Seelos Therapeutics 10K/A 2007 Annual report (amended)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K/A

(AMENDMENT NO. 1)

(Mark One)

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

For the fiscal year ended December 31, 2007

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

For the transition period from to

Commission file number 0-22245

NEXMED, INC.

(Exact Name of Registrant as Specified in Its Charter)

Nevada	87-0449967
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

89 Twin Rivers Drive, East Windsor, NJ 08520

(Address of Principal Executive Offices) (Zip Code)

(609) 371-8123

(Registrant’s telephone number, including area code)

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

Title of Each Class	Name of Exchange on Which Registered
Common Stock, par value $.001	The NASDAQ Capital Market

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

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (check one): Large accelerated filer o Accelerated filer x Non-accelerated filer o (do not check if a smaller reporting company) Smaller reporting company o

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

As of March 10, 2008, 83,108,002 shares of the common stock, par value $.001, of the registrant were outstanding. and the aggregate market value of the common stock held by non-affiliates, based upon the last sale price of the registrant’s common stock on June 30, 2007, was approximately $150 million.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of our Proxy Statement to be delivered to our stockholders in connection with the Company’s 2008 Annual Meeting of Stockholders (the “2007 Proxy Statement”) are incorporated by reference into Part III of this Report.

Explanatory Note:

We are filing this Amendment No. 1 on Form 10-K/A to NexMed, Inc.’s Annual Report on Form 10-K (the "Original 10-K") for the fiscal year ended December 31, 2007, which was originally filed with the Securities and Exchange Commission on March 12, 2008, to include under Note 8 of the consolidated financial statements a table that was inadvertently omitted. Except for the foregoing amended information, no other portion of the Original 10-K as originally filed is being modified by this amendment.

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

INDEX TO FINANCIAL STATEMENTS

	PAGE
Report of Independent Registered Public Accounting Firm 2006 and 2007	4
Report of Independent Registered Public Accounting Firm 2005	5
Financial Statements	6
Consolidated Balance Sheets - December 31, 2007 and 2006	6
Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2007, 2006 and 2005	7
Consolidated Statements of Changes in Stockholders' Equity for years ended December 31, 2007, 2006 and 2005	8
Consolidated Statements of Cash Flows for the years ended December 31, 2007, 2006 and 2005	9
Notes to the Consolidated Financial Statements	10

NexMed, Inc.

Consolidated Balance Sheets

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

Stockholders of NexMed, Inc

We have audited the accompany consolidated balance sheets of NexMed, Inc. and subsidiaries as of December 31, 2007 and 2006, and the related consolidated statements of operations, stockholders’ equity and cash flows for the years ended December 31, 2007 and 2006. Our audits also include the financial statement schedule included in Item 15. We also have audited NexMed, Inc.‘s internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). NexMed, Inc.‘s management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these financial statements and financial statement schedule and an opinion on the company’s internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made my management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the financial statements and financial statement schedule referred to above present fairly, in all material respects, the financial position of NexMed, Inc. and subsidiaries as of December 31, 2007 and 2006, and the results of its operations and its cash flows for the years ended December 31, 2007 and 2006 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, NexMed, Inc. and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control-Internal Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

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

As discussed in Note 13 to the consolidated financial statements, effective January 1, 2007, the Company adopted the provisions of Financial Interpretation (“FIN”) No. 48, Accounting for Uncertainty in Income Taxes-An Interpretation of Financial Accounting Standards No. 109. Also, as discussed in Note 2 to the consolidated financial statements, effective January 1, 2006, the Company changed its method of accounting for “stock-based compensation”.

/s/ Amper, Politziner & Mattia, PC

March 10, 2008

Edison, New Jersey

NexMed, Inc.

Consolidated Balance Sheets

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of NexMed, Inc.:

In our opinion, the consolidated statement of operations and comprehensive loss, stockholders' equity, and cash flows for the year ended December 31, 2005 present fairly, in all material respects, the results of operations and cash flows of NexMed, Inc. and its subsidiaries for the year ended December 31, 2005, in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule for the year ended December 31, 2005 presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audit. We conducted our audit of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

New York, New York

March 15, 2006

The accompanying notes are an integral part of these consolidated financial statements.

NexMed, Inc.

Consolidated Balance Sheets

	December 31,
Assets	2007			2006
Current assets
Cash and cash equivalents	$	2,735,940		$	11,069,133
Short term investments		750,000			1,000,000
Other receivable		-			183,700
Debt issuance cost, net of accumulated amortization of $7,565 and $11,742		68,081			27,803
Prepaid expenses and other current assets		127,659			164,898

Total current assets		3,681,680			12,445,534

Fixed assets, net		6,956,986			7,488,100
Debt issuance cost, net of accumulated amortization of $3,782		34,040			-

Total assets	$	10,672,706		$	19,933,634

Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued expenses	$	621,668		$	587,750
Payroll related liabilities		693,774			156,567
Deferred revenue		953,528			1,693,917
Deferred compensation - current portion		60,929			60,212
Note payable, net of debt discount of $127,385		-			1,872,615
Convertible notes payable - current portion		-			3,000,000

Total current liabilities		2,329,899			7,371,061

Long term liabilities
Note payable, net of debt discount of $461,295		2,538,705			-
Deferred compensation		999,345			1,058,098

Total liabilities		5,867,949			8,429,159


Commitments and contingincies (Note 14)

Stockholders' equity:
Common stock, $.001 par value, 120,000,000 shares authorized,
83,063,002 and 80,285,905 shares issued and outstanding, respectively		83,065			80,287
Additional paid-in capital		139,239,794			137,164,658
Accumulated other comprehensive loss		-			(9,596	)
Accumulated deficit		(134,518,102	)		(125,730,874	)

Total stockholders' equity		4,804,757			11,504,475

Total liabilities and stockholders' equity	$	10,672,706		$	19,933,634

The accompanying notes are an integral part of these consolidated financial statements.

NexMed, Inc.

Consolidated Statements of Operations

	For the Year Ended
	December 31,
	2007			2006			2005

Revenues, principally license fee revenue		1,270,367			1,866,927			2,399,161

Costs and expenses
Research and development		5,022,671			5,425,137			11,222,099
General and administrative		5,634,479			5,570,765			6,878,335

Total costs and expenses		10,657,150			10,995,902			18,100,434

Loss from operations		(9,386,783	)		(9,128,975	)		(15,701,273	)

Other income (expense)
Other income		-			627,455			-
Interest income		275,508			271,730			122,071
Interest expense		(481,862	)		(380,860	)		(344,352	)
Total other income (expense)		(206,354	)		518,325			(222,281	)

Loss before benefit from income taxes		(9,593,137	)		(8,610,650	)		(15,923,554	)

Benefit from income taxes		805,909			567,397			481,116

Net loss		(8,787,228	)		(8,043,253	)		(15,442,438	)

Deemed dividend to preferred shareholders
from beneficial conversion feature		-			(49,897	)		(984,715	)
Preferred dividend		-			(15,264	)		(123,326	)

Net loss applicable to common stock		(8,787,228	)		(8,108,414	)		(16,550,479	)

Other comprehensive loss
Foreign currency translation adjustments		-			-			592

Comprehensive loss	$	(8,787,228	)	$	(8,043,253	)	$	(15,441,846	)

Basic and diluted loss per share	$	(.11	)	$	(.12	)	$	(.32	)

Weighted average common shares outstanding
used for basic and diluted loss per share		82,015,909			66,145,807			52,528,345

The accompanying notes are an integral part of these consolidated financial statements.

NexMed, Inc.

Consolidated Statements of Changes in Stockholders’ Equity

											Foreign
	Common		Common		Additional						Currency			Total
	Stock		Stock		Paid-In			Accumulated			translation			Stockholders'
	(Shares)		(Amount)		Capital			Deficit						Equity

Balance at January 1, 2005		51,687,046	$	51,688	$	113,604,968			($102,245,183	)		($10,188	)	$	11,401,285

Issuance of common stock upon exercise of stock options and warrants		578,286		578		833,848			-			-			834,426
Issuance of compensatory options and warrants to consultants		-		-		82,210			-			-			82,210
Issuance of common stock in payment of interest on convertible notes		218,545		218		303,948			-			-			304,166
Amortization of beneficial conversion feature, discount and issuance costs related to preferred stock		-		-		(1,032,391	)		-			-			(1,032,391	)
Issuance of common stock upon conversion of preferred stock, including dividends paid in stock		3,215,590		3,216		3,479,758			-			-			3,482,974
Discount on preferred stock, including beneficial conversion features and fair value of detachable warrants		-		-		1,009,530									1,009,530
Cumulative translation adjustment												592			592
Net loss									(15,442,438	)					(15,442,438	)

Balance at December 31, 2005		55,699,467		55,700		118,281,871			(117,687,621	)		(9,596	)		640,354

Issuance of common stock upon exercise of stock options and warrants, net		208,095		208		97,108			-			-			97,316
Issuance of compensatory options to employees and consultants		-		-		1,214,403			-			-			1,214,403
Issuance of common stock in payment of interest on convertible notes		392,467		393		303,774			-			-			304,167
Issuance of compensatory stock to the board of directors		197,264		197		143,804			-			-			144,001
Issuance of common stock from private placement, net of offering costs		22,664,191		22,664		16,318,993			-			-			16,341,657
Issuance of common stock upon conversion of preferred stock, including dividends paid in stock		1,124,421		1,125		873,875			-			-			875,000
Amortization of beneficial conversion feature, discount and issuance costs related to preferred stock						(207,170	)		-			-			(207,170	)
Discount on Note payable for issuance of warrants						138,000			-			-			138,000
Net loss		-		-		-			(8,043,253	)		-			(8,043,253	)
		80,285,905	$	80,287	$	137,164,658			($125,730,874	)		($9,596	)	$	11,504,475
Balance at December 31, 2006

Issuance of common stock upon exercise of stock options and warrants, net		1,717,943		1,718		219,175			-			-			220,893
Issuance of compensatory options to employees and consultants		-		-		776,835			-			-			776,835
Issuance of compensatory stock to employees and consultants		609,000		609		89,391			-			-			90,000
Issuance of common stock in payment of interest on notes		145,614		146		190,602			-			-			190,748
Issuance of compensatory stock to the board of directors		304,540		305		288,693			-			-			288,998
Net offering costs from issuance of common stock		-		-		(2,110	)		-			-			(2,110	)
Discount on Note payable for issuance of warrants		-		-		512,550			-			-			512,550
Realized gain on foreign currency exchange												9,596			9,596
Net loss		-		-		-			(8,787,228	)		-			(8,787,228	)

Balance at December 31, 2007		83,063,002	$	83,065	$	139,239,794			($134,518,102	)		-		$	4,804,757

The accompanying notes are an integral part of these consolidated financial statements.

NexMed, Inc.

Consolidated Statements of Cash Flows

	For the Year Ended
	December 31,
	2007			2006			2005
Cash flows from operating activities
Net loss	$	(8,787,228	)	$	(8,043,253	)	$	(15,442,438	)
Adjustments to reconcile net loss to net cash
used in operating activities
Depreciation and amortization		621,869			842,087			953,051
Non-cash interest, amortization of debt discount and
deferred financing costs		408,538			328,050			315,512
Non-cash compensation expense		1,155,832			1,358,403			82,210
Net gain on foreign currency exchange		9,596			-			-
Loss on disposal of property and equipment		10,121			473,312			16,371
Changes in assets and liabilities
Decrease (increase) in other receivable		183,700			(183,700	)		(582,440	)
Decrease in prepaid expense and other assets		37,239			791,477			1,025,579
(Decrease) increase in deferred revenue		(740,389	)		(1,091,884	)		2,785,801
Increase in payroll related liabilities		537,207			156,567			858,011
(Decrease) increase in deferred compensation		(58,036	)		(59,889	)		610,199
Increase (decrease) in accounts payable and accrued expenses		33,918			(1,238,184	)		(457,577	)
Net cash used in operating activities		(6,587,633	)		(6,667,014	)		(9,835,721	)
Cash flows from investing activities
Proceeds from sale of fixed assets		-			178,769			-
Capital expenditures		(100,875	)		(76,553	)		(160,694	)
Proceeds from collection of note receivable		-			-			-
Purchases of short term investments		(3,000,000	)		(6,000,000	)		(1,500,000	)
Proceeds from sale of short term investments		3,250,000			5,500,000			2,384,000
Net cash provided by (used in) investing activities		149,125			(397,784	)		723,306
Cash flows from financing activities
Issuance of common stock, net of offering costs		(2,110	)		16,341,657			-
Proceeds from exercise of stock options and warrants		220,893			97,316			834,426
Issuance of preferred stock, net of offering costs		-			-			4,219,969
Redemption of preferred stock		-			-			(92,027	)
Issuance of notes payable, net of debt issue costs		2,886,532			1,975,000			-
Repayment of notes payable		(2,000,000	)
Repayment of convertible notes payable		(3,000,000	)		(3,000,000	)		-
Principal payments on capital lease obligations		-			(233,823	)		(644,049	)
Net cash (used in) provided by financing activities		(1,894,685	)		15,180,150			4,318,319
Effect of foreign exchange on cash		-			-			592
Net increase (decrease) in cash and cash equivalents		(8,333,193	)		8,115,352			(4,793,504	)
Cash and cash equivalents
Beginning of year		11,069,133			2,953,781			7,747,285
End of year	$	2,735,940		$	11,069,133		$	2,953,781

Cash paid for interest	$	119,307		$	91,912		$	40,185

Supplemental disclosure of non-cash investing and financing activities:
Payment of interest in common stock		190,748			304,167			304,166
Amortization of debt discount		178,640			10,615			-
Conversion of preferred stock to common stock		-			859,736			3,359,648
Deemed dividend to preferred shareholders		-			-			984,715
Preferred stock dividend paid in common stock		-			15,264			123,326

The accompanying notes are an integral part of these consolidated financial statements.

NexMed, Inc.

Notes to Consolidated Financial Statements

1.	Organization and Basis of Presentation

The Company was incorporated in Nevada in 1987. In January 1994, the Company began research and development of a device for the treatment of herpes simplex. The Company, since 1995, has conducted research and development both domestically and abroad on proprietary pharmaceutical products, with the goal of growing through acquisition and development of pharmaceutical products and technology.

The accompanying consolidated financial statements have been prepared on a basis which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company has an accumulated deficit of $134,518,102 at December 31, 2007 and expects that it will incur additional losses in the future completing the research, development and commercialization of its technologies. These circumstances raise substantial doubt about the Company's ability to continue as a going concern. Management anticipates that the Company will require additional financing, which it is actively pursuing, to fund operations, including continued research, development and clinical trials of the Company’s product candidates. Although management continues to pursue these plans, there is no assurance that the Company will be successful in obtaining financing on terms acceptable to the Company. If the Company is unable to obtain additional financing, operations will need to be discontinued. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

2.	Summary of Significant Accounting Principles

Significant accounting principles followed by the Company in preparing its financial statements are as follows:

Principles of consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.

Cash and cash equivalents

For purposes of the balance sheets and the statements of cash flows, cash equivalents represent all highly liquid investments with an original maturity date of three months or less.

Short term investments

A significant amount of our short term investments are comprised of investment grade variable rate debt obligations, which are asset-backed and categorized as available-for-sale. Accordingly, our investments in these securities are recorded at cost, which approximates fair value due to their variable interest rates, which typically reset every 28 days. Despite the long-term nature of their contractual maturities, we have the ability and intent to liquidate these securities within one year. As a result of the resetting variable rates, we had no cumulative gross unrealized or realized holding gains or losses from these investments. All income generated from these investments was recorded as interest income.

Fair value of financial instruments

The carrying value of cash and cash equivalents, convertible notes payable, accounts payable and accrued expenses and deferred compensation approximates fair value due to the relatively short maturity of these instruments.

NexMed, Inc.

Notes to Consolidated Financial Statements

Fixed assets

Property and equipment are stated at cost less accumulated depreciation. Depreciation of equipment and furniture and fixtures is provided on a straight-line basis over the estimated useful lives of the assets, generally three to ten years. Depreciation of buildings is provided on a straight-line basis over the estimated useful life of 31 years. Amortization of leasehold improvements is provided on a straight-line basis over the shorter of their estimated useful life or the lease term. The costs of additions and betterments are capitalized, and repairs and maintenance costs are charged to operations in the periods incurred.

Long-lived assets

The Company reviews for the impairment of long-lived assets whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition is less than its carrying amount. If such assets are considered impaired, the amount of the impairment loss recognized is measured as the amount by which the carrying value of the asset exceeds the fair value of the asset, fair value being determined based upon discounted cash flows or appraised values, depending on the nature of the asset. No such impairment losses have been recorded by the Company during 2007, 2006 or 2005.

Revenue recognition

Revenues from product sales are recognized upon delivery of products to customers, less allowances for estimated returns and discounts. Royalty revenue is recognized upon the sale of the related products, provided the royalty amounts are fixed or determinable and the amounts are considered collectible.

Revenues earned under licensing and research and development contracts are recognized in accordance with the cost-to-cost method whereby the extent of progress toward completion is measured on the cost-to-cost basis; however, revenue recognized at any point will not exceed the cash received. When the current estimates of total contract revenue and contract cost indicate a loss, a provision for the entire loss on the contract is made in the period which it becomes probable. All costs related to these agreements are expensed as incurred and classified within “Research and development” expenses in the Consolidated Statement of Operations.

Also, licensing agreements typically include several elements of revenue, such as up-front payments, milestones, royalties upon sales of product, and the delivery of product and/or research services to the licensor. We follow the accounting guidance of SEC Staff Accounting Bulletin No. 104 (which superseded SEC Staff Accounting Bulletin No. 101) and EITF No. 91-6 and EITF No. 00-21 (which became effective for contracts entered into after June 2003). Non-refundable license fees received upon execution of license agreements where we have continuing involvement are deferred and recognized as revenue over the estimated performance period of the agreement. This requires management to estimate the expected term of the agreement or, if applicable, the estimated life of its licensed patents.

In addition, EITF No. 00-21 requires a company to evaluate its arrangements under which it will perform multiple revenue-generating activities. For example, a license agreement with a pharmaceutical company may involve a license, research and development activities and/or contract manufacturing. Management is required to determine if the separate components of the agreement have value on a standalone basis and qualify as separate units of accounting, whereby consideration is allocated based upon their relative “fair values” or, if not, the consideration should be allocated based upon the “residual method.” Accordingly, up-front and development stage milestone payments will be deferred and recognized as revenue over the performance period of such license agreement.

NexMed, Inc.

Notes to Consolidated Financial Statements

Research and development

Research and development costs are expensed as incurred and include the cost of salaries, building costs, utilities, allocation of indirect costs, and expenses to third parties who conduct research and development, pursuant to development and consulting agreements, on behalf of the Company.

Income taxes

Income taxes are accounted for under the asset and liability method. Deferred income taxes are recorded for temporary differences between financial statement carrying amounts and the tax bases of assets and liabilities. Deferred tax assets and liabilities reflect the tax rates expected to be in effect for the years in which the differences are expected to reverse. A valuation allowance is provided if it is more likely than not that some or all of the deferred tax assets will not be realized.

Loss per common share

Basic earnings per share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share gives effect to all dilutive potential common shares outstanding during the period. The computation of diluted earnings per share does not assume conversion, exercise or contingent exercise of securities that would have an antidilutive effect on per share amounts.

At December 31, 2007, 2006 and 2005, outstanding options to purchase 3,469,841, 3,663,421, and 5,018,880 shares of common stock, respectively, with exercise prices ranging from $0.55 to $16.25 have been excluded from the computation of diluted loss per share as they are antidilutive. At December 31, 2007, 2006 and 2005, outstanding warrants to purchase 12,439,954, 20,125,027, and 11,030,550 shares of common stock, respectively, with exercise prices ranging from $0.55 to $4.04 have also been excluded from the computation of diluted loss per share as they are antidilutive. Promissory notes convertible into 600,000 shares of common stock in 2006 and 1,200,000 shares of common stock (see Note 6) in 2005 have also been excluded from the computation of diluted loss per share, as they are antidilutive. Series C 6% cumulative convertible preferred stock (see Note 9) convertible into 643,382 shares of common stock in 2005 have also been excluded from the computation of diluted loss per share, as it is antidilutive.

Accounting for stock based compensation

Effective January 1, 2006, the Company adopted the provisions of Statement of Financial Accounting Standards No. 123R, “Share-Based Payment”, which establishes the financial accounting and reporting standards for stock-based compensation plans. SFAS 123R requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors, including employee stock options. Under the provisions of SFAS 123R, stock-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense on a straight-line basis over the requisite service period of the entire award (generally the vesting period of the award). The Company adopted the provisions of SFAS 123R as of January 1, 2006 using the modified prospective transition method. Under this transition method, stock-based compensation expense for the year ended December 31, 2006 includes expense for all equity awards granted during the year ended December 31, 2006 and prior, but not yet vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of SFAS No. 123, “Accounting for Stock-Based Compensation” as amended by SFAS 148, “Accounting for Stock-Based Compensation—Transition and Disclosure.” Also in accordance with the modified prospective transition method, prior interim and annual periods have not been restated and do not reflect the recognition of stock-based compensation cost under SFAS 123R. Since the adoption of SFAS 123R, there have been no changes to the Company’s stock compensation plans or modifications to outstanding stock-based awards which would increase the value of any awards outstanding. Compensation expense for all stock-based compensation awards granted subsequent to January 1, 2006 was based on the grant-date fair value determined in accordance with the provisions of SFAS 123R.

NexMed, Inc.

Notes to Consolidated Financial Statements

The Company accounts for stock options granted to non-employees on a fair value basis in accordance with SFAS No. 123, "Accounting for Stock-Based Compensation," and Emerging Issues Task Force Issue No. 96-18, "Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services." Any options issued to non-employees are recorded in the consolidated financial statements in deferred expenses in stockholders' equity using the fair value method and then amortized to expense over the applicable service periods (See Note 8). As a result, the non-cash charge to operations for non-employee options with vesting or other performance criteria is valued each reporting period based upon changes in the fair value of the Company's common stock.

As a result of adopting SFAS 123R, the Company’s net loss and its non cash compensation expense as shown in the Consolidated Statements of Operations for the years ended December 31, 2007 and 2006 is $1,095,834 and $1,358,403 more, respectively, than if the Company had continued to account for stock-based compensation under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” and its related interpretations. Basic and diluted net loss per share for the years ended December 31, 2007 and 2006 of $(0.11) and $(0.12), respectively, is $0.01 and $0.02 more than if the Company had not adopted SFAS 123R.

Prior to January 1, 2006, the Company accounted for stock-based compensation in accordance with APB 25 and also followed the disclosure requirements of SFAS 123. Under APB 25, the Company accounted for stock-based awards to employees and directors using the intrinsic value method as allowed under SFAS 123. Under the intrinsic value method, no stock-based compensation expense had been recognized in the Company’s Statement of Operations because the exercise price of the Company’s stock options granted to employees and directors equaled the fair market value of the underlying stock at the date of grant. The following table sets forth the computation of basic and diluted loss per share for year ended December 31, 2005 and illustrates the effect on net loss and loss per share as if the Company had applied the fair value recognition provisions of SFAS 123 to its stock plans:

NexMed, Inc.

Notes to Consolidated Financial Statements

	2005

Net loss applicable to common stock, as reported	$	(16,550,479	)
Add: Stock-based compensation expense included
in reported net loss		82,210
Deduct: Total stock-based compensation expense determined
under fair-value based method for all awards		(1,147,979	)
Proforma net loss applicable to common stock	$	(17,616,248	)

Basic and diluted loss per share:
As reported	$	(0.32	)
Proforma	$	(0.34	)

The following table indicates where the total stock-based compensation expense resulting from stock options and awards appears in the Statement of Operations:

	Year Ended
	December 31, 2007		December 31, 2006
Research and development		111,108		122,800
General and administrative	$	1,044,724	$	1,235,603

Total stock-based compensation expense	$	1,155,832	$	1,358,403

The stock-based compensation expense has not been tax-effected due to the recording of a full valuation allowance against U.S. net deferred tax assets.

The fair value of each stock option grant is estimated on the grant date using the Black-Scholes option-pricing model with the following assumptions used for the years ended December 31, 2007 and 2006:

Dividend yield	0.00%
Risk-free yields	1.35% - 5.02%
Expected volatility	80% - 103.51%
Expected option life	1 - 6 years
Forfeiture rate	6.41%

NexMed, Inc.

Notes to Consolidated Financial Statements

Expected Volatility. The Company uses analysis of historical volatility to compute the expected volatility of its stock options.

Expected Term. The expected term is based on several factors including historical observations of employee exercise patterns during the Company’s history and expectations of employee exercise behavior in the future giving consideration to the contractual terms of the stock-based awards.

Risk-Free Interest Rate. The interest rate used in valuing awards is based on the yield at the time of grant of a U.S. Treasury security with an equivalent remaining term.

Dividend Yield. The Company has never paid cash dividends, and does not currently intend to pay cash dividends, and thus has assumed a 0% dividend yield.

Pre-Vesting Forfeitures. Estimates of pre-vesting option forfeitures are based on Company experience. The Company will adjust its estimate of forfeitures over the requisite service period based on the extent to which actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures will be recognized through a cumulative catch-up adjustment in the period of change and will also impact the amount of compensation expense to be recognized in future periods. The cumulative effect resulting from initially applying the provisions of SFAS 123R to nonvested equity awards was not significant.

Additional disclosures required under SFAS 123R are presented in Note 8.

Concentration of credit risk

From time to time, the Company maintains cash in bank accounts that exceed the FDIC insured limits. The Company has not experienced any losses on its cash accounts.

Comprehensive loss

The Company has recorded comprehensive loss in accordance with Statement of Financial Accounting Standards No. 130, “Reporting Comprehensive Income” , which requires the presentation of the components of comprehensive loss in the Company’s financial statements. Comprehensive loss is defined as the change in the Company’s equity during a financial reporting period from transactions and other circumstances from non-owner sources (including cumulative translation adjustments and unrealized gains/losses on available for sale securities). Accumulated other comprehensive loss included in the Company’s balance sheet is comprised of translation adjustments from the Company’s foreign subsidiaries and unrealized gains and losses on investment in marketable securities.

Accounting estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates 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. The Company’s most significant estimates relate to the valuation of its long-lived assets, estimated cost to complete under its research contracts, and valuation allowances for its deferred tax benefit. Actual results may differ from those estimates.

Recent accounting pronouncements

In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities" . FAS 159 permits companies to choose to measure certain financial instruments and certain other items at fair value. The standard requires that unrealized gains and losses on items for which the fair value option has been elected be reported in earnings. FAS 159 is effective for us beginning in the first quarter of fiscal year 2009, although earlier adoption is permitted. The Company is currently evaluating the impact of adopting FAS 159 on our consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business Combinations" , which replaces FASB Statement No. 141. FAS 141R establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any non controlling interest in the acquiree and the goodwill acquired. The Statement also establishes disclosure requirements which will enable users to evaluate the nature and financial effects of the business combination. FAS 141R is effective as of the beginning of an entity's fiscal year that begins after December 15, 2008. The Company is currently evaluating the potential impact, if any, of the adoption of FAS 141R on our consolidated financial position, results of operations and cash flows.

In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements - an amendment of Accounting Research Bulletin No. 51" ("FAS 160"), which establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount of consolidated net income attributable to the parent and to the noncontrolling interest, changes in a parent's ownership interest and the valuation of retained noncontrolling equity investments when a subsidiary is deconsolidated. The Statement also establishes reporting requirements that provide sufficient disclosures that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. FAS 160 is effective as of the beginning of an entity's fiscal year that begins after December 15, 2008. The Company is currently evaluating the potential impact, if any, of the adoption of FAS 160 on our consolidated financial position, results of operations and cash flows.

In December 2007, the Emerging Issues Task Force (EITF) issued EITF Issue No. 07-1, “Accounting for Collaborative Arrangements.” EITF 07-1 provides guidance concerning: determining whether an arrangement constitutes a collaborative arrangement within the scope of the Issue; how costs incurred and revenue generated on sales to third parties should be reported in the income statement; how an entity should characterize payments on the income statement; and what participants should disclose in the notes to the financial statements about a collaborative arrangement. The provisions of EITF 07-1 will be adopted in 2009. The Company is in the process of evaluating the impact, if any, of adopting EITF 07-1 on our financial statements.

3.	Licensing and Research and Development Agreements

On November 1, 2007, the Company signed an exclusive licensing agreement with Warner Chilcott Company, Inc., (“Warner”) for its topical alprostadil-based cream treatment for erectile dysfunction (“ED Product”). Under the agreement, Warner acquired the exclusive rights in the United States to the ED Product and will assume all further development, manufacturing, and commercialization responsibilities as well as costs. Warner agreed to pay the Company an up front payment of $500,000 and up to $12.5 million in milestone payments on the achievement of specific regulatory milestones. In addition, the Company is eligible to receive royalties in the future based upon the level of sales achieved by Warner, assuming the product is approved by the FDA.

NexMed, Inc.

Notes to Consolidated Financial Statements

The Company is recognizing the initial up-front payment as revenue on a straight line basis over the estimated 9 month period ending July 31, 2008 which is the remaining anticipated review time by the FDA for the Company’s new drug application filed in September 2007 for the ED Product. Pursuant to the agreement, NexMed is responsible for the regulatory approval of the ED Product. Accordingly, for the year ended December 31, 2007, the Company recognized licensing revenue of $111,111 related to the Warner agreement.

On September 15, 2005, the Company signed an exclusive global licensing agreement with Novartis International Pharmaceutical Ltd., (“Novartis”) for its anti-fungal product, NM100060. Under the agreement, Novartis acquired the exclusive worldwide rights to NM100060 and would assume all further development, regulatory, manufacturing and commercialization responsibilities as well as costs. Novartis agreed to pay the Company up to $51 million in upfront and milestone payments on the achievement of specific development and regulatory milestones, including an initial cash payment of $4 million at signing. In addition, the Company is eligible to receive royalties based upon the level of sales achieved and is entitled to receive reimbursements of third party preclinical study costs up to $3.25 million. The Company began recognizing the initial up front and preclinical reimbursement revenue from this agreement based on the cost-to-cost method over the 32-month period estimated to complete the remaining preclinical studies for NM100060. On February 16, 2007, the Novartis agreement was amended. Pursuant to the amendment, the Company is no longer obligated to complete the remaining preclinical studies for NM100060. Novartis has taken over all responsibilities related to the remaining preclinical studies. As such, the balance of deferred revenue of $1,693,917 at December 31, 2006 is being recognized as revenue on a straight line basis over the 18 month period ended June 30, 2008 which is the estimated performance period for Novartis to complete the remaining preclinical studies. Accordingly, for the year ended December 31, 2007, the Company recognized licensing revenue of $846,960 related to the Novartis agreement.

On July 1, 2004, the Company entered into a license, supply and distribution agreement with Schering AG, Germany (“Schering”). This agreement provided Schering with exclusive commercialization rights to Alprox-TD^® in approximately 75 countries outside of the U.S. On June 20, 2006, Schering elected to terminate the agreement without cause. Pursuant to the agreement, Schering was obligated to pay the Company a termination fee of 500,000 Euros or approximately $627,000. This amount was received in August 2006 and is recorded as other income in the Consolidated Statements of Operations for the year ended December 31, 2006.

In October 2005, the Company entered into an agreement with a Japanese pharmaceutical company whereby NexMed would provide contract development services for a tape/patch treatment for chronic pain. The Company received $100,000 as a signing payment. In December 2005, the Company ceased all development work on this project. The $100,000 signing payment which was recorded as deferred revenue in the December 31, 2005 Consolidated Balance Sheet was recognized as revenue in 2006 when the Japanese partner agreed to and the Company completed the technology transfer of development work done to date.

4.	Fixed Assets

Fixed assets at December 31, 2007 and 2006 were comprised of the following:

NexMed, Inc.

Notes to Consolidated Financial Statements

	2007			2006

Land	$	363,909		$	363,909
Building		7,371,607			7,317,865
Machinery and equipment		2,630,155			2,642,030
Computer software		600,167			596,605
Furniture and fixtures		188,935			196,027
		11,154,773			11,116,436

Less: accumulated depreciation		(4,197,787	)		(3,628,336	)

	$	6,956,986		$	7,488,100

Depreciation and amortization expense was $621,870, $842,087, and $953,051 for 2007, 2006 and 2005 respectively, of which $0, $188,825, and $378,789 related to capital leases for the respective years.

5.	Deferred Compensation

On February 27, 2002, the Company entered into an employment agreement with Y. Joseph Mo, Ph.D., that had a constant term of five years, and pursuant to which Dr. Mo served as the Company's Chief Executive Officer and President. Under the employment agreement, Dr. Mo is entitled to deferred compensation in an annual amount equal to one sixth of the sum of his base salary and bonus for the 36 calendar months preceding the date on which the deferred compensation payments commence subject to certain limitations, including a vesting requirement through the date of termination, as set forth in the employment agreement. The deferred compensation is payable monthly for 180 months commencing on termination of employment. Dr. Mo’s employment was terminated as of December 15, 2005. The monthly deferred compensation payment through May 15, 2021 will be $9,158. As of December 31, 2007 and 2006, the Company has accrued $1,060,274 and $1,118,310 respectively, which is included in deferred compensation, based upon the estimated present value of the vested portion of the obligation.

6.	Convertible Notes Payable

On December 12, 2003, the Company issued convertible notes in an aggregate principal amount of $6 million. The notes were payable in two installments of $3 million on November 30, 2006 and May 31, 2007 and were collateralized by the Company’s facility in East Windsor, New Jersey which has a carrying value of approximately $6.9 million. The notes were convertible into shares of the Company’s common stock at a conversion price initially equal to $6.50 per share (923,077 shares). Pursuant to the terms of the Notes, the conversion price was adjusted on June 14, 2004 to the greater of (i) the volume weighted average price of the Company’s stock over the six-month period ending on such date and (ii) $5.00. Since the volume weighted average price of the Company’s stock during this period was below $5.00, the conversion price was adjusted to $5.00 (1,200,000 shares). Interest accreted on the notes on a semi-annual basis at a rate of 5% per annum, and the Company could pay such amounts in cash or by effecting the automatic conversion of such amount into the Company’s common stock at a 5% premium to the then average market prices.

NexMed, Inc.

Notes to Consolidated Financial Statements

In April and October 2006, respectively, the Company issued 164,855 shares and 227,612 shares of its common stock as payment of an aggregate of $304,167 in interest on the notes. During 2005 and 2004, the Company issued 218,545 and 130,673 shares of its common stock as payment of $304,167 in interest on the notes.

On November 30, 2006, the Company paid in cash the $3 million installment due plus accrued interest of $25,417. The remaining $3 million balance plus accrued interest of $25,417 on the note was paid on May 31, 2007 such that no amounts remain outstanding at December 31, 2007.

For the years ended December 31, 2006 and 2005, the Company recorded amortization of the debt issuance costs of $11,345 in each year.

7.	Notes Payable

October 2007 Note

On October 26, 2007 the Company issued a note in a principal amount of $3 million. The note is payable on June 30, 2009 and can be prepaid by the Company at any time without penalty. Interest accretes on the note on a quarterly basis at a rate of 8.0% per annum. The note is collateralized by the Company’s facility in East Windsor, New Jersey.

The Company also issued to the noteholder a 5-year detachable warrant to purchase 450,000 shares of common stock at an exercise price of $1.52. Of the total warrants issued, 350,000 warrants vest immediately and the remaining 100,000 warrants will vest if the note remains outstanding on October 26, 2008. The Company valued the warrants using the Black-Scholes pricing model. The Company allocated a relative fair value of $512,550 to the warrants. The relative fair value of the warrants is allocated to additional paid in capital and treated as a discount to the note that is being amortized over the 20-month period ended June 30, 2009.

For the year ended December 31, 2007, the Company recorded $51,255 of amortization related to the note discount.

November 2006 Note

On November 30, 2006, the Company issued a note in the principal amount of $2 million. The note was payable on the earlier of December 31, 2007 or the closing by the Company on the sale of the Company’s facility in East Windsor, New Jersey. Interest accreted on the note on a quarterly basis at a rate of 7.5% per annum provided, however, if the Company had not entered into a contract of sale of the East Windsor property on or prior to May 31, 2007, and the note had not be repaid by such date, the interest rate would increase to 8.5%. As such, on May 31, 2007, the interest rate increased to 8.5%.

On February 28, 2007, the Company issued 28,809 shares of its common stock as payment of an aggregate of $25,000 in interest on the note.

On May 1, 2007, the Company issued 30,711 shares of its common stock as payment of an aggregate of $37,500 in interest on the note.

NexMed, Inc.

Notes to Consolidated Financial Statements

On August 1, 2007 the Company issued 26,518 shares of its common stock as payment of an aggregate of $40,833 in interest on the note.

The Company also issued the noteholder a 4-year detachable warrant to purchase 500,000 shares of common stock at an exercise price of $0.5535. The Company valued the warrants using the Black-Scholes pricing model. The Company allocated a relative fair value of $138,000 to the warrants. The relative fair value of the warrants was allocated to additional paid in capital and treated as a discount to the note that was being amortized through the October 2007 repayment date.

This note was paid on October 29, 2007 with the proceeds from the issuance of the $3 million note referred to above. The Company paid in cash the $2 million balance on the Note plus accrued interest of $42,028.

For the year ended December 31, 2007, the Company recorded $127,385 of amortization related to the note discount.

8.	Stock Options and Restricted Stock

During December 1996, the Company adopted The NexMed, Inc. Stock Option and Long-Term Incentive Compensation Plan (“the Incentive Plan”) and The NexMed, Inc. Recognition and Retention Stock Incentive Plan (“the Recognition Plan”). A total of 2,000,000 shares were set aside for these two plans. In May 2000, the Stockholders’ approved an increase in the number of shares reserved for the Incentive Plan and Recognition Plan to a total of 7,500,000. During June 2006, the Company adopted the NexMed, Inc. 2006 Stock Incentive Plan. A total of 3,000,000 shares were set aside for the plan. Options granted under the Company’s plans generally vest over a period of one to five years, with exercise prices of currently outstanding options ranging between $0.55 to $16.25. The maximum term under these plans is 10 years.

The following table summarizes information about options outstanding at December 31, 2007:

		Options Outstanding						Options Exercisable
			Weighted
			Average
			Remaining	Weighted		Aggregate			Weighted		Aggregate
	Range of	Number	Contractual	Average		Intrinsic		Number	Average		Intrinsic
	Exercise Prices	Outstanding	Life	Exercise Price		Value		Exercisable	Exercise Price		Value *
$	.55 - 1.85	2,934,390	7.70 years	$	0.87	$	1,653,679	2,587,289	$	0.82	$	1,578,078
	2.00 - 3.99	139,250	3.08 years		2.83	-		139,250		2.83	-
	4.00 - 5.50	374,301	4.51 years		4.65	-		374,301		4.65	-
	8.00 - 16.25	21,900	2.50 years		10.02	-		21,900		10.02	-
		3,469,841		$	1.41	$	1,653,679	3,122,740	$	1.43	$	1,578,078

	*Intrinsic values are determined by comparing the aggregate exercise prices of options to the closing price of our Common Stock on December 31, 2007

NexMed, Inc.

Notes to Consolidated Financial Statements

A summary of stock option activity is as follows:

				Weighted		Weighted		Total
				Average		Average Remaining		Aggregate
	Number of			Exercise		Contractual		Intrinsic
	Shares			Price		Life		Value

Outstanding at January 1, 2005		5,215,081		$	2.91
Granted		400,650			1.03
Exercised		(106,400	)		1.08
Cancelled		(490,451	)		2.62
Outstanding at December 31, 2005		5,018,880		$	2.83
Granted		1,993,750			0.78
Exercised		(354,666	)		0.71
Cancelled		(2,994,543	)		3.28
Outstanding at December 31, 2006		3,663,421		$	1.52
Granted		202,100			1.41
Exercised		(78,480	)		1.07
Cancelled		(317,200	)		2.82

Outstanding at December 31, 2007		3,469,841		$	1.41		7.14 years	$	1,653,679

Vested or expected to vest at
December 31, 2007		3,247,424		$	1.41		7.14 years	$	1,578,078

Exercisable at December 31, 2007		3,122,740		$	1.43		6.93 years	$	1,578,078
Exercisable at December 31, 2006		2,395,897		$	1.83
Exercisable at December 31, 2005		4,443,730		$	2.94

Options available for grant at December 31, 2007		52,278

The weighted average grant date fair value of options granted during 2007, 2006 and 2005 was $1.41, $0.78, and $1.03, respectively. The intrinsic value of options exercised during the year ended December 31, 2007 was $110,556.

As of December 31, 2007, there was $1,626,004 of total unrecognized compensation cost related to non-vested stock and stock options. That cost is expected to be recognized over a weighted-average period of 1.66 years.

Compensatory Share Issuances

The value of restricted stock grants is calculated based upon the closing stock price of the Company’s common stock on the date of the grant. The value of the grant is expensed over the vesting period of the grant in accordance with FAS123R as discussed in Note 2.

Principal employee based compensation transactions for the year ended December 31, 2007 were as follows:

On January 24, 2007, the Company issued awards of restricted shares of the Company’s common stock to Richard Berman, Chief Executive Officer, Vivian Liu, Chief Operating Officer, and Mark Westgate, Chief Financial Officer. Mr. Berman’s award of 60,000 shares were to vest in four equal installments on March 31, June 30, September 30, and December 31, 2007, assuming continuous and uninterrupted service as Chief Executive Officer of the Company. Mr. Berman’s 30,000 unvested shares at June 30, 2007 were cancelled upon his resignation as CEO and the appointment of Ms. Liu to the position of CEO. Ms. Liu and Mr. Westgate received awards of 150,000 and 75,000 restricted shares, respectively. Ms. Liu and Mr. Westgate’s awards vest in three equal installments on December 31, 2007, 2008 and 2009, assuming continuous and uninterrupted service with the Company.

NexMed, Inc.

Notes to Consolidated Financial Statements

Also on January 24, 2007, the Company issued awards of shares of the Company’s common stock to Board members Leonard Oppenheim, Martin Wade and Arthur Emil for their services during their 2006 - 2007 terms. Mr. Oppenheim received an award of 20,000 shares for his service as Chairman of the Board of Directors and 5,000 shares for his services as Chairman of the Finance Committee. Mr. Wade received an award of 10,000 shares for his service as Chairman of the Audit Committee and Compensation Committee of the Board of Directors. Mr. Emil received an award of 5,000 shares for his service as Chairman of the Corporate Governance/Nominating Committee of the Board of Directors. There were no such shares issued in 2006 and 2005 for director services as chairman of Board Committees.

Additionally, on April 1, June 28, September 28, and December 31, 2007 the Company issued awards of shares of the Company’s common stock to each independent director as compensation for his services during the quarters ended March 31, June 30, 2007, September 30, 2007 and December 31, 2007. Each independent director received 10,227 shares of common stock for a total of 51,135 shares issued on each April 1, June 28, and September 28, 2007 and December 31, 2007. In 2006, the Company issued each independent director 12,329 shares of common stock for a total of 49,316 shares issued each calendar quarter for his services in 2006. In 2005 no such shares were issued as each of the directors was compensated in cash at $1,500 per month.

The Company appointed Dr. David S. Tierney to the Board of Directors on January 24, 2007. In connection with his appointment to the Board, the Company issued an award of restricted shares of the Company’s common stock as compensation for his services as a member of the Board of Directors. The restricted stock award of 30,000 shares vests in three equal installments on February 1, 2007 and on the dates of the Annual Meeting of Stockholders in 2007 and 2008 assuming continuous and uninterrupted service with the Company.

On September 12, 2007, the Company issued awards of shares of the Company’s common stock to Board members Leonard Oppenheim, Martin Wade, Arthur Emil and David Tierney for their services during their 2007 - 2008 terms. Mr. Oppenheim received an award of 5,000 shares for his service as Chairman of the Finance Committee of the Board of Directors. Mr. Wade received an award of 10,000 shares for his service as Chairman of the Audit Committee and Compensation Committee of the Board of Directors. Mr. Emil received an award of 5,000 shares for his service as Chairman of the Corporate Governance/Nominating Committee of the Board of Directors. Dr. Tierney received an award of 20,000 shares for his service as Chairman of the Company’s Scientific Advisory Board.

On October 3, 2007, the Company issued an award of 850,000 shares of the Company’s common stock to Vivian Liu for her services as CEO. 100,000 shares vested immediately while the remaining 750,000 shares will vest in three equal installments of 250,000 shares on June 18, 2008, 2009 and 2010 assuming continuous and uninterrupted service as CEO of the Company.

On October 31, 2007, the Company hired Hemanshu Pandya as its Vice President and Chief Operating Officer. In connection with his employment agreement, Mr. Pandya was issued an award of 125,000 shares of the Company’s common stock. 75,000 shares will vest in three equal installments of 25,000 shares on October 31, 2008, 2009 and 2010 assuming continuous and uninterrupted service with the Company. 50,000 shares will vest upon the execution of a licensing/development agreement brought to the Company by Mr. Pandya valued at over $5 million on or before April 30, 2009. Additionally, the Company awarded Mr. Pandya a grant of options to purchase at $1.43 per share an aggregate of 175,000 shares of the Company’s common stock. The stock options vest in three installments as follows: 25,000 on October 31, 2008, 50,000 shares on October 31, 2009 and 100,000 shares on October 31, 2010 assuming continuous and uninterrupted service with the Company.

9.	Series C 6% Cumulative Convertible Preferred Stock

On May 17, 2005, the Company sold an aggregate of 445 shares of its Series C 6% cumulative convertible preferred stock and raised gross proceeds of $4,450,000 ($10,000 liquidation preference per share). Each preferred share of the Series C Stock was initially convertible at the holder’s option into approximately 7,353 shares of common stock (total of 3,272,059 shares). Each investor also received for each share of Series C Stock purchased, 4-year detachable warrants to purchase 2,672 shares of common stock (total of 1,188,931 warrants) at an exercise price of $1.43 per share. The Series C Stock could be converted at any time, at the holder’s option, into shares of the Company’s common stock at an initial conversion value of $1.36.

For the years ended December 31, 2006 and 2005 pursuant to the terms of the Series C Stock, the Company recorded dividends in the amount of $15,264 and $123,326, respectively, as a dividend to preferred shareholders in the Consolidated Statements of Operations.

For the years ended December 31, 2006 and 2005, the Company recorded a deemed dividend of $49,897 and $984,715, respectively. This deemed dividend represents the sum of the beneficial conversion feature, amortization of the contingent beneficial conversion feature, and amortization of preferred stock issuance costs.

During 2005, the Company converted 357.5 shares of the Series C Stock and accrued dividends into 3,215,590 shares of its common stock with an aggregate value of $3,482,974. During the first half of 2006, the Company converted 72 shares of the Series C Stock and accrued dividends into 880,308 shares of its common stock with a value of $715,388.

On June 30, 2006, pursuant to the terms of the Series C Stock, the Company converted the remaining 15.5 preferred shares and accrued dividends through June 30, 2006 of $159,612 at a price of $0.65 per share. Upon conversion, the Company issued a total of 244,113 shares of common stock. As of December 31, 2007 and 2006, no shares of the Series C Stock remained outstanding.

10.

Common Stock

Pursuant to a Common Stock and Warrant Purchase Agreement dated December 20, 2006, the Company closed a private placement of its securities and raised over $8.65 million in gross proceeds. The Company sold 13,317,000 shares of its common stock at $0.6501 per share. The investors also received four-year warrants to purchase 5,326,800 shares of common stock, exercisable beginning six months after closing at a price of $0.79 per share. The warrants will be redeemable by the Company at $0.01 per share if the closing sales price of its common stock is above $5 for ten consecutive trading days as reported on the Nasdaq Capital Market or other principal exchange.

On January 23, 2006, the Company closed a private placement of its securities and raised over $8.3 million in gross proceeds. The Company sold 9,347,191 shares of its common stock at $0.89 per share. The investors also received four-year warrants to purchase 3,738,876 shares of common stock, exercisable beginning six months after closing at a price of $1.11 per share. The warrants will be redeemable by the Company at $0.01 per share if the closing sales price of its common stock is above $5 for ten consecutive trading days as reported on the Nasdaq Capital Market or other principal exchange.

NexMed, Inc.

Notes to Consolidated Financial Statements

11.

Stockholder Rights Plan

On April 3, 2000, the Company declared a dividend distribution of one preferred share purchase Right for each outstanding share of the Company's common stock to shareholders of record at the close of business on April 21, 2000. One Right will also be distributed for each share of Common Stock issued after April 21, 2000, until the Distribution Date described in the next paragraph. Each Right entitles the registered holder to purchase from the Company a unit consisting of one one-hundredths of a share (a Unit) of Series A Junior Participating Preferred Stock, $.001 par value per share , at a Purchase Price of $100.00 per Unit, subject to adjustment. Under the Rights Plan, 1,000,000 shares of the Company’s preferred stock have been set-aside.

Initially, the Rights will be attached to all Common Stock certificates representing shares then outstanding, and no separate Rights Certificates will be distributed. The Rights will separate from the Common Stock and a Distribution Date will occur upon the earlier of (i) ten (10) business days following a public announcement that a person or group of affiliated or associated persons (an Acquiring Person) has acquired, or obtained the right to acquire, beneficial ownership of 15% or more of the outstanding shares of Common Stock , or (ii) ten (10) business days following the public announcement of a tender offer or exchange offer that would, if consummated, result in a person or group beneficially owning 15% or more of such outstanding shares of Common Stock, subject to certain limitations.

Under the terms of the Rights Agreement, Dr. Y. Joseph Mo, the Company’s former CEO, will be permitted to increase his ownership to up to 25% of the outstanding shares of Common Stock, without becoming an Acquiring Person and triggering a Distribution Date.

On January 16, 2007 the Rights Agreement was amended to exempt Southpoint Master Fund, LP and its affiliates from becoming an Acquiring Person within the meaning of the Rights Agreement, provided that Southpoint’s aggregate beneficial ownership of the Company’s common stock is less than 20% of the shares of common stock then outstanding.

12.

Warrants

A summary of warrant activity is as follows:

NexMed, Inc.

Notes to Consolidated Financial Statements

				Weighted		Weighted
	Common Shares			Average		Average
	Issuable upon			Exercise		Contractual
	Exercise			Price		Life

Outstanding at January 1, 2005		11,436,691			1.91
Issued (Note 9)		1,188,938			1.43
Redeemed		(471,883	)		1.53
Cancelled		(1,123,196	)		1.99
Outstanding at December 31, 2005		11,030,550			1.83
Issued (Notes 7 and 10)		9,565,676			0.90
Redeemed		-			-
Cancelled		(471,199	)		1.82
Outstanding at December 31, 2006		20,125,027		$	1.33
Issued (Note 7)		450,000		$	1.52
Exercised		(2,790,495	)	$	1.83
Cancelled		(5,344,578	)	$	1.40
Outstanding at December 31, 2007		12,439,954		$	1.23		2.43 years
Exercisable at December 31, 2007		12,339,954		$	1.23		2.41 years

13.

Income Taxes

The Company has incurred losses since inception, which have generated net operating loss carryforwards of approximately $84 million for federal and state income tax purposes. These carryforwards are available to offset future taxable income and expire beginning in 2014 through 2026 for federal income tax purposes. In addition, the Company has general business and research and development tax credit carryforwards of approximately $2.1 million. Internal Revenue Code Section 382 places a limitation on the utilization of federal net operating loss carryforwards when an ownership change, as defined by tax law, occurs. Generally, an ownership change, as defined, occurs when a greater than 50 percent change in ownership takes place during any three-year period. The actual utilization of net operating loss carryforwards generated prior to such changes in ownership will be limited, in any one year, to a percentage of fair market value of the Company at the time of the ownership change. Such a change may have already resulted from the additional equity financing obtained by the Company since its formation.

In 2005, 2006 and 2007, the Company was approved by the State of New Jersey to sell a portion of its state tax credits pursuant to the Technology Tax Certificate Transfer Program. The Company has approximately $1.9 million in NJ tax credit benefits left available to sell at December 31, 2007, and was approved to sell net operating loss tax benefits of $905,515 in 2007, $637,525 in 2006, and $540,580 in 2005. The Company received net proceeds of $805,909, $567,397, and $481,116 in 2007, 2006, and 2005, respectively, as a result of the sale of the tax credits, which has been recognized as received as an income tax benefit in the Consolidated Statements of Operations. There can be no assurance that this program will continue in future years.

The net operating loss carryforwards and tax credit carryforwards resulted in a noncurrent deferred tax benefit at December 31, 2007, 2006 and 2005 of approximately $39.2 million, $35.6 million and $32.8 million, respectively. In consideration of the Company’s accumulated losses and the uncertainty of its ability to utilize this deferred tax benefit in the future, the Company has recorded a valuation allowance of an equal amount on such date to fully offset the deferred tax benefit amount.

In June 2006, the FASB issued FIN No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109 (“FIN 48”) which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement criteria for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN No. 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition and defines the criteria that must be met for the benefits of a tax position to be recognized. The cumulative effect of the change in accounting principle must be recorded as an adjustment to opening retained earnings. Effective January 1, 2007, the Company adopted FIN No. 48 and determined that such adoption did not have a material impact on its financial statements.

NexMed, Inc.

Notes to Consolidated Financial Statements

The reconciliation of income taxes computed using the statutory U.S. income tax rate and the provision (benefit) for income taxes for the years ended December 31, 2007, 2006 and 2005 are as follows:

	For the years ended
	December 31,
	2007		2006		2005

Federal statutory tax rate		(35%)		(35%)		(35%)
State taxes, net of federal benefit		(6%)		(6%)		(6%)
Valuation allowance		41%		41%		41%
Sale of state net operating losses		(8.40%)		(6.59%)		(3.02%)

Provision (benefit) for income taxes		(8.40%)		(6.59%)		(3.02%)

For the years ended December 31, 2007, 2006 and 2005, the Company’s effective tax rate differs from the federal statutory rate principally due to net operating losses and other temporary differences for which no benefit was recorded, state taxes and other permanent differences.

14.

Commitments and Contingencies

The Company is a party to clinical research agreements amended in October 2005 such that the total commitment was reduced to approximately $4.2 million. These agreements provide that if the Company cancels them prior to 50% completion, the Company will owe the higher of 10% of the outstanding contract amount prior to the amendment or 10% of the outstanding amount of the amended contract at the time of cancellation. At December 31, 2007, this amounts to approximately $1.1 million. The Company anticipates that the clinical research in connection with the agreements will be completed in 2008.

The Company is a party to several short-term consulting and research agreements that, generally, can be cancelled at will by either party.

We are subject to certain legal proceedings in the ordinary course of business. We do not expect any such items to have a significant impact on our financial position.

15.

Segment and Geographic Information

The Company is active in one business segment: designing, developing, manufacturing and marketing pharmaceutical products. The Company maintained development and business development operations in the United States and Hong Kong in 2005, 2006. In September 2007, the Company ceased all operations in Hong Kong.

Geographic information as of December 31, 2007, 2005 and 2005 are as follows:

NexMed, Inc.

Notes to Consolidated Financial Statements

	For the years ended December 31,
	2007		2006		2005
Net revenues
United States	$	775,894	$	758,207	$	1,062,550
Hong Kong		494,473		1,108,720		1,336,611
	$	1,270,367	$	1,866,927	$	2,399,161

	December 31,
	2007		2006		2005
Long-lived assets
United States	$	6,956,986	$	7,488,100	$	8,905,716
Hong Kong		-		-		-
	$	6,956,986	$	7,488,100	$	8,905,716

PART IV.

ITEM 15.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)

Exhibits

EXHIBITS NO.	DESCRIPTION

3.1	Amended and Restated Articles of Incorporation of the Company (incorporated herein by reference to Exhibit 2.1 filed with the Company's Form 10-SB filed with the Securities and Exchange Commission on March 14, 1997).

3.2	Amended and Restated By-laws of the Company (incorporated herein by reference to Exhibit 3.1 to the Company’s Form 10-Q filed with the Securities and Exchange Commission on May 14, 2003).

3.3	Certificate of Amendment to Articles of Incorporation of the Company, dated June 22, 2000 (incorporated herein by reference to Exhibit 3.2 to the Company’s Form 10-K filed with the Securities and Exchange Commission on March 31, 2003).

3.4	Certificate of Amendment to the Company’s Articles of Incorporation, dated June 14, 2005. (incorporated herein by reference to Exhibit 3.4 to the Company’s Form 10-K filed with the Securities and Exchange Commission on March 16, 2006)

4.1	Form of Common Stock Certificate (incorporated herein by reference to Exhibit 3.1 filed with the Company's Form 10-SB filed with the Securities and Exchange Commission on March 14, 1997).

4.2	Rights Agreement and form of Rights Certificate (incorporated herein by reference to Exhibit 4 to our Current Report on Form 8-K filed with the Commission on April 10, 2000).

4.3	Certificate of Designation of Series A Junior Participating Preferred Stock (incorporated herein by reference to Exhibit 4 to our Current Report on Form 8-K filed with the Commission on April 10, 2000).

4.5	Form of Warrant dated April 21, 2003 (incorporated herein by reference to Exhibit 4.2 to the Company’s Form 10-Q filed with the Securities and Exchange Commission on May 14, 2003).

4.6	Form of Common Stock Purchase Warrant dated July 2, 2003 (incorporated herein by reference to Exhibit 4.3 to the Company’s Registration Statement on Form S-3 filed with the Securities and Exchange Commission on July 17, 2003).

4.7	Form of Warrant dated June 18, 2004 (incorporated herein by reference to Exhibit 4.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on June 25, 2004).

4.8	Form of Common Stock Purchase Warrant A, dated December 17, 2004 (incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 23, 2004).

4.10	Form of Warrant, dated May 17, 2005 (incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 19, 2005).

4.11	Form of Warrant, dated January 23, 2006 (incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 27, 2006).

4.12	Form of Warrant, dated November 30, 2006 (incorporated herein by reference to Exhibit 4.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on December 4, 2006).

4.14	Form of Warrant, dated December 20, 2006 (incorporated herein by reference to Exhibit 4.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on December 21, 2006).

4.15	Amendment No. 1 to Rights Agreement, dated as of January 16, 2007 (incorporated herein by reference to Exhibit 4.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on January 22, 2007).

4.16	Form of Warrant, dated October 26, 2007 (incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 31, 2007).

10.1*	Amended and Restated NexMed, Inc. Stock Option and Long-Term Incentive Compensation Plan (incorporated herein by reference to Exhibit 10.1 filed with the Company's Form 10-Q filed with the Securities and Exchange Commission on May 15, 2001).

10.2*	The NexMed, Inc. Recognition and Retention Stock Incentive Plan (incorporated herein by reference to Exhibit 99.1 filed with the Company's Form 8-K filed with the Securities and Exchange Commission on May 28, 2004).

10.3	License Agreement dated March 22, 1999 between NexMed International Limited and Vergemont International Limited (incorporated herein by reference to Exhibit 10.7 of the Company’s Form 10-KSB filed with the Securities and Exchange Commission on March 16, 2000).

10.4*	The NexMed, Inc. Non-Qualified Stock Option Plan (incorporated herein by reference to Exhibit 6.6 filed with the Company's Form 10-SB/A filed with the Securities and Exchange Commission on June 5, 1997).

10.5*	Employment Agreement dated February 26, 2002 by and between NexMed, Inc. and Dr. Y. Joseph Mo (incorporated herein by reference to Exhibit 10.7 of the Company's Form 10-K filed with the Securities and Exchange Commission on March 29, 2002).

10.6	Registration Rights Agreement between the Company and The Tailwind Fund Ltd. and Solomon Strategic Holdings, Inc. dated June 11, 2002 (incorporated herein by reference to Exhibit 10.2 to the Company's Form 10-Q filed with the Securities and Exchange Commission on August 14, 2002).

10.7	Investor Rights Agreement, dated as of April 21, 2003, between the Company and the Purchasers identified on Schedule 1 to the Investor Rights Agreement (incorporated herein by reference to Exhibit 10.2 to the Company’s Form 10-Q filed with the Securities and Exchange Commission on May 14, 2003).

10.8	Investor Rights Agreement, dated as of July 2, 2003, between the Company and the Purchasers identified on Schedule 1 to the Investor Rights Agreement (incorporated herein by reference to Exhibit 10.2 to the Company’s Registration Statement on Form S-3 filed with the Securities and Exchange Commission on July 17, 2003).

10.9*	Amendment dated September 26, 2003 to Employment Agreement by and between Dr. Y. Joseph Mo and NexMed, Inc. dated February 26, 2002 (incorporated herein by reference to Exhibit 10.4 to the Company's Form 10-Q filed with the Securities and Exchange Commission on November 12, 2003).

10.10	Registration Rights Agreement, dated as of December 12, 2003, between the Company and the Purchasers named therein (incorporated herein by reference to Exhibit 10.2 to the Company’s Registration Statement on Form S-3 filed with the Securities and Exchange Commission on January 13, 2004).

10.11	Form of 5% Convertible Note due May 31, 2007 (incorporated herein by reference to Exhibit 10.3 to the Company’s Registration Statement on Form S-3 filed with the Securities and Exchange Commission on January 13, 2004).

10.12	Investor Rights Agreement, dated as of June 18, 2004, between the Company and the Purchasers identified on Schedule 1 thereto (incorporated herein by reference to Exhibit 10.2 to the Company’s Form 8-K filed with the Securities and Exchange Commission on June 25, 2004).

10.13*	Stock Option Grant Agreement between the Company and Leonard A. Oppenheim dated November 1, 2004 (incorporated herein by reference to Exhibit 10.2 to the Company’s Form 10-Q filed with the Securities and Exchange Commission on November 9, 2004).

10.14*	Form of Stock Option Grant Agreement between the Company and its Directors (incorporated herein by reference to Exhibit 10.29 of the Company’s Form 10-K filed with the Securities and Exchange Commission on March 16, 2006).

10.15	Investor Rights Agreement, dated as of December 17, 2004, between the Company and the Purchasers named therein (incorporated herein by reference to Exhibit 10.2 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on December 23, 2004).

10.16	Preferred Stock and Warrant Purchase Agreement, dated as of May 16, 2005, between the Company and the Purchasers named therein (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 19, 2005).

10.17	Investor Rights Agreement, dated as of May 16, 2005, between the Company and the Purchasers named therein (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 23, 2004).

10.18+	License Agreement, dated September 13, 2005, between NexMed, Inc., NexMed International Limited and Novartis International Pharmaceutical Ltd.(incorporated herein by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 15, 2005).

10.19	Common Stock and Warrant Purchase Agreement, dated as of January 23, 2006, between the Company and the Purchasers named therein (incorporated herein by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on January 27, 2006).

10.20	Investor Rights Agreement, dated as of January 23, 2006, between the Company and the Purchasers named therein( (incorporated herein by reference to Exhibit 10.2 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on January 27, 2006).

10.21*	Employment Agreement dated December 21, 2005 by and between NexMed, Inc. and Vivian H. Liu.

10.22*	Employment Agreement dated December 21, 2005 by and between NexMed, Inc. and Mark Westgate.

10.23	Common Stock and Warrant Purchase Agreement, dated January 23, 2006 (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on January 27, 2006).

10.24*	NexMed, Inc. 2006 Stock Incentive Plan (incorporated herein by reference to Annex A of the Company’s Definitive Proxy Statement filed with the Securities and Exchange Commission on April 6, 2006).

10.25	Securities Purchase Agreement, dated November 30, 2006, between NexMed, Inc., NexMed (U.S.A.), Inc. and Metronome LPC 1, Inc. (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on December 4, 2006).

10.26	Senior Secured Note, dated November 30, 2006, in favor of Metronome LPC 1, Inc. (incorporated herein by reference to Exhibit 10.2 to the Company’s Form 8-K filed with the Securities and Exchange Commission on December 4, 2006).

10.27	Common Stock and Warrant Purchase Agreement, dated December 20, 2006 (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on December 21, 2006).

10.28	Registration Rights Agreement, dated December 20, 2006 (incorporated herein by reference to Exhibit 10.2 to the Company’s Form 8-K filed with the Securities and Exchange Commission on December 21, 2006).

10.29	Amendment, effective as of February 13, 2007, to License Agreement between Novartis International Pharmaceutical Ltd., NexMed, Inc. and NexMed International Limited, dated September 13, 2005 (incorporated herein by reference to Exhibit 99.1 of the Company’s Form 8-K filed with the Securities and Exchange Commission on February 23, 2007).

10.30*	Employment Agreement dated October 31, 2007 between NexMed, Inc. and Hemanshu Pandya (incorporated herein by reference to Exhibit 10.1 of the Company’s Form 8-K filed with the Securities and Exchange Commission on November 5, 2007).

10.31+	License Agreement dated November 1, 2007 between NexMed, Inc. and Warner Chilcott Company, Inc.

10.32	Securities Purchase Agreement, dated October 26, 2007, between NexMed, Inc. and Twin Rivers Associates LLC (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 31, 2007).

10.33	Senior Secured Note, dated October 26, 2007, between NexMed, Inc. and Twin Rivers Associates LLC (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 31, 2007).

10.34	Registration Rights Agreement, dated October 26, 2007, between NexMed, Inc. and Twin Rivers Associates LLC (incorporated herein by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on October 31, 2007).

21	Subsidiaries.

23	Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm.

23.1 —	Consent of Amper, Politziner & Mattia P.C., independent registered public accounting firm.

31.1 —	Chief Executive Officer's Certificate, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 —	Chief Financial Officer's Certificate, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 —	Chief Executive Officer's Certificate, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 —	Chief Financial Officer's Certificate, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*Management compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 15(c) of Form 10-K.

+ Portions of this exhibit have been omitted pursuant to a request for confidential treatment with the Securities and Exchange Commission. Such portions have been filed separately with the Securities and Exchange Commission.

— Filed herewith.

SIGNATURES

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

	NEXMED, INC.


Dated: March 20, 2008	By:	/s/ Vivian Liu
		Vivian Liu
		President and Chief Executive Officer

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

SIGNATURE	TITLE	DATE

/s/ Vivian H. Liu VIVIAN H. LIU	Director, President and Chief Executive Officer	March 20, 2008

/s/ Mark Westgate MARK WESTGATE	Vice President, Chief Financial Officer and principal accounting officer	March 20, 2008

/s/ Richard J. Berman RICHARD J. BERMAN	Chairman of the Board of Directors	March 20, 2008

/s/ Arthur D. Emil ARTHUR D. EMIL	Director	March 20, 2008

/s/ Leonard A. Oppenheim LEONARD A. OPPENHEIM	Director	March 20 2008

/s/ David S. Tierney, M.D. DAVID S. TIERNEY	Director	March 20, 2008

/s/ Martin Wade III MARTIN WADE III	Director	March 20, 2008

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