Edgar Filing: NOVADEL PHARMA INC

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 17, 2003,
REGISTRATION NO. 333-__________

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM SB-2
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933

NOVADEL PHARMA INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 2834 22-2407152
------------------------------- ---------------------------- ------------------

(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE) IDENTIFICATION NO.)

NOVADEL PHARMA INC.
31 STATE HIGHWAY 12
FLEMINGTON, NJ 08822
(908) 782-3431
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

GARY A. SHANGOLD, M.D.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
NOVADEL PHARMA INC.
31 STATE HIGHWAY 12
FLEMINGTON, NJ 08822
(908) 782-3431
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER
INCLUDING AREA CODE, OF AGENTS FOR SERVICE)
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COPIES TO:
STUART NEUHAUSER, ESQ.
BROWN RUDNICK BERLACK ISRAELS LLP
120 WEST 45TH STREET
NEW YORK, NEW YORK 10036
(212) 704-0100

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS
SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.

IF THIS FORM IS FILED TO REGISTER ADDITIONAL SECURITIES FOR AN OFFERING
PURSUANT TO RULE 462(B) UNDER THE SECURITIES ACT, PLEASE CHECK THE FOLLOWING BOX
AND LIST THE SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER
EFFECTIVE REGISTRATION STATEMENT FOR THE SAME OFFERING. |_|

IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE
462(C) UNDER THE SECURITIES ACT, CHECK THE FOLLOWING BOX AND LIST THE SECURITIES
ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE REGISTRATION
STATEMENT FOR THE SAME OFFERING. |_|

IF THIS FORM IS POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE 462(D)
UNDER THE SECURITIES ACT, CHECK THE FOLLOWING BOX AND LIST THE SECURITIES ACT
REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE REGISTRATION STATEMENT
FOR THE SAME OFFERING. |_|

IF DELIVERY OF THE PROSPECTUS IS EXPECTED TO BE MADE PURSUANT TO RULE
434, PLEASE CHECK THE FOLLOWING BOX. |_|

CONTINUED OVERLEAF

CALCULATION OF REGISTRATION FEE
================================== ================ ==================== ================== =================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED SECURITY OFFERING PRICE REGISTRATION FEE
---------------------------------- ---------------- -------------------- ------------------ -----------------

Common Stock(1) 3,200,345 $2.10(2) $6,720,724.50 $543.71
---------------------------------- ---------------- -------------------- ------------------ -----------------

Common Stock(3) 840,099 $2.10(2) $1,764,207.90 $142.72
---------------------------------- ---------------- -------------------- ------------------ -----------------

Common Stock(4) 160,017 $2.10(2) $336,035.70 $27.19
---------------------------------- ---------------- -------------------- ------------------ -----------------
Total $713.62
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(1) Common stock outstanding held by selling securityholders.

(2) Estimated solely for purposes of calculating registration fee pursuant
to Rule 457(c) under the Securities Act of 1933, as amended (the "Act")
based upon the closing sales price of the common stock on July 16,
2003, as reported on the NASD OTC Bulletin Board.

(3) These shares of common stock are not outstanding and are issuable upon
exercise of warrants (that are not being registered hereunder) to
purchase common stock held by selling securityholders. In accordance
with Rule 457(g) of the Act, the offering price is based on the highest
of the following: (a) the price at which such warrants may be exercised
or (b) the price of the common stock as determined in accordance with
Rule 457(c) under the Act. See Footnote 2.

(4) These shares of common stock are not outstanding and are issuable upon
exercise of warrants (that are not being registered hereunder) to
purchase common stock held by selling securityholders. In accordance
with Rule 457(g) of the Act, the offering price is based on the highest
of the following: (a) the price at which such warrants may be exercised
or (b) the price of the common stock as determined in accordance with
Rule 457(c) under the Act. See Footnote 2.

--------------------------

Pursuant to Rule 416 of the Act, this registration statement also
covers such indeterminate additional shares of common stock as may become
issuable as a result of stock splits, stock dividends or other similar events.

--------------------------

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

PROSPECTUS SUBJECT TO COMPLETION; DATED JULY 17, 2003

4,200,461 SHARES OF COMMON STOCK

NOVADEL PHARMA INC.

We are registering up to 4,200,461 shares of our common stock for sale
by certain shareholders of our company identified in this prospectus. These
shareholders are referred to throughout this prospectus as "selling
securityholders."

These individuals who wish to sell their shares of our common stock may
offer and sell their shares on a continuous or delayed basis in the future.
These sales may be conducted in the open market or in privately negotiated
transactions and at market prices, fixed prices or negotiated prices. We will
not receive any of the proceeds from the sale of the shares owned by the selling
securityholders but will receive funds from the exercise of their warrants. Such
proceeds will be used for working capital and general corporate purposes.

Our common stock is traded on the OTC Electronic Bulletin Board under
the symbol "NVDL.OB". On July 16, 2003, the closing sales price for the common
stock on the OTC Electronic Bulletin Board was $2.10 per share.

Our principal executive offices are located at 31 State Highway 12,
Flemington, NJ 08822. Our telephone number is (908) 782-3431.

Our common stock being offered by this prospectus involves a high
degree of risk. You should read the "Risk Factors" section beginning on page 7
before you decide to purchase any common stock.

------------------------------------

Neither the Securities and Exchange Commission nor any state commission
has approved or disapproved of these securities or passed upon the adequacy or
accuracy of this prospectus. Nor have they made, nor will they make, any
determination as to whether anyone should buy these securities. Any
representation to the contrary is a criminal offense.

The date of this Prospectus is _______ __, 2003

The information in this prospectus is not complete and may be changed. These
securities may not be sold until the registration statement filed with the
securities and exchange commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.

TABLE OF CONTENTS

PROSPECTUS SUMMARY........................................................................3
SELECTED FINANCIAL DATA...................................................................6
SAFE HARBOR STATEMENTS UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.........6
RISK FACTORS..............................................................................7
USE OF PROCEEDS..........................................................................14
SELLING SECURITYHOLDERS..................................................................15
PLAN OF DISTRIBUTION.....................................................................17
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.............................20
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT...........................24
DESCRIPTION OF SECURITIES................................................................25
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES......28
OUR BUSINESS.............................................................................29
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS....39
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...........................................42
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS................................45
EXECUTIVE COMPENSATION...................................................................46
LEGAL MATTERS............................................................................52
EXPERTS..................................................................................52
AVAILABLE INFORMATION....................................................................52

You should rely only on the information contained in this document. We have not
authorized anyone to provide you with information that is different. This
document may only be used where it is legal to sell these securities. The
information in this document may only be accurate on the date of this document.

PROSPECTUS SUMMARY

This summary highlights certain information contained elsewhere in this
prospectus. You should read the following summary together with the more
detailed information regarding NovaDel and our financial statements and the
related notes appearing elsewhere in this prospectus.

OUR COMPANY

NovaDel (formerly known as Flemington Pharmaceutical Corporation), is
engaged in the development of novel application drug delivery systems for
presently marketed prescription and over-the-counter ("OTC") drugs. Our (both
patented and patent-pending) delivery systems are lingual sprays, enabling drug
absorption through the oral mucosa and more rapid absorption into the
bloodstream than presently available oral delivery systems. Our proprietary
delivery system enhances and greatly accelerates the onset of the therapeutic
benefits which the drugs are intended to produce. We refer to our delivery
system as Immediate-Immediate Release (I2RTM) because our delivery system is
designed to provide therapeutic benefits within minutes of administration. Our
development efforts for our novel drug delivery system are concentrated on drugs
which are already available and proven in the marketplace. In addition to
increasing bioavailability by avoiding metabolism by the liver before entry into
the bloodstream, we believe that our proprietary delivery system offers the
following significant advantages: (i) improved drug safety profile by reducing
the required dosage, including possible reduction of side-effects; (ii) improved
dosage reliability; (iii) allowing medication to be taken without water; and
(iv) improved patient convenience and compliance.

In light of the material expense and delays associated with
independently developing and obtaining approval of pharmaceutical products, we
will seek to develop such products through collaborative arrangements with major
pharmaceutical companies, which will fund that development. Due to our small
revenue base, low level of working capital and the inability to conclude
development agreements with major pharmaceutical companies, we have been unable
aggressively to pursue our product development strategy. We will require
significant additional financing and/or a strategic alliance with a well-funded
development partner to undertake our business plan. See "Management Discussion
and Analysis."

At its inception in 1982, Novadel, then known as Pharmaconsult, was a
consultant to the pharmaceutical industry, focusing on product development
activities of various European pharmaceutical companies. Since 1992 NovaDel has
used its consulting revenues to fund its own product development activities. Our
focus on developing our own products evolved naturally out of our consulting
experience for other pharmaceutical companies. Substantially all of our revenues
previously were derived from our consulting activities. Consulting activities
are no longer a material part of our business. In 1991, we changed our name to
Flemington Pharmaceutical Corporation. Effective October 1, 2002, we changed our
name to NovaDel Pharma Inc. Our principal business address is 31 State Highway
12, Flemington, New Jersey, 08822, and our telephone number is (908) 782-3431.

RECENT PRIVATE OFFERING

In April and May 2003, we sold Units (consisting of common stock and
warrants) to accredited investors. Investors were issued one warrant for each
four shares purchased. The warrants are exercisable for five years, at an
exercise price of $2.00 per share. The securities were sold through Paramount
Capital, Inc., a NASD broker- dealer. The gross proceeds of the private offering
were approximately $4.8 million. For its services as placement agent, we paid
Paramount a 7.5% commission fee of the aggregate amount raised (approximately
$360,000) and also issued to Paramount warrants to purchase 160,017 shares of
common stock at an exercise price of $1.65 and 40,004 shares of common stock at

an exercise price of $2.00. In connection with the offering, we agreed to file a
registration statement with the Securities and Exchange Commission to register
the resale of the shares of common stock and the shares underlying the warrants
(as well as the shares underlying Paramount's warrants). We also agreed that if,
at any time following the closing of the offering and continuing for a period of
two (2) years thereafter, we offer shares of our common stock for sale in a
capital raising transaction, we will permit the investors to purchase such
number of shares of common stock to maintain their pro rata ownership
percentages of NovaDel. We also agreed that if, at any time following the
closing of the offering for a period of one year, we sold shares of common stock
in a capital raising transaction (of at least $1 million) at a per share price
less than $1.50, we will issue to the investors additional shares of common
stock (so that they would receive their original shares at such lower price).

THE OFFERING

Shares outstanding before offering1...................... 17,762,183 shares of common stock.

Shares outstanding offered by selling securityholders.... 3,200,345 shares of common stock.

Shares underlying warrants offered by selling
securityholders ......................................... 1,000,116 shares of common stock.

Plan of distribution..................................... The offering of our shares of common stock
is being made by shareholders of our
company who wish to sell their shares.
Sales of our common stock may be made by
the selling securityholders in the open
market or in privately negotiated
transactions and at market prices, fixed
prices or negotiated prices.

Use of proceeds.......................................... We will not receive any of the proceeds
from the sale of the shares owned by the
selling securityholders. However, we will
receive funds from the exercise of warrants,
if warrants are exercised for cash. Such
funds, if any, will be used for working
capital and general corporate purposes.

-----------
/1/ As of June 15, 2003

SELECTED FINANCIAL DATA

..........The following selected financial data is qualified by reference to, and
should be read in conjunction with, "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included elsewhere in this
Prospectus. The financial information set forth below is audited with respect to
the annual period ended July 31, 2002 and unaudited for the nine month period
ended April 30, 2003, and has been prepared by our management.

--------------------------------------------------- ------------------ ---------------------------------
9 Mos. Ended Years Ended
Apr. 30 July 31
--------------------------------------------------- ------------------ ---------------------------------
2003 2002 2001
--------------------------------------------------- ------------------ ---------------- ----------------
SUMMARY OPERATING DATA
--------------------------------------------------- ------------------ ---------------- ----------------

Consulting Revenues. . . . . . . . . . . . . . . $-0- $339,000 $300,000
--------------------------------------------------- ------------------ ---------------- ----------------
Interest Income . . . . . . . . . . . . . . . . . 40,000 44,000 23,000
--------------------------------------------------- ------------------ ---------------- ----------------
Total Revenues . . . . . . . . . . . . . . . . . 40,000 383,000 323,000
--------------------------------------------------- ------------------ ---------------- ----------------
Expenses . . . . . . . . . . . . . . . . . . . . 4,478,000 4,791,000 1,478,000
-------------------------------------------------- ------------------ ---------------- -----------------
Net Loss Before Taxes. . . . . . . . . . . . . (4,438,000) (4,378,000) (1,155,000)
--------------------------------------------------- ------------------ ---------------- ----------------
Deferred Income Tax Benefit . . . . . . . . . . 84,000 88,000 46,000
--------------------------------------------------- ------------------ ---------------- ----------------
Net Loss. . . . . . . . . . . . . . . . . . . . (4,354,000) (4,290,000) (1,109,000)
--------------------------------------------------- ------------------ ---------------- ----------------

--------------------------------------------------- ------------------ ---------------- ----------------
Net Loss Per Common Share . . . . . . . . . . . $(.30) $(.38) $(.18)
--------------------------------------------------- ------------------ ---------------- ----------------

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--------------------------------------------------- ------------------ ---------------- ----------------
BALANCE DATA SHEET
--------------------------------------------------- ------------------ ---------------- ----------------
Working Capital . . . . . . . . . . . . . . . . . 1,980,000 3,095,000 646,000
--------------------------------------------------- ------------------ ---------------- ----------------
Total Assets . . . . . . . . . . . . . . . . . . 3,642,000 3,839,000 984,000
--------------------------------------------------- ------------------ ---------------- ----------------
Total Liabilities . . . . . . . . . . . . . . . . 747,000 316,000 88,000
--------------------------------------------------- ------------------ ---------------- ----------------
Shareholders' equity. . . . . . . . . . . . . . . 2,895,000 3,523,000 896,000
--------------------------------------------------- ------------------ ---------------- ----------------

SAFE HARBOR STATEMENTS UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995

This prospectus includes "forward-looking statements" as that term is
defined in the Private Securities Litigation Reform Act of 1995. The safe harbor
provisions of the Securities Exchange Act of 1934 and the Securities Act of 1933
apply to forward-looking statements made by us. These statements can be
identified by the use of forward-looking terminology such as "believes,"
"expects," "may," "will," "should," "plans," "future," "intends," "continue,"
"estimate" or "anticipates" or the negatives or variations of these terms, and
other comparable terminology. In addition, any statements discussing strategy
that involve risks and uncertainties are forward-looking.

Forward-looking statements involve risks and uncertainties, including
those risks and uncertainties identified in the section of this prospectus
beginning on page 7 titled "Risk Factors" and those risks and uncertainties
identified elsewhere in, or incorporated by reference into, this prospectus. Due
to these risks and uncertainties, the actual results that we achieve may differ
materially from these forward-looking statements. These forward-looking

statements are based on current expectations, and we assume no obligation to
update this information. In preparing this prospectus, we may have made a number
of assumptions and projections about the future of our business. These
assumptions and projections could be wrong for several reasons including, but
not limited to, those factors identified in the "Risk Factors" section.

You are urged to carefully review and consider the various disclosures
that we make in this prospectus, any subsequent prospectus supplement and in our
other reports filed with the Commission. These disclosures attempt to advise
interested parties of the risk factors that may affect our business and the
market price of our shares of common stock.

RISK FACTORS

You should carefully consider the following risk factors and all other
information contained in this prospectus before investing in our common stock.
Investing in our common stock involves a high degree of risk. Any of the
following risks could adversely affect our business, financial condition and
results of operations and could result in a complete loss of your investment.
The risks and uncertainties described below are not the only ones we may face.

WE HAVE A HISTORY OF LOSSES AND OUR AUDITORS HAVE QUALIFIED THEIR AUDIT
OPINION WITH REGARD TO OUR ABILITY TO CONTINUE AS A GOING CONCERN

We had an accumulated deficit at April 30, 2003 of approximately
$14,167,000. We incurred operating losses in all of the last seven fiscal years
ended July 31 including a net loss of approximately $4,290,000 for the year
ended July 31, 2002 and $4,354,000 for the nine month period ended April 30,
2003. Because we increased our product development activities, we anticipate
that we will incur substantial operating expenses in connection with continued
development, testing and approval of our proposed products, and expect these
expenses will result in continuing and, perhaps, significant operating losses
until such time, if ever, that we are able to achieve adequate product sales
levels. Because our rate of expenses is high, and our very limited resources,
our auditors have qualified their audit opinion with regard to our ability to
continue as a going concern.

WE WILL REQUIRE SIGNIFICANT CAPITAL REQUIREMENTS FOR PRODUCT
DEVELOPMENT AND COMMERCIALIZATION

We have significant capital requirements necessary to fund planned
expenditures in connection with the research, development, testing and approval
of our proposed products. We anticipate, based on our current proposed plans and
assumptions relating to our operations (including the timetable of, and costs
associated with, new product development), that the proceeds of our recent
private placements and projected cash flow from operations will be sufficient to
satisfy our contemplated cash requirements for the remainder of the calendar
year 2003. Due to our small revenue base, low level of working capital and
inability to increase the number of development agreements with pharmaceutical
companies, we have been unable to aggressively pursue our product development
strategy. We will require significant additional financing and/or a strategic
alliance with a well-funded development partner to aggressively pursue our
business plan. We have no current arrangements with respect to, or sources of,
additional financing, and there can be no assurance that additional financing
will be available to us on acceptable terms, if at all. Unless we raise
additional financing or significantly reduce our expenses, we will not have
sufficient funds and we will not be to complete development and
commercialization of our proposed products or continue operating. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

OUR BUSINESS AND REVENUE IS DEPENDENT ON THE SUCCESSFUL DEVELOPMENT OF
OUR PRODUCTS

Revenue received from our product development consists of payments by
pharmaceutical companies for research and bioavailability studies, pilot
clinical trials, and similar milestone-related payments. Our future growth and
profitability will be dependent upon our ability successfully to raise
additional funds to complete the development of, obtain regulatory approvals
for, and license out or market, our proposed products. Accordingly, our
prospects must be considered in light of the risks, expenses and difficulties
frequently encountered in connection with the establishment of a new business in
a highly competitive industry, characterized by frequent new product
introductions. We anticipate that we will incur substantial operating expenses
in connection with the development, testing and approval of our proposed
products and expect these expenses to result in continuing and, perhaps,
significant operating losses until such time, if ever, that we are able to
achieve adequate levels of sales or license revenues. There can be no assurance
that we will be able to raise additional financing, increase revenues
significantly, or achieve profitable operations.

WE DO NOT HAVE COMMERCIALLY AVAILABLE PRODUCTS

Our principal efforts are the development of, and obtaining regulatory
approvals for, our proposed products. We anticipate that marketing activities
for our proprietary products, whether by us or one or more licensees, will not
begin until 2004 at the earliest. Accordingly, it is not anticipated that we
will generate any revenues from royalties or sales of proprietary products until
regulatory approvals are obtained and marketing activities begin. There can be
no assurance that any of the proposed proprietary products will prove to be
commercially viable, or if viable, that they will reach the marketplace on the
timetables desired by us. The failure or the delay of these products to achieve
commercial viability would have a material adverse effect on us. See "Business -
Proposed Products" and " - Government Regulation."

WE HAVE NOT COMPLETED PRODUCT DEVELOPMENT

The development of our proposed products has not been completed and we
will be required to devote considerable effort and expenditures to complete such
development. In addition to obtaining adequate financing, satisfactory
completion of development, testing, government approval and sufficient
production levels of such products must be obtained before the proposed products
will become available for commercial sale. We do not anticipate generating
material revenue from product sales until perhaps 2004 or thereafter. Other
potential products remain in the conceptual or very early development stage and
remain subject to all the risks inherent in the development of pharmaceutical
products, including unanticipated development problems, and possible lack of
funds to undertake or continue development. These factors could result in
abandonment or substantial change in the development of a specific formulated
product. There can be no assurance that any of our proposed products will be
successfully developed, be developed on a timely basis or be commercially
accepted once developed. The inability to successfully complete development, or
a determination by us, for financial or other reasons, not to undertake to
complete development of any product, particularly in instances in which we have
made significant capital expenditures, could have a material adverse effect on
us.

WE DO NOT HAVE DIRECT CONSUMER MARKETING EXPERIENCE

We have no experience in marketing or distribution at the consumer
level of our proposed proprietary products. Moreover, we do not have the
financial or other resources to undertake extensive marketing and advertising
activities. Accordingly, we intend generally to rely on marketing arrangements,
including possible joint ventures or license or distribution arrangements with
third parties. We have not entered into any significant agreements or
arrangements with respect to the marketing of our proposed products, and there

can be no assurance that we will do so in the future or that any such products
can be successfully marketed. Our strategy to rely on third party marketing
arrangements could adversely affect our profit margins. See "Business -
Marketing and Distribution."

WE MUST COMPLY WITH GOOD MANUFACTURING PRACTICES

The manufacture of our pharmaceutical products will be subject to
current Good Manufacturing Practices ("cGMP") prescribed by the FDA,
pre-approval inspections by the FDA or foreign authorities, or both, before
commercial manufacture of any such products and periodic cGMP compliance
inspections thereafter by the FDA. There can be no assurance that we or any
third party manufacturer will be able to comply with cGMP or satisfy pre- or
post-approval inspections in connection with the manufacture of our proposed
products. Failure or delay by us or any such manufacturer to comply with cGMP or
satisfy pre- or post-approval inspections would have a material adverse effect
on us. See "Business-- Manufacturing."

WE ARE DEPENDENT ON OUR SUPPLIERS

We believe that the active ingredients used in the manufacture of our
proposed pharmaceutical products are presently available from numerous suppliers
located in the United States, Europe, India and Japan.

We believe that certain raw materials, including inactive ingredients,
are available from a limited number of suppliers and that certain packaging
materials intended for use in connection with our spray products currently are
available only from sole source suppliers. Although we do not believe we will
encounter difficulties in obtaining the inactive ingredients or packaging
materials necessary for the manufacture of our products, there can be no
assurance that we will be able to enter into satisfactory agreements or
arrangements for the purchase of commercial quantities of such materials. We
have a written supply agreement with Dynamit Nobel for certain raw materials for
the nitroglycerin lingual spray product. With respect to other suppliers, we
operate primarily on a purchase order basis beyond which there is no contract
memorializing our purchasing arrangements. The inability to enter into
agreements or otherwise arrange for adequate or timely supplies of principal raw
materials and the possible inability to secure alternative sources of raw
material supplies could have a material adverse effect on our ability to arrange
for the manufacture of formulated products. In addition, development and
regulatory approval of our products are dependent upon our ability to procure
active ingredients and certain packaging materials from FDA-approved sources.
Since the FDA approval process requires manufacturers to specify their proposed
suppliers of active ingredients and certain packaging materials in their
applications, FDA approval of a supplemental application to use a new supplier
would be required if active ingredients or such packaging materials were no
longer available from the originally specified supplier, which could result in
manufacturing delays. See "- Business- Raw Materials and Suppliers."

WE FACE INTENSE COMPETITION

The markets which we intend to enter are characterized by intense
competition. We or our licensees may be competing against established
pharmaceutical companies which currently market products which are equivalent or
functionally similar to those we intend to market. Prices of drug products are
significantly affected by competitive factors and tend to decline as competition
increases. In addition, numerous companies are developing or may, in the future,
engage in the development of products competitive with our proposed products. We
expect that technological developments will occur at a rapid rate and that
competition is likely to intensify as enhanced dosage from technologies gain
greater acceptance. Additionally, the markets for formulated products which we
have targeted for development are intensely competitive, involving numerous
competitors and products. Most of our prospective competitors possess

substantially greater financial, technical and other resources than we do.
Moreover, many of these companies possess greater marketing capabilities than we
do, including the resources necessary to enable them to implement extensive
advertising campaigns. There can be no assurance that we will have the ability
to compete successfully. See "Business - Competition."

THE ABSENCE OF PRODUCT LIABILITY INSURANCE COVERAGE MAY AFFECT OUR
BUSINESS

We may be exposed to potential product liability claims by consumers.
We presently maintain no product liability insurance coverage. Although we will
seek to obtain product liability insurance before the commercialization of any
proprietary products, there can be no assurance that we will be able to obtain
such insurance or, if obtained, that any such insurance will be sufficient to
cover all possible liabilities to which we may be exposed. In the event of a
successful suit against us, insufficiency of insurance coverage could have a
material adverse effect on us. In addition, certain food and drug retailers
require minimum product liability insurance coverage as a condition precedent to
purchasing or accepting products for retail distribution. Failure to satisfy
such insurance requirements could impede the ability of us or our distributors
to achieve broad retail distribution of our proposed products, which could have
a material adverse effect on us. See "Business - Product Liability."

EXTENSIVE GOVERNMENT REGULATION MAY AFFECT OUR BUSINESS

The development, manufacture and commercialization of pharmaceutical
products are generally subject to extensive regulation by various federal and
state governmental entities. The FDA, which is the principal United States
regulatory authority, has the power to seize adulterated or misbranded products
and unapproved new drugs, to request their recall from the market, to enjoin
further manufacture or sale, to publicize certain facts concerning a product and
to initiate criminal proceedings. As a result of federal statutes and FDA
regulations, pursuant to which new pharmaceuticals are required to undergo
extensive and rigorous testing, obtaining pre-market regulatory approval
requires extensive time and expenditures. Under the "FDC Act", a new drug may
not be commercialized or otherwise distributed in the United States without the
prior approval of the FDA. The FDA approval processes relating to new drugs
differ, depending on the nature of the particular drug for which approval is
sought. With respect to any drug product with active ingredients not previously
approved by the FDA, a prospective drug manufacturer is required to submit a new
drug application ("NDA"), including complete reports of pre-clinical, clinical
and laboratory studies to prove such product's safety and efficacy. The NDA
process generally requires, before the submission of the NDA, submission of an
IND pursuant to which permission is sought to begin preliminary clinical testing
of the new drug. An NDA, based on published safety and efficacy studies
conducted by others, may also be required to be submitted for a drug product
with a previously approved active ingredient if the method of delivery, strength
or dosage form is changed. Alternatively, a drug having the same active
ingredient as a drug previously approved by the FDA may be eligible to be
submitted under an ANDA, which is significantly less stringent than the NDA
approval process. While the ANDA process requires a manufacturer to establish
bioequivalence to the previously approved drug, it permits the manufacturer to
rely on the safety and efficacy studies contained in the NDA for the previously
approved drug. We believe that products developed in spray dosage form will
require submission of an NDA. We estimate that the development of new
formulations of pharmaceutical products, including formulation, testing and
obtaining FDA approval, generally takes four to seven years for the NDA process.
There can be no assurance that our determinations will prove to be accurate or
that pre-marketing approval relating to our proposed products will be obtained
on a timely basis, or at all. The failure by us to obtain necessary regulatory
approvals, whether on a timely basis, or at all, would have a material adverse
effect on our business.

WE MAY NOT BE ABLE TO PROTECT AND ENFORCE OUR INTELLECTUAL PROPERTY RIGHTS.

Our patents, pending patents and other intellectual property rights in
the United States and in selected other countries may not be allowed or
competitors may challenge the validity or scope of these rights. In addition,
our intellectual property rights may not provide us with a significant
competitive advantage. In addition, competitors may design around our
proprietary technology or develop competing technologies. Effective patent,
trademark, service mark, copyright and trade secret protection may not be
available in every country in which we may offer our product.

We rely on a combination of patents, trademarks, trade secrets,
confidentiality agreements and licensing arrangements to establish and protect
our proprietary technology. Employees, consultants and customers have access to
our proprietary and confidential information. Any misuse or misappropriation of
this intellectual property could have an adverse impact on our business. We take
steps to control access to, and the distribution of, our proprietary
information. We cannot guarantee, however, that such safeguards will protect our
intellectual property and other valuable competitive information. If we fail to
successfully enforce our intellectual property rights, our competitive position
will suffer.

Because our success depends on our proprietary technology, if third
parties infringe our intellectual property, we may be forced to expend
significant resources enforcing our rights or suffer competitive injury. We may
not be able to detect infringement and may lose our competitive position in the
market before we do so.

Although there are no pending lawsuits regarding our technology or
notices that we are infringing upon intellectual property rights of others,
litigation or infringement claims may occur in the future. Such litigation or
claims could result in substantial costs, and diversion of resources and could
have a material adverse effect on our business, financial condition, and results
of operations.

WE ARE DEPENDENT ON EXISTING MANAGEMENT

Our success is substantially dependent on the efforts and abilities of
our President and Chief Executive Officer, Gary A. Shangold, MD, our founder and
Chief Scientific Officer, Harry A. Dugger, III, Ph.D., our Chairman, John Klein,
our Chief Financial Officer, Donald Deitman, our Vice President - Formulation
Development, Mohammed Abd El-Shafy, Ph.D., and our Vice President-New Business
and Product Development, Barry Cohen. Mr. Klein is not required to devote full
time to us. Decisions concerning our business and our management are and will
continue to be made or significantly influenced by these individuals. The loss
or interruption of their continued services would have a materially adverse
effect on our business operations and prospects.

WE ARE CONTROLLED BY CURRENT STOCKHOLDERS, OFFICERS AND DIRECTORS

Our directors, executive officers and principal stockholders and
certain of our affiliates have the ability to influence the election of our
directors and most other stockholder actions. Management and our affiliates
currently beneficially own (including shares they have the right to acquire)
approximately 78% of our common stock. Specifically, Dr. Rosenwald has the
ability to exert significant influence over the election of the Board of
Directors and other matters submitted to our stockholders for approval. These
arrangements may discourage or prevent any proposed takeover of NovaDel,
including transactions in which stockholders might otherwise receive a premium
for their shares over the then current market prices. Such stockholders may
influence corporate actions, including influencing elections of directors and
significant corporate events.

THERE IS A POTENTIAL ADVERSE EFFECT IF WE REDEEM OUR PUBLICLY TRADED
WARRANTS

The 680,000 warrants issued in connection with our initial public
offering may be redeemed by us, at a redemption price of $.10 per warrant, upon
not less then thirty days prior written notice provided the last sale price of
our common stock on the NASD OTC Bulletin Board, Nasdaq (or another national
securities exchange) for twenty consecutive trading days ending within three
days of the notice of redemption, equals or exceeds 200% of the current warrant
exercise price ($5.80), subject to adjustment. Redemption of the warrants could
force the holders thereof to exercise the warrants and pay the exercise price at
a time when it may be disadvantageous for the holders to do so, to sell the
warrants at the then current market price when they might otherwise wish to hold
the warrants, or to accept the redemption price, which is likely to be
substantially less than the market value of the warrants at the time of
redemption. The warrants expire on November 18, 2003.

THE LIMITED PRIOR PUBLIC MARKET AND TRADING MARKET MAY CAUSE POSSIBLE
VOLATILITY IN OUR STOCK PRICE

There has only been a limited public market for our securities and
there can be no assurance that an active trading market in our securities will
be maintained. The OTC Bulletin Board is an unorganized, inter-dealer,
over-the-counter market which provides significantly less liquidity than the
Nasdaq Stock market, and quotes for stocks included on the OTC Bulletin Board
are not listed in the financial sections of newspapers as are those for the
Nasdaq Stock Market. In addition, the stock market in recent years has
experienced extreme price and volume fluctuations that have particularly
affected the market prices of many smaller companies. The trading price of our
common stock is expected to be subject to significant fluctuations in response
to variations in quarterly operating results, changes in analysts' earnings
estimates, announcements of innovations by us or our competitors, general
conditions in the industry in which we operate and other factors. These
fluctuation, as well as general economic and market conditions, may have a
material or adverse effect on the market price of our common stock.

PENNY STOCK REGULATIONS MAY IMPOSE CERTAIN RESTRICTIONS ON
MARKETABILITY OF OUR SECURITIES

The Securities and Exchange Commission (the "Commission") has adopted
regulations which generally define a "penny stock" to be any equity security
that has a market price (as defined) of less than $5.00 per share or an exercise
price of less than $5.00 per share, subject to certain exceptions. As a result,
our common stock is subject to rules that impose additional sales practice
requirements on broker-dealers who sell such securities to persons other than
established customers and accredited investors (generally those with assets in
excess of $1,000,000 or annual income exceeding $200,000, or $300,000 together
with their spouse). For transactions covered by these rules, the broker-dealer
must make a special suitability determination for the purchase of such
securities and have received the purchaser's written consent to the transaction
prior to the purchase. Additionally, for any transaction involving a penny
stock, unless exempt, the rules require the delivery, prior to the transaction,
of a risk disclosure document mandated by the Commission relating to the penny
stock market. The broker-dealer must also disclose the commission payable to
both the broker-dealer and the registered representative, current quotations for
the securities and, if the broker-dealer is the sole market maker, the
broker-dealer must disclose this fact and the broker-dealer's presumed control
over the market. Finally, monthly statements must be sent disclosing recent
price information for the penny stock held in the account and information on the
limited market in penny stocks. Consequently, the "penny stock" rules may
restrict the ability of broker-dealers to sell our securities and may affect the
ability of investors to sell our securities in the secondary market and the
price at which such purchasers can sell any such securities.

Shareholders should be aware that, according to the Securities and
Exchange Commission, the market for penny stocks has suffered in recent years
from patterns of fraud and abuse. Such patterns include:

o control of the market for the security by one or a few
broker-dealers that are often related to the promoter or
issuer;

o manipulation of prices through prearranged matching of
purchases and sales and false and misleading press releases;

o "boiler room" practices involving high pressure sales tactics
and unrealistic price projections by inexperienced sales
persons;

o excessive and undisclosed bid-ask differentials and markups by
selling broker-dealers; and

o the wholesale dumping of the same securities by promoters and
broker-dealers after prices have been manipulated to a desired
level, along with the inevitable collapse of those prices with
consequent investor losses.

Our management is aware of the abuses that have occurred historically
in the penny stock market. Although we do not expect to be in a position to
dictate the behavior of the market or of broker-dealers who participate in the
market, management will strive within the confines of practical limitations to
prevent the described patterns from being established with respect to our common
stock.

ADDITIONAL AUTHORIZED SHARES OF COMMON STOCK AND PREFERRED STOCK
AVAILABLE FOR ISSUANCE MAY ADVERSELY AFFECT THE MARKET

We are authorized to issue 50,000,000 shares of our common stock. As of
June 15, 2003 there were 17,762,183 shares of our common stock issued and
outstanding. However, the total number of shares of common stock issued and
outstanding does not include the exercise of options or warrants. We have
reserved up to 14,705,409 shares of our common stock for issuance upon exercise
of stock options and warrants. Of the reserved shares, a total of 2,800,000
shares have been reserved among NovaDel's 1992, 1997 and 1998 Stock Option
Plans, of which options to purchase an aggregate of 500,000, 500,000 and
1,247,500 shares have been issued under the respective Plans. Another 3,800,000
shares are reserved for issuance and available for the options granted pursuant
to the terms of certain employment agreements. A significant number of such
options and warrants contain provisions for cashless exercise.

Exercise of the outstanding convertible securities, will reduce the
percentage of common stock held by the public stockholders. Further, the terms
on which we could obtain additional capital during the life of the convertible
securities may be adversely affected, and it should be expected that the holders
of the convertible securities would exercise them at a time when we would be
able to obtain equity capital on terms more favorable than those provided for by
such convertible securities. As a result, any issuance of additional shares of
common stock may cause our current shareholders to suffer significant dilution
which may adversely affect the market.

In addition to the above-referenced shares of common stock which may be
issued without shareholder approval, we have 1,000,000 shares of authorized
preferred stock, the terms of which may be fixed by our Board of Directors. We
presently have no issued and outstanding shares of preferred stock and while we
have no present plans to issue any shares of preferred stock, our Board of
Directors has the authority, without shareholder approval, to create and issue
one or more series of such preferred stock and to determine the voting, dividend
and other rights of holders of such preferred stock. The issuance of any of such
series of preferred stock could have an adverse effect on the holders of common
stock.

SHARES ELIGIBLE FOR FUTURE SALE MAY ADVERSELY AFFECT THE MARKET

Of the 17,762,183 shares of common stock (as of June 15, 2003) held by
our present stockholders, 14,405,924 shares may be available for public sale by
means of ordinary brokerage transactions in the open market pursuant to Rule
144, promulgated under the Act, subject to certain limitations. In general,
under Rule 144, a person (or persons whose shares are aggregated) who has
satisfied a one-year holding period may, under certain circumstances, sell
within any three-month period a number of securities which does not exceed the
greater of 1% of the then outstanding shares of common stock or the average
weekly trading volume of the class during the four calendar weeks prior to such
sale. Rule 144 also permits, under certain circumstances, the sale of
securities, without any limitation, by a person who is not an affiliate of
NovaDel and who has satisfied a two-year holding period. In addition, 3,200,345
shares of our outstanding common stock are being registered for resale by
certain selling stockholders.

We have reserved up to 14,705,409 shares of common stock for issuance
upon exercise of various stock options and warrants, of which 1,600,000 shares
were registered under a Registration Statement on Form S-8 under the Act. Any
substantial sale of common stock pursuant to Rule 144 may have an adverse effect
on the market price of our securities.

LIMITATION ON DIRECTOR/OFFICER LIABILITY

As permitted by Delaware law, our certificate of incorporation limits
the liability of our directors for monetary damages for breach of a director's
fiduciary duty except for liability in certain instances. As a result of our
charter provision and Delaware law, stockholders may have limited rights to
recover against directors for breach of fiduciary duty. In addition, our
certificate of incorporation provides that we shall indemnify our directors and
officers to the fullest extent permitted by law.

WE HAVE NO HISTORY OF PAYING DIVIDENDS ON OUR COMMON STOCK

We have never paid any cash dividends on our common stock and do not
anticipate paying any cash dividends on our common stock in the foreseeable
future. We plan to retain any future earnings to finance growth. If we determine
that we will pay dividends to the holders of our common stock, there is no
assurance or guarantee that such dividends will be paid on a timely basis.

USE OF PROCEEDS

We will not receive any of the proceeds from the sale of the shares
owned by the selling securityholders. However, we will receive funds from the
exercise of warrants, if warrants are exercised. Some of the warrants contain
provisions for cashless exercise. We intend to use all of such proceeds for
working capital and general corporate purposes. Pending use of the proceeds,
they will be invested in short-term, interest bearing securities or money market
funds.

SELLING SECURITYHOLDERS

The following table sets forth the shareholders who are offering their
shares for sale under this prospectus, the amount of shares owned by such
shareholder prior to this offering, the amount to be offered by such shareholder
and the amount to be owned by such shareholders following completion of the
offering. The prior-to-offering figures are as of June 30, 2003. All share
numbers are based on information that these shareholders supplied to us. This
table assumes that each shareholder will sell all of its shares available for
sale during the effectiveness of the registration statement that includes this
prospectus. Shareholders are not required to sell their shares. Beneficial
ownership is determined in accordance with SEC rules and includes voting or
investment power with respect to the securities.

The percentage interest of each selling securityholder is based on the
beneficial ownership of that selling securityholder divided by the sum of the
current outstanding shares of common stock plus the additional shares, if any,
which would be issued to that selling securityholder (but not any other selling
shareholder) when exercising warrants or other rights in the future.

------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------

NUMBER OF
NUMBER OF SHARES SHARES NUMBER OF
POSITION WITH OWNED PRIOR TO PERCENTAGE OF BEING SHARES OWNED
NAME NOVADEL OFFERING SHARES OWNED OFFERED AFTER OFFERING
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------

Mark Berg SEP IRA(1) None 250,000
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
Smithfield Fiduciary, LLC (2) None 125,000
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
Isaac R. Dweck (3) None 125,000
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
Thomas J. Glennen (4) None 166,668
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
Eva Lipton (5) None 20,834
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
Mark Mazzer (6) None 21,250
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
Carmine Sanzo (7) None 41,668
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
Hillel Weinberger (8) None 125,000
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
Trevor Colby IRA (9) None 41,668
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
Robert Falk (10) None 125,000
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
Kash Family Trust (11) None 20,834
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
Eli Levitin (12) None 20,834
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
Howard Schain (13) None 12,500
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
Edmund & Mary Shea Real Property Trust None 125,000
(14)
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
Aaron Wolfson (15) None 33,334
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
South Ferry #2, LP (16) None 416,668
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
Cornell Capital Partners, LP (17) None 83,334
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
Ivette's Isaac Dabah 2002 Trust (18) None 245,834
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
Leonard Grunstein (19) None 20,834
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
The Mataponi Trust (20) None 20,834
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
Riverside Contracting, LLC (21) None 41,668
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
Ivan Kaufman (22) None 83,334
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
Howard Gittis (23) None 208,334
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
Harris R.L. Lydon, Jr. (24) None 20,834
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
Bonnie B. Kazam (25) None 83,334
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
Keys Foundation (26) None 416,668
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
Burton I. Koffman (27) None 20,834
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------

------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------

MHR Capital Partnership, LP (28) (28) 833,334
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
Michael A. Mullen (29) None 20,834
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
The Osterweis Revocable Trust (30) None 41,668
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
Wolcot Capital, Inc (31) None 37,500
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
Dr. Tis Prager (32) None 41,668
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
David W. Ruttenberg (33) None 25,000
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
Gary. J Strauss (34) None 41,668
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
Bruno Widmer (35) None 41,668
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
William Corcoran (36) None 1,938
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
Timothy McInerney (37) None 23,534
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
Peter M. Kash (38) None 52,588
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
Scott Katzmann (39) None 34,238
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
Joshua Kazam (40) None 49,494
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
Michael Rosenman (41) None 8,250
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
David M. Tanen (42) None 10,616
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
Stephen C. Rocamboli (43) None 10,616
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
John Knox (44) None 1,250
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
Basil Christakos (45) None 1,250
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------
JS & Co. (46) None 6,250
------------------------------------------- ----------------- ------------------ --------------- ------------- ---------------

(1) Includes 50,000 warrants exercisable at $2.00 per share which expire in
May, 2008.

(2) Includes 25,000 warrants exercisable at $2.00 per share which expire in
May, 2008.

(3) Includes 25,000 warrants exercisable at $2.00 per share which expire in
May, 2008.

(4) Includes 33,334 warrants exercisable at $2.00 per share which expire in
May, 2008.

(5) Includes 4,167 warrants exercisable at $2.00 per share which expire in
May, 2008.

(6) Includes 4,250 warrants exercisable at $2.00 per share which expire in
May, 2008.

(7) Includes 8,334 warrants exercisable at $2.00 per share which expire in
May, 2008.

(8) Includes 25,000 warrants exercisable at $2.00 per share which expire in
May, 2008.

(9) Includes 8,334 warrants exercisable at $2.00 per share which expire in
May, 2008.

(10) Includes 25,000 warrants exercisable at $2.00 per share which expire in
May, 2008.

(11) Includes 4,167 warrants exercisable at $2.00 per share which expire in
May, 2008.

(12) Includes 4,167 warrants exercisable at $2.00 per share which expire in
May, 2008.

(13) Includes 2,500 warrants exercisable at $2.00 per share which expire in
May, 2008.

(14) Includes 25,000 warrants exercisable at $2.00 per share which expire in
May, 2008.

(15) Includes 6,667 warrants exercisable at $2.00 per share which expire in
May, 2008.

(16) Includes 83,334 warrants exercisable at $2.00 per share which expire in
May, 2008.

(17) Includes 16,667 warrants exercisable at $2.00 per share which expire in
April, 2008.

(18) Includes 49,167 warrants exercisable at $2.00 per share which expire in
April, 2008.

(19) Includes 4,167 warrants exercisable at $2.00 per share which expire in
April, 2008.

(20) Includes 4,167 warrants exercisable at $2.00 per share which expire in
April, 2008.

(21) Includes 8,334 warrants exercisable at $2.00 per share which expire in
April, 2008.

(22) Includes 16,667 warrants exercisable at $2.00 per share which expire in
April, 2008.

(23) Includes 41,667 warrants exercisable at $2.00 per share which expire in
April, 2008.

(24) Includes 4,167 warrants exercisable at $2.00 per share which expire in
April, 2008.

(25) Includes 16,667 warrants exercisable at $2.00 per share which expire in
April, 2008.

(26) Includes 83,334 warrants exercisable at $2.00 per share which expire in
April, 2008.

(27) Includes 4,167 warrants exercisable at $2.00 per share which expire in
April, 2008.

(28) Includes 166,667 warrants exercisable at $2.00 per share which expire
in April, 2008. MHR Capital Partnership, L.P. is controlled by Mark H.
Rachesky, a director of Novadel.

(29) Includes 4,167 warrants exercisable at $2.00 per share which expire in
April, 2008.

(30) Includes 8,334 warrants exercisable at $2.00 per share which expire in
April, 2008.

(31) Includes 7,500 warrants exercisable at $2.00 per share which expire in
April, 2008.

(32) Includes 8,334 warrants exercisable at $2.00 per share which expire in
April, 2008.

(33) Includes 5,000 warrants exercisable at $2.00 per share which expire in
April, 2008.

(34) Includes 8,334 warrants exercisable at $2.00 per share which expire in
April, 2008.

(35) Includes 8,334 warrants exercisable at $2.00 per share which expire in
April, 2008.

(36) Includes 1,550 warrants exercisable at $1.65 per share and 388 warrants
exercisable at $2.00 per share, which each expire in 2008.

(37) Includes 18,827 warrants exercisable at $1.65 per share and 4,707
warrants exercisable at $2.00 per share, which each expire in 2008.

(38) Includes 42,070 warrants exercisable at $1.65 per share and 10,518
warrants exercisable at $2.00 per share, which each expire in 2008.

(39) Includes 27,390 warrants exercisable at $1.65 per share and 6,848
warrants exercisable at $2.00 per share, which each expire in 2008.

(40) Includes 39,595 warrants exercisable at $1.65 per share and 9,899
warrants exercisable at $2.00 per share, which each expire in 2008.

(41) Includes 6,600 warrants exercisable at $1.65 per share and 1,650
warrants exercisable at $2.00 per share, which each expire in 2008.

(42) Includes 8,493 warrants exercisable at $1.65 per share and 2,123
warrants exercisable at $2.00 per share, which each expire in 2008.

(43) Includes 8,493 warrants exercisable at $1.65 per share and 2,123
warrants exercisable at $2.00 per share, which each expire in 2008.

(44) Includes 1,000 warrants exercisable at $1.65 per share and 250 warrants
exercisable at $2.00 per share, which each expire in 2008.

(45) Includes 1,000 warrants exercisable at $1.65 per share and 250 warrants
exercisable at $2.00 per share, which each expire in 2008.

(46) Includes 5,000 warrants exercisable at $1.65 per share and 1,250
warrants exercisable at $2.00 per share, which each expire in 2008.

PLAN OF DISTRIBUTION

IN THIS SECTION OF THE PROSPECTUS, THE TERM "SELLING SECURITYHOLDER"
MEANS AND INCLUDES: (1) THE PERSONS IDENTIFIED IN THE TABLES ABOVE AS THE
SELLING SECURITYHOLDERS AND (2) ANY OF THEIR DONEES, PLEDGEES, DISTRIBUTEES,
TRANSFEREES OR OTHER SUCCESSORS IN INTEREST WHO MAY (A) RECEIVE ANY OF THE
COMMON STOCK OFFERED HEREBY AFTER THE DATE OF THIS PROSPECTUS AND (B) OFFER OR
SELL THOSE SHARES HEREUNDER.

The common stock offered by this prospectus may be sold from time to
time directly by the selling securityholders. Alternatively, the selling
securityholders may from time to time offer those shares through underwriters,
brokers, dealers, agents or other intermediaries. The selling securityholders as
of the date of this prospectus have advised us that at that time there were no
underwriting or distribution arrangements entered into with respect to the
common stock offered hereby. The distribution of the common stock by the selling
securityholders may be effected in one or more transactions that may take place
on the OTC Electronic Bulletin Board (including one or more block transaction)

through customary brokerage channels, either through brokers acting as agents
for the selling securityholders, or through market makers, dealers or
underwriters acting as principals who may resell these shares on the OTC
Electronic Bulletin Board; in privately-negotiated sales; by a combination of
such methods; or by other means. These transactions may be effected at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at other negotiated prices. Usual and customary or specifically
negotiated brokerage fees or commissions may be paid by the selling
securityholders in connection with sales of the common stock.

The selling securityholder may enter into hedging transactions with
broker-dealers in connection with distributions of the shares or otherwise. In
such transactions, broker-dealers may engage in short sales of the shares in the
course of hedging the positions they assume with the selling securityholder. The
selling securityholder also may sell shares short and redeliver the shares to
close out such short positions. The selling securityholder may enter into option
or other transactions with broker-dealers which require the delivery to the
broker-dealer of the shares. The broker-dealer may then resell or otherwise
transfer such shares pursuant to this prospectus.

The selling securityholders also may lend or pledge the shares to a
broker-dealer. The broker-dealer may sell the shares so lent, or upon a default
the broker-dealer may sell the pledged shares pursuant to this prospectus. Any
securities covered by this prospectus which qualify for sale pursuant to Rule
144 promulgated under the Securities Act may be sold under Rule 144 rather than
pursuant to this prospectus. The selling securityholders have advised us that
they have not entered into any agreements, understandings or arrangements with
any underwriters or broker-dealers regarding the sale of their securities. There
is no underwriter or coordinating broker acting in connection with the proposed
sale of shares by the selling securityholders.

Although the common stock covered by this prospectus are not currently
being underwritten, the selling securityholders or their underwriters, brokers,
dealers or other agents or other intermediaries that may participate with the
selling securityholders in any offering or distribution of common stock may be
deemed "underwriters" within the meaning of the Securities Act of 1933, as
amended (the "Securities Act"), and any profits realized or commissions received
by them may be deemed underwriting compensation thereunder.

At the time a particular offer of common stock is made by or on behalf
of a selling securityholder, to the extent required under applicable rules of
the SEC, we will prepare a prospectus supplement setting forth the number of
shares being offered and the terms of the offering, including the name or names
of any underwriters, dealers, brokers, agents or other intermediaries, if any,
the purchase price paid by any underwriter for securities purchased from the
selling securityholders and any discounts, commissions or concessions allowed or
reallowed or paid to others, and the proposed selling price to the public.

Under applicable rules and regulations under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), any person engaged in a
distribution of the common stock offered hereby may not simultaneously engage in
market making activities with respect to the common stock for a period of up to
five days preceding such distribution. The selling securityholders will be
subject to the applicable provisions of the Exchange Act and the rules and
regulations promulgated thereunder, including without limitation Regulation M,
which provisions may limit the timing of purchases and sales by the selling
securityholders.

In order to comply with certain state securities laws, if applicable,
the common stock offered hereby will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In certain states, the common stock
may not be sold unless they are registered or qualified for sale in such state,
or unless an exemption from registration or qualification is available and is
obtained.

All costs, expenses and fees in connection with the registration of the
common stock offered hereby will be borne by NovaDel. However, any brokerage or
underwriting commissions and similar selling expenses, if any, attributable to
the sale of the common stock will be borne by the selling securityholders.

We have agreed to indemnify certain of the selling securityholders
against certain liabilities, including liabilities under the Securities Act of
1933, or to contribute to payments to which any of those securityholders may be
required to make in respect thereof.

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

Officers and directors

The names and ages of the directors and executive officers of
NovaDel are set forth below. All directors are elected annually by the
stockholders to serve until the next annual meeting of the stockholders and
until their successors are duly elected and qualified. Officers are elected
annually by the Board to service at the pleasure of the Board.

Name Age Position with NovaDel
---- --- ---------------------

Gary A. Shangold, M.D. 49 President, Chief Executive Officer and Director
Harry A. Dugger, III, Ph.D. 66 Chief Scientific Officer and Director
John Klein 56 Chairman of the Board
Donald Deitman 60 Chief Financial Officer
Robert F. Schaul, Esq. 63 Secretary and Director
William F. Hamilton, Ph.D. 63 Director
Lawrence J. Kessel, M.D., FACP 49 Director
Robert C. Galler 42 Vice President - Corporate Development
Mohammed Abd El-Shefy, Ph. D. 49 Vice President - Formulation Development
Barry Cohen 40 Vice President - New Business and Product Development
Mark H. Rachesky, M.D. 44 Director

Background of Executive Officers and Directors

GARY SHANGOLD, M.D., President, Chief Executive Officer and Director. Dr.
Shangold joined NovaDel in December 2002 and was elected as a director in March
2003. Previously he had been Vice President and Regulatory Head of Drug
Development at Johnson & Johnson Pharmaceutical Research and Development, LLC.
Before joining the Johnson & Johnson family of companies in 1992, he had been
Medical Director of Obstetrics, Gynecology & Infertility at Serono Laboratories,
Inc. and had been a member of the faculty of Obstetrics and Gynecology at the
University of Chicago's Pritzker School of Medicine from 1983 to 1991. Dr.
Shangold also is an Associate Clinical Professor at the Harvard University
School of Medicine and a Clinical Associate at Massachusetts General Hospital.
Dr. Shangold is a graduate of the University of Pennsylvania and received his
M.D. from Columbia University's College of Physicians and Surgeons.

HARRY A. DUGGER, III, PH.D., Chief Scientific Officer and Director. Dr. Dugger
is the founder of NovaDel and served as its President from its inception in May
1982 until December 2002. Prior to founding NovaDel, from June 1980 to November
1982, Dr. Dugger was employed as Vice President of Research and Development by
Bauers-Kray Associates, a company engaged in the development of pharmaceutical
products. From 1964 to 1980, Dr. Dugger was Associate Section Head for Research
and Development at Sandoz Pharmaceuticals Corporation. Dr. Dugger received an MS
in Chemistry from the University of Michigan in 1960 and received a Ph.D. in
Chemistry from the University of Michigan in 1962.

JOHN H. KLEIN, Chairman of the Board. Mr. Klein joined NovaDel in February 2002
as a consultant and as Chairman of its Board of Directors. From April 1996 to
the present Mr. Klein has been affiliated with a number of enterprises,
including True North Capital (Chairman/ Managing Director ), Kindred Healthcare
(Director), US Interactive, Inc. (Director), America's Plan (Director and
Chairman), Coleman Co., Inc. (Director), Sunbeam Corp. (Director), Bi Logix,
Inc. (Director), Strategic Business and Technology Solutions, LLC (Chairman),

Cybear (Director and Chairman) and Image Vision (Director and Vice Chairman).
From 1996 to 1998, Mr. Klein was Chairman and CEO of Mim Corp. From 1989 to
1996, he was President, CEO and Director of Zenith Laboratories, Inc., which in
1995 merged into IVAX, Inc., of which Mr. Klein is an Executive Officer and
President of its IVAX North American Multi-Source Pharmaceutical Group. Mr.
Klein holds BS and MBA degrees from Roosevelt University, Chicago, Illinois.

DONALD DEITMAN, Chief Financial Officer. Mr. Deitman joined NovaDel in 1998.
From 1988 until joining NovaDel, Mr. Deitman was employed as a business
consultant implementing multi-module MRP II software systems. From 1982 to 1988,
Mr. Deitman was corporate controller for FCS Industries, Inc. of Flemington, New
Jersey. From 1975 to 1982, he was manager of materials and systems for the
Walworth Company operations located in Linden and Elizabeth, NJ and from 1966 to
1975, he was employed by Ortho Pharmaceuticals, Inc. and Ortho Diagnostics, Inc.
Mr. Deitman received a BS in Accounting from Rutgers University in 1972.

ROBERT F. SCHAUL, ESQ., Secretary and Director. Mr. Schaul has been a Director
of NovaDel since November 1991 and was Vice President, Secretary and General
Counsel of NovaDel from November 1991 to February 1995. He has advised NovaDel
since its formation. Mr. Schaul is also a part-time Municipal Court Judge for a
number of New Jersey municipalities. From 1995 to 1998, Mr. Schaul was Vice
President and General Counsel of Landmark Financial Corp. From 1989 to 1991, Mr.
Schaul was a partner with the law firm of Glynn, Byrnes and Schaul, and for
twenty years prior thereto was an attorney and partner with the law firm Kerby,
Cooper, English, Schaul & Garvin, specializing in business law and business
related litigation. Mr. Schaul received a BA from New York University in 1961
and a JD from Harvard University in 1964.

WILLIAM F. HAMILTON, PH.D., Director. Mr. Hamilton was elected to the Board in
March 2003. Dr. Hamilton has served on the University of Pennsylvania faculty
since 1967, and is the Landau Professor of Management and Technology, and
Director of the Jerome Fisher Program in Management and Technology at The
Wharton School and the School of Engineering and Applied Science. He serves as a
director of the following publicly-held companies: Neose Technologies, Inc., a
company developing a drug manufacturing process and proprietary drugs, and
Digital Lightwave, Inc., a manufacturer of telecommunications test equipment.
Dr. Hamilton received his B.S. and M.S. in chemical engineering and his M.B.A.
from the University of Pennsylvania, and his Ph.D. in applied economics from the
London School of Economics. Mr. Hamilton is a member of the Board's Audit
Committee and Compensation Committee.

LAWRENCE J. KESSEL, M.D., FACP, Director. Dr. Kessel was elected to the Board in
March 2003. Dr. Kessel is president of a five physician practice specializing in
Internal Medicine and Geriatrics since 1984. He graduated Magna Cum Laude with a
B.S. degree from the University of Pittsburgh as an honors major in Biology and
subsequently graduated with an MD degree from Temple Medical School. He
completed a formal residency in Internal Medicine at Abington Memorial Hospital,
and is Board Certified in Internal Medicine with added qualification as a
diplomate in Geriatric Medicine. He is an active staff attending and Clinical
Instructor at Chestnut Hill Hospital (University of Pennsylvania affiliate) and
Roxborough Memorial Hospital in Philadelphia, Pennsylvania. Dr. Kessel is a
Board Reviewer for the American Board of Internal Medicine, as well as a Fellow
of the American College of Physicians. He also serves on the advisory board of
Independence Blue Cross. Dr. Kessel presently serves as a director to Cypress
Biosciences, Inc. of San Diego, California, a publicly traded biotechnology
company and Dor BioPharma, Inc. of Lake Forest, Illinois, a publicly traded
biotechnology company. He previously served on the board of Genta, Inc., a
publicly traded biopharmaceutical company. Mr. Kessel is a member of the Board's
Audit Committee and Compensation Committee.

ROBERT C. GALLER, Vice President, Corporate Development. Mr. Galler has been an
employee of NovaDel since September, 2001. He was also a director from December
2001 to March 2003. From 1992 to the present, Mr. Galler has been the President
and Chairman of the Lois Joy Galler Foundation for Hemolytic Uremic Syndrom, a
non-profit charity. From 1999 to 2001, Mr. Galler was Vice President, Corporate
Development and Director of Select Therapeutics, Inc. From 1994 to 1998 Mr.
Galler was a Director and advisor of Synsorb Biotech, Inc. From 1992 to 1994 Mr.
Galler was an equity coordinator at Gallers Financial Group, Inc., and from 1984
to 1992 he was Vice President of Investments with Gruntal & Co. Mr. Galler
attended Hofstra University, Hempstead, N. Y.

MOHAMMED ABD EL-SHAFY, PH.D., Vice President-Formulation Development. Dr.
El-Shafy has been an employee of NovaDel since May of 2002. From 1999 to 2002 he
was employed as a Team Leader and Senior Scientist with Nastech Pharmaceutical
Inc., Hauppauge, New York. From 1998 to 1999 Dr. El-Shafy was a Post-Doctoral
Fellow at the University of Wisconsin's School of Pharmacy. He received his
doctorate in 1997 from the School of Pharmacy, University of Wales, Cardiff,
Wales, UK. From 1983 to 1993 he was an Assistant Lecturer of Pharmaceutical
Sciences on the Faculty of Pharmacy, Al-Azhar University, Cairo, Egypt.

BARRY COHEN, Vice President of New Business and Product Development. Mr. Cohen
joined Novadel in May 2003. Before joining Novadel, he was Vice
President-Business Development at Keryx, and before that held several executive
marketing and business development positions at Novartis Consumer Health. Mr.
Cohen holds a BBA in Marketing from Hofstra University and an MBA in Marketing
from Pace University.

MARK H. RACHESKY, M.D., Director. Dr. Rachesky joined the Board in June 2003.
Dr. Rachesky is the founder and President of MHR Fund Management LLC and
affiliates, investment managers of various private investment funds that invest
in inefficient market sectors, including special situation equities and
distressed investments. Dr. Rachesky is currently on the board of directors of
Neose Technologies, Inc. a company developing a drug manufacturing process and
proprietary drugs. Dr. Rachesky is a graduate of Stanford University School of
Medicine, and Stanford University School of Business. Dr. Rachesky graduated
from the University of Pennsylvania with a major in Molecular Aspects of Cancer.

Compliance with Section 16(a) of the Securities Exchange Act of 1934
--------------------------------------------------------------------

Section 16(a) of the Securities Exchange Act of 1934 requires our
directors and executive officers, and persons who own more than ten percent
(10%) of a registered class of our equity securities, to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of common stock and other equity securities of NovaDel.
Officers, directors and greater than ten percent shareholders are required by
SEC regulation to furnish us with copies of all Section 16(a) forms they file.

To our knowledge, based solely upon its review of the copies of such
reports furnished to us during the year ended July 31, 2002, all Section 16(a)
filing requirements applicable to its officers and directors and greater than
ten percent beneficial owners were satisfied.

DIRECTOR COMPENSATION

The Directors of NovaDel are elected annually and serve until the next
annual meeting of stockholders and until a successor shall have been duly
elected and qualified. Effective February 2002, Directors of NovaDel, who are
not employees or consultants, receive for each Board and committee meeting
attended fees of $1,000 (telephone meetings are compensated at the rate of $750
per meeting). Such Directors are also reimbursed for expenses incurred in

connection with their attendance at meetings of the Board of Directors.
Directors may be removed with or without cause by a vote of the majority of the
stockholders then entitled to vote. There were no other arrangements pursuant to
which any Director was compensated during fiscal 2002 for any services provided
as a Director. Directors who are members of the Compensation and Audit
Committees receive $1,000 per committee meeting. The Chairman of each of the
Audit and Compensation Committees receives an annual fee of $5,000 for serving
as such; other members of the Committees receive an annual fee of $3,000.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information, as of June 15, 2003 with
respect to the beneficial ownership of the outstanding shares of our common
stock (17,762,183 as of such date plus, where relevant for particular beneficial
owners, shares which such beneficial owner has the right to acquire), by (i) any
holder known to us owning more than five percent (5%) of the outstanding shares;
(ii) our officers and directors; and (iii) the directors and officers of NovaDel
as a group:

TITLE OF NAME AND ADDRESS OR AMOUNT AND NATURE OF PERCENTAGE OF
CLASS NUMBER IN GROUP(1) BENEFICIAL OWNERSHIP CLASS
----- ------------------ -------------------- -----

Common Stock Harry A. Dugger, III, Ph.D. 2,104,003(2) 11.26%

Common Stock Gary A. Shangold, M.D. 0(3) --

Common Stock John Klein 666,666(4) 3.62%

Common Stock Donald Deitman 0 --

Common Stock Robert C. Galler 700,000(5) 3.79%

Common Stock Robert F. Schaul, Esq. 274,286(6) 1.52%

Common Stock Mohammed Abd El-Shafy 150,000(7) .84%

Common Stock William F. Hamilton, Ph.D. 0(8) --

Common Stock Lawrence J. Kessel, M.D., FACP 0(8) --

Common Stock Barry Cohen 0(9) --

Common Stock Mark H. Rachesky 833,334(10) 4.65%

Common Stock Lindsay Rosenwald 13,233,334(11) 54.28%

Common Stock Biomedical Investment Group, LLC 5,333,334(11)(12) 26.11%

Common Stock All Executive Officers and Directors as 4,728,289(2)(3)(4)(5)(6)(7)(8)(9) 23.66%
a group (11 persons) (10)

(1) The address of all holders listed herein is c/o NovaDel Pharma Inc., 31
State Highway 12, Flemington, New Jersey 08822.

(2) Includes options to purchase 200,000 shares of common stock (exercisable at
$.70 per share) issued under the 1992 Stock Option Plan which expire in July
2006; options to purchase 50,000 shares of common stock (exercisable at $.70 per
share) under the 1997 Stock Option Plan which expire in December 2006; options
to purchase 95,000 shares of common stock (exercisable at $.70 per share) issued
under the 1998 Stock Option Plan which expire in January 2005; options to
purchase 300,000 shares of common stock issued outside of the Plans (exercisable
at $1.84 per share) which expire November 2007; options to purchase 200,000
shares of common stock issued outside of the Plans (exercisable at $1.30 per
share) which expire October 2007; options to purchase 75,000 shares of common
stock (exercisable at $1.30 per share) issued under the 1998 Stock Option Plan,
which expire in October 2007; 142,000 shares owned by his daughter Christina
Dugger; and 142,000 shares owned by his son Andrew Dugger.

(3) Does not include Non-Plan Options, issued in December 2002, to purchase
1,000,000 shares of common stock at an exercise price of $1.93 per share. These
options vest in three equal annual installments, beginning in December 2003, and
expire in December 2007.

(4) Represents 666,666 Non-Plan Options exercisable at $2.40 per share. Does not
include additional Non-Plan options to purchase 333,334 shares of common stock
at an exercise price of $2.40 per share. These additional options vest in
February 2004. All of the options expire in 2012.

(5) Mr. Galler was granted Non-Plan options to purchase 1,050,000 shares of
common stock, at an exercise price of $0.75 per share. 700,000 of these options
are vested; the remaining 350,000 options are subject to a condition precedent
which has not yet been met. The vested options expire in September 2011.

(6) Includes: 20,000 options, issued under the 1992 Option Plan, to purchase
common stock at an exercise price of $.63 per share, expiring in July, 2006;
25,000 options issued under the 1997 Option Plan, to purchase common stock at an
exercise price of $.63 per share, expiring in March 2008; 10,000 options issued
under the 1998 Option Plan, to purchase common stock at an exercise price of
$.63 per share, expiring in September 2009: 95,000 options issued under the 1998
Option Plan, to purchase common stock at an exercise price of $.63 per share,
expiring in January 2010; 75,000 options issued under the 1998 Option Plan, to
purchase common stock at an exercise price of $2.69 per share, expiring in
February 2012; and, 10,000 options issued under the 1998 Option Plan to purchase
common stock at an exercise price of $1.51 per share, expiring in March 2008.

(7) Represents Non-Plan Options exercisable at $3.02 per share. Does not include
additional Non-Plan Options to purchase 50,000 shares of common stock at an
exercise price of $3.02 per share. The additional options vest in May 2004. All
of such options expire in May 2012. Also includes 50,000 options issued under
the 1998 Option Plan to purchase common stock at an exercise price of $1.51 per
share, expiring in March 2008.

(8) Does not include options to purchase 100,000 shares of common stock at an
exercise price of $1.51 per share, which shall vest in three annual installments
beginning March 2004.

(9) Does not include 75,000 options issued under the 1998 Plan, to purchase
common stock at an exercise price of $2.01 per share. The options expire in May
2008 and vest subject to certain conditions.

(10) Does not include options to purchase 100,000 shares of common stock at an
exercise price of $2.15 per share, which shall vest in three annual installments
beginning June, 2004. Includes 666,667 shares of common stock and warrants to
purchase 166,667 shares of common stock at an exercise price of $2.00 per share
which expire in April, 2008. Such shares and warrants are held by MHR Capital
Partnership, LP, which is controlled by Dr. Rachesky. MHR Capital Partnership is
a selling securityholder. See "Selling securityholders".

(11) Includes 3,950,000 shares of common stock and warrants to purchase
3,950,000 shares of common stock at an exercise price of $.75 per share which
expire in December 2008. Also includes 2,666,667 shares of common stock and
2,666,667 warrants to purchase 2,666,667 shares of common stock, which expire in
March 2009, owned by Biomedical Investment Group, LLC, which is an affiliate of
Lindsay A. Rosenwald.

(12) Includes warrants to purchase 2,666,667 shares of common stock at an
exercise price of $.75 per share which expire in March 2009.

DESCRIPTION OF SECURITIES

GENERAL

The following description of our capital stock does not purport to be
complete and is subject to and qualified in its entirety by our certificate of
incorporation and bylaws, which are included as exhibits to the registration
statement of which this prospectus forms a part, and by the applicable
provisions of Delaware law.

We are authorized to issue up to 50,000,000 shares of common stock,
$.001 par value per share, of which 17,762,183 shares were issued and
outstanding as of June 15, 2003. Our certificate of incorporation authorizes
1,000,000 shares of "blank check" preferred stock, none of which are
outstanding.

COMMON STOCK

Subject to the rights of holders of preferred stock, if any, holders of
shares of our common stock are entitled to share equally on a per share basis in
such dividends as may be declared by our Board of Directors out of funds legally
available therefore. There are presently no plans to pay dividends with respect
to the shares of our common stock. Upon our liquidation, dissolution or winding
up, after payment of creditors and the holders of any of our senior securities,
including preferred stock, if any, our assets will be divided pro rata on a per
share basis among the holders of the shares of our common stock. The common
stock is not subject to any liability for further assessments. There are no
conversion or redemption privileges nor any sinking fund provisions with respect
to the common stock and the common stock is not subject to call. The holders of
common stock do not have any pre-emptive or other subscription rights.

Holders of shares of common stock are entitled to cast one vote for
each share held at all stockholders' meetings for all purposes, including the
election of directors. The common stock does not have cumulative voting rights.

All of the issued and outstanding shares of common stock are fully
paid, validly issued and non-assessable.

PREFERRED STOCK

None of the 1,000,000 "blank check" preferred shares are currently
outstanding. Our Board of Directors have the authority, without further action
by the holders of the outstanding common stock, to issue shares of preferred
stock from time to time in one or more classes or series, to fix the number of
shares constituting any class or series and the stated value thereof, if
different from the par value, and to fix the terms of any such series or class,
including dividend rights, dividend rates, conversion or exchange rights, voting
rights, rights and terms of redemption (including sinking fund provisions), the
redemption price and the liquidation preference of such class or series.

WARRANTS

As of June 15, 2003, we had 9,034,835 warrants outstanding as follows:
680,000 publicly traded warrants exercisable at $5.80 per share; 200,000
warrants exercisable at $1.00 per share; 60,000 warrants exercisable at $2.00
per share; 840,099 warrants exercisable at $2.00 per share; 160,017 warrants
exercisable at $1.65 per share; and the balance at $.75 per share. All of such
warrants, except the publicly traded warrants and the warrants issued to the
investors in the 2003 private placement, contain provisions for cashless
exercise.

The exercise price of the warrants and the number of shares issuable
upon exercise of the warrants are subject to adjustment to protect against
dilution in certain events such as stock splits, combinations, subdivisions and
reclassifications.

PUBLICLY TRADED CLASS A WARRANTS

The following statements are summaries of the Warrant Agreement
(defined below) and are qualified in their entirety by reference to the Warrant
Agreement, which is incorporated herein in its entirety by reference.

In connection with our initial public offering, 680,000 of our publicly
traded warrants were issued pursuant to a warrant agreement (the "Warrant
Agreement") between NovaDel and American Stock Transfer and Trust Company, as
Warrant Agent, and are evidenced by warrant certificates in registered form.

Each warrant entitles the holder to purchase one share of common stock
at an exercise price, subject to adjustment, of $5.80 at any time during the
period ending at 5:00 P.M., New York City time, on November 18, 2003 (the
"Expiration Date"), unless previously redeemed.

The warrants are subject to redemption by NovaDel upon 30 days written
notice at $.10 per Warrant, if the last sale price of the common stock has been
at least 200% of the current warrant exercise price, subject to adjustment, for
at least twenty consecutive trading days ending within three days prior to the
date on which notice of redemption is given. The right to purchase common stock
will be forfeited unless exercised before the date of notice.

Warrants may be exercised upon surrender of the warrant certificate on
or prior to the Expiration Date (or earlier redemption date) at the office of
American Stock Transfer & Trust Company, the Warrant Agent, with the
Subscription Form on the reverse side of the warrant certificate completed and
executed as indicated, accompanied by payment of the full exercise price (by
certified or bank check payable to the order of NovaDel) for the number of
shares with respect to which the warrants are being exercised. Shares issued
upon exercise of warrants and payment in accordance with the terms of the
warrants will be fully paid and non-assessable.

The warrants do not confer upon the warrant holder any voting or other
rights of a stockholder of NovaDel. Upon notice to the warrant holders, NovaDel
has the right to reduce the exercise price or extend the Expiration Date of the
warrants.

Upon the exercise of the warrants, NovaDel may pay NASD members a fee
of 5% of the aggregate exercise price if (i) the market price of our common
stock on the date the warrant is exercised is greater than the then exercise
price of the warrants; (ii) the exercise of the warrant was solicited by a
member of NASD and the customer states in writing that the transaction was
solicited and designates in writing the broker-dealer to receive compensation
for the exercise; (iii) the warrant is not held in a discretionary account; (iv)
disclosure of compensation arrangements were made both at the time of the
offering and at the time of exercise of the warrants; and (v) the solicitation
of exercise of the warrant was not in violation of Regulation M promulgated
under the Exchange Act.

LIMITATION ON LIABILITY OF DIRECTORS

Our certificate of incorporation provides that a director of NovaDel
will not be personally liable to NovaDel or its stockholders for monetary
damages for breach of the fiduciary duty of care as a director, including
breaches which constitute gross negligence. By its terms and in accordance with
the Delaware General Corporation Law, however, this provision does not eliminate
or limit the liability of a director of NovaDel (i) for breach of the director's
duty of loyalty to NovaDel or its stockholders, (ii) for acts or omissions not

in good faith or which involve international misconduct or a knowing violation
of law, (iii) under Section 174 of the Delaware General Corporation Law
(relating to unlawful payments or dividends or unlawful stock repurchases or
redemptions)or (iv) for any improper benefit.

DIVIDEND POLICY

We have not paid any dividends on our common stock since our inception
and do not intend to pay dividends on our common stock in the foreseeable
future. Any earnings which we may realize in the foreseeable future will be
retained to finance the growth of NovaDel.

SHARES ELIGIBLE FOR FUTURE RESALE

Of the 17,762,183 shares of common stock held by our present
stockholders, 14,405,924 shares may be available for public sale by means of
ordinary brokerage transactions in the open market pursuant to Rule 144,
promulgated under the Act, subject to certain limitations. In general, under
Rule 144, a person (or persons whose shares are aggregated) who has satisfied a
one-year holding period may, under certain circumstances, sell within any
three-month period a number of securities which does not exceed the greater of
1% of the then outstanding shares of common stock or the average weekly trading
volume of the class during the four calendar weeks prior to such sale. Rule 144
also permits, under certain circumstances, the sale of securities, without any
limitation, by a person who is not an affiliate of NovaDel and who has satisfied
a two-year holding period. In addition, 3,200,345 shares of our outstanding
common stock have been registered for resale hereunder by the selling
securityholders.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for our common stock is American Stock
Transfer & Trust Company, 59 Maiden Lane, New York, NY 10038.

DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES

Our bylaws provide that we will indemnify our officers and directors
and for all costs and expenses incurred by them on account of their being or
having been directors or officers of NovaDel.

Section 145 of the Delaware General Corporation Law (the "GCL")
empowers a corporation to indemnify its directors and officers and to purchase
insurance with respect to liability arising out of the performance of their
duties as directors and officers. The GCL provides further that the
indemnification permitted thereunder shall not be deemed exclusive of any other
rights to which the directors and officers may be entitled under the
corporation's by-laws, any agreement, vote of stockholders or otherwise.

Article Ninth of our Certificate of Incorporation eliminates the
personal liability of directors to the fullest extent permitted by Section 102
of the GCL. Article Tenth provides for indemnification of all persons whom we
shall have the power to indemnify pursuant to Section 145 of the GCL.

The effect of the foregoing is to require NovaDel to the extent
permitted by law to indemnify the officers and directors of NovaDel for any
claim arising against such persons in their official capacities if such person
acted in good faith and in a manner that he reasonably believed to be in or not
opposed to the best interests of NovaDel, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons controlling
NovaDel pursuant to the foregoing provisions, we have been informed that in the
opinion of the Commission, such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.

OUR BUSINESS

SUMMARY

PRODUCT DEVELOPMENT

NovaDel has the following products under active development, with
clinical trials either having been performed or currently under way, pursuant to
open INDs.

CARDIOVASCULAR (NITROGLYCERIN)

NovaDel's Nitroglycerin product has been formulated and stability
testing has been completed. A United States patent was issued in 1999. An IND
was filed with FDA in early 2002 and clinical trials began in July 2002 and were
completed in December 2002. NovaDel anticipates filing an NDA in the fourth
quarter of 2003.

LORATADINE LINGUAL SPRAY

A loratadine lingual spray formulation has been developed and
successfully undergone stability testing. A Pre-IND meeting with FDA was held in
the third quarter of 2000 and based on the results of that meeting a plan for
further development was prepared. An IND was filed and a pharmacokinetic study
was carried out under this IND to compare the plasma levels following
administration of a 5.0 mg and a 2.5 mg lingual spray to those after
administration of a 10 mg tablet. Both lingual spray doses resulted in higher
plasma levels concentrations than the 10 mg tablet. In the case of the 5.0 mg
dose the peak plasma levels were greater than twice those of the tablet and
those after the 2.5 mg dose were about 50% higher. Therapeutic plasma levels
based on the claimed start of antihistaminic effect for the Claritin(R) tablet
(1-3 hours) were achieved between 24 and thirty minutes. Subsequently, a "wheal
and flare" study was completed, the results of which are currently being
evaluated. NovaDel is presently seeking a partner to complete development of
this product.

CLEMASTINE LINGUAL SPRAY

The formulation of clemastine lingual spray that was terminated by
Novartis in 1998 was revised and a Pre-IND meeting with FDA was held in the
third quarter of 2000. Based on the results of that meeting a plan for further
development was prepared and an IND was filed. A pilot nasal challenge efficacy
study was initiated in the second quarter of 2000. This study tested the
relative response of subjects challenged with allergy producing substances to an
OTC tablet (1.34 mg) and a lingual spray dose of 0.68 mg. The antihistamine was
administered 15 minutes prior to the challenge. The results showed that the
spray had the same antihistaminic effect as the tablet when compared to placebo
at 45 minutes after dosing even though the dose was only half that of the
tablet. Eight of the parameters measured in the study showed a clear trend that
the spray was better than the tablet and the tablet was better than placebo.
Even though the study was only a pilot study, the results appear to support the
concept that a clemastine lingual spray could be a non-sedating antihistamine
product in that there were two cases of drowsiness when the tablet was given and
one with the placebo but none when the lingual spray was administered. A
pharmacokinetic dose-ranging study has been completed and other pilot studies
are planned. NovaDel is seeking a partner to complete development of this
product.

ESTRADIOL SPRAYS

NovaDel presently has two open IND's for the study of Estradiol
therapies and has performed pharmacokinetic studies. Due to questions that
recently have been raised about estrogen therapy, NovaDel is reevaluating the
viability of this development program.

AGREEMENT WITH MANHATTAN PHARMACEUTICALS

In April 2003, we entered into a license and development agreement with
Manhattan Pharmaceuticals, Inc. for the worldwide, exclusive rights to our
lingual spray technology to deliver Pro-pofol for pre-procedural sedation. The
terms of the agreement call for certain milestones and other payments, the first
of which was received during June 2003.

BUSINESS STRATEGY

NovaDel's strategy is to concentrate its product development activities
primarily on those pharmaceuticals for which there already are significant
prescription and OTC sales, where the use of NovaDel's innovative delivery
system will greatly enhance speed of onset of therapeutic effect, reduce side
effects through a reduction of the amount of active drug substance required to
produce a given therapeutic effect, and improve patient convenience or
compliance.

PATENTED AND PATENT PENDING DELIVERY SYSTEMS

NovaDel has certain patents and pending patent applications for its
Lingual (Oral) Spray delivery system. FDA approval is not a prerequisite for
patent approval. The expected year of marketability of a given product will vary
depending upon the specific drug product with which the delivery system will be
utilized. Each individual use of the delivery system will require registration
with and/or approval by the FDA prior to marketability, and the amount of
regulatory oversight required by the FDA will also depend on the specific type
of drug product for which the delivery system is implemented. The following is a
description of the oral dosage delivery system for which patent applications are
either granted or pending:

LINGUAL (ORAL) SPRAY. NovaDel's aerosol and pump spray formulations
release the drug in the form of a fine mist into the mouth for immediate
absorption into the bloodstream via the mucosal membranes. NovaDel believes that
this delivery system offers certain advantages, including improving the safety
profile of certain drugs by lowering the required dosage, improving dose
reliability, and allowing medication to be taken without water. Drug absorption
through the mucosal membranes of the mouth is rapid and minimizes the first-pass
metabolism effect (i.e., total or partial inactivation of a drug as it passes
through the gastrointestinal tract and liver).

PROPOSED PRODUCTS

NovaDel's proposed products described below are subjected to laboratory
testing and stability studies and tested for therapeutic comparison to the
originators' products by qualified laboratories and clinics. To the extent that
two drug products with the same active ingredients are substantially identical
in terms of their rate and extent of absorption in the human body
(bioavailability), they are considered bioequivalent. If the accumulated data
demonstrates bioequivalency, submission is then made to the FDA (through the
filing of an ANDA) for its review and approval to manufacture and market. If the
accumulated data demonstrates that there are differences in the two drugs' rate
and extent of absorption into the human body, or if it is intended to make
additional or different claims regarding therapeutic effect for the newly
developed product, submission is made to the FDA via a NDA for its review and
approval under Section 505(b)(1) or Section 505(b)(2) of the FDC Act. An NDA
submitted under section 505(b)(2) of the FDC Act is generally less complex than
an ordinary NDA. It is NovaDel's expectation that the majority of its products
in development will require the filing of these shorter versions of an NDA
because the products are known chemical entities, but NovaDel or its licensees
will be making new claims as to therapeutic effects or lessened side effects, or
both.

NovaDel estimates that development of new formulations of
pharmaceutical products, including formulation, testing and obtaining FDA
approval, generally takes three to five years for the ANDA process. Development
of products requiring additional clinical studies under Section 505(b)(2) NDAs,
may take four to seven years. There can be no assurance that NovaDel's
determinations will prove to be accurate or that pre-marketing approval relating
to its proposed products will be obtained on a timely basis, or at all. See
"Government Regulation."

NovaDel's currently proposed products fall into the following
therapeutic classes:

o CARDIOVASCULAR (NITROGLYCERIN)

o ANTIHISTAMINE (LORATADINE) LINGUAL SPRAY

A loratadine lingual spray formulation has been developed and
successfully undergone stability testing. An IND was filed in the fourth quarter
of 2000 and a pharmacokinetic study was completed in the second quarter of 2001.
A phase II clinical trial has been completed and the results are being
evaluated. NovaDel is seeking a development partner to complete development of
this product.

o ANTIHISTAMINE (CLEMASTINE) LINGUAL SPRAY

The formulation of clemastine lingual spray was revised, and an IND was
filed. A pilot nasal challenge efficacy study was initiated in the second
quarter of 2000. and was completed in the fourth quarter of 2000. This study
tested the relative response of subjects challenged with allergy producing
substances to an OTC tablet (1.34 mg) and a lingual spray dose of 0.68 mg. The
antihistamine was administered 15 minutes prior to the challenge. The results
showed that the spray had the same antihistaminic effect as the tablet when
compared to placebo at 45 minutes after dosing even though the dose was only
half that of the tablet. Eight of the parameters measured in the study showed a
clear trend that the spray was better than the tablet and the tablet was better
than placebo. Even though the study was only a pilot study, the results support
the concept that a clemastine lingual spray could be an OTC non-sedating
antihistamine product in that there were two cases of drowsiness when the tablet
was given and one with the placebo but none when the lingual spray was
administered. A larger confirmatory study, as well as other pilot studies, is
needed. NovaDel is seeking a partner to complete development of this product.

MARKETING AND DISTRIBUTION

NovaDel intends, generally, to license products developed with its
technology to other drug companies, or to market its products to pharmaceutical
wholesalers, drug distributors, drugstore chains, hospitals, United States
governmental agencies, health maintenance organizations and other drug
companies. It is anticipated that promotion of the NovaDel 's proposed products
will be characterized by an emphasis on their distinguishing characteristics,
such as dosage form and packaging, as well as possible therapeutic advantages of
such products. NovaDel will seek to position its proposed products as
alternatives or as line extensions to brand-name products. NovaDel believes that
to the extent that the NovaDel 's formulated products are patent-protected, such
formulations may offer brand-name manufacturers the opportunity to expand their
product lines. Alternatively, products which are not patented may be offered to
brand-name manufacturers as substitute products after patent protection on
existing products expire.

Inasmuch as NovaDel does not have the financial or other resources to
undertake extensive marketing activities, NovaDel generally intends to seek to
enter into marketing arrangements, including possible joint ventures or license
or distribution arrangements, with third parties.

NovaDel believes that such third-party arrangements will permit it to
maximize the promotion and distribution of its products while minimizing
NovaDel's direct marketing and distribution costs. Except for the agreement with
Manhattan Pharmaceutical, NovaDel has not entered into any agreements or
arrangements with respect to the marketing of its proposed products and there
can be no assurance that it will do so in the future. There can be no assurance
that NovaDel's proposed products can be successfully marketed.

Strategies relating to marketing of NovaDel's other proposed formulated
products have not yet been determined; these will be formulated in advance of
anticipated completion of development activities relating to the particular
formulated product. As a company, NovaDel has no experience in marketing or
distribution of its proposed proprietary products, and NovaDel's ability to fund
such marketing activities will require NovaDel to raise additional funds and/or
consummate a strategic alliance or combination with a well-funded business
partner.

MANUFACTURING

NovaDel has determined to internalize the manufacturing of its proposed
products. Presently, NovaDel has established a pilot manufacturing facility at
its present location, which it believes is adequate for its needs in
manufacturing our requirements for formulation development, stability testing
and clinical supplies. It has also leased a new, larger facility which will have
adequate space for its future foreseeable requirements for production
manufacturing and warehouse space. This new space is presently being prepared
for occupancy, which is anticipated to begin in third quarter of 2003. There can
be no assurance, however, that NovaDel will be successful in constructing and
maintaining such a manufacturing and warehousing facility in compliance with
cGMP. If it is unable to do so, it will become necessary for NovaDel to make
arrangements with a third party contract manufacturer to satisfy NovaDel's
requirements. There can be no assurance that, if necessary, NovaDel will be able
to do so, or be able to do so on commercially satisfactory terms. Failure of
NovaDel to complete successfully the internalization of its manufacturing
requirements, or to conclude an alternative contract manufacturing arrangement,
could have an adverse effect on NovaDel's efforts to obtain regulatory approval
for or to commercialize its products.

It is anticipated that NovaDel will arrange with third-party suppliers
for supplies of active and inactive pharmaceutical ingredients and packaging
materials used in the manufacture of NovaDel's proposed products. It is
NovaDel's present intent to seek to enter into similar manufacturing
arrangements for other products to be developed by it in the future.

The manufacture of NovaDel's pharmaceutical products will be subject to
current Good Manufacturing Processes ("cGMP") prescribed by the FDA, and
pre-approval inspections by the FDA and foreign authorities prior to the
commercial manufacture of any such products. See "Government Regulation" and
"Raw Materials and Suppliers."

In addition, the raw materials necessary for the manufacture of
NovaDel's products will, in all likelihood, be purchased by NovaDel from
suppliers in the United States, Europe and Japan and delivered to its
manufacturing facility by such suppliers.

Accordingly, NovaDel may be subject to various import duties applicable
to both finished products and raw materials and may be affected by various other
import and export restrictions as well as other developments impacting upon
international trade. These international trade factors will, under certain
circumstances, have an impact on the manufacturing cost (which will, in turn,
have an impact on the cost to NovaDel of the manufactured product). To the
extent that transactions relating to the purchase of raw materials involve
currencies other than United States dollars (e.g., Swiss francs and Euros), the
operating results of NovaDel will be affected by fluctuations in foreign
currency exchange rates.

RAW MATERIALS AND SUPPLIERS

NovaDel believes that the active ingredients used in the manufacture of
its proposed pharmaceutical products are presently available from numerous
suppliers located in the United States, Europe and Japan. Generally, certain raw
materials, including inactive ingredients, are available from a limited number
of suppliers and certain packaging materials intended for use in connection with
NovaDel's lingual spray products may be only available from sole source
suppliers. Although NovaDel believes that it will not encounter difficulties in
obtaining the inactive ingredients or packaging materials necessary for the
manufacture of its products, there can be no assurance that NovaDel will be able
to enter into satisfactory agreements or arrangements for the purchase of
commercial quantities of such materials. The failure to enter into agreements or
otherwise arrange for adequate or timely supplies of principal raw materials and
the possible inability to secure alternative sources of raw material supplies
could have a material adverse effect on the ability to manufacture formulated
products.

Development and regulatory approval of NovaDel's pharmaceutical
products are dependent upon NovaDel's ability to procure active ingredients and
certain packaging materials from FDA-approved sources. Since the FDA approval
process requires manufacturers to specify their proposed suppliers of active
ingredients and certain packaging materials in their applications, FDA approval
of a supplemental application to use a new supplier would be required if active
ingredients or such packaging materials were no longer available from the
specified supplier, which could result in manufacturing delays. Accordingly,
NovaDel will seek to locate alternative FDA approved suppliers.

GOVERNMENT REGULATION

Under the Food, Drug and Cosmetic (FDC) Act, a new drug may not be
commercialized or otherwise distributed in the United States without the prior
approval of the FDA.

The FDA approval process relating to a new drug differs, depending on
the nature of the particular drug for which approval is sought. With respect to
any drug product with active ingredients not previously approved by the FDA, a
prospective drug manufacturer is required to submit a NDA, including complete
reports of pre-clinical, clinical and laboratory studies to prove such product's
safety, quality and efficacy. The NDA process generally requires, before the
submission of the NDA, submission of an IND pursuant to which permission is
sought to begin preliminary clinical testing of the new drug. An NDA based on
published safety and efficacy studies conducted by others may also be required
to be submitted for a drug product with a previously approved active ingredient,
if the method of delivery, strength or dosage is changed. Alternatively, a drug
having the same active ingredients as a drug previously approved by the FDA may
be eligible to be submitted under an ANDA, which is significantly less stringent
than the NDA approval process.

While the ANDA process requires a manufacturer to establish
bioequivalence to the previously approved drug, it permits the manufacturer to

rely on the safety and efficacy studies contained in the NDA for the previously
approved drug.

The NDA approval process generally requires between ten (10) to twenty
four (24) months from NDA submission to pre-marketing approval, although in the
case of an NDA submitted pursuant to Section 505(b)(2) of the Act this time
frame may be significantly shorter. NovaDel believes that most products
developed in lingual spray delivery systems (dosage forms) usually will require
submission of an NDA under Section 505(b)(2).

NovaDel estimates that the development of new formulations of
pharmaceutical products, including formulation, testing and obtaining FDA
approval, generally takes four to seven years for the NDA process, although NDAs
submitted under Section 505(b)(2) are generally less complex than an ordinary
NDA and are usually acted upon by the FDA in a shorter period of time. There can
be no assurance that NovaDel's determinations will prove to be accurate or that
pre-marketing approval relating to its proposed products will be obtained on a
timely basis, or at all. The FDA application procedure has become more rigorous
and costly and the FDA currently performs pre-approval and periodic inspections
of each finished dosage form and each active ingredient.

The manufacture of NovaDel's pharmaceutical products will be subject to
cGMP prescribed by the FDA, pre-approval inspection by the FDA before beginning
commercial manufacture of such products and periodic cGMP compliance inspections
by the FDA thereafter.

COMPETITION

The markets which NovaDel intends to enter are characterized by intense
competition. NovaDel will be competing against established pharmaceutical
companies which currently market products which are equivalent or functionally
similar to those NovaDel intends to market. Prices of drug products are
significantly affected by competitive factors and tend to decline as competition
increases. In addition, numerous companies are developing or may, in the future,
engage in the development of products competitive with NovaDel's proposed
products. NovaDel expects that technological developments will occur at a rapid
rate and that competition is likely to intensify as enhanced delivery system
technologies gain greater acceptance. Additionally, the markets for formulated
products which NovaDel has targeted for development are intensely competitive,
involving numerous competitors and products. NovaDel will seek to enhance our
competitive position by focusing our efforts on our novel dosage forms.

PATENTS AND PROTECTION OF PROPRIETARY INFORMATION

NovaDel has applied for United States and foreign patent protection for
the buccal spray delivery systems which are the primary focus of its development
activities as well as for NovaDel's delayed contact allergy topical
formulations. Four United States patents have been issued and other applications
are pending. There can be no assurance, however, that any additional patent
applications will be granted, or, if granted, will provide adequate protection
to NovaDel. NovaDel also intends to rely on whatever protection the law affords
to trade secrets, including unpatented know-how. Other companies, however, may
independently develop equivalent or superior technologies or processes and may
obtain patents or similar rights with respect thereto.

Although NovaDel believes that its technology has been developed
independently and does not infringe on the patents of others, there can be no
assurance that the technology does not and will not infringe on the patents of
others. In the event of infringement, NovaDel could, under certain
circumstances, be required to modify its infringing product or process or obtain
a license. There can be no assurance that NovaDel would be able to do either of
those things in a timely manner or at all, and failure to do so could have a
material adverse effect on NovaDel and its business. In addition, there can be

no assurance that NovaDel will have the financial or other resources necessary
to enforce a patent infringement or proprietary rights violation action or to
defend itself against such actions brought by others. If any of the products
developed by NovaDel infringe upon the patent or proprietary rights of others,
NovaDel could, under certain circumstances, be enjoined or become liable for
damages, which would have a material adverse effect on NovaDel.

NovaDel also relies on confidentiality and nondisclosure arrangements
with its licensees and potential development candidates. There can be no
assurance that other companies will not acquire information which NovaDel
considers to be proprietary. Moreover, there can be no assurance that other
companies will not independently develop know-how comparable to or superior to
that of NovaDel.

BUCCAL NONPOLAR SPRAYS. On April 12, 1996 NovaDel filed an application
with the United States Patent and Trademark Office ("USPTO") with claims
directed to a buccal spray composition containing certain amounts of propellant,
a non-polar solvent, and certain classes of drugs, as well as specific drugs
within those classes. The application also included claims directed to soft-bite
gelatin capsules containing these drugs. On September 1, 1998 the USPTO allowed
the claims directed to buccal spray compositions, but rejected the claims
directed to the capsules. In November 1998 NovaDel deleted the capsule claims
from this application to pursue issuance of a patent with claims directed to the
buccal non-polar spray compositions and methods of administering the class of
drugs using the buccal spray compositions. On September 21, 1999 U.S. Patent No.
5,955,098 issued to NovaDel with claims directed to the above-described buccal
non-polar spray compositions and methods.

On February 21, 1997, NovaDel filed an application under the Patent
Cooperation Treaty ("PCT") for the above-subject matter. The International
Preliminary Examination Authority issued an International Preliminary
Examination Report alleging that the subject matter of the invention lacked
novelty and/or lacked an inventive step. This opinion, with which NovaDel
disagrees, is not dispositive. The opinion, however, may be persuasive to
individual national patent offices in countries where NovaDel enters the
national phase.

With respect to the above PCT application, in October and November 1998
NovaDel entered the national phase in Canada and Europe, respectively, with
claims directed to the above subject matter. On April 16, 2003 European patent
no. EP 0 904 055 was granted to NovaDel with claims directed to propellant
containing buccal non-polar spray compositions containing similar drugs to those
in the corresponding issued U.S. patent. In Canada, a request for examination
was filed with the Canadian Patent Office on February 7, 2002. An office action
has not yet been received from the Canadian Patent Office.

BUCCAL POLAR SPRAYS. On April 12, 1996, NovaDel filed an application
with the USPTO with claims directed to propellant free buccal polar spray
compositions containing certain amounts of a polar solvent and certain classes
of drugs, as well as specific drugs within those classes. The application also
contained claims to soft-bite gelatin capsules containing such drugs. A
continuation-in-part ("CIP") application was filed directed to this subject
matter before the original application was allowed to go abandoned. The USPTO
initially rejected the claims in the CIP application. NovaDel deleted the claims
from this application (including the soft-bite capsule claims) and replaced them
with claims directed to methods of using the above-described propellant free
buccal polar spray compositions to administer the drugs. On August 29, 2000 U.S.
Patent No. 6,110,486 issued to NovaDel with claims directed to the
above-described methods of administering the drugs

On February 21, 1997 NovaDel filed a PCT application directed to the
above-described subject matter. The International Preliminary Examination
Authority issued an International Preliminary Examination Report alleging that
the subject matter of the invention lacked novelty and/or lacked an inventive

step. This opinion, with which NovaDel disagrees, is not dispositive. The
opinion, however, may be persuasive to individual national patent offices in
countries where NovaDel enters the national phase.

With respect to the above PCT application, in October and November 1998
NovaDel entered the national phase in Canada and Europe, respectively. In
Canada, a request for Examination was filed on February 7, 2002. An office
action has not yet been received from the Canadian Patent Office. In Europe,
claims directed to using the propellant free buccal polar spray composition to
manufacture a medicament containing the various classes of drugs is currently
being prosecuted.

BUCCAL NONPOLAR SPRAY FOR NITROGLYCERIN. On April 12,1996 NovaDel filed
an application with the USPTO with claims directed to a buccal spray containing
certain amounts of nitroglycerin, a non-polar solvent, and a propellant The
claims were allowed and on February 9, 1999 the USPTO issued a U.S.Patent No.
5,869,082 to NovaDel for said nitroglycerin buccal spray.

On February 21, 1997, NovaDel filed a PCT application directed to the
above-described subject matter. The International Preliminary Examination
Authority issued an International Preliminary Examination Report alleging that
the subject matter of the invention lacks an inventive step. This opinion, with
which NovaDel disagrees, is not dispositive. The opinion, however, may be
persuasive to individual national patent offices in countries where NovaDel
enters the national phase.

In October 1998, NovaDel entered the national phase in Canada. A
request for examination was filed on February 7, 2002. An office action has not
been received from the Canadian Patent Office.

In November 1998, NovaDel entered the national phase in Europe. A
European patent was granted on April 16, 2003 with claims directed to a buccal
spray containing certain amounts of nitroglycerin, a non-polar solvent, and a
propellant.

BUCCAL POLAR/NONPOLAR SPRAYS OR CAPSULES. On October 1, 1997 NovaDel
filed a PCT application designating a large number of countries including the
United States, directed to the above-described subject matter. The application
included claims directed to a buccal spray composition containing either a polar
solvent with certain classes of drugs, as well as specific drugs in those
classes or a non-polar solvent and a propellant with certain classes of drugs,
as well as specific drugs in those classes; buccal spray composition containing
a non-polar solvent, a flavoring agent, and certain classes of drugs; and
methods of administering these drugs using the buccal spray compositions. The
application also contained claims to soft-bite gelatin capsules containing such
drugs. This application differs from the first three applications, discussed
above, in that the claimed compositions include different classes of drugs from
those described in the first three applications. The International Preliminary
Examination Authority issued an International Preliminary Examination Report
alleging that the subject matter of the invention lacked novelty and/or lacked
an inventive step. This opinion, with which NovaDel disagrees, is not
dispositive. The opinion, however, may be persuasive to individual national
patent offices in countries where NovaDel enters the national phase.

On March 29, 2000, NovaDel entered the national phase in the United
States by filing a CIP of the above-identified PCT application with the USPTO.
The CIP application included claims directed to propellant free buccal spray
compositions containing certain amounts of polar or non-polar solvents, and
certain classes of drugs, as well as specific drugs in those classes; buccal
spray compositions containing certain amounts of a propellant, a polar or
non-polar solvent, and certain classes of drugs, as well as specific drugs in
those classes; and methods of administering said drugs using these types of
buccal spray compositions. The application is currently being prosecuted with

claims directed to the propellant free buccal spray compositions and methods of
administering said drugs using these types of buccal spray compositions.
Subsequently, a divisional application was filed claiming priority to the CIP.
The divisional application is currently being prosecuted with claims directed to
the buccal spray compositions containing certain amounts of a propellant, a
polar or non-polar solvent, and certain classes of drugs, as well as specific
drugs in those classes and methods of administering said drugs using these types
of buccal spray compositions.

Based on the above-identified PCT application, NovaDel entered the
national phase in Canada on March 29, 2000. A request for examination was filed
on August 29, 2002. An office action has not been received from the Canadian
Patent Office.

Based on the above-identified PCT application, NovaDel also entered the
national phase in Japan on April 3, 2000. A request for examination has not yet
been filed. A request for examination must be filed before October 1, 2004 to
pursue patent protection in Japan.

Based on the above-identified PCT application, NovaDel also entered the
national phase in Europe in April 2000. The European application includes claims
directed to propellant free buccal spray compositions containing certain amounts
of a polar solvent and certain classes of drugs, as well as specific drugs in
those classes and the use thereof to prepare a medicament for use as a buccal
spray for transmucossal administration. Four divisional applications based on
this application have also been filed in Europe. The first divisional
application included claims directed to buccal spray compositions containing
certain amounts of a non-polar solvent, a propellant, and certain classes of
drugs, as well as specific drugs in those classes and the use thereof to prepare
a medicament for use as a buccal spray for transmucossal administration. The
second divisional application included claims directed to propellant free buccal
spray compositions containing certain amounts of a non-polar solvent, and
certain classes of drugs, as well as specific drugs in those classes. The third
divisional application included claims directed to buccal spray compositions
containing certain amounts of a non-polar solvent, a propellant, and an alkaloid
or analgesic. The fourth divisional application included claims directed to a
buccal spray composition containing certain amounts of a polar solvent, a
propellant, and certain classes of drugs, as well as specific drugs in those
classes. Each of the above-identified European applications is currently being
prosecuted.

ANTIHISTAMINE SYRUP AND OINTMENT. On November 10, 1997 NovaDel filed an
application with the USPTO with claims directed to a spray composition for
topical administration containing an antihistamine and a polar solvent or an
antihistamine, a non-polar solvent, and a propellant. In October 1998, the PTO
rejected the claims. The claims were deleted and replaced with a claim directed
to a method of controlling the occurrence of delayed contact dermatitis by
applying a lotion composition containing certain amounts of certain
antihistamines in certain amounts of a polar or non-polar solvent. On May 21,
2002 U.S. patent no. 6,391,282 issued to for the above-described method.

On November 9, 1998 NovaDel filed the above-identified application with
the Canadian Patent Office and on October 29, 2002 a request for examination was
filed. An office action has not been received from the Canadian Patent Office.

GENERAL COMMENT WITH RESPECT TO ENTERING THE NATIONAL PHASE FOR EACH OF
THE FOREGOING PCT APPLICATIONS. In addition to its patents and patent
applications in the United States, NovaDel is interested in entering the
national phase and obtaining patent protection in Europe and Canada. At the
present time, it is not possible accurately to predict the expenses involved in
pursuing the foregoing applications in Canada and Europe. For example, NovaDel
anticipates that, in the case of the European applications, it may become
necessary to file appeals with the Board of Appeals in Munich. Expenses may
exceed $100,000 (in the aggregate) before a final disposition is obtained.

PRODUCT LIABILITY

NovaDel may be exposed to potential product liability claims by
consumers. NovaDel does not presently maintain product liability insurance
coverage. Although NovaDel will seek to obtain product liability insurance prior
to the commercialization of any products, there can be no assurance that NovaDel
will obtain such insurance or, if obtained, that any such insurance will be
sufficient to cover all possible liabilities. In the event of a successful suit
against NovaDel, insufficiency of insurance coverage could have a material
adverse effect on NovaDel. In addition, certain food and drug retailers require
minimum product liability insurance coverage as a condition precedent to
purchasing or accepting products for retail distribution. Failure to satisfy
such insurance requirements could impede the ability of NovaDel or its
distributors to achieve broad retail distribution of its proposed products,
which would have a material adverse effect upon the business and financial
condition of NovaDel.

EMPLOYEES

We currently have seventeen (17) full-time employees, six (6) of
whom are executive officers of NovaDel, seven (7) of whom are laboratory or
support personnel and four (4) of whom are engaged in administrative functions.
The success of NovaDel will be dependent in part, upon its ability to hire and
retain additional qualified sales, manufacturing and distribution personnel,
however, there can be no assurance that NovaDel will be able to hire or retain
such necessary personnel.

FACILITIES

Our executive offices are located at 31 State Highway 12,
Flemington, New Jersey. The facility, constituting approximately 4,500 square
feet is occupied under a five-year lease which expires during September 2005.
During fiscal 2002, we paid rent of $63,000 plus real estate taxes. In March
2003, we entered into a 10 year lease for approximately 31,800 sq. feet of
office, laboratory, manufacturing and warehouse space. These premises are
presently being fitted-out. Occupancy should begin, in stages, during the third
quarter 2003.

LEGAL PROCEEDINGS

There are no legal proceedings pending to which we are a party and
we are unaware of any contemplated material legal actions against us.

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

GENERAL

Since its inception, substantially all of our revenues have been
derived from our consulting activities. We have had a history of recurring
losses from operations, giving rise to an accumulated deficit at April 30, 2003
of approximately $14,167,000. For the nine months ending April 30, 2003, we have
had no revenue from consulting as we have shifted our emphasis away from product
development consulting for our clients and to development of our own products.

For the reasons stated above, we anticipate that we will incur
substantial operating expenses in connection with the testing and approval of
our proposed delivery systems, and expect these expenses will result in
continuing and significant operating losses until such time, if ever, that we
are able to achieve adequate sales levels.

In view of our very limited resources, our anticipated expenses and the
competitive environment in which we operate, there can be no assurance that our
operations will be sustained for the duration of the next fiscal year.

RESULTS OF OPERATIONS

FISCAL YEAR 2002 COMPARED TO FISCAL YEAR 2001

Consulting revenues for fiscal 2002 increased approximately $39,000 or
13% to $339,000 from $300,000 for fiscal 2001. This revenue increase for fiscal
2002 was primarily attributable to an increase in project management of clinical
studies for clients.

General expenses increased approximately $271,000 or 39% to $962,000
from $691,000 for fiscal 2001. This increase was due to increased payroll and
inside laboratory expenses. Selling, general and administrative expenses
increased approximately $2,980,000 or 379% to $3,767,000 from $787,000 for
fiscal 2001. This increase was due, primarily, to the value of options issued
for services and had no effect on NovaDel's cash position.

Total costs and expenses for fiscal 2002 increased approximately
$3,251,000 or 220% to approximately $4,729,000 from approximately $1,478,000 for
fiscal 2001.

This increase includes approximately: $2,208,000 in outside consultant
fees primarily due to options issued to consultants; $288,000 in payroll expense
primarily due to additional employees and the establishment of a vacation pay
accrual; $357,000 in legal & professional fees; $131,000 in bad debt expense;
$92,000 in employee recruiting and relocation; $51,000 in depreciation and
amortization expense due to the earlier purchases of laboratory equipment;
$40,000 in laboratory expenses due to additional lab employees; $34,000 in
travel expenses; $28,000 in public company expenses due primarily to an increase
in the number of outside directors and the increased number of board meetings
held during the 2002 Period; $22,000 in trade show and conference expenses;
$19,000 in rent expenses due to increased rents for NovaDel's facilities,
occupied in October 2000 and the establishment of NovaDel's Florida office
during October 2001; $19,000 in insurance expenses due to increased premiums for
directors and officers coverage and additional clinical studies coverage; and,
$12,000 in outside services.

Decreases in costs and expenses for the 2002 Period, as compared to the
2001 Period, includes an approximate $71,000 in laboratory testing and clinical
studies costs due primarily to NovaDel's earlier decision to establish an
internal laboratory.

A buy-out of a consultant's contract, during the 2002 Period, resulted
in an approximate $32,000 increase in expenses.

Interest income for fiscal 2002 increased approximately $21,000 or 91%
to $44,000 from $23,000 for fiscal 2001. The interest income increase was
primarily attributable to an increased average cash balance in conjunction with
reduced interest rates for the 2002 year.

Deferred income tax benefit for fiscal 2002 was approximately $88,000
compared to approximately $47,000 for fiscal 2001. These benefits resulted from
the sale of NovaDel's New Jersey net operating losses.

The resulting net loss for fiscal 2002 was $4,290,000 compared to a net
loss of $1,109,000 for fiscal 2001.

THE NINE MONTHS ENDED APRIL 2003 [THE "2003 PERIOD"] AND APRIL 2002 [THE "2002
PERIOD"]

Operating revenues for the 2003 Period decreased approximately $335,000 to $0
from $335,000 for the 2002 Period.

Total costs and expenses for the 2003 Period increased approximately $1,435,000
or 47% to $4,478,000 from $3,043,000 for the 2002 Period. This increase includes
approximately: $665,000 in payroll expenses primarily due to the hiring of
additional employees and an increase of the vacation pay accrual; $362,000 in
legal & professional fees; $140,000 in laboratory testing and clinical studies
costs; $129,000 in consultants fees primarily due to a non-cash charge for
options issued to consultants; $66,000 in depreciation and amortization expenses
due to the earlier purchases of internal laboratory equipment; $51,000 in
employee recruiting; $47,000 in insurance expenses due to additional employees
and generally increased premiums; $28,000 in inside laboratory expenses; $17,000
in trade show and conference expenses; $12,000 in office expenses due to
additional employees; $11,000 in automobile expenses; $11,000 in travel
expenses; $10,000 in outside services primarily due to environmental waste
removal costs and $9,000 in rent expenses.

Costs and expenses decreases for the 2003 period, as compared to the 2002
period, includes approximately: $89,000 in bad debt expense; $32,000 in buy-out
of contract with a consultant; $8,000 in sample purchases primarily due to
returns of earlier purchases and $6,000 in meetings and memberships.

Interest income increased approximately $8,000 or 25% to $40,000 for the 2003
Period from $32,000 for the 2002 Period due to an increased average cash
balance.

Deferred income tax benefit for the 2003 period was approximately $84,000
compared to approximately $88,000 for the 2002 period. These benefits resulted
from the sale of Novadel's New Jersey net operating losses.

The resulting net loss for the 2003 Period was $4,354,000 (net loss per share of
$0.30) compared to a net loss of $2,588,000 (net loss per share of $0.25) for
the 2002 Period.

THE THREE MONTHS ENDED APRIL 2003 [THE "2003 PERIOD"] AND APRIL 2002 [THE "2002
PERIOD"]

Operating revenues for the 2003 Period decreased approximately $81,000 to $0
from $81,000 for the 2002 Period.

Total costs and expenses for the 2003 Period decreased approximately $1,261,000
or 59% to $878,000 from $2,139,000 for the 2002 Period. This decrease includes
approximately: $1,369,000 in consultants fees; $18,000 in travel expenses;
$12,000 in trade shows and conferences and $7,000 in laboratory testing and
clinical studies expenses.

Costs and expenses increases for the 2003 period, as compared to the 2002
period, includes approximately: $145,000 in payroll expense primarily due to the
hiring of additional employees and an increase of the vacation pay accrual;
$42,000 in legal & professional fees; $20,000 in depreciation and amortization
expense due to the earlier purchases of internal laboratory equipment and
$13,000 in public company expenses due to increased directors' fees.

Interest income decreased approximately $10,000 or 59% to $7,000 for the 2003
period from $17,000 for the 2002 period due to a decreased average cash balance.

The resulting net loss for the 2003 Period was $871,000 (net loss per share of
$0.06) compared to a net loss of $2,041,000 (net loss per share of $0.15) for
the 2002 Period.

LIQUIDITY AND CAPITAL RESOURCES

Net cash used in operating activities approximated $2,965,000 for the 2003
Period compared to net cash used in operating activities of approximately
$810,000 for the 2002 Period. Net cash used in operating activities for both the
2003 and 2002 periods was primarily attributable to the net loss of $4,354,000
and $2,588,000, respectively. For the 2003 period, $264,000 was used for
investing activities compared to $179,000 for the 2002 Period. For the 2003
period, $2,511,000 was received from financing activities compared to $4,934,000
for the 2002 period. Total cash flow for the 2003 period decreased approximately
$718,000 as compared to a $3,945,000 increase for the 2002 period.

In May 2003, we completed a private placement, raising an additional $2,006,000
of equity. Before the end of the calendar year, it will be necessary for the
Novadel to obtain additional financing and/or consummate a strategic alliance
with a well funded business partner. There are a number of risks and
uncertainties related to Novadel's attempt to complete a financing or strategic
partnering arrangement that are outside the control of the Novadel. We may not
be able to successfully obtain additional financing on terms acceptable to us,
or at all. These uncertainties raise substantial doubt as to our ability to
continue as a going concern. Our auditors have qualified their audit opinion
with regard to our ability to continue as a going concern.

INFLATION

We do not believe that inflation has had a material effect on our
results of operations during the past three fiscal years. There can be no
assurance that our business will not be affected by inflation in the future.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

To the best of management's knowledge, other than as set forth below,
there were no material transactions, or series of similar transactions, or any
currently proposed transactions, or series of similar transactions, to which
NovaDel was or is to be a party, in which the amount involved exceeds $60,000,
and in which any director or executive officer, or any security holder who is
known by us to own of record or beneficially more than 5% of any class of our
common stock, or any member of the immediate family of any of the foregoing
persons, has an interest.

In September 2001, we entered into a short-term employment agreement
with Robert Galler, who was appointed as Vice President - Corporate Development
and a Director. That agreement provided for the issuance to Mr. Galler of
options to purchase 700,000 shares of our common stock at an exercise price of
$.75 per share. Under the agreement, the vesting of these options was subject to
the satisfaction of certain conditions precedent. In December 2001, the
agreement with Mr. Galler was amended to recognize the accomplishment of the
conditions. Among other things, the term was extended to three years, his
compensation was increased, the options became vested, and he was granted an
additional 350,000 options (on the same terms) which would become vested upon
satisfaction of a condition in the amended agreement.

During November 2001, we cancelled and reissued certain options under
the 1992, 1997 and 1998 Option Plans. An aggregate of 345,000 options were
issued to each of Harry A. Dugger and John J. Moroney at an exercise price of
$.70 per share (110% of the market price), having a term of five years. An

aggregate of 150,000 options were issued to each of Jack Kornreich and Robert
Schaul at an exercise price of $.63 per share (100% of the market price), having
a term of ten years.

During December 2001, we received net proceeds of approximately
$3,000,000 from a private placement of 4,000,000 units, which were purchased by
Lindsay Rosenwald. Each unit consisted of one share of common stock, and a
warrant (which expires December 2008) to purchase an additional share of our
common stock at an exercise price of $.75. As part of the purchase agreement, we
agreed to elect to the Board a Director to be nominated by Dr. Rosenwald (as of
the date hereof, no such nominee had been selected) and to permit Dr. Rosenwald
or a representative of his to attend Board meetings. Appropriate confidentiality
agreements are in place to protect confidential company information. In March
2002, we received net proceeds of approximately $2,000,000 from a private
placement of 2,666,667 additional units at a sale price of $.75 per unit. These
units were purchased by Biomedical Investment Group LLC, which is affiliated
with Dr. Rosenwald. These warrants expire in March 2009.

In February 2002, 187,500 options were issued under the 1998 Option
Plan; 37,500 to John J. Moroney, and 75,000 to each of Jack Kornreich and Robert
Schaul. The options have an exercise price of $2.69 per share and a term of ten
years.

In October 2002, 200,000 non-plan options and 75,000 options under the
1998 Option Plan were issued to Harry A. Dugger. The options have an exercise
price of $1.18 per share and a term of five years.

In February 2002, we entered into a consulting agreement with John H.
Klein, who was simultaneously elected as our chairman of the Board. In February
2003 the agreement was renewed for an additional one year term. Under the
agreement, Mr. Klein was granted non-plan options to purchase 1,000,000 shares
of our common stock at an exercise price of $2.40 per share. The options have a
term of ten years and vest in three equal annual installments, beginning in
February 2003. Mr. Klein is also entitled to certain bonuses, in the form of
stock, stock options or other rights or property, as determined by the Board. In
addition, Mr. Klein is entitled to receive certain success fees (based upon a
percentage of net revenues) upon completion of certain types of corporate
transactions (i.e., strategic partnerships, licensing arrangements and the like)
which are introduced to NovaDel by Mr. Klein. The percentage of net revenue
(which is between 4% - 10%) depends upon the share of profits that NovaDel is
entitled to in such transactions.

In December 2002, we entered into an employment agreement with Gary A.
Shangold. Pursuant to the agreement, Dr. Shangold was granted non-plan options
to purchase 1,000,000 shares of our common stock (at an exercise price of $1.93
per share) which vests over a three year period.

In March 2003, 10,000 options under the 1998 Plan were issued to each
of Messrs. Schaul and Kornreich. The options are exercisable at $1.51 per share
and expire is March 2008.

In March 2003, we issued 100,000 Non-Plan Options to each of Mr.
William Hamilton and Dr. Lawrence Kessel upon their being elected to the Board
of Directors. The options have an exercise price of $1.51, vest in three equal
annual installments beginning in March 2004 and expire in March 2008.

In June, 2003, we issued 100,000 Non-Plan Options to Dr. Mark H.
Rachesky upon his being appointed to the Board of Directors. The options have an
exercise price of $2.15 and vest in three equal annual installments beginning in
June 2004 and expire in June 2008.

In May 2003, we entered into an employment agreement with Barry Cohen.
Pursuant to the agreement, Mr. Cohen was granted 75,000 options under the 1998
Plan (at an exercise price of $2.04 per share). 60,000 of such options vest in

three equal annual installments beginning May 2004. The balance of such options
vest upon the achievement of certain events. These options expire in May 2008.

During fiscal 2002 we paid Mr. Schaul approximately $125,000 for legal
services rendered to NovaDel.

In fiscal 1998, we lent the principal amount of $60,000 to Dr. Dugger
in exchange for a 7% promissory note. The note was due on demand, with interest
due quarterly. This note was paid in full in January 2002.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS

Since the November 1997 closing of the public offering, our common
stock has traded in the over-the-counter market on the National Association of
Securities Dealers, Inc. OTC Bulletin Board System ("OTC.BB"). Since October 1,
2002, the symbol has been "NVDL". Prior thereto, the common stock traded under
the symbol "FLEM". The following table sets forth the range of high and low
closing bid quotations of the common stock as reported by the OTCBB for each
fiscal quarter for the past three fiscal years. High and low bid quotations
represent prices between dealers without adjustment for retail mark-ups,
mark-downs or commissions and may not necessarily represent actual transactions.

Bid Prices
----------
High Low
---- ---

FISCAL 2002
First Quarter (August 1, 2001 through October 31, 2001) .60 .43
Second Quarter (November 1, 2001 through January 31, 2002) 2.30 .63
Third Quarter (February 1, 2002 through April 30, 2002) 3.79 2.40
Fourth Quarter (May 1, 2002 through July 31, 2002) 3.62 1.65

FISCAL 2001
First Quarter (August 1, 2000 through October 31, 2000) 2.125 .969
Second Quarter (November 1, 2000 through January 31, 2001) 1.562 .438
Third Quarter (February 1, 2001 through April 30, 2001) 1.094 .550
Fourth Quarter (May 1, 2001 through July 31, 2001) .950 .510

FISCAL 2000
First Quarter (August 1, 1999 through October 25, 1999) 1.687 0.875
Second Quarter (November 1, 1999 through January 31, 2000) 2.25 .875
Third Quarter (February 1, 2000 through April 30, 2000) 3.375 1.00
Fourth Quarter (May 1, 2000 through July 31, 2000) 1.406 .750

The closing bid price of our common stock as reported by the OTCBB was
$2.10 on July 16, 2003.

As of June 15, 2003 there were approximately 630 record holders of our
common stock.

We have never declared or paid a dividend on our Common Stock, and
management expects that all or a substantial portion of our future earnings will
be retained for expansion or development of our business. The decision to pay
dividends, if any, in the future is within the discretion of the Board of
Directors and will depend upon our earnings, capital requirements, financial
condition and other relevant factors such as contractual obligations. Management

does not anticipate that we will pay dividends on the common stock in the
foreseeable future. Moreover, there can be no assurance that dividends can or
will ever be paid.

EXECUTIVE COMPENSATION

The following table sets forth a summary for the fiscal years ended
July 31, 2002, 2001 and 2000, respectively, of the cash and non-cash
compensation awarded, paid or accrued by NovaDel to NovaDel's Chief Executive
Officer ("CEO") (since December 2002, our Chief Scientific Officer) and its four
most highly compensated officers other than the CEO, who served in such
capacities at the end of fiscal 2002 (collectively, the "Named Executive
Officers"). No other executive officer of NovaDel earned in excess of $100,000
in total annual salary and bonus for 2002, 2001 and 2000 in all capacities in
which such person served NovaDel. There were no restricted stock awards,
long-term incentive plan payouts or other compensation paid during fiscal 2002,
2001 and 2000 to the Named Executive Officers, except as set forth below:

SUMMARY COMPENSATION TABLE

ANNUAL COMPENSATION LONG-TERM COMPENSATION
-------------------------------- -------------------------------------
AWARDS PAYOUTS
-------------------------- ---------
SECURITIES
UNDER-
RESTRICTED LYING
OTHER ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
NAME AND FISCAL SALARY BONUS COMPENSATION AWARD(S) SAR (1) PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($) ($) ($)
------------------------------------ ------- ------------ ----- ------------- -------------------------- ---------- ----------------

Harry A. Dugger, III, Ph.D. 2002 347,000 0 0 0 0 0 10,000
Chief Scientific Officer, formerly (2)
President and CEO
------------------------------------ ------- ------------ ----- ------------- ------------- ------------ ---------- ----------------
2001 182,974 0 0 0 0 0 0
------------------------------------ ------- ------------ ----- ------------- ------------- ------------ ---------- ----------------
2000 226,000 0 0 0 95,000 0 0
------------------------------------ ------- ------------ ----- ------------- ------------- ------------ ---------- ----------------
John H. Klein 2002 150,000 0 0 0 1,000,000 0 36,000
Chairman
------------------------------------ ------- ------------ ----- ------------- ------------- ------------ ---------- ----------------
Donald Deitman 2002 104,400 0 0 0 0 0 4,200
Chief Financial Officer
------------------------------------ ------- ------------ ----- ------------- ------------- ------------ ---------- ----------------
2001 70,800 0 0 0 0 0 0
------------------------------------ ------- ------------ ----- ------------- ------------- ------------ ---------- ----------------
2000 68,000 0 0 0 0 0 0
------------------------------------ ------- ------------ ----- ------------- ------------- ------------ ---------- ----------------
Robert C. Galler 2002 143,600 0 0 0 700,000 0 6,600
Vice President
Corporate Development
------------------------------------ ------- ------------ ----- ------------- ------------- ------------ ---------- ----------------

(1) No Stock Appreciation Rights have been issued.

(2) This amount exceeds the amount of annual compensation payable to Dr.
Dugger under his employment agreement. The reason for this is that
during fiscal 2002 Dr. Dugger was paid certain accrued compensation
from a prior year.

OPTION GRANTS IN LAST FISCAL YEAR
(INDIVIDUAL GRANTS)

The following table sets forth information with respect to the Named
Executive Officers concerning grants of options during fiscal 2002:

----------------------------------------------------------------------------------------------------------------------------------
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
----------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
---------------------------------- -------------------------- -------------------------- ---------------------- ------------------
Name Number of Securities % of Total Options/SARs Exercise or Base Expiration
Underlying Options/SARs Granted to Employees in Price ($/Sh) Date
Granted (#) Fiscal Year
---------------------------------- -------------------------- -------------------------- ---------------------- ------------------

Harry A Dugger III, Ph.D 345,000 16% $0.70 14 Nov. 2011
---------------------------------- -------------------------- -------------------------- ---------------------- ------------------
John H. Klein 1,000,000 47% $2.40 31 Jan. 2012
---------------------------------- -------------------------- -------------------------- ---------------------- ------------------
Donald J. Deitman 0 N/A N/A N/A
---------------------------------- -------------------------- -------------------------- ---------------------- ------------------
Robert Galler 350,000 16% $0.75 4 Dec. 2011
350,000 16% $0.75 11 Dec. 2011
---------------------------------- -------------------------- -------------------------- ---------------------- ------------------

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES

The following table sets forth information with respect to the Named
Executive Officers concerning the exercises of options during fiscal 2002 and
the number and value of unexercised options held as of the end of fiscal 2002.

-------------------------------- ------------------- ------------------- ---------------------- -----------------------
NUMBER OF SECURITIES
UNDERLYING
UNEXERCISED OPTIONS VALUE OF UNEXERCISED
AT FISCAL YEAR END; IN-THE-MONEY OPTIONS
NUMBER OF SHARES (EXERCISABLE/ AT FISCAL YEAR END
Name of Executive ACQUIRED ON UNEXERCISABLE) ($); (EXERCISABLE/
EXERCISE VALUE REALIZED ($) UNEXERCISABLE)
OFFICER
-------------------------------- ------------------- ------------------- ---------------------- -----------------------

Harry A. Dugger, III, Ph.D. 0 - 645,000 / 0 345,000 / 0
-------------------------------- ------------------- ------------------- ---------------------- -----------------------
John H. Klein 0 - 0 / 1,000,000 0 / 0
-------------------------------- ------------------- ------------------- ---------------------- -----------------------
Robert C. Galler 0 - 700,000 / 0 665,000 / 0
-------------------------------- ------------------- ------------------- ---------------------- -----------------------
Donald Deitman 0 - - -
-------------------------------- ------------------- ------------------- ---------------------- -----------------------

The following table sets forth information regarding securities
authorized for issuance as of the end of fiscal 2002 with respect to
compensation we exchanged for consideration in the form of services.

EQUITY COMPENSATION PLAN INFORMATION

============================== ============================ ============================ ============================
Number of securities to be Weighted average exercise
issued upon exercise of price of outstanding Number of securities
outstanding options, options, warrants and remaining available for
Plan Category warrants and rights rights future issuance
============================== ============================ ============================ ============================

(a) (b) (c)
============================== ============================ ============================ ============================
Equity compensation plans
approved by security holders 0 N/A N/A
============================== ============================ ============================ ============================
Equity compensation plans
not approved by security
holders 3,717,472 $1.658 N/A
============================== ============================ ============================ ============================

TOTAL 3,717,472 $1.658 N/A
============================== ============================ ============================ ============================

STOCK OPTION PLANS

NovaDel has three stock option plans, adopted in 1992, 1997 and 1998,
respectively (collectively referred to as the "Plans"). The 1992 and 1997 Plans
provide for the issuance of options to purchase 500,000 shares of common stock,
and the 1998 Plan provides for the issuance of options to purchase 1,800,000
shares of common stock, for a total of 2,800,000 shares. The 1997 Stock Option
Plan is administered by Messrs. Hamilton and Kessel, who constitute the
Compensation Committee of the Board of Directors ("Committee"), and the 1992
Stock Option Plan and 1998 Stock Option Plan are administered by the entire
Board of Directors. For purposes of the following discussion, the term
"Committee" will be used to reference the Committee with respect to the 1997
Stock Option Plan and the entire Board of Directors with respect to the 1992
Stock Option Plan and 1998 Stock Option Plan, as applicable. The Committee has
sole discretion and authority, consistent with the provisions of the Plans, to
select the Eligible Participants to whom options will be granted under the
Plans, the number of shares which will be covered by each option and the form
and terms of the agreement to be used. All employees and officers of NovaDel are
eligible to participate in the Plans.

At June 15, 2003, 500,000, 500,000 and 1,247,500 shares of our common
stock were reserved for issuance pursuant to the 1992, 1997 and 1998 Plans,
respectively. The exercise prices for the outstanding options reserved under the
1992 Plan range between $.63 and $2.00 per share; the exercise prices for the
outstanding options reserved under the 1997 Plan range between $.63 and $2.00
per share; and the exercise prices for the outstanding options reserved under
the 1998 Plan range between $.63 and $2.69 per share.

The Committee is empowered to determine the exercise price of options
granted under the Plans, but the exercise price of ISOs must be equal to or
greater than the fair market value of a share of common stock on the date the
option is granted (110% with respect to optionees who own at least 10% of the
outstanding common stock). The Committee has the authority to determine the time
or times at which options granted under the Plans become exercisable, but
options expire no later than ten years from the date of grant (five years with

respect to Optionees who own at least 10% of the outstanding common stock of
NovaDel). Options are nontransferable, other than by will and the laws of
descent, and generally may be exercised only by an employee while employed by
NovaDel or within 90 days after termination of employment (one year from
termination resulting from death or disability).

No ISO may be granted to an employee if, as the result of such grant,
the aggregate fair market value (determined at the time each option was granted)
of the shares with respect to which ISOs are exercisable for the first time by
such employee during any calendar year (under all such plans of NovaDel and any
parent and subsidiary) exceeds $100,000. The Plans do not confer upon any
employee any right with respect to the continuation of employment by NovaDel,
nor do the Plans interfere in any way with the employee's right or NovaDel's
right to terminate the employee's employment at any time.

NON-PLAN OPTIONS

As of June 15, 2003, we had 4,150,000 non-plan options outstanding as
follows: 1,000,000 options exercisable at $1.93 per share; 600,000 options
exercisable at $1.84 per share; 700,000 options exercisable at $.75 per share;
1,000,000 options exercisable at $2.40 per share; 250,000 options exercisable at
$3.18 per share; 150,000 options exercisable at $3.02 per share; 200,000 options
exercisable at $1.18 per share; and 200,000 options at $1.51 per share.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Messrs. Hamilton and Kessel serve as the members of our Compensation
Committee, which reviews and makes recommendations with respect to compensation
of officers, employees and consultants, including the granting of options under
our 1997 Stock Option Plan. The 1992 and 1998 Stock Option Plans are
administered by the entire Board.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

Compensation of NovaDel's executives is intended to attract, retain and
award persons who are essential to the enterprise. The fundamental policy of
NovaDel's executive compensation program is to offer competitive compensation to
executives that appropriately rewards the individual executive's contribution to
corporate performance. The Board of Directors utilizes subjective criteria for
evaluation of individual performance. The Board focuses on two primary
components of NovaDel's executive compensation program, each of which is
intended to reflect individual and corporate performance: base salary
compensation and long-term incentive compensation. NovaDel has not paid cash
incentive bonuses during fiscal 2002.

Except as set forth herein, NovaDel does not have any annuity,
retirement, pension, deferred or incentive compensation plan or arrangement
under which any executive officer is entitled to benefits, nor does NovaDel have
any long-term incentive plan pursuant to which performance units or other forms
of compensation are paid. Executive officers who qualify will be permitted to
participate in NovaDel 1992, 1997 and 1998 Stock Option Plans which were adopted
in May 1992, February 1997 and June 1998, respectively. In September 1998 the
Board of Directors adopted an investment retirement account plan in which all
employees of NovaDel are eligible to participate. Executive officers may
participate in group life, health and hospitalization plans, if and when such
plans are available generally to all employees. The Compensation Committee is
satisfied that the compensation and stock option plans provided to the officers
of NovaDel are structured and operated to create strong alignment with the
long-term best interests of the NovaDel and its stockholders.

The compensation of NovaDel's Chief Scientific Officer, Dr. Dugger (who
served as NovaDel's President and Chief Executive Officer for fiscal 2002), for
fiscal 2002 consisted of base salary of $248,500. Because of an inadequacy of
cash flow during the first and second quarters of fiscal 2001, Dr. Dugger agreed
to accrue all of his salary until the cash flow situation resolved itself. In
May 2001, Dr. Dugger's salary was resumed and one-half of his accrued salary was
paid out. The remaining half was paid out in January 2002. No bonuses, stock
grants or option grants were awarded to Dr. Dugger during fiscal 2002. The
determination by the Compensation Committee of Dr. Dugger's remuneration is
based upon methods consistent with those used for other senior executives. The
committee considers certain quantitative factors, including NovaDel's financial,
strategic and operating performance for the year. The qualitative criteria
include Dr. Dugger's leadership qualities and management skills, as exhibited by
his innovations, time and effort devoted to NovaDel, and other general
considerations. The Compensation Committee also takes note of comparable
remuneration of other CEOs at similar companies. Based on the performance of
NovaDel, the Compensation Committee believes that Mr. Dugger's compensation was
appropriate.

EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL ARRANGEMENTS

GARY A. SHANGOLD, M.D.. In December 2002, Dr. Shangold entered into a
three-year employment agreement with NovaDel pursuant to which he agreed to
serve as its President and Chief Executive Officer. We agreed to pay Dr.
Shangold an annual base salary of $350,000 and a guaranteed bonus of $150,000.
In addition, Dr. Shangold is eligible to receive: (i) an annual discretionary
bonus of up to $262,500, which shall be determined at the sole discretion of the
Board; and (ii) an investment and fee bonus equal to 5% of all amounts up to an
aggregate of $7,500,000 (i.e., $375,000) invested in, or earned by, NovaDel
during his term. We are obligated to pay Dr. Shangold at least $200,000 on or
before June 30, 2003. Such investment and fee bonus shall be reduced by certain
proceeds received by Dr. Shangold from his former employer. Pursuant to the
agreement, Dr. Shangold was also granted non-plan options to purchase 1,000,000
shares of our common stock (at an exercise price of $1.93 per share) which vest
over a three year period.

HARRY A. DUGGER, III, PH.D. In February 2002, effective January 1,
2002, Dr. Dugger entered into a new three-year employment agreement at a base
salary, for the first year, of $248,500 per year (which increases each year by
the greater of the CPI index or 5%). Except for the increase in base salary,
there was no material difference between the new employment agreement and that
previously in effect.

JOHN KLEIN. In February 2002, Mr. Klein entered into a one-year
consulting agreement (which was renewed in February 2003 for an additional one
year) at a base compensation of $300,000, plus certain fringe benefits of
approximately $72,000 per year. Pursuant to the agreement, he was granted
1,000,000 non-plan options at $2.40 per share. See "Certain relationships and
related transactions." Mr. Klein is also entitled to certain bonuses, in the
form of stock, stock options or other rights or property, as determined by the
Board. In addition, Mr. Klein is entitled to receive certain success fees (based
upon a percentage of net revenues) upon completion of certain types of corporate
transactions (i.e., strategic partnerships, licensing arrangements and the like)
which are introduced to NovaDel by Mr. Klein. The percentage of net revenue
(which is between 4% - 10%) depends upon the share of profits that NovaDel is
entitled to in such transactions.

ROBERT C. GALLER. In September 2001, Mr. Galler entered into a
short-term employment agreement in which he was appointed as our Vice President
- Corporate Development and a Director. The agreement provided for a base salary
of $120,000 per year and the issuance to Mr. Galler of options to purchase
700,000 shares of our common stock at an exercise price of $.75 per share. Under
the agreement, the vesting of these options was subject to the satisfaction of
certain conditions precedent. In December 2001, the agreement with Mr. Galler

was amended to recognize the accomplishment of the conditions. Pursuant to the
amendment, the term was extended to three years, his compensation was increased
to $180,000, the options became vested, and he was granted an additional 350,000
options (on the same terms) which would become vested upon satisfaction of a
condition in the amended agreement. See "Certain relationships and related
transactions."

DONALD DEITMAN. In February 2002, effective January 1, 2002, Mr.
Deitman entered into a three year employment agreement as our Chief Financial
Officer. The agreement provided for a base salary, for the first year, of
$125,000 per year (which increases each year by the greater of the CPI index or
5%). All other provisions of the agreement are the same as those in effect for
our other executives.

MOHAMMED ABD EL-SHAFY, PH.D. In May 2002, we entered into a three year
employment agreement with Dr. El-Shafy, who was appointed Vice
President-Formulation Development. Pursuant to the agreement, he received a base
salary, for the first year, of $110,000, which increased in April 2003 to
$180,000. In addition, he was granted 150,000 non-plan options at $3.02 per
share. Subsequently, in March 2003, Dr. El-Shafy was granted 50,000 options
under the 1998 Option Plan at an exercise price of $1.51.

BARRY COHEN. In May 2003, we entered into a three year employment
agreement with Barry Cohen, who was appointed Vice President-New Business and
Product Development. Pursuant to the agreement, he receives a base salary of
$185,000, plus incentive bonuses. Pursuant to the agreement, he was issued
75,000 options (exercisable at $2.04 per share) under the 1998 Plan. 60,000 of
such options vest in three equal installments commencing May 2004. These options
expire in May 2008. The balance of such options vest upon achievement of certain
objectives.

The foregoing agreements also provide for certain non-competition and
non-disclosure covenants on the part of such executive. However, with respect to
the non-competition covenants, a court may determine not to enforce such
provisions or only partially enforce such provisions. Additionally, each of the
foregoing agreements (other than John Klein) provides for certain fringe
benefits, such as inclusion in pension, profit sharing, stock option, savings,
hospitalization and other benefit plans at such times as NovaDel shall adopt
them.

LEGAL MATTERS

The validity of the common stock offered hereby will be passed upon for
NovaDel by Brown Rudnick Berlack Israels LLP, New York, New York.

EXPERTS

Certain of the financial statements of NovaDel included in this
prospectus and elsewhere in the registration statement, to the extent and for
the periods indicated in their reports, have been audited by Wiss & Company,
LLP, independent certified public accountants, whose reports thereon appear
elsewhere herein and in the registration statement.

AVAILABLE INFORMATION

Reports and other information filed by us with the Commission can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington D.C. 20549, and at
the Commission's New York Regional office at Seven World Trade Center, Suite
1300, New York, New York 10048. Copies of such material can also be obtained
from the Public Reference Section of the Commission, Washington, DC 20549 at
prescribed rates.

This Registration Statement, as well as all amendments thereto and
subsequent reports, have been and will be filed through the Electronic Data
Gathering, Analysis and Retrieval ("EDGAR") system. Documents filed through
EDGAR are publicly available through the Commission's Website at
http:/www.sec.gov.

Statements contained herein as to the contents of any document are
summaries of such documents and, in each instance, reference is hereby made to
the copy of such document filed as an exhibit to the Registration Statement, and
each such statement is qualified in all respects by such reference. All material
information of such exhibits are discussed in this Form SB-2. The Registration
Statement may be inspected and copied at the places set forth above.

INDEX TO FINANCIAL STATEMENTS

FINANCIAL STATEMENT (UNADITED) - April 30, 2003

Page
----

Consolidated Balance Sheets as of April 30, 2003 and July 31, 2002 F-2
Statements of Operations for the Three Months and Nine Months Ended April 30, 2003 and 2002 F-3
Statement of Changes in Shareholders' Equity for the Nine Months Ended April 30, 2003 F-4
Statements of Cash Flows for the Nine Months Ended April 30, 2003 and 2003 F-5
Notes to Financial Statements F-6 thru F-9

Financial Report - July 31, 2002

Independent Auditors' Report F-10
Balance Sheet F-11
Statement of Operations F-12
Statements of Changes in Shareholder' Equity F-13
Statements of Cash Flows F-14
Notes to Financial Statements F-15 thru F-22

NOVADEL PHARMA INC.

BALANCE SHEETS

April 30 July 31,
2003 2002
------------ ------------
(Unaudited) (Note 1)
ASSETS
CURRENT ASSETS:

Cash $ 2,596,000 $ 3,314,000
Accounts receivable - trade, less allowance for
doubtful accounts of $88,000 at April 30, 2003 and
July 31, 2002 -- 1,000
Prepaid expenses and other current assets 131,000 96,000
------------ ------------
Total Current Assets 2,727,000 3,411,000
------------ ------------

FURNITURE, FIXTURES, AND EQUIPMENT, LESS
ACCUMULATED DEPRECIATION 559,000 406,000

OTHER ASSETS 356,000 22,000
------------ ------------
$ 3,642,000 $ 3,839,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)

CURRENT LIABILITIES:
Accounts payable-trade $ 247,000 $ 125,000
Accrued expenses and other current liabilities 500,000 191,000
------------ ------------
Total Current Liabilities 747,000 316,000
------------ ------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY (DEFICIENCY):
Preferred stock, $.01 par value:
Authorized 1,000,000 shares, none issued Common stock, $.001 par value:
Authorized - 50,000,000 shares
Issued and outstanding 16,411,842 and 14,448,817;
respectively 16,000 14,000
Additional paid-in capital 17,046,000 13,322,000
Accumulated Deficit (14,167,000) (9,813,000)
------------ ------------
Total Stockholders' Equity (Deficiency) 2,895,000 3,523,000
------------ ------------
$ 3,642,000 $ 3,839,000
============ ============

See accompanying notes to financial statements.

F-2

NOVADEL PHARMA INC.

STATEMENTS OF OPERATIONS
(Unaudited)

Three Months Ended Nine Months Ended
April 30, April 30,
---------------------------------------------------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------

CONSULTING REVENUES -- $ 81,000 -- $ 335,000

CONSULTING, SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 878,000 2,139,000 4,478,000 3,011,000
------------ ------------ ------------ ------------

LOSS FROM OPERATIONS (878,000) (2,058,000) (4,478,000) (2,676,000)

BUY-OUT OF CONSULTANT'S

CONTRACT -- -- -- (32,000)

INTEREST INCOME 7,000 17,000 40,000 32,000
------------ ------------ ------------ ------------

NET LOSS BEFORE TAXES (871,000) (2,041,000) (4,438,000) (2,676,000)

DEFFERED INCOME TAX BENEFIT -- -- 84,000 88,000
------------ ------------ ------------ ------------

NET LOSS $ (871,000) $ (2,041,000) $ (4,354,000) $ (2,588,000)
============ ============ ============ ============

BASIC AND DILUTED LOSS PER SHARE $ (.06) $ (.15) $ (.30) $ (.25)
============ ============ ============ ============

SHARES USED IN COMPUTATION OF
BASIC AND DILUTED LOSS PER
SHARE 15,155,662 13,432,765 14,731,391 10,332,959
============ ============ ============ ============

See accompanying notes to financial statements.

F-3

NOVADEL PHARMA INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
(Unaudited)

Common Stock
------------------------------
Stockholders'
Par Paid-in Accumulated Equity
Shares Value Capital Deficit (Deficiency)
------------ ------------ ------------ ------------ ------------

BALANCE, JULY 31, 2002 14,448,817 $ 14,000 $ 13,322,000 $ (9,813,000) $ 3,523,000
NINE MONTHS ENDED APRIL 30, 2003 --
Stock issued in connection with private 1,863,333 1,000 2,510,000 -- 2,511,000
placements, net of costs
Shares issued for Warrants exercised 99,692 1,000 9,000 -- 10,000
Options issued for services -- -- 1,198,000 -- 1,198,000
Warrants issued for services -- -- 7,000 -- 7,000
Net Loss -- -- -- (4,354,,000) (4,354,000)
------------ ------------ ------------ ------------ ------------
BALANCE, APRIL 30, 2003 16,411,842 $ 16,000 $ 17,046,000 $(14,167,000) $ 2,895,000
============ ============ ============ ============ ============

See accompanying notes to financial statements.

F-4

NOVADEL PHARMA INC.

STATEMENT OF CASH FLOWS
(Unaudited)

Nine Months Ended
April 30,
-----------------------------
2003 2002
----------- -----------
CASH FLOW FROM OPERATING ACTIVITIES:

Net (loss) $(4,354,000) $(2,588,000)
Adjustments to reconcile net income (loss) to net cash
flows from operating activities:
Warrants issued for Services 7,000 47,000
Options Issued for Services 1,198,000 1,348,000
Shares issued for Warrants exercised 10,000 --
Depreciation & Amortization 111,000 45,000
Allowance for Doubtful Accounts -- 89,000
Changes in operating assets and liabilities:
Accounts receivable 1,000 (94,000)
Prepaid expenses and other current assets (35,000) (22,000)
Demand note receivable, officer -- 60,000
Due from joint venture partner for reimbursable expenses -- (4,000)
Other Assets (334,000) (1,000)
Accounts payable - trade 122,000 191,000
Accrued expenses and other current liabilities 309,000 119,000
----------- -----------
Net cash flows from operating activities (2,965,000) (810,000)
----------- -----------

CASH FLOWS FROM INVESTING ACTIVITIES -
Purchase of property and equipment (264,000) (179,000)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES - Proceeds received from issuance
of common stock through a private placement offering 2,511,000 4,934,000
----------- -----------
NET CHANGE IN CASH (718,000) 3,945,000

CASH, BEGINNING OF PERIOD 3,314,000 585,000
----------- -----------
CASH, END OF PERIOD $ 2,596,000 $ 4,530,000
=========== ===========

SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ -- $ --
=========== ===========
Income taxes paid $ -- $ --
=========== ===========

See accompanying notes to financial statements.

F-5

NOVADEL PHARMA INC.
NOTES TO FINANCIAL STATEMENTS

Note 1 - Basis of Presentation:

The balance sheet at the end of the preceding fiscal year has
been derived from the audited balance sheet contained in the
Company's Form 10-KSB and is presented for comparative
purposes. All other financial statements are unaudited. In the
opinion of management, all adjustments, which include only
normal recurring adjustments necessary to present fairly the
financial position, results of operations and cash flows for
all periods presented, have been made in the interim
statements. Results of operations for interim periods are not
necessarily indicative of the operating results for a full
year.

The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern.
Before the end of the calendar year, it will be necessary for
the Company to obtain additional financing and/or consummate a
strategic alliance with a well-funded business partner. There
are a number of risks and uncertainties related to the
Company's attempt to complete a financing or strategic
partnering arrangement that are outside the control of the
Company. We may not be able to successfully obtain additional
financing on terms acceptable to the Company, or at all. These
uncertainties raise substantial doubt as to the Company's
ability to continue as a going concern.

Footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been omitted in accordance with the published
rules and regulations of the Securities and Exchange
Commission. The financial statements in this report should be
read in conjunction with the financial statements and notes
thereto included in the Form 10-KSB of NOVADEL PHARMA INC.
(the "Company"), for the year ended July 31, 2002.

Note 2 - Prepaid expenses and other current assets:

Approximately $86,000 of prepaid supplies; $41,000 of prepaid
insurance; $2,000 of employee loan and $2000 of other are
included in the $131,000 total.

Other assets:

Approximately $351,000 of security deposits are included in
the $354,000 total. The remainder is other assets.

Accrued expenses and other current liabilities:

Approximately $221,000 of accrued payroll and related payroll
taxes; $168,000 of accrued employee vacation and $104,000 of
accrued legal and professional fees are included in the
$500,000 total. The remainder is other accrued expenses and
other current liabilities.

Note 3 - Private Placement:

During April 2003, the Company received net proceeds of
approximately $2,511,000 from a total of 27.95 Units of the
Company's securities. Each Unit consisted of sixty six
thousand, six hundred, sixty seven (66,667) common shares, par
value $.001, and sixteen thousand, six hundred, sixty seven
(16,667) warrants. Each warrant entitled the holder to
purchase an additional share of the company's common stock at
an exercise price of $2.00 within five (5) years. The terms of
the placement provide that if at any time following the
closing of the offering and continuing for a period of two (2)
years thereafter we offer shares of our common stock for sale
in a capital raising transaction, we will permit the investors
to purchase such number of shares of common stock to maintain
their pro rata ownership

F-6

percentages of NovaDel and that if, at any timed following the
closing of the offering for a period of one year, we sold
shares of common stock in a capital raising transaction (of at
least $1 million) at a per share price less than $1.50, we
will issue to the investors additional shares of common stock
(so that they would receive their original shares at such
lower price). The sale price of each Unit was $100,000 ($1.50
per share). (See also notes 4 and 7) As partial compensation
to the placement agent, the Company became obligated to issue
to the placement agent warrants to purchase 93,167 shares of
the Company's common stock at an exercise price of $1.65 per
share. The warrants have a term of five (5) years.

Note 4 - Stock Options and Warrants:

The Company follows the intrinsic method of Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued
to Employees" (APB 25) and related interpretations in
accounting for its employee stock options because, as
discussed below, Financial Accounting Standards Board
Statement No. 123, "Accounting for Stock-Based Compensation"
(FAS 123) requires use of option valuation models that were
not developed for use in valuing employee stock options. FAS
123 permits a company to elect to follow the intrinsic method
of APB 25 rather than the alternative fair value accounting
provided under FAS 123, but requires pro forma net income and
earnings per share disclosures as well as various other
disclosures not required under APB 25 for companies following
APB 25. The Company has adopted the disclosure provisions
required under Financial Accounting standards Board Statement
No. 148, "Accounting for Stock-Based Compensation Transition
and Disclosure" (FAS 148). Under APB 25, because the exercise
price of the Company's stock options equals the market price
of the underlying stock on the date of grant, no compensation
expense was recognized.

Pro forma information regarding net income and earnings per
share is required by FAS 123 and FAS 148, and has been
determined as if the Company had accounted for its employee
stock options under the fair value method of that Statement.

The Black-Scholes option valuation model was developed for use
in estimating the fair value of traded options which have no
vesting restrictions and are fully transferable. In addition,
options valuation models require the input of highly
subjective input assumptions including the expected stock
price volatility. Because the Company's employee stock options
have characteristics significantly different from those of
traded options, and because changes in the subjective input
assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily
provide a reliable measure of the fair value of its employee
stock options.

For purposes of pro forma disclosures, the estimated fair
value of options is amortized to expense over the options'
vesting period. The Company's pro forma information follows:

3 Months Ended 9 Months Ended
April 30, April 30,
------------------------------------------------------------------
2003 2002 2003 2002
----------- ------------ ------------ -----------

Net Loss, as reported $ (871,000) $ (2,041,000) $ (4,554,000) $(2,588,000)
Stock-based employee compensation expense (238,000) -- (437,000) (1,439,000)
under fair value method, net of related tax effects
----------- ------------ ------------ -----------
Pro forma net loss $(1,109,000) $ (2,041,000) $(4,791,00) $(4,027,000)
=========== ============ ============ ===========

Loss per share:
Basic and diluted, as reported $ (.06) $ (.15) $ (.30) $ (.25)
=========== ============ ============ ===========
Basic and diluted, pro forma $ (.07) $ (.15) $ (.33) $ (.39)
=========== ============ ============ ===========

F-7

In October 2002, the Company issued 75,000 options under the
1998 Option Plan and 200,000 Non-Plan options to its then
President. These options vested immediately, have an exercise
price of $1.30 and expire during October 2007.

In November 2002, the Company decided to extend for one year
the expiration date of its publicly traded Warrants (i.e. to
November 18, 2003). All other provisions of the Warrants
remain unchanged.

In December 2002, pursuant to an employment agreement with
Gary A. Shangold, M.D. (see Note 5, below) 1,000,000 options
were issued at an exercise price of $1.93 per share with a 5
year life. The options vest and become exercisable in three
equal annual installments commencing December 1, 2003

During March 2003, the Company granted an aggregate of 140,000
stock options under the Company's 1998 Option Plan,
exercisable at $1.51 per share for a term of five (5) years,
to nine (9) employees.

In March 2003, the board issued 10,000 stock options to each
of two (2) directors under the Company's 1998 Option Plan.
These options have an exercise price of $1.51 and a term of 5
years.

In March 2003, the board issued 100,000 Non-Plan options to
each of two new independent directors. These options have an
exercise price of $1.51 and a term of 5 years.

During April 2003, the Company received net proceeds of
approximately $2,560,000 from a total of 27.95 Units of the
Company's securities. Each Unit consisted of sixty six
thousand, six hundred, sixty seven (66,667) common shares, par
value $.001, and sixteen thousand, six hundred, sixty seven
(16,667) warrants. Each warrant entitled the holder to
purchase an additional share of the company's common stock at
an exercise price of $2.00 within five (5) years. The sale
price of each Unit was $100,000 ($1.50 per share). (See also
notes 3 and 7) As partial compensation to the placement agent,
the Company became obligated to issue to the placement agent
warrants to purchase 93,167 shares of the Company's common
stock at an exercise price of $1.65 per share. The warrants
have a term of five (5) years.

Note 5 - Deferred income tax benefit:

During December 2002, the Company received approximately
$84,000 as consideration for transferring approximately
$1,116,000 of New Jersey net operating loss tax benefit to a
third party corporation buyer. The Technology Tax Certificate
Transfer Program for transferring net operating loss and R & D
tax benefits is the responsibility of New Jersey Economic
Development Authority.

Note 6 - Contracts:

In December 2002, the Company entered into a three-year
employment agreement with Gary A. Shangold, M.D. pursuant to
which he agreed to serve as the Company's President and Chief
Executive Officer. The Company agreed to pay Dr. Shangold an
annual base salary of $350,000 and a guaranteed bonus of
$150,000. In addition, Dr. Shangold is eligible to receive:
(i) an annual discretionary bonus of up to $262,500, which
shall be determined at the sole discretion of the Board; and
(ii) an investment and fee bonus equal to 5% of all amounts up
to an aggregate of $7,500,000 (i.e., $375,000) invested in, or
earned by, the Company during his term. The Company is
obligated to pay Dr. Shangold at least $200,000 on or before
June 30, 2003. Such investment and fee bonus shall be reduced
by certain proceeds received by Dr. Shangold from his former
employer. Pursuant to the agreement, Dr. Shangold was also
granted Non-Plan options

F-8

(see Note 3, above) to purchase 1,000,000 shares of the
Company's common stock (at an exercise price of $1.93 per
share) which vest over a three year period. Such options have
a term of five (5) years.

In March 2003, the Company entered into a 10 year lease for
approximately 31,200 sq. feet of office, laboratory,
manufacturing and warehouse space. These premises are
presently being fitted-out. Occupancy should begin, in stages,
during the third quarter 2003. When fully occupied,
anticipated to be during the 4th quarter 2003, the annual rent
will be approximately $300,000 plus a proportionate share of
real estate taxes and common areas.

In April 2003, the Company entered into a license and
development agreement with Manhattan Pharmaceuticals, Inc. for
the worldwide, exclusive rights to the Company's proprietary
lingual spray technology to deliver Propofol for
pre-procedural sedation. The terms of the agreement calls for
certain milestone and other payments, the first of which was
received during June 2003.

Note 7 - Subsequent Events:

In May 2003, the Company entered into a three-year employment
agreement with Barry Cohen pursuant to which he agreed to
serve as the Company's Vice President, New Business & New
Product Development. The Company agreed to pay Mr. Cohen an
annual base salary of $185,000. Pursuant to the agreement, Mr.
Cohen was also granted Plan options to purchase up to 75,000
shares of the Company's common stock at an exercise price of
$2.04 per share (110% of the fair market value on the grant
date) which vest, subject to conditions, over a three year
period. Such options have a term of ten (10) years.

During May 2003, the Company completed a private placement and
received additional net proceeds of approximately $1,850,000
from the placement of a total of 20.05 Units of the Company's
securities. Each Unit consisted of sixty six thousand, six
hundred, sixty seven (66,667) common shares, par value $.001,
and sixteen thousand, six hundred, sixty seven (16,667)
warrants. Each warrant entitles the holder to purchase an
additional share of the company's common stock at an exercise
price of $2.00 within five (5) years. The sale price of each
Unit was $100,000 ($1.50 per share). The terms of the
placement provide that if at any time following the closing of
the offering and continuing for a period of two (2) years
thereafter we offer shares of our common stock for sale in a
capital raising transaction, we will permit the investors to
purchase such number of shares of common stock to maintain
their pro rata ownership percentages of NovaDel and that if,
at any timed following the closing of the offering for a
period of one year, we sold shares of common stock in a
capital raising transaction (of at least $1 million) at a per
share price less than $1.50, we will issue to the investors
additional shares of common stock (so that they would receive
their original shares at such lower price). For this portion
of the private placement, the placement agent received, as
additional compensation, warrants to purchase an additional
66,850 shares of the Company's common stock at an exercise
price of $1.65 per share. These warrants have a term of five
(5) years. "See also note 4".

F-9

INDEPENDENT AUDITORS' REPORT

To the Audit Committee of NOVADEL PHARMA INC.

We have audited the balance sheet of NOVADEL PHARMA INC. (formerly known as
Flemington Pharmaceutical Corporation) as of July 31, 2002 and the related
statements of operations, changes in stockholders' equity and cash flows for
each of the two years in the period then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of NOVADEL PHARMA INC. at July 31,
2002, and the results of its operations and its cash flows for each of the two
years in the period then ended are in conformity with accounting principles
generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has had a recent history of recurring losses
from operations, giving rise to an accumulated deficit through July 31, 2002 and
is currently developing pharmaceutical products which will require substantial
financing to fund anticipated product development costs. Resulting operating
losses and negative cash flows from operations are likely to occur until, if
ever, profitability can be achieved through successful marketing of newly
developed products. These factors raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans in regard to these
matters are described in Note 2. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

WISS & COMPANY, LLP

Livingston, New Jersey
October 17, 2002

F-10

NOVADEL PHARMA INC.

BALANCE SHEET
JULY 31, 2002

ASSETS
CURRENT ASSETS:

Cash and equivalents ....................................................... $ 3,314,000
Accounts receivable - trade, less allowance for doubtful
accounts
of $88,000 .............................................................. 1,000
Prepaid expenses and other current assets .................................. 96,000
------------
Total Current Assets ............................................. $ 3,411,000

FURNITURE, FIXTURES, EQUIPMENT
and LEASEHOLD IMPROVEMENTS, LESS
ACCUMULATED DEPRECIATION OF $172,000 ......................................... 406,000

OTHER ASSETS ................................................................. 22,000
------------
$ 3,839,000
============
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable-trade ..................................................... $ 125,000
Accrued expenses and other current liabilities ............................. 191,000
------------
Total Current Liabilities ............................................... $ 316,000

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY : Preferred stock, $.01 per value:
Authorized 1,000,000 shares, none issued Common stock $.001 par value:
Authorized - 50,000,000 shares
Issued and outstanding -14,448,817 shares ......................... 14,000
Additional paid-in capital ................................................ 13,322,000
Accumulated Deficit ....................................................... (9,813,000)
------------
Total Stockholders' Equity ........................................ 3,523,000
------------
$ 3,839,000
============

See accompanying notes to financial statements.

F-11

NOVADEL PHARMA INC.

STATEMENTS OF OPERATIONS

Year Ended
July 31,
-------------------------------
2002 2001
------------ ------------

CONSULTING REVENUES ................................ $ 339,000 $ 300,000

CONSULTING EXPENSES ................................ 962,000 691,000

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ....... 3,767,000 787,000
------------ ------------

LOSS FROM OPERATIONS ............................... (4,390,000) (1,178,000)

BUY-OUT OF CONSULTANT'S CONTRACT ................... (32,000) --

INTEREST INCOME .................................... 44,000 23,000
------------ ------------

NET LOSS BEFORE TAXES .............................. (4,378,000) (1,155,000)

DEFERRED INCOME TAX BENEFIT ........................ 88,000 46,000
------------ ------------

NET LOSS ........................................... $ (4,290,000) $ (1,109,000)
============ ============

BASIC AND DILUTED LOSS
PER COMMON SHARE:
Net Loss ......................................... $ (.38) $ (.18)
------------ ------------

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 11,361,000 6,326,000
============ ============

See accompanying notes to financial statements.

F-12

NOVADEL PHARMA INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

Common Stock
-----------------------------
Additional
Par Paid-in Accumulated Stockholders'
Shares Value Capital Deficit Equity
----------- ----------- ----------- ----------- -----------

BALANCE, JULY 31, 2000 5,877,300 $ 6,000 $ 5,250,000 $(4,414,000) $ 842,000
----------- ----------- ----------- ----------- -----------

YEAR ENDED JULY 31, 2001
Common Shares Issued for Services 3,937 -- 6,000 -- 6,000
In connection with private placement,
net of costs 1,843,663 2,000 1,155,000 -- 1,157,000
Net Loss -- -- -- (1,109,000) (1,109,000)
----------- ----------- ----------- ----------- -----------
BALANCE, JULY 31, 2001 7,724,900 $ 8,000 $ 6,411,000 $(5,523,000) $ 896,000
----------- ----------- ----------- ----------- -----------

YEAR ENDED JULY 31, 2002
Common Shares Issued in connection
with private placements, net of costs 6,666,667 6,000 4,910,000 -- 4,916,000
Shares issued for Options exercised 7,765 -- -- -- --
Shares issued for Warrants exercised 49,485 -- -- -- --
Options issued for services -- -- 1,947,000 -- 1,947,000
Warrants issued for services -- -- 54,000 -- 54,000
Net Loss -- -- -- (4,290,000) (4,290,000)
----------- ----------- ----------- ----------- -----------
BALANCE, JULY 31, 2002 14,448,817 $ 14,000 $13,322,000 $(9,813,000) $ 3,523,000
=========== =========== =========== =========== ===========

See accompanying notes to financial statements.

F-13

NOVADEL PHARMA INC

STATEMENTS OF CASH FLOWS

July 31
Year Ended
------------------------------
2002 2001
----------- -----------
CASH FLOW FROM OPERATING ACTIVITIES:

Net loss $(4,290,000) $(1,109,000)
Adjustments to reconcile net loss to net cash
flows from operating activities:
Shares issued for services -- 6,000
Options issued for services 1,947,000 --
Warrants issued for services 54,000 --
Depreciation and amortization 77,000 24,000
Allowances for Doubtful Accounts 79,000 --
Changes in operating assets and liabilities:
Accounts receivable 12,000 (46,000)
Due from D&O Insurance Carrier -- 86,000
Demand note receivable, Officer 60,000 --
Prepaid expenses and other current assets (39,000) (5,000)
Due from Joint Venture partner for reimbursable expenses 6,000 74,000
Other Assets (5,000) (7,000)
Accounts payable - trade 114,000 (57,000)
Billings in excess of costs and estimated earnings
on uncompleted contracts -- (49,000)
Accrued expenses and other current liabilities 114,000 (23,000)
----------- -----------
Net cash flows from operating activities (1,871,000) (1,106,000)
----------- -----------

CASH FLOWS FROM INVESTING ACTIVITIES -
Purchase of property and equipment (316,000) (166,000)
----------- -----------
Net cash flows from investing activities (316,000) (166,000)
----------- -----------

CASH FLOWS FROM FINANCING ACTIVITIES -
Proceeds received from private placements 4,916,000 1,157,000
----------- -----------
Net cash flows from financing activities 4,916,000 1,157,000
----------- -----------
NET CHANGE IN CASH 2,729,000 (115,000)
CASH, BEGINNING OF YEAR 585,000 700,000
----------- -----------
CASH, END OF YEAR $ 3,314,000 $ 585,000
=========== ===========

SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ -- $ --
=========== ===========
Income taxes paid $ -- $ --
=========== ===========

See accompanying notes to financial statements.

F-14

NOVADEL PHARMA INC.

NOTES TO FINANCIAL STATEMENTS

Note 1 - Nature of the Business and Summary of Significant Accounting Policies:

Nature of the Business - NOVADEL PHARMA INC. (the "Company"), which was formerly
known as Flemington Pharmaceutical Corporation, is incorporated in the State of
Delaware. The Company is engaged in domestic and international consulting
activities and the development of novel pharmaceutical products combining
presently marketed drugs with innovative patent-pending oral dosage delivery
systems of the Company, designed to enhance and accelerate the onset of the
therapeutic benefits which the drugs are intended to produce. Management intends
to develop the products in collaboration with pharmaceutical companies having
significant existing sales of the pharmaceutical compounds being incorporated
into the Company's dosage delivery systems, thereby creating a more effective
and more attractive product.

Revenues and Costs - Revenues from contract clinical research
are recognized as earned.

Contract costs normally consist of fees paid to outside
clinics for studies and an allocable portion of the Company's
operating expenses. General and administrative costs
pertaining to contracts are charged to expense as incurred.

Cash Equivalents - Cash equivalents include certificates of
deposit and money market instruments purchased with original
maturities of three months or less.

Financial Instruments - Financial instruments include cash and
cash equivalents, accounts receivable, amounts due from joint
venture partner and insurance carrier, loans to stockholders,
accounts payable, and accrued expenses. The amounts reported
for financial instruments are considered to be reasonable
approximations of their fair values, based on market
information available to management.

Furniture, Fixtures and Equipment - Furniture, fixtures and
equipment are stated at cost. The Company provides for
depreciation using accelerated methods, based upon estimated
useful lives of 5 to 7 years for furniture, fixtures and
equipment.

Income Taxes - Temporary differences between financial
statement and income tax reporting result primarily from net
operating losses. As a result of these temporary differences,
the Company has recorded a deferred tax asset with an
offsetting valuation allowance for the same amount.

Defined Contribution Retirement Plans - The Company has a
Simple IRA retirement plan providing for contributions at
management's discretion. During the years ended July 2002 and
July 2001, the Company made contributions to the retirement
plan of approximately $11,000 and approximately $15,000,
respectively.

Risk Concentrations:

(a) Credit Risk - The Company maintains its cash balances
in financial institutions that are insured by the
Federal Deposit Insurance Corporation (FDIC) up to
$100,000 each. Such balances, at times, may exceed
the FDIC limits.

(b) Major Customers - During fiscal 2002, the Company had
revenue from two customers located in the USA
approximating 46% and 40%, respectively, of the
Company's total revenue.

During fiscal 2001, the Company had revenue from two customers located in
the United States approximating 40 % and 18 %, respectively, of the
Company's total revenue.

F-15

(c) Supplier Dependence - The Company believes that
certain raw materials, including inactive
ingredients, are available only from a limited number
of suppliers internationally and that certain
packaging materials intended for use in connection
with its spray products currently are available from
limited supply sources. The Company does not believe
it will encounter difficulties in obtaining inactive
ingredients or packaging materials necessary for the
manufacture of its products. However, there can be no
assurance that the Company will be able to enter into
satisfactory purchasing agreements or arrangements,
thereby, causing a potential significant adverse
effect on the Company's ability to arrange for the
manufacture of formulated products.

Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date
of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual
results could differ from those estimates.

Earnings (Loss) per Share - Statement of Financial Accounting
Standards (SFAS) No. 128, "Earnings Per Share" requires the
disclosure of both diluted and basic earnings per share. Basic
earnings per share is based on the weighted average of all
common shares outstanding. The computation of diluted earnings
per share does not assume the conversion, exercise or
contingent issuance of securities that would have an
antidilutive effect on earnings per share.

Recent Accounting Pronouncements - In August 2001, the FASB
issued, SFAS No. 143, Accounting for Asset Retirement
Obligations, which requires companies to record a liability at
fair value for asset retirement obligations in the period in
which they are incurred. The associated asset retirement costs
are capitalized as part of the carrying amount of the
long-lived asset. This Statement is effective for the Company
for the fiscal year beginning June 1, 2003. The Company is
currently evaluating the provisions of this Statement, but
does not believe adoption of the statement will result in
material impact to its results of operations or financial
position. In October 2001, the FASB issued SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived
Assets, which provides a single accounting model for
long-lived assets to be disposed of. This Statement is
effective for the Company for the fiscal year beginning August
1, 2002. The Company is currently evaluating the provisions of
this Statement, but does not anticipate that adoption will
result in a material impact to its results of operations or
financial position.

Note 2 - Management's Plans to Overcome Operating and Liquidity Difficulties

The Company's financial statements have been presented on the
basis that it is a going concern, which contemplates the
realization of assets and the satisfaction of liabilities in
the normal course of business.

The Company's continued existence is dependent upon its
ability to achieve profitable operations or obtain additional
financing. The Company is currently seeking collaborative
arrangements with pharmaceutical companies for the joint
development of delivery systems and the successful marketing
of these delivery systems. The Company is exploring merger
opportunities or other strategic alternatives to fund future
operations.

In view of the Company's very limited resources, its
anticipated expenses and the competitive environment in which
the Company operates, there can be no assurance that its
operations will be sustained for the duration of its next
fiscal year.

F-16

Note 3 - Prepaid and Accrued expenses:

Accrued expenses and other current liabilities - Approximately
$77,000 of accrued vacation salary and related payroll taxes
due to the Company's employees, approximately $27,000 of study
costs, approximately $48,000 of legal fees and approximately
$20,000 of accrued salary and related payroll taxes due to the
Company's employees are included in the $191,000 total. The
remainder is accrued expenses and other current liabilities.

Note 4 - Furniture, Fixtures and Equipment

Furniture, fixtures and equipment is summarized as follows:

July 31, 2002
-----------------
Equipment $ 510,000
Furniture and fixtures 40,000
Leasehold improvements 28,000
-----------------
578,000
Less: Accumulated depreciation 172,000
=================
$ 406,000
=================

Note 5 - Stockholders' equity:

Preferred Stock - The Company's Certificate of Incorporation
authorizes the issuance of up to 1,000,000 shares of Preferred
Stock. None of such Preferred Stock has been designated or
issued to date. The Board is authorized to issue shares of
Preferred Stock from time to time in one or more series and to
establish and designate any such series and to fix the number
of shares and the relative conversion rights, voting, terms of
redemption and liquidation.

Note 6 - Related Party Transactions:

Legal Fees - The Company has incurred legal fees with an
officer and director of the Company. These fees approximated
$125,000 and $85,000 for the years ended July 31, 2002 and
2001, respectively.

Stockholder's Note Receivable - In April 1998, the Company
lent $60,000 to its President. The note was paid in full,
together with all accrued interest, in January 2002.

Consulting Agreement - In February 2002 the Company
entered into a consulting agreement with John H. Klein,
effective February 1, 2002 (see Note 7 (d) ). In addition, in
February 2002, Mr. Klein was elected as a member and Chairman
of the Company's Board of Directors.

Note 7 - Commitments and Contingencies:

(a) During January 2002, the Company entered into a
consulting agreement, and will pay $25,000 per quarter through
December 31, 2002 for investor relations with the Trout Group,
LLC.

(b) The Company entered into an employment agreement with its
President for a base salary of $248,500. The agreement
provides for annual cost of living adjustments equal to the
greater of the increase in the Consumer Price Index or 5% with
additional increases and bonuses as shall be approved by the
Board. The agreement has a base term of three years, which
became effective in January 2002. The agreement is thereafter
renewable for additional one-year periods, unless the Company
gives notice to the contrary.

F-17

(c) The Company entered into an employment agreement with its
Chief Financial Officer for a base annual salary of $125,000.
The agreement provides for annual cost of living adjustments
equal to the greater of the increase in the Consumer Price
Index or 5% with additional increases and bonuses as shall be
approved by the Board. The agreement has a base term of three
years, which became effective in January 2002. The agreement
is thereafter renewable for additional one-year periods,
unless the Company gives notice to the contrary.

(d) The Company entered into an employment agreement with its
Vice President Corporate Development for a base annual salary
of $120,00, later increased by an amendment to $180,000. The
agreement as amended has a base term of three years, which
became effective in December 2001. The agreement is thereafter
renewable for additional one-year periods, unless the Company
gives notice to the contrary.

In addition, the agreement granted the employee 1,050,000 non
plan options to purchase shares of the Company's common stock
at an exercise price of $0.75 per share; as of the date of
this report 700,000 of such options had vested.

(e) The Company entered into a consulting agreement with its
Chairman for a base annual retainer of $300,000, plus
reimbursement of various expenses and certain success fees.
The agreement has a base term of one year, which became
effective in February 2002. The agreement is thereafter
renewable for additional one-year periods, unless the Company
gives notice to the contrary. In addition, the agreement
granted the Chairman 1,000,000 non plan options to purchase
shares of the Company's common stock at an exercise price of
$2.40 per share; as of the date of this report none of such
options had vested.

(f) The Company entered into an employment agreement with its
Vice President Formulation Development for a base annual
salary of $110,000. The agreement provides for annual cost of
living adjustments equal to the greater of the increase in the
Consumer Price Index or 5% with additional increases and
bonuses as shall be approved by the Board. The agreement has a
base term of three years, which became effective in May 2002.
The agreement is thereafter renewable for additional one-year
periods, unless the Company gives notice to the contrary. In
addition, the agreement granted the employee 150,000 non plan
options to purchase shares of the Company's common stock at an
exercise price of $3.02 per share; as of the date of this
report none of such options had vested.

Leases - In August 2000, the Company entered into a 5-year
lease agreement, effective October 2000, for approximately
4,500 square feet of office, laboratory and manufacturing
space. Annual rent is approximately $63,000 plus real estate
taxes, currently estimated to be approximately $11,000
annually. Previously, the Company rented office space on a
month to month basis. Rent expense for the Company totaled
approximately $75,000 and $69,000 for the years ended July 31,
2002, and 2001 respectively.

Government Regulation - The development, manufacture and
commercialization of pharmaceuticals are subject to extensive
regulation by various federal and state government entities.
The Company cannot determine the impact of government
regulations on the development of its delivery systems.

Note 8 - Income Taxes:

No provision for current and deferred income taxes is required
for the years ended July 31, 2002 and 2001.

F-18

The significant components of the Company's net
deferred tax asset are summarized as follows:

July 31
-----------------------------
2002 2001
----------- -----------

Differences between the cash basis of accounting
for income tax reporting and the accrual basis
for financial reporting purposes $ -- $ (27,000)

Net operating loss carryforwards 2,890,000 2,003,000
----------- -----------
2,890,000 1,976,000

Valuation allowance 2,890,000 1,976,000
----------- -----------
Net deferred tax asset $ -- $ --
=========== ===========

The following is a reconciliation of income tax benefit
computed at the 34% statutory rate to the provision for income
taxes:

------------------------------
2002 2001
----------- -----------
Federal Tax at statutory rate $ 1,459,000 $ 377,000
State Income Tax 257,000
48,000
Non deductible; options issued for services (802,000) --
----------- -----------
Valuation allowance (914,000) (425,000)
----------- -----------
$ -- $ --
=========== ===========

A valuation allowance is provided when it is more likely than
not that some portion of the deferred tax asset will not be
realized. The Company has determined, based on the Company's
prior history of recurring losses, that a full valuation
allowance is appropriate at July 31, 2002 and 2001.

At July 31, 2002, the Company has federal and state net
operating loss carryforwards for financial reporting and
income tax purposes of approximately $7,900,000 and
$5,5000,000, respectively, which can be used to offset current
and future taxable income through the year 2023.

Note 9 - Stock Options:

At July 31, 2002, the Company had three plans to allow for the
issuance of stock options and other awards, the 1992 Stock
Option Plan, the 1997 Stock Option Plan and the 1998 Stock
Option Plan (the "Plans"). The total number of shares of
common stock reserved for issuance, either as incentive stock
options ("ISO's") under the Internal Revenue Code or as
non-qualified options, under the 1992 and 1997 Plans is
500,000 shares each and 1,075,000 under the 1998 Plan. ISOs
may be granted to employees and officers of the Company and
non-qualified may be granted to consultants, directors,
employees and officers of the Company. Options to purchase
Company's common stock could not be granted at a price less
than the fair market value of the common stock at the date of
grant and will expire not more than ten years from the date of
grant. ISOs granted to a 10% or more stockholder could not be
for less than 110% of fair market value or for a term of more
than 5 years.

The Company uses the intrinsic value method prescribed by APB
Opinion No. 25 to measure compensation expense. If the fair
value method had been used to measure compensation expense as
prescribed by SFAS No. 123, net loss would have increased by
$1,440,000 or $.13 per share to $5,730,000 or $.51 per share
for fiscal 2002. There were no options granted in fiscal 2001.

F-19

The fair value of options granted in fiscal 2002 were
estimated at the date of grant using a Black-Sholes option
model with the following weighted-average assumptions,
respectively: risk-free interest rates of 5.7% yield of 0.0%
volatility factors of the expected market price of the
Company's Common Stock of 99% and a weighted-average expected
life of the options of five (5) to ten (10) years.

The Black-Scholes option valuation model was developed for use
in estimating the fair value of traded options, which have no
vesting restrictions and are fully transferable. In addition,
option valuation models require input of highly subjective
assumptions including the expected stock price volatility.
When the Company shares were not traded publicly, the employee
stock options had characteristics significantly different from
those of publicly traded options. Because changes in the
subjective input assumptions can materially affect fair value
estimate, in management's opinion, the existing models do not
necessarily provide a reliable single estimate of the fair
value of its employee stock options.

Information with respect to stock option activity is as
follows (in thousands, except exercise price amounts):

Outstanding Options
-----------------------------
Options Available Number of Weighted Average
for Grant Options Exercise Price
--------- -------- ---------

Balance at August 1, 2000 ................ -- 2,300 $ 1.53
Grants .................................... -- -- --
Exercises ................................. -- -- --
Cancellations ............................. -- -- --
----- ----- ---------
Balance at July 31, 2001 .................. -- 2,300 1.53
Additional Shares reserved ................ -- -- --
2,475
Grants .................................... 3,378 3,378 1.60
Exercises ................................. 10 10 .63
Cancellations ............................. 1,190 1,190 1.42
----- ----- ---------
Balance at July 31, 2002 .................. 277 4,478 $ 1.61
===== ===== =========
Option price per share: $.63 - $3.18
Options exercisable: 3,328,000

The following table summarizes significant ranges of outstanding and exercisable
options at July 31, 2002 (in thousands, except exercise price amounts):

Outstanding Options Options Exercisable
---------------------------------------------- -------------------------------
Range of Exercise Prices Options Weighted Weighted Options Weighted
Average Average
Remaining Exercise Average
Life in Years Price Exercise Price
---------- -------------- ----------- ---------- ----------------

$0.01 - $1.00.............. 2,030 6.7 $ .74 2,030 $ .74
$1.01 - $2.00.............. 860 4.1 1.84 860 1.84
$2.01 - $3.00.............. 1,188 9.5 2.44 188 2.63
$3.01 - $4.00.............. 400 9.7 3.12 250 3.18
---------- -------------- ----------- ---------- ----------------
4,478 7.2 $1.61 3,328 $1.38
========== ============== =========== ========== ================

In addition to stock options issued by the Company under the Plans, the
Company has reserved 11,364,781 shares of common stock for non-plan options
and warrants as detailed below.

F-20

Non-plan Options and Warrants - At July 31, 2002 there were outstanding the
following classes and numbers of instruments exercisable for Common Stock:

A. 680,000 Class A Warrants, issued in connection with the Public Offering,
exercisable until November 2002, to purchase a like number of shares of
Common Stock at an exercise price of $5.80 per share.

B. 68,000 warrants, issued to the Underwriter in connection with the Public
Offering, exercisable until November 2002, to purchase 68,000 units, each
consisting of one share of Common Stock and one Class A Warrant at an
exercise price of $9.74 per unit. Each Class A Warrant included in the
units is exercisable on the same terms as is described above in paragraph
A.

C. 2,700,000 stock options, not issued under any of the plans, as follows:

o 300,000 options each issued on November 19, 1997, vesting immediately,
to the Company's President and former Chairman of the Board of
Directors, for a total of 600,000, having an exercise price of $1.84
per share, issued in connection with their respective employment
agreements in June 1997, exercisable until November 2007.

o 700,000 options issued in December 2001, vesting immediately, to the
Company's Vice President for Corporate Development, in connection with
his employment agreement, exercisable until December 2011. There is a
contingency in that employment agreement which, if satisfied, would
result in the issuance of an additional 350,000 options; the Company
has reserved shares to meet that contingency.

o 1,000,000 options issued in February 2002, vesting in three equal
installments beginning in February 2003, to the Company's present
Chairman in connection with his consulting agreement, having an
exercise price of $2.40 per share, exercisable until January 2012.

o 250,000 options issued in April 2002, vesting immediately, to a
consultant to provide investment banking assistance to the Company.
These options have an exercise price of $3.18 per share, exercisable
until April 2012.

o 150,000 options issued in May 2002, vesting in three equal
installments beginning November 15, 2002, to the Company's Vice
President Formulation Development, in connection with his employment
agreement, having an exercise price of $3.02 per share, exercisable
until May 2012.

D. 60,000 warrants issued to a public relations company, exercisable until
January 2007 at a price of $2.00.

E. 4,000,000 warrants issued to an investor, in connection with the fiscal
year 2002 private placement, exercisable until December 2008 at a price of
$.75.

F. 2,666,667 warrants issued to an investor, in connection with the fiscal
year 2002 private placement, exercisable until December 2009 at a price of
$.75.

G. 200,000 warrants issued to a consulting company, exercisable until
January 2010 at a price of $1.00.

H. 200,000 warrants issued to each of two consulting companies, for a total
of 400,000, exercisable until November 2010 at a price of $.75.

I. 240,114 warrants at $.75 per share issued to broker/dealers in
connection with the fiscal year 2001 private placement. 50,000 of such
warrants expire in October 2010, and remaining warrants (190,114 shares)
expire in May 2011.

F-21

Note 10 - Subsequent Events:

In October 2002 the Company issued 75,000 options under the 1998 option
plan and 200,000 Non-Options Plan to its President. These options vest
immediately, have an exercise price of $1.30 and expire during October
2007.

In November, 2002, the Company decided to extend for one year the
expiration date of its publicly traded warrants (i.e. to November 18,
2003). All other provisions of the warrants remain unchanged.

F-22

----------------------------------------------------------- --------------------------------------------------------

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED NOVADEL PHARMA INC.
IN THIS DOCUMENT. WE HAVE NOT AUTHORIZED ANYONE TO
PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. THIS
DOCUMENT MAY ONLY BE USED WHERE IT IS LEGAL TO SELL THESE DISTRIBUTION OF 4,200,461 SHARES OF
SECURITIES. THE INFORMATION IN THIS DOCUMENT MAY ONLY BE COMMON STOCK
ACCURATE ON THE DATE OF THIS DOCUMENT.

ADDITIONAL RISKS AND UNCERTAINTIES NOT PRESENTLY
KNOWN OR THAT ARE CURRENTLY DEEMED IMMATERIAL MAY ALSO
IMPAIR OUR BUSINESS OPERATIONS. THE RISKS AND ----------------
UNCERTAINTIES DESCRIBED IN THIS DOCUMENT AND OTHER RISKS
AND UNCERTAINTIES WHICH WE MAY FACE IN THE FUTURE WILL PROSPECTUS
HAVE A GREATER IMPACT ON THOSE WHO PURCHASE OUR COMMON
STOCK. THESE PURCHASERS WILL PURCHASE OUR COMMON STOCK AT ----------------
THE MARKET PRICE OR AT A PRIVATELY NEGOTIATED PRICE AND
WILL RUN THE RISK OF LOSING THEIR ENTIRE INVESTMENT.

________, 2003

----------------------------------------------------------- --------------------------------------------------------

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS

We currently have liability insurance coverage for our officers and
directors.

Item 25. Other Expenses of Issuance and Distribution

The following table sets forth the costs and expenses payable by the
registrant in connection with the sale of the securities being registered. All
amounts are estimates except the SEC registration fee:

SEC registration fee......................................$ 713.62
Printing and engraving expenses...........................$ 2,500.00
Accounting fees and expenses..............................$ 5,000.00
Attorneys' fees and expenses..............................$ 35,000.00
Transfer agent's fees and expenses........................$ 4,000.00
Miscellaneous.............................................$ 2,786.38
----------

Total............................................$ 50,000.00
---------

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.

Set forth below is information regarding the issuance and sales of
NovaDel's common stock without registration during the last three years. Other
than as set forth below, no such sales involved the use of an underwriter and no
commissions were paid in connection with the sale of any securities.

In April and May 2003, we sold units (consisting of common stock and
warrants) to accredited investors. Investors we issued one warrant for each four
shares. We issued a total of 3,200,345 shares (at $1.50 per share) and 800,095
warrants (exercisable at $2.00 per share). The securities were sold through
Paramount Capital, Inc. We paid Paramount approximately $360,000 in commission
fees and issued to them 160,017 warrants exercisable at $1.65 per share and
40,004 warrants exercisable at $2.00 per share. These sales were made in
reliance on Section 4(2) and on Regulation D of the Act.

II-1

In May 2003, we issued 13,329 shares to a holder of warrants, upon
exercise of warrants held by it. The sale was made in reliance on Section 4(2)
of the Act.

In December 2002, we issued 13, 770 shares to holders of warrants, upon
exercise of warrants held by them. The sales were made in reliance of Section
4(2) of the Act.

In August 2002, we issued 85,922 shares to holders of warrants (via
cashless exercise of warrants to purchase 136,482 shares). The sale was made in
reliance on Section 3(a)(9) of the Act.

In July 2002, we issued 7,765 shares to a former employee upon cashless
exercise of outstanding options. The sale was made in reliance on Section
3(a)(9) of the Act.

During July 2002, we issued 35,106 shares of common stock (via cashless
exercise of warrants to purchase 48,142 shares). The sales were made in reliance
of Section 3(a)(9) of the Act.

During June 2002, we issued 14,379 shares of our common stock (via
cashless exercise of warrants to purchase 19,216 shares). The sale was made in
reliance of Section 3(a)(9) of the Act.

During March 2002, we issued 2,666,667 units (each consisting of one
share of common stock and one warrant to purchase a share of common stock at
$.75 per share) at $.75 per unit, to an accredited investor pursuant to Section
4(2) of the Act.

During December 2001, we issued 4,000,000 units (each consisting of one
share of common stock and one warrant to purchase a share of common stock at
$.75 per share) at $.75 per unit, to an accredited investor pursuant to Section
4(2) of the Act.

In May 2001, we issued 1,843,663 shares of our common stock, in a
private placement, at $.75 per share, to accredited investors. The sales were
made in reliance of Section 4(2) of the Act. We paid $138,275 in commissions in
connection with that transaction.

In October 2000, we issued 3,937 shares of our common stock to an
investor relations firm. The sale was made in reliance on Section 4(2) of the
Act.

II-2

ITEM 27. EXHIBITS

EXHIBIT
NUMBER NAME
------ ----

INCORPORATED DOCUMENTS SEC EXHIBIT REFERENCE
---------------------- ---------------------

2.1 Agreement of Merger dated as of October 29, As filed with the Registrant's Preliminary Proxy
1998 Statement on October 20, 1998, File No. 000-23399

3.1 Certificate of Incorporation of the As filed with the Registrant's Preliminary Proxy
Registrant, as amended Statement on October 20, 1998, File No. 000-23399

3.2 Bylaws of the Registrant, as amended As filed with the Registrant's Preliminary Proxy
Statement on October 20, 1998, File No. 000-23399

4.1 Form of Warrant Agreement relating to Public As filed with the Registrant's Form SB-2, on
Warrants October 31, 1997, File No. 333-33201

4.3 Form of Class A Warrant Certificate As filed with the Registrant's Form SB-2, on
October 31, 1997, File No. 333-33201

4.4 Form of Underwriters' Option Agreement As filed with the Registrant's Form SB-2, on
October 31, 1997, File No. 333-33201

5 Opinion of Brown Rudnick Berlack Israels LLP*

10.1 Employment Agreement with Harry A. Dugger, As filed with the Registrant's Form SB-2, on
III, Ph.D. April 15,2002, File No. 333-86262

10.2 Employment Agreement with John J. Moroney As filed with the Registrant's Form SB-2, on
October 3, 1997, File No. 333-33201

10.3 Agreement dated December 7, 1996 between the As filed with the Registrant's Form SB-2, on
Registrant and Altana, Inc. August 8, 1997, File No. 333-33201

10.4 Registrant's 1992 Stock Option Plan As filed with the Registrant's Form SB-2, on
August 8, 1997, File No. 333-33201

10.5 Form of Option Agreement under the 1992 Stock As filed with the Registrant's Form SB-2, on
Option Plan October 3, 1997, File No. 333-33201

10.6 Registrant's 1997 Stock Option Plan As filed with the Registrant's Form SB-2, on
August 8, 1997, File No. 333-33201

10.7 Form of Option Agreement under the 1997 Stock As filed with the Registrant's Form SB-2, on
Option Plan October 3, 1997, File No. 333-33201
---------------------------------

II-3

EXHIBIT
NUMBER NAME
------ ----

INCORPORATED DOCUMENTS SEC EXHIBIT REFERENCE
---------------------- ---------------------

10.8 Agreement with Rapid Spray (Clemastine) dated As filed with the Registrant's Form SB-2, on
June 2, 1992 August 8, 1997, File No. 333-33201

10.9 Agreement with Rapid Spray (Nitroglycerin) As filed with the Registrant's Form SB-2, on
dated June 2, 1992 August 8, 1997, File No. 333-33201

10.10 Agreement with Creative Technologies, Inc. As filed with the Registrant's Form SB-2, on
dated December 26, 1996 October 3, 1997, File No. 333-33201

10.11 Registrant's 1998 Stock Option Plan As filed with the Registrant's Preliminary Proxy
Statement on October 20, 1998,
File No. 000-23399

10.12 Employment Agreement with Donald P. Cox, Ph.D. As filed with the Registrant's Form 10-KSB on
October 28, 1999, File No. 000-23399

10.13 Employment Agreement with Kenneth Cleaver, As filed with the Registrant's Form 10-KSB on
Ph.D. October 28, 1999, File No. 000-23399

10.14 Amendment to Consulting Agreement with Saggi As filed with the Registrant's Form 10-KSB on
Capital Corp. dated March 25, 1998 October 28, 1999, File No. 000-23399

10.15 Agreement with Altana, Inc., dated December 7, As filed with the Registrant's Form 10-KSB/A on
1996 September 26, 2001, File No. 000-23399

10.16 Agreement with CLL Pharma dated February 12, As filed with the Registrant's Form 10-KSB/A on
1998 September 26, 2001, File No. 000-23399

10.17 Agreement with Nace Resources, Inc., dated As filed with the Registrant's Form 10-KSB/A on
December 29, 1997, together with Amendment September 26, 2001, File No. 000-23399
Number 1 dated February 9, 1998; Amendment
Number 2 dated November 29, 1999; and,
Amendment Number 3, dated May 5, 2000

10.18 Agreement with PolyMASC Pharmaceuticals plc, As filed with the Registrant's Form 10-KSB/A on
dated July 25, 2000 September 26, 2001, File No. 000-23399

10.19 Authorization to proceed with Innovex, Inc. As filed with the Registrant's Form 10-KSB/A on
and Novartis Pharmaceuticals Corp., dated June September 26, 2001, File No. 000-23399
15, 2000

II-4

EXHIBIT
NUMBER NAME
------ ----

INCORPORATED DOCUMENTS SEC EXHIBIT REFERENCE
---------------------- ---------------------

10.20 Consulting Agreement with John Klein. As filed with the Registrant's Form SB-2, on
April 15,2002, File No. 333-86262

10.21 Employment Agreement with Robert Galler. As filed with the Registrant's Form SB-2, on
April 15,2002, File No. 333-86262

10.22 Employment Agreement Amendment No. 1 with As filed with the Registrant's Form SB-2, on
Robert Galler April 15,2002, File No. 333-86262

10.23 Employment Agreement with Donald Deitman. As filed with the Registrant's Form SB-2, on
April 15,2002, File No. 333-86262

10.24 Common Stock and Warrant Purchase Agreement Incorporated by Reference to Schedule 13D filed
dated December 12, 2001. on December 21, 2001 by Lindsay A. Rosenwald, M.D.

10.25 Amendment No. 1 to Common Stock and Warrant As filed with the Registrant's Form SB-2, on
Purchase Agreement April 15,2002, File No. 333-86262

10.26 Employment Agreement with Mohammed Abd As filed with the Registrant's Form SB-2 on
El-Shafy, Phd. September 3, 2002, File No. 333-86262

10.27 Employment Agreement with Gary A. Shangold. As filed with the Registrant's Quarterly Report
of Form 10-QSB for the six month period ending
January 31, 2003

10.28 Amendment No. 1 to Employment Agreement with As filed with the Registrant's Quarterly Report
Gary A. Shangold of Form 10-QSB for the six month period ending
January 31, 2003

10.29 Lease Agreement with Macedo Business Park, II, As filed with the Registrant's Quarterly Report
LLC on Form 10-QSB for the nine month period ending
April 30, 2003.

10.30 Amendment No. 1 to Lease Agreement with Macedo As filed with the Registrant's Quarterly Report
Business Park, II, LLC on Form 10-QSB for the nine month period ending
April 30, 2003.

10.31 Employment Agreement with Barry C. Cohen As filed with the Registrant's Quarterly Report
on Form 10-QSB for the nine month period ending
April 30, 2003.

11.1 Computation of earnings per share**

23 Consent of Wiss & Company LLP**

* To be filed by Amendment

** Filed herewith

II-5

ITEM 28. UNDERTAKINGS.

The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:

(a) To include any prospectus required by section 10(a)(3) of
Securities Act.

(b) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the commission pursuant to Rule 424(B) if, in the aggregate, the
changes in volume and price represent no more than 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and

(c) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement

(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.

(4) That, for purposes of determining any liability under the
Securities Act, each filing of the registrant's annual report pursuant
to section 13(a) or section 15(d) of the Exchange Act that is
incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-6

SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the County of Hunterdon, State of New
Jersey, on July 14, 2003.

NOVADEL PHARMA INC.

By: /s/ Gary Shangold
------------------------------------------------
Gary Shangold, M.D., President, CEO & Director

Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.

NAME TITLE DATE
---- ----- ----

/s/ Gary Shangold President, Chief Executive Officer July 14, 2003
---------------------------- (Principal Executive Officer) and Director
Gary Shangold

/s/ Donald Deitman Chief Financial Officer July 14, 2003
---------------------------- (Principal Financial Officer)
Donald Deitman

/s/ Harry A. Dugger III Chief Scientific Officer July 14, 2003
----------------------------
Harry A. Dugger III

/s/John Klein Chairman of the Board July 14, 2003
----------------------------
John Klein

/s/ Robert F. Schaul Secretary and Director July 14, 2003
---------------------------
Robert F. Schaul

/s/ William F. Hamilton Director July 14, 2003
---------------------------
William F. Hamilton

/s/ Lawrence J. Kessel Director July 14, 2003
--------------------------
Lawrence J. Kessel

/s/ Mark H. Rachesky Director July 14, 2003
--------------------------
Mark H. Rachesky