The discussion in "Management's Discussion and Analysis of Financial Condition and Results of Operations" contains trend analysis, estimates and other forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, without limitation, statements containing the words "believes," "anticipates," "expects," "continue," and other words of similar import or the negative of those terms or expressions. Such forward-looking statements are subject to known and unknown risks, uncertainties, estimates and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Actual results could differ materially from those set forth in such forward-looking statements as a result of, but not limited to, the "Risk Factors" described in Part I, Item 1A. You should read the following discussion and analysis along with the "Selected Financial Data" and the financial statements and notes attached to those statements included elsewhere in this report.

Overview

We are a development stage company. We do not expect to generate significant revenues for approximately the next one to three years, during which time we will engage in significant research and development efforts. However, we have eight active agricultural license agreements to develop and commercialize our technology in corn, soy, cotton, rice, canola, trees, alfalfa, bedding plants, turf grass, and ethanol. Seven of the licenses provide for upfront payments, milestone payments and royalty payments to us upon commercial introduction. The ethanol license provides for annual payments for each of the licensee's ethanol production facilities that incorporates our technology. We also have entered into a joint venture to develop and commercialize our technology in banana plants. In connection with the joint venture, we will receive 50% of the profits from the sale of enhanced banana plants.

Consistent with our commercialization strategy, we intend to license our technology for additional crops, as the opportunities may arise, that may result in additional license fees, revenues from contract research and other related revenues. Successful future operations will depend on our and our partners' ability to transform our research and development activities into a commercially feasible technology.

We plan to employ the same partnering strategy in both the human health and agricultural target markets.

Our human health research program, which has consisted of pre-clinical in-vitro and in-vivo experiments designed to assess the role and method of action of the Factor 5A genes in human diseases, is performed by approximately thirteen third party researchers at our direction, at the University of Waterloo, Mayo Clinic and the University of Virginia.

Our primary human health initiative is to advance our technology for the potential treatment of multiple myeloma with the goal of initiating a clinical trial. In connection with the potential clinical trial, we have engaged a CRO to assist us through the process. We have also determined the delivery system for our technology, contracted for the supply of pharmaceutical grade materials to be used in toxicology and human studies and have contracted with a third party laboratory to conduct toxicology studies, Together with the assistance of our CRO, we will have the toxicology studies performed with the goal of filing an investigational new drug application, or IND application, with the U.S. Food and Drug Administration, or FDA, for the review and consideration in order to initiate a clinical trial. We estimate that it will take approximately fifteen
(15) months from June 30, 2009 to complete these objectives.

Our preclinical human health research has yielded data that we have presented to various biopharmaceutical companies that may be prospective licensees for the development and marketing of potential applications for our technology.

Critical Accounting Policies and Estimates

Revenue Recognition

We record revenue under technology license and development agreements related to the following. Actual fees received may vary from the recorded estimated revenues.
· Nonrefundable upfront license fees that are received in exchange for the transfer of our technology to licensees, for which no further obligations to the licensee exist with respect to the basic technology transferred, are recognized as revenue on the earlier of when payments are received or collections are assured.

· Nonrefundable upfront license fees that are received in connection with agreements that include time-based payments are, together with the time-based payments, deferred and amortized ratably over the estimated research period of the license.

· Milestone payments, which are contingent upon the achievement of certain research goals, are recognized as revenue when the milestones, as defined in the particular agreement, are achieved.

The effect of any change in revenues from technology license and development agreements would be reflected in revenues in the period such determination was made. Historically, no such adjustments have been made.

Estimates of Expenses

Our research and development agreements with third parties provide for an estimate of our expenses and costs, which are variable and are based on the actual services performed by the third party. We estimate the aggregate amount of the expenses based upon the projected amounts that are set forth in the agreements, and we accrue the expenses for which we have not yet been invoiced. In estimating the expenses, we consider, among other things, the following factors:

· the existence of any prior relationship between us and the third party provider;

· the past results of prior research and development services performed by the third party provider; and

· the scope and timing of the research and development services set forth in the agreement with the third party provider.

After the research services are performed and we are invoiced, we make any adjustments that are necessary to accurately report research and development expense for the period.

Valuation Allowances and Carrying Values

We have recorded valuation allowances against our entire deferred tax assets of $11,520,000 at June 30, 2009 and $9,152,000 at June 30, 2008. The valuation allowances relate primarily to the net operating loss carryforward deferred tax asset where the tax benefit of such asset is not assured.

As of June 30, 2009 and 2008, we have determined that the estimated future discounted cash flows related to our patent applications will be sufficient to recover their carrying value.

We have determined that we are receiving the economic benefit of the agricultural patent applications as well as all of the issued patents and are amortizing the agricultural patent application costs and all of the issued patents over seventeen years on a straight-line basis.

We do not have any off-balance sheet arrangements.

Stock-Based Compensation

The fair value of each stock option and warrant is estimated on the date of grant using the Black-Scholes option-pricing model. Expected volatility is based on the historical volatility of our stock and of similar companies. The expected term of stock options and warrants granted is based upon the simplified method whereby expected term is calculated using the weighted average term of the vesting period of such options and warrants. The expected term is calculated for and applied to all groups of stock options and warrants as we do not expect substantially different exercise or post-vesting termination behavior amongst our employee population. The risk-free rate of stock options is based on the U.S. Treasury rate in effect at the time of grant for the expected term of the stock options and warrants. Expected forfeitures are based on historical data.

In connection with our Short-Term and Long-Term incentive plans, our management reviews the specific goals of such plans to determine if such goals have been achieved or are probable that they will be achieved. If the goals have been achieved or are probable of being achieved, then the amount of compensation expense determined on the date of grant related to those specific goals is charged to compensation expense at such time.

Convertible Notes

During the year ended June 30, 2008, we issued convertible notes and warrants for gross proceeds in the amount of $10,000,000. The proceeds have been allocated between convertible notes and warrants based upon their fair values, whereby the fair value of the warrants have been determined using the Black-Scholes model. The remaining amounts were allocated to the beneficial conversion feature based upon the effective conversion price compared to the fair value of the common stock on the date of issuance of the convertible notes and warrants. As such, all of the proceeds of the convertible notes and warrants were recorded as equity. The convertible notes are being amortized to interest expense using the effective yield method over the term of the notes.

Research Program

We do not expect to generate significant revenues for approximately the next one to three years, during which time we will engage in significant research and development efforts. We expect to spend significant amounts on the research and development of our technology. We also expect our research and development costs to increase as we continue to develop and ultimately commercialize our technology. However, the successful development and commercialization of our technology is highly uncertain. We cannot reasonably estimate or know the nature, timing and expenses of the efforts necessary to complete the development of our technology, or the period in which material net cash inflows may commence from the commercialization of our technology, including the uncertainty of:

· the scope, rate of progress and expense of our research activities;

· the interim results of our research;

· the expense of additional research that may be required after review of the interim results;

· the terms and timing of any collaborative, licensing and other arrangements that we may establish;

· the expense and timing of regulatory approvals;

· the effect of competing technological and market developments; and

· the expense of filing, prosecuting, defending and enforcing any patent claims or other intellectual property rights.

Liquidity and Capital Resources

Overview

As of June 30, 2009, our cash balance and investments totaled $1,430,569, and we had working capital of $1,259,300. In addition, upon the closing of our private equity financing on July 9, 2009, we received aggregate net proceeds of approximately $900,000. As of June 30, 2009, we had a federal tax loss carryforward of approximately $25,582,000 and a state tax loss carry-forward of approximately $19,219,000 to offset future taxable income. We cannot assure you that we will be able to take advantage of any or all of such tax loss carryforwards, if at all, in future fiscal years.

Contractual Obligations

The following table lists our cash contractual obligations as of June 30, 2009:

                                                                   Payments Due by Period
                                                     Less than                                             More than
     Contractual Obligations            Total          1 year         1 - 3 years       4 - 5 years          5 years
Research and Development
Agreements (1)                       $ 1,702,050     $ 1,702,050     $           -     $            -     $           -
Facility, Rent and Operating
Leases (2)                           $   152,989     $    79,420     $      73,569     $            -     $           -
Employment, Consulting and
Scientific Advisory Board
Agreements (3)                       $   531,970     $   519,264     $      12,706     $            -     $           -
Total Contractual Cash Obligations   $ 2,387,009     $ 2,300,734     $      86,275     $            -     $           -

(1) Certain of our research and development agreements disclosed herein provide that payment is to be made in Canadian dollars and, therefore, the contractual obligations are subject to fluctuations in the exchange rate.

(2) The lease for our office space in New Brunswick, New Jersey is subject to certain escalations for our proportionate share of increases in the building's operating costs.

(3) Certain of our employment and consulting agreements provide for automatic renewal, which is not reflected in the table, unless terminated earlier by the parties to the respective agreements.

We expect our capital requirements to increase significantly over the next several years as we commence new research and development efforts, increase our business and administrative infrastructure and embark on developing in-house business capabilities and facilities. Our future liquidity and capital funding requirements will depend on numerous factors, including, but not limited to, the levels and costs of our research and development initiatives and the cost and timing of the expansion of our business development and administrative staff.

Effective September 1, 2009, we extended our research and development agreement with the University of Waterloo for an additional one-year period through August 31, 2010, in the amount of CAD $650,400 or approximately USD $650,400, which is not included in the above table of contractual obligations. Research and development expenses under this agreement aggregated $653,104 for the year ended June 30, 2009 and USD $730,960 for the year ended June 30, 2008 and USD $5,280,368 for the cumulative period from inception through June 30, 2009. Total research and development expenses aggregated $2,353,962 for the year ended June 30, 2009 and $1,764,426 for the year ended June 30, 2008 and $12,311,557 for the cumulative period from inception through June 30, 2009.

Capital Resources

Since inception, we have generated revenues of $1,450,000 in connection with the initial fees and milestone payments received under our license and development agreements. We have not been profitable since inception, we will continue to incur additional operating losses in the future, and we will require additional financing to continue the development and subsequent commercialization of our technology. While we do not expect to generate significant revenues from the licensing of our technology for at least the next one to three years, we may enter into additional licensing or other agreements with marketing and distribution partners that may result in additional license fees, receive revenues from contract research, or other related revenue.

License Agreements

On July 17, 2007 we entered into a license agreement with Bayer CropScience AG for the development and commercialization of Cotton. Under the terms of the license agreement, we received an upfront payment, will receive milestone payments upon the achievement of certain development milestones, and additionally, upon commercialization, a royalty on net sales.

On August 6, 2007 we entered into a license agreement with Monsanto for the development and commercialization of Corn and Soy. Under the terms of the license agreement, we received an upfront payment, will receive milestone payments upon the achievement of certain development milestones, and additionally, upon commercialization, a royalty on net sales.

On September 11, 2007 we entered into a license agreement with Bayer CropScience AG for the development and commercialization of Rice. Under the terms of the agreement, we received an upfront payment, will receive milestone payments upon the achievement of certain development milestones, and additionally, upon commercialization, a royalty on net sales.

Financing

As discussed in Part II, Item 5, Recent Sales of Unregistered Securities, in this Annual Report on Form 10-K:

· On July 9, 2009, we entered into a Securities Purchase Agreement with Partlet Holdings Ltd., for the issuance of common stock and warrants for gross proceeds of $1,000,000.

· On July 29, 2009, we entered into Securities Purchase Agreements with each of Robert Forbes, Timothy Forbes and certain insiders and affiliates for the issuance of common stock and warrants for an aggregate gross proceeds of $530,000.

· On July 29, 2009, we entered into a Securities Purchase Agreement with Cato Holding Company for the issuance of common stock and warrants in exchange for amounts currently owed by us to Cato Research Ltd in the amount of $175,000.

· On August 1, 2007 and August 29, 2007, we entered into binding Securities Purchase Agreements with YA Global and Stanford and have sold to each of YA9 Global and Stanford $5,000,000 of secured convertible notes and accompanying warrants for aggregate gross proceeds in the amount of $10,000,000.

We anticipate that, based upon our current cash and investments and the proceeds from the above mentioned financings, we will be able to fund our operations for the next six (6) months from June 30, 2009. Over the next twelve months from June 30, 2009, we plan to fund our research and development and commercialization activities by:

· utilizing our current cash balance and investments,

· achieving some of the milestones set forth in our current licensing agreements,

· through the execution of additional licensing agreements for our technology, and

· through the placement of equity or debt instruments.

We cannot assure you that we will be able to raise money through any of the foregoing transactions, or on favorable terms, if at all.

Results of Operations

Fiscal Years ended June 30, 2008, 2007 and 2006

Revenue

Total revenues consisted of initial fees and milestone payments on our agricultural development and license agreements. During the fiscal year ended June 30, 2009, we earned revenue in the amount of $275,000, which consisted of milestone payments in connection with certain agricultural license agreements. During the fiscal year ended June 30, 2008, we earned revenue in the amount of $456,667, which consisted of the initial payments and the amortized portion of previous milestone payments received in connection with certain agricultural license agreements. During the year ended June 30, 2007, we earned revenue in the amount of $300,000 consisted of current milestone payments and the amortized portion of previous milestone payments in connection with certain agricultural license agreements.

We anticipate that we will continue to receive milestone payments in connection with our current agricultural development and license agreements while we continue to pursue our goal of attracting other companies to license our technologies in various other crops. Additionally, we anticipate that we will receive royalty payments from our license agreements when our partners commercialize their crops containing our technology. However, it is difficult for us to determine our future revenue expectations because we are a development stage biotechnology company. As such, the timing and outcome of our experiments, the timing of signing new partners and the timing of our partners moving through the development process into commercialization is difficult to accurately predict.

Operating expenses

                                                         Year Ended June 30,
                      2009        2008       Change           %          2008        2007       Change           %
                                                   (In thousands, except % values)
General and
administrative     $ 2,206     $ 2,291     $    (85 )        (4 ) %   $ 2,291     $ 2,413     $   (122 )        (5 )%
Research and
development          2,354       1,765          589          33 %       1,765       1,208          557          46 %
Total operating
expenses           $ 4,560     $ 4,056     $    504          12 %     $ 4,056     $ 3,621     $    435          12 %

We expect operating expenses to increase over the next twelve months as we anticipate that research and development expenses and other general and administrative expenses will increase as we continue to expand our research and development activities.

General and administrative expenses

General and administrative expenses consist of the following:

                                                         Year ended June 30,
                                                    2009        2008        2007
                                                           (In thousands)
       Share-based compensation                    $   445     $   749     $   910
       Payroll and benefits                            690         669         616
       Investor relations                              245         305         278
       Professional fees                               416         261         217
       Depreciation and amortization                   112          97         166
       Other general and administrative expenses       298         210         226

       Total general and administrative expenses   $ 2,206     $ 2,291     $ 2,413

· Share-based compensation for Fiscal 2009 and 2008 consisted of the amortized portion of the Black-Scholes value of options, restricted stock units and warrants granted to directors, employees and consultants. During Fiscal 2009 and 2008, the following options, warrants and restricted stock units were granted:

                                          Fiscal 2009      Fiscal 2008
               Options                        834,812        1,069,600
               Warrants                           500            1,000
               Restricted Stock Units         136,000          337,700

Additionally, during Fiscal 2008, 1,500,000 warrants were extended and repriced in connection with a financial advisory agreement.

Share-based compensation was lower in Fiscal 2009 primarily due to the extension and repricing of warrants in connection with the financial advisory agreement in fiscal 2008 The Black-Scholes value of the extension and repricing of warrants amounted to $385 in Fiscal 2008.

Share-based compensation was lower in Fiscal 2008 due to the extension and repricing of warrants in connection with a financial advisory agreement. The Black-Scholes value of the extension and repricing of warrants amounted to $385 in Fiscal 2008 compared to $683 in Fiscal 2007. This was partially offset by an increase in the Black-Scholes value of the options and warrants granted during Fiscal 2008 compared to the Black-Scholes value of the options and warrants granted during Fiscal 2007 because we granted more options during Fiscal 2008.

· Payroll and benefits increased primarily as a result of salary and health insurance rate increases.

· Investor relations expense for Fiscal 2009 is lower than Fiscal 2008 primarily as a result of a decrease in the cost of the annual report and investor relations consulting costs.

Investor relations expense for Fiscal 2008 is higher than Fiscal 2007 primarily as a result of an increase in the cost of the annual report due to the inclusion of additional disclosures and the services of a proxy solicitor.

· Professional fees increased during Fiscal 2009 compared to Fiscal 2008 primarily as a result of an increase in accounting and legal fees. Legal fees increased primarily due to our multiple myeloma project and employee compensation review. Accounting and legal fees also increased primarily due to the review and filing of our securities filings.

· Professional fees increased during Fiscal 2008 compared to Fiscal 2007 primarily as a result of an increase in accounting and legal fees in connection with the additional disclosure included in the annual report.

· Depreciation and amortization increased during Fiscal 2009 compared to Fiscal 2008 primarily as a result of an increase in amortization of patent costs. .

· Depreciation and amortization decreased during Fiscal 2008 compared to Fiscal 2007 primarily as a result of a decrease in amortization of patent costs. During Fiscal 2008, we did not amortize the cost of our human health pending patent applications.

We expect general and administrative expenses to modestly increase over the next twelve months primarily due to an increase in payroll and benefits, insurance costs related to our multiple myeloma project and legal and accounting fees related to the increased regulatory environment surrounding our business.

Research and development expenses

                                                        Year Ended June 30,
                      2009        2008       Change           %         2008        2007       Change           %
                                                  (In thousands, except % values)
Stock-based
compensation       $    62     $   148     $    (86 )       (58 )%   $   148     $    60     $     88         147 %
Other research
and development      2,292       1,617          675          38 %      1,617       1,148          469          41 %
Total research
and development    $ 2,354     $ 1,765     $    589          33 %    $ 1,765     $ 1,208     $    557          46 %

· Stock-based compensation decreased during Fiscal 2009 compared to Fiscal 2008 primarily because the Black-Scholes calculated fair value of the options and warrants granted during Fiscal 2009 were lower than Fiscal 2008 because the number of options granted were lower in Fiscal 2009.

· Stock-based compensation increased during Fiscal 2008 compared to Fiscal 2007 primarily because the Black-Scholes calculated fair value of the options and warrants granted during Fiscal 2008 were higher than Fiscal 2007 because the number of options granted were higher in Fiscal 2008.

· Other research and development costs increased during Fiscal 2009 compared to Fiscal 2008 primarily as a result of the expansion of our human health programs, specifically our multiple myeloma project, which was partially offset by a decrease in the cost of our research agreement with the University of Waterloo due to the strengthening of the U.S. dollar against the Canadian dollar. .

· Other research and development costs increased during Fiscal 2008 compared to Fiscal 2007 primarily as a result of the initiation of our multiple myeloma . . .