their pain. Even among those patients who do receive treatment for pain, many do not achieve significant relief. In fact, one survey found that respondents were so dissatisfied with the efficacy of their prescription and over-the-counter (OTC) pain control medications that 78% were willing to try new treatments, and 43% said they would spend a substantial portion of their financial resources on a treatment if they thought it would work.

Shortcomings of Current Pain Management

Despite widespread clinical use of drugs for pain, pain management remains less than optimal due to a variety of factors, including:

•

Insufficient efficacy. Opioids, the current standard of care for severe pain, reduce pain less than 50 percent in a majority of situations. Neuropathic pain is difficult to treat with existing analgesics because of the differing types of nerves and organs involved in, and types of injuries causing, this kind of pain. Neuropathic pain does not respond to treatment with NSAIDs and responds poorly to treatment with opioids at doses that do not impair the ability of patients to live reasonably active lifestyles.

•

Lack of site specificity. Most analgesics, including opioids and NSAIDs, are given orally or by intravenous infusion and thereby subject the patient to high circulating concentrations of drug, even though most types of pain are experienced in discrete parts of the body. Circulating drugs cause side effects at parts of the body unrelated to the perception of pain. Although there are currently means of delivering site-specific analgesia, such as by injection of short-acting anesthetics into joints such as the ankle or knee, these techniques are reserved to provide relatively short-term anesthesia prior to surgery and are not appropriate for long-term pain relief.

•

Occurrence of side effects. NSAIDs can cause gastrointestinal ulcers, with between 10,000 and 20,000 patients dying each year from gastrointestinal bleeding believed to be related to the use of NSAIDs. Use of opioids is associated with nausea and vomiting in many patients. High-dose opioids cause sedation and may also cause respiratory depression, or a decrease in the ability to breathe spontaneously. Opioids used chronically can cause severe constipation that leads many patients to stop using them, and opioids may sometimes cause severe itching. Drugs used to treat neuropathic pain frequently cause sedation and problems with coordination.

•

Need for frequent dosing. Drugs used to treat neuropathic pain require frequent dosing that makes their use inconvenient, often leading to reduced patient compliance.

•

Potential to cause physical dependence. Opioids, when used chronically, can cause physical dependence. Fear of physical dependence often influences clinicians to prescribe less than adequate doses of opioid analgesics. Similar fears lead many patients to refuse opioid analgesics.

Given doctors’ and patients’ desire to achieve adequate control of pain, and the significant shortcomings associated with existing treatments, doctors and patients often struggle to find an appropriate balance between pain relief and adverse side effects. With both over- and under-treatment of pain, patients may be suffering unnecessarily, have poor quality of life and have difficulty meeting their social, familial and work-related commitments.

Winston Product Pipeline

We have developed multiple proprietary formulations and uses of Civamide and doxepin hydrochloride, two agents that affect a variety of neuroactive chemical transmitters that convey primary sensory input (e.g., pain) from the periphery to the central nervous system. Our focus on neurotransmitter-active compounds has generated several of our most important product candidates. A common feature of these product candidates is the use of an active ingredient that depletes or interferes with the action of a neuroactive transmitter (e.g., substance P (SP), calcitonin gene-related peptide (CGRP), histamine and serotonin), thereby decreasing the ability of sensory fibers or nerve ganglia to transmit or receive sensory stimuli and mediate inflammatory reactions. SP is believed to be the principal neurotransmitter of pain.

Civamide is a proprietary TRPV-1 (transient receptor potential vanilloid-1) receptor modulator, and doxepin hydrochloride is a potent histamine receptor blocker and serotonin reuptake inhibitor. Civamide is being developed in several different dosage forms for a variety of painful conditions. Doxepin is being developed in a nasal solution for prophylaxis and treatment of chronic daily headache.

The following table summarizes the late stage pain control products in our portfolio:

								MARKETING
								RIGHTS IN
PRODUCT/				PRODUCT		DEVELOPMENT		NORTH
COMPOUND		DOSAGE FORM		INDICATION(S)		STATUS IN U.S.		AMERICA
Civamide		Patch		Postherpetic Neuralgia		Phase III		Winston
Civamide		Nasal Spray		Episodic Cluster Headache PHN of Trigeminal Nerve		Phase III Phase II		Winston Winston
Doxepin		Nasal Spray		Chronic Daily Headache		Phase II		Winston
Civamide		Cream		Osteoarthritis		Phase III Completed NDA 2010		Winston Sanofi Aventis (Canada)
OTHER PRODUCTS
Civamide		Capsule		Crohn’s Disease		Phase II		Winston
Civamide		Nasal Spray		Keratoconjunctivitis Sicca		Phase II		Winston

Civamide

Civamide, a synthetically produced, proprietary new chemical entity, is the active ingredient in several of our product candidates. The chemical structure is shown below:

Civamide

(cis-8-methyl-N-vanilly1-6-nonenamide)

Civamide produces analgesia by decreasing the activity of sensory neurons, shown below. Civamide appears to affect preferentially type-C neurons by specific binding to a membrane receptor, the TRPV-1 receptor, which is coupled to a cation channel. The specificity of Civamide for type-C neurons limits its sensory effects to the inhibition of pain transmission unlike local anesthetics, which act to block the activity of all sensory neurons, thereby impairing all sensations including touch, pressure, heat, and vibration, in addition to pain signals.

Initial applications of Civamide cause a transient release of SP from type-C neurons which may produce the transient burning sensation that is often felt following initial applications of Civamide. Civamide has also been shown to inhibit the synthesis of SP and reduce axonal transport of granules containing SP from the cell body to the nerve terminals. These effects may likely contribute to the analgesic effects of Civamide by reducing the amount of SP available for release. The analgesic effect of Civamide is completely reversible, since after administration of Civamide is discontinued, SP stores gradually return to normal and neuronal sensitivity to noxious stimuli returns. However, in animal and human studies, Civamide has a very long duration of analgesic activity, with a single dose or one-week course of treatment providing weeks of effective analgesic activity.

We have extensive preclinical and clinical experience with Civamide, with over 1,600 patients having been treated with the drug in Phase I to Phase III clinical trials in different formulations including the patch, nasal spray, oral capsule, and topical cream. The most significant adverse event noted has been localized burning sensation at the site of application. Because of these attributes, we believe Civamide represents a clinically significant treatment advance for a number of painful conditions, including neuropathic pain, cancer pain, headache pain, and arthritis pain.

Civamide Patch

Civamide Patch is an ultra-thin patch containing Civamide in a concentration of 0.015% which is being developed for postherpetic neuralgia (“PHN”) of the trunk. PHN is a condition that affects the nerve fibers in the skin. It is the most common complication of shingles and results from damage to nerve fibers during shingles. The rash and pain from shingles usually lasts about a month. But in people with PHN, the pain from shingles may last for months, and sometimes years, after the shingles rash has healed. Capsaicinoids in a topical cream formulation have been shown to have efficacy in treating PHN and other neuropathic pain syndromes in numerous studies. The development of Civamide Patch for PHN would also offer a substantial improvement in the delivery of medication to the cutaneous nerves involved in PHN.

Civamide Patch can be applied to the skin for up to 24 hours daily and the patient can bathe or shower without removing it. As there is no measurable systemic absorption of Civamide from the patch, we believe it is safer than its competitors, i.e. oral medications including Cymbalta^® and Lyrica^® as well as the Lidoderm^® Patch. Compared to Lidoderm, the Civamide Patch will not have the potential of cardiovascular side effects or drug interactions that Lidoderm^® has. Civamide Patch is also a thinner, more flexible patch and thus will have better adherence to the skin and will only require a single patch to treat a dermatome affected by PHN, while Lidoderm requires three or four patches.

On February 9, 2009, we announced positive top line results from Study WL1001-04-01, a Phase I clinical trial evaluating the tolerability and pharmacokinetic profile of two concentrations of Civamide Patch 0.0075% and 0.015% vs. placebo. The study successfully demonstrated the tolerability of the two concentrations tested for continuous application to the skin for a period of one week. Additionally, there was no systemic absorption of Civamide detected in any patients, supporting its local use for the topical treatment of postherpetic neuralgia. In this 38 patient study, a patch was applied once daily to the same area of the abdomen, and worn for 24 hours before replacing with a new patch, during a 7 day study. Both strengths of Civamide Patch were tolerable, with all subjects completing the study and with all but one subject being able to wear the patch for the entire 7 day period. Subjects applying active Civamide Patches experienced transient burning sensations which progressively lessened or resolved with each application during the study. Based upon the favorable results of this study, we conducted Study WL1001-04-03, a Phase II study of the 0.015% Civamide Patch for treatment of postherpetic neuralgia.

On February 24, 2009, we received orphan drug designation from the FDA for Civamide Patch for the treatment of postherpetic neuralgia. An orphan designation grants special status to a product to treat a rare disease or condition upon request of a sponsor. This is a key designation as the marketing application for a prescription drug product that has been designated as a drug for a rare disease or condition is not subject to a prescription drug user fee unless the application includes an indication for other than a rare disease or condition. The product also receives seven year market exclusivity and tax credits for the sponsor.

In September, 2009, we completed Study WL-1001-04-03, a Phase II clinical trial evaluating the efficacy and safety of Civamide Patch 0.015% in the treatment of PHN. Twenty-two patients with at least a 6 month history of PHN already on stable doses of medication for PHN, but with recalcitrant pain of at least a 4 on a 0-10 categorical scale during the week prior to enrollment, were enrolled in the study. Civamide Patch 0.015% was applied over a 4 week Treatment Period, for up to 24 hours daily. Daily Pain and Sleep Scores were assessed as the primary efficacy variables. There was a 2 week Post-Observation Treatment Period during which no patch was applied, but patients continued to record efficacy and safety parameters. Results demonstrated that by Week 2 and continuing throughout the Treatment Period and Post Treatment Observation Period, there was approximately a 40% improvement from Baseline in both Daily Pain Scores and Sleep Scores, seen below.

Civamide Patch Phase II

Study WL-1001-04-03

Adverse events were primarily transient self-limited application site burning sensations. There were no systemic adverse events. The lack of systemic absorption should permit the use of the Civamide Patch as both monotherapy and adjunctively with systemic medications such as Cymbalta^® (duloxetine) and Lyrica^® (pregabalin) without the risk of drug-drug interactions.

Civamide Nasal Spray

Civamide Nasal Spray contains Civamide in a concentration of 0.01% and is being developed for the prophylaxis and treatment of Episodic Cluster Headache (“ECH”). Cluster headache, nicknamed “suicide headache”, is a neurological disease that involves, as its most prominent feature, an immense degree of pain. “Cluster” refers to the tendency of these headaches to occur periodically, with active periods interrupted by spontaneous remissions. The cause of the disease is currently unknown. There are currently no approved products for this indication except injectable sumatriptan, which is approved for the treatment of individual cluster headaches, but not for the prevention of others occurring within the cluster period. There is no systemic absorption of Civamide from this formulation making Civamide Nasal Spray safer to use than other medications which might be used off label.

We have completed a Phase II as well two Phase III clinical trials. A meta-analysis of the data was performed. After a single week of treatment with Civamide Nasal Spray there was a decrease of approximately 70% vs. 35% in the control group (by the third week post-treatment). The per protocol results are shown below.

Civamide Nasal Spray

Phase II and Phase III Meta-analysis

Episodic Cluster Headache

The FDA approved a Special Protocol Assessment (an “SPA”) for a Phase III pivotal study of Civamide Nasal Spray for prophylaxis and treatment of episodic cluster headache. The SPA is a process that provides for an official FDA evaluation of Phase III clinical study protocols. The SPA provides trial sponsors with a binding written agreement that the design and analysis of the studies are adequate to support a license application submission if the study is performed according to the SPA and the study is successful. The FDA has agreed that if this pivotal study is robustly positive, it would be the final study necessary to support approval of Civamide Nasal Spray 0.01% for this indication. Civamide Nasal Spray has been studied in several additional indications, and there is positive Phase II data for acute migraine treatment and for treatment of vasomotor rhinitis, a nonallergic condition that involves a constant runny nose, sneezing, and nasal congestion. Civamide Nasal Spray has received orphan designation from FDA for treatment of PHN of the trigeminal nerve.

Civamide Cream

Civamide Cream is a cream formulation containing Civamide in a concentration of 0.075% being developed for osteoarthritis, the most common form of arthritis, which occurs when cartilage in the joints wears down over time. The lack of systemic absorption of Civamide from this formulation makes it safer to use than any oral COX-2 or NSAID. i.e., without the risk of cardiovascular and gastrointestinal side effects, or the risks of drug-drug interactions. Additionally, Civamide Cream 0.075% would also be without the safety concerns of topical NSAIDs, e.g. Volteren^® Gel, which because its use results in diclofenac absorption, has similar safety concerns to that of the oral products.

We believe that we have completed all studies required for a new drug application (an “NDA”) submission to the Food and Drug Administration (“FDA”) on Civamide Cream for osteoarthritis. In a pivotal 695 patient Phase III trial in osteoarthritis, Civamide Cream demonstrated statistically significant reductions in all three co-primary efficacy parameters and in important secondary parameters.

Table 1: TWA and Day 84 P-Values for Co-Primary Efficacy Variables in Favor of CIVANEX Over Control Study WL-1001-05-01 (ITT Population)

Primary Efficacy Variable		TWA				Day 84
WOMAC® Pain Subscale			0.0089				0.0126
WOMAC® Physical Function Subscale			<0.0001				0.0005
Subject Global Evaluation			0.0080				0.0485

The filing of an NDA 505(b)(2) in the United States had been delayed pending approval of a User Fee Waiver of the approximately $1.4 million filing fee. The User Fee Waiver was granted to the Company on February 12, 2010. Consequently, the Company intends to file an NDA 505(b)(2) in the second quarter, 2010. The Marketing Authorization Applications (MAA) in Europe for Civamide Cream filed January 2008 was not approved in July 2009 and an appeal has been filed in the United Kingdom and Sweden. A new drug submission (“NDS”) submitted in Canada in October 2008 was issued a Notice of Noncompliance in October, 2009, which decision is currently being appealed by the Company. We have licensed the marketing rights for Civamide Cream to Sanofi-Aventis in Canada and continue discussions with several pharmaceutical companies regarding the marketing rights in the United States, Europe and the Pacific Rim.

Doxepin

Doxepin Nasal Spray

We are also developing doxepin hydrochloride, a potent histamine receptor blocker and serotonin reuptake inhibitor in a patented nasal solution formulation in a concentration of 0.4%, for the prophylaxis and treatment of chronic daily headache. There are approximately 12 million patients in the United States with chronic daily headaches, for which there are no FDA-approved treatment options. This product appears to interfere with the release/actions of histamine and serotonin as well as modulating neuronal sodium ion channels involved in the pathogenesis of this disorder.

Doxepin Nasal Spray would have advantages over oral tricyclics that may be used off-label for this indication. Unlike systemically administered doxepin, there are virtually no sedative or anti-cholinergic side affects which accompany nasal administration of doxepin nasal spray.

A successful Phase IIa trial of Doxepin Nasal Spray in chronic daily headache has been completed. There were 210 patients enrolled in a 28-day lead-in Vehicle Treatment Period to eliminate placebo responders. Of these patients, 92 continued in either a 14- or 28-day Double-blind Treatment Period. There was statistical significant improvement seen in decreases in headache duration and increases in global satisfaction, seen below.

Our next step in the clinical development of Doxepin Nasal Spray is to conduct a Phase II/III study of longer duration.

Other Products

Civamide Capsule

Civamide Capsules are being developed for the treatment of Crohn’s disease. Crohn’s disease is an inflammatory disease of the intestines that may affect any part of the gastrointestinal tract from anus to mouth, causing a wide variety of symptoms. It primarily causes abdominal pain, diarrhea (which may be bloody), vomiting, or weight loss, but may also cause complications outside of the gastrointestinal tract such as skin rashes, arthritis and inflammation of the eye. If effective for this indication, it would represent a breakthrough therapy as it would be without the systemic side effects of systemic medications currently used, including systemic steroids, immunosuppressives, and biologics.

An investigational new drug application (“IND”) was filed in the United States in the second quarter of 2008 for the Civamide soft-gel oral capsule. One Phase I pharmacokinetic study has been completed which demonstrated that a single dose of the enteric-coated capsule 5mg or 10mg, either in a fasting or fed state was safe and did not provide measurable blood levels of Civamide. Since recent data have strongly suggested that pain and inflammation in Crohn’s disease may be related to an accumulation of substance P in nerve fibers in all layers of the intestinal wall, we are planning to initiate a Phase II double-blind evaluation of several dosages of our Civamide Capsule for relief of pain and inflammation in Crohn’s disease.

Civamide Nasal Spray

Civamide Nasal Spray in a concentration of 0.01%, is also being developed for the treatment of keratoconjuctivitis sicca, also known as dry eye syndrome, in addition to its development for the prophylaxis and treatment of Episodic Cluster Headache described above. The product was licensed to Opko Health in September 2007. On February 24, 2010, the Company received communications from Opko that it was terminating the license agreement effective May 24, 2010. As a result, all of Opko’s rights to certain products, as defined in the agreement, will revert back to the Company. The only product approved for this indication in the U.S. is Restasis^® which had sales of over $400 million in 2008. Our product has several important advantages over Restasis, and if successfully developed and approved could become the U.S. market leader for this condition.

Manufacturing and Raw Materials

All of our manufacturing is performed under contract by outside vendors. Currently, our primary suppliers of contract manufacturing services are DPT Laboratories, Ltd., Patheon, Inc., Catalant Pharma Solutions, and Aveva Drug Delivery Systems. All of our current products may be manufactured only at a site approved by the FDA specifically for the individual product, as specified in the NDA for the product.

We believe that adequate and reliable sources of raw materials for our products are currently available. In particular, Civamide is manufactured for us by Sigma-Aldrich Fine Chemicals. Since some of the raw materials and finished drug products are purchased from only one supplier, Winston’s operations may be adversely affected if certain suppliers are unable to provide raw materials or to manufacture drug substance or finished products on its behalf.

Commercialization Strategy

We currently have no marketing sales or distribution capabilities. In order to commercialize our product candidates, we must develop sales, marketing and distribution capabilities or make arrangements with other parties to perform these services for us. As part of our commercialization plan, we will conduct a variety of promotional and educational programs aimed at establishing awareness of our products in the physician community, and will focus on differentiating our products from other competitive products. These programs are planned to include sales representative promotion, publications in medical journals, continuing medical education, symposia, regional speaker programs and medical conference exhibits.

Our current plans call for us to market only those products of ours and those we might obtain by acquisition or license, that are for pain control and which can be successfully served with a focused specialty sales force. Consequently, we plan to build our own U.S. sales force to market our Civamide Patch for PHN, our Civamide Nasal Spray for ECH and our Doxepin Nasal Spray for chronic daily headache. This sales force will call on the approximately 5,000 pain centers and 10,000 neurologists and other specialists who specialize in treating chronic pain in the U.S.

For those products of ours which address large generalist medical markets, as our Civamide Cream for osteoarthritis, or large markets unrelated to pain control as our product for Crohn’s disease, we intend to seek U.S. marketing partners to handle the primary commercialization of these products.

Outside of the United States, and subject to marketing approval in the relevant countries, we intend to engage sales, marketing and distribution partners in Europe, Asia and Latin America.

We attempt, to the extent practicable, to use patent protection in the commercialization of our owned and licensed technology. We actively seek patent protection for our proprietary technology in the United States and, as appropriate and cost-effective, in other countries. We currently have five issued U.S. patents and 25 issued foreign patents and several pending foreign patent applications. These patents and patent applications are principally composition of matter and method of use claims. The range of expiration dates of our issued U.S. patents is from March 25, 2010 to October 16, 2023 with the patents most material to our business expiring January 28, 2019 and October 16, 2023. Upon regulatory approval of any of our patent-protected products, we plan to seek patent extension, where available, under existing U.S. and foreign regulations permitting extension of a pharmaceutical patent. In the United States, the Hatch-Waxman Act provides for patent term extension calculated as a portion of time during which the drug was in clinical development or under review at the FDA with a maximum extension of five years. Additionally, under the Hatch-Waxman Act, all new molecular entities (“NMEs”) such as Civamide automatically receive five (5) years data exclusivity upon approval. We believe that we are eligible for the full five-year patent term extension period on patents covering Civamide. Also, we expect to employ product life-cycle management, including the development of new formulations, new indications, and other significant product improvements, in order to maximize the value of our intellectual property.

Set forth below, please find a table of our current trademarks:

Trademark Name/Reg. No.		Owner		Filed (US)		Registered
CIVANEX 2,729,437		Winston Labs		February 16, 1999		June 24, 2003
MICANOL 3,283,446		Winston Labs		March 27, 2003		August 21, 2007
WINSTON LABORATORIES, The Pain Company 2,856,161		Winston Labs		October 13, 1999		June 22, 2004
WINSTON LABORATORIES Illinois State Trademark 73000		Winston Labs				August 13, 1993
AXSAIN 2,925,798		Winston Labs		November 14, 2002		February 8, 2005
ANTHRODERM		Winston Labs		February 1, 2010
RHEUMODERM		Winston Labs		February 1, 2010
CIVADERM		Winston Labs		February 1, 2010
NEURODERM		Winston Labs		February 1, 2010
DOLORAC		Winston Labs		November 10, 2009

In addition to seeking the protection of patents, licenses and trademarks, we also rely on unpatented proprietary technology and know-how to maintain its competitive position. To protect its rights in these areas, we have has a policy of requiring its employees, consultants, advisors, prospective licensees and business partners to enter into confidentiality agreements.

Competition

In general, a company’s ability to compete successfully in the pharmaceutical industry is based on: relative product performance (efficacy, safety, ease of use); price; acceptance by physicians, patients, and third-party payers; marketing support and distribution; availability of patent protection; and the ability to obtain and maintain FDA approval for testing, manufacturing and marketing.

Our products and technologies face competition from various classes of drugs, currently marketed and in development, across a range of therapeutic categories, from headache to neuropathic pain. For some indications, such as prophylaxis of episodic cluster headache, chronic daily headache and PHN of the trigeminal nerve, there are no existing FDA-approved products, and the Company is not aware of any other drugs presently in development for these conditions.

For other markets such as PHN, Crohn’s disease and osteoarthritis, our products targeted delivery combined with their lack of systemic side effects or potential for drug interactions, conveys substantial competitive advantage over competitors products for these conditions.

Our primary competitors include: small companies focused on pain management, such as Adolor, NeurogesX, NicOx, Pain Therapeutics, and Pozen; mid-sized companies with significant pain franchises, such as Endo Pharmaceuticals, King Pharmaceuticals, Purdue Pharma, and Valeant Pharmaceuticals; and very large, diversified pharmaceutical companies including GlaxoSmithKline, Merck, and Pfizer. A summary of what we believe to be the competitive advantages of our lead products as compared to the principal competing products currently in the market, if any, is presented below:

Competitive Advantages Summary
Our Product		Indication		Competitor Product(s)		Our Competitive Advantages
Civamide Patch		Postherpetic Neuralgia		Lyrica® Neurontin® Opiates Lidoderm® Patch		No Systemic Side Effects or Drug Interactions Can be Used Adjunctively No Disposal Issues (as with Lidoderm) Can be Bathed or Showered with (in Contrast to Lidoderm)
Civamide Nasal Spray		Episodic Cluster Headache		None		No Approved Competitor
		Trigeminal PHN		None		No Systemic Side Effects or Drug Interactions
Civamide Capsule		Crohn’s Disease		Aminosalicylates (e.g. sulfasalazine, mesalamine); Oral corticosteroids; Biologic Therapies (e.g. adalimumab (Humira®), infliximab (Remicade®))		Targeted Unique Action No Systemic Side Effects or Drug Interactions
Civamide Cream		Osteoarthritis		Oral NSAIDs (e.g. Mobic®, Naprosyn®) and COX2 Inhibitors (e.g. Celebrex®) Topical NSAIDs (e.g. Volteran®)		No Approved Competitor No Systemic Side Effects or Drug Interactions
Doxepin Nasal Spray		Chronic Daily Headache		None		No Approved Competitor No Systemic Side Effects or Drug Interactions

In the case of certain of our products, particularly those targeting large markets such as osteoarthritis and Crohn’s disease, thus requiring a very large sales force, we intend to pursue collaborations with larger pharmaceutical companies to market such products most effectively.

Government Regulation

Government authorities in the United States, at the federal, state, and local level, and other countries extensively regulate, among other things, the safety, efficacy, research, development, testing, manufacture, storage, record-keeping, labeling, promotion, advertising, distribution, marketing and export and import of pharmaceutical products such as those Winston is developing.

United States Government Regulation

In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act and implements regulations. If we fail to comply with the applicable United States requirements at any time during the product development process, clinical testing, and the approval process or after approval, we may become subject to administrative or judicial sanctions. These sanctions could include the FDA’s refusal to approve pending applications, license suspension or revocation, withdrawal of an approval, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties or criminal prosecution. Any agency enforcement action could have a material adverse effect on the Company.

The Company’s products are considered by the FDA to be drugs. The drugs are subject to FDA review and approval or clearance. If the FDA denies approval or clearance of the drugs, Winston’s ability to market its products could be significantly delayed or precluded.

The steps required before a drug may be marketed in the United States include:

	•		completion of preclinical laboratory tests, animal studies and formulation studies under the FDA’s good laboratory practices regulations;
	•		submission to the FDA of an Investigational New Drug, or IND, application for human clinical testing, which must become effective before human clinical trials may begin;
	•		performance of adequate and well-controlled clinical trials to establish the safety and efficacy of the product for each proposed indication;
	•		submission to the FDA of an NDA;
	•		satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with current good manufacturing practice, or cGMP; and
	•		FDA review and approval of the NDA before any commercial marketing, sale or shipment of the product.

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

Clinical trials involve the administration of the investigational product to human subjects under the supervision of qualified investigators. Clinical trials are conducted under protocols detailing, among other things, the objectives of the study, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated. Each protocol must be submitted to the FDA as part of the IND. Each trial must be reviewed and approved by an independent Institutional Review Board, or IRB, before it can begin and the trial is subject to IRB oversight. The FDA, the IRB or the Company may discontinue a clinical trial at any time for various reasons, including a belief that the subjects are being exposed to an unacceptable health risk. Clinical testing also must satisfy extensive good clinical practice requirements and the requirements for informed consent.

Clinical trials typically are conducted in three sequential phases, but the phases may overlap or be combined. Phase I trials usually involve the initial introduction of the investigational drug into humans to evaluate the product’s safety, dosage tolerance, pharmacodynamics, and, if possible, to gain an early indication of its effectiveness.

Phase II trials usually involve controlled trials in a limited patient population to: (a) evaluate dosage tolerance and appropriate dosage; (b) identify possible adverse effects and safety risks; and (c) evaluate preliminary the efficacy of the drug for specific indications.

Phase III trials usually further evaluate clinical efficacy and test further for safety in an expanded patient population. Phase I, Phase II and Phase III testing may not be completed successfully within any specified period, if at all. Furthermore, the FDA or the Company may suspend or terminate clinical trials at any time on various grounds, including a finding that the subjects or patients are being exposed to an unacceptable health risk.

Assuming successful completion of the required clinical testing, the results of the preclinical studies and of the clinical studies, together with other detailed information, including extensive manufacturing information and information on the composition of the product, are submitted to the FDA in the form of an NDA requesting approval to market the product for one or more specified indications. An NDA may also be submitted in the format of an electronic Common Technical Document, or eCTD, which under ICH guidelines, is acceptable to the FDA and many foreign regulatory authorities. The FDA reviews an NDA or eCTD to determine, among other things, whether a product is safe and effective for its intended use.

Before approving an application, the FDA will inspect the facility or the facilities at which the product is manufactured, and will not approve the product unless cGMP compliance is satisfactory. FDA will also inspect the clinical sites at which the trials were conducted to assess their compliance, and will not approve the product unless compliance with Good Clinical Practice requirements is satisfactory. If the FDA determines the application demonstrates that the product is safe and effective for the proposed indication and that the manufacturing process and the manufacturing facilities are acceptable, the FDA will issue an approval letter. If the FDA determines the application, manufacturing process or manufacturing facilities are not acceptable, the FDA will outline the deficiencies in the submission and often will request additional testing or information. Notwithstanding the submission of any requested additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval and may deny the application, limit the indication for which the drug is approved or require additional post-approval testing or other requirements.

The testing and approval process requires substantial time, effort, and financial resources, and each may take several years to complete. The FDA may not grant approval on a timely basis, or at all. We may encounter difficulties or unanticipated costs in its efforts to secure necessary governmental approvals, which could delay or preclude it from marketing its products. The FDA may limit the indications for use or place other conditions on any approvals that could restrict the commercial application of the products. After approval, certain changes to the approved product, such as adding new indications, manufacturing changes, or additional labeling claims are subject to further FDA review and approval.

If and when regulatory approval of a product is obtained, we will be required to comply with a number of post-approval requirements. We also must comply with other regulatory requirements, including cGMP regulations and adverse event reporting. Holders of an approved NDA are required to report certain adverse reactions and production problems, if any, to the FDA, to provide updated safety and efficacy information and to comply with requirements concerning advertising and promotional labeling for their products. Also, quality control and manufacturing procedures must continue to conform to cGMP after approval. The FDA periodically inspects manufacturing facilities to assess compliance with cGMP. Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain compliance with cGMP and other aspects of regulatory compliance.

We use, and will continue to use at least in the near term, third-party manufacturers to produce its products in clinical and commercial quantities. Future FDA inspections may identify compliance issues at its facilities or at the facilities of its contract manufacturers that may disrupt production or distribution, or require substantial resources to correct. In addition, discovery of problems with a product or the failure to comply with requirements may result in restrictions on a product, manufacturer, or holder of an approved NDA, including withdrawal or recall of the product from the market or other voluntary or FDA-initiated action that could delay further marketing. Also, new government requirements may be established that could delay or prevent regulatory approval of our products under development.

Foreign Regulation

In addition to regulations in the United States, we will be subject to a variety of foreign regulations governing clinical trials and commercial sales and distribution of its products. Whether or not we obtain FDA approval for a product, it must obtain approval of a product by the comparable regulatory authorities of foreign countries before it can commence clinical trials or marketing of the product in those countries. The approval process varies from country to country, and the time may be longer or shorter than that required for FDA approval. The requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from country to country.

Under European Union regulatory systems, marketing authorizations may be submitted either under a centralized or mutual recognition procedure. The centralized procedure provides for the grant of a single marketing authorization that is valid for all European Union member states. The mutual recognition procedure provides for mutual recognition of national approval decisions. Under this procedure, the holder of a national marketing authorization may submit an application to the remaining member states. Within 90 days of receiving the applications and assessment report, each member state must decide whether to recognize approval.

In addition to regulations in Europe and the United States, we will be subject to a variety of foreign regulations governing clinical trials and commercial distribution of its products.

Product Liability

We maintain product liability insurance on our products and clinical trials that provides coverage in the amount of $5 million per incident and $5 million in the annual aggregate.

Executive Officers and Key Employees of the Registrant

Information concerning our executive officers and key employees, including their names, ages and certain biographical information can be found in Part III, Item 10 under the caption, “Directors, Executive Officers and Corporate Governance”. This information is incorporated by reference into Part I of this report.

Human Resources

As of March 1, 2010 we employed 9 persons, including 4 engaged in research and development activities, including clinical development, and regulatory affairs, and 5 in general and administrative functions such as human resources, finance, accounting, business development and investor relations. Our staff includes 2 employees with Ph.D. or M.D. degrees. Our employees are not represented by any collective bargaining unit. We believe that we maintain good relations with our employees.

Financial Information about Segments

We operate in a single accounting segment — the development and commercialization of novel treatments that target the central nervous system. Refer to Note 2, “Segment Information” in the Notes to the Consolidated Financial Statements.

Item 1A. Risk Factors

We are a “smaller reporting company” as such term is defined in Item 10(f)(1) of Regulation S-K and are exempt from making the disclosures required by this item pursuant to the instructions to Item 1A of Form 10-K.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

We maintain a 7,300 square foot leased office and warehouse facility in Vernon Hills, Illinois (a suburb of Chicago), which serves as our headquarters.

Item 3. Legal Proceedings

As previously reported in the Company’s quarterly reports on Form 10-Q for the quarters ended June 30, 2009 and September 30, 2009, the Company filed suit against the FDA in the United States District Court for Northern District of Illinois for declaratory and injunctive relief with respect to the FDA’s refusal to waive it’s application user fee under small business waiver rules relating to the Company’s submission of the Civamide Cream NDA. In September, 2009, the FDA filed a motion to dismiss the suit. In October 2009, the Company filed a response in opposition to the FDA’s motion to dismiss and in December 2009, the court ruled in the Company’s favor. Consequently, on February 12, 2010, the Company was granted the user fee waiver.

There are no other pending legal proceedings.

Item 4. (Removed and Reserved)

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our common stock is quoted on the Over-The-Counter Bulletin Board (the “OTCBB”) under the symbol “WPHM.” The following table sets forth the high and low bid prices for our common stock for each of the last two fiscal years, as reported on the OTCBB.

For the Year Ended December 31, 2009:

		High				Low
First Quarter			3.40				0.25
Second Quarter			2.80				0.25
Third Quarter			2.25				0.45
Fourth Quarter			1.65				0.28

For the Year Ended December 31, 2008:

		High				Low
First Quarter			1.50				1.05
Second Quarter			1.25				0.75
Third Quarter			1.09				0.51
Fourth Quarter			1.00				0.30

Holders

As of January 29, 2010, there were approximately 177 stockholders of record and 274 beneficial owners of our common stock. The last sale price as reported by the OTCBB on March 1, 2010, was $0.20.

Dividends

We have never declared or paid dividends on our common stock and we do not anticipate paying any cash dividends in the foreseeable future. We currently intend to retain future earnings, if any, to fund the development and growth of our business. Except for the rights of holders of shares of preferred stock that are authorized and which may be issued in the future to receive dividends, any future determination to pay dividends will be at the discretion of our Board of Directors and will be dependent upon our financial condition, operating results, capital requirements, applicable contractual restrictions and other such factors as our Board of Directors may deem relevant.

2009 Equity Compensation Plan Information

Information regarding securities authorized for issuance under our equity compensation plans is disclosed in Part III Item 12 under the caption “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.”

Recent Sales of Unregistered Securities

None.

Performance Graph

We are a “smaller reporting company” as such term is defined in Item 10(f)(1) of Regulation S-K and are exempt from making the disclosures required by this item pursuant to instruction 6 to Item 201(e) of Regulation S-K.

Item 6. Selected Financial Data

We are a “smaller reporting company” as such term is defined in Item 10(f)(1) of Regulation S-K and are exempt from making the disclosures required by this item pursuant to paragraph (c) of Item 301 of Regulation S-K.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

THE FOLLOWING DISCUSSION SHOULD BE READ TOGETHER WITH THE INFORMATION CONTAINED IN THE FINANCIAL STATEMENTS AND RELATED NOTES INCLUDED ELSEWHERE IN THIS ANNUAL REPORT ON FORM 10-K.

On September 25, 2008, Getting Ready Corporation completed a merger transaction (the “Merger”) with Winston Laboratories, Inc., a Delaware corporation (“Winston Labs”) by merging a wholly-owned subsidiary of Getting Ready Corporation into Winston Labs. Effective November 17, 2008, Getting Ready Corporation changed its name to Winston Pharmaceuticals, Inc. (hereafter referred to as “we,” “us,” “our” or the “Company”). The Company has carried on the business of Winston Labs as its sole line of business and it has retained all of Winston’s management. The Merger was accounted for as a reverse merger for accounting purposes with Winston Labs as the accounting acquirer.

This discussion contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, including statements regarding our expected financial position and business and financing plans. These statements involve risks and uncertainties. Our actual results could differ materially from the results described in or implied by these forward-looking statements as a result of various factors. See Item 1. Business — Cautionary Note Regarding Forward-Looking Statements.

Executive Overview

Winston Labs is the successor to a research and development partnership, Cisco Ltd. (“Cisco”), formed in 1992 to develop a specific novel neuroactive compound, civamide. Civamide was discovered and patented by Joel E. Bernstein, M.D. (“Dr. Joel Bernstein”), the managing general partner of Cisco and subsequently, the founder and Chief Executive Officer, or CEO, of Winston Labs. In 1997, Cisco became Winston Laboratories LLC, which in 1998 was converted to a “C” Corporation. Winston’s initial operating funds were obtained from a rights offering in 1997 and a private equity placement in 1998. In 1999, Winston Labs sold approximately 19% of its common stock to Bioglan Pharma Plc (“Bioglan”) for $25 million; in 2004, Bioglan’s stock ownership was subsequently reduced below 7% when it did not participate in Winston Labs offering of additional shares of its common stock. In September 2007, Winston Labs purchased all of Bioglan’s outstanding ownership in Winston Labs from Bioglan for $225,000. Subsequent to this transaction, Winston Labs retired all of the shares purchased from Bioglan.

In 2000, Winston Labs established a subsidiary, Rodlen Laboratories, Inc. (“Rodlen,” formerly Oncovir Corporation). In 2001, Bioglan purchased approximately 18% of Rodlen’s outstanding common stock for $13.3 million. In 2002, Bioglan’s stock ownership in Rodlen was reduced below 3% as a result of Bioglan’s election not to participate in a Rodlen rights offering. The proceeds of this rights offering were used to acquire the Zostrix^® line of over-the-counter topical analgesics. Rodlen marketed the Zostrix^® product line until July 2005, when it sold the product line to Hi-Tech Pharmacal Co. (“Hi-Tech”). In October 2004, Rodlen launched the marketing and sale of another topical analgesic, Axsain^®, which it promoted to physicians and other health-care professionals. In June 2005, based on disappointing sales, Rodlen sharply reduced the promotion of the Axsain^® product and in March 2006, Rodlen discontinued selling this product altogether. In February 2007, Rodlen licensed certain technology underlying the Axsain^® product to Hi-Tech. Rodlen operated as a “virtual company” with no employees of its own. From inception to September, 2007, Rodlen was consolidated into the financial statements of Winston Labs. In September 2007, Winston Labs purchased all of the then outstanding ownership in Rodlen from Bioglan for $10,000. Subsequent to this transaction, all of the shares purchased from Bioglan were retired. On September 21, 2007, Rodlen was merged into Winston Labs.

In 2005, Winston Labs established a wholly owned UK subsidiary, Winston Laboratories Limited (“UK Ltd.”). UK Ltd. was established for the purpose of conducting work with European drug regulatory authorities, who typically require a European entity. UK Ltd. has no employees or material assets. The consolidated entity of Winston Labs, Rodlen, and UK Ltd. is hereinafter referred to as “Winston Labs.”

Gideon Pharmaceuticals, Inc. (“Gideon”) is a corporation whose chairman and sole director is Joel E. Bernstein, M.D., president and CEO of the Company. Gideon reimburses the Company for certain expenses that the Company incurs on behalf of Gideon. Amounts due from Gideon of $12,675 and $0 as of December 31, 2009 and 2008, respectively, are included in related party receivable on the Consolidated Balance Sheets.

On January 30, 2006, Winston Labs licensed to Sirius Laboratories, Inc., a company founded by Dr. Joel Bernstein, the rights to market products containing anthralin owned by Winston Labs, including a marketed 1% anthralin cream trade name Psoriatec^® . The license had a two-year term which expired on January 31, 2008 and provided for the following key terms: (i) a 25% royalty on net sales; (ii) a $300,000 minimum royalty; and (iii) a $750,000 purchase option. This agreement was assigned by Sirius to DUSA Pharmaceuticals, Inc. following DUSA’s purchase of Sirius. This license had been extended until September 30, 2008 by mutual written consent of the parties and the extension provided for continuation of the 25% royalty on net sales but eliminated the minimum royalty and purchase option. This agreement expired on September 30, 2008. Under the technology license agreement, the Company recorded royalty revenue of $0 and $34,861 for the years ended December 31, 2009 and 2008, respectively. In July 2008, the Company learned that DUSA had breached a license agreement with Winston Labs. Winston Labs initiated arbitration in October 2008 to recover the damages caused by this breach. In June 2009, DUSA settled this matter by agreeing to pay $75,000 in damages. This settlement is included in other income in the Consolidated Statements of Operations.

On August 14, 2007, Winston Labs entered into an exclusive technology license agreement with Exopharma, Inc., now known as Elorac, Inc. (“Elorac”). Dr. Joel Bernstein is a majority owner and President and Chief Executive Officer of Elorac. Under the terms of the license agreement, Winston Labs granted Elorac an exclusive license to the proprietary rights of certain products (£ 0.025% civamide with the stated indication of psoriasis of the skin). In exchange, Elorac paid Winston Labs a license fee of $100,000 and is required to pay a 9% royalty on sales of the product. In addition, the agreement required Elorac to pay Winston Labs a non-refundable payment of $250,000 upon approval of a marketing authorization by Elorac on the product(s) described in the agreement. On October 27, 2008 the Winston Labs and Elorac mutually terminated the above license agreement. As a result of this mutual termination, the Winston Labs agreed to pay Elorac the $105,000 in exchange for Winston Labs retaining all the proprietary rights under the original agreement. Since inception, Elorac has been located in the same offices as Winston Labs and therefore has shared in certain of Winston Labs expenses such as rent, utilities, internet usage, etc. The amount of Elorac’s share of such expenses is based on various allocation factors related to particular expense. Winston Labs received $162,977 and $128,323 in 2009 and 2008, respectively for such services, which are included as a reduction of Winston Labs expenses on the Consolidated Statement of Operations. Amounts due from Elorac of $2,601 and $0 as of December 31, 2009 and 2008, respectively, are included in related party receivables in the Company’s Consolidated Balance Sheets.

On September 19, 2007, Winston Labs entered into an exclusive technology license agreement with Opko Ophthalmologics, LLC, (“OPKO”). Under the terms of the license agreement, Winston Labs granted OPKO an exclusive license to the proprietary rights of certain products (pharmaceutical compositions or preparations containing the active ingredient civamide in formulations suitable for use in the therapeutic or preventative treatment of ophthalmic conditions in humans). In exchange, OPKO paid Winston Labs a license fee of $100,000 and is required to pay a 10% royalty on sales of the products. In addition, the agreement requires OPKO to pay Winston Labs a non-refundable payment of $5,000,000 upon approval of a marketing authorization by OPKO on the product described in the agreement. In addition, under the terms of the agreement, OPKO and Winston Labs agreed to equally share the cost related to manufacturing and clinical supplies of Civamide Nasal Spray. During 2009 and 2008, OPKO reimbursed Winston Labs approximately $111,539 and $80,000, respectively for such costs. In addition, the agreement calls for OPKO to reimburse Winston Labs for certain legal expenses Winston Labs has incurred related to the use of the licensed products to treat keratoconjunctivitis. In 2009 and 2008, approximately $38,800 and $38,000, respectively of legal fees were billed to OPKO, of which approximately $7,000 and $38,000 were outstanding as of December 31, 2009 and 2008 and are included in related party receivable on the Consolidated Balance Sheets. Subsequent to December 31, 2009 and 2008, respectively, OPKO paid $7,000 and $38,000 of the balance due. Phillip Frost, M.D. is the Chairman and Chief Executive Officer of OPKO’s parent company, Opko Health, Inc. (“Opko Health”), and as of December 31, 2009 was the beneficial owner of more than 50% of Opko Health’s common stock.

On February 24, 2010, the Company received communications from Opko that it was terminating the license agreement effective May 24, 2010. As a result, all of Opko’s rights to certain products, as defined in the agreement, will revert back to the Company.

As of December 31, 2009, Dr. Frost is also the indirect beneficial owner of 26,574,659 shares of the Company’s capital stock on a fully diluted basis (29.7% of the total issued and outstanding shares), including, 8,779,797 shares of common stock underlying warrants. Furthermore, Subbarao Uppaluri, Ph.D., a director of the Company and the Senior Vice President — Chief Financial Officer of Opko Health, is the beneficial owner of 326,538 shares of the Company’s capital stock on a fully-diluted basis, including 27,500 shares of common stock underlying options and 89,589 shares of common stock underlying warrants.

On November 13, 2007, the Company entered into a merger agreement with Winston Labs and Winston Acquisition Corp., the Company’s wholly-owned subsidiary, pursuant to which, upon completion of the Merger on September 25, 2008, Winston Labs became our wholly-owned subsidiary and:

	•		all of the issued and outstanding capital stock of Winston Labs, consisting of 23,937,358 shares of common stock, par value $0.001 per share, 5,815,851 shares of the Winston Labs Series A Convertible Preferred Stock, par value $0.001 per share (“Winston Labs Series A Preferred Stock”), and 4,187,413 shares of the Winston Labs Series B Convertible Preferred Stock, par value $0.001 per share (“Winston Labs Series B Preferred Stock”), was exchanged for 422,518,545 shares of our common stock, par value $0.001 per share (at an exchange ratio of 17.65101 shares of our common stock per share of Winston Labs common stock), 101,849 shares of our Series A Preferred Stock and 73,332 shares of our Series B Preferred Stock (at an exchange ratio of .01751238 shares of our preferred stock per share of Winston Labs preferred stock);
	•		we assumed Winston Labs’s stock option plans;
	•		Winston Labs’s outstanding 1,643,750 options to purchase 1,643,750 shares of Winston Labs’s common stock were converted to options to purchase 29,013,848 shares of our common stock; and
	•		outstanding warrants to purchase Winston Labs Series A Preferred Stock were assumed by us and converted into the right to acquire, expiring November 13, 2012, upon the exercise of such warrants, an aggregate of 71,672 shares of our Series A Preferred Stock at a price per share of $49.09.

Immediately following the closing of the Merger, we had outstanding 440,851,441 shares of common stock. Our Board of Directors recommended and our stockholders approved an amendment to our charter to increase the number of authorized shares of our common stock from 499,000,000 shares to 900,000,000 shares to permit the conversion of all outstanding shares of our preferred stock, including shares of our preferred stock underlying outstanding warrants.

Subsequent to the completion of the Merger, the Company has carried on the business of Winston Labs as its sole line of business and has retained all of Winston Labs’s management. Our executive offices are located at 100 North Fairway Drive, Suite 134, Vernon Hills, Illinois 60061 and our telephone number is (847) 362-8200. Effective November 17, 2008, we changed our name from Getting Ready Corporation to “Winston Pharmaceuticals, Inc.” and have discontinued any and all prior business operations in favor of the business plan and operations of Winston, which has been our only significant operation as a result of the merger with Winston Labs.

On October 29, 2008, Winston Labs filed a new drug submission (NDS) in Canada, for CIVANEX^® Cream (civamide cream 0.075%) for the treatment of signs and symptoms of osteoarthritis, the first product Winston Labs has developed under its transient receptor potential vanilloid (TRPV) channel technology. On October 30, 2008, Winston Labs entered into a License Agreement (the “License Agreement”) with sanofi-aventis Canada Inc. (“sanofi-aventis Canada”) pursuant to which Winston Labs granted sanofi-aventis an exclusive license to the Canadian rights to Winston Labs proprietary transient receptor potential vanilloid (TRPV-1) modulator in formulations for topical application. Under the terms of the License Agreement, sanofi-aventis Canada owns the rights to manufacture, develop and commercialize Civamide Cream in Canada along with a second generation cream that is currently in development. In return for granting sanofi-aventis Canada the Canadian rights to Civamide Cream, Winston Labs received an upfront payment of $1.9 million (US), and will receive an additional $2 million (CAD) upon regulatory approval of Civamide Cream in Canada, certain milestone payments, and future royalties on net sales of Civamide or the related second generation cream in Canada.

On December 15, 2008 the Company amended its Certificate of Incorporation to provide for the reduction of the total number of issued and outstanding shares of the Company’s common stock, par value $.001 per share (“Common Stock”) and its preferred stock, par value $.001 per share (“Preferred Stock”), by exchanging each eight (8) shares of such issued and outstanding shares of Common Stock and Preferred Stock for one (1) share of Common Stock or Preferred Stock, respectively.

Following a 1-for-8 reverse split of the Company’s common and preferred stock on December 15, 2008, 12,730 shares of its Series A Preferred Stock and 9,157 shares of its Series B Preferred Stock were issued and outstanding. On September 24, 2009, each outstanding share of Company Series A Preferred Stock and Series B Preferred Stock automatically converted into 1,000 fully-paid, non-assessable shares of the Company’s Common Stock. In addition, in connection with such conversion, each outstanding warrant to purchase shares of Series A Preferred Stock automatically converted into the right to acquire 1,000 shares of Common Stock upon the exercise of such warrant, at an exercise price of $0.39 per share of Common Stock.

Winston Labs submitted a Marketing Authorization Application (“MAA”) in Europe for CIVANEX in January 2008. On July 10, 2009 the Company received a negative opinion letter from the Swedish Medical Products Administration (“MPA”) as the Reference Member State on behalf of the Concerned Member States, the United Kingdom and Spain on the Company’s MAA for CIVANEX in the decentralized procedure to obtain mutual recognition of CIVANEX by such states. CIVANEX is an investigational therapy in development for the signs and symptoms of, including the pain associated with, osteoarthritis. In its letter to the Company, MPA cited lack of data relating to the full risk assessment of the carcinogenic potential of CIVANEX. The Company’s management disagrees with several of the conclusions in the opinion letter and has filed an appeal of the negative opinion of the Swedish review team with the MPA. On November 2, 2009, the Company filed a separate appeal of the opinion with the Medicines and Healthcare products Regulatory Agency in the United Kingdom. The Company believes that the current application containing safety and efficacy data support the approval of CIVANEX for use under the proposed labeling. The Company is currently considering whether to conduct another carcinogenesis study of CIVANEX.

In May 2009, the Company completed a Phase I pharmacokinetic and safety study of oral civamide in an enteric coated soft gel capsule with no systemic absorption detected. The Company intends to conduct a new study designed to take advantage of this lack of systemic absorption in a proof of concept study for the treatment of the inflammatory bowel disorder, Crohn’s Disease.

As previously reported in the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2009, in July 2009, the Company filed suit against the FDA in the United States District Court for Northern District of Illinois for declaratory and injunctive relief with respect to the FDA’s refusal to waive its application user fee under small business waiver rules relating to the Company’s submission of the civamide cream application. In September, 2009, the FDA filed a motion to dismiss the suit. In October, 2009, the Company filed a response in opposition to the FDA’s motion to dismiss and in December 2009, the court ruled in the Company’s favor. Consequently, on February 12, 2010, the Company was granted the user fee waiver.

In September, 2009, we completed Study WL-1001-04-03, a Phase II clinical trial evaluating the efficacy and safety of Civamide Patch 0.015% in the treatment PHN. Twenty-two patients with at least a 6 month history of PHN already on stable doses of medication for PHN, but with recalcitrant pain of at least a 4 on a 0-10 categorical scale during the week prior to enrollment, were enrolled in the study. Civamide Patch 0.015% was applied over a 4 week Treatment Period, for up to 24 hours daily. Daily Pain and Sleep Scores were assessed as the primary efficacy variables. There was a 2 week Post-Observation Treatment Period during which no patch was applied, but patients continued to record efficacy and safety parameters. Results demonstrated that by Week 2 and continuing throughout the Treatment Period and Post Treatment Observation Period, there was approximately up to a 40% improvement from Baseline in both Daily Pain Scores and Sleep Scores as discussed in further detail in Part I, Item I, Business, elsewhere in this Annual Report on Form 10-K.

Effective September 22, 2009, Robert Yolles succeeded Dr. Joel E. Bernstein as Chairman of the Board of the Company’s Board of Directors.

On October 15, 2009, Winston Labs announced that it received a Notice of Non-compliance (“NON”) from the Therapeutics Drug Directorate, Health Canada (the “Directorate”) for its New Drug Submission (NDS) for CIVANEX (zucapsaicin cream 0.075%) for the treatment of the signs and symptoms of osteoarthritis. The Directorate remarked that the analysis of the pivotal trial did not support the requested indication. Winston Labs had a period of ninety days to submit a response to the Directorate’s NON, which it did on January 29, 2010. In the event that the Company is not be able to obtain regulatory approval in Canada by June 30, 2010, the sanofi-aventis payment due upon regulatory approval will be reduced by $250,000 (CAD) to $1,750,000 (CAD).

On February 12, 2010, Pharmaceutical Financial Syndicate, LLC (“PFS”), whose members include Dr. Joel Bernstein, the Company’s President and Chief Executive Officer and Robert A. Yolles and Neal S. Penneys, directors of the Company, executed a letter of intent (“LOI”) with Frost Gamma Investments Trust, Subbarao Uppaluri, a director of the company, and certain other shareholders of the Company (collectively, the “Frost Group”), to acquire 100% of the Company’s capital stock (the “Acquisition”) beneficially owned by all of the members of the Frost Group consisting of an aggregate of 18,399,271 outstanding shares of common stock and warrants to purchase an aggregate of 8,958,975 shares of common stock (collectively, the “Acquired Securities”).

As provided in the LOI, consummation of the Acquisition is subject to a number of conditions, including the parties entering into a definitive acquisition agreement. The LOI also provides that simultaneous with the completion of the Acquisition, three of the Company’s directors, namely Subbarao Uppaluri, Glenn Halpryn and Curtis Lockshin, shall resign as directors of the Company, and each of Messrs. Uppaluri, Halpryn and Lockshin have advised the Company that they have consented to resign upon completion of the Acquisition. Upon completion of the Acquisition, as the manager of PFS, Dr. Bernstein would be deemed to be the beneficial owner of all of the Acquired Securities, however Dr. Bernstein intends to disclaim beneficial ownership of those Acquired Securities in which he does not have a pecuniary interest through PFS.

Winston Labs does not currently market any products. In the past, Winston Labs marketed certain products revenues from which were used to help fund its research programs. Winston Labs is engaged in the development of innovative products for managing and alleviating pain. After discontinuing the Zostrix^® and Axsain^® product lines, Winston Labs has devoted most of its resources to research and development. Winston Labs has spent $2,062,933 and, $3,496,150, each of the years 2009 and 2008, respectively, on research and development activities. Winston Labs has incurred significant operating losses since the initiation of operations in 1997 and as of December 31, 2009, had an accumulated deficit of approximately $49.3 million.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make a number of assumptions and estimates that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reported periods. Significant estimates and assumptions are required in the determination of revenue recognition and sales deductions for certain royalties and returns and losses. Significant estimates and assumptions are also required in the appropriateness of capitalization and amortization periods for identifiable intangible assets, income taxes, contingencies, and stock-based compensation. We base our estimates on historical experience and various other assumptions, available at that time, that we believe to be reasonable under the circumstances. Some of these judgments can be subjective and complex. For any given individual estimate or assumption made by us, there may also be other estimates or assumptions that are reasonable. These items are monitored and analyzed by management for changes in facts and circumstances, and material changes in these estimates could occur in the future. Changes in estimates are recorded in the period in which they become known. Actual results may differ from our estimates if past experience or other assumptions do not turn out to be substantially accurate.

Revenue Recognition

The Company has historically generated revenues from product sales, collaborative research and development arrangements, and other commercial arrangements such as, royalties, and sales of technology rights. Payments received under such arrangements may include non-refundable fees at the inception of the arrangements, milestone payments for specific achievements designated in the agreements, royalties on sales of products resulting from collaborative arrangements, and payments for the sale of rights to future royalties.

The Company recognizes revenue in accordance with the SEC’s Staff Accounting Bulletin Topic 13 (“Topic 13”), “Revenue Recognition.” Revenue is recognized when all of the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the seller’s price to the buyer is fixed and determinable; and (4) collectability is reasonably assured.

Certain sales transactions include multiple deliverables. The Company allocates amounts to separate elements in multiple element arrangements in accordance with ASC Topic 605, Revenue Recognition. Revenues are allocated to a delivered product or service when all of the following criteria are met: (1) the delivered item has value to the customer on a standalone basis; (2) there is objective and reliable evidence of the fair value of the undelivered item; and (3) if the arrangement includes a general right of return relative to the delivered item, delivery or performance of the undelivered item is considered probable and substantially in the Company’s control. The Company uses the relative fair values of the separate deliverables to allocate revenue. For arrangements with multiple elements that are separated, the Company recognizes revenues in accordance with Topic 13.

Multiple Element Arrangements

The Company has arrangements whereby it delivers to the customer multiple elements including technology and/or services. Such arrangements have generally included some combination of the following: licensed rights to technology, patented products, compounds, data and other intellectual property; and research and development services. The Company analyzes its multiple element arrangements to determine whether the elements can be separated. The Company performs its analysis at the inception of the arrangement and as each product or service is delivered. If a product or service is not separable, the combined deliverables will be accounted for as a single unit of accounting.

When a delivered element meets the criteria for separation, the Company allocates amounts based upon the relative fair values of each element. The Company determines the fair value of a separate deliverable using the price it charges other customers when it sells that product or service separately; however, if the Company does not sell the product or service separately, it uses third-party evidence of fair value. The Company considers licensed rights or technology to have standalone value to its customers if it or others have sold such rights or technology separately or its customers can sell such rights or technology separately without the need for the Company’s continuing involvement.

License Arrangements. License arrangements may consist of non-refundable upfront license fees, data transfer fees, research reimbursement payments, exclusive licensed rights to patented or patent pending compounds, technology access fees, various performance or sales milestones. These arrangements are often multiple element arrangements.

Non-refundable, up-front fees that are not contingent on any future performance by the Company, and require no consequential continuing involvement on its part, are recognized as revenue when the license term commences and the licensed data, technology and/or compound is delivered. Such deliverables may include physical quantities of compounds, design of the compounds and structure-activity relationships, the conceptual framework and mechanism of action, and rights to the patents or patents pending for such compounds. The Company defers recognition of non-refundable upfront fees if it has continuing performance obligations without which the technology, right, product or service conveyed in conjunction with the non-refundable fee has no utility to the licensee that is separate and independent of the Company’s performance under the other elements of the arrangement. In addition, if the Company has required continuing involvement through research and development services that are related to its proprietary know-how and expertise of the delivered technology, or can only be performed by the Company, then such up-front fees are deferred and recognized over the period of continuing involvement. Under the license agreement with sanofi-aventis Canada, Inc., referred to under “Results of Operations — Revenues”, and described under “Liquidity and Capital Resources — Financing Activities”, the obligation period was not contractually defined in relation to the $1.9 million upfront fee. Under the circumstances, management exercised judgment in estimating the period of time over which certain deliverables will be provided to enable the licensee to utilize the license, which was determined to be 18 months. The estimated period of 18 months was primarily determined based on the management’s estimate of the maximum amount of time it would take the Canadian regulatory authorities to approve the Company’s new drug submission (NDS).

Payments related to substantive, performance-based milestones in a research and development arrangement are recognized as revenues upon the achievement of the milestones as specified in the underlying agreements when they represent the culmination of the earnings process.

Research Services Arrangements. Revenues from research services are recognized during the period in which the services are performed and are based upon the number of full-time-equivalent personnel working on the specific project at the agreed-upon rate. Reimbursements from collaborative partners for agreed upon direct costs including direct materials and outsourced services, or subcontracted, pre-clinical studies are classified as revenues in accordance with ASC Topic 605 and recognized in the period the reimbursable expenses are incurred. Payments received in advance are deferred until the research services are performed or costs are incurred.

Royalty Arrangements. The Company recognizes royalty revenues from licensed products when earned in accordance with the terms of the license agreements. Net sales amounts generally required to be used for calculating royalties include deductions for returned product, pricing allowances, cash discounts, freight and warehousing.

Certain royalty arrangements require that royalties are earned only if a sales threshold is exceeded. Under these types of arrangements, the threshold is typically based on annual sales. The Company recognizes royalty revenue in the period in which the threshold is exceeded.

Research and development expenses

The guidance in ASC Topic 730, Research and Development, requires the Company to defer and capitalize nonrefundable advance payments made for goods or services to be used in research and development activities until the goods have been delivered or the related services have been performed. If the goods are no longer expected to be delivered or the services are no longer expected to be performed, the Company would be required to expense the related capitalized advance payments.

Research and development expenses consist of expenses incurred in performing research and development activities including salaries and benefits, facilities and other overhead expenses, clinical trials, contract services and outsource contracts. Research and development expenses are charged to operations as they are incurred.

Acquired contractual rights. Payments to acquire contractual rights to a licensed technology or drug candidate are expensed as incurred when there is uncertainty in receiving future economic benefits from the acquired contractual rights. The Company considers the future economic benefits from the acquired contractual rights to a drug candidate to be uncertain until such drug candidate is approved by the FDA or when other significant risk factors are abated.

Share-Based Compensation Expense

ASC Topic 718, Stock Compensation, requires that the compensation cost relating to share-based payment transactions be recognized in financial statements, based on the fair value of the instruments issued. ASC Topic 718 covers a wide range of share-based compensation including stock options, restricted stock, performance-based awards, share appreciation rights and employee share purchase plans. Prior to January 1, 2006, the Company accounted for stock-based compensation arrangements using the intrinsic value method.

The fair value of each option award is estimated on the date of grant using a Black-Scholes-Merton option pricing model (“Black-Scholes model”) that uses assumptions regarding a number of complex and subjective variables. These variables include, but are not limited to, our expected stock price volatility, actual and projected employee stock option exercise behaviors, risk-free interest rate and expected dividends. Expected volatilities are based on historical volatility of our common stock and other factors. The expected terms of options granted are based on analyses of historical employee termination rates and option exercises. The risk-free interest rates are based on the U.S. Treasury yield in effect at the time of the grant. Since we do not expect to pay dividends on our common stock in the foreseeable future, we estimated the dividend yield to be 0%. ASC Topic 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. We estimate pre-vesting forfeitures based on our historical experience.

If factors change and we employ different assumptions in the application of ASC Topic 718 in future periods, the compensation expense that we record under ASC Topic 718 may differ significantly from what we have recorded in the current period. There is a high degree of subjectivity involved when using option pricing models to estimate share-based compensation under ASC Topic 718. Because changes in the subjective input assumptions can materially affect our estimates of fair values of our share-based compensation, in our opinion, existing valuation models, including the Black-Scholes and lattice binomial models, may not provide reliable measures of the fair values of our share-based compensation. Consequently, there is a risk that our estimates of the fair values of our share-based compensation awards on the grant dates may bear little resemblance to the actual values realized upon the exercise, early termination or forfeiture of those share-based payments in the future. Certain share-based payments, such as employee stock options, may expire worthless or otherwise result in zero intrinsic value as compared to the fair values originally estimated on the grant date and reported in our financial statements. For awards with a longer vesting period, such as the three-year cliff vesting awards issued to certain officers, the actual forfeiture rate and related expense may not be known for a longer period of time, which can result in more significant accounting adjustments once the awards are either vested or forfeited.

Alternatively, values may be realized from these instruments that are significantly in excess of the fair values originally estimated on the grant date and reported in our financial statements. There is no current market-based mechanism or other practical application to verify the reliability and accuracy of the estimates stemming from these valuation models, nor is there a means to compare and adjust the estimates to actual values. Although the fair value of employee share-based awards is determined in accordance with ASC Topic 718 and SAB 107 using an option-pricing.

Nature of Operating Expenses

In fiscal 2009, our operating expenses consisted mainly of our Phase, I, Phase II, and Phase III clinical trial expenses (research costs) and general and administrative expenses such as human resources, legal and accounting, primarily related to being a public company. In fiscal 2008, our operating expenses consisted mainly of our Phase II and Phase III clinical trial expenses (research costs) and general and administrative expenses such as human resources, legal and accounting, primarily related with the Merger.

Our business is exposed to significant risks which may result in additional expenses, delays and lost opportunities that could have a material adverse effect on our results of operations and financial condition.

Effects of Inflation

We believe the impact of inflation and changing prices on net revenues and on loss from operations has been minimal during the past two years.

Results of Operations

We operate our business on the basis of a single reportable segment, which is the discovery and development of products for pain management. Our chief operating decision-maker is our Chief Executive Officer, who evaluates our company as a single operating segment.

We categorize revenues by type of revenue in two different categories: 1) licensing revenue and, 2) royalty revenue. All long-lived assets for fiscal 2009 and 2008 are located in the United States.

For the year ended December 31, 2009 compared to the year ended December 31, 2008

		Year Ended December 31,
		2009				2008				$ Change				% Change
REVENUES
License Revenue		$	1,266,825			$	316,706			$	950,119				300	%
Royalty Revenue			127,762				135,836				(8,074	)			(6	)%
			1,394,587				452,542				942,045				208	%
EXPENSES
Research and development			2,062,933				3,496,150				(1,433,217	)			(41	)%
General and administrative			2,063,879				2,182,012				(118,133	)			(5	)%
Depreciation and amortization			9,007				8,651				356				4	%
Total Operating Expenses			4,135,819				5,686,813				(1,550,994	)			(27	)%
Loss from Operations			(2,741,232	)			(5,234,271	)			2,493,039				(48	)%
Interest income			10,487				90,614				(80,127	)			(88	)%
Other income			75,429				1,911				73,518				3,847	%
Other income (expenses)			85,916				92,525				(6,609	)			(7	)%
Loss before income taxes			(2,655,316	)			(5,141,746	)			2,486,430				(48	)%
Income Taxes
Current			—				—				—				—
Deferred			—				—				—				—
Income Taxes			—				—				—				—
NET LOSS		$	(2,655,316	)		$	(5,141,746	)		$	2,486,430				(48	)%

Revenues

Revenues from licenses increased to $1,266,825 for the fiscal year ended December 31, 2009 compared to $316,706 for the fiscal year ended December 31, 2008. The $1,226,825 and $316,706 license revenue in 2009 and in 2008, respectively, represents 12 and 3 months of revenue recognition related to a $1.9 million upfront cash payment received by the Company from sanofi-aventis Canada Inc. in accordance with a license agreement entered into by the Company in the fourth quarter of 2008.

Revenues from royalties declined to $127,762 for the fiscal year ended December 31, 2009 compared to $135,826 for the fiscal year ended December 31, 2008. The decline was primarily due to $34,861 of royalties generated in 2008 from the License Agreement with DUSA that expired on September 30, 2008. Royalties from Hi-Tech increased from $100,975 in 2008 to $127,762 for the same period in 2009. On October 30, 2009, the Company received communication from Hi-Tech that is has discontinued the sale of the product as defined in the license agreement. As a result, the Company does not expect to receive any more royalties from Hi-Tech in the future.

Research & Development Expenses

Research and development expenses decreased to $2,062,933 for the fiscal year ended December 31, 2009 compared to $3,496,150 for the fiscal year ended December 31, 2008. The decrease was primarily due to decreased spending on various European and Canadian filing fees and the timing of certain R&D projects.

General and Administrative Expenses

General and administrative expenses decreased to $2,063,879 for the fiscal year ended December 31, 2009 compared to $2,182,012 for the fiscal year ended December 31, 2008. The decrease is due largely to a decrease in spending on accounting, legal and recruiting fees which countered with a slight increase in payroll due to hiring of additional administrative staff.

Interest Income

Interest income decreased by $80,127 to $10,487 for the year ended December 31, 2009 from $90,614 for the same period in 2008 due to decreased amounts of funds on deposit.

Net Loss

Net loss was $2.6 million, or $0.04 per share, for the fiscal year ended December 31, 2009, compared to a net loss of $5.2 million, or $0.10 per share for the fiscal year ended December 31, 2008. The decrease in net loss is primarily attributed to an increase in revenues of $0.9 million and a decrease in operating expenses totaling $1.5 million, consisting of a decrease in research and development expenses totaling $1.4 million and a decrease in general and administrative expenses totaling $0.1 million.

Liquidity and Capital Resources

Since Winston Labs’s inception, it has financed its operations through the private placement of equity securities and, to a lesser extent, through licensing revenues and product sales. Through December 31, 2009, Winston Labs has raised approximately $54 million from the private placement of Winston Labs and Rodlen common shares.

While the focus going forward is to improve our financial performance, we expect operating losses and negative cash flow to continue for the foreseeable future. We anticipate that our losses may increase from current levels because we expect to incur significant additional costs and expenses related to being a public company, continuing our research and development activities, filing with regulatory agencies (e.g. FDA) as well as developing new compounds and products, advertising, marketing and promotional activities, all of which will involve employing additional personnel as our business expands. Our ability to become profitable depends on our ability to develop products and to generate and sustain substantial revenue related to those products through new license and distribution agreements while maintaining reasonable expense levels.

We assess our liquidity by our ability to generate cash to fund future operations. Key factors in the management of our liquidity are: cash required to fund operating activities including expected operating losses and the levels of accounts receivable and accounts payable; the timing and extent of cash received from milestone payments under license agreements; and financial flexibility to attract long-term equity capital on favorable terms. Historically, cash required to fund on-going business operations has been provided by financing activities and used to fund operations, working capital requirements and investing activities.

Cash, cash equivalents and investments, as well as, net cash provided by or used for operating, investing and financing activities, are summarized in the table below.

						Increase
		December 31,				(Decrease)				December 31,
		2009				During Period				2008
Cash and cash equivalents		$	1,562,848			$	(4,064,065	)		$	5,626,913
Net working capital		$	457,356			$	(2,734,246	)		$	3,191,602

		Year Ended				Change				Year Ended
		December 31,				Between				December 31,
		2009				Periods				2008
Net cash used in operating activities		$	(4,198,636	)		$	(1,136,416	)		$	(3,062,220	)
Net cash provided by (used in) investing activities			141				16,475				(16,334	)
Net cash provided by financing activities			134,430				(4,089,426	)			4,223,856
Net increase (decrease) in cash and cash equivalents		$	(4,064,065	)		$	(5,209,367	)		$	1,145,302

Operating activities. Net cash used in operating activities was $4.2 million in the fiscal year 2009 compared to $3.0 million in the fiscal year 2008. The increase in cash used in operating activities resulted from a decrease in unearned revenue resulting from the upfront payment of $1.9 million in connection with the licensing agreement with sanofi aventis Canada.

Investing activities. Net cash provided by investing activities was $0.01 million in the fiscal year 2009. Our capital expenditures have historically been a small fraction of our overall expenses, since we outsource manufacturing and other capital-intensive functions. The highest annual amount of capital expenditures was $56,000 in the year ended December 31, 2004, reflecting expenditures on computer equipment, phone equipment and furniture to support a field force and increased headcount associated with an unsuccessful product launch. We do not anticipate making significant capital expenditures in the near future.

Historically, our investing activities have included the acquisition or purchase of product rights, such as Psoriatec^® in 2001 and Zostrix^® in 2002, the divestment of product rights, such as Zostrix^® in 2005, and the acquisition or redemption of holdings in other companies, such as the preferred shares in Ovation that we redeemed in 2005.

Financing activities. Net cash provided by financing activities was $0.1 million in the fiscal year 2009, compared to $4.2 million in fiscal 2008.

On November 13, 2007, Winston Labs issued 5,815,851 shares of Winston Labs Series A Preferred Stock and warrants to purchase 4,092,636 shares of Winston Labs Series A Preferred Stock in a private placement for an aggregate purchase price of $5.1 million. Immediately prior to consummation of the Merger, Winston Labs issued 4,187,413 shares of Winston Labs Series B Preferred Stock in a private placement for an aggregate purchase price of $4.0 million. All of the Winston Labs shares and warrants issued in these transactions were exchanged for shares of the Company’s Series A and B Preferred Stock and warrants to purchase the Company’s Series A Preferred Stock upon consummation of the Merger.

On October 30, 2008, the Company and sanofi-aventis Canada Inc. entered into a licensing agreement for the Canadian rights to Civamide, Winston Labs transient receptor potential vanilloid (TRPV-1) modulator, in formulations for topical application. Under the terms of the agreement, sanofi-aventis Canada Inc. owns the rights to develop, manufacture and commercialize Civamide Cream in Canada along with a second generation cream that is currently in development. In return for granting sanofi-aventis Canada Inc. the Canadian rights, Winston Labs received an upfront payment of $1.9 million (US) and will receive an additional $2 million (CAD) upon regulatory approval of Civamide Cream in Canada, certain milestone payments and future royalties on net sales of Civamide or the related second generation cream in Canada. In connection with this agreement, Winston Labs is recognizing the upfront payment of $1.9 million over 18 months. As such, approximately $1,264,000 and $316,000 has been recognized as revenue in 2009 and in 2008, respectively, with the remainder being treated as unearned revenue on our Consolidated Balance Sheet as of December 31, 2009 and 2008.

The Company has incurred significant losses from operations since its inception and expects losses to continue for the foreseeable future. The Company’s success depends primarily on the development and regulatory approval of its product candidates. From inception through December 31, 2009, the Company has incurred cumulative net losses of $49.4 million. Net losses may continue for at least the next several years as the Company proceeds with the development of its product candidates and programs. The size of these losses will depend on the receipt of revenue from its products candidates and programs, if any, and on the level of the Company’s expenses. To achieve profitable operations, the Company must successfully identify, develop, partner and/or commercialize its product candidates and programs. Product candidates developed by the Company will require approval of the U.S. Food and Drug Administration (FDA) or a foreign regulatory authority prior to commercial sales. The regulatory approval process is expensive, time consuming and uncertain, and any denial or delay of approval could have a material adverse effect on the Company’s ability to become profitable or continue operations. Even if approved, the Company’s product candidates may not achieve market acceptance and could face competition.

The Company’s cash and cash equivalents have decreased from $5.6 million as of December 31, 2008 to $1.6 million as of December 31, 2009. The Company will need to raise additional funds in the immediate future to support its operations through December 31, 2010. The Company seeks additional sources of financing through collaborations with third parties, or public or private debt or equity financings. There can be no assurance that additional funds will be available on satisfactory terms, or at all. If adequate funds are not available, the Company may be required to significantly reduce expenses related to its operations and/or delay or reduce the scope of its development programs.

As described herein under Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and the Financial Statements filed as part of this Form 10-K, the Report of Independent Registered Public Accounting Firm contains an emphasis of matter paragraph which indicates that there is substantial doubt about the Company’s ability to continue as a going concern. As described herein under Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources, the Company plans to raise additional funds early in the second quarter of 2010 in order to support its operations through December 31, 2010.

Contractual Obligations

Contractual Obligations		Total				Less than 1 year
Operating Lease Obligations		$	3,000			$	3,000

We lease our facilities on a month-to-month basis and certain equipment under operating leases that expire in 2010 and require payments totaling approximately $3,000. Rental expense for the years ended December 31, 2009 and 2008 was $93,944 and $120,649, respectively.

We enter into contracts in the normal course of business with clinical research organizations and clinical investigators, for third party manufacturing and formulation development. These contracts generally provide for termination with notice, and therefore, our management believes that our non-cancelable obligations under these agreements are not material.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements, with the exception of the above noted operating leases.

Recent Accounting Pronouncements

See Note 2, “Summary of Accounting Policies” in the Notes to Consolidation Financial Statements for a discussion of recent accounting pronouncements and their effect, if any, on the Company.

Item 7A. Quantitative and Qualitative Disclosure About Market Risk

We are a smaller reporting company, as defined by Item 10(f)(1) of Regulation S-K, and we are not required to make the disclosures required by this item pursuant to Item 305(e) of Regulation S-K.

Item 8. Financial Statements and Supplementary Data

Our Financial statements are annexed to this report beginning on page F-1 and are hereby incorporated by reference.

Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure

None.

Item 9A(T). Controls and Procedures

Disclosure Controls and Procedures. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the Exchange Act, including, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Management’s Annual Report on Internal Control Over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934). A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the interim or annual consolidated financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2009 based on the framework in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, our management concluded that, as of December 31, 2009, our internal control over financial reporting was effective based on those criteria.

This annual report on Form 10-K does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

Internal Control Over Financial Reporting. There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Management

As of March 1, 2010, the Company employed 9 full-time individuals, including 4 engaged in research and development activities, and 5 in general and administrative functions. Most of the Company’s management and professional employees have substantial prior experience with other pharmaceutical, biotechnology or medical products and service companies. None of the Company’s employees is a member of a labor union. The Company believes that it maintains good relations with its employees.

The table and text below provide certain descriptive information about our senior management and directors following the Merger.

Name		Age		Position		First Elected				Term Expires
Joel E. Bernstein, M.D.		67		President and Chief Executive Officer; Director			2008				2010
Scott B. Phillips, M.D.		49		Senior Vice President, Scientific Affairs; Director			2008				2010
David Starr		40		Vice President, Chief Financial Officer, Secretary			—				—
Robert A. Yolles		69		Director, Audit Committee Chair, Chairman of the Board			2008				2010
Glenn L. Halpryn		49		Director			2008				2010
Curtis Lockshin, Ph.D.		49		Director			2006				2010
Neal S. Penneys, M.D., Ph.D.		68		Director, Audit Committee Member			2008				2010
Subbarao Uppaluri, Ph.D.		60		Director, Audit Committee Member			2008				2010

Executive Officers

Joel E. Bernstein, M.D., a director of the Company and its President and Chief Executive Officer since the Merger is also Winston Labs’s founder and has served as Winston Labs’s Chief Executive Officer since 1998 and prior to the Merger as a director of Winston Labs since 1998. Dr. Bernstein is also the founder and Chief Executive Officer of Elorac, Inc. and Gideon Pharmaceuticals, Inc. Before founding Winston Labs, Dr. Bernstein was the founder, Chairman, and Chief Executive Officer of GenDerm Corporation, a pharmaceutical company that was acquired by Medicis Pharmaceutical Corporation in 1997. Previously, Dr. Bernstein was head of dermatopharmacology at Northwestern University Medical School and the University of Chicago Pritzker School of Medicine. Dr. Bernstein has also held senior scientific positions at Abbott Laboratories and Schering-Plough Corporation. He has authored more than 125 scientific publications and holds over 150 patents. Dr. Bernstein received a B.A. from Carleton College and an M.D. from the University of Chicago Pritzker School of Medicine, where he received the Roche Award for ranking first in his class. He completed specialty training programs in both dermatology and clinical pharmacology at the University of Chicago. Dr. Bernstein is a past president of the University of Chicago Medical and Biological Alumni Association. In 1988, he was chosen as the Illinois high-tech entrepreneur of the year by KPMG and the State of Illinois. Dr. Bernstein was also the founder and non-executive chairman of Sirius Laboratories, Inc., (acquired in 2006 by DUSA Pharmaceuticals) and a co-founder of Ovation Pharmaceuticals (acquired by Lundbeck in 2009). Based on Dr. Bernstein’s familiarity with the Company as an incumbent member of the Company’s Board of Directors and an executive officer of the Company and his knowledge and expertise in the pharmaceutical industry, the Corporate Governance and Nominating Committee of the Board of Directors concluded that Dr. Bernstein has the requisite experience, qualifications, attributes and skill necessary to serve as a member of the Board of Directors.

Scott B. Phillips, M.D., a director of the Company and its Senior Vice President, Scientific Affairs since the Merger has also been Winston Labs’s Senior Vice President, Scientific Affairs since April 1999. Previously Director of Drug Discovery at GenDerm Corporation, Dr. Phillips has 15 years of experience in the pharmaceutical industry. In addition, he has been Chief of the Clinical Investigations Unit at Harvard Medical School and Clinical Assistant Professor of Dermatology and Medicine at the University of Chicago Pritzker School of Medicine. He received a B.A. in biology from Cornell University and an M.D. from Harvard University. Based on Dr. Phillips’s familiarity with the Company as an incumbent member of the Company’s Board of Directors and an executive officer of the Company and his knowledge and expertise in the pharmaceutical industry, the Corporate Governance and Nominating Committee of the Board of Directors concluded that Dr. Phillips has the requisite experience, qualifications, attributes and skill necessary to serve as a member of the Board of Directors.

David Starr, the Company’s Vice President and Chief Financial Officer since the Merger has also been Winston Labs’s Vice President and Chief Financial Officer since November 2007 and he has served as Winston Lab’s sole director since the Merger. From August 2005 to October 2007, Mr. Starr was a Chief Financial Officer of DayOne Health, which set up and managed bariatric surgery programs for ambulatory surgery centers. From October 2003 to August 2005, Mr. Starr was a Chief Financial Officer and Director of Operations Research of MSO Medical, a national obesity disease management company serving hospitals with a proprietary version of the gastric bypass surgery. From March 1998 to September 2003, Mr. Starr served in senior management positions at several technology companies. From September 1991 to March 1998, Mr. Starr was an audit manager with Arthur Andersen’s Enterprise Group. Mr. Starr has an MBA from Northwestern’s Kellogg Graduate School of Business and a BS in Accounting from Indiana University, Bloomington.

Outside Directors

Robert A. Yolles, J.D., the chairman of the Company’s board of directors, served as a director of Winston Labs prior to the Merger since 2002, and is a retired partner of the international law firm Jones Day. While a partner, he served as the chair of the Firm’s domestic and international finance practices and, previously, co-chair of the Firm’s corporate practice. He received a B.A. and J.D. from Northwestern University. Based on Mr. Yolles’s familiarity with the Company as an incumbent member of the Company’s Board of Directors and as a Chairperson of its Audit Committee and his knowledge and expertise in numerous aspects of managing a rapidly-growing enterprise, the Corporate Governance and Nominating Committee of the Board of Directors concluded that Mr. Yolles has the requisite experience, qualifications, attributes and skill necessary to serve as a member of the Board of Directors.

Glenn L. Halpryn, was Chairman of the Board and Chief Executive Officer of Getting Ready Corporation prior to the Merger. Mr. Halpryn has been a Director of the Company since the Merger. Mr. Halpryn was a Director of Ivax Diagnostics, Inc., an AMEX listed corporation specializing in the manufacturing and distribution of diagnostic products from October 2002 until September 2008. Mr. Halpryn currently serves on the board of directors of Sorrento Therapeutics (OTCBB: SRNE), a biopharmaceutical company focused on applying a proprietary technology platform for the discovery and development of human therapeutic antibodies for the treatment of a variety of disease conditions, Castle Brands, Inc., (AMEX: ROX), a developer and international marketer of premium branded spirits, and SearchMedia Holdings Limited, the second largest outdoor billboard and in-elevator advertiser in China Mr. Halpryn received a B.S. in Business Administration from the University of Florida. Based on Mr. Halpryn’s familiarity with the Company as an incumbent member of the Company’s Board of Directors and as a Chairperson of its Compensation Committee, the Corporate Governance and Nominating Committee of the Board of Directors concluded that Mr. Halpryn has the requisite experience, qualifications, attributes and skill necessary to serve as a member of the Board of Directors.

Curtis Lockshin, Ph.D. was a director of Getting Ready Corporation prior to the Merger. Dr. Lockshin has been a Director of the Company since the Merger. Since 2003, Dr. Lockshin has been an independent pharmaceutical and life sciences consultant, focused on small companies that seek to leverage their technology assets inside healthcare, biotechnology and security sectors. At Sepracor Inc. from 1998 to 2002, as a Scientist, Associate Director, and Director of Discovery Biology & Informatics, Dr. Lockshin was instrumental in establishing the New Leads program, which delivered novel chemical entities into the preclinical pipeline. In 2002-2003, while Director of Discovery Biology at Beyond Genomics, Inc., Dr. Lockshin co-developed strategies for utilizing proprietary technology platforms in clinical trial optimization and prediction of off-target drug activities. Since 2004, Dr. Lockshin has served on the Board of Directors of the Ruth K. Broad Biomedical Research Foundation, a Duke University support corporation, which supports basic research related to Alzheimer’s disease and neurodegeneration via intramural, extramural, and international grants. From July, 2006 to December, 2006, Dr. Lockshin was a director of Orthodontix, a publicly traded shell company that effected a reverse merger with a biotechnology company, Protalix (AMEX: PLX). From September, 2007 to September, 2008, Dr. Lockshin was a director of clickNsettle.com, a publicly traded shell company that effected a reverse merger with an orthopedic medical device company, Cardo Medical, Inc. (OTCBB: CDOM). From July 2008 to September, 2009, Dr. Lockshin was a director of QuikByte Software, Inc., a publicly traded shell company that effected a reverse merger with a biopharmaceutical company, Sorrento Therapeutics (OTCBB: SRNE), where he continues to serve as a director. Dr. Lockshin is a co-inventor on several U.S. patents covering pharmaceuticals, biomaterials, and optics for remote biochemical sensing. He holds a Bachelor’s degree in Life Sciences and a Ph.D. in Biological Chemistry, both from the Massachusetts Institute of Technology. Based on Dr. Lockshin’s familiarity with the Company as an incumbent member of the Company’s Board of Directors and his knowledge of the pharmaceutical industry, the Corporate Governance and Nominating Committee of the Board of Directors concluded that Dr. Lockshin has the requisite experience, qualifications, attributes and skill necessary to serve as a member of the Board of Directors.

Neal S. Penneys, M.D., Ph.D., is currently a dermatopathologist with AmeriPath, American Laboratories, Fort Lauderdale, Florida. Prior to joining AmeriPath, from 1999-2001 Dr. Penneys served as Associate Dean, Chief Operating Officer, Saint Louis University Health Sciences Center, and from 1995-1999 as Chairperson, Department of Dermatology, Saint Louis University School of Medicine. Dr. Penneys has served on many Boards, including those of the audit committee of the American Academy of Dermatology, the American Society of Dermatopathology, GenDerm Corporation, DUSA Pharmaceuticals, Inc. (NASDAQ: DUSA) and Sirius Laboratories, Inc. He was a senior consultant to the FDA from 1989-2006, and from 1985-2004 served on several FDA Advisory Panels including those for Dermatologic Drugs and for Orphan Drugs. Dr. Penneys received a B.A. from Franklin and Marshall College, an M.D. from the University of Pennsylvania, a Ph.D. from the University of Miami, and an M.B.A. from St. Louis University. Based on Dr. Penneys’s familiarity with the Company as an incumbent member of the Company’s Board of Directors and his knowledge of the pharmaceutical industry, the Corporate Governance and Nominating Committee of the Board of Directors concluded that Dr. Penneys has the requisite experience, qualifications, attributes and skill necessary to serve as a member of the Board of Directors.

Subbarao Uppaluri, Ph.D., Dr. Uppaluri has served as Senior Vice President and Chief Financial Officer of OPKO Health Inc. since May 2007. Dr. Uppaluri served as the Vice President, Strategic Planning and Treasurer of IVAX from 1997 until December 2006. Before joining IVAX, from 1987 to August 1996, Dr. Uppaluri was Senior Vice President, Senior Financial Officer and Chief Investment Officer with Intercontinental Bank, a publicly traded commercial bank in Florida. In addition, he served in various positions, including Senior Vice President, Chief Investment Officer and Controller, at Peninsula Federal Savings & Loan Association, a publicly traded Florida S&L, from October 1983 to 1987. His prior employment, during 1974 to 1983, included engineering, marketing and research positions with multinational companies and research institutes in

India and the United States. Dr. Uppaluri currently serves on the board of directors of Non-Invasive Monitoring Systems, Inc., (OTCBB:NIMU), a medical device company, Kidville, Inc. (OTCBB:KVIL), which operates large, upscale facilities, catering to newborns through five-year-old children and their families and offers a wide range of developmental classes for newborns- 5 years old and Cardo Medical, Inc., an early-stage orthopedic medical device company specializing in designing, developing and marketing reconstructive joint devices and spinal surgical devices (OTCBB:CDOM). From June 1, 2007 to October 30, 2009, Dr. Uppaluri was a director of Ideation Acquisition Corporation, a publicly traded SPAC (Special Purpose Acquisition Corporation), seeking to effect a merger in the digital media sector. Based on Dr. Uppaluri’s familiarity with the Company as an incumbent member of the Company’s Board of Directors and his knowledge and expertise in the pharmaceutical industry, the Corporate Governance and Nominating Committee of the Board of Directors concluded that Dr. Uppaluri has the requisite experience, qualifications, attributes and skill necessary to serve as a member of the Board of Directors.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers, directors and persons who beneficially own more than 10% of a registered class of our securities to file reports of ownership and changes in ownership with the SEC. Based solely on a review of copies of such forms submitted to the Company, we believe that all persons subject to the requirements of Section 16(a) filed such reports on a timely basis in 2009, except as follows: (1) a Form 4 reporting an exercise of common stock options by Dr. Joel Bernstein was filed after the due date; (2) Forms 4, each reporting a grant of common stock options to Joel E. Bernstein, M.D., Scott B. Phillips, M.D. and David Starr, respectively, were filed after the due date; and (3) Forms 4, each reporting a grant of common stock options to Dr. Curtis Lockshin, Ph.D., Robert A. Yolles, Glenn L. Halpryn, Subbarao Uppaluri, Ph.D. and Neal S. Penneys, M.D., Ph.D., respectively, were filed after the due date.

Code of Business Conduct and Ethics

The Company has adopted a code of business conduct and ethics within the meaning of Item 406 of Regulation S-K that applies to its officers (including our principal executive officer and principal financial officer) and employees. The code of ethics is posted on the Company’s website at www.winstonlabs.com. The Company shall include on its website any amendments to, or waivers from, a provision of its code of ethics that applies to the Company’s chief executive officer and chief financial officer, or persons performing similar functions, that relate to any element of the code of business conduct and ethics.

Stockholder Communications with the Board of Directors

All stockholder communications must (i) be addressed to the Chief Financial Officer of the Company, Winston Pharmaceuticals, Inc., 100 North Fairway Drive, Suite 134, Vernon Hills, Illinois, 60061, or at the CFO’s internet e-mail address at dstarr@winstonlabs.com, (ii) be in writing either in print or electronic format, (iii) be signed by the stockholder sending the communication, (iv) indicate whether the communication is intended for a specific director(s), the entire Board of Directors, the Nominating and Governance Committee, or all non- management directors, (v) if the communication relates to a stockholder proposal or director nominee, identify the number of shares held by the stockholder, the length of time such shares have been held, and the stockholder’s intention to hold or dispose of such shares, provided that the Board of Directors and the Nominating and Governance Committee will not entertain stockholder proposals or stockholder nominations from stockholders who do not meet the eligibility and procedural criteria for submission of shareholder proposals under SEC Rule 14a-8 of Regulation 14A under the Exchange Act, and (vi) if the communication relates to a director nominee being recommended by the stockholder, must include appropriate biographical information of the candidate.

Upon receipt of a stockholder communication that is compliant with the requirements identified above, the Chief Financial Officer shall promptly deliver such communication to the appropriate board or committee member(s) identified by the stockholder as the intended recipient of such communication by forwarding the communication to either the Chairman of the Board of Directors with a copy to the chief executive officer, the Chairman of the Nominating and Governance Committee, or the non-management directors, as the case may be.

The Chief Financial Officer may, in his sole discretion and acting in good faith, provide copies of any such stockholder communication to any one or more directors and executive officers of the Company, except that in processing any stockholder communication addressed to the non-management directors, the Chief Financial Officer may not copy any member of management in forwarding such communication to such directors.

Audit Committee

The Board of Directors has established an audit committee in accordance with Section 3(a)(58)(A) of the Exchange Act. The Board has designated from among its members Robert A. Yolles, Neal S. Penneys and Subbarao Uppaluri as the members of the Audit Committee. The primary functions of the Audit Committee are to represent and assist the Board of Directors with the oversight of:

	•		appointing, approving the compensation of, and assessing the independence of the Company’s independent auditors;
	•		overseeing the work of the Company’s independent auditors, including through the receipt and consideration of certain reports from the independent auditors;

	•		reviewing and discussing with management and the independent auditors the Company’s annual and quarterly financial statements and related disclosures;
	•		coordinating the Board of Director’s oversight of the Company’s internal control over financial reporting, disclosure controls and procedures and code of business conduct and ethics;
	•		establishing procedures for the receipt and retention of accounting related complaints and concerns;
	•		meeting independently with the Company’s independent auditors and management; and
	•		preparing the audit committee report required by SEC rules.

The Board of Directors has determined that Subbarao Uppaluri is an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K.

Item 11. Executive Compensation

Summary Compensation Table

The following table sets forth information concerning the compensation paid by Winston Labs and/or the Company, as applicable, during the fiscal years ended December 31, 2009 and 2008 to the Company’s Chief Executive Officer, the Company’s former Chief Executive Officer and the next two most highly compensated executive officers whose salary and bonus for the year exceeded $100,000 and who served as an executive officer of each of the respective companies as of, or during the fiscal year ended, December 31, 2009 (each, a “Named Executive Officer”).

														Option				All Other				Total
Name and Principal						Salary				Bonus				Awards				Compensation				Compensation
Position		Year				($)				($)				($)(1)				($)(2)				($)
Joel E. Bernstein, M.D.			2009				265,307				—				218,000				23,593				506,900
President and Chief			2008				242,000				25,000				—				23,570				290,570
Executive Officer of the Company and; Director of the Company
Scott B. Phillips, M.D.			2009				250,000				—				109,000				22,588				381,588
Senior Vice President,			2008				221,000				14,500				—				20,840				256,340
Scientific Affairs of the Company and; Director of the Company
David Starr, Vice			2009				200,000				—				163,500				11,530				375,030
President, Chief			2008				200,000				14,500				—				3,883				218,383
Financial Officer, Secretary of the Company and; Director of Winston

Outstanding Equity Awards at Fiscal Year-End

The following table provides information regarding exercisable and unexercisable option and stock awards held by the Named Executive Officers as of December 31, 2009.

Number of

Securities

Underlying

Unexercised

Options

Option

Option

(#)

Exercise

Expiration

Name

Exercisable

Price ($)

Date

Joel E. Bernstein, M.D.

661,913

0.37

4/6/2010

100,000

1.53

4/7/2019

Scott B. Phillips, M.D.

205,193

0.33

12/10/2012

231,670

0.33

1/12/2014

661,913

0.34

4/6/2015

50,000

1.53

4/7/2019

David Starr

75,000

1.53

4/7/2019

Narrative Disclosure to Summary Compensation Table; Additional Narrative Disclosure

Employment and Consulting Agreements; Termination, Severance and Change-in-Control Matters

The Company and Winston Labs have entered into certain employment and severance agreements with certain of our Named Executive Officers. Such agreements are summarized below. Such summaries are intended solely as a synopsis of the material terms of such agreements and are qualified in their entirety by the terms and provisions of such agreements.

Joel E. Bernstein, M.D. Employment Agreement

In connection with the Merger, we entered into an employment agreement with Dr. Joel Bernstein, effective on the date of the Merger. The agreement provides that Dr. Bernstein will serve as President and Chief Executive Officer, or Vice Chairman in the event that the Board hires a new Chief Executive, for a term of two years. His base salary under the agreement is $260,000 for the first year of the agreement and $280,000 for the second. Dr. Bernstein will be eligible to receive bonuses in such amounts and in such form as may be determined by the Board if awarded by the Board, as well as medical insurance, life insurance, 401(k) participation and six weeks of vacation annually.

Under the agreement, Dr. Bernstein is allowed to pursue other employment during the period he is employed by us, provided he devotes at least 60% of his working time to us. He has also assigned to Winston Labs all patents relating to pharmaceutical products that he invents following the date of the agreement, except those related to dermatological and ophthalmic products.

The agreement provides that we may terminate Dr. Bernstein for any reason; however, if such termination is not due to Cause, death or Disability, we will be required to pay the following:

	•		the base salary in effect on the date of termination for the twelve months following termination;
	•		life insurance benefits, to the same extent as provided to similarly situated employees, for the twelve months following termination;
	•		medical insurance continuation coverage under COBRA up to twelve months following termination; and
	•		all benefits not fully vested will vest on the date of termination.

Dr. Bernstein will not be entitled to any such compensation or benefits if he breaches any of the covenants in the agreement relating to the protection of confidential information, non-disclosure, non-competition and non-solicitation. He will also not be entitled to any compensation or other benefits under the Agreement if his employment is terminated for Cause.

As used in Dr. Bernstein’s employment agreement, the following terms have the following definitions:

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

“Disability” means the incapacity of Dr. Bernstein due to physical or mental illness where Dr. Bernstein has been unable to perform his duties during the preceding 90 days, or where said incapacity has been determined to exist or have existed such that he is or was unable to perform his previously assigned duties, and that such incapacity continued, has continued and/or will continue for such period of time for at least 90 days during any consecutive 365 day period by either (i) the liability insurance carrier for the Company or its subsidiaries or (ii) the concurring opinions of two board certified, licensed physicians (as selected one by the Company and one by Dr. Bernstein); provided that Dr. Bernstein shall, within 15 days after the written request of the Company or any subsidiary or affiliate thereof, including without limitation Winston Labs, submit to a physical and/or mental examination for purposes of determining Disability.

Scott B. Phillips, M.D. — Severance Agreements

Winston Labs has entered into two separate agreements dated as of October 8, 2003 (the “Phillips Change in Control Agreement”) and January 26, 2006 (the “Phillips Severance Letter”, and collectively with the Change in Control Agreement, the “Phillips Severance Agreements”) with Scott B. Phillips, its Senior Vice President and Chief Scientific Officer, which together outline the terms upon which Dr. Phillips’ employment with Winston Labs may be terminated and the conditions upon which certain severance payments will be made to Dr. Phillips in the event of such termination, including termination of his employment in connection with a change in control of Winston Labs.

Pursuant to the terms of the Phillips Severance Letter, Winston Labs may terminate Dr. Phillips’ employment at any time upon thirty (30) days written notice. Dr. Phillips may terminate his employment with Winston Labs at any time upon fourteen (14) days written notice. If Dr. Phillips’ employment is terminated by Winston Labs, then Dr. Phillips is entitled to receive by reason of such termination his base salary and life insurance benefits in effect at the time of such termination for an additional six (6) months from the termination date. Any COBRA benefits shall begin at the conclusion of such six (6) month period. All other benefits that are not fully vested on the termination date shall cease and be extinguished on such date. If Dr. Phillips terminates his employment for any reason, all salary and benefits that are not fully-vested, including any and all unvested bonuses, shall cease and be extinguished on the termination date.

Pursuant to the terms of the Phillips Change in Control Agreement, in the event Dr. Phillips’ employment with Winston Labs is terminated by Winston Labs following a change in control of Winston Labs, Dr. Phillips shall be entitled to receive the following severance compensation (“Change in Control Severance”): (i) a lump-sum severance payment equal to two times his annual salary at the highest rate in effect at any time prior to such termination, plus incentive pay in an amount not less than the highest incentive, bonus or other cash payment made to Dr. Phillips in addition to his salary in any of the three years immediately preceding the year in which the change in control occurred and (ii) for a period of twenty-four (24) months following the termination date, welfare benefits (but excluding stock option, stock purchase, stock appreciation and similar compensatory benefits) substantially similar to those which Dr. Phillips was entitled to receive immediately prior to the termination date, reduced to the extent comparable welfare benefits are actually received by Dr. Phillips from another employer during such period.

Dr. Phillips shall also be entitled to receive Change in Control Severance following a change in control of Winston Labs, if he terminates his employment following: (i) failure by Winston Labs to elect or re-elect Dr. Phillips to the position (or a substantially equivalent position) he held immediately prior to the change in control, or the removal of Dr. Phillips as a director of Winston Labs if he was a director immediately prior to the change in control; (ii) a significant adverse change in the nature or scope of Dr. Phillips’ duties, or a reduction in his base pay, incentive pay or benefits; (iii) a good faith determination by Dr. Phillips that a change in circumstances (e.g. a change in the scope of business or Dr. Phillips’ responsibilities) has occurred following a change in control; (iv) the liquidation, dissolution, merger, consolidation, or reorganization or sale of substantially all of Winston Labs’s assets, unless the successor assumes all duties and obligations under the Phillips Change in Control Severance Agreement; (v) the relocation of Winston Labs’s principal executive offices or of Dr. Phillips’ principal location of work in excess of 25 miles from the location thereof immediately prior to the change in control, or the requirement that Dr. Phillips travel away from his office in the course of discharging his duties to Winston Labs at least 20% more often than was required immediately prior to the change in control; and (vi) the material breach of the Phillips Change in Control Agreement by Winston Labs or its successor. Dr. Phillips will not be entitled to receive Change in Control Severance if his employment is terminated for Cause or due to Dr. Phillips’ death or permanent disability.

As used in the Phillips Change in Control Agreement, “Cause” means:

	(i)		an intentional act of fraud, embezzlement or theft in connection with Dr. Phillips’ duties or in the course of his employment with Winston Labs or a subsidiary thereof;
	(ii)		intentional wrongful damage to the property of Winston Labs or a subsidiary thereof;
	(iii)		intentional wrongful disclosure of secret processes or confidential information of Winston Labs or a subsidiary thereof; or
	(iv)		intentional wrongful engagement by Dr. Phillips in the management of any business enterprise that engages in substantial and direct competition with Winston Labs and such enterprise’s sales of any product or service competitive with any of Winston Labs’s products or services amounted to 10% of the net sales of such enterprise and of Winston Labs for their respective most recently-completed fiscal years.

Compensation of Directors

The following table provides information regarding compensation of directors for the year ended December 31, 2009.

		Fees
		earned or
		Paid in				Option
		Cash				Awards				Total
Name		($)				($)(1)				($)
Robert A. Yolles			5,000				43,830				48,830
Glenn L. Halpryn			5,000				43,830				48,830
Curtis Lockshin Ph.D.			5,000				40,178				45,178
Neal S. Penneys, M.D., Ph.D.			5,000				40,178				45,178
Subbarao Uppaluri, Ph.D.			5,000				40,178				45,178

Each of our non-employee directors currently receives $1,250 per quarter. Directors do not receive additional compensation for attendance at meetings. Directors who are also employees do not receive compensation for their service on the Board.

Compensation Committee Interlocks and Insider participation; Compensation Committee Report

We are a “smaller reporting company” as defined by Item 10(f)(1) of Regulation S-K and, pursuant to Item 407(g)(2) of Regulation S-K, we are not required to make the disclosures otherwise required by Item 407(e)(4) and (e)(5) of Regulation S-K.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

2009 Equity Compensation Plan Information

Number of

securities

remaining

available for

future issuance

Number of

Weighted

under

securities to

average

equity

be issued

exercise price

compensation

upon exercise

of

plans

of outstanding

outstanding

(excluding

options,

options,

securities

warrants and

warrants and

reflected in

rights

rights

column (a)

(a)

(b)

(c)

Equity compensation plans approved by security holders

3,041,985

$

0.50

6,666,070

Effective April 1, 2009, the Company’s Board of Directors adopted the Company’s Omnibus Incentive Plan (the “Plan”). The Plan was established by amending, restating and merging the Company’s existing Stock Option Plan for Non-Employee directors, and the 1999 Stock Option Plan (collectively, the “Prior Plans”), with and into the Plan. The Plan was approved by the Company’s shareholders at the Company’s annual meeting held on June 17, 2009.

The Plan provides for a broad range of awards to attract, motivate and retain qualified and talented employees, directors, consultants and other persons who provide services to the Company (“Participants”), including stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, and other stock-based awards and cash-based awards (“Awards”). The Plan promotes the success and enhances the value of the Company by linking the personal interests of Participants to those of the Company’s stockholders, and by providing Participants with an incentive for outstanding performance.

Awards under the Plan will be determined by a committee of the Board of Directors (the “Committee”), the members of which are selected by the Board of Directors. Currently the Plan provides that the Compensation Committee will serve as the administrator. The number of shares of Company common stock (“Shares”) as to which an Award is granted and to whom any Award is granted shall be determined by the Committee, subject to the provisions of the Plan. Awards may be made exercisable or settled at such prices and may be made terminable under such terms as are established by the Committee, to the extent not otherwise inconsistent with the terms of the Plan.

Prior to the merger of the Prior Plans with and into the Plan, there were 9,708,055 Shares reserved for issuance for awards under the Prior Plans, including 3,196,487 Shares reserved for outstanding awards, and 5,922,466 Shares for future awards. Upon the merger of the Prior Plans with and into the Plan, effective April 1, 2009, there was no change to such numbers, with 9,708,055 Shares reserved for issuance for Awards under the Plan, of which 3,196,487 Shares were reserved for outstanding Awards, and 5,922,466 Shares for future Awards.

On April 7, 2009, pursuant to the terms of the Plan, the Compensation Committee of the Board of Directors granted 267,000 non-qualified stock options to purchase Shares to employees of the Company, including 225,000 options to key officers of the Company. All of the options expire on April 7, 2019, vest in five equal installments commencing April 7, 2010, and have an exercise price of $1.53, as determined by the Compensation Committee of the Board of Directors in accordance with the terms of the Plan.

On September 25, 2009 pursuant to the terms of the Plan, the Compensation committee of the Board of Directors granted 142,500 non-qualified stock options to purchase shares to non-employee directors of the Company. All of the options expire on September 25, 2019, vest in five equal installments commencing September 25, 2010 and have an exercise price of $1.36 as determined by the Compensation Committee of the Board of Directors in accordance with the terms of the Plan.

Voting Securities and Principal Stockholders

Prior to the 8-1 reverse stock split described below, our voting securities consisted of our common stock, par value $0.001 per share, of which 440,851,441 shares were outstanding, our Series A Convertible Preferred Stock, of which 101,849 shares were outstanding, and our Series B Convertible Preferred Stock, of which 73,332 shares were outstanding. Each share of preferred stock was convertible into 1,000 shares of common stock. The holders of our voting securities are entitled to one vote for each outstanding share of common stock, including outstanding shares of preferred stock on an as-converted basis, on all matters submitted to our stockholders.

On December 15, 2008 the Company amended its Certificate of Incorporation to provide for the reduction of the total number of issued and outstanding shares of the Company’s common stock, par value $.001 per share (“Common Stock”) and its preferred stock, par value $.001 per share (“Preferred Stock”), by exchanging each eight (8) shares of such issued and outstanding shares of Common Stock and Preferred Stock for one (1) share of Common Stock or Preferred Stock, respectively.

On September 24, 2009, each outstanding share of Company Series A Convertible Preferred Stock (12,730) and Series B Convertible Preferred Stock (9,157) automatically converted into 1,000 fully-paid, non-assessable shares of the Company’s common stock, par value $.001 per share. In addition, in connection with such conversion, each outstanding warrant to purchase shares of Series A Convertible Preferred Stock automatically converted into the right to acquire 1,000 shares of Common Stock upon the exercise of such warrant, at an exercise price of $0.39 per share of Common Stock.

As of March 1, 2010, our voting securities consist of our common stock, par value $0.001 per share, of which 77,408,893 shares are outstanding. The following tables contain information regarding record ownership of our common stock as or March 1, 2010 held by:

	•		persons who own beneficially more than 5% of our outstanding voting securities,
	•		our directors,
	•		named executive officers, and
	•		all of our directors and officers as a group.

Management and Directors:		Shares Beneficially Owned (14)				Percentage Ownership
Joel E. Bernstein, M.D. (1)			26,498,432				29.63	%
Scott B. Phillips, M.D. (2)			1,810,433				2.02	%
David Starr (3)			75,000				*
Curtis Lockshin, Ph.D. (4)			28,750				*
Robert A. Yolles (5)			398,665				*
Glenn L. Halpryn (6)			384,781				*
Neal Penneys, M.D., Ph.D. (7)			439,362				*
Subbarao Uppaluri, Ph.D. (8)			326,538				*
All officers and directors As a group (8 people)			29,961,961				33.51	%

5% Stockholders		Shares Beneficially Owned				Percentage Ownership
Frost Gamma Investments (9), (10)			26,574,659				29.72	%
Jeffrey Bernstein (11)			5,170,824				5.78	%
David Bernstein (12)			4,982,129				5.57	%
Rebecca Zelken (13)			4,983,829				5.57	%

Item 13. Certain Relationships and Related Transactions, and Director Independence

Certain Relationships and Related Person Transactions

PFS Acquisition

On February 12, 2010, Pharmaceutical Financial Syndicate, LLC (“PFS”), whose members include Dr. Joel E. Bernstein, the President and Chief Executive Officer and Robert A. Yolles and Neal S. Penneys, directors of the Company, executed a letter of intent (“LOI”) with Frost Gamma Investments Trust, Subbarao Uppaluri, a director of the company, and certain other shareholders of the Company (collectively, the “Frost Group”), to acquire 100% of the Company’s capital stock (the “Acquisition”) beneficially owned by all of the members of the Frost Group consisting of an aggregate of 18,399,271 outstanding shares of common stock and warrants to purchase an aggregate of 8,958,975 shares of common stock (collectively, the “Acquired Securities”).

As provided in the LOI, consummation of the Acquisition is subject to a number of conditions, including the parties entering into a definitive acquisition agreement. The LOI also provides that simultaneous with the completion of the Acquisition, three of the Company’s directors, namely Subbarao Uppaluri, Glenn Halpryn and Curtis Lockshin, shall resign as directors of the Company, and each of Messrs. Uppaluri, Halpryn and Lockshin have advised the Company that they have consented to resign upon completion of the Acquisition. Upon completion of the Acquisition, as the manager of PFS, Dr. Bernstein would be deemed to be the beneficial owner of all of the Acquired Securities, however Dr. Bernstein intends to disclaim beneficial ownership of those Acquired Securities in which he does not have a pecuniary interest through PFS.

Opko License

On September 19, 2007, Winston Labs entered into an exclusive technology license agreement with Opko Ophthalmologics, LLC (“OPKO”). Under the terms of the license agreement, Winston Labs granted OPKO an exclusive license to the proprietary rights of certain products (pharmaceutical compositions or preparations containing the active ingredient civamide in formulations suitable for use in the therapeutic or preventative treatment of ophthalmic conditions in humans). In exchange, OPKO paid Winston Labs a license fee of $100,000 and is required to pay a 10% royalty on sales of the product. In addition, the agreement requires OPKO to pay Winston Labs a non-refundable payment of $5,000,000 upon approval of a marketing authorization by OPKO on the product described in the agreement. In addition, under the terms of the agreement, OPKO and Winston Labs agreed to equally share the cost related to manufacturing and clinical supplies of Civamide Nasal solution. During 2009 and 2008, OPKO reimbursed Winston Labs approximately $111,539 and $80,000, respectively for such costs. In addition, the agreement calls for OPKO to reimburse Winston for certain legal expenses Winston Labs has incurred related to keratoconjunctivitis. In 2009 and 2008, approximately $38,800 and $38,000, respectively, of legal fees were billed to OPKO, of which approximately $7,000 and $38,000 is included in related party receivable on the Consolidated Balance Sheets as of December 31, 2009 and 2008. Subsequent to December 31, 2009 and 2008, respectively, OPKO paid $7,000 and $38,000 of the balance due. Phillip Frost, M.D. is the Chairman and Chief Executive Officer of OPKO’s parent company, Opko Health, Inc. (“Opko Health”), and as of December 31, 2009 was the beneficial owner of more than 50% of Opko Health’s common stock. As of December 31, 2009, Dr. Frost is also the indirect beneficial owner of 26,574,659 shares of the Company’s capital stock on a fully diluted basis (29.7% of the total issued and outstanding shares), including 8,779,797 shares of common stock underlying warrants. Furthermore, Subbarao Uppaluri, Ph.D., a director of the Company and the Senior Vice President — Chief Financial Officer of Opko Health, is the beneficial owner of 326,538 shares of the Company’s capital stock on a fully-diluted basis, including 27,500 shares of common stock underlying options and 89,589 shares of common stock underlying warrants.

On February 24, 2010, the Company received communications from Opko that it was terminating the license agreement effective May 24, 2010. As a result, all of Opko’s rights to certain products, as defined in the agreement, will revert back to the Company.

Elorac License

On August 14, 2007, Winston Labs entered into an exclusive technology license agreement with Exopharma, Inc., now known as Elorac, Inc. (“Elorac”). Robert Yolles, a director of the Company is also a director of Elorac. In addition, Elorac is an entity that is controlled by Dr. Bernstein, CEO of Winston Labs and the Company. Under the terms of the license agreement, Winston Labs granted Elorac an exclusive license to the proprietary rights of certain products (£ 0.025% civamide with the stated indication of psoriasis of the skin). In exchange, Elorac paid Winston Labs a license fee of $100,000 and is required to pay a 9% royalty on sales of the product. In addition, the agreement requires Elorac to pay Winston Labs a non-refundable payment of $250,000 upon approval of a Marketing Authorization by Elorac on the product(s) described in the agreement. On October 27, 2008 Winston Labs and Elorac mutually terminated the above license agreement. As a result of this mutual termination, Winston Labs paid Elorac $105,000 in November 2007, in exchange for Winston Labs retaining all the proprietary rights under the original agreement. Since inception, Elorac has been located in the same offices as Winston Labs and therefore has shared in certain of Winston Labs expenses such as rent, utilities, internet usage, etc. The amount of Elorac’s share of such expenses is based on various allocation factors related to a particular expense. Winston Labs has received approximately $162,977 and $128,323 in 2009 and in 2008, respectively for such services, which are included as a reduction of Winston Labs expenses on the Consolidated Statement of Operations. Amounts due from Elorac of $2,601 and $0 as of December 31, 2009 and 2008, respectively, are included in related party receivables in the Company’s Consolidated Balance Sheets.

Gideon Pharmaceuticals, Inc.

Gideon Pharmaceuticals, Inc. (“Gideon”) is a corporation whose chairman and sole director is Joel E. Bernstein, M.D., president and CEO of the Company. Gideon reimburses the Company for certain expenses that the Company incurs on behalf of Gideon. Amounts due from Gideon of $12,675 and $0 as of December 31, 2009 and 2008, respectively, are included in related party receivable on the Consolidated Balance Sheets.

Sirius (DUSA) License

On January 30, 2006, Winston Labs licensed to Sirius Laboratories, Inc., a company founded by Dr. Bernstein, the rights to market products containing anthralin owned by Winston Labs, including a marketed 1% anthralin cream trade name Psoriatec^® . The license had a two-year term which expired on January 31, 2008 and provided for the following key terms: (i) a 25% royalty on net sales; (ii) a $300,000 minimum royalty; and (iii) a $750,000 purchase option.

This agreement was assigned by Sirius to DUSA Pharmaceuticals, Inc. following DUSA’s purchase of Sirius. This license had been extended until September 30, 2008 by mutual written consent of the parties and the extension provides for continuing of the 25% royalty on net sales but eliminates the minimum royalty and purchase option. This agreement expired on September 30, 2008. Under the technology license agreement, Winston Labs recorded royalty revenue of $0 and $34,861 for the years ended December 31, 2009 and 2008, respectively. In July 2008, the Company learned that DUSA had breached a license agreement with Winston Labs. Winston Labs initiated arbitration in October 2008 to recover the damages caused by this breach. In June 2009, DUSA settled this matter by agreeing to pay $75,000 in damages. This settlement is included in other income in the Consolidated Statements of Operations.

Packer’s-Pine Corporation

In 2006 and 2007, Winston Labs assisted Packer’s-Pine Corporation (“Packer’s”) with distribution of certain personal care products and administration. Packer’s is a corporation whose chairman is Dr. Bernstein, president and CEO of the Company and two directors of the Company served on the board of directors of Packer’s. Under this arrangement, Packer’s reimbursed Winston Labs for direct costs. In 2008, Packer’s merged into Elorac.

Consulting Agreement with Jeffrey Bernstein

On September 30, 2007, Dr. Jeffrey Bernstein resigned as Senior Vice President and Chief Operating Officer of Winston Labs, and entered into a consulting agreement with that company, effective as of October 1, 2007. Dr. Bernstein’s responsibilities as set forth in his consulting agreement include assisting with the Merger, interfacing with various of Winston Labs’s service providers, aiding in the completion of audits of Winston Labs financial statements for fiscal years 2006 and 2007, and working with Winston Labs’s new Chief Financial Officer, David Starr. Pursuant to the terms of his consulting agreement, Winston Labs agreed to compensate Dr. Bernstein at a rate of $150 per hour. Further, Winston Labs agreed to reimburse Dr. Bernstein for all reasonable out-of-pocket expenses incurred in the course of his services to Winston Labs, including, but not limited to, reasonable expenses related to travel, telephone, postage, and office supplies. The consulting agreement is terminable by either Dr. Jeffrey Bernstein or by Winston upon thirty (30) days notice to the other party. Dr. Jeffrey Bernstein is the son of Dr. Joel E. Bernstein, the President and Chief Executive Officer of the Company. Winston incurred $12,213 and $21,488 of expenses under the consulting agreement for years ended December 31, 2009 and 2008, respectively, of which approximately $7,900 was outstanding as of December 31, 2009 and is included in accrued expenses and other current liabilities on the Consolidated Balance Sheets.

Independence of Directors

The Board of Directors has determined that the following individuals are independent as defined by the listing standards of the NYSE Amex Market and the NASDAQ Stock Market: Messrs. Yolles, and Halpryn and Drs. Lockshin, Penneys and Uppaluri. In reaching this conclusion, the Board of Directors considered family and employment relationships that such directors have with the members of the Board of Directors.

Item 14. Principal Accounting Fees and Services

Pre-Approval Policies and Procedures

Pursuant to its charter, the Audit Committee has the sole authority to select, evaluate and replace the Company’s independent registered public accountants (subject, if applicable, to stockholder ratification). The Audit Committee is directly responsible for the compensation and oversight of the work of the Company’s independent registered public accountants (including resolution of disagreements between management and the Company’s independent registered public accountants regarding financial reporting) for the purpose of preparing or issuing an audit report or related work. The Company’s independent registered public accountants are engaged by, and report directly to, the Audit Committee.

The Audit Committee pre-approves all auditing services and permitted non-audit services (including the fees and terms thereof) to be performed for the Company by its independent registered public accountants, subject to the de minimis exceptions for non-audit services described in Section 10A(i)(1)(B) of the Exchange Act and SEC Rule 2-01(c)(7)(i)(C) of Regulation S-X, all of which are approved by the Audit Committee prior to the completion of the audit. In the event pre-approval for such auditing services and permitted non-audit services cannot be obtained as a result of inherent time constraints in the matter for which such services are required, the Chairman of the Audit Committee has been granted the authority to pre-approve such services provided that the Chairman of the Audit Committee presents for ratification such pre-approval to the Audit Committee at its next scheduled meeting. The Audit Committee has complied with the procedures set forth above, and has otherwise complied with the provisions of its charter.

Audit Fees

The aggregate fees incurred by the Company and its consolidated subsidiaries for fiscal years ended December 31, 2009 and 2008 for professional services rendered by McGladrey & Pullen LLP in connection with (i) the audit of the Company’s annual financial statements, (ii) the reviews of the financial statements included in the Company’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2009, June 30, 2009, September 30, 2009 and September 30, 2008 and (iii) a consent issued in connection with the Company’s Current Report on Form 8-K as filed with the SEC on October 1, 2008, were $138,062 and $148,125, respectively.

Audit-Related Fees

The Company did not incur fees for fiscal years ended December 31, 2009 and 2008 for assurance and related services rendered by McGladrey & Pullen LLP in connection with (i) the performance of the audit or review of the Company’s financial statements, including 401(k) plan audits, (ii) due diligence assistance and (iii) assistance with compliance with Section 404 of the Sarbanes-Oxley Act of 2002.

Tax Fees

The aggregate fees incurred by the Company for fiscal years ended December 31, 2009 and 2008 for professional services rendered by RSM McGladrey, Inc. for tax compliance, tax advice and tax planning were $20,000 and $54,750, respectively. These services consisted of preparing the Company’s tax returns.

All Other Fees

The Company did not incur any other fees for fiscal years ended December 31, 2009 and 2008 for services rendered by RSM McGladrey, Inc. or McGladrey & Pullen LLP.

PART IV

Item 15. Exhibits, Financial Statement Schedules

The following are filed as part of this Annual Report on Form 10-K:

(1)		Financial Statements: For a list of financial statements which are filed as part of this Form 10-K, See Item 8. Financial Statements and Supplementary Data on Page 28.
(2)		Exhibits

	2.1			Merger Agreement and Plan of Reorganization dated as of November 13, 2007 by and among Getting Ready Corporation, Winston Laboratories, Inc. and Winston Acquisition Corp. (filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K dated November 13, 2007 and incorporated herein by reference).
	2.2			First Amendment to Merger Agreement and Plan of Reorganization dated as of May 30, 2008 by and among Winston Laboratories, Inc., a Delaware corporation, Getting Ready Corporation, a Delaware corporation, and Winston Acquisition Corp., a Delaware corporation (filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K dated May 30, 2008 and incorporated herein by reference).
	2.3			Second Amendment to Merger Agreement and Plan of Reorganization dated as of June 23, 2008 by and among Winston Laboratories, Inc., a Delaware corporation, Getting Ready Corporation, a Delaware corporation, and Winston Acquisition Corp., a Delaware corporation (filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K dated June 23, 2008 and incorporated herein by reference).
	3.1			Certificate of Incorporation (filed as Exhibit 3.1A to the Company’s Registration Statement on Form SB-2 dated September 15, 2004 and incorporated herein by reference).
	3.2			Certificate of Amendment of Certificate of Incorporation (filed as Exhibit 3.1B to the Company’s Registration Statement on Form SB-2 dated September 15, 2004 and incorporated herein by reference).
	3.3			Certificate of Amendment of Certificate of Incorporation (filed as Exhibit 1 to the Company’s Form PRE14C dated December 7, 2007 and incorporated herein by reference).
	3.4			Certificate of Amendment to Certificate of Incorporation (filed as Annex A to the Company’s DEF 14C dated September 22, 2008 and incorporated herein by reference).
	3.5			Certificate of Designation, Preferences and Rights of Series A Convertible Preferred Stock of Getting Ready Corporation (filed as Exhibit 3.5 to the Company’s Current Report on Form 8-K as filed with the SEC on October 1, 2008 and incorporated herein by reference).
	3.6			Certificate of Designation, Preferences and Rights of Series B Convertible Preferred Stock of Getting Ready Corporation (filed as Exhibit 3.6 to the Company’s Current Report on Form 8-K as filed with the SEC on October 1, 2008 and incorporated herein by reference).
	3.7			Certificate of Amendment to Certificate of Incorporation (form of amendment filed in the Company’s DEF 14C dated October 22, 2008 and incorporated herein by reference).
	3.8			Certificate of Amendment to Certificate of Incorporation (form of amendment filed in the Company’s DEF 14C dated November 25, 2008 and incorporated herein by reference).

	3.9			By-laws (filed as Exhibit 3.7 to the Company’s Current Report on Form 8-K as filed with the SEC on October 1, 2008 and incorporated herein by reference).
	4.1			Form of Common Stock Certificate (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K as filed with the SEC on October 1, 2008 and incorporated herein by reference).
	4.2			Form of Warrant to Purchase Series A Convertible Preferred Stock (filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K as filed with the SEC on October 1, 2008 and incorporated herein by reference).
	4.3			Form of Lockup Agreement (filed as Exhibit 4.3 to the Company’s Current Report on Form 8-K as filed with the SEC on October 1, 2008 and incorporated herein by reference).
	10.1	+		License Agreement dated October 30, 2008 by and between Winston Laboratories, Inc. and sanofi-aventis Canada Inc. (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 and incorporated herein by reference).
	10.2			Voting Agreement dated as of September 25, 2008 between Getting Ready Corporation and certain stockholders of the Company (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K as filed with the SEC on October 1, 2008 and incorporated herein by reference).
	10.3			Employment Agreement dated as of September 25, 2008 between Getting Ready Corporation and Joel E. Bernstein, M.D (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K as filed with the SEC on October 1, 2008 and incorporated herein by reference).
	10.4			Secrecy, Invention and Non-Competition Agreement dated as of October 5, 2007 by and between Winston Laboratories, Inc. and Joel E. Bernstein, M.D. (filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K as filed with the SEC on October 1, 2008 and incorporated herein by reference).
	10.5			Employment Letter Agreement dated October 3, 2007 between Winston Laboratories, Inc. and David Starr (filed as Exhibit 10.4 to the Company’s Current Report on Form 8-K as filed with the SEC on October 1, 2008 and incorporated herein by reference).
	10.6			Secrecy, Invention and Non-Competition Agreement dated as of October 3, 2007 by and between Winston Laboratories, Inc. and David Starr (filed as Exhibit 10.5 to the Company’s Current Report on Form 8-K as filed with the SEC on October 1, 2008 and incorporated herein by reference).
	10.7			Severance Agreement dated as of October 8, 2003 between Winston Laboratories, Inc. and Scott B. Phillips, M.D. (filed as Exhibit 10.6 to the Company’s Current Report on Form 8-K as filed with the SEC on October 1, 2008 and incorporated herein by reference).
	10.8			General Severance Letter Agreement dated January 26, 2006 between Winston Laboratories, Inc. and Scott B. Phillips, M.D. (filed as Exhibit 10.7 to the Company’s Current Report on Form 8-K as filed with the SEC on October 1, 2008 and incorporated herein by reference).
	10.9			Secrecy, Invention and Non-Competition Agreement dated as of October 5, 2007 by and between Winston Laboratories, Inc. and Scott B. Phillips, M.D. (filed as Exhibit 10.8 to the Company’s Current Report on Form 8-K as filed with the SEC on October 1, 2008 and incorporated herein by reference).
	10.10			Consultation Agreement dated September 30, 2007 between Winston Laboratories, Inc. and Jeffrey R. Bernstein, Ph.D. (filed as Exhibit 10.9 to the Company’s Current Report on Form 8-K as filed with the SEC on October 1, 2008 and incorporated herein by reference).
	10.11			Winston Pharmaceuticals Inc. Omnibus Inventive Plan (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated April 17, 2009 and incorporated herein by reference).
	10.12			Form of Nonqualified Stock Option Agreement (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K dated April 17, 2009 and incorporated herein by reference).
	10.13			Form of Nonqualified Stock Option Agreement (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009 and incorporated herein by reference).

	10.14			Letter of Intent Between Pharmaceutical Financial Syndicate, LLC, Frost Gamma Investments Trust, Subbarao Uppaluri, Steven D. Rubin and Jane Hsiao, Ph.D. (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated February 12, 2010 and incorporated herein by reference).
	21.1	*		Subsidiaries of Winston Pharmaceuticals, Inc.
	31.1	*		Certification of the Company’s President and Chief Executive Officer, Joel E. Bernstein, M.D., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31.2	*		Certification of the Company’s Vice President and Chief Financial Officer, David Starr, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32.1	*		Certification of the Company’s President and Chief Executive Officer, Joel E. Bernstein, M.D., pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	32.2	*		Certification of the Company’s Vice President and Chief Financial Officer, David Starr, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: March 5, 2010		Winston Pharmaceuticals, Inc.
		(Registrant)
		By:		/s/ Joel E. Bernstein   Joel E. Bernstein, M.D.
				President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Dated: March 5, 2010		/s/ Joel E. Bernstein   Joel E. Bernstein
		President, Chief Executive Officer
		(Principal Executive Officer)
Dated: March 5, 2010		/s/ David Starr   David Starr
		Vice President, Chief Financial Officer
		(Principal Accounting Officer and
		Principal Financial Officer)
Dated: March 5, 2010		/s/ Robert A. Yolles   Robert A. Yolles
		Director, Chairman of the Board

Dated: March  5, 2010		/s/ Glenn L. Halpryn   Glenn L. Halpryn
		Director
Dated: March  5, 2010		/s/ Curtis Lockshin   Curtis Lockshin
		Director
Dated: March  5, 2010		/s/ Neal S. Penneys   Neal S. Penneys
		Director
Dated: March  5, 2010		/s/ Scott B. Phillips   Scott B. Phillips, M.D.
		Senior Vice President,
		Clinical Affairs and Director
Dated: March  5, 2010		/s/ Subbarao Uppaluri   Subbarao Uppaluri
		Director

Index to Financial Statements

Winston Pharmaceuticals, Inc. and Subsidiaries

		Page
Audited Financial Statements as of and for the Years Ended December 31, 2009 and 2008
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets		F-3
Consolidated Statements of Operations		F-4
Consolidated Statements of Stockholders’ Equity		F-5
Consolidated Statements of Cash Flows		F-6
Notes to Consolidated Financial Statements		F-7

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Winston Pharmaceuticals, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets of Winston Pharmaceuticals, Inc. and Subsidiaries (the “Company”) as of December 31, 2009 and 2008, and the related consolidated statements of operations, stockholders’ equity and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Winston Pharmaceuticals, Inc. and Subsidiaries as of December 31, 2009 and 2008, and the results of their operations and their cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.

We were not engaged to examine management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2009, included in the accompanying Controls and Procedures and, accordingly, we do not express an opinion thereon.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered significant recurring losses from operations and cash reserves have fallen below recent cash flows from operations. This raises substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ McGladrey & Pullen, LLP   Chicago, Illinois
March  5, 2010

Winston Pharmaceuticals, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

		December 31,				December 31,
		2009				2008
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	1,562,848			$	5,626,913
Accounts receivable			15,653				17,498
Related party receivable			22,395				38,142
Prepaid and other current assets			43,944				68,465
Total current assets			1,644,840				5,751,018
EQUIPMENT, net of accumulated depreciation of $141,433 at December 31, 2009 and $161,907 at December 31, 2008			13,760				18,823
INTANGIBLE ASSETS, NET			17,455				21,540
TOTAL ASSETS		$	1,676,055			$	5,791,381
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable		$	724,140			$	1,058,980
Accrued expenses and other current liabilities			146,638				233,611
Unearned revenue — current portion			316,706				1,266,825
Total current liabilities			1,187,484				2,559,416
Unearned revenue — long-term portion			—				316,706
Total liabilities			1,187,484				2,876,122
Commitments and Contingencies
Stockholders’ equity
Preferred Stock, $.001 par value, 250,000,000 shares authorized
Series A, Convertible 0 and 12,730 shares issued and outstanding at December 31, 2009 and at December 31, 2008, respectively			—				13
Series B, Convertible 0 and 9,157 shares issued and outstanding at December 31, 2009 and December 31, 2008, respectively			—				9
Common stock, $.001 par value, 900,000,000 shares authorized 77,408,893 and 55,106,364 shares issued and outstanding at December 31, 2009 and December 31, 2008, respectively			77,409				55,106
Additional paid-in capital			49,794,260				49,587,913
Accumulated deficit			(49,383,098	)			(46,727,782	)
Total stockholders’ equity			488,571				2,915,259
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	1,676,055			$	5,791,381

See accompanying notes

Winston Pharmaceuticals, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

		2009				2008
REVENUE
License revenue		$	1,266,825			$	316,706
Royalty revenue			127,762				135,836
			1,394,587				452,542
EXPENSES
Research and development			2,062,933				3,496,150
General and administrative			2,063,879				2,182,012
Depreciation and amortization			9,007				8,651
Total operating expenses			4,135,819				5,686,813
Loss from operations			(2,741,232	)			(5,234,271	)
Interest income			10,487				90,614
Other income			75,429				1,911
			85,916				92,525
Loss before income taxes			(2,655,316	)			(5,141,746	)
Income Taxes
Current			—				—
Deferred			—				—
			—				—
NET LOSS		$	(2,655,316	)		$	(5,141,746	)
Loss per share, basic and diluted		$	(0.04	)		$	(0.10	)
Weighted average number of shares outstanding basic and diluted			61,258,364				53,422,158

See accompanying notes

Winston Pharmaceuticals, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

																										Additional								Total
		Common Stock								Preferred Stock A								Preferred Stock B								Paid-in				Accumulated				Stockholders’
		Shares				Amount				Shares				Amount				Shares				Amount				Capital				Deficit				Equity (Deficit)
Balance at January 1, 2008			52,814,818			$	52,814				—				—				—				—			$	40,573,523			$	(41,586,036	)		$	(959,699	)
Reclassification of Series A Convertible Preferred Stock (net of cost of $194,648)											12,731			$	13												4,805,339								4,805,352
Issuance of Series B Convertible Preferred Shares (net of cost of $3,211)																			9,166			$	9				3,996,780								3,996,789
Merger with Getting Ready Corporation (net of cost of $250,000)			2,291,612				2,292																				233,615								235,907
Redemption of fractional shares			(66	)							(1	)							(9	)							(21,344	)							(21,344	)
Net loss																															(5,141,746	)			(5,141,746	)
Balance at December 31, 2008			55,106,364				55,106				12,730				13				9,157				9				49,587,913				(46,727,782	)			2,915,259
Issuance of common stock upon exercise of stock options			415,529				416																				134,014								134,430
Conversion of Series A Convertible Preferred Shares and Series B Convertible Preferred Shares to common shares			21,887,000				21,887				(12,730	)			(13	)			(9,157	)			(9	)			(21,865	)							—
Compensation with respect to employee and non-employee stock option grants																											94,198								94,198
Net loss																														$	(2,655,316	)			(2,655,316	)
Balance at December 31, 2009			77,408,893			$	77,409				—			$	—				—			$	—			$	49,794,260			$	(49,383,098	)		$	488,571