On February 16, 2012, Alliqua, Inc. entered into a securities purchase agreement (the “Securities Purchase Agreement”) with certain accredited investors (the “Investors”) pursuant to which it issued, in the aggregate, (i) 21,000,000 shares of common stock (the “Investor Shares”) and (ii) five year warrants to purchase, in the aggregate, up to 10,500,000 shares of common stock at an exercise price of $0.069 per share (each, an “Investor Warrant”), in exchange for aggregate consideration of $1,050,000 (the “Private Placement”).

Palladium Capital Advisors, LLC (the “Placement Agent”) served as our placement agent in the Private Placement. As consideration for serving as our placement agent, we paid the Placement Agent a fee equal to approximately $55,500 and issued the Placement Agent a five year warrant to purchase 1,109,500 shares of common stock at an exercise price of $0.069 per share (the “Placement Agent Warrant”). The Placement Agent Warrant has identical terms to the terms of the Investor Warrant. In addition, the Placement Agent invested $15,000 in the Private Placement and, in exchange therefor, was issued 300,000 Investor Shares and an Investor Warrant to purchase 150,000 shares of common stock.

The foregoing summaries of the Securities Purchase Agreement and the Investor Warrant are not complete, and are qualified in their entirety by reference to the full text of the forms of agreements that are attached as exhibits to this Current Report on Form 8-K. Readers should review those agreements for a more complete understanding of the terms and conditions associated with this transaction.