UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

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

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

Commission File Number: 000-51314

Winston Pharmaceuticals, Inc.

(Exact name of registrant as specified in its charter)

Delaware		30-0132755
(State or other Jurisdiction of Incorporation)		(IRS Employer Identification No.)
100 North Fairway Drive,
Suite 134
Vernon Hills, Illinois		60061
(Address of Principal Executive Offices)		(Zip Code)

(847) 362-8200
(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was 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 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. (Check one):

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 May 10, 2010, 77,408,893 shares of the registrant’s Common Stock were issued and outstanding.

 

 

WINSTON PHARMACEUTICALS, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (unaudited)			3
Condensed Consolidated Balance Sheets at March 31, 2010 and December 31, 2009			3
Condensed Consolidated Statements of Operations for the three month periods ended March 31, 2010 and 2009			4
Condensed Consolidated Statements of Cash Flows for the three month periods ended March 31, 2010 and 2009			5
Notes to Unaudited Condensed Consolidated Financial Statements			6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			13
Item 3. Quantitative and Qualitative Disclosures About Market Risk			20
Item 4. Controls and Procedures			20
PART II. OTHER INFORMATION			21
Item 1. Legal Proceedings			21
Item 1A. Risk Factors			21
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			21
Item 3. Defaults Upon Senior Securities			21
Item 4. Removed and Reserved			21
Item 5. Other Information			21
Item 6. Exhibits			21
Signatures			22
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Winston Pharmaceuticals, Inc. and Subsidiaries
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

		March 31,				December 31,
		2010				2009
ASSETS
CURRENT ASSETS
Cash		$	677,522			$	1,562,848
Accounts receivable			—				15,653
Related party receivables			59,440				22,395
Inventory			28,925				—
Prepaid and other current assets			45,414				43,944
Total current assets			811,301				1,644,840
EQUIPMENT, net of accumulated depreciation of $142,817 at March 31, 2010 and $141,433 at December 31, 2009			12,376				13,760
INTANGIBLE ASSETS, NET			18,597				17,455
TOTAL ASSETS		$	842,274			$	1,676,055
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable		$	715,248			$	724,140
Accrued expenses and other current liabilities			61,793				146,638
Unearned revenue			—				316,706
Total liabilities			777,041				1,187,484
Commitments and Contingencies
Stockholders’ equity
Common stock, $.001 par value, 900,000,000 shares authorized, 77,408,893 shares issued and outstanding at March 31, 2010 and at December 31, 2009			77,409				77,409
Additional paid-in capital			49,831,613				49,794,260
Accumulated deficit			(49,843,789	)			(49,383,098	)
Total stockholders’ equity			65,233				488,571
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	842,274			$	1,676,055

See notes to unaudited condensed consolidated financial statements

Winston Pharmaceuticals, Inc. and Subsidiaries
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

		Three Months ended March 31
		2010				2009
REVENUES
License revenues		$	316,706			$	316,706
Royalty revenues			—				23,280
			316,706				339,986
EXPENSES
Research and development			326,340				545,966
General and administrative			449,765				580,309
Depreciation and amortization			2,141				2,318
Total operating expenses			778,246				1,128,593
Loss from operations			(461,540	)			(788,607	)
Interest income			159				9,727
Other income			690				96
			849				9,823
Loss before income taxes			(460,691	)			(778,784	)
Income Taxes
Current			—				—
Deferred			—				—
NET LOSS		$	(460,691	)		$	(778,784	)
Loss per share, basic and diluted		$	(0.01	)		$	(0.01	)
Weighted average number of shares outstanding, basic and diluted			77,408,893				55,307,145

See notes to unaudited condensed consolidated financial statements

Winston Pharmaceuticals, Inc. and Subsidiaries
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 2010 and 2009

		2010				2009
Cash flows from operating activities
Net loss		$	(460,691	)		$	(778,784	)
Depreciation and amortization			2,141				2,318
Stock Option expense for non-employee directors and employees			37,353				—
Changes in:
Accounts receivable			(21,392	)			14,645
Inventory			(28,925	)			—
Prepaid and other current assets			(1,470	)			11,373
Other assets			—				1,154
Unearned revenue			(316,706	)			(316,706	)
Accounts payable			(8,892	)			(429,800	)
Accrued expenses and other current liabilities			(84,845	)			(43,537	)
Net cash used in operating activities			(883,427	)			(1,539,337	)
Cash flows from investing activities
Purchases of equipment			—				(738	)
Purchases of intangibles			(1,899	)			—
Net cash used in investing activities			(1,899	)			(738	)
Cash flows from financing activities
Proceeds from exercise of stock options			—				82,950
Net cash provided by financing activities			—				82,950
NET DECREASE IN CASH AND CASH EQUIVALENTS			(885,326	)			(1,457,125	)
Cash and cash equivalents at beginning of period			1,562,848				5,626,913
Cash and cash equivalents at end of period		$	677,522			$	4,169,788
Supplemental disclosures of cash flow information
Interest paid		$	—			$	—
Income taxes paid		$	—			$	—

See notes to unaudited condensed consolidated financial statements

Winston Pharmaceuticals, Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — BASIS OF PRESENTATION

Winston Pharmaceuticals, Inc. (“Winston” or the “Company”) is a research-based specialty pharmaceutical company engaged in the discovery, development and commercialization of pain-management products.

The accompanying financial statements are unaudited but in the opinion of management contain all the adjustments (consisting of those of a normal recurring nature) considered necessary to present fairly the financial position and the results of operations and cash flow for the periods presented in conformity with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by United States generally accepted accounting principles for complete financial statements.

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 March 31, 2010, the Company has incurred cumulative net losses of $49.8 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 has decreased from $1.6 million as of December 31, 2009 to $0.7 million as of March 31, 2010. The Company believes that its existing cash will be sufficient to fund its activities through the end of June, 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 the Company is unsuccessful in its efforts to raise additional outside capital in the near term, the Company will be required to significantly reduce its research, development, and administrative operations, including further reduction of its employee base, or it may be required to cease operations completely, or liquidate in order to offset the lack of available funding.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The financial statements for the three months ended March 31, 2010 do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from uncertainty related to the Company’s ability to continue as a going concern.

Principles of Consolidation

The consolidated financial statements of the Company include the accounts of Winston Laboratories, Inc., the Company’s wholly-owned subsidiary (“Winston Labs”) and its subsidiaries, Winston Laboratories Limited (“UK Ltd.”) and Rodlen Laboratories, Inc. (“Rodlen”), as of March 31, 2010 and December 31, 2009 and for the three months ended March 31, 2010 and 2009. All intercompany balances and transactions have been eliminated.

Inventories

Inventories are valued at the lower of cost or market (net realizable value). Cost is determined by the first-in, first-out method.

Fair Value of Financial Instruments

The carrying amounts of financial instruments, including cash, accounts receivable, accounts payable and accrued expenses approximate fair value due to the short term maturity of these instruments.

Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures, provides a framework for measuring fair value of assets and liabilities in accordance with GAAP, and establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The Company did not have any financial assets measured at fair value on a recurring basis, subject to the disclosure requirements of ASC Topic 820 as of March 31, 2010.

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. (Note 3), the obligation period was not contractually defined in relation to the 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 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.

Research and development costs totaled $326,340 and $545,966 for the three month periods ended March 31, 2010 and 2009, respectively.

Income Taxes

The Company files a consolidated tax return that includes all subsidiaries. Deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end, based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred income tax assets to the amount expected to be realized.

ASC Topic 740, Income Taxes, prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740 provides a two-step process to evaluate a tax position and also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company has not recorded a reserve for any tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. The Company files tax returns in all appropriate jurisdictions. The open tax years are those years ending December 31, 2006 to December 31, 2009, which statutes expire in 2010-2013. As of March 31, 2010 and March 31, 2009, the Company has no liability for unrecognized tax benefits. The Company recognizes interest and penalties related to uncertain tax positions as income tax expense as incurred. No expense for interest and penalties was recognized for the three month period ended March 31, 2010 and 2009.

Segment Information

The Company is operated on the basis of a single reportable segment, which is the business of discovery and development of products for pain management. The Company’s chief operating decision-maker is the Chief Executive Officer, who evaluates the Company as a single operating segment.

Recent Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board (FASB) issued a new pronouncement relating to “Amendments to variable interest entities (VIE)”, which changes the approach to determining the primary beneficiary of a VIE and requires companies to more frequently assess whether they must consolidate VIEs. This new standard is effective for the Company beginning on January 1, 2010. The adoption of this new pronouncement did not have a material impact on the Company’s financial position, results of operations or cash flows.

In October 2009, the FASB issued Accounting Standards Update (ASU) 2009-13, Revenue Recognition (Topic 605)- Multiple-Deliverable Revenue Arrangements, which amends ASC 605, Revenue Recognition, to require companies to allocate revenue in multiple-element arrangements based on an element’s estimated selling price if vendor-specific or other third-party evidence of value is not available. ASU 2009-13 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Earlier application is permitted. The Company is currently evaluating both the timing and the impact of the pending adoption of the ASU on its consolidated financial statements.

The FASB has issued ASU No. 2010-17, Revenue Recognition — Milestone Method (Topic 605): Milestone Method of Revenue Recognition. The ASU codifies the consensus reached in Emerging Issues Task Force Issue No. 08-9, “Milestone Method of Revenue Recognition.” The amendments to the FASB Accounting Standards Codification™ provide guidance on defining a milestone and determining when it may be appropriate to apply the milestone method of revenue recognition for research or development transactions. Consideration that is contingent on achievement of a milestone in its entirety may be recognized as revenue in the period in which the milestone is achieved only if the milestone is judged to meet certain criteria to be considered substantive. Milestones should be considered substantive in their entirety and may not be bifurcated. An arrangement may contain both substantive and nonsubstantive milestones, and each milestone should be evaluated individually to determine if it is substantive.

The amendments in the ASU are effective on a prospective basis for milestones achieved in fiscal years, and interim periods within those years, beginning on or after June 15, 2010. Early adoption is permitted. If a vendor elects early adoption and the period of adoption is not the beginning of the entity’s fiscal year, the entity should apply the amendments retrospectively from the beginning of the year of adoption. Vendors may also elect to adopt the amendments in the ASU retrospectively for all prior periods.

NOTE 2 — EARNINGS PER SHARE

Basic EPS is computed by dividing income (loss) attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS is computed giving effect to all dilutive potential common shares that were outstanding during the period. Dilutive potential common shares consist of the incremental common shares issuable upon conversion of convertible preferred shares and the exercise of stock options and warrants and unvested shares granted to employees and non-employee directors.

		Three months ended March 31
		2010				2009
Denominator:
Weighted average common shares outstanding — basic and diluted			77,408,893				55,307,145
Loss per common share — basic and diluted		$	(0.01	)		$	(0.01	)

The Company’s Basic EPS and Diluted EPS is identical as inclusion of the incremental common shares attributable upon conversion of convertible preferred shares and the exercise of stock options and warrants and unvested shares granted to employees and directors would have been anti-dilutive.

NOTE 3 — TECHNOLOGY LICENSE AGREEMENTS

Under its technology license agreement with Hi-Tech Pharmacal Co.(“Hi-Tech”), the Company recorded royalty revenues of $0 and $23,280 for the three months ended March 31, 2010 and 2009, respectively. On October 30, 2009, the Company received communication from Hi-Tech that it 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.

Under its licensing agreement with sanofi-aventis Canada Inc., the Company recognized approximately $316,000 license revenue for the three months ended March 31, 2010, and 2009, respectively.

NOTE 4 — RELATED-PARTY TRANSACTIONS

Elorac, Inc. (“Elorac”) is an entity controlled by Dr. Bernstein, CEO of the Company. In addition, Robert Yolles, a director of the Company, is also a director of Elorac. Since inception, Elorac has been located in the same offices as Winston and therefore has shared in certain of Winston’s 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. The Company has received approximately $46,399 and $25,169 for such services for the three month periods ended March 31, 2010 and 2009, respectively, which are included as a reduction of the Company’s expenses on the Consolidated Statements of Operations. Amounts due from Elorac of $40,188 and $2,106 as of March 31, 2010 and December 31, 2009, respectively, are included in related party receivables on the Company’s Consolidated Balance Sheets. Subsequent to March 31, 2010, Elorac paid the $40,188 balance.

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. As of March 31, 2010 and December 31, 2009, respectively, the Company had $12,675 of receivables related to such expenses which are included in related party receivables on the Consolidated Balance Sheets.

On September 19, 2007, Winston Labs entered into an exclusive technology license agreement with OPKO Ophthalmologists, LLC, (“OPKO”). The CEO and Chairman of OPKO 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. 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. During the three month period ended March 31, 2010, approximately $9,274 of legal fees were billed to OPKO, $6,577 of which were outstanding as of March 31, 2010 and are included in related party receivables on the Consolidated Balance Sheets at March 31, 2010. Subsequent to March 31, 2010, OPKO paid the $6,577 balance.

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.

NOTE 5 — INCOME TAXES

Due to the continuing operating losses, no tax benefit is being recorded. The Company continues to provide a full valuation allowance for any future tax benefits resulting from the Company’s net operating losses.

The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate of 34.0% to pre-tax loss as follows:

		March 31,				March 31,
		2010				2009
Tax benefit at U.S. federal statutory rate		$	(157,000	)		$	(265,000	)
State tax benefit, net of federal benefit			(22,000	)			(38,000	)
Change in valuation allowance			197,000				311,000
Permanent differences			1,000				1,000
Research and development credits			(18,000	)			(25,000	)
Other, net			(1,000	)			16,000
Income tax expense (benefit)		$	—			$	—

NOTE 6 — STOCK OPTION PLANS

The following table summarizes stock option activity under the Company’s Omnibus Incentive Plan during the three-month period ended March 31, 2010:

																		Weighted
						Weighted-				Weighted-								Average
						Average				Average				Aggregate				Remaining
						Exercise				Grant Date				Intrinsic				Contractual
		Shares				Price				Fair Value				Value				Life
Options at December 31, 2009			3,041,985			$	0.50
Granted			—				—			$	—
Exercised			—			$	—
Forfeitures			(3,000	)		$	1.53
Options at March 31, 2010			3,038,985			$	0.50							$	1,711,362				3.96

Total unrecognized compensation cost for stock options as of March 31, 2010 was $634,722. The aggregate intrinsic value in the table above is before income taxes, based on the fair value of a share of the Company’s common stock of $1.00 at March 31, 2010. The aggregate intrinsic value of options outstanding and exercisable as of March 31, 2010 is $1,711,362.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the Condensed Consolidated Financial Statements of Winston Pharmaceuticals, Inc., related Notes, and other financial information included elsewhere in this report and in our Annual Report on Form 10-K for the year ended December 31, 2009. Certain defined terms used herein have the meaning ascribed to them in such financial statements.

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. 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 Quarterly Report on Form 10-Q. 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.

Executive Overview

On September 25, 2008, the Company, formerly known as Getting Ready Corporation completed its merger transaction (the “Merger”) with 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 Labs’s management.

On August 14, 2007, Winston Labs entered into an exclusive technology license agreement with Elorac, formerly known as Exopharma, Inc. Dr. Bernstein is a majority owner and President and Chief Executive Officer of Elorac. Robert Yolles, a director of the Company, is also a director 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 Winston Labs and Elorac mutually terminated the above license agreement. As a result of this mutual termination, 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 has received approximately $46,399 and $25,169 for such services for the three month periods ended March 31, 2010 and 2009, respectively, which are included as a reduction of the Winston Labs’s expenses on the Consolidated Statements of Operations. Amounts due from Elorac of $40,188 and $2,106 as of March 31, 2010 and December 31, 2009, respectively, are included in related party receivables on the Company’s Consolidated Balance Sheets. Subsequent to March 31, 2010, Elorac paid the $40,188 balance.

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 would have been required to pay a 10% royalty on sales of the products. In addition, under the terms of the agreement, OPKO and the Company agreed to equally share the cost related to manufacturing and clinical supplies of Civamide Nasal solution. For the three month period ending March 31, 2010 and 2009, respectively, OPKO’s share of these costs was $0 and $112,221. Under the terms of the agreement OPKO agreed to reimburse Winston Labs for certain legal expenses Winston Labs has incurred related to the use of the licensed products to treat keratoconjunctivitis. During the period ended March 31, 2010, approximately $9,274 of legal fees were billed to OPKO, $6,577 of which were outstanding as of March 31, 2010 and are included in related party receivables on the Consolidated Balance Sheets at March 31, 2010. Subsequent to March 31, 2010, OPKO paid the $6,577 balance.

Phillip Frost, M.D. is the Chairman and Chief Executive Officer of OPKO’s parent company, OPKO Health, Inc. (“OPKO Health”), and the sole trustee of Frost Gamma Investments Trust. As of April 15, 2010, Dr. Frost was the beneficial owner of more than 48% of OPKO Health’s common stock. As of March 31, 2010, Frost Gamma Investments Trust was the beneficial owner of 26,574,659 shares (29.7%) of the Company, including 8,779,797 shares of common stock underlying warrants. Furthermore, Subbarao Uppaluri, Ph.D., the Senior Vice President — Chief Financial Officer of OPKO Health, is the beneficial owner of 326,538 shares (0.3%) of the Company, 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.

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 milestone payment upon regulatory approval of civamide cream in Canada (see page 15 for further details), 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. If the Company is able to raise sufficient funds, it 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.

In September, 2009, the Company 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.

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 Winston Labs is not 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.

Results of Operations

For the three months ended March 31, 2010 compared to the three months ended March 31, 2009

		Three Months Ended March 31,
		2010				2009				$ Change				% Change
REVENUES
License revenues		$	316,706			$	316,706			$	—				—
Royalty revenues			—				23,280				(23,280	)			100	%
			316,706				339,986				(23,280	)			(7	)%
EXPENSES
Research and development			326,340				545,966				(219,626	)			(40	)%
General and administrative			449,765				580,309				(130,544	)			(22	)%
Depreciation and amortization			2,141				2,318				(177	)			(8	)%
Total operating expenses			778,246				1,128,593				(350,347	)			(31	)%
Loss from operations			(461,540	)			(788,607	)			327,067				(41	)%
Interest income			159				9,727				(9,568	)			(98	)%
Other income			690				96				594				619	%
Other income			849				9,823				(8,974	)			(91	)%
Loss before income taxes			(460,691	)			(778,784	)			318,093				(41	)%
Income Taxes			—				—				—				—
NET LOSS		$	(460,691	)		$	(778,784	)		$	318,093				(41	)%

Revenues

Revenues from licenses remained the same at $316,706 for the three months ended March 31, 2010 compared to the same period in 2009. The $316,706 license revenue in 2010 and in 2009 represents 3 months of revenue recognition related to a $1.9 million upfront cash payment received by Winston Labs from sanofi-aventis Canada Inc. in accordance with a license agreement entered into by Winston Labs in the fourth quarter of 2008.

Revenues from royalties declined to $0 for the three months ended March 31, 2010 compared to $23,280 for the same period in 2009. The $23,280 royalty revenue for the three month period ending March 31, 2009 is comprised entirely of royalties earned from Hi-Tech. On October 30, 2009, the Company received communication from Hi-Tech that it 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 declined to $326,340 for the three months ended March 31, 2010 compared to $545,966 for the same period in 2009. The decline was primarily due to decreased spending on various European and Canadian filing fees and other decreased spending on R&D projects as well as decrease in payroll due to reduction of R&D staff.

General and Administrative Expenses

General and administrative expenses decreased to $449,765 for the three months ended March 31, 2010 compared to $580,309 for the same period in 2009. The decrease is due largely to decreased spending on legal and accounting fees as well as decrease in payroll due to reduction of administrative staff.

Interest Income

Interest income decreased by $9,568 to $159 for the three month period ended March 31, 2010 from $9,727 for the same period in 2009 due to less cash on hand at March 31, 2010 compared to the same period in 2009.

Net Loss

Net loss was $460,691, or $(0.01) per share, for the three months ended March 31, 2010, compared to a net loss of $778,784, or $(0.01) per share for the same period in 2009. The decrease in net loss is primarily attributed to a decrease in operating expenses totaling $.3 million, consisting of a decrease in research and development totaling $.2 million and a decrease in general and administrative expenses totaling $.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 March 31, 2010, 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 and, as described below we will need to raise additional capital to fund these losses. We anticipate that our losses may increase from current levels because we expect to incur significant 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.

The bulk of our expenditures are for operating activities. Our net cash used in operating activities was $3.1 million for the year ended December 31, 2008, $4.2 million for the year ended December 31, 2009 and $0.9 million for the three months ended March 31, 2010. These amounts were used to fund our operating losses for the periods, adjusted for non-cash expenses and changes in operating assets and liabilities.

On November 13, 2007, Winston issued 5,815,851 shares of Winston 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, Winston Labs and sanofi-aventis Canada Inc. entered into a licensing agreement for the Canadian rights to Winston Labs’s 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 $316,000 has been recognized as revenue for the three month periods ended March 31, 2010 and March 31, 2009, respectively.

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).

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 March 31, 2010, the Company has incurred cumulative net losses of $49.8 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 has decreased from $1.6 million as of December 31, 2009 to $0.7 million as of March 31, 2010. The Company believes that its existing cash will be sufficient to fund its activities through the end of June, 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 the Company is unsuccessful in its efforts to raise additional outside capital in the near term, it will be required to significantly reduce its research, development, and administrative operations, including further reduction of its employee base, or it may be required to cease operations completely, or liquidate in order to offset the lack of available funding.

Contractual Obligations

We lease our facilities on a month-to-month basis and certain equipment under operating leases that expire through 2013 and require monthly payments of $1,166.

Rental expense for the three months ended March 31, 2010 and 2009 was $16,510 and $22,078, 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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are a “smaller reporting company” as such term is defined in Rule 12b-2 of the Exchange Act and are exempt from making the disclosures required by this item pursuant to paragraph (e) of Item 305 of Regulation S-K.

Item 4. 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.

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.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are not a party to any legal proceedings, other than ordinary routine litigation incidental to our business, which we believe will not have a material effect on our financial position, results of operations, or cash flows.

Item 1A. Risk Factors

We are a “smaller reporting company” as such term is defined in Rule 12b-2 of the Exchange Act and are exempt from making the disclosures required by this item pursuant to the instructions to Item 1A to Part II of Form 10-Q.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Removed and Reserved

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit No.
10.1		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).
31.1		Certification of the President and Chief Executive Officer of Winston Pharmaceuticals, Inc., Joel E. Bernstein, M.D., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of the Vice President and Chief Financial Officer of Winston Pharmaceuticals, Inc., David Starr, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of the President and Chief Executive Officer of Winston Pharmaceuticals, Inc., Joel E. Bernstein, M.D., and the Vice President and Chief Financial Officer of Winston Pharmaceuticals, Inc., David Starr, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

EXHIBIT INDEX

Exhibit
No.		Description
10.1		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).
31.1		Certification of the President and Chief Executive Officer of Winston Pharmaceuticals, Inc., Joel E. Bernstein, M.D., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of the Vice President and Chief Financial Officer of Winston Pharmaceuticals, Inc., David Starr, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of the President and Chief Executive Officer of Winston Pharmaceuticals, Inc., Joel E. Bernstein, M.D., and the Vice President and Chief Financial Officer of Winston Pharmaceuticals, Inc., David Starr, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.