As filed with the Securities and Exchange Commission on October 3, 2008

Registration No. 333-          
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 


FORM S-1
REGISTRATION STATEMENT

UNDER
THE SECURITIES ACT OF 1933
 


GENSPERA, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
 
2834
 
20-0438951
(State or jurisdiction of
incorporation or organization)
 
(Primary Standard Industrial
Classification Code Number)
 
(I.R.S. Employer Identification No.)
 
9901 IH 10 West, Suite 800
San Antonio, TX, 78230
(210) 477-8537
FAX (210) 477-8547
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)
 
Agent for Service:
National Corporate Research
800 Brazos St., Suite 400
Austin, TX 78701
800-345-4647
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service )



Copy to:
Raul Silvestre
Law Offices of Raul Silvestre & Associates, APLC
31200 Via Colinas, Suite 200
Westlake Village, CA 91362
(818) 597-7552
Fax (818) 597-7551
 


Approximate date of commencement of proposed sale to the public: From time to time after this registration statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box.  x

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

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.

Large accelerated filer
 
¨
  
Accelerated filer
 
¨
Non-accelerated filer
 
¨   (Do not check if smaller reporting company)
  
Smaller reporting company
 
x





CALCULATION OF REGISTRATION FEE
 
Title of Each Class of
Securities to be Registered
 
Amount to be
Registered
 
Proposed Maximum
Offering Price 
 
Proposed Maximum
Aggregate Offering
Price
 
Amount of
Registration Fee
 
Common Stock, par value $0.001 per share
   
4,865,000
 
$  
1.00
(1)   
$
4,865,000
  
$
194.11
 
Common Stock, par value $0.001 per share (3)
   
1,522,400
 
$
2.00
(2)
$
3,044,800
 
$
121.50
 
      6,387,400        
$
7,909,800  
$
315.61  

(1)
Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457 of the Securities Act based upon a per share amount of $1.00, based on the price on which the securities were previously sold pursuant to the Company's July to August private placements. There is currently no trading market for the Registrant's common stock. The price of $1.00 is a fixed price at which the selling stockholders identified herein may sell their shares until the Registrant's common stock is quoted, if ever, at which time the shares may be sold at prevailing market prices or privately negotiated prices.

(2)
Fee based on exercise price applicable to shares issuable upon exercise of warrants in accordance with Rule 457(g).

(3)
Represents shares of Common Stock issuable upon the exercise (at a price of $2.00 per share) of outstanding warrants.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(a), MAY DETERMINE.

2




SUBJECT TO COMPLETION, DATED OCTOBER 3, 2008

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
 
PROSPECTUS

6,387,400 Shares


GENSPERA, INC.

Common Stock
 


This prospectus relates to the resale of 6,387,400 shares of our common stock, by the selling stockholders identified on pages 32 of this prospectus. We will not receive any proceeds from the sale of these shares by the selling stockholders.

Our common stock is not presently traded on any market or securities exchange, and we have not applied for listing or quotation on any public market. We anticipate seeking sponsorship for the trading of our common stock on the National Association of Securities Dealers OTC Bulletin Board upon the effectiveness of the registration statement of which this prospectus forms a part. However, we can provide no assurance that our shares will be traded on the OTC Bulletin Board or, if traded, that a public market will materialize. The selling shareholders will sell at a price of $1.00 per share until our shares are quoted on the OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices.
 


Investing in our common stock is highly speculative and involves a high degree of risk. You should consider carefully the risks and uncertainties in the section entitled “ Risk Factors ” beginning on page 5 of this prospectus.
 


NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
 
The date of this Prospectus is October 3, 2008


TABLE OF CONTENTS

    
Page
RISK FACTORS     
5
FORWARD LOOKING STATEMENTS     
13
USE OF PROCEEDS     
14
DIVIDEND POLICY     
14
OUR BUSINESS   
14
PROPERTIES
22
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS     
22
LEGAL PROCEEDINGS
27
MANAGEMENT     
27
EQUITY COMPENSATION PLAN INFORMATION
29
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS     
30
PRINCIPAL STOCKHOLDERS     
31
SELLING STOCKHOLDERS     
32
DESCRIPTION OF SECURITIES     
33
MARKET FOR COMMON EQUITY & RELATED STOCKHOLDER MATTERS
34
SHARES ELIGIBLE FOR FUTURE SALE
34
PLAN OF DISTRIBUTION     
35
INDEMNIFICATION OF DIRECTORS AND OFFICERS
37
LEGAL MATTERS     
37
EXPERTS     
37
INTERESTS OF NAMED EXPERTS AND COUNSEL     
37
WHERE YOU CAN FIND MORE INFORMATION     
37
FINANCIAL STATEMENTS     
39

You may rely only on the information contained in this prospectus. We have not authorized anyone to provide information or to make representations not contained in this prospectus. This prospectus is neither an offer to sell nor a solicitation of an offer to buy any securities other than those registered by this prospectus, nor is it an offer to sell or a solicitation of an offer to buy securities where an offer or solicitation would be unlawful. Neither the delivery of this prospectus, nor any sale made under this prospectus, means that the information contained in this prospectus is correct as of any time after the date of this prospectus.

4


RISK FACTORS

Investing in our common stock involves a high degree of risk. You should carefully consider the following risk factors and all other information contained in this prospectus before purchasing our common stock. If any of the following events were to occur, our business, financial condition or results of operations could be materially and adversely affected. In these circumstances, the market price of our common stock could decline, and you could lose some or all of your investment. Additional risks and uncertainties not currently known to us or that we currently believe to be immaterial could also materially and adversely affect our business, financial condition, operating results and/or cash flow.

Risks Relating to the Company's Stage of Development

Since the Company has a limited operating history you cannot rely upon the Company's limited historical performance to make an investment decision.  
 
Since inception in 2003 and through August 31, 2008 the Company has raised slightly in excess of $3,428,000 in capital and recorded accumulated losses totaling $2,477,727 as of June 30, 2008 and the Company had working capital of $182,295 and stockholders’ equity of $242,626 at June 30, 2008. Our net losses for the two most recent fiscal years have been $691,199 and $245,070 for 2007 and 2006 respectively. During this period, we have generated no revenue.
 
The Company's ability to generate revenues and achieve profitability depends upon its ability to complete the development of its technology and compounds, obtain the required regulatory approvals and manufacture, market and sell its products. In part because of the Company's past operating results, no assurances can be given that the Company will be able to accomplish all or any of these goals.

This limited and changing history may not be adequate to enable you to fully assess the Company's current ability to develop and commercialize its technologies and proposed products, obtain approval from the U.S. Food and Drug Administration (“FDA”), achieve market acceptance of its proposed products and respond to competition. No assurances can be given as to exactly when, if at all, the Company will be able to fully develop, commercialize, market, sell and derive material revenues from its proposed products in development.

The Company   will need to raise additional capital to continue operations, and failure to do so would impair the Company's ability to fund operations, develop its technologies or promote its products.  

The Company has relied almost entirely on external financing to fund operations. Such financing has historically come primarily from the sale of common stock to third parties and convertible debt from a stockholder. The Company anticipates, based on current proposed plans and assumptions relating to its operations (including the timetable of, and costs associated with, new product development) and financing the Company has undertaken prior to the date of this prospectus, that its current working capital will be sufficient to satisfy contemplated cash requirements for approximately 6 months, assuming that the Company does not engage in an extraordinary transaction or otherwise face unexpected events or contingencies, any of which could affect cash requirements. As of September 12, 2008, the Company has cash and cash equivalents on hand of $1,858,041. Presently, the Company has a monthly cash burn rate of approximately $300,000. Accordingly, the Company will need to raise additional capital to fund anticipated operating expenses and future expansion after such 6 month period. Among other things, external financing will be required to cover the further development of the Company's technologies and products and other operating costs. The Company cannot assure you that financing whether from external sources or related parties will be available if needed or on favorable terms. If additional financing is not available when required or is not available on acceptable terms, the Company may be unable to fund operations and planned growth, develop or enhance its technologies, take advantage of business opportunities or respond to competitive market pressures. Any negative impact on the Company's operations may make the raising of capital more difficult and may also result in a lower price for the Company's securities.

The Company may have difficulty raising needed capital in the future as a result of, among other factors, the Company's limited operating history and business risks associated with the Company.

The Company's business currently generates no cash and will not be sufficient to meet its future capital requirements. The Company's management does not know when this will change. The Company has expended and will continue to expend substantial funds in the research, development, and clinical testing of the Company's products. The Company will require additional funds to conduct research and development, establish and conduct clinical trials, support commercial-scale manufacturing arrangements and provide for the marketing and distribution of its products. Additional funds may not be available on acceptable terms, if at all. If adequate funds are unavailable from any source, the Company may have to delay, reduce the scope of or eliminate one or more of its research, development or commercialization programs or product launches or marketing efforts which may materially harm the Company's business, financial condition and results of operations.

5


The Company's long term capital requirements are expected to depend on many factors, including:
 
·      
continued progress and cost of its research and development programs;
 
·      
progress with pre-clinical studies and clinical trials;
 
·      
time and costs involved in obtaining regulatory clearance;
 
·      
costs involved in preparing, filing, prosecuting, maintaining and enforcing patent claims;
 
·      
costs of developing sales, marketing and distribution channels and its ability to sell the Company's products;
 
·      
costs involved in establishing manufacturing capabilities for commercial quantities of its products;
 
·      
competing technological and market developments;
 
·      
market acceptance of its products;
 
·      
costs for recruiting and retaining employees and consultants; and
 
·      
costs for educating and training physicians about its products.
 
The Company may consume available resources more rapidly than currently anticipated, resulting in the need for additional funding. The Company may seek to raise any necessary additional funds through the exercising of warrants, options, equity or debt financings, collaborative arrangements with corporate partners or other sources, which may be dilutive to existing stockholders or otherwise have a material effect on the Company's current or future business prospects. If adequate funds are not available, the Company may be required to significantly reduce or refocus its development and commercialization efforts.

The Company relies on technologies that it may not be able to commercially develop, which will prevent the Company from generating revenues, operating profitably or providing investors any return on their investment.  
 
The Company has concentrated its research on its pro-drug technologies, and the Company's ability to generate revenue and operate profitably will depend on it being able to develop these technologies for human applications. These are emerging technologies with, as yet, limited human applications. The Company cannot guarantee that it will be able to develop its technologies or that such development will result in products or services with any significant commercial utility. The Company anticipates that the commercial sale of such products or services, and royalty/licensing fees related to its technology, will be the Company's primary sources of revenues. If the Company is unable to develop its technologies, investors will likely lose their entire investment.
 
Inability to complete pre-clinical and clinical testing and trials will impair the viability of the Company.  
 
The Company is in its development stage and has not yet applied for approval by the FDA to conduct clinical trials. Even if the Company successfully files an Investigational New Drug (IND) application and receives clearance from the FDA to commence trials, the outcome of pre-clinical, clinical and product testing of the Company's products is uncertain, and if the Company is unable to satisfactorily complete such testing, or if such testing yields unsatisfactory results, the Company will be unable to commercially produce its proposed products. Before obtaining regulatory approvals for the commercial sale of any potential human products, the Company's products will be subjected to extensive pre-clinical and clinical testing to demonstrate their safety and efficacy in humans. No assurances can be given that the clinical trials of the Company's products, or those of licensees or collaborators, will demonstrate the safety and efficacy of such products at all, or to the extent necessary to obtain appropriate regulatory approvals, or that the testing of such products will be completed in a timely manner, if at all, or without significant increases in costs, program delays or both, all of which could harm the Company's ability to generate revenues. In addition, the Company's proposed products may not prove to be more effective for treating disease or injury than current therapies. Accordingly, the Company may have to delay or abandon efforts to research, develop or obtain regulatory approval to market its proposed products. Many companies involved in biotechnology research and development have suffered significant setbacks in advanced clinical trials, even after promising results in earlier trials. The failure to adequately demonstrate the safety and efficacy of a therapeutic product under development could delay or prevent regulatory approval of the product and could harm the Company's ability to generate revenues, operate profitably or produce any return on an investment in the Company.

6


The Company's additional financing requirements could result in dilution to existing stockholders.

The additional financings which the Company will require may in the future be obtained through one or more transactions which will effectively dilute the ownership interests of stockholders. The Company has the authority to issue additional shares of common stock and preferred stock, as well as additional classes or series of ownership interests or debt obligations which may be convertible into any one or more classes or series of ownership interests. The Company is authorized to issue 80 million shares of common stock and 10 million shares of preferred stock. Such securities may be issued without the approval or other consent of the Company's stockholders.
 
Risks Relating to Intellectual Property and Government Regulation
 
The Company may not be able to withstand challenges to its intellectual property rights, such as patents, should contests be initiated in court or at the U.S Patent and Trademark Office .
 
The Company relies on its intellectual property, including its issued and applied for patents, as the foundation of its business. The intellectual property rights of the Company may come under challenge, and no assurances can be given that, even though issued, the Company's current and potential future patents will survive claims commencing in the court system alleging invalidity or infringement on other patents. The viability of the Company's business would suffer if such patent protection were limited or eliminated. Moreover, the costs associated with defending or settling intellectual property claims would likely have a material adverse effect on the Company.

The Company may not be able to adequately protect against piracy of intellectual property in foreign jurisdictions.  
 
Considerable research in the area of pro-drugs is being performed in countries outside of the United States, and a number of the Company's competitors are located in those countries.  The laws protecting intellectual property in some of those countries may not provide protection for the Company's trade secrets and intellectual property adequate to prevent its competitors from misappropriating the Company's trade secrets or intellectual property.  If the Company's trade secrets or intellectual property are misappropriated in those countries, the Company may be without adequate remedies to address the issue.
   
The Company's products may not receive FDA approval, which would prevent the Company from commercially marketing its products and producing revenues.  

The FDA and comparable government agencies in foreign countries impose substantial regulations on the manufacture and marketing of pharmaceutical products through lengthy and detailed laboratory, pre-clinical and clinical testing procedures, sampling activities and other costly and time-consuming procedures. Satisfaction of these regulations typically takes several years or more and varies substantially based upon the type, complexity and novelty of the proposed product. The Company cannot yet accurately predict when it might first submit any Investigational New Drug, or IND, application to the FDA, or whether any such IND application would be granted on a timely basis, if at all, nor can the Company assure you that it will successfully complete any clinical trials in connection with any such IND application. Further, the Company cannot yet accurately predict when it might first submit any product license application for FDA approval or whether any such product license application would be granted on a timely basis, if at all.  As a result, the Company cannot assure you that FDA approvals for any products developed by it will be granted on a timely basis, if at all. Any such delay in obtaining, or failure to obtain, such approvals could have a material adverse effect on the marketing of the Company's products and its ability to generate product revenue.

Because the Company or its collaborators must obtain regulatory approval to market its products in the United States and other countries, the Company cannot predict whether or when it will be permitted to commercialize its products.  

Federal, state and local governments and agencies in the United States (including the FDA) and governments in other countries have significant regulations in place that govern many of the Company's activities.  The Company is or may become subject to various federal, state and local laws, regulations and recommendations relating to safe working conditions, laboratory and manufacturing practices, the experimental use of animals and the use and disposal of hazardous or potentially hazardous substances used in connection with its research and development work. The preclinical testing and clinical trials of the products that the Company or its collaborators develop are subject to extensive government regulation that may prevent the Company from creating commercially viable products from its discoveries. In addition, the sale by the Company or its collaborators of any commercially viable product will be subject to government regulation from several standpoints, including manufacturing, advertising and promoting, selling and marketing, labeling, and distributing. If, and to the extent that, the Company is unable to comply with these regulations, its ability to earn revenues will be materially and negatively impacted. 

7


Risks Relating to Competition
 
The Company's competition includes both public and private organizations and collaborations among academic institutions and large pharmaceutical companies, most of which have significantly greater experience and financial resources than the Company does.  

The biotechnology industry is characterized by intense competition. The Company competes against numerous companies, many of which have substantially greater financial and other resources than it has. Several such enterprises have initiated pro-drug research programs and/or efforts to treat the same diseases targeted by the Company. Companies such as Merck, Ipsen and Diatos, as well as others, have substantially greater resources and experience in the Company's fields than it does, and are well situated to compete with us effectively. Of course, any of the world's largest pharmaceutical companies represent a significant actual or potential competitor with vastly greater resources than the Company's.

Risks Relating to the Company's Reliance on Third Parties
 
The Company depends on non-employee consultants and scientific contractors to help it develop and test its proposed products. Our ability to develop such relationships could impair or delay our ability to develop products.

The Company's strategy for the development, clinical testing and commercialization of its proposed products is based on an outsource model. This model requires that the Company enter into agreements with corporate partners, research institutions, scientific contractors and licensors, licensees and others in order to further develop its technology and develop products. In the event the Company is not able to enter into such relationships in the future, our: ability to develop products may be seriously hindered; or we would be required to expend considerable money and research to bring such research and development functions in house. Either outcome could result in our inability to develop a commercially feasible product or in the need for substantially more working capital to complete the research in-house.

We may not be able to establish and maintain strategic relationships with research institutions and scientific contractors or our current relationships with these individuals and entities may weaken.

Our business will depend on our ability to establish and maintain strategic relationships with research institutions and scientific contractors. Many of our strategic relationships currently consist of non-binding letters of understanding that contemplate future agreements that would contain specific obligations of the respective parties and would set forth the financial terms of the relationships. We may not be able to establish such future agreements on terms that are satisfactory to us or at all, and any arrangements that we enter into may not result in the type of collaborative relationship with the third party that we are seeking. Further, these third parties may not regard their relationship with us as important to their own business operations and may not perform their obligations as agreed. If we are unable to establish and maintain satisfactory strategic relationships, our ability to implement a business plan may be significantly impaired and our financial condition adversely effected.
 
We intend to rely upon the third-party FDA-approved manufacturers for our products. Should these manufacturers fail to perform as expected, we will need to develop or procure other manufacturing sources, which would cause delays or interruptions in our product supply and result in the loss of significant sales and customers.
 
We currently have no internal manufacturing capability, and will rely extensively on FDA-approved licensees, strategic partners or third party contract manufacturers or suppliers. Should we be forced to manufacture our product, we cannot give you any assurance that we will be able to develop an internal manufacturing capability or procure third party suppliers. In the event we seek third party suppliers, they may require us to purchase a minimum amount of compound or could require other unfavorable terms. Any such event would materially impact our prospects and could delay the development and sale of our products. Moreover, we cannot give you any assurance that any contract manufacturers or suppliers we procure will be able to supply our products in a timely or cost effective manner or in accordance with applicable regulatory requirements or our specifications.
 
General Risks Relating to the Company's Business

The Company may be subject to litigation that will be costly to defend or pursue and uncertain in its outcome.

The Company's business may bring it into conflict with its licensees, licensors, or others with whom it has contractual or other business relationships or with its competitors or others whose interests differ from the Company's. If the Company is unable to resolve those conflicts on terms that are satisfactory to all parties, the Company may become involved in litigation brought by or against it. That litigation is likely to be expensive and may require a significant amount of management's time and attention, at the expense of other aspects of the Company's business. The outcome of litigation is always uncertain, and in some cases could include judgments against us that require the Company to pay damages, enjoin it from certain activities, or otherwise affect its legal or contractual rights, which could have a significant adverse effect on its business. 

8



The Company may not be able to obtain third-party patient reimbursement or favorable product pricing, which would reduce its ability to operate profitably.
 
The Company's ability to successfully commercialize certain of its proposed products in the human therapeutic field may depend to a significant degree on patient reimbursement of the costs of such products and related treatments at acceptable levels from government authorities, private health insurers and other organizations, such as health maintenance organizations. The Company cannot assure you that reimbursement in the United States or foreign countries will be available for any products it may develop or, if available, will not be decreased in the future, or that reimbursement amounts will not reduce the demand for, or the price of, its products with a consequent harm to the Company's business. The Company cannot predict what additional regulation or legislation relating to the health care industry or third-party coverage and reimbursement may be enacted in the future or what effect such regulation or legislation may have on the Company's business. If additional regulations are overly onerous or expensive or if health care related legislation makes its business more expensive or burdensome than originally anticipated, the Company may be forced to significantly downsize its business plans or completely abandon its business model.

The Company's products may be expensive to manufacture, and they may not be profitable if the Company is unable to control the costs to manufacture them.  

The Company's products may be significantly more expensive to manufacture than most other drugs currently on the market today due to a fewer number of potential manufacturers, greater level of needed expertise, and other general market conditions affecting the manufacturers of its products.  The Company would hope to substantially reduce manufacturing costs through process improvements, development of new science, increases in manufacturing scale and outsourcing to experienced manufacturers. If the Company is not able to make these, or other improvements, and depending on the pricing of the product, its profit margins may be significantly less than that of most drugs on the market today. In addition, the Company may not be able to charge a high enough price for any products it develops, even if they are safe and effective, to make a profit. If the Company is unable to realize significant profits from its potential product candidates, its business would be materially harmed.
 
In order to secure market share and generate revenues, the Company's proposed products must be accepted by the health care community, which can be very slow to adopt or unreceptive to new technologies and products.  
 
The Company's proposed products and those developed by its collaborative partners, if approved for marketing, may not achieve market acceptance since hospitals, physicians, patients or the medical community in general may decide not to accept and utilize these products. The products that the Company is attempting to develop represents substantial departures from established treatment methods and will compete with a number of more conventional drugs and therapies manufactured and marketed by major pharmaceutical companies. The degree of market acceptance of any of the Company's developed products will depend on a number of factors, including:
 
·      
the Company's establishment and demonstration to the medical community of the clinical efficacy and safety of its proposed products;
 
·      
the Company's ability to create products that are superior to alternatives currently on the market;
 
·      
the Company's ability to establish in the medical community the potential advantage of its treatments over alternative treatment methods; and
 
·      
reimbursement policies of government and third-party payors.
 
If the health care community does not accept the Company's products for any of the foregoing reasons, or for any other reason, the Company's business would be materially harmed.

We depend on Craig A. Dionne, PhD for our continued operations and future success. A loss of Dr. Dionne will significantly hinder our ability to move forward with our business plan.  

The loss of Craig A. Dionne, PhD would be significantly detrimental to us. We currently maintain a one million dollar “key person” life insurance policy on the life of Dr. Dionne. Nevertheless, the Company’s prospects and operations will be significantly hindered upon the death or incapacity of this key individual.

In addition, the Company's anticipated growth and expansion into areas and activities requiring additional expertise, such as clinical testing, regulatory compliance, manufacturing and marketing, will require the addition of new management personnel and the development of additional expertise by existing management personnel. There is intense competition for qualified personnel in the areas of the Company's present and planned activities, and there can be no assurance that the Company will be able to continue to attract and retain the qualified personnel necessary for the development of its business. The failure to attract and retain such personnel or to develop such expertise would adversely affect the Company's business.


Our business is dependent upon securing sufficient quantities of a natural product that currently grows naturally in very specific locations located outside of the United States.

The therapeutic component of our products, including our lead compound G-202, is referred to as 12ADT. 12ADT is derived from a material called Thapsigargin. Thapsigargin is derived from the seeds of a plant referred to as Thapsia garganica . To our knowledge, Thapsia garganica only grows along the coastal regions of certain Mediterranean countries. We currently secure seeds from Thapsia garganica plants that grow along the coastal regions of Spain. Thapsia garganica is considered a “weed” and to our knowledge, the plant has no horticultural value in and of itself. We believe that it will not be possible to grow Thapsia garganica within the United States under current United States laws and regulations because the plant is not native to this country and we do not have the resources to seek and/or secure any required permits and licenses to import and grow the plant in this country. While we have secured the necessary import permits from the appropriate state and federal authorities for the seeds of Thapsia garganica that are shipped to us, we are and will be highly dependent upon our ability to secure sufficient quantities of the seeds of Thapsia garganica from countries outside of the United States. There can be no assurances that the countries from which we can secure Thapsia garganica will continue to allow our third party supplier to collect such seeds and/or to do so and export the seeds derived from Thapsia garganica to the United States. In addition, we do not know if there is significant year-to-year variability in the quantity of Thapsigargin in Thapsia garganica due to yearly weather variations or other causes such that our forecast for the amount of seeds required for our needs may be underestimated. No assurances can be given that such variability, if any, will not have an adverse impact on our business.

To our knowledge, there are no commercially viable means to synthesize the active ingredient of our therapeutics from laboratory chemicals.

Generally, attempts are often made to develop a synthetic approach using laboratory chemicals to make an active ingredient derived from a natural substance. Although a group has recently published a scientific paper on the full chemical synthesis of Thapsigargin, we believe that the number of individual chemical steps required to make synthetic Thapsigargin (42 individual steps) is too large for economically feasible commercial synthesis of this compound. We cannot provide any assurances, however, that another group at some time may be able to significantly reduce the number of individual chemical steps to make synthetic Thapsigargin. To our current knowledge, there is no commercially viable means to conduct such synthesis for 12ADT, the active component of our therapeutic agents. Therefore, we believe that our ability to produce the therapeutic component 12ADT will always depend upon our ability to secure seeds from the plant Thapsia garganica. There can be no assurances that our ability to secure such seeds can be adequately secured to satisfy our development and commercial needs.

Commercial requirements, if any, for our therapeutic products may require us to secure land for cultivation and harvesting of the seeds derived from Thapsia garganica.

While we believe that we can satisfy our needs for clinical development of G-202 through completion of Phase III clinical studies from Thapsia garganica that grows naturally in the wild, with respect to commercial operations, if any, that involve development of an approved therapeutic that comprises G-202, we may not be able to rely upon securing the seeds from Thapsia garganica that grow naturally. We have estimated that in order to secure sufficient quantities of the seeds from Thapsia garganica for commercialization of a product comprising G-202, we will need to secure approximately 100 acres of land to cultivate and grow Thapsia garganica. There can be no assurances that we can secure such acreage, or that even if we are able to do so, that we can adequately grow sufficient quantities of Thapsia garganica to satisfy any commercial objectives that involve G-202.

Thapsia garganica and Thapsigargin, when brought into contact with the skin, can cause severe irritation.

It has been known for centuries that the plant Thapsia garganica can cause severe skin irritation when contact is made between the plant and the skin. Skin plasters made from the plant have been part of the Medical Pharmacopeia in Western Europe as recently as the 1930s. The therapeutic action of the plaster is that of a severe counter-irritant. In 1978, Thapsigargin was determined to be the skin-irritating component of the plant Thapsia garganica . The therapeutic component of our products, including our lead product G-202, is derived from Thapsigargin. We obtain Thapsigargin from the above-ground seeds of Thapsia garganica . These seeds are currently harvested by hand and those conducting the harvesting must wear protective clothing and gloves to avoid contact of the skin with the seeds. Although we obtain the seeds from a third-party contractor located in Spain, and although the contractor has contractually waived any and all liability associated with collecting the seeds for our supply needs, it is possible that the contractor or those employed by the contractor may suffer medical issues related to the harvesting and subsequently seek compensation from us via, for example, litigation. No assurances can be given, despite our contractual relationship with the third party contractor, that the Company may not be the subject of litigation related to the harvesting of the seeds.

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Thapsia garganica is a plant that to our knowledge is not grown in the United States but might be able to grow in this country if the seeds of the plant are accidentally scattered.

Non-native plants and animals that are introduced to the United States can in time overtake a natural plant or animal and cause destructive or deleterious problems for the eco-system of this country. While we do not know if Thapsia garganica can grow within the United States or what effect such growth might have on the eco-system of the United States, if such growth were to occur due to the accidental dispersion of seeds from Thapsia garganica that we have imported into the United States, we may be liable for any damages or corrective measures that might be required to be taken to counteract such growth. No assurances can be given that seeds that we import into this country might not accidentally be scattered, resulting in the accidental growth of Thapsia garganica within this country. Furthermore, no assurances can be given that if such accidental growth were to occur, we will not be held financially liable for any measures that might be required to be taken to eradicate such growth or to mitigate any damages caused by such growth.

Development and commercialization, if any, of our therapeutic compounds may incur scrutiny under the Convention on Biological Diversity Treaty.

The Convention on Biological Diversity is an international treaty that was adopted at the Earth Summit in Rio de Janeiro in 1992 (the “Convention”). The Convention has three main goals: (1) the conservation of biodiversity; (2) sustainable use of the components of biodiversity; and (3) sharing the benefits arising from the commercial and other utilization of genetic resources in a fair and equitable way. Although the United States was a signatory at the initial summit, the United States Senate has never ratified the treaty such that the United States is not a participating country in the Convention. However, most countries, including Spain and others where we currently obtain or can obtain seeds from Thapsia garganica , have ratified the Convention and are currently participants in the Convention. Our current supplier of Thapsia garganica seeds harvests the seeds from plants growing in uncultivated fields and does not replant the materials. Although this method of harvesting does not to our knowledge destroy or damage the parent plant, the long-term consequences of this practice on the natural biodiversity of the local ecosystem is unknown. Our supplier is currently undergoing research on the optimal methods of cultivation, but until such optimization is in full production, if ever, harvesting of the seeds may be viewed by the Government of Spain as in violation of the Convention and such harvesting may be susceptible to government intervention. If the Government of Spain were to take any action against our supplier with regard to the Convention, we may be at risk of losing our current source of seeds. There can be no assurances that the Government of Spain, or any other government of any country where we might be able to harvest seeds from Thapsia garganica , may not use the Convention as a means to prevent such harvesting. We may also fall under scrutiny of the Convention if any of our products derived from the seeds of Thapsia garganica are approved for commercialization by the United States Food and Drug Administration or other similar regulatory agencies in other countries. There can be no assurances that under the Convention, because the seeds originated in Spain, the Government of Spain will not assert that it is entitled to some form of equitable compensation from GenSpera. There can also be no assurances that such compensation, if demanded, may not be onerous or make commercialization of our products, if any, not feasible.

Because Thapsia garganica is a toxic plant, synthesis of 12ADT, the active ingredient of our therapeutic compounds which we obtain from the seeds of Thapsia garganica, must be conducted in a facility qualified for making compounds that have a toxic effect on human cells.

There are a limited number of facilities that are qualified to handle toxic agents for the manufacture of therapeutic agents. This limits the potential number of possible manufacturing sites for our therapeutic compounds that are derived from Thapsia garganica. No assurances can be provided that these facilities will be available for the manufacture of our therapeutic compounds under our time schedules or within the parameters of our manufacturing budget.

Our lead therapeutic compound, G-202, has not been subjected to large scale manufacturing procedures

Although G-202 has been manufactured in an academic setting and while we believe that the process used in such a setting can be transferred to large scale manufacturing procedures, we have not yet performed such large scale manufacturing of G-202. There can be no assurances that the current procedure for manufacturing G-202 can be manufactured under larger scale manufacturing procedures such that we can not provide assurances that we can manufacture G-202 to satisfy our development and commercial needs, if any.

The Company has no product liability insurance, which may leave it vulnerable to future claims that the Company will be unable to satisfy.  

The testing, manufacturing, marketing and sale of human therapeutic products entails an inherent risk of product liability claims, and the Company cannot assure that substantial product liability claims will not be asserted against it. The Company has no product liability insurance. In the event the Company is forced to expend significant funds on defending product liability actions, and in the event those funds come from operating capital, the Company will be required to reduce its business activities, which could lead to significant losses.

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The Company cannot assure you that adequate insurance coverage will be available in the future on acceptable terms, if at all, or that, if available, the Company will be able to maintain any such insurance at sufficient levels of coverage or that any such insurance will provide adequate protection against potential liabilities.  

The Company has secured limited director and officer insurance and will have commercial insurance policies. Any significant insurance claims would have a material adverse effect on its business, financial condition and results of operations. Insurance availability, coverage terms and pricing continue to vary with market conditions. The Company endeavors to obtain appropriate insurance coverage for insurable risks that it identifies, however, the Company may fail to correctly anticipate or quantify insurable risks, may not be able to obtain appropriate insurance coverage, and insurers may not respond as the Company intends to cover insurable events that may occur. The Company has observed rapidly changing conditions in the insurance markets relating to nearly all areas of traditional corporate insurance. Such conditions have resulted in higher premium costs, higher policy deductibles, and lower coverage limits. For some risks, the Company may not have or maintain insurance coverage because of cost or availability.
 
Risks Relating to the Company's Common Stock
 
There is no public market for the Company's securities and no assurances can be given that one will ever develop.

The Company is a private company. Without registration, there is only a limited ability of a security holder to sell their securities, as those transfers or sales would be made privately. Therefore, an investment in our common stock should be considered as totally illiquid, and investors are cautioned that they may not be able to liquidate their investment readily or at all when the need or desire to sell arises. Moreover, no assurances can be given that a public market for our securities will ever materialize. Additionally, even if a public market for our securities develops and our securities become listed, the trading volume may be limited, making it difficult for an investor to sell shares.

When and if the Company becomes a public company, the Company faces risks related to compliance with corporate governance laws and financial reporting standards.  

The Sarbanes-Oxley Act of 2002, as well as related new rules and regulations implemented by the Securities and Exchange Commission and the Public Company Accounting Oversight Board, require changes in the corporate governance practices and financial reporting standards for public companies. These new laws, rules and regulations, including compliance with Section 404 of the Sarbanes-Oxley Act of 2002 relating to internal control over financial reporting (“Section 404”), will materially increase the Company's legal and financial compliance costs and made some activities more time-consuming and more burdensome. Starting in 2007, Section 404 of the Sarbanes-Oxley Act of 2002 requires that the Company's management assess the Company's internal control over financial reporting annually and include a report on its assessment in its annual report filed with the SEC. Effective December 15, 2009 for a smaller reporting company, the Company's independent registered public accounting firm is required to audit both the design and operating effectiveness of its internal controls and management's assessment of the design and the operating effectiveness of its internal controls. There exist material weaknesses and deficiencies at this time in the Company's internal controls. These weaknesses and deficiencies could have a material adverse effect on the Company's business and operations.
 
The Company does not intend to pay cash dividends on its common stock in the foreseeable future .

Any payment of cash dividends will depend upon the Company's financial condition, results of operations, capital requirements and other factors and will be at the discretion of the Board of Directors. The Company does not anticipate paying cash dividends on its common stock in the foreseeable future. Furthermore, the Company may incur additional indebtedness that may severely restrict or prohibit the payment of dividends.

Our issuance of additional common shares or preferred shares, or options or warrants to purchase those shares, could dilute your proportionate ownership and voting rights and negatively impact the value of your investment in our common shares as the result of preferential voting rights or veto powers, dividend rights, disproportionate rights to appoint directors to our board, conversion rights, redemption rights and liquidation provisions granted to the preferred shareholders, including the grant of rights that could discourage or prevent the distribution of dividends to you, or prevent the sale of our assets or a potential takeover of our company.
 
We are entitled under our certificate of incorporation to issue up to 80,000,000 common and 10,000,000 “blank check” preferred shares. As of September 27, 2008, we have issued and outstanding 12,486,718 common shares, and 3,637,800 common shares reserved for issuance upon the exercise of current outstanding options, warrants and convertible securities . Accordingly, we will be entitled to issue up to 63,875,482 additional common shares and 10,000,000 additional preferred shares. Our board may generally issue those common and preferred shares, or options or warrants to purchase those shares, without further approval by our shareholders based upon such factors as our board of directors may deem relevant at that time. Any preferred shares we may issue shall have such rights, preferences, privileges and restrictions as may be designated from time-to-time by our board, including preferential dividend rights, voting rights, conversion rights, redemption rights and liquidation provisions. It is likely that we will be required to issue a large amount of additional securities to raise capital to further our development and marketing plans. It is also likely that we will be required to issue a large amount of additional securities to directors, officers, employees and consultants as compensatory grants in connection with their services, both in the form of stand-alone grants or under our various stock plans. We cannot give any assurance that we will not issue additional common or preferred shares, or options or warrants to purchase those shares, under circumstances we may deem appropriate at the time.

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Our Officers and Scientific Advisors beneficially own approximately 52% of our outstanding common shares. These shareholders' interest may be different than yours. Furthermore, these shareholders will retain the ability to substantially control our management and the outcome of corporate actions requiring shareholder approval notwithstanding the overall opposition of our other shareholders. This concentration of ownership could discourage or prevent a potential takeover of our company that might otherwise result in you receiving a premium over the market price for your common shares.

Our Officers and Scientific Advisors own approximately 52% of our outstanding common shares. As a consequence of their level of stock ownership, the group will substantially retain the ability to elect or remove members of our board of directors, and thereby control our management. This group of shareholders has the ability to significantly control the outcome of corporate actions requiring shareholder approval, including mergers and other changes of corporate control, going private transactions, and other extraordinary transactions any of which may be in opposition to the best interest of the other shareholders.
 
FORWARD LOOKING STATEMENTS

This prospectus, and the documents incorporated into it by reference, contains forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"), which are intended to convey our expectations or predictions regarding the occurrence of possible future events or the existence of trends and factors that may impact our future plans and operating results. These forward-looking statements are derived, in part, from various assumptions and analyses we have made in the context of our current business plan and information currently available to use and in light of our experience and perceptions of historical trends, current conditions and expected future developments and other factors we believe are appropriate in the circumstances. You can generally identify forward looking statements through words and phrases such as “believe”, “expect”, “seek”, “estimate”, “anticipate”, “intend”, “plan”, “budget”, “project”, “may likely result”, “may be”, “may continue” and other similar expressions.

When reading any forward-looking statement you should remain mindful that actual results or developments may vary substantially from those expected as expressed in or implied by such statement for a number of reasons or factors, including but not limited to:
 
·
the success of our research and development activities, the development of a viable commercial product, and the speed with which regulatory authorizations and product launches may be achieved;
   
·
whether or not a market for our product develops and, if a market develops, the rate at which it develops;
   
·
our ability to successfully sell our products if a market develops;
   
·
our ability to attract and retain qualified personnel to implement our growth strategies;
   
·
our ability to develop sales, marketing, and distribution capabilities;
   
·
our ability to obtain reimbursement from third party payers for the products that we sell;
   
·
the accuracy of our estimates and projections;
   
our ability to fund our short-term and long-term financing needs;
   
·
changes in our business plan and corporate strategies; and
   
·
other risks and uncertainties discussed in greater detail in the section captioned “Risk Factors”
 
Each forward-looking statement should be read in context with and in understanding of the various other disclosures concerning our company and our business made elsewhere in this Prospectus as well as our public filings with the Securities and Exchange Commission. You should not place undue reliance on any forward-looking statement as a prediction of actual results or developments. We are not obligated to update or revise any forward-looking statements contained in this Prospectus or any other filing to reflect new events or circumstances unless and to the extent required by applicable law. 

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USE OF PROCEEDS

We will not receive any of the proceeds from the sale of the shares by any of the selling stockholders, but we will receive the exercise prices payable upon the exercise of the warrants, if exercised for cash. We will use the proceeds received from the exercise of warrants, if any, for working capital and general corporate purposes.

DIVIDEND POLICY

We have never paid or declared cash dividends on our common stock, and we do not intend to pay or declare cash dividends on our common stock in the foreseeable future.

OUR BUSINESS

Our History

GenSpera, Inc. (“GenSpera”) was incorporated as a Delaware corporation in 2003. We are a biotechnology company focused on the discovery and development of pro-drug cancer therapeutics, an emerging medical science. A pro-drug is an inactive precursor of a drug that is converted into its active form only at the site of the tumor.

The Potential of Our Pro-Drug Therapies

Cancer chemotherapy involves treating patients with cytotoxic drugs (compounds or agents that are toxic to cells). Chemotherapy is often combined with surgery or radiation in the treatment of early stage disease and it is the preferred, or only, treatment option for many forms of cancer in later stages of the disease. However, major drawbacks of chemotherapy include;

 
·
Side effects - Non-cancer cells in the body are also affected, often leading to serious side effects.

 
·
Incomplete tumor kill - Many of the leading chemotherapeutic agents act by stopping cells from dividing - they might be effective with tumors comprised of rapidly-dividing cells, but are much less effective for tumors that contain cells that are slow dividing.

 
·
Resistance - Cancers will often develop resistance to current drugs after repeated exposure, limiting the number of times that a treatment can be effectively applied.

Pro-drug chemotherapy is a relatively new approach to cancer treatment that is being investigated as a means to get higher concentrations of cytotoxic agents at the tumor location while avoiding the toxicity of these high doses in the rest of the body. An inactive form of a cytotoxin (referred to as the “pro-drug”) is administered to the patient. The pro-drug is converted into the active cytotoxin only at the tumor site.

We believe that, if successfully developed, pro-drug therapies have the potential to provide an effective therapeutic approach to a broad range of solid tumors. We have developed proprietary technologies that we believe appear, in animal models, to meet the requirements for an effective pro-drug. In addition, we believe that our cytotoxin addresses two other issues prevalent with current cancer drugs - it kills slowly- and non-dividing cancer cells as well as rapidly dividing cancer cells, and does not appear to trigger the development of resistance to its effects.

Our Technology

Our technology supports the creation of pro-drugs by attaching masking/targeting agents to the cytotoxin “12ADT”, and does so in a way that allows conversion of the pro-drug to its active form selectively at the site of tumors. We own patents that contain claims that cover 12ADT as a composition of matter.

Cytotoxin

12ADT is a chemically modified form of thapsigargin, a cytotoxin that kills fast-, slow- and non-dividing cells. Our two issued core patents, both entitled “ Tissue Specific Prodrug ”, contain claims which cover the composition of 12ADT.

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Masking/Targeting Agent  

We use peptides as our masking/targeting agents. Peptides are short strings of amino-acids, the building blocks of many components found in cells. When attached to 12ADT, they can make the cytotoxin inactive - once removed, the cytotoxin is active again. Our technology takes advantage of the fact that the masking peptides can be removed by chemical reactors in the body called enzymes, and that the recognition of particular peptides by particular enzymes can be very specific.

How we make our pro-drugs


Our Approach

Our approach is to identify specific enzymes that are found at high levels in tumors relative to other tissues in the body. Upon identifying these enzymes, we create peptides that are recognized predominantly by those enzymes in the tumor and not by enzymes in normal tissues. This double layer of recognition adds to the tumor-targeting found in our pro-drugs. Because the exact nature of our masking/targeting peptides is so refined and specific, they form the basis for another set of our patents and patent applications on the combination of the peptides and 12ADT.

15

 
Our Pro-Drug Development Candidates

We currently have four pro-drug candidates under development based on this technology, as summarized in the table below:
 

Pro-Drug Candidate
 
Activating enzyme
 
Target location of activation
enzyme
 
Status
             
G-202
 
Prostate Specific Membrane Antigen (PSMA)
 
The blood vessels of all solid tumors 1
 
·   Validated efficacy in pre-clinical models
 
·   Investigational New Drug Application planned to be filed with the US Food and Drug Administration in Q4 2008
             
G-114
 
Prostate Specific Antigen (PSA)
 
Prostate cancers
 
·   Grant supported laboratory research underway
             
G-115
 
Prostate Specific Antigen (PSA)
 
Prostate cancers
 
·   Grant supported laboratory research underway
             
Ac-GKAFRR-L12ADT
 
Human glandular kallikrein 2 (hK2)
 
Prostate cancers
 
·   Grant supported laboratory research underway
 
Strategy

Business Strategy

We plan to develop a series of therapies based on our pro-drug technology platform and bring them through Phase I/II clinical trials.

Manufacturing and Development Strategy

Under the planning and direction of key personnel, we expect to outsource all of our Good Laboratory Practices (“GLP”) preclinical development activities (e.g., toxicology) and Good Manufacturing Practices (“GMP”) manufacturing and clinical development activities to contract research organizations (“CRO”) and contract manufacturing organizations (“CMO”).  CROs and CMOs are third-parties that specialize in executing processes relating to project-oriented research activities on behalf of their clients’ company and are commonly engaged in the industry. Manufacturing will also be outsourced to organizations with approved facilities and manufacturing practices. 

Commercialization Strategy

After Phase I/II clinical trials, our experimental drugs will then be licensed to third parties who would then continue development, market, sell, and distribute the products.

Market and Competitive Considerations
 
G-202

Our primary focus is the opportunity offered by our lead pro-drug candidate, G-202. We believe that we have validated G-202 as a drug candidate to treat various forms of solid tumors; including breast, urinary bladder, kidney and prostate cancer. Manufacturing scale up is now in process, and we plan to begin the clinical evaluation of G-202 in early 2009. We hope to eventually demonstrate that G-202 is more efficacious than current (and prospective) commercial products that treat solid tumors by disrupting their blood supply.
 

1 but not by blood vessels in normal tissue – meaning that we believe that we should be able to selectively attack the blood supply to a large number of different tumors

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Potential Markets for G-202

We believe that, if successfully developed, G-202 has the potential to treat a range of solid tumors by disrupting their blood supply. The table below summarizes a number of the potential United States patient populations which we believe may be amenable to this therapy and represent potential target markets.

Potential United States Patient Populations
For Pro-Drug Chemotherapies

Cancer
 
Estimated Number of
New Cases (2006)
 
Probability of
Developing
(birth to death)
 
       
Male
 
Female
 
Prostate
   
234,460
   
1 in 6
   
-
 
Breast
   
214,640
   
n/a
   
1 in 8
 
Urinary Bladder
   
61,420
   
1 in 28
   
1 in 88
 
Kidney Cancer
   
38,890
   
n/a
   
n/a
 
                     
Source: CA Cancer J. Clin 2006; 56;106-130 .
 
The clinical opportunity for G-202

We believe that current anti-angiogenesis drugs (drugs that disrupt the blood supply to tumors) validate the clinical approach and market potential of G-202.

Angiogenesis is the physiological process involving the growth of new blood vessels from pre-existing vessels and is a normal process in growth and development, as well as in wound healing. However, angiogenesis is also a fundamental step in the transition of tumors from a clinically insignificant size to a malignant state because no tumor can grow beyond a few millimeters in size without the nutrition and oxygenation that comes from an intimately associated blood supply. Interrupting this process has been targeted as a point of intervention for slowing or reversing tumor growth. A well known example of a successful anti-angiogenic approach is the recently approved drug, Avastin TM , a monoclonal antibody that inhibits the activity of Vascular Endothelial Growth Factor (“VEGF”), which is important for the growth and survival of endothelial cells (a thin layer of specialized cells that line the interior surface of blood vessels). Other recently approved drugs may also work in part via anti-angiogenesis.

Nonetheless, these anti-angiogenic drugs have only a limited therapeutic effect with increased median patient survival times of only a few months. Our approach is designed to destroy both the existing and newly growing tumor vasculature, rather than just block new blood vessel formation. We anticipate that this approach will lead to a more immediate collapse of nutrient supply to the tumors and consequently an enhanced rate of tumor destruction.

G-202 destroys new and existing blood vessels in tumors

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Competition

The pharmaceutical, biopharmaceutical and biotechnology industries are very competitive, fast moving and intense, and expected to be increasingly so in the future.  Other larger and well funded companies have developed and are developing drug candidates that, if not similar in type to our drug candidates, are designed to address the same patient or subject population.  Therefore, our lead product, other products in development, or any other products we may acquire or in-license may not be the best, the safest, the first to market, or the most economical to make or use.  If a competitor’s product or product in development is better than ours, for whatever reason, then our ability to license our technology could be diminished and/or our sales could be lower than that of competing products, if we are able to generate sales at all.  

Patents and Proprietary Rights

Our success will likely depend upon our ability to preserve our proprietary technologies and operate without infringing the proprietary rights of other parties. However, we may rely on certain proprietary technologies and know-how that are not patentable or that we determine to keep as trade secrets. We protect our proprietary information, in part, by the use of confidentiality agreements with our employees, consultants, significant scientific collaborators and sponsored researchers that generally provide that all inventions conceived by the individual in the course of rendering services to us shall be our exclusive property.
 
The intellectual property underlying our technology is covered by certain patents and patent applications previously owned by the Johns Hopkins University ("JHU"). This intellectual property was assigned by JHU back to the inventors in 2004. In April 2008, the inventors assigned to Genspera all right, title, and interest in and to the intellectual property, and Genspera subsequently recorded  these assignments in the United States Patent & Trademark Office. By virtue of the April 2008 assignments, GenSpera has no further financial obligations to the inventors or to JHU with regard to the assigned intellectual property. JHU retains a paid-up, royalty-free, non-exclusive license to use the intellectual property for non-profit purposes. Under the Bayh-Dole Act of 1980 (codified at 35 USC section 200 et seq), the United States government retains a non-exclusive, non-transferable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States the intellectual property.
 
Number
 
Country
 
Filing
Date
 
Issue Date
 
Expiration
Date
 
Title
 
Patents Issued  
                     
6,504,014
   
US
   
6/7/00
   
1/7/2003
   
6/6/2020
  Tissue specific pro-drug (TG)
 
6,545,131
   
US
   
7/28/00
   
4/8/2003
   
7/27/2020
  Tissue specific pro-drug (TG)
 
6,265,540
   
US
   
5/19/98
   
7/24/2001
   
5/18/2018
  Tissue specific pro-drug (PSA)
 
6,410,514
   
US
   
6/7/00
   
6/25/2002
   
6/6/2020
  Tissue specific pro-drug (PSA)
 
7,053,042
   
US
   
7/28/00
   
5/30/2006
   
7/27/2020
  Activation of peptide pro-drugs by HK2  
     
 
                       
Patents Pending
                             
US 2004/0029778
   
US
   
11/30/01
   
Pending
   
N/A
  Tissue specific pro-drugs (PSMA)
 
PCT/US01/45100
   
WO
   
11/30/01
   
Pending
   
N/A
  Tissue specific pro-drugs (PSMA)
 
US 2006/0183689
   
US
   
8/24/05
   
Pending
   
N/A
  Activation of peptide pro-drugs by HK2  
US 2006/0217317
   
US
   
11/18/03
   
Pending
   
N/A
  Activation of peptide pro-drugs by HK2  
US 2007/0160536
   
US
   
1/6/2006
   
Pending
   
N/A
  Tumor Activated Pro-drugs (PSA,G-115)
 

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When appropriate, we will continue to seek patent protection for inventions in our core technologies and in ancillary technologies that support our core technologies or which we otherwise believe will provide us with a competitive advantage. We will accomplish this by filing and maintaining patent applications for discoveries we make, either alone or in collaboration with scientific collaborators and strategic partners. Typically, although not always, we plan to file patent applications in the United States. In addition, we plan to obtain licenses or options to acquire licenses to patent filings from other individuals and organizations that we anticipate could be useful in advancing our research, development and commercialization initiatives and our strategic business interest.

Manufacturing & Development

12-ADT is manufactured by chemically modifying the cytotoxin thaspigargin, which is isolated from the seeds of T. garganica , a plant found in the Mediterranean. Our pro-drug, G-202, is then manufactured by attaching a specific peptide to 12-ADT.

Outsource Manufacturing

To leverage our experience and available financial resources, we do not plan to develop company-owned or company-operated manufacturing facilities. We plan to outsource all drug manufacturing to a contract manufacturer that operates in compliance with GMP.  We may also seek to refine the current manufacturing process and final drug formulation to achieve improvements in storage temperatures and the like.

In January, 2008 we entered into an Alliance Agreement with InB:Hauser Pharmaceutical Services to perform most of our contract manufacturing efforts. Under the terms of this agreement independent work orders have been, and will be, constructed for various tasks including manufacture of chemical intermediates and reference standards, manufacture of G-202 in compliance with GMP, and development of analytical methods in support of our development programs.

Supply of Raw Materials

While T. garganica is relatively common in the wild, to our knowledge, there is only one commercial supplier of T. garganica seeds. In April 2007, we obtained the proper permits from the USDA for the importation of T. garganica seeds. In January 2008, we entered into a sole source agreement with this supplier, Thapsibiza, SL. Under the terms of this agreement GenSpera agrees to purchase a minimum of 50 kg of T. garganica seeds at 300 Euro/kg only if GenSpera is still actively engaged in the development of a thapsigargin prodrug. Thapsibiza, SL agrees to supply seeds to the company on an exclusive basis and is prohibited from selling T. garganica seeds to other companies.

Government Regulation

In December 2007, we entered into a Master Services Consulting Agreement with Regulatory and Toxicology Services Corporation (“RTS”). Under the terms of this agreement, RTS agrees to consult on, sub-contract and oversee our regulatory and toxicology programs.

The FDA and comparable regulatory agencies in foreign countries, as well as drug regulators in state and local jurisdictions, impose substantial requirements upon the clinical development, manufacture and marketing of pharmaceutical products.  These agencies and other federal, state and local entities regulate research and development activities and the human testing, manufacture, quality control, safety, effectiveness, labeling, storage, record keeping, approval, advertising, and promotion of our lead product   G-202 (and any other products we may develop, acquire, or in-license).

The process required by the FDA under the drug provisions of the United States Food, Drug, and Cosmetic Act before our initial products may be marketed in the U.S. generally involves the following:

 
·
Preclinical laboratory and animal tests;

 
·
Submission of an Investigational New Drug Application (“IND”), which must become effective before human clinical trials may begin;

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·
Adequate and well-controlled human clinical trials to establish the safety and efficacy of the product candidate for its intended use;

 
·
Submission to the FDA of an New Drug Application (“NDA”); and

 
·
FDA review and approval of an NDA.

The testing and approval process requires substantial time, effort, and financial resources, and we cannot be certain that any approval will be granted on an expeditious basis, if at all.  Preclinical tests include laboratory evaluation of the product candidate, its chemistry, formulation and stability, as well as animal studies to assess the potential safety and efficacy of the product candidate.  Certain preclinical tests must be conducted in compliance with good laboratory practice regulations. Violations of these regulations can, in some cases, lead to invalidation of the studies, requiring such studies to be replicated.  In some cases, long-term preclinical studies are conducted while clinical studies are ongoing.

We then submit the results of the preclinical tests, together with manufacturing information and analytical data, to the FDA as part of an IND, which must become effective before we may begin human clinical trials.  The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time period, raises concerns or questions about the conduct of the trials as outlined in the IND and imposes a clinical hold.  In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before clinical trials can begin.  Our submission of an IND may not result in FDA authorization to commence clinical trials.  All clinical trials must be conducted under the supervision of a qualified investigator in accordance with good clinical practice regulations.  These regulations include the requirement that all prospective patients provide informed consent. Further, an independent Institutional Review Board (“IRB”) at each medical center proposing to conduct the clinical trials must review and approve any clinical study.  The IRB also continues to monitor the study and must be kept aware of the study’s progress, particularly as to adverse events and changes in the research.  Progress reports detailing the results of the clinical trials must be submitted at least annually to the FDA and more frequently if adverse events occur.

Human cancer drug clinical trials are typically conducted in three sequential phases that may overlap:

 
·
Phase I: The experimental drug is initially introduced into cancer patients and tested for safety and tolerability at escalating dosages,

 
·
Phase II: The drug is studied in a limited cancer patient population to further identify possible adverse effects and safety risks, to evaluate the efficacy of the experimental drug for specific targeted diseases and to determine dosage tolerance and optimal dosage.

 
·
Phase III: When Phase II evaluations demonstrate that a dosage range of the experimental drug may be effective and has an acceptable safety profile, Phase III trials are undertaken to further evaluate dose response, clinical efficacy and safety profile in an expanded patient population, often at geographically dispersed clinical study sites.

Our business strategy is to bring our drug candidates through Phase I/II clinical trials before licensing them to third parties who would then further develop the drugs through to marketing approval. Once the drug is approved, the third party licensee will be expected to market, sell, and distribute the products in exchange for some combination of up-front payments, royalty payments, and milestone payments. Management cannot be certain that we, or our licensees, will successfully initiate or complete Phase I, Phase II, or Phase III testing of our product candidates within any specific time period, if at all.  Furthermore, the FDA or the Institutional Review Board or the IND sponsor may suspend clinical trials at any time on various grounds, including a finding that the patients are being exposed to an unacceptable health risk.

Concurrent with clinical trials and pre-clinical studies, we also must develop information about the chemistry and physical characteristics of the drug and finalize a process for manufacturing the product in accordance with GMP requirements.  The manufacturing process must be capable of consistently producing quality batches of the experimental drug, and management must develop methods for testing the quality, purity, and potency of the final experimental drugs.  Additionally, appropriate packaging must be selected and tested and chemistry stability studies must be conducted to demonstrate that the experimental drug does not undergo unacceptable deterioration over its shelf-life.

The results of drug development efforts, pre-clinical studies, and clinical studies are submitted to the FDA as part of an NDA for approval of the marketing and commercial shipment of the product.  The FDA reviews each NDA submitted and may request additional information, rather than accepting the NDA for filing. In this event, the application must be resubmitted with the additional information.  The resubmitted application is also subject to review before the FDA accepts it for filing.  Once the FDA accepts the NDA for filing, the agency begins an in-depth review of the NDA.  The FDA has substantial discretion in the approval process and may disagree with our, or our licensees, interpretation of the data submitted in the NDA.

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The review process may be significantly extended by FDA requests for additional information or clarification regarding information already provided.  Also, as part of this review, the FDA may refer the application to an appropriate advisory committee, typically a panel of clinicians, for review, evaluation and a recommendation.  The FDA is not bound by the recommendation of an advisory committee.  Manufacturing establishments often also are subject to inspections prior to NDA approval to assure compliance with GMPs and with manufacturing commitments made in the relevant marketing application.

Under the Prescription Drug User Fee Act (“PDUFA”), submission of an NDA with clinical data requires payment of a fee to the FDA, which is adjusted annually.  For fiscal year 2007, that fee is $896,200.  In return, the FDA assigns a goal (often months) for standard NDA reviews from acceptance of the application to the time the agency issues its “complete response,” in which the FDA may approve the NDA, deny the NDA if the applicable regulatory criteria are not satisfied, or require additional clinical data. Even if these data are submitted, the FDA may ultimately decide that the NDA does not satisfy the criteria for approval.  If the FDA approves the NDA, the product becomes available for physicians to prescribe.  Even if the FDA approves the NDA, the agency may decide later to withdraw product approval if compliance with regulatory standards is not maintained or if safety problems are recognized after the product reaches the market.  The FDA may also require post-marketing studies, also known as Phase IV studies, as a condition of approval to develop additional information regarding the efficacy and safety of a product.  In addition, the FDA requires surveillance programs to monitor approved products that have been commercialized, and the agency has the power to require changes in labeling or to prevent further marketing of a product based on the results of these post-marketing programs.

Satisfaction of the above FDA requirements or requirements of state, local and foreign regulatory agencies typically takes several years, and the actual time required may vary substantially based upon the type, complexity and novelty of the pharmaceutical product.  Government regulation may delay or prevent marketing of potential products for a considerable period of time and impose costly procedures upon our activities.  Management cannot be certain that the FDA or any other regulatory agency will grant approval for the lead product G-202 (or any other products we may develop, acquire, or in-license) under development on a timely basis, if at all.  Success in preclinical or early-stage clinical trials does not assure success in later-stage clinical trials.  Data obtained from preclinical and clinical activities are not always conclusive and may be susceptible to varying interpretations that could delay, limit or prevent regulatory approval.  Even if a product receives regulatory approval, the approval may be significantly limited to specific indications or uses.  Further, even after regulatory approval is obtained, later discovery of previously unknown problems with a product may result in restrictions on the product or even complete withdrawal of the product from the market.  Delays in obtaining, or failures to obtain regulatory approvals would have a material adverse effect on our business.

Any products manufactured or distributed by us, or our licensees, pursuant to the FDA clearances or approvals are subject to pervasive and continuing regulation by the FDA, including record-keeping requirements, reporting of adverse experiences with the drug, submitting other periodic reports, drug sampling and distribution requirements, notifying the FDA and gaining its approval of certain manufacturing or labeling changes, complying with certain electronic records and signature requirements, and complying with the FDA promotion and advertising requirements.  Drug manufacturers and their subcontractors are required to register their facilities with the FDA and state agencies and are subject to periodic unannounced inspections by the FDA and state agencies for compliance with good manufacturing practices, which impose procedural and documentation requirements upon our third-party manufacturers.  Failure to comply with these regulations could result, among other things, in suspension of regulatory approval, recalls, suspension of production or injunctions, seizures, or civil or criminal sanctions.  Management cannot be certain that our present or future subcontractors or licensees will be able to comply with these regulations and other FDA regulatory requirements.

The FDA regulates drug labeling and promotion activities.  The FDA has actively enforced regulations prohibiting the marketing of products for unapproved uses. Under the FDA Modernization Act of 1997, the FDA will permit the promotion of a drug for an unapproved use in certain circumstances, but subject to very stringent requirements.

Our product candidates are also subject to a variety of state laws and regulations in those states or localities where our lead product G-202 (and any other products we may develop, acquire, or in-license) will be marketed.  Any applicable state or local regulations may hinder our ability to market our lead product G-202 (and any other products we may develop, acquire, or in-license) in those states or localities.  In addition, whether or not FDA approval has been obtained, approval of a pharmaceutical product by comparable governmental regulatory authorities in foreign countries must be obtained prior to the commencement of clinical trials and subsequent sales and marketing efforts in those countries.  The approval procedure varies in complexity from country to country, and the time required may be longer or shorter than that required for FDA approval.  We may incur significant costs to comply with these laws and regulations now or in the future.

The FDA’s policies may change, and additional government regulations may be enacted which could prevent or delay regulatory approval of our potential products.  Moreover, increased attention to the containment of health care costs in the U.S. and in foreign markets could result in new government regulations that could have a material adverse effect on our business.  Management cannot predict the likelihood, nature or extent of adverse governmental regulation that might arise from future legislative or administrative action, either in the U.S. or abroad.

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Other Regulatory Requirements

The U.S. Federal Trade Commission and the Office of the Inspector General of the U.S. Department of Health and Human Services (“HHS”) also regulate certain pharmaceutical marketing practices. Also, reimbursement practices and HHS coverage of medicine or medical services are important to the success of procurement and utilization of our product candidates, if they are ever approved for commercial marketing.

We are also subject to numerous federal, state and local laws relating to such matters as safe working conditions, manufacturing practices, environmental protection, fire hazard control, and disposal of hazardous or potentially hazardous substances.  We may incur significant costs to comply with these laws and regulations now or in the future.  Management cannot assure you that any portion of the regulatory framework under which we currently operate will not change and that such change will not have a material adverse effect on our current and anticipated operations.

Employees

As of July 2008 we employed 2 individuals, both of whom hold advanced degrees.  Both of our professional employees have had prior experience with pharmaceutical, biotechnology, or medical product companies. Collective bargaining agreements do not cover any of our employees, and management considers relations with its employees to be good.

PROPERTIES

Our executive   offices are located at 9901 IH 10 West, Suite 800, San Antonio, TX, 78230. We lease this facility consisting of approximately 300 square feet, for $2,470 per month inclusive of receptionist, telecommunication, and internet services. Our lease expires on December 31, 2008.
 
We also rent a virtual office at 12100 Wilshire Blvd, 8 th Floor, Los Angeles, CA 90025 to maintain a business presence in that state and for meetings with participants who are located within travel distance to Los Angeles so as not to require travel exclusively to our executive office in San Antonio. This contract carries forward on a month by month basis at a charge of $210 per month.

The aforesaid properties are in good condition and we believe they will be suitable for our purposes for the next 12 months. There is no affiliation between us or any of our principals or agents and our landlords or any of their principals or agents.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains statements and information about management’s view of our future expectations, plans and prospects that constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results and events to differ materially from those we anticipate. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

We are a pharmaceutical company focused on the development of targeted cancer therapeutics for the treatment of cancerous tumors, including breast, prostate, bladder and kidney cancer. Our operations are based in San Antonio, TX.

Management's Plan of Operation

At June 30, 2008, we were pursuing a business plan related to the development of targeted cancer therapeutics for the treatment of cancerous tumors, including breast, prostate, bladder and kidney cancer and were considered to be in the development stage as defined by SFAS No. 7, “ Accounting and reporting by Development Stage Enterprises “.

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Business Strategy

Our business strategy is to develop a series of therapies based on our target-activated pro-drug technology platform - identifying potentially attractive drug candidates with strong Intellectual Property (IP) protection that are still in the laboratory, and bringing them through Phase I/II clinical trials. At that point, we plan to license the rights to further development of the drug candidates to major pharmaceutical companies. We believe that major pharmaceutical companies see significant value in drug candidates that have passed one or more phases of clinical trials, and these organizations have the significant resources and expertise already in-house to finalize drug development and market the drugs.

This strategy permits us to leverage our passion and core expertise of identifying promising treatments and bringing them into the clinic, and to do so in a relatively “lean” manner. For example, laboratory research is continuing in the laboratories of our co-founders at John Hopkins University using funds derived from standard academic channels. Toxicology, clinical trials and other development activities can be outsourced to reliable, experienced contract organizations known to us. We plan to realize the significant value of these efforts after Phase I/II trials without having to incur the time, cost and risk of building a pharmaceutical marketing and sales organization.

Plan of Operation

In addition to the drug discovery work and the intellectual property development described in the Business section of this Prospectus, we have made significant progress in other key areas such as drug manufacture, toxicology, and clinical and regulatory activities for our lead compound G-202.

For the manufacture of G-202, we have secured a stable supply of source material ( T. garganica seeds) from which thaspigargin is isolated, have a sole source agreement with a European supplier, Thapsibiza, SL, and have obtained the proper import permits from the USDA for these materials. We have also identified a clinically and commercially viable formulation for G-202 and are in the process of manufacturing G-202 at a large scale to supply our Phase I clinical needs. We have also conducted successful preliminary stability studies of seeds, manufacturing intermediates and final drug substance.

Pilot toxicology studies in rats and monkeys have been completed and definitive toxicology studies in both species were launched in early September. We expect a draft report of the study results in the fourth quarter of 2008.

In preparation for our clinical activities, we have formulated a draft clinical plan for development of G-202 as a drug for metastatic breast cancer, and have obtained active interest from two major medical centers to be involved in the Phase I clinical trial (Johns Hopkins Oncology Center and the University of Wisconsin Comprehensive Cancer Center).

The continued characterization of our lead molecules and the development of second generation approaches to the current programs will continue in the laboratories of Drs. Isaacs and Denmeade at John Hopkins University using funds obtained from traditional academic channels.

As part of our regulatory activities, we sought and conducted a pre-Investigational New Drug application (IND) meeting with the United States Food and Drug Administration (FDA) in August 2008. For this process we compiled all the information from our manufacturing processes and preliminary toxicological studies together with our proposed further development and clinical plans to obtain guidance from, and open a dialog with, the FDA. The FDA responded to our proposed development plan with some helpful suggestions and remarks but did not require us to change any aspect of our proposed development program including our manufacture, toxicology or clinical plans.

Over the next twelve months we plan to focus on the remaining pre-clinical work for G-202 and initiate clinical trials of G-202 in cancer patients.

Firstly, we have initiated the manufacture of clinical grade G-202 under Good Manufacturing Practice (GMP) guidelines. We have contracted manufacture of the cytotoxin 12ADT to the company InB: Hauser Pharmaceutical Services (Denver, CO), synthesis of the peptide to Ambiopharm (Augusta, SC), and the final coupling of the peptide to 12ADT to make G-202 to InB: Hauser.

We expect to complete the definitive toxicology studies and obtain a draft report of the results in the fourth quarter of 2008.

We plan to prepare and submit an IND with the FDA in the fourth quarter of 2008. The main purpose of an IND application is to provide the data showing that it is reasonable to begin clinical evaluation of a new drug candidate in humans. The application contains all of the preclinical data pertaining to G-202 including the scientific rationale, efficacy data in animals, toxicological data, manufacturing information, drug formulation and stability, etc., and the proposed clinical plan. Although it is possible to assemble this data after completion of all the studies, we make a point of assembling reports and documents in final submissible format as the data are collected in order to facilitate the rapid assembly of the final IND application. Nevertheless, we expect the application to require at least one month for assembly and up to $100,000 in consultant’s fees to assure that we have complied with the high level of regulatory requirements inherent in this process.

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Finally, we will continue to develop and protect our intellectual property position particularly with regard to the outstanding claims contained within the core PSMA-pro-drug patent application in the United States. We will also continue to prosecute the claims contained in our other patent applications in the United States.

We anticipate that the second year, and much of the third year, of operations we will be engaged in the conduct of a Phase I clinical trial of G-202, and, if appropriate, extension into a Phase II clinical trial of G-202 in metastatic breast cancer patients. The purpose of a Phase I study of G-202 is to evaluate safety, understand the pharmacokinetics (the process by which a compound is absorbed, distributed, metabolized, and eliminated by the body) of the drug candidate in humans, and to determine an appropriate dosing regime for the subsequent clinical studies. We currently plan to conduct the Phase I study in refractory cancer patients (those who have relapsed after former treatments) with any type of solid tumors. This strategy is intended to facilitate enrollment and perhaps give us a glimpse of safety across a wider variety of patients. We expect to enroll up to 30 patients in this Phase I study at Johns Hopkins Oncology Center (Michael Carducci, MD as Principal Investigator), and the University of Wisconsin Comprehensive Cancer Center (George Wilding, MD as Principal Investigator).

Assuming successful completion of the Phase I clinical program, we expect to conduct a Phase II clinical trial to determine the therapeutic efficacy of G-202 in cancer patients. Although we believe that G-202 will be useful across a wide variety of cancer types, it is usually most efficient and medically prudent to evaluate a drug candidate in a single tumor type within a single trial. As discussed earlier, we currently intend to focus our efforts in metastatic breast cancer, and we expect that 42 patients will be required for an appropriate evaluation over a total time span of 18 months.

We currently have budgeted $3,200,000 in cash expenditures for the twelve month period following the date of this prospectus, including (1) $490,000 to cover our projected general and administrative expense during this period; and (2) $2,710,000 for research and development activities. In order to cover these expenses, we anticipate undertaking a series of financings.

To date, we have raised net proceeds of $2,278,000 through August 31, 2008 via the sale of Units. The units consist of one share of our common stock and one-half warrant with an exercise price of $2.00 per share of common stock, exercisable any time within five years after the date of issuance. Also, in November of 2007 we sold 1,300,000 shares of common stock for proceeds of $650,000. Additionally, we have received proceeds of $500,000 through the exercise of warrants that were issued for financial services. We expect that the working capital generated by the full funding of the sale of the units to be sufficient to fund our lead drug (G-202) development through Phase I clinical trials by the end of Q2 2010. Should we not be able to raise the necessary funding, we may have to substantially curtail our proposed expansion.

As an accommodation to the Company, TR Winston & Company, LLC, our placement agent, agreed to receive a convertible debenture and warrants to purchase an additional 81,800 common shares in lieu of $163,600 of its cash fee for the sale of the common stock units. The convertible debenture accrues interest at 5% per annum and has a maturity date of July 14, 2009. It is convertible into the shares of our common stock, at the sole discretion of the holder, at $1.00 per share subject to certain anti-dilution adjustments. The warrant has the same terms as those issued to investors in the offering.

The amounts and timing of our actual expenditures may vary significantly from our expectations depending upon numerous factors, including our results of operation, financial condition and capital requirements. Accordingly, we will retain the discretion to allocate the cash proceeds of this offering among the identified uses described above, and we reserve the right to change the allocation of the net proceeds among the uses described above. Pending their use, we intend to invest the cash proceeds in short-term, interest-bearing, investment-grade securities.

If we decide to raise additional sums of capital during the time periods described above, we will be able to apply these funds to accelerate the other pipeline drugs and development of other business opportunities such as diagnostic imaging.

Significant Accounting Policies
 
Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Note 1 of the Notes to Financial Statements describes the significant accounting policies used in the preparation of the financial statements. Certain of these significant accounting policies are considered to be critical accounting policies, as defined below. We do not believe that there have been significant changes to our accounting policies during the six months ended June 30, 2008, as compared to those policies disclosed in the December 31, 2007 financial statements contained elsewhere in this Prospectus.

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A critical accounting policy is defined as one that is both material to the presentation of our financial statements and requires management to make difficult, subjective or complex judgments that could have a material effect on our financial condition and results of operations. Specifically, critical accounting estimates have the following attributes: 1) we are required to make assumptions about matters that are highly uncertain at the time of the estimate; and 2) different estimates we could reasonably have used, or changes in the estimate that are reasonably likely to occur, would have a material effect on our financial condition or results of operations.
 
Estimates and assumptions about future events and their effects cannot be determined with certainty. We base our estimates on historical experience and on various other assumptions believed to be applicable and reasonable under the circumstances. These estimates may change as new events occur, as additional information is obtained and as our operating environment changes. These changes have historically been minor and have been included in the financial statements as soon as they became known. Based on a critical assessment of our accounting policies and the underlying judgments and uncertainties affecting the application of those policies, management believes that our financial statements are fairly stated in accordance with accounting principles generally accepted in the United States, and present a meaningful presentation of our financial condition and results of operations. We believe the following critical accounting policies reflect our more significant estimates and assumptions used in the preparation of our financial statements:

Use of Estimates — These financial statements have been prepared in accordance with accounting principles generally accepted in the United States and, accordingly, require management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Specifically, our management has estimated the expected economic life and value of our licensed technology, our net operating loss for tax purposes and our stock, option and warrant expenses related to compensation to employees and directors and consultants. Actual results could differ from those estimates.

Fair Value of Financial Instruments —For certain of our financial instruments, including accounts payable, accrued expenses and notes payable, the carrying amounts approximate fair value due to their relatively short maturities.

Cash and Equivalents —Cash equivalents are comprised of certain highly liquid investments with maturity of three months or less when purchased. We maintain our cash in bank deposit accounts, which at times, may exceed federally insured limits. We have not experienced any losses in such accounts.

Intangible and Long-Lived Assets — We follow SFAS No. 144, " Accounting for Impairment of Disposal of Long-Lived Assets ", which established a "primary asset" approach to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting for a long lived asset to be held and used. Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell. During the period ended June 30, 2008, no impairment losses were recognized.

Research and Development Costs — Research and development costs include expenses incurred by the Company for research and development of therapeutic agents for the treatment of cancer and are charged to operations as incurred.

Stock Based Compensation — We account for our share-based compensation under the provisions of FASB Statement No. 123(R), “Share-Based Payment”, (“FAS 123R”). We adopted FAS 123R as of January 1, 2006, using the modified prospective application method. Prior to January 1, 2006 we applied the provisions of FAS 123, “Accounting for Stock-Based Compensation”.

Results of Operations

Six Months Ended June 30, 2008 Compared to the Six Months Ended June 30, 2007

Operating losses increased from $408,215 in 2007 to $1,032,531 in 2008. The increase of $624,316 was the result of an increase of $249,885 in general and administrative expenses, from $263,651 in 2007 to $513,536 in 2008, and an increase in research and development expenses of $374,431, from $144,564 in 2007 to $518,995 in 2008. Our expenses have increased as we have obtained financing and have begun to implement our business plan.
 
Research and Development Expenses
 
Research and development expenses for the six month periods ended June 30, 2008 and 2007 were $518,995 and $144,564 respectively. The increase in 2008 was primarily the result of the increase in available cash as a result of our sale of equity in 2008 and late 2007 and consequent implementation of the development program for G-202.
 
Our research and development expenses consist primarily of expenditures for toxicology and other studies, manufacturing, and compensation and consulting costs.


Under the planning and direction of key personnel, we expect to outsource all of our Good Laboratory Practices (“GLP”) preclinical development activities (e.g., toxicology) and Good Manufacturing Practices (“GMP”) manufacturing and clinical development activities to contract research organizations (“CRO”) and contract manufacturing organizations (“CMO”).  CROs and CMOs are third-parties that specialize in executing processes relating to project-oriented research activities on behalf of their clients’ company and are commonly engaged in the industry. Manufacturing will also be outsourced to organizations with approved facilities and manufacturing practices. 
 
General and Administrative Expenses

General and administrative expenses for the six month periods ended June 30, 2008 and 2007 were $513,536 and $263,651 respectively. The increase in 2008 results from increases in compensation, consulting, professional fees and other expenses as we have obtained financing and have begun to implement our business plan.
 
Other Expense
 
Other expense for the six month periods ended June 30, 2008 and 2007 was $3,211 and $3,220, respectively, and consists of interest expense on stockholder loans.
 
Net Loss
 
Net losses for the six month periods ended June 30, 2008 and 2007 were $1,035,742 and $411,435 respectively, resulting from the expenses described above.

Year Ended December 31, 2007 Compared to the Year Ended December 31, 2006

Operating losses increased from $240,443 in 2006 to $684,239 in 2007. The increase of $443,796 was the result of an increase of $380,448 in general and administrative expenses, from $9,351 in 2006 to $389,799 in 2007, and an increase in research and development expenses of $63,348, from $231,092 in 2006 to $294,440 in 2007. Our expenses increased as we have obtained financing and have begun to implement our business plan.
 
Research and Development Expenses
 
Research and development expenses for 2007 and 2006 were $294,440 and $231,092 respectively. The increase in 2007 was primarily the result of increased compensation and the increase in available cash as a result of our sale of equity in late 2007.
 
Our research and development expenses in 2007 consisted primarily of compensation and patent costs.

Under the planning and direction of key personnel, we expect to outsource all of our Good Laboratory Practices (“GLP”) preclinical development activities (e.g., toxicology) and Good Manufacturing Practices (“GMP”) manufacturing and clinical development activities to contract research organizations (“CRO”) and contract manufacturing organizations (“CMO”).  CROs and CMOs are third-parties that specialize in executing processes relating to project-oriented research activities on behalf of their clients’ company and are commonly engaged in the industry. Manufacturing will also be outsourced to organizations with approved facilities and manufacturing practices. 
 
General and Administrative Expenses

General and administrative expenses for 2007 and 2006 were $389,799 and $9,351 respectively. The increase in 2007 results primarily from an increase in stock based consulting costs. Other expenses have increased as we have obtained financing and have begun to implement our business plan.
 
Other Expense
 
Other expense for 2007 and 2006 was $6,960 and $4,627, respectively, consisting of interest expense, primarily on stockholder loans .
 
Net Loss
 
Net losses for 2007 and 2006 were $691,199 and $245,070 respectively, resulting from the expenses described above

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Recent Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No.157, Fair Value Measurements (“SFAS 157”).  SFAS 157 defines fair value to be the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and emphasizes that fair value is a market-based measurement, not an entity-specific measurement.  It establishes a fair value hierarchy and expands disclosures about fair value measurements in both interim and annual periods. SFAS 157 is effective for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years.  We adopted SFAS 157 on January 1, 2008 which did not have a material impact on our financial position and results of operations. We also adopted the deferral provisions of the Financial Accounting Standards Board Staff Position No. 157-2, which delays the effective date of SFAS No. 157 for all nonrecurring fair value measurements of non-financial assets and liabilities until fiscal years beginning after November 15, 2008.

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  SFAS No. 157 also expands disclosures about instruments measured at fair value and establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.  The standard describes three levels of inputs that may be used to measure fair value:
 
Level 1 — Quoted prices for identical assets and liabilities in active markets;
 
Level 2 — Quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable  in active markets; and
 
Level 3 — Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
 
We designate cash equivalents as Level 1. As of June 30, 2008, and December 31, 2007, we did not have any cash equivalents, therefore there were no assets measured at fair value.

In February 2007, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 159, The Fair Value Option for Financial Assets and Financial Liabilities-Including an Amendment of FASB Statement No. 115 (“SFAS 159”).  SFAS 159 permits entities to measure eligible assets and liabilities at fair value.  Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings.  SFAS 159 is effective for fiscal years beginning after November 15, 2007.  We adopted SFAS 159 on January 1, 2008 and did not elect the fair value option which did not have a material impact on our financial position and results of operations.

In December 2007, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 141R, Business Combinations , and Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial Statements,   an amendment of ARB No. 51 .  These new standards significantly change the accounting for and reporting of business combination transactions and noncontrolling interests (previously referred to as minority interests) in consolidated financial statements.  Both standards are effective for fiscal years beginning on or after December 15, 2008, with early adoption prohibited. These Statements are effective for the Company beginning on January 1, 2009.  The Company is currently evaluating the provisions of FAS 141(R) and FAS 160.

In March 2008, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 161, Disclosures About Derivative Instruments and Hedging Activities,   an amendment of FASB Statement No. 133 .  This new standard enhances the disclosure requirements related to derivative instruments and hedging activities required by FASB Statement No. 133 .  This standard is effective for fiscal years and interim periods beginning after November 15, 2008, with early adoption encouraged. We adopted the required provisions of SFAS 161 on January 1, 2008 and the adoption did not have a significant impact on our financial position and results of operations.
 
Liquidity and Capital Resources
 
We are financing our operations primarily with approximately $2,278,000 in net proceeds from the sale of common stock units through August 31, 2008, $650,000 from the sale of 1,300,000 shares of common stock in November 2007 and with $500,000 received from the exercise of warrants in March, 2008. Through late 2007 financing of our operations has been provided by our majority stockholder in the form of promissory notes aggregating $155,000.
 
Cash at June 30, 2008 and December 31, 2007 was approximately $252,000 and $590,000, respectively. During July and August 2008 we received an additional $2,278,000 from the sale of common stock units. We have expended a substantial portion of the proceeds of the common stock units to support ongoing operations and research and development activities.

As an accommodation to the Company, TR Winston & Company, LLC, our placement agent, agreed to receive a convertible debenture and warrants to purchase an additional 81,800 common shares in lieu of $163,600 of its cash fee for the sale of the common stock units. The convertible debenture accrues interest at 5% per annum and has a maturity date of July 14, 2009. It is convertible into the shares of our common stock, at the sole discretion of the holder, at $1.00 per share subject to certain anti-dilution adjustments. The warrant has the same terms as those issued to investors in the offering.
 
Our future cash requirements will depend on many factors, including the pace and scope of our research and development programs, the costs involved in filing, prosecuting, maintaining and enforcing patents and other costs associated with commercializing our potential products. We intend to seek additional funding primarily through private equity transactions. If we are unable to raise additional funds, we will be forced to either scale back our business efforts or curtail our business activities entirely. We anticipate that our available cash and expected equity sales will be sufficient to finance our current activities for at least twelve months from the date of the financial statements. We cannot assure you that public or private financing will be available on acceptable terms, if at all.

Off Balance Sheet Arrangements
 
We do not have any off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in trading activities involving non-exchange traded contracts.
 
Inflation
 
We believe that inflation has not had a material effect on our operations to date.

LEGAL PROCEEDINGS
 
As of the date of this prospectus, there are no material pending legal or governmental proceedings relating to our company or properties to which we are a party, and to our knowledge there are no material proceedings to which any of our directors, executive officers or affiliates are a party adverse to us or which have a material interest adverse to us.

MANAGEMENT
 
Directors

The following sets forth our current directors and information concerning their ages and background. All directors hold office until the next annual meeting of stockholders and until their respective successors are elected, except in the case of death, resignation or removal:

27



Name
  
Principal Occupation
  
Age
  
Director
Since
Craig A. Dionne, PhD
 
Chief Executive Officer, Chief Financial Officer, President and Director of GenSpera
 
51
 
11/03
             
John M. Farah, Jr., PhD
 
Vice President Intercontinental Operations at Cephalon (NASDAQ: CEPH)
 
56
 
02/08
             
Scott Ogilvie
 
President and CEO of Gulf Enterprises International, Ltd.
 
53
 
02/08

Craig A. Dionne, PhD, age 51, has over 18 years experience in the pharmaceutical industry, including direct experience of identifying promising oncology treatments and bringing them through the clinic. For example, he served for five years as VP Discovery Research at Cephalon, Inc. where he was responsible for its oncology and neurobiology drug discovery and development programs. Dr. Dionne has also recently served as EVP at the Prostate Cancer Research Foundation. In addition to extensive executive experience, Dr. Dionne’s productive scientific career has led to 6 issued patents and co-authorship of many scientific papers.

John M. Farah, Jr., Ph.D. , age 56, is VP Intercontinental Operations at Cephalon (Nasdaq:CEPH), which he joined in 1992 after six years as a discovery research scientist at G.D. Searle and Co. He is responsible for ensuring corporate support and managing sales performance of international partners in the Americas and Asia Pacific with specific growth initiatives for Cephalon in China and Japan. His prior roles included the responsibility for promoting and negotiating R&D and commercial alliances with multinational and regional pharmaceutical firms, and responsibilities in scientific affairs, product licensing and academic collaborations. He currently serves on the board of directors of Aeolus Pharmaceuticals (AOLS.OB).

Scott Ogilvie , age 53,   is President and   CEO of Gulf Enterprises International, Ltd, a company that brings strategic partners, expertise and investment capital to the Middle East and North Africa. He began his career as a corporate and securities lawyer with Hill, Farrer & Burrill, and has extensive public and private corporate board experience in finance, real estate, and technology companies. Mr. Ogilvie currently serves on the board of directors of Neuralstem, Inc. (AMEX:CUR), Innovative Card Technologies, Inc. (NASDAQ:INVC) and Preferred Voice Inc, (OTCBD:PRFV).

Committees

The Board of Directors currently does not have any committees. We intend to establish audit and compensation committees and such other committees as determined advisable by our Board.

Independent Directors

For purposes of determining independence, the Company has adopted the definition of independence as contained in NASDAQ Market Place Rules 4200. Pursuant to the definition, the Company has determined that Messrs. Ogilvie and Farah qualify as independent.

Executive Officers and Significant Employees

The following sets forth our current executive officers and information concerning their age and background:

Name
  
Position
  
Age
  
Position Since
Craig A. Dionne, PhD
 
Chief Executive Officer, Chief Financial Officer and President
 
51
 
11/03
             
Russell Richerson, PhD
 
Chief Operating Officer and Secretary
 
56
 
07/08

Craig A. Dionne, PhD. – See Bio in Directors Section

Russell Richerson, PhD , age 56, has over 25 years experience in the Biotechnology/Diagnostics industry, including 11 years at Abbott Laboratories in numerous management roles. He has extensive experience in senior research and development positions at companies such as Boehringer Mannheim, Du Pont, Prometheus Laboratories, Ventana Medical Systems, and the Molecular Profiling Institute.

Executive Compensation

Summary Compensation

28


The following table sets forth information for our most recently completed fiscal year concerning the compensation of (i) the Principal Executive Officer and (ii) all other executive officers of GenSpera, Inc. who earned over $100,000 in salary and bonus during the last most recently completed fiscal year ended December 31, 2007 (together the “Named Executive Officers”).  No other employees earned a salary over $100,000 in the last completed fiscal years.

Name and
principal
position
(a)
 
Year
(b)
 
Salary
($)
(c)
 
Bonus
($)
(d)
 
Stock
Awards
($)
(e)
 
Option
Award
($)
(f)(2)
 
Nonequity
Incentive
Plan
compensation
($)
(g)
 
Non-qualified
deferred
compensation
earning
($)
(h)
  
All other
Compensation
($)
(i)(1)
 
Total
($)
(j)
 
 
 
 
                                 
Craig Dionne
Chief Executive
Officer/Chief Financial Officer
   
2007
 
$
20,000
                                      
$
20,000
 

Employment Agreements

At present, there are no written employment agreements with Dr. Craig Dionne or Dr. Russell Richerson. The board has approved an annual salary for Dr. Dionne in the amount of $240,000 and for Dr. Richerson in the amount of $200,000.  Additionally, we have agreed to reimburse Messrs Dionne and Richerson up to $1,500 per month for health insurance. We anticipate entering into a formal written employment agreement with Dr. Dionne in the future.

EQUITY COMPENSATION PLAN INFORMATION
 
The following table sets forth information with respect to our 2007 Stock Plans as of December 31, 2007.

 
 
(a)
 
(b)
 
(c)
 
 
 
Number of Securities
to be Issued
upon Exercise of
Outstanding
Options, Warrants
and Rights
 
Weighted-Average
Exercise Price of 
Outstanding
Options,
Warrants and
Rights
 
Number of Securities
Remaining Available or
Future Issuance under
Equity Compensation Plans
(Excluding Securities
Reflected in Column (a))
 
Equity compensation plans approved by security holders
             
2007 Stock Plan, as amended  
   
1,500,000
 
$
0.00
   
1,500,000
 
Equity compensation plans not approved by security holders
   
N/A
   
N/A
   
N/A
 
Total
   
1,500,000
 
$
0.00
   
1,500,000
 
 
GenSpera2007 Equity Compensation Plan

We have one equity incentive plan, our 2007 Equity Compensation Plan (“2007 Plan”). Our 2007 Plan is administered by a committee of non-employee directors who are appointed by our board of directors (“Committee”). The purpose of our 2007 Plan is to advance the interests of GenSpera and our stockholders by attracting, retaining and rewarding persons performing services for us and to motivate such persons to contribute to our growth and profitability.

Issuance of Awards. The issuance of awards under our 2007 Plan is at the discretion of the Committees, which has the authority to determine the persons to whom any awards shall be granted and the terms, conditions and restrictions applicable to any award. Under our 2007 Plan, we may grant stock options and restricted stock to employees, directors and consultants. Our 2007 Plan authorizes the issuance of up to 1,500,000 shares of our common stock for the foregoing awards. As of December 31, 2007, we not had made any awards under our 2007 Plan and 1,500,000 shares were available for future awards. As of December 31, 2007, we had not adopted any performance targets or other goals or objectives that must be met in order to issue awards under our 2007 Plan. In the first half of 2008, the Company awarded a total of 560,000 stock options as compensation to members of our Board of Directors, Scientific Advisory Board and consultants. In July 2008, the non-management members of the Board of Directors authorized an increase in the number of shares under the 2007 Plan by 560,000 shares such that the total number of shares available for future awards is 1,500,000. No further shares have been issued, awarded, pledged or promised as of the date of this Prospectus.


Exercise Price for Options. The exercise price of Nonqualified Stock Options shall not be less than 85% of the fair market value per share on the date of grant. The exercise price per share for Incentive Stock Option grants must be no less than 100% of the fair market value per share on the date of grant. The exercise price per share for an incentive stock option grant to an employee who, at the time of grant, owns stock representing more than 10% of the voting power of all classes of stock of GenSpera or any parent or subsidiary, must be no less than 110% of the fair market value per share on the date of grant.
 
Payment of Exercise Price. Generally, the option exercise price may be paid in cash, by check, by cashless exercise, by net exercise or by tender or attestation of ownership of shares having a fair market value not less than the exercise price and that either (A) have been owned by the optionee for more than six months and not used for another exercise by tender or attestation, or (B) were not acquired, directly or indirectly, from us.

Exercisability and Vesting. At the time an award is granted, the Committee must fix the period within which the award may be exercised and determine any conditions that must be satisfied before the award may be exercised. Notwithstanding, options shall vest over a period of not more than five years and at a rate of not less than 20% per year. The Committee may accelerate the exercisability of any or all outstanding options at any time for any reason.

Term of Options. The maximum term of an option granted under our 2007 Plan is ten years.

Transferability of Awards. Grants are nontransferable by the grantee other than by will or by the laws of descent and distribution and are exercisable during the grantee’s lifetime only by the grantee.

Change in Control. Our 2007 Plan provides that in the event of our merger with or into another corporation, the sale of substantially all of our assets, or the sale or exchange of more than 50% of our voting stock, each outstanding award shall be assumed or an equivalent award substituted by the surviving, continuing, successor or purchasing corporation or a parent thereof. The Committee may also deem an award assumed if the award confers the right to the award-holder to receive, for each share of stock subject to an award immediately prior to the change in control, the consideration that a stockholder is entitled on the effective date of the change in control. Upon a change in control, all outstanding options shall automatically accelerate and become fully exercisable and all restrictions and conditions on all outstanding restricted stock grants shall immediately lapse.

Amendment and Termination. The Committee may at any time amend, suspend or terminate our 2007 Plan. Notwithstanding the forgoing, the Committee shall not amend the Plan without shareholder approval if such approval is required by section 422 of the Internal Revenue Code or section 162(m) therein.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

This summary of certain agreements we have entered into with our stockholders does not purport to be complete and is qualified in its entirety by reference to the respective agreements, a copy of each of which is filed or incorporated by reference as an exhibit to this report. We believe the terms and conditions set forth in such agreements are reasonable and customary for transactions of these types.

 
·
On November 10, 2006, we issued options to purchase an aggregate of 150,000 common shares to the Company’s officers, directors and certain shareholders as compensation for services provided to the Company. The options vested at grant and have a term of 10 years. The options were granted as follows: (i) 111,250 to Mr. Burgoon, a former director; (ii) 8,875 to Mr. Dionne, a director and Chief Executive Officer; (iii) 10,000 to Mr. Richerson, our Chief Operating Officer; and (iv) 10,000 to each of Messrs. Isaacs and Demneade, each an advisor to the Company and a beneficial owner of 5% or more of the Company’s common shares. The options had an exercise price of $0.01 and a term of 10 years.

 
·
On May 14, 2007, our Board of Directors approved the acceleration of outstanding common stock options that were previously issued to Messrs Isaacs and Denmeade as compensation. As a result of the acceleration, 10,500 common stock options because immediately vested. The options have an exercise price of $0.0016 and a term of 10 years.

 
·
On January 7, 2008, we granted 100,000 shares of common stock, valued at $50,000, to a Mr. Burgoon, a former director, as compensation for serving on the board. The shares vested upon grant.
 
 
·
On February 1, 2008, we granted Messrs Isaacs and Denmeade common stock purchase options to purchased 60,000 shares each as compensation for joining the Company’s scientific advisory board. The options have an exercise price of $0.50 per share. The options vest in equal installments quarterly over a period of three years commencing March 31, 2008, and lapse if unexercised on January 31, 2018.

 
·
On February 11, 2008, we entered into a verbal employment agreement with Craig Dionne, our Chief Executive Officer. Under the terms of the agreement, we have agreed to pay Mr. Dionne an annual salary of $240,000. The agreement is retroactively effective December 1, 2007. In July 2008 we entered into a verbal agreement with Craig Dionne where we have agreed to a monthly reimbursement for medical benefits of $1,500. We anticipate entering into a formal written agreement with Mr. Dionne in the near future.

30

 
 
·
In March of 2008, we granted options to purchase an aggregate of 300,000 common shares to our directors Messrs Farah and Ogilvie as well as our former director Mr. Burgoon. Each director received options to purchase 100,000 common shares at an exercise price of $0.50 per share. Each director’s grant vests 50,000 upon grant with the balance vesting quarterly over a period of two years commencing March 31, 2008, and lapses if unexercised on April 1, 2018.

 
·
On March 11, 2008 we exercised our option to license certain intellectual property from Messrs Isaacs and Denmeade. As consideration for the option exercise, we paid each of Isaacs and Denmeade: (i) $37,995.90 which they immediately transferred to John Hopkins University as repayment of past patent costs; and (ii) $18,997 as a “gross-up” to pay for relevant tax consequences of the option exercise payment.

 
·
In April of 2008, Messrs Isaacs and Denmeade transferred to the Company their interest in the intellectual property licensed on March 11, 2008.

 
·
On July 1, 2008, we entered into a verbal employment agreement with Russell Richerson, our Chief Operating Officer. Under the terms of the agreement, we have agreed to pay Mr. Richerson an annual salary of $200,000 and monthly reimbursement for medical benefits of $1,500. We anticipate entering into a formal written agreement with Mr. Richerson in the near future.

 
·
Between December 2003 and December 2006, we entered into five convertible notes with Craig Dionne, our majority stockholder and Chief Executive Officer, pursuant to which we have borrowed an aggregate of $155,000. The notes bear an interest rate of 4.2% and mature at various dates through December 6, 2011. Interest accrued through February 29, 2008 was $15,859. On March 7, 2008 we issued 31,718 shares of common stock as payment of this amount.

PRINCIPAL STOCKHOLDERS

The following table sets forth, as of September 27, 2008, information regarding beneficial ownership of our capital stock by:

·
each person, or group of affiliated persons, known by us to be the beneficial owner of 5% or more of any class of our voting securities;
 
·
each of our current directors and nominees;
 
·
each of our current named executive officers; and
 
·
all current directors and named executive officers as a group.
 
Beneficial ownership is determined according to the rules of the SEC. Beneficial ownership means that a person has or shares voting or investment power of a security and includes any securities that person or group has the right to acquire within 60 days after the measurement date. This table is based on information supplied by officers, directors and principal stockholders. Except as otherwise indicated, we believe that each of the beneficial owners of the common stock listed below, based on the information such beneficial owner has given to us, has sole investment and voting power with respect to such beneficial owner’s shares, except where community property laws may apply.

   
Common Stock
 
Name and Address of Beneficial Owner(1)
 
Shares
 
  Shares
Underlying
Convertible
Securities(2)
 
  Total
 
Percent of
Class(2)
 
Directors and named executive officers
                         
Craig Dionne, PhD
   
2,438,662
   
310,000
   
2,748,662
   
21.5
%
Russell B. Richerson, PhD (3)
   
925,000
         
925,000
   
7.40
%
John M. Farah, PhD
         
68,750
   
68,750
   
*
 
Scott Ogilvie
         
68,750
   
68,750
   
*
 
All directors and executive officers as a group (4 persons)
   
3,363,662
   
447,500
   
3,811,162
   
29.5
%
Beneficial Owners of 5% or more
                         
John T. Isaacs, PhD (4)
   
1,271,528
   
15,000
   
1,286,528
   
10.3
%
Samuel R. Denmeade, M.D (5)
   
1,271,528
   
15,000
   
1,286,528
   
10.3
%
 
31

 

*
Less than one percent.
   
(1)
Except as otherwise indicated, the persons named in this table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable and to the information contained in the footnotes to this table. Unless otherwise indicated, the address of the beneficial owner is GenSpera, Inc., 9901 IH-10 West, Suite 800, San Antonio, TX 78230.
   
(2)
Pursuant to Rules 13d-3 and 13d-5 of the Exchange Act, beneficial ownership includes any shares as to which a shareholder has sole or shared voting power or investment power, and also any shares which the shareholder has the right to acquire within 60 days, including upon exercise of common shares purchase options or warrant. There are 12,486,718 shares of common stock issued and outstanding as of September 27, 2008
   
(3)
5050 East Gleneagles Drive, Tucson, AZ 85718
   
(4)
13638 Poplar Hill Road, Phoenix, Maryland 21131
   
(5)
5112 Little Creek Drive, Ellicott City, MD 21043

SELLING STOCKHOLDERS
 
This prospectus relates to the offering and sale, from time to time, of up to 6,387,400 shares of our common stock held by the stockholders named in the table below, which amount includes common shares issuable upon the exercise of warrants held by the selling stockholders. The selling stockholders may exercise their warrants at any time in their sole discretion. All of the selling stockholders named below acquired their shares of our common stock and warrants directly from us in private transactions.

Set forth below is information, to the extent known to us, setting forth the name of each Selling Shareholder and the amount and percentage of Common Stock owned by each (including shares that can be acquired on the exercise of outstanding warrants) prior to the offering, the shares to be sold in the offering, and the amount and percentage of Common Stock to be owned by each (including shares that can be acquired on the exercise of outstanding warrants) after the offering assuming all shares are sold. The footnotes provide information about persons who have investment voting power for the Selling Shareholders and about material transactions between the Selling Shareholders and the Company.

The selling stockholders may sell all or some of the shares of common stock they are offering, and may sell shares of our common stock otherwise than pursuant to this prospectus. The table below assumes that each selling stockholder exercises all of its warrants and sells all of the shares issued upon exercise thereof, and that each selling stockholder sells all of the shares offered by it in offerings pursuant to this prospectus, and does not acquire any additional shares. We are unable to determine the exact number of shares that will actually be sold or when or if these sales will occur.

The selling stockholders may sell all, some or none of their shares in this offering. See “Plan of Distribution.”

The total number of common shares sold under this prospectus may be adjusted to reflect adjustments due to stock dividends, stock distributions, splits, combinations, recapitalizations or the triggering anti-dilution protective provisions with regard to the common stock and warrants.
 
Unless otherwise stated below in the footnotes, to our knowledge, no selling shareholder nor any affiliate of such shareholder: (i) has held any position or office with, been employed by or otherwise has had any material relationship with us or our affiliates during the three years prior to the date of this prospectus; or (ii) is a broker-dealer, or an affiliate of a broker-dealer.

We may amend or supplement this prospectus from time to time in the future to update or change this list and shares which may be resold.
 
   
  Common Shares Owned Before Sale (1)
     
Common Shares Owned After Sale (2)
 
 
 
Held
Outright
 
Warrants/
Options
 
Amount
 
% of class
 
Shares
being
registered
 
Amount
 
% of Class
 
Bristol Investment Fund, Ltd. (3)
   
500,000
   
125,000
   
625,000
   
4.1
%
 
625,000
   
-
   
-
 
The JD Group LLC (4)
   
500,000
     -    
500,000
   
3.3
%
 
500,000
   
-
   
-
 
G. Tyler Runnels or Jasmine Niklas Runnels TTEES The Runnel Family Trust dtd 1-11-20 (5)
   
375,000
   
62,500
   
437,500
   
2.8
%
 
437,500
   
-
   
-
 
IRA FBO J. Steven Emerson Rollover II Pershing LLC as Custodian
   
250,000
   
125,000
   
375,000
   
2.4
%
 
375,000
   
-
   
-
 
TR Winston & Company, LLC (6)(7)
     -    
337,700
   
337,700
   
2.2
%
 
255,900
   
81,800
   
0.5
%
Richard Hull, PhD
   
295,000
   
25,000
   
320,000
   
2.1
%
 
75,000
   
245,000
   
1.6
%
Steven Mitchell Sack Profit Sharing Plan
   
200,000
   
50,000
   
250,000
   
1.6
%
 
250,000
   
-
   
-
 
Steven Chizzik
   
245,000
    -    
245,000
   
1.6
%
 
245,000
   
-
   
-
 
Steven Mitchell Sack
   
100,000
   
50,000
   
150,000
   
1.0
%
 
150,000
   
-
   
-
 
Ajax Partners (8)
   
100,000
   
50,000
   
150,000
   
1.0
%
 
150,000
   
-
   
-
 
JAG MULTI INVESTMENTS LLC (9)
   
100,000
   
50,000
   
150,000
   
1.0
%
 
150,000
   
-
   
-
 
Robert R. Kauffman
   
100,000
   
50,000
   
150,000
   
1.0
%
 
150,000
   
-
   
-
 
Kathryn F. Hopper
   
130,000
   
15,000
   
145,000
   
0.9
%
 
145,000
   
-
   
-
 
Robert O'Mara
   
120,000
   
20,000
   
140,000
   
0.9
%
 
140,000
   
-
   
-
 
Subhash C. Gulati
   
110,000
   
5,000
   
115,000
   
0.7
%
 
115,000
   
-
   
-
 
New Giles, LLC
   
75,000
   
37,500
   
112,500
   
0.7
%
 
112,500
   
-
   
-
 
Samax Family Limited Partnership (10)
   
75,000
   
37,500
   
112,500
   
0.7
%
 
112,500
   
-
   
-
 
D. Carl Lustig, III
   
75,000
   
37,500
   
112,500
   
0.7
%
 
112,500
   
-
   
-
 
Core Fund, L.P. (11)
   
100,000
    -    
100,000
   
0.7
%
 
100,000
   
-
   
-
 
Bruce N. Barron & Jacqueline A. Barron
   
100,000
     -    
100,000
   
0.7
%
 
100,000
   
-
   
-
 
Thomas E. Genna
   
100,000
     -    
100,000
   
0.7
%
 
100,000
   
-
   
-
 
Jay R. Solan
   
75,000
   
12,500
   
87,500
   
0.6
%
 
87,500
   
-
   
-
 
Richard W. Green
   
75,000
   
12,500
   
87,500
   
0.6
%
 
87,500
   
-
   
-
 
The Verrazano Group, LLC (12)
     -    
84,000
   
84,000
   
0.5
%
 
84,000
   
-
   
-
 
Windermere Insurance Co. Ltd. (13)
   
50,000
   
25,000
   
75,000
   
0.5
%
 
75,000
   
-
   
-
 
Christopher Miglino
   
50,000
   
25,000
   
75,000
   
0.5
%
 
75,000
   
-
   
-
 
Doris Sutz Roth IRA
   
50,000
   
25,000
   
75,000
   
0.5
%
 
75,000
   
-
   
-
 
Dr. Arnold Yoskowitz and Regina Yoskowitz
   
50,000
   
25,000
   
75,000
   
0.5
%
 
75,000
   
-
   
-
 
Gerald B. Lichtenberger
   
50,000
   
25,000
   
75,000
   
0.5
%
 
75,000
   
-
   
-
 
John Peter Christensen
   
50,000
   
25,000
   
75,000
   
0.5
%
 
75,000
   
-
   
-
 
Joseph Giamanco
   
50,000
   
25,000
   
75,000
   
0.5
%
 
75,000
   
-
   
-
 
Philip S. Sassower
   
50,000
   
25,000
   
75,000
   
0.5
%
 
75,000
   
-
   
-
 
Mitchell J. Sassower
   
50,000
   
25,000
   
75,000
   
0.5
%
 
75,000
   
-
   
-
 
Jerry A. Lubliner, M.D.
   
50,000
   
25,000
   
75,000
   
0.5
%
 
75,000
   
-
   
-
 
Beatrice Slomiuc
   
50,000
     -    
50,000
   
0.3
%
 
50,000
   
-
   
-
 
Chaim Slomiuc
   
50,000
     -    
50,000
   
0.3
%
 
50,000
   
-
   
-
 
David N. Baker
   
50,000
     -    
50,000
   
0.3
%
 
50,000
   
-
   
-
 
Equireal Leasing, Inc., Andrew Margulies, VP (14)
   
50,000
     -    
50,000
   
0.3
%
 
50,000
   
-
   
-
 
Jeff Strauss & Mindy Schultheis
   
50,000
     -    
50,000
   
0.3
%
 
50,000
   
-
   
-
 
John Curley & Patricia Jennings Curley
   
50,000
     -    
50,000
   
0.3
%
 
50,000
   
-
   
-
 
Marie A. Karanfilian
   
50,000
     -    
50,000
   
0.3
%
 
50,000
   
-
   
-
 
Sheila Sugerman
   
50,000
     -    
50,000
   
0.3
%
 
50,000
   
-
   
-
 
Steven E. Holzel
   
50,000
     -    
50,000
   
0.3
%
 
50,000
   
-
   
-
 
Steven Shum
   
50,000
     -    
50,000
   
0.3
%
 
50,000
   
-
   
-
 
Alan Schwartz
   
25,000
   
12,500
   
37,500
   
0.2
%
 
37,500
   
-
   
-
 
Arthur Dunkin
   
25,000
   
12,500
   
37,500
   
0.2
%
 
37,500
   
-
   
-
 
Faith Griffin & John A. Lenhart JTWROS
   
25,000
   
12,500
   
37,500
   
0.2
%
 
37,500
   
-
   
-
 
IRA FBO John Curley, Pershing LLC as Custodian
   
25,000
   
12,500
   
37,500
   
0.2
%
 
37,500
   
-
   
-
 
Patrick Hund
   
25,000
   
12,500
   
37,500
   
0.2
%
 
37,500
   
-
   
-
 
Rhonda Wesolak
   
25,000
   
12,500
   
37,500
   
0.2
%
 
37,500
   
-
   
-
 
John G. Korman
   
25,000
   
12,500
   
37,500
   
0.2
%
 
37,500
   
-
   
-
 
A.C. Providenti
   
25,000
   
12,500
   
37,500
   
0.2
%
 
37,500
   
-
   
-
 
Benjamin Hill
   
15,000
   
7,500
   
22,500
   
0.1
%
 
22,500
   
-
   
-
 
John Toedtman
   
20,000
    -    
20,000
   
0.1
%
 
20,000
   
-
   
-
 
Donald L. Stahl
   
12,500
   
6,250
   
18,750
   
0.1
%
 
18,750
   
-
   
-
 
Leslie M. James
   
12,500
   
6,250
   
18,750
   
0.1
%
 
18,750
   
-
   
-
 
Nathan Sugerman
   
12,500
   
6,250
   
18,750
   
0.1
%
 
18,750
   
-
   
-
 
Robert B. Greene
   
12,500
   
6,250
   
18,750
   
0.1
%
 
18,750
   
-
   
-
 
Klaus Peter Eichner
   
12,500
   
6,250
   
18,750
   
0.1
%
 
18,750
   
-
   
-
 
Gary J. Faden
   
12,500
   
6,250
   
18,750
   
0.1
%
 
18,750
   
-
   
-
 
Mercer Capital, Ltd. (15)(7)
    -    
15,500
   
15,500
   
0.1
%
 
15,500
   
-
   
-
 
Andrew B. Dorman
     -    
4,250
   
4,250
   
0.0
%
 
4,250
   
-
   
-
 
David S. Lustig
     -    
2,080
   
2,080
   
0.0
%
 
2,080
   
-
   
-
 
Nicole H. Tavernier
     -    
500
   
500
   
0.0
%
 
500
   
-
   
-
 
Mark P. Eichner
     -    
170
   
170
   
0.0
%
 
170
   
-
   
-
 
                                             
TOTALS
   
5,110,000
   
1,604,200
   
6,714,200
   
45.3
%
 
6,387,400
   
326,800
   
2.1
%
 

(1)
Pursuant to Rules 13d-3 and 13d-5 of the Exchange Act, beneficial ownership includes any common shares as to which a shareholder has sole or shared voting power or investment power, and also any common shares which the shareholder has the right to acquire within 60 days, including upon exercise of common shares purchase options or warrants. There were 12,486,718 common shares outstanding as of September 27, 2008.

(2)
Assumes the sale of all common shares registered pursuant to this registration statement.
 
(3)
Bristol Capital Advisors, LLC (“BCA”) is the investment advisor to Bristol Investment Fund, Ltd. (“Bristol”). Paul Kessler is the manager of BCA and as such has voting and investment control over the securities held by Bristol. Mr. Kessler disclaims beneficial ownership of these securities.
 
(4)
John Davies, Manager, is the person with voting and dispositive control with respect to the securities being offered.

(5)
G. Tyler Runnels and Jasmine Niklas Runnels, as Trustees, have voting and dispositive control with respect to the securities being offered.

(6)
G. Tyler Runnels, as President, has voting and dispositive control with respect to the securities being offered.

(7)
In connection with our July and August offering, the Company issued: (i) 255,900 warrants to TR Winston & Company, LLC; and (ii) 15,500 to Mercer Capital, Ltd. The warrants issued to TR Winston & Company, LLC and Mercer Capital, Ltd. are been deemed compensation by the NASD and are therefore subject to a 180-day lock-up from the date of this prospectus pursuant to Rule 2710(g)(l) of the NASD Conduct Rules. Additionally, the warrants may not be sold, transferred, assigned, pledged or hypothecated for a period of 180 days following the date of this prospectus. However, the warrants may be transferred to any underwriter and selected dealer participating in the offering and their bona fide officers or partners. Thereafter, the warrants will be transferable provided such transfer is in accordance with the provisions of the Securities Act.

(8)
Richard Stone, Managing Partner, has voting and dispositive control with respect to the securities being offered.

(9)
James Coren, member has voting and dispositive control with respect to the securities being offered.

(10)
Andrew Margulies, General Partner, has voting and dispositive control with respect to the securities being offered.

(11)
Steve Shum, Managing Director, has voting and dispositive control with respect to the securities being offered.

(12)
Steven Chizzik, Managing Director, has voting and dispositive control with respect to the securities being offered.

(13)
John Scardino, Director, has voting and dispositive control with respect to the securities being offered.

(14)
Andrew Margulies, Vice President, has voting and dispositive control with respect to the securities being offered.

(15)
Len Demer, Managing Director, has voting and dispositive control with respect to the securities being offered.
 
32


DESCRIPTION OF SECURITIES

General

As of July 8, 2008, our authorized capital stock consisted of:

·
80,000,000 shares of common stock, par value $0.0001; and
   
·
10,000,000 shares of “blank check” preferred stock, par value $0.0001.
 
As of September 27, 2008, 12,486,718 shares of common stock were issued and outstanding and 0 shares of preferred stock were issued and outstanding. All of our currently issued and outstanding shares of capital stock were validly issued, fully paid and non-assessable under the Delaware General Corporation Law, as amended, or the DGCL.

Set forth below is a summary description of all the material terms of our common stock and warrants. This description is qualified in its entirety by reference to our amended and restated certificate of incorporation, bylaws and form of warrants, each of which is filed as an exhibit to this registration statement.

Common Stock

The holders of our common stock are entitled to one vote per share on each matter submitted to a vote at a meeting of our stockholders, except to the extent that the voting rights of our shares of any class or series of stock are determined and specified as greater or lesser than one vote per share in the manner provided by our certificate of incorporation. Our stockholders have no pre-emptive rights to acquire additional shares of our common stock or other securities. Our common stock is not subject to redemption rights and carries no subscription or conversion rights. In the event of liquidation of our company, the shares of our common stock are entitled to share equally in corporate assets after satisfaction of all liabilities. All shares of our common stock now outstanding are fully paid and non-assessable. Our bylaws authorize the board of directors to declare dividends on our outstanding shares. As of September 27, 2008 there are 12,486,718 shares of our common stock issued and outstanding.

Preferred Stock

We may issue our preferred shares from time to time in one or more series as determined by our board of directors. The voting powers and preferences, the relative rights of each series, and the qualifications, limitations and restrictions thereof may be established by our board of directors without any further vote or action by our shareholders. As of August 31, 2008 there were no shares of our preferred stock issued and outstanding.
 
Warrants and Debentures Convertible into Common Shares

In connection with our July to August 2008 offering, we issued warrants and convertible debentures to purchase up to 1,683,800 shares of our common stock.

Warrants  – The warrants have a term of 5 years and an exercise price of $2.00 per shares subject to certain anti-dilution adjustments. The warrants are also callable by the Company in the event the Company’s shares are publically traded in the future and certain price and volume conditions are met.

Convertible Debentures  – The convertible debenture accrues interest at 5% per annum and has a maturity date of July 14, 2009. The debenture is convertible into the shares of the Company’s common stock, at the sole discretion of the holder, at $1.00 per share subject to certain anti-dilution adjustments.

Registration Rights

From July 14, 2008 through August 30, 2008, we received $2,320,000 in gross proceeds from the private placement of units consisting of one share of common stock and one-half warrant with an exercise price of $2.00 per share of common stock, exercisable any time within five years   after the date of issuance. As part of the private placement, we entered into a registration rights agreements with the investors under which we agreed to file the registration statement of which this prospectus is a part in order to register (1) the common shares issued in the private placement; and (2) the common shares issuable upon the exercise of the warrants.
 
The registration rights agreement required us to use our best efforts to:

33


·
file the registration statement as soon as reasonably practicable after the first closing for the offering, but in no event later than September 27, 2008 (“Filing Deadline”);
 
·
have the registration agreement declared effective by December 11, 2008 (“Effectiveness Deadline”) ; and
   
·
maintain the registration statement continuously effective until the date that the shares covered by this prospectus may be sold pursuant to Rule 144 of the Securities Act without any manner of sale or volume restrictions.
 
If we fail to file the registration statement by the Filing Deadline, have the registration statement declared effective by the Effectiveness Deadline, or the registration statement does not stay effective for any 20 consecutive day period, the Company will pay monthly partial liquidated damages, in cash, in the amount of 1.5% of the aggregate purchase price paid by the holder for any unregistered securities.

MARKET FOR COMMON EQUITY & RELATED STOCKHOLDER MATTERS  
 
Holders

There exists no market for our common stock. Private sales or transfers are permitted under the respective state and Federal securities laws, subject to compliance with exemptions set forth under the respective statutory guidelines.  As of September 27, 2008, we had 78 common shareholders of record.

Options, Warrants and Convertible Securities

As of September 27, 2008, there were outstanding common share purchase options, warrants and convertible securities entitling the holders to purchase up to 3,637,800 common shares at exercise prices between $0.50 and $2.00 with an average weighted exercise price of $1.29 per share.

SHARES ELIGIBLE FOR FUTURE SALE  
 
To date, there has been no market for our common stock. In the event a public market for our shares develops, future sales of substantial amounts of our common stock in the public market could adversely affect prevailing market prices from time to time. Further, since only a limited number of shares will be available for sale shortly after this offering because of certain contractual and legal restrictions on resale described below, sales of substantial amounts of our common stock in the public market after the restrictions lapse could adversely affect the prevailing market price and our ability to raise equity capital in the future.

Sale of Restricted Shares  
 
Upon completion of this offering, we will have 12,486,718 shares of common stock outstanding, based on 12,486,718 shares of common stock outstanding as of September 27, 2008. Of these shares, the shares sold in this offering will be freely tradable without restriction under the Securities Act, except for any shares purchased by our “affiliates” as that term is defined in Rule  144 under the Securities Act. In general, affiliates include executive officers, directors, and 10% stockholders. Shares purchased by affiliates will remain subject to the resale limitations of Rule  144.
 
Upon completion of this offering, 7,458,518 shares of common stock will be “restricted securities,” as that term is defined in rule  144 under the Securities Act. These restricted securities are eligible for public sale only if they are registered under the Securities Act or if they qualify for an exemption from registration under rules  144 or 701 under the Securities Act, which are summarized below.
 
As a result of the lock-up agreements described below and the provisions of Rule  144 and Rule 701 of the Securities Act, the shares of our common stock (excluding the shares sold in this offering) will be available for sale in the public market as follows:

Date
 
Number of Shares
 
On the date of this prospectus
    1,309,438  
Within 90 days after the date of this prospectus
    1,309,438  
Between 90 and 360 days after the date of this prospectus
    1,309,438  
365 days after the effective date of this prospectus     7,621,718  

34


Lock-Up Agreements  

Our directors, executive officers, and certain other stockholders are subject to lock up agreements, generally providing that they will not offer, sell, contract to sell, or grant any option to purchase or otherwise dispose of our common stock or any securities exercisable for or convertible into our common stock owned by them for a period of at least 12 months after the date that this registration is deemed effective. Despite possible earlier eligibility for sale under the provisions of Rules  144 and 701, shares subject to lock-up agreements will not be salable until these agreements expire or are waived by prior investors. Approximately 6,312,280 or 50 % of our outstanding shares of common stock will be subject to such lock-up agreements.
 
Rule  144  
 
Generally, Rule  144 (as amended effective February 15, 2008) provides that an affiliate who has beneficially owned “restricted” shares of our common stock for at least six months will be entitled to sell on the open market in brokers’ transactions, within any three-month period, a number of shares that does not exceed the greater of:
 
     
 
• 
1% of the number of shares of common stock then outstanding; or
 
   
 
• 
the average weekly trading volume of the common stock during the four calendar weeks preceding the filing of a notice on Form  144 with respect to such sale.
 
In addition, sales under Rule  144 are subject to requirements with respect to manner of sale, notice, and the availability of current public information about us.
 
In the event that any person who is deemed to be our affiliate purchases shares of our common stock in this offering or acquires shares of our common stock pursuant to one of our employee benefits plans, sales under Rule  144 of the shares held by that person are subject to the volume limitations and other restrictions described in the preceding two paragraphs.
 
The volume limitation, manner of sale and notice provisions described above will not apply to sales by non-affiliates. For purposes of Rule  144, a non-affiliate is any person or entity who is not our affiliate at the time of sale and has not been our affiliate during the preceding three months. Once we have been a reporting company for 90 days, a non-affiliate who has beneficially owned restricted shares of our common stock for six months may rely on Rule  144 provided that certain public information regarding us is available. The six month holding period increases to one year in the event we have not been a reporting company for at least 90 days. However, a non-affiliate who has beneficially owned the restricted shares proposed to be sold for at least one year will not be subject to any restrictions under Rule  144 regardless of how long we have been a reporting company.
 
Rule 701  
 
Under Rule 701, each of our employees, officers, directors, and consultants who purchased shares pursuant to a written compensatory plan or contract is eligible to resell these shares 90 days after the effective date of this offering in reliance upon Rule  144, but without compliance with specific restrictions. Rule 701 provides that affiliates may sell their Rule 701 shares under Rule  144 without complying with the holding period requirement and that non-affiliates may sell their shares in reliance on Rule  144 without complying with the holding period, public information, volume limitation, or notice provisions of Rule  144.
 
Form S-8 Registration Statements  
 
We intend to file one or more registration statements on Form S-8 under the Securities Act as soon as practicable after the completion of this offering for shares issued upon the exercise of options and shares to be issued under our employee benefit plans. As a result, any shares acquired upon the exercise of such options will be freely tradable in the public market.

PLAN OF DISTRIBUTION

Each Selling Stockholder (the “ Selling Stockholders ”) of the common stock and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of common stock on any other stock exchange in which a market develops or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. A Selling Stockholder may use any one or more of the following methods when selling shares:
 
 
·
ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

35

 
 
·
block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
 
 
·
purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
 
 
·
an exchange distribution in accordance with the rules of the applicable exchange;
 
 
·
privately negotiated transactions;
 
 
·
settlement of short sales entered into after the effective date of the registration statement of which this prospectus is a part;
 
 
·
broker-dealers may agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per share;
 
 
·
through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;
 
 
·
a combination of any such methods of sale; or
 
 
·
any other method permitted pursuant to applicable law.
 
The Selling Stockholders may also sell shares under Rule 144 under the Securities Act of 1933, as amended (the “ Securities Act ”), if available, rather than under this prospectus.
 
Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with NASD Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with NASD IM-2440.
 
In connection with the sale of the common stock or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume. The Selling Stockholders may also sell shares of the common stock short and deliver these securities to close out their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The Selling Stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
 
The Selling Stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each Selling Stockholder has informed the Company that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the Common Stock. In no event shall any broker-dealer receive fees, commissions and markups which, in the aggregate, would exceed eight percent (8%).
 
The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the shares. The Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.
 
Because Selling Stockholders may be deemed to be “underwriters” within the meaning of the Securities Act, they will be subject to the prospectus delivery requirements of the Securities Act including Rule 172 thereunder. In addition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this prospectus. There is no underwriter or coordinating broker acting in connection with the proposed sale of the resale shares by the Selling Stockholders.
 
We agreed to keep this prospectus effective until the earlier of (i) the date on which the shares may be resold by the Selling Stockholders without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for the Company to be in compliance with the current public information under Rule 144 under the Securities Act or any other rule of similar effect or (ii) all of the shares have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale shares will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale shares may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.

36

 
Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale shares may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the Selling Stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of shares of the common stock by the Selling Stockholders or any other person. We will make copies of this prospectus available to the Selling Stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).
 
INDEMNIFICATION OF DIRECTORS AND OFFICERS
 
The Corporation Laws of the State of Delaware and the Company's Bylaws provide for indemnification of the Company's Directors for expenses actually and necessarily incurred by them in connection with the defense of any action, suit or proceeding in which they, or any of them, are made parties, or a party, by reason of having been Director(s) or Officer(s) of the corporation, or of such other corporation, except, in relation to matter as to which any such Director or Officer or former Director or Officer or person shall be adjudged in such action, suit or proceeding to be liable for negligence or misconduct in the performance of duty.  Furthermore, the personal liability of the Directors is limited as provided in the Company's Articles of Incorporation.
 
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling the Company pursuant to the foregoing provisions, the Company has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is therefore unenforceable.
 
LEGAL MATTERS

The Law Office of Raul Silvestre & Associates, APLC, will issue a legal opinion as to the validity of the issuance of the shares of common stock offered under this prospectus.

EXPERTS

The financial statements as of December 31, 2007 and 2006 and for each of the two years in the period ended December 31, 2007 included in this prospectus and in the registration statement of which it forms a part have been so included in reliance on the report of RBSM LLP our independent registered public accounting firm (which report contains an explanatory paragraph regarding our ability to continue as a going concern), appearing elsewhere in this prospectus and the registration statement of which it forms a part, given on the authority of said firm as experts in auditing and accounting.

INTERESTS OF NAMED EXPERTS AND COUNSEL

No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the shares of common stock was employed on a contingency basis or had, or is to receive, in connection with the offering, a substantial interest, directly or indirectly, in the registrant nor was any such person connected with the registrant as a promoter, managing or principal underwriter, voting trustee, director, officer or employee.

WHERE YOU CAN FIND MORE INFORMATION

We will file annual, quarterly and other reports, proxy statements and other information with the SEC. You may read and copy any document we file at the public reference facilities of the SEC at 100 F Street, NE, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference rooms. Our SEC filings are also available to the public at the SEC’s web site at http://www.sec.gov and at our website at http://www.genspera.com. We will furnish our stockholders with annual reports containing audited financial statements.

This prospectus is part of a registration statement on Form S-1 that we filed with the SEC. Certain information in the registration statement has been omitted from this prospectus in accordance with the rules and regulations of the SEC. We have also filed exhibits and schedules with the registration statement that are excluded from this prospectus. For further information you may:

37


·
read a copy of the registration statement, including the exhibits and schedules, without charge at the SEC’s public reference rooms; or

 
·
obtain a copy from the SEC upon payment of the fees prescribed by the SEC.
 
38


  RBSM LLP
CERTIFIED PUBLIC ACCOUNTANTS
 
REPORT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM

Board of Directors
GenSpera Inc.
Santa Monia, CA


We have audited the accompanying balance sheets of GenSpera Inc., a development stage company, as of December 31, 2007 and 2006, and the related statements of losses, statement of stockholders' equity (deficit), and cash flows for each of the two years in the period ended December 31, 2007 and the period November 21, 2003 (date of inception) through December 31, 2007. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on the financial statements based upon our audits.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of GenSpera Inc., a development stage company, at December 31, 2007 and 2006 and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2007 and the period November 21, 2003 (date of inception) through December 31, 2007 in conformity with accounting principles generally accepted in the United States of America.
 

      
 
RBSM LLP
 
 
Certified Public Accountants
 

New York, New York
March 10, 2008
39

FINANCIAL INFORMATION

GENSPERA INC.
(A Development Stage Company)
BALANCE SHEETS
DECEMBER 31, 2007 AND 2006

   
2007
 
2006
 
Assets
             
               
Current assets:
             
Cash
 
$
590,435
 
$
15,763
 
               
Liabilities and stockholders' equity (deficit)
             
               
Current liabilities:
             
               
Accounts payable and accrued expenses:
 
$
3,874
 
$
8,725
 
Accrued interest - stockholder
   
14,800
   
8,360
 
Convertible note payable - stockholder, current portion
   
35,000
   
-
 
               
Total current liabilities
   
53,674
   
17,085
 
               
Convertible notes payable - stockholder, long term portion
   
120,000
   
155,000
 
               
Total liabilities
   
173,674
   
172,085
 
               
Commitments and contingencies
             
               
Stockholders' equity (deficit):
             
               
Preferred stock, par value $.0001 per share; 10,000,000 shares authorized, none issued and outstanding
   
-
   
-
 
Common stock, par value $.0001 per share; 80,000,000 shares authorized, 9,035,000 and 6,100,000 shares issued and outstanding, respectively
   
904
   
610
 
Additional paid-in capital
   
1,857,842
   
593,854
 
Deficit accumulated during the development stage
   
(1,441,985
)
 
(750,786
)
               
Total stockholders' equity (deficit)
   
416,761
   
(156,322
)
               
Total liabilities and stockholders' equity (deficit)
 
$
590,435
 
$
15,763
 

See accompanying notes to financial statements.

40


GENSPERA, INC.
(A Development Stage Company)
STATEMENTS OF LOSSES
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
AND FOR THE PERIOD FROM INCEPTION (NOVEMBER 21, 2003) TO DECEMBER 31, 2007

       
Cumulative Period
 
       
from November 21, 2003
 
       
(date of inception) to   
 
   
Years ended December 31,
 
December 31,
 
   
2007
 
2006
 
2007
 
               
Operating expenses:
                   
General and administrative expenses
 
$
389,799
 
$
9,351
 
$
435,248
 
Research and development
   
294,440
   
231,092
   
991,416
 
                     
Total operating expenses
   
684,239
   
240,443
   
1,426,664
 
                     
Loss from operations
   
(684,239
)
 
(240,443
)
 
(1,426,664
)
                     
Interest expense, net
   
(6,960
)
 
(4,627
)
 
(15,321
)
                     
Loss before provision for income taxes
   
(691,199
)
 
(245,070
)
 
(1,441,985
)
                     
Provision for income taxes
   
-
   
-
   
-
 
                     
Net loss
 
$
(691,199
)
$
(245,070
)
$
(1,441,985
)
                     
Net loss per common share, basic and diluted
 
$