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

Overview

The Company was incorporated in 1992 and until July 30, 1999, devoted substantially all of its resources to the development and application of novel yeast-based and other drug discovery technologies. On July 30, 1999, the Company sold its drug discovery assets and ceased its internal drug discovery operations and research efforts for collaborative partners. The Company currently has limited operations, no employees and the Company's current Chief Executive Officer is a consultant. The Company is currently seeking to (i) license its wholly-owned subsidiary's drug discovery technologies and (ii) to use a portion of its available cash to acquire or invest in companies or income producing assets.

At March 31, 2012, the Company had an accumulated deficit of approximately $36.1 million. The Company's losses have resulted principally from costs incurred in connection with its research and development activities and from general and administrative costs associated with the Company's operations. These costs have exceeded the Company's revenues and interest income. As a result of the sale of its drug discovery assets and the cessation of its internal drug discovery operations and research efforts for collaborative partners, the Company ceased to have research funding revenues and substantially reduced its operating expenses. The Company expects to generate revenues in the future only if it is able to license its technologies.

Results of Operations

Three Month Ended March 31, 2012 and 2011.

Revenues

There were no revenues for the three months ended March 31, 2012 and for the three months ended March 31, 2011.

Costs and Expenses

General and administrative expenses increased to $134,538 for the three months ended March 31, 2012 from $134,128 for the same period in 2011. Patent expenses increased by $8,901, accounting, consulting and legal expenses decreased by $13,656, stockholders relations increased by $5,718 due to costs in connection with the shareholders' meeting to be held on June 21, 2012 and other costs decreased by $553.

For the three months ended March 31, 2012, the Company recognized a gain of $7 in its investment in Laurel Partners Limited Partnership. There was a gain of $21 for the same period in 2011.

Interest Income

Interest income for the three months ended March 31, 2012 was $654 compared to interest income of $1,832 for the same period in 2011. This decrease is attributable primarily to significant lower interest rates earned on invested funds.

Net (Loss)

Net loss for the three months ended March 31, 2012 was $155,485 compared to a net loss of $153,883 for the same period in 2011. The increase in net loss can be principally attributed to an increase in general and administrative expenses of $410, a decrease in interest income of $1,178 and a decrease in income from other ventures of $14.

Liquidity and Capital Resources

At March 31, 2012, the Company held cash and cash equivalents of $23.3 million. The Company's working capital at March 31, 2012 was $23.2 million.

The Company believes that its existing capital resources, together with interest income, will be sufficient to support its operations through the end of 2013. This forecast of the period of time through which the Company's financial resources will be adequate to support its operations is a forward-looking statement that may not prove accurate and, as such, actual results may vary. The Company's capital requirements may vary as a result of a number of factors, including the transactions, if any, arising from the Company's efforts to acquire or invest in companies and income-producing assets and the expenses of pursuing such transactions.