UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended: March 31, 2012

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

For the transition period from: _____________to _____________

NERIUM BIOTECHNOLOGY, INC.

(Exact name of registrant as specified in its charter)

Canada	000-54051	14-1987900
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

11467 Huebner Road, Suite 175

San Antonio, Texas, 78230

(Address of Principal Executive Office) (Zip Code)

(210) 822-7908

(Registrant’s telephone number, including area code)

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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o	Smaller reporting company x

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

The number of shares outstanding of the Registrant’s common stock as of May 14, 2012 is 33,808,176.

NERIUM BIOTECHNOLOGY, INC.

INDEX TO FORM 10-Q

FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2012

(EXPRESSED IN UNITED STATES FUNDS)

Part I	FINANCIAL INFORMATION
Item 1	Interim Condensed Consolidated Financial Statements (Unaudited)	3
	Interim Condensed Consolidated Balance Sheets (Unaudited)
	Interim Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)
	Interim Condensed Consolidated Statements of Changes in Stockholder’ Equity (Unaudited)
	Interim Condensed Consolidated Statements of Cash Flows (Unaudited)
	Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)
Item 2	Management’s Interim Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3	Quantitative and Qualitative Disclosures About Market Risk
Item 4	Controls and Procedures	22
Part II	OTHER INFORMATION
Item 1	Legal proceedings	23
Item 1A	Risk Factors	23
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3	Defaults upon Senior Securities	26
Item 4	Mine Safety Disclosures
Item 5	Other information	26
Item 6	Exhibits	27

Index

Nerium Biotechnology, Inc.

Part I

Item 1.

Financial Statements

Interim Condensed Consolidated Balance Sheets

(Unaudited)

	March 31 2012			December 31 2011

Assets
Current assets
Cash and cash equivalents	$	666,735		$	217,034
Accounts receivable		6,282			3,934
Accounts receivable from related party (note 8)		20,000			-
Inventory (note 4)		367,883			368,696
Prepaid expenses and deposits		170,734			89,481

Total current assets		1,231,634			679,145
Prepaid expenses relating to patents		73,096			68,507
Equipment, net (note 5)		200,297			213,851
Total assets	$	1,505,027		$	961,503

Liabilities
Current liabilities
Accounts payable		119,590			-
Accrued liabilities		167,237			266,081
Employee related payables		22,325			-
Loan from related party (note 8)		80,000			-
Advance from related party (note 8)		27,150			3,914
Customer deposits		515,000			75,000
Total liabilities		931,302			344,995

Stockholders’ Equity
Preferred stock, no-par value, unlimited, none issued and outstanding		-			-
Common stock, no-par value, unlimited authorized, 33,607,176 (December 31, 2011 – 32,617,105) shares issued and outstanding (note 6)		7,352,410			7,077,077
Additional paid in capital		3,313,016			2,082,988
Accumulated comprehensive (loss) income		(2,690	)		2,922
Accumulated deficit		(10,078,107	)		(8,535,754	)

Nerium Biotechnology, Inc. Stockholders’ equity		584,629			627,233
Non-controlling interests		(10,904	)		(10,725	)
Total stockholders’ equity		573,725			616,508
Total liabilities and equity	$	1,505,027		$	961,503

Going Concern (note 2)
Commitments (note 9)

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

Index

Nerium Biotechnology, Inc.

Interim Condensed Consolidated Statements of Operations and Comprehensive Loss

For the three-month period ended March 31, 2012

(Unaudited)

	March 31 2012			March 31 2011
Revenue
Sales (note 8)	$	687,734		$	122,542
Other		1,559			2,243
		689,293			124,785
Cost of Sales		469,900			38,935
Gross profit		219,393			85,850
Expenses
General and administrative (note 8)		389,468			229,673
Research and development		64,856			62,138
Stock-based compensation (note 7)		1,298,290			-
Depreciation		9,311			10,490
Foreign exchange loss		-			2,739
		1,761,925			305,040
Net loss for the period		(1,542,532	)		(219,190	)
Exchange difference on translating foreign operations		(5,612	)		6,683
Comprehensive loss for the period		(1,548,144	)		(212,507	)
Loss attributable to non-controlling interest		179			145
Loss attributable to controlling interest	$	(1,547,965	)	$	(212,362	)

Basic and diluted loss per common share	$	(0.05	)	$	(0.01	)

Weighted-average common shares outstanding- basic and diluted		32,638,865			31,551,334

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

Index

Nerium Biotechnology, Inc.

Interim Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the three month period ended March 31, 2012

(Unaudited)

	Common Stock					Preferred Stock						Shares to be		Additional Paid-in		Accumulated Other Comprehensive			Non- Controlling			Accumulated			Total Stockholders’ Equity
	Shares			Amount		Shares			Amount			Issued		Capital		Loss			Interest			Deficit
At December 31, 2010		31,544,681		$	5,814,538		-		$	-		$	-	$	1,410,215	$	(3,871	)	$	(10,140	)	$	(6,671,273	)	$	539,469
Preference shares issued (note 6(b)(ii) and( viii))		-			-		750,000			750,000			-		-		-			-			-			750,000
Issued on private placements (note 6(b)(i))		199,583			299,374		-			-			-		-		-			-			-			299,374
Preference shares converted to common shares (note 6(b)(iii) and (ix))		750,000			750,000		(750,000	)		(750,000	)		-		-		-			-			-			-
Issued on private placements (note 6 (b)(iv))		29,867			44,800		-			-			-		-		-			-			-			44,800
Fair value of warrants (note 6(c))		-			-		-			-			-		504,043		-			-			-			504,043
Issued on private placements (note 6 (b)(v))		41,206			61,809		-			-			-		-		-			-			-			61,809
Cancellation of shares (note 6(b)(vi))		(19,269	)		-		-			-			-		-		-			-			-			-
Issued on private placements (note 6 (b) (vii))		68,737			103,106		-			-			-		-		-			-			-			103,106
Fair value of options		-			-		-			-			-		168,730		-			-			-			168,730
Issued on private placements (note 6(b) (x))		2,300			3,450		-			-			-		-		-			-			-			3,450
Comprehensive loss for the year		-			-		-			-			-		-		6,793			(585	)		(1,864,481	)		(1,858,273	)

At December 31, 2011		32,617,105		$	7,077,077		-		$	-		$	-	$	2,082,988	$	2,922		$	(10,725	)	$	(8,535,754	)	$	616,508

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

Index

Nerium Biotechnology, Inc.

Interim Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the three month period ended March 31, 2012

(Unaudited)

	Common Stock				Preferred Stock				Shares to be		Additional Paid in			Accumulated Other Comprehensive			Non- Controlling			Accumulated			Total Stockholders’ Equity
	Shares		Amount		Shares		Amount		Issued		Capital			Loss			Interest			Deficit
At December 31, 2011		32,617,105	$	7,077,077		-	$	-	$	-	$	2,082,988		$	2,922		$	(10,725	)	$	(8,535,754	)	$	616,508
Issued on private placements (note 6(b)(xi))		120,071		120,071		-		-		-		-			-			-			-			120,071
Fair value of options (note 7 (iii))		-		-		-		-		-		1,298,290			-			-			-			1,298,290
Exercise of options (note 6(b)(xii))		870,000		87,000		-		-		-		-			-			-			-			87,000
Fair value of options exercised		-		68,262		-		-		-		(68,262	)		-			-			-			-
Comprehensive loss for the period		-		-		-		-		-		-			(5,612	)		(179	)		(1,542,353	)		(1,548,144	)

At March 31, 2012		33,607,176	$	7,352,410		-	$	-	$	-	$	3,313,016		$	(2,690	)	$	(10,904	)	$	(10,078,107	)	$	573,725

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

Index

Nerium Biotechnology, Inc.

Interim Condensed Consolidated Statements of Cash Flows

For the three-month period ended March 31, 2012

(Unaudited)

	March 31 2012			March 31 2011
Cash flow from operating activities
Net loss for the period	$	(1,542,532	)	$	(219,190	)
Items not affecting cash:
Depreciation		9,311			10,490
Depreciation included in research and development		3,790			3,790
Share-based compensation		1,298,290			-
Changes in non-cash working capital balances:
Accounts receivable		(2,348	)		(1,032	)
Accounts receivable from related party		(20,000	)		-
Inventory		813			(3,490	)
Prepaid expenses and deposits		(81,253	)		(88,208	)
Accounts payable		119,590			(13,321	)
Accrued liabilities		(98,844	)		-
Loan from related party		80,000			-
Employee related payables		22,325			-
Customer deposits		440,000			-
Advanced from related party		23,236			-
		252,378			(310,961	)

Cash flow from investing activities
Purchase of equipment		-			(4,124	)
Prepaid expenses relating to patents		(4,589	)		-
		(4,589	)		(4,124	)
Cash flow from financing activities
Issuance of common shares		120,071			299,374
Issuance of preference shares		-			500,000
Proceeds from options exercised		87,000			-
		207,071			799,374
Effect of exchange rate changes on cash and cash equivalents		(5,159	)		1,230
Increase in cash and cash equivalents		449,701			485,519
Cash and cash equivalents, beginning of the period		217,034			186,823
Cash and cash equivalents, end of the period	$	666,735		$	672,342

Included in cash and cash equivalents is:
Cash	$	438,120		$	137,467
Money market instruments		228,615			534,875
	$	666,735		$	672,342

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

Index

Nerium Biotechnology, Inc.

Notes to the Interim Condensed Consolidated Financial Statements

March 31, 2012 (Unaudited)

1.	Basis of Presentation

The accompanying interim condensed consolidated financial statements of the Company have been prepared following generally accepted accounting principles in the United States (“US GAAP”), and are expressed in United States dollars, unless otherwise noted.

Pursuant to the rules and regulations of the Securities and Exchange Commission for Form 10-Q, the interim condensed consolidated financial statements, footnote disclosures and other information normally included in consolidated financial statements prepared in accordance with US GAAP have been condensed or omitted. The interim condensed consolidated financial statements contained in this report are unaudited but, in the opinion of management, reflect all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the interim condensed consolidated financial statements. All significant inter-company accounts and transactions have been eliminated on consolidation. The results of operations for any interim period are not necessarily indicative of results for the full year. The interim condensed consolidated balance sheet at December 31, 2011 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by US GAAP for complete financial statements.

For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Form

10-K for the year ended December 31, 2011.

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management reviews these estimates and assumptions on an ongoing basis using currently available information. Actual results could differ from those estimates.

Index

Nerium Biotechnology, Inc.

Notes to the Interim Condensed Consolidated Financial Statements

March 31, 2012 (Unaudited)

2.	Going Concern

These interim condensed consolidated financial statements have been prepared in accordance with US GAAP applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next twelve months.

During the three-month period ended March 31, 2012, the Company incurred a net loss of $1,542,532 (three-month period ended March 31, 2011 - $219,190). At March 31, 2012 the Company had an accumulated deficit of $10,078,107, cash and cash equivalents of $666,735 and working capital of $300,332. In order to meet future expenditures and cover administrative costs, the Company will need to raise additional financing. Although the Company has been successful in raising funds to date, there is no assurance that adequate funding will be available in the future, or available under terms favourable to the Company and therefore, there is substantial doubt about the Company’s ability to continue as a going concern. These interim condensed consolidated financial statements do not reflect any adjustments to the carrying values of assets and liabilities that would be necessary if the Company were unable to achieve profitable operations or obtain adequate financing.

3.	Significant Accounting Policies

Adoption of new accounting principles

During the three-month period ended March 31, 2012 the Company adopted the following Accounting Standards Updates (“ASU”) to the Financial Accounting Standard Board (“FASB”) Accounting Standards Codification (the “ASC”) issued by the FASB.

In May 2011, the FASB issued Accounting Standards Update ("ASU") No. 2011-04—Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in US GAAP and IFRSs ("ASU No. 2011-04"). This authoritative guidance changes the wording used to describe the requirements in US GAAP for measuring fair value and for disclosing information about fair value measurements. ASU No. 2011-04 is effective for interim and annual periods beginning after December 15, 2011. The implementation of this guidance did not have a significant impact on our financial condition, results of operations or cash flows.

In connection with ASU 2011-05, on December 23, 2011, the FASB issued ASU 2011-12 “Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05” an amendment of ASC topic 220 “Comprehensive Income” to allow FASB time to redeliberate whether to present on the face of the financial statements the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income for all periods presented. While FASB is considering this matter, entities should continue to report reclassifications out of accumulated other comprehensive income consistent with the presentation requirements in effect before ASU 2011-05. The ASU is effective for fiscal years, and interim periods, beginning after December 15, 2011. The implementation of this guidance did not have a significant impact on our financial condition, results of operations or cash flows.

Recently issued accounting pronouncements

On December 16, 2011, the FASB issued ASU No. 2011-11 “Disclosures about Offsetting Assets and Liabilities” an amendment of ASC topic 210 “Balance Sheet.” The objective of this ASU is to improve disclosures about offsetting and related arrangements to enable users of financial statements to understand the effect of those arrangements on its financial position. Entities are required to disclose both gross information and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. This scope would include derivatives, sale and repurchase agreements and reverse sale and repurchase agreements, and securities borrowing and securities lending arrangements. The objective of this disclosure is to facilitate comparison between those entities that prepare their financial statements on the basis of US GAAP and those entities that prepare their financial statements on the basis of IFRS. This ASU is effective for annual periods beginning on or after January 1, 2013, and interim periods within those annual periods. An entity should provide the disclosures required by those amendments retrospectively for all comparative periods presented. The entity is currently evaluating the impact of this pronouncement.

Index

Nerium Biotechnology, Inc.

Notes to the Interim Condensed Consolidated Financial Statements

March 31, 2012 (Unaudited)

Inventory

	March 31 2012		December 31 2011

Raw materials and consumables	$	293,953	$	289,722
Supplies		22,080		47,873
Medicine (finished goods)		51,850		31,101
	$	367,883	$	368,696

5.	Equipment, net

					March 31 2012		December 31 2011
	Cost		Accumulated Depreciation		Net Book Value		Net Book value


Lab furniture and equipment	$	270,363	$	158,872	$	111,491	$	117,275
Clinic, office furniture, and equipment		88,464		61,287		27,177		30,787
Computer equipment		12,990		5,684		7,306		7,676
Research and development		75,800		21,477		54,323		58,113
	$	447,617	$	247,320	$	200,297	$	213,851

6.	Capital Stock

(a)

Authorized

Unlimited Common stock

Unlimited Preferred stock, non-voting, issuable in series

(b)

Issued

Common stock	Shares			Amount

As at December 31, 2010		31,544,681		$	5,814,538
Private placement (i)		199,583			299,374
Preference share conversion (iii)		500,000			500,000
Private placement (iv)		29,867			44,800
Private placement (v)		41,206			61,809
Cancellation of shares (vi)		(19,269	)		-
Private placement (vii)		68,737			103,106
Preference share conversion (ix)		250,000			250,000
Private placement (x)		2,300			3,450
As at December 31, 2011		32,617,105			7,077,077
Private placement (xi)		120,071			120,071
Stock option exercise (xii)		870,000			87,000
Fair value of options exercised		-			68,262
As at March 31, 2012		33,607,176		$	7,352,410

Preferred stock	Shares			Amount
As at December 31, 2010		-		$	-
Issuance of preference shares (ii)		500,000			500,000
Conversion to common shares (iii)		(500,000	)		(500,000	)
Issuance of preference shares (viii)		250,000			250,000
Conversion to common shares (ix)		(250,000	)		(250,000	)
As at December 31, 2011 and March 31, 2012				$	-

Index

Nerium Biotechnology, Inc.

Notes to the Interim Condensed Consolidated Financial Statements

March 31, 2012 (Unaudited)

6.	Capital Stock - continued

(b)	Issued - continued

(i)

On March 29, 2011, the Company completed the fourth closing of its non-brokered private placement by issuing 199,583 common shares at $1.50 per share for gross proceeds of $299,374.

(ii)

On March 9, 2011, the Company completed a non-brokered private placement to issue 500,000 Series “A” Convertible Preference Shares, at a subscription price of $1.00 per share for a total of $500,000. The Convertible Preference Shares are non-voting, non-redeemable, non-retractable and are not entitled to receive dividends. Each Series “A” Convertible Preference Share may, at the option of the holder, be converted into one common share. The expiry date of the conversion is December 31, 2012.

(iii)

On May 5, 2011 the 500,000 Series “A” Convertible Preference Shares were converted into 500,000 common shares.

(iv)

On May 5, 2011, the Company completed the fifth closing of its non-brokered private placement by issuing 29,867 common shares at $1.50 per share for gross proceeds of $44,800.

(v)

On June 28, 2011, the Company completed the sixth closing of its non-brokered private placement by issuing 41,206 common shares at $1.50 per share for gross proceeds of $61,809.

(vi)

On June 28, 2011 the Company cancelled 19,269 residual shares as result of the shares in trust being distributed to individual shareholders.

(vii)

On September 8, 2011 and September 29, 2011, the Company completed the seventh and eighth closing of its non-brokered private placement by issuing 58,737 and 10,000 common shares at $1.50 per share for gross proceeds of $88,106 and $15,000, respectively.

(viii)

On September 26, 2011, the Company approved a non-brokered private placement to issue 1,000,000 Series “B” Convertible Preference Shares, at a subscription price of $1.00. The Convertible Preference Shares are non-voting, non-redeemable, non-retractable and are not entitled to receive dividends. Each Series “B” Convertible Preference Share may, at the option of the holder, be converted into one common share. The expiry date of the conversion is December 31, 2012. Pursuant to this private placement 250,000 preference shares were issued.

(ix)

On September 29, 2011, the 250,000 Series “B” Convertible Preference Shares were converted into 250,000 common shares.

(x)

On December 22, 2011, the Company completed the ninth closing of its non-brokered private placement by issuing 2,300 common shares at $1.50 per share for gross proceeds of $3,450.

(xi)

In February 2012, the Company's Board of Directors approved a private placement of up to 2,000,000 common shares of the Company at a subscription price of $1.00 per common share. On March 30, 2012, the Company completed the first closing of its non-brokered private placement by issuing 120,071 common shares at $1.00 per share for gross proceeds of $120,071.

(xii)

During the quarter ended March 31, 2012, 870,000 stock options were exercised at $0.10 per option for gross proceeds of $87,000. The fair value of the options was $68,262.

Index

Nerium Biotechnology, Inc.

Notes to the Interim Condensed Consolidated Financial Statements

March 31, 2012 (Unaudited)

6.	Capital Stock - continued

(c)

Warrants

A summary of the Company’s warrant activity is as follows:

	March 31, 2012				December 31, 2011
	Number of Warrants		Exercise Price		Number of Warrants			Exercise Price
Outstanding, beginning		500,000	$	1.25		500,000		$	1.25
Expired		-		-		(500,000	)		1.25
Issued		-		-		500,000			1.25

Outstanding, ending		500,000	$	1.25		500,000		$	1.25

The fair value of the 500,000 warrants issued in May 2010 was $161,476. The fair value of the warrants was estimated using the Black-Scholes pricing model based on the following assumptions: risk-free interest of 1.89%, volatility of 143%; expected dividend yield of 0% and expected life of one year.

On May 5, 2011, the 500,000 warrants expired; and replacement warrants were issued on May 6, 2011 with the same terms and an expiry date of May 5, 2012. The fair value of the 500,000 warrants was $504,043 and was expensed. The fair value of the warrants was estimated using the Black-Scholes pricing model based on the following assumptions: risk-free interest of 1.65%; volatility of 181%; expected dividend yield of 0% and expected life of one year.

7.	Stock-Based Compensation

The Company has reserved and set aside up to 6,256,000 common shares for the granting of options to directors, officers, employees and consultants. The terms of the awards under the Plan are determined by the Board of Directors.

A summary of the status of the Company's outstanding stock options as of March 31, 2012 and December 31, 2011, and changes during the periods is presented in the following table.

	March 31, 2012						December 31, 2011
	Stock Options			Weighted- average exercise price			Stock options		Weighted- average exercise price
Outstanding, beginning		3,630,000		$	0.47			3,180,000	$	0.47
Exercised (i)		(870,000	)		(0.10	)		-		-
Granted (ii) and (iii)		150,000			1.50			450,000		1.50
Expired		-			-			-		-

Outstanding, ending		2,910,000		$	0.79			3,630,000	$	0.47

Index

Nerium Biotechnology, Inc.

Notes to the Interim Condensed Consolidated Financial Statements

March 31, 2012 (Unaudited)

7.	Stock-Based Compensation- continued

The weighted-average remaining contractual life and weighted-average exercise price of options outstanding and of options exercisable as at March 31, 2012 are as follows:



		Options Outstanding		Options Exercisable
			Weighted
		Weighted-	- Average		Weighted-
		Average	Remaining		Average
Exercise		Exercise	Contractual		Exercise
Prices	Outstanding	Price	Life	Exercisable	Price

	#		Years	#

CDN$0.10	750,000	CDN $0.10	2.80	750,000	CDN$0.10
CDN$0.50	800,000	CDN $0.50	0.27	800,000	CDN$0.50
CDN$1.22	310,000	CDN $1.22	1.29	310,000	CDN$1.22
$1.22	450,000	$1.22	3.41	450,000	$1.22
$1.50	600,000	$1.50	4.29	150,000	$1.50

	2,910,000	$0.79	2.34	2,460,000	$0.66

Index

Nerium Biotechnology, Inc.

Notes to the Interim Condensed Consolidated Financial Statements

March 31, 2012 (Unaudited)

7.	Share-Based Compensation - continued

(i)

1,950,000 stock options with an exercise price of CDN$0.10 were granted to various directors, employees and consultants on January 17, 2007, which vested immediately and expire January 17, 2012. The fair value was determined to be $153,000 at $0.08 per option, using the Black-Scholes model for pricing options. This amount was recorded as stock-based compensation expense and an increase to accumulated paid in capital. The following assumptions were used: risk free interest rate of return of 4.3%, expected stock volatility of 105%, dividend yield of 0% and expected life of 5 years. In January 2012, 870,000 of these options were exercised for $87,000. The fair value of these options was $68,262. On January 17, 2012 the remaining un-exercised options were amended to expire January 17, 2015. The fair value of the amended options is $1,084,251 at $1.45 per option, using the Black-Scholes model for pricing options. The following assumptions were used: risk free interest rate of return of 1.06%, expected stock volatility of 148%, dividend yield of 0% and expected life of 3 years. This amount was recorded as stock-based compensation expense and an increase to accumulated paid in capital.

(ii)

450,000 stock options were granted to certain employees on June 27, 2011 with an exercise price of $1.50, which vest 25% on June 27, 2012; 25% on June 27, 2013; 25% on June 27, 2014 and 25% on June 27, 2015 and expire June 27, 2016. The fair value was determined to be $647,925 at $1.44 per option, using the Black-Scholes model for pricing options. $84,365 was recorded as an increase to stock-based compensation expense and an increase to accumulated paid in capital for the three-month period ended March 31, 2012. The following assumptions were used: risk free interest rate of return of 2.79%; expected volatility of 181%; dividend yield of 0% and expected life of 5 years.

(iii)

150,000 stock options were granted to a consultant on February 14, 2012 with an exercise price of $1.50, which vest immediately. The fair value was determined to be $129,674 at $0.86 per option, using the Black-Scholes model for pricing options. The following assumptions were used: risk free interest rate of return of 1.44%; expected volatility of 148%; dividend yield of 0% and expected life of 5 years.

8.	Related Party Transactions and Balances

During the three-month period ended March 31, 2012, the Company entered into the following related party transactions:

The Company incurred consulting fees of $nil (three-month period ended March 31, 2011 - $15,000) during the three-month period ended March 31, 2012, for services provided by a director of the Company. This amount is included in general and administrative expenses.

In the three-month period ended March 31, 2012, total sales by the Company to Nerium International, LLC (“NI”) was $683,340 (three-month period ended March 31, 2011 - $nil). The unrealized profit of $27,150 associated with these sales to the related party has been eliminated (sales of $97,876 less cost of sales of $70,726). As of March 31, 2012, the Company’s $300 investment in NI has been recorded at $nil as a result of accumulated losses to date of $88,688 (December 31, 2011 - $271,325).

As at March 31, 2012, accounts receivable from NI was $20,000 (December 31, 2011 - $nil).

At March 31, 2012, the loan from related party relates to a loan from the chief executive officer totalling $80,000 (December 31, 2011 - $nil). The loan is unsecured, non-interest bearing and due on demand.

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Nerium Biotechnology, Inc.

Notes to the Interim Condensed Consolidated Financial Statements

March 31, 2012 (Unaudited)

9.	Commitments

Operating leases

At March 31, 2012, the Company was committed to operating lease payments for its various premises in the following amounts:

2012	$	163,166
2013		220,094
2014		199,686
2015		196,691
	$	779,637

In addition, the Company is committed to the following:

(a)

The Company has entered into two separate agreements with one individual. The first agreement, a production and purchasing agreement effective June 2004, entitles the individual to receive $3.25 per vial of Anvirzel sold to third parties in exchange for the use of facilities and production supervision. The second agreement, a consulting agreement effective January 2007, entitles the individual to receive an additional $3.25 per vial of Anvirzel sold to third parties in exchange for consulting services in relation to the production of Anvirzel. Both agreements remain in effect for as long as Anvirzel is produced in Honduras.

(b)

Prior to 2004, the Company entered into a consulting agreement which entitles the consultant to receive $1.00 per vial of Anvirzel sold to third parties in Central America and $2.00 per vial for patients coming from countries other than Central America, to a maximum of $20,000 per month, expiring in 2018.

(c)

During 2011, the Company entered into a consulting agreement which entitles the consultant to receive 5% commission, based on a per unit price charged on each product produced for commercial sale to the end consumer, that was formulated by the consultant. The agreement expires in 2031.

The commissions paid are not significant and are included in cost of sales.

10.	Financial Instruments

Fair value

The Company's financial instruments include cash and cash equivalents, accounts receivable and accounts payables, accrued liabilities and employee related payables, and loan from related party. The carrying value of the financial instruments approximates their fair value because of the short-term maturities of these items.

The Company's risk exposure and the impact on its financial instruments are summarized below:

Credit risk

Credit risk is the risk of loss associated with a counterparty's inability to fulfill its contractual obligations. The Company is exposed to credit risk on its cash and cash equivalents and accounts receivable.

The Company has deposited the cash and cash equivalents with reputable financial institutions, from which management believes the risk of loss is minimal. The Company's cash and cash equivalents are not subject to any external restrictions.

Index

Nerium Biotechnology, Inc.

Notes to the Interim Condensed Consolidated Financial Statements

March 31, 2012 (Unaudited)

10.	Financial Instruments - continued

Liquidity risk

The Company's approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. The Company does not have any long-term debt other than accrued liabilities. The Company also has commitments discussed in Note 9.

Since inception, the Company has financed its liquidity needs through private placements of preferred and common stock. To secure additional capital, the Company will attempt to raise additional funds through the issuance of common stock or similar equity instruments.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market interest rates.

The Company is exposed to interest rate risk arising from fluctuations in interest rates received on its cash and cash equivalents. Fluctuations in market interest rates do not have a significant impact on the Company's results of operations due to the short-term nature of interest bearing cash and cash equivalents.

Currency risk

The Company is exposed to currency fluctuations as a significant amount of its accrued liabilities are denominated in Canadian dollars and Honduran Lempira. The Company does not use derivative instruments to reduce its exposure to foreign currency risk.

11.	Capital Disclosure

The Company's primary objective with respect to its capital management is to ensure that it has sufficient cash resources to maintain its ongoing operations. The Company includes stockholder’s equity in the definition of capital.

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable.

There were no changes to the Company's approach to capital management during three-month period ended March 31, 2012. The Company is not subject to externally imposed capital requirements.

Index

Nerium Biotechnology, Inc.

Notes to the Interim Condensed Consolidated Financial Statements

March 31, 2012 (Unaudited)

12.	Segmented Information

The Company uses a management approach for determining segments. The management approach designates the internal organization that is used by management for making operating decisions and assessing performance as the source of the Company’s reportable segments. The Company’s management reporting structure provides for only one segment: healthcare.

The regions and countries in which the Company had identifiable assets and revenues are presented in the following table. Identifiable assets are those that can be directly associated with a geographic area.

As at March 31, 2012	United States		Honduras		Total

Equipment	$	66,515	$	133,782	$	200,297
Total assets	$	1,191,609	$	313,418	$	1,505,027

Three-month period ended March 31, 2012	United States			Honduras			Total

Revenues	$	585,884		$	103,409		$	689,293
Net loss for the period	$	(1,528,064	)	$	(14,468	)	$	(1,542,532	)

As at December 31, 2011	United States		Honduras		Total

Equipment	$	72,421	$	141,430	$	213,851
Total assets	$	655,065	$	306,438	$	961,503

Three-month period ended March 31, 2011	United States			Honduras		Total

Revenues	$	-		$	124,785	$	124,785
Net loss for the period	$	(222,638	)	$	3,448	$	(219,190	)

13.	Subsequent Events

On April 25, 2012, the Company completed the second closing of its non-brokered private placement by issuing 120,000 common shares at $1.00 per share for gross proceeds of $120,000.

On May 10, 2012, the Company completed the third closing of its non-brokered private placement by issuing 81,000 common shares at $1.00 per share for gross proceeds of $81,000.

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Nerium Biotechnology, Inc.

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

Forward-looking Statements

Statements made in this Form 10-Q that are not historical or current facts are “forward-looking statements” made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements often can be identified by the use of terms such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate,” “approximate,” or “continue,” or the negative thereof. We intend that such forward-looking statements be subject to the safe harbor processes for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management’s best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. Except as required by law, we disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.

All references herein to the terms “we,” “our,” “us,” “Nerium,” and “the Company” refer to Nerium Biotechnology, Inc. and its subsidiaries.

Overview

Nerium Biotechnology, Inc. (“Nerium” or the “Company”) is a biotechnology company involved in the development of Nerium oleander-based products for the treatment of certain forms of proliferative diseases and viral infections. We are also involved in the development of a skincare/cosmetic line of products based on the patent pending aloe-oleander extract. Our existing product line includes Anvirzel™, HIviral, HEP-viral, and NeriumAD.

Nerium was incorporated pursuant to the Canada Business Corporations Act on June 1, 2006 to acquire Phoenix Biotech, LTD (Phoenix BVI), a British Virgin Islands corporation, and its five majority-owned Latin American subsidiaries, from Phoenix Biotechnology, Inc., a Texas corporation (Phoenix US). Nerium currently owns, indirectly, four Latin American corporations, collectively known as “The Salud Integral Group”, located in Honduras and El Salvador, which integrate the manufacturing, marketing, and sales of our treatment products, while the cosmetic line is being developed by the wholly owned subsidiary, Nerium SkinCare, Inc.

Nerium utilizes a proprietary method to grind the Nerium oleander plant cuttings into the biomass used for manufacturing of its products. Drogueria Salud Integral, one of the subsidiaries within the “Salud Integral Group”, has a manufacturing facility in Tegucigalpa, Honduras, that operates under Honduran “current Good Manufacturing Practices” (cGMP) standards and is inspected by the Honduran health ministry to confirm compliance with such standards. Drogueria Salud Integral is located inside the pharmaceutical manufacturing plant of Francelia Laboratories, whose cGMP clean room is fully operational and is currently producing our existing line of treatment products. Through its Latin American subsidiaries, our drug products are available to international patients who import them under personal use exemption rules of their respective countries.

Anvirzel™, our lead product, is intended to treat certain forms of cancer, and has successfully completed a United States Food and Drug Administration Phase I Study which was limited to establishing safety and dosage. The study was conducted at the Cleveland Clinic in Cleveland, Ohio.

In addition to Anvirzel™, Nerium currently has three other marketable products, HIviral, HEP-viral and NeriumAD. HIviral is for use as an adjuvant therapy in the treatment of HIV/AIDS, HEP-viral is for use as an adjuvant therapy in the treatment of hepatitis C and NeriumAD is a skin cream for age-defying treatment.

NeriumAD is manufactured by a third party company in Texas and marketed by Nerium International, LLC (“NI”) based in Dallas, TX.

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Nerium Biotechnology, Inc.

Anvirzel™ is available as a prescription drug through the Salud Integral Clinic in Honduras. While it has historically been administered by intramuscular injection (IM), many users are now administering it sublingually (“SL”) by placing drops under the tongue. The SL method of administration may soon be clinically tested as we received, on April 29, 2012, an approval from the US FDA to commence a Phase 1 study of the combination of Carboplatin, Docetaxel and increasing doses of sublingual Anvirzel in advanced non-small cell lung cancer patients at MD Anderson Cancer Center in Houston, Texas. A successful Phase 1 may result in a better understanding of the bioavailability of Anvirzel when administered sublingually. The success of the study could also lead to a multi-site Phase II clinical study.

Anvirzel is currently provided in a 10ml vial as 150mg of freeze-dried oleander extract powder that is reconstituted with 10ml of water. In the proposed clinical study, Sublingual Anvirzel will be provided in a 30ml vial as 300mg of freeze-dried oleander extract powder. We believe that in the future Anvirzel may be provided in a quick dissolving strip or tablet which can be placed under the tongue in order to make administration more user friendly than it presently is.

HIviral and HEP-viral are provided in a 30ml vial as 300mg of freeze-dried oleander extract powder that is reconstituted with 20ml of water. No further development of either product is planned until after completion of the proposed cancer study. HIviral is for use as an adjuvant therapy in the treatment of HIV/AIDS and HEP-viral is for use as an adjuvant therapy in the treatment of hepatitis C.

NeriumAD is a cosmetic product designed for use on wrinkled and/or aging skin. It has been developed by Nerium SkinCare, Inc. It is anticipated that additional skincare type products will be developed.

Results of Operations – Three months Ended March 31, 2012 Compared to March 31, 2011

Sales for the three months ended March 31, 2012 increased by $565,192, or 461.2% to $687,734 from $122,542 for the three-month period ended March 31, 2011. This increase can be attributed to the increase in sales of $585,464 by NSC. Sales of other Nerium products decreased by $20,272 for the three months ended March 31, 2012 from the corresponding period of the prior year.

Other income comprises income from administrative services performed by our Honduran subsidiary. Other income for the three months ended March 31, 2012 decreased by $684, or 43.9% to 1,559 from $2,243 for the three-month period ended March 31, 2011. This decrease resulted from fewer billed record keeping services.

Cost of sales for the three months ended March 31, 2012 increased by $430,965, or 1,106.9% to $469,900 from $38,935 for the three-month period ended March 31, 2011. This increase is attributed to the increase in sales by NSC. Our gross margin for the three months ended March 31, 2012 was 31.7% compared to 68.2% for the corresponding period of the prior year. This decrease in margins resulted from fewer sales of Anvirzel as a percentage of the total and the advent of the sale of skin care products.

Stock-based compensation expense for the quarter ended March 31, 2012 totaled $1,298,290 compared to $nil for the corresponding period of the prior year. In addition, the 750,000 remaining outstanding options from the 2007 grant were amended and extended for an additional three years at an exercise price of $0.10.

General and administrative expenses for the three months ended March 31, 2012 increased by $159,795, or 69.6% to $389,468 from $229,673 for the three-month period ended March 31, 2011. This increase is attributed to the additional expenses associated with the lauch of the skin care line.

Research and development expenses totaled $64,856 for the three-month period ended March 31, 2012, consistent with the $62,138 for the three-month period ended March 31, 2011.

Depreciation expense totaled $9,311 for the three-month period ended March 31, 2012, slightly less than the $10,490 for three-month period ended March 31, 2011. The decrease resulted from additional items being fully depreciated.

The loss on foreign exchange for the three-month period ended March 31, 2012 totaled $nil compared to $2,739 for the corresponding period of the prior year.. This zero loss for the three months ended March 31, 2012 resulted from the US Dollar and the Canadian dollar being at par for most of the quarter.

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Nerium Biotechnology, Inc.

As a result of the forgoing, we incurred a loss for the three-month period ended March 31, 2012 of $1,542,532 ($0.05 per share) compared to a loss for the 2011 three-month period of $219,190 ($0.01 per share). Most of this increase can be attributed to the stock-based compensation.

We had a gain on the exchange loss on translating foreign operations for the three-month period ended March 31, 2012 of $5,612 compared to a gain of $6,683 in the three-month period ended March 31, 2011. The difference is a result of the exchange of the Honduran Lempira against the US Dollar.

As a result of the forgoing, we incurred a comprehensive loss of $1,548,144 for the three-month period ended March 31, 2012 compared to a comprehensive loss for the three-month period ended March 31, 2011 of $212,507.

We had a loss attributable to non-controlling interest of $179 for the three-month period ended March 31, 2012 compared to a loss attributable to non-controlling interest of $145 in the same period in 2011.

Liquidity

As at March 31, 2012 we had cash and cash equivalents of $666,735 and working capital of $300,332. This compares with cash and cash equivalents of $217,034 and working capital of $334,150 as of December 31, 2011. Most cash equivalents are held in a money market fund, earning a variable rate of market interest, at Texas Capital Bank. The balance of cash equivalents are held in various operating accounts at Texas Capital Bank, Banco Ficohsa (located in Honduras) and Banco Credomatic (located in Honduras).

Historically, the Company has generate the cash required for operations, as well as its research projects, through the private placement issuances of common shares. During the three month period ended March 31, 2012 the Company received $120,071 in cash from the sale of 120,071 shares of its common stock and 870,000 stock options were exercised at $0.10 for gross proceeds of $87,000.

Based upon prior year operations, the Company has insufficient cash flow to fund its operation and to execute its business plan for the next twelve months. However, revenue for the three months ended March 31, 2012 has nearly exceeded that of the entire year 2011. This growth is expected to continue, and when combined with anticipated sales of common stock, should provide the funds necessary to allow the Company to execute its business plan for the next twelve months. However, if the Company is unable to sustain this revenue growth and/or sell shares at a sufficient price, it will be unable to continue as a going concern.

Capital Resources

We had no long-term debt financing arrangements and do not anticipate incurring any such debt. Since incorporation, a majority of cash has been raised through private placement issuances of common shares. It is expected that further cash will be raised through the private placement of common shares, which, along with cash received through continuing product sales, will be sufficient to meet capital requirements for 2012. However, given the uncertain state of the capital markets, we have developed a contingency plan in the event that we are unable to generate cash through the sale of equity, which plan includes the scaling back of certain research and development projects. There were no commitments for capital expenditures as at March 31, 2012.

Off Balance Sheet Arrangements

As at the date of this filing, we did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on the results of operations or financial condition of the Company, including, and without limitation, such considerations as liquidity and capital resources.

Index

Nerium Biotechnology, Inc.

Commitments

Operating leases

At March 31, 2012, we committed to operating lease payments for its various premises in the following amounts:

2012	$	163,166
2013		220,094
2014		199,686
2015		196,691
	$	779,637

In addition, we committed to the following:

(a)

We entered into two separate agreements with one individual. The first agreement, a production and purchasing agreement effective June 2004, entitles the individual to receive $3.25 per vial of Anvirzel sold to third parties in exchange for the use of facilities and production supervision. The second agreement, a consulting agreement effective January 2007, entitles the individual to receive an additional $3.25 per vial of Anvirzel sold to third parties in exchange for consulting services in relation to the production of Anvirzel. Both agreements remain in effect for as long as Anvirzel is produced in Honduras.

(b)	Prior to 2004, we entered into a consulting agreement which entitles the consultant to receive $1.00 per vial of Anvirzel sold to third parties in Central America and $2.00 per vial for patients coming from countries other than Central America, to a maximum of $20,000 per month, expiring in 2018.

(c)	During 2011, the Company entered into a consulting agreement which entitles the consultant to receive 5% commission, based on a per unit price charged on each product produced for commercial sale to the end consumer, that was formulated by the consultant. The agreement expires in 2031

The commissions paid are not significant and are included in cost of sales.

Disclosure Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are designed to provide reasonable assurance that all relevant information is gathered and reported to senior management, including the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), on a timely basis so that appropriate decisions can be made regarding public disclosure. Management of the Company, with the participation of the CEO and CFO, has evaluated the effectiveness of the Company’s disclosure controls and procedures as at March 31, 2012, as required by Canadian securities law. Based on that evaluation, the CEO and CFO have concluded that, as at March 31, 2012, the disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the Company’s annual filings and interim filings (as such terms are defined under Multilateral Instrument 52-109 Certification of Disclosure in Issuers Annual and Interim Filings) and other reports filed or submitted under Canadian securities laws were recorded, processed, summarized and reported within the time period specified by those laws and that material information was accumulated and communicated to management of the Company, including the CEO and CFO, as appropriate to allow for accurate disclosure to be made on a timely basis.

Internal Controls over Financial Reporting

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 US GAAP. The CEO and CFO have concluded that there has been no change in the Company’s internal control over financial reporting during the three-month period ended March 31, 2012 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. As of March 31, 2012, the Company’s internal control over financial reporting was effective.

Item 3.Quantitative and Qualitative Disclosures About Market Risk

There are no disclosures as our stock does not trade.

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Nerium Biotechnology, Inc.

Item 4.Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and the principal financial officer, we are responsible for conducting an evaluation of the effectiveness of the design and operation of our internal controls and procedures, as defined in rules 13a-15(e) under the Securities Exchange Act of 1934, as of the end of the fiscal year covered by this report. Disclosure controls and procedures means that the material information required to be included in our Securities and Exchange Commission (“SEC”) reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms relating to our company, including any consolidating subsidiaries, and was made known to us by others within those entities, particularly during the period when this report was being prepared. Based on this evaluation, our principal executive officer and principal financial officer concluded as of the evaluation date that our disclosure controls and procedures were effective as of March 31, 2012.

Management’s Annual Report on Internal Control over Financial Reporting

As of March 31, 2012, management assessed the effectiveness of our internal control over financial reporting. The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Internal control over financial reporting is defined in rule 13a-15(f) or 15d-15(f) promulgated under the Securities and Exchange Act of 1934, as amended, as a process designed by, or under the supervision of, the Company’s Chief Executive Officer and Chief Financial Officer and effected by the Company’s Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP in the United States of America and includes those policies and procedures that:

(i) Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets;

(ii) Provide reasonable assurance our transactions are recorded as necessary to permit preparation of our financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

(iii) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statement.

In evaluating the effectiveness of our internal control over financial reporting, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control – Integrated Framework. Based on that evaluation, completed by Dennis R. Knocke, our President and Chief Executive Officer, and Joseph B. Nester, our Chief Financial Officer, management concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below.

This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.

The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board was inadequate segregation of duties consistent with control objectives. The aforementioned material weakness was identified by our President and Chief Executive Officer, and our Chief Financial Officer, in connection with the review of our interim condensed consolidated financial statements as of March 31, 2012.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting that occurred during the three-month period ended March 31, 2012 that have materially affected, or that are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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Nerium Biotechnology, Inc.

Limitations on the effectiveness of controls

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparations and presentations. 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.

Part II

Item 1.Legal Proceedings

As of May 14, 2012, we had no outstanding legal proceedings.

Item 1A.Risk Factors

Going Concern Opinion

Under United States reporting standards the Company’s auditors issue a going concern footnote to the annual audited financial statement.

Anvirzel™ is Not a Cure for Cancer

Anvirzel™ is not a cure for cancer. Anvirzel™ may or may not have the desired effect of inhibiting the growth of tumors or causing the elimination or reduction of tumors. Effectiveness has not been demonstrated in clinical trials.

Lack of Approval in Major North American Markets

While Anvirzel™ has been approved for sale by the health ministry in Honduras (through the issuance of a Sanitary Register), neither Health Canada nor the USFDA have approved Anvirzel™ for use in Canada or the United States, respectively.

Outside of individual use, the granting of which is at the discretion of the respective agencies, sales of Anvirzel™ in the United States and Canada is limited, the result of which will be limited revenue from major North American markets. We have no regulatory exemptions in either the US or Canada.

While we intend to seek Health Canada and USFDA approval for some of its developmental stage products, there can be no assurance that such approval will ever be granted. Failure to receive such approval may have a material impact on revenue generation by the Company.

Use of Cardiac Glycosides May Cause Unwanted Side Effects

Possible side effects that may be associated with the administration of a cardiac glycoside, such as Anvirzel™, include allergic reaction, nausea, vomiting and atrioventricular block. Such potential side effects may deter some patients from undergoing treatment with Anvirzel™. The Company is not aware of any reports of life-threatening side-effects associated with the use of Anvirzel™.

Combining Therapeutic Dosages of Different Cardiac Glycoside Could Be Dangerous

Cardiac glycosides are well known to be toxic to humans. Overdosing of cardiac glycosides can lead to cardiac arrhythmia, cardiac toxicity and death. Anvirzel™ contains cardiac glycosides in sub-therapeutic amounts. Clinical testing on humans and animals has demonstrated Anvirzel™ and its cardiac glycoside components are below toxic levels and are safe. However, when used in combination with other cardiac glycosides (such as digoxin) for congestive heart failure, Anvirzel™ may have a toxic effect due to the patient exceeding the maximum tolerated dosage for cardiac glycosides.

Positive Immune Response Not Independently Proven

Positive immune response after treatment with our antiviral drugs is based on evidence gathered from internal clinical trials and has not been verified by independent third parties. A positive immune response does not equal a cure. There is no evidence that oleandrin has cured, or has the ability to cure, any viral-related diseases. The Company does not claim that use of the antiviral drugs will cause a positive immune response.

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Nerium Biotechnology, Inc.

Lack of Physician Acceptance

Physician education and acceptance of a medical product in the major markets is limited to scientific journals, news media, and experience with treating patients that have chosen to add alternative treatment to their therapies until a product is approved in their respective countries. As Anvirzel™ has not been approved by either Health Canada or the USFDA, the ability for the Company to educate physicians as to the potential benefits of Anvirzel™ may be limited.

The Company’s Products, including Anvirzel™, May Become Obsolete

The biotechnology industry has been characterized by the frequent introduction of new products. Accordingly, we may be adversely affected by the new products and technology developed by its competitors. In addition, as the potential benefits of oleander extract enter the public domain, our competitors may seek to develop, on an expedited basis, products which compete with our products.

GENERAL RISK FACTORS

An investment in securities of the Company should be considered highly speculative due to the nature of our business and its stage of development and should be considered only by investors who can afford the total loss of their investment.

An investment in securities of the Company involves a significant degree of risk. The risks related to the Company and its business includes the following:

Marketability

There is no market for the common shares and shareholders may not be able to resell them.

Necessity for Additional Capital

We have limited cash and revenues. We may need to raise further capital through the sale of additional equity capital to continue to implement our business plan. We anticipate the need for additional capital to fully implement our business plan over the next twelve months.

Speculative Nature of Securities

There is no assurance that we will be successful in implementing our business plan. We have limited funds available for it and one source of significant future funds presently available to us is through the sale of equity capital. The shares of the Company are speculative.

Currency Risk

We are exposed to currency risk as a part of the Subsidiaries' business is carried out in Honduran Lempira and we maintain Honduran Lempira denominated bank accounts but use U.S. dollars as our reporting currency. Unfavorable changes in the exchange rate between Honduran Lempira and U.S. dollars may materially affect the foreign exchange gain/losses. We do not use derivative instruments to reduce our exposure to foreign currency risk.

Reliance on Key Personnel

Our success depends, in large part, upon the continuing contributions of its key technical, marketing, sales and management personnel. The loss of the service of several key people within a short period of time could have a material adverse effect upon our financial condition and operations. Our future success is also dependent upon its continuing ability to attract and retain other highly qualified personnel. Competition for such personnel is intense, and our inability to attract and retain additional key employees could have a material adverse effect on our financial condition and operations.

Dependence on Ability to Obtain Technical and Administrative Staff

We anticipate that we will require more administrative, executive, scientific, engineering and manufacturing employees. We have no binding arrangements to fulfill our staffing requirements and there is no assurance we will be able to successfully accomplish this requirement. If the Company is not able to do so, it will diminish the Company’s ability to operate effectively.

The Company Operates in a Competitive Market Sector

The medical, drug and biotechnology businesses are highly competitive. The Company and its products will be competing with various other manufacturers with existing technological support and acceptance in the same markets the Company will target. Many of these other products are well-established, have substantial sales volume, and are produced and marketed by companies with much greater financial resources, facilities, organization and experience than the Company. If the potential benefits of oleander extract enter the public domain, competitive companies with substantially more resources than the Company may try to develop products competitive with the Company’s products.

Index

Nerium Biotechnology, Inc.

Intellectual Property Protection may be Uncertain

In respect of certain of its proprietary rights, the Company may need to secure licenses from third parties and/or assignments of rights from independent contractors. This is particularly applicable to intellectual property which may arise under sponsored research agreements with public universities. While no licensing agreements have been entered in to to-date, there is no assurance that the Company will secure the necessary licenses or assignments to execute on its business plan. The loss of any proprietary rights which may be protected or protectable under any of the foregoing future intellectual property safeguards may result in the loss of a competitive advantage over present or potential competitors.

The Company has registered the mark Anvirzel™ in certain jurisdictions in Latin America and the Caribbean and plans to apply for additional protection as funds allow, but does not have the rights to use the mark in the United States and Canada. Neither the Company nor its licensors have registered all of its trademarks or copyrights. The Company may decide not to take additional steps to secure its rights in certain copyrights, trademarks and/or patents to which it may be entitled. Failure to do so, in the case of copyrights and trademarks, may reduce the access of the Company to the courts, and to certain remedies of statutory damages and attorneys’ fees, to which it may be entitled in the event of a violation of the Company’s proprietary and intellectual rights by third parties. Similarly, the failure to seek protections of any patentable materials to which the Company may be entitled may result in loss of patent protection should a third party copy the patentable technology or process.

The loss of any proprietary rights which are protectable under any of the foregoing intellectual property safeguards may result in the loss of a competitive advantage over present or potential competitors, with a resulting decrease in the profitability for the Company. There is no guarantee that such a loss of competitive advantage could be remedied or overcome by the Company at a price which the Company would be willing or able to pay.

There has not been any action brought against the Company alleging intellectual property violations.

High Start-up and Operating Risks During Initial Operations

The Company incurred start-up losses during its development period and initial period of operations and will experience lower revenues and operating margins than an established company until the customer base grows to a more optimal operating level. There can be no assurance that we will be able to achieve satisfactory operating results within the expected period of time or develop and have in operation sufficient level of employees to operate the facility.

The Company May Not Be Able to Successfully Develop its Current Product Line

Although the Company believes that its products can be profitably developed and manufactured, there may be unanticipated technological, regulatory and marketing issues that may make the products unfeasible to produce or to market. In addition, delays in the production and release testing of Anvirzel™ in the Company’s pharmaceutical clean room facilities can occur due to unforeseen development obstacles, some of which are beyond the Company’s control. If the Company is unable to complete the products as planned, its revenue and earnings growth could be materially adversely affected.

Failure of Promotional Activities

Although there are certain expectations with respect to the projected results of promotion activities, particular promotions may not reach anticipated levels of success. If early advertising and promotion is not successful, the likelihood of the Company expending all of its funds prior to the Company reaching a level of profitability will be increased.

The Company May Be Unable to Manage Rapid Growth

The Company’s business plan will, if successfully implemented, result in the rapid expansion of its business on a widespread basis. Rapid expansion of the Company’s operations may place a significant strain on the Company’s management, financial and other resources. The ability to manage future growth will depend upon the Company’s ability to monitor operations, control costs, maintain regulatory compliance, maintain effective quality controls and significantly expand internal management and technical, information and accounting systems, and to attract, assimilate and retain additional qualified personnel.

The Company Does Not Carry Product Liability Insurance

Insurance carriers are currently reluctant to provide product liability insurance for biotechnology products due to the limited claims history for such products. The Company has no plans to obtain such insurance and may be unable to secure product liability insurance, or be unable to secure such insurance except on terms unacceptable to the Company. In the event of major product liability litigation or a major award against the Company during a time when the Company has no available insurance, the Company may sustain significant losses of its operating capital.

Index

Nerium Biotechnology, Inc.

The Company is Subject to Extensive Regulation

The healthcare industry is subject to extensive regulation relating to licensure, conduct of operations, ownership of facilities, addition of facilities and services and prices for services. Currently, the Company and many of its patients rely on regulatory guidance applicable to individual use importation of Anvirzel.

Each jurisdiction in which the Company may operate has its own regulatory scheme addressing the development, testing, labeling, manufacturing, registration, notification, clearance or approval, marketing, distribution, record-keeping and reporting requirements for human drugs.

While the Company currently has a Sanitary Register issued by the Ministry of Health of the Republic of Honduras for the manufacture, sale and distribution of Anvirzel™, HIviral and HEP-viral, as well as approvals for sale and distribution in the Republics of El Salvador and Guatemala for Anvirzel™, there can be no assurances that the Sanitary Register will be extended.

Rules and regulations governing the sales of pharmaceuticals are subject to the laws of the issuing countries, as well as the terms and conditions of international treaties. Given that the Company’s pharmaceutical operations take place only in Honduras, the Sanitary Register only shows approval under Honduran regulations for manufacturing, sale, and distribution in Honduras. Additional regulatory approval may be required for some or all products developed by the Company if the Company expands operations to other jurisdictions. Failure to achieve initial approval will require modification and redesign of the Company’s products or, at worst, elimination of the product. The Company may not have the financial resources to modify its products or implement new designs.

Risks Applicable to Selling Products in Foreign Countries

Sales of products in foreign countries expose the Company to certain risks, including the difficulty and expense of maintaining foreign sales distribution channels, barriers to trade, potential fluctuations in foreign currency exchange rates, political and economic instability, availability of suitable export financing, accounts receivable collections, tariff regulations, foreign taxes, export licensing requirements and other foreign regulations that may apply to the export of its products. In addition, the Company may experience difficulties in providing prompt and cost-effective service of its products in foreign countries.

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

During the three months ended March 31, 2012, the Company issued 121,071 shares of its common stock for $121, 070 and exercised 870,000 warrants at $.10 per share for $87,000. The $208,071 received is being used for general working capital.

Item 3.Defaults upon Senior Securities

None

Item 4.Mine Safety Disclosures

None

Item 5.Other Information

None

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Nerium Biotechnology, Inc.

Item 6.Exhibits

Exhibit No.	Name of Exhibit

31.1	Certification of Chief Executive Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a)
31.2	Certification of Chief Financial Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a)
32.1	Certifications pursuant to Securities Exchange Act of 1934 Rule13a-14(b) or 15d-14(b) and 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certifications pursuant to Securities Exchange Act of 1934 Rule 13a-14(b) or 15d-14(b) and 18 U.S.C. SecSection 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

In accordance with the requirements of the Securities Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

NERIUM BIOTECHNOLOGY, INC

	By:	/s/ Dennis R. Knocke
		Dennis R. Knocke
		President and Chief Executive Officer

Dated: May 14, 2012


	By:	/s/ Joseph B. Nester
		Joseph B. Nester
		Vice-President, Chief Financial Officer

Dated: May 14, 2012

NERIUM BIOTECHNOLOGY INC 10-Q