UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

  (X) Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
                                   Act of 1934

                  For the fiscal year ended December 31, 2004.

                                       OR

     ( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
                              Exchange Act of 1934

                        COMMISSION FILE NUMBER: 33-05384

                          IR BIOSCIENCES HOLDINGS, INC.
                 ----------------------------------------------
                 (Name of Small Business Issuer in its Charter)

                DELAWARE                              13-3301899
     --------------------------------            -------------------
     (State or Other Jurisdiction of               (I.R.S. Employer
      Incorporation or Organization)               Identification No.)

4021 N. 75th Street, Suite 201, Scottsdale, AZ                        85251
----------------------------------------------                  ----------------
  (Address of Principal Executive Offices)                          (Zip Code)

                                 (480) 922-3926
                ------------------------------------------------
                (Issuer's Telephone Number, including Area Code)

         Securities registered under Section 12(b) of the Exchange Act:

                                      NONE

      SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE EXCHANGE ACT:

                    COMMON STOCK, $ 0.001 PAR VALUE PER SHARE
                   ------------------------------------------
                                (Title of class)

Check whether the issuer:  (1) filed all reports required to be filed by Section
13 or 15(d) of the  Exchange  Act of 1934 during the past 12 months (or for such
shorter period that the  Registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days.

YES           NO  X
   -----        ------

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation  S-B is not  contained  in  this  form,  and no  disclosure  will  be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

State issuer's revenues for its most recent fiscal year: $ 0

The aggregate market value of the Registrant's  issued and outstanding shares of
common stock held by non-affiliates of the Registrant as of April 3, 2005 (based
on the average of the bid and asked  prices as reported by the NASD OTC Bulletin
Board as of that date) was approximately $20,377,554.

The number of shares outstanding of Registrant's  Common Stock, par value $0.001
as of April 3, 2005: 70,074,188.

Documents  Incorporated by reference:  The  information  required by Part III of
Form 10-KSB  incorporated by reference from the  Registrant's  definitive  proxy
statement on Schedule 14A, or, if the Registrant's definitive proxy statement is
not  filed  within  that  time,  the  information  will be  filed  as part of an
amendment to this Annual Report on Form 10-KSB/A,  not later than the end of the
120-day period.

Transitional Small Business Disclosure Format  Yes       No  X
                                                  -----    -----

<PAGE>

                               TABLE OF CONTENTS

                                                                          Page
                                                                          ----

                                     PART I

Item 1.  Description of Business.............................................3

Item 2.  Description of Property............................................29

Item 3.  Legal Proceedings..................................................29

Item 4.  Submission of Matters to a Vote of Security Holders................29

                                     PART II

Item 5.  Market for Common Equity, Related Stockholder Matters..............29

Item 6.  Management's Discussion and Analysis or Plan of Operation..........31

Item 7.  Financial Statements......................................F-1 to F-25

Item 8.  Changes in and Disagreements with Accountants......................39

Item 8A. Controls and Procedures............................................39

Item 8B.  Other Information.................................................39

                                    PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act...........................40

Item 10. Executive Compensation.............................................40

Item 11. Security Ownership of Certain Beneficial Owners and
         Management and Related Stockholder Matters.........................40

Item 12. Certain Relationships and Related Transactions.....................40

Item 13. Exhibits...........................................................40

Item 14. Principal Accountant Fees and Services.............................43

                                      -2-

<PAGE>


                           FORWARD-LOOKING STATEMENTS

THIS  ANNUAL  REPORT ON FORM 10-KSB  CONTAINS  FORWARD-LOOKING  STATEMENTS  THAT
INVOLVE  RISKS  AND   UNCERTAINTIES.   IN  PARTICULAR,   STATEMENTS   ABOUT  OUR
EXPECTATIONS,  BELIEFS,  PLANS,  OBJECTIVES,  ASSUMPTIONS  OR  FUTURE  EVENTS OR
PERFORMANCE ARE CONTAINED OR  INCORPORATED BY REFERENCE IN THIS REPORT.  WE HAVE
BASED THESE FORWARD-LOOKING  STATEMENTS ON OUR CURRENT EXPECTATIONS ABOUT FUTURE
EVENTS. WHILE WE BELIEVE THESE EXPECTATIONS ARE REASONABLE, SUCH FORWARD-LOOKING
STATEMENTS ARE INHERENTLY SUBJECT TO RISKS AND UNCERTAINTIES,  MANY OF WHICH ARE
BEYOND OUR CONTROL. THE ACTUAL FUTURE RESULTS FOR IR BIOSCIENCES HOLDINGS,  INC.
MAY DIFFER  MATERIALLY FROM THOSE DISCUSSED HERE FOR VARIOUS REASONS,  INCLUDING
THOSE DISCUSSED IN THIS REPORT UNDER THE HEADING "RISK FACTORS," PART II, ITEM 6
ENTITLED  "MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OR  PLAN OF  OPERATION"  AND
ELSEWHERE  THROUGHOUT THIS ANNUAL REPORT.  GIVEN THESE RISKS AND  UNCERTAINTIES,
YOU  ARE  CAUTIONED  NOT  TO  PLACE  UNDUE  RELIANCE  ON  SUCH   FORWARD-LOOKING
STATEMENTS. THE FORWARD-LOOKING STATEMENTS INCLUDED IN THIS REPORT ARE MADE ONLY
AS OF THE  DATE  HEREOF.  WE DO  NOT  UNDERTAKE  AND  SPECIFICALLY  DECLINE  ANY
OBLIGATION TO UPDATE ANY SUCH STATEMENTS OR TO PUBLICLY  ANNOUNCE THE RESULTS OF
ANY  REVISIONS  TO  ANY  OF  SUCH   STATEMENTS  TO  REFLECT   FUTURE  EVENTS  OR
DEVELOPMENTS.  WHEN USED IN THE REPORT, UNLESS OTHERWISE INDICATED, "WE," "OUR,"
"US," THE "COMPANY" OR "IMMUNEREGEN" REFERS TO IR BIOSCIENCES HOLDINGS, INC. AND
ITS SUBSIDIARY, IMMUNEREGEN BIOSCIENCES, INC.

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

         IR BioSciences  Holdings,  Inc., a development-stage  biopharmaceutical
company,  is engaged  in the  research,  development  and  commercialization  of
important  life  saving,   health-enhancing  products  and  therapies.   Product
development is focused around  Homspera(TM),  our  proprietary  compound that is
derived from homeostatic  substance P, a naturally  occurring peptide within the
body. The Company's initial area of focus is on the development of products that
we believe will treat the  suppression  of the body's  immune  system  caused by
exposure to various forms of  radiation,  toxic  inhalants and viral  infectious
diseases.

         Our company, IR BioSciences  Holdings,  Inc., is a Delaware corporation
and,  until July 2001,  was engaged in the  business of  assisting  unaffiliated
early-stage  development and small to mid-sized  emerging growth  companies with
financial  and  business  development  services,  including  raising  capital in
private  and  public  offerings.  During  2001,  we failed  to meet our  revenue
targets.  On July 27, 2001, a majority interest in our company was acquired by a
private  investor,  and we installed new  management  and adopted a new business
plan.  The  immediate  action  taken  regarding  this new  business  plan was to
discontinue our then current operations effective July 27, 2001.

                                      -3-

<PAGE>

         On July 2, 2003,  our  company and  ImmuneRegen  Biosciences,  Inc.,  a
privately-held   Delaware   corporation   ("ImmuneRegen"),   entered   into  and
consummated an Agreement and Plan of Merger (the  "Merger").  In accordance with
the Merger, on July 2, 2003, we acquired  ImmuneRegen in exchange for 10,531,585
shares of our common stock.  The  transaction  contemplated by the Agreement was
intended to be a "tax-free" reorganization pursuant to the provisions of Section
351 and 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended. On August
29,  2003,  the  Registrant's  name was  changed  from GPN  Network,  Inc. to IR
BioSciences Holdings, Inc.

CORPORATE STRUCTURE

         IR  BioSciences  Holdings  is a  publicly-traded  entity  and  has  one
wholly-owned subsidiary:  ImmuneRegen BioSciences, Inc. ImmuneRegen BioSciences,
Inc.  is a Delaware  Corporation,  and was  incorporated  on October  30,  2002.
Currently,  all  of  our  Company's  operations  are  conducted  by  ImmuneRegen
BioSciences, Inc.

GENERAL

OVERVIEW

         IR BioSciences Holdings, Inc. is a development-stage  biopharmaceutical
company. Through our wholly owned subsidiary,  ImmuneRegen BioSciences, Inc., we
are engaged in the research and  development  of health  enhancing and potential
life saving products. Our product development is focused around Homspera(TM),  a
proprietary  compound that is derived from homeostatic  substance P, a naturally
occurring  peptide.  We believe  Homspera can be used as  treatment  for various
medical  conditions as our preclinical animal studies have shown the compound to
have  very  high   anti-inflammatory  and   immunostimulatory   properties  when
introduced  into the body.  To date,  results  from several  animal  studies and
initial toxicology data have shown Homspera to be safe.

         Our  patents  and  continued  substance  P research  are  derived  from
discoveries  made  during  research  studies  funded by the Air Force  Office of
Scientific  Research in early 1991 by our Chief Scientific Officer and Director,
Dr.  Mark  Witten.  These  studies  further  showed that the  administration  of
Homspera prevented and reversed the damaging effects of jet fuel exposure in the
lungs, as well as protecting and regenerating the immune system.  These findings
led to early  research on  treatments  for  exposure to acute  radiation,  toxic
inhalants, viral infection and on the reversal of lung damage.

         Our current area of focus is on the  development  of  Radilex(TM)  as a
universal  protectant  against  various  potential  forms of  injury  caused  by
chemical,  biological,  radiological  and  nuclear  threats.  We are  developing
Radilex pursuant to a new rule enacted by the U.S. Food and Drug  Administration
("FDA")  under  which  approval  may be granted  solely on the basis of proof of
safety in humans and proof of  efficacy  in  relevant  animal  species.  We have
chosen  this area of focus  initially  because we believe  that it offers us the
best  potential to reach a large  market  quicker and more cost  effectively  as
compared to the  development  of a drug under a traditional  medical  indication
model.

         The  majority of our efforts are in the  research  and  development  of
Radilex as a countermeasure  to the effects of radiological and nuclear threats.
Because  of the  high  anti-inflammatory  and  immunostimulatory  properties  of
Radilex  that we have  witnessed,  we believe the  compound is  well-suited  for
treating  the  damaging  effects of radiation  injury when given  shortly  after
exposure to total body irradiation.  We have generated a large amount of data in
rodent  animal  models  relating to the activity and safety of both Homspera and
Radilex.  To date we have  completed  seven mouse  studies in which  Radilex was
administered  after  exposure to lethal doses of radiation.  In these studies we
witnessed survival rates of up to 100% of the exposed mice.

         Based on data collected in our preclinical  animal studies,  we believe
that similar  results  would be possible in humans.  We are now  finalizing  the
protocols that we believe will allow us to initiate  pivotal large animal trials
that will be  necessary  for  establishing  efficacy in treating  the effects of
exposure to radiation. Within the next twelve months, we expect to begin studies
in non-human primates in order to

                                      -4-

<PAGE>

collect  data on the  efficacy  of  Radilex  in the  treatment  of  exposure  to
radiation.  In  conjunction,  we are  establishing  all  of  the  manufacturing,
toxicology  and human  safety  data  that  will be needed to  support a New Drug
Application (NDA).

         We are  continuing  to research  the efficacy of Radilex as a universal
protectant, used to treat not only radiological and nuclear threats, but also as
a treatment for exposure to potential chemical and biological  threats.  We have
generated data in preclinical  studies indicating that Radilex could conceivably
be used in treating  respiratory  failure caused by exposure to various chemical
and biological  threats,  such as anthrax,  ricin  poisoning and other poisonous
inhalants,  as well as  infectious  diseases  such as avian flu and SARS. We are
continuing to design and perform studies for the further  development of Radilex
in treating these potential threats.

         We have observed in early preclinical studies that Homspera may have an
effect  in  promoting  or  accelerating  wound  healing.   We  plan  to  conduct
preclinical  studies to  determine  if Homspera  could  become a  candidate  for
further  development as a compound to be used in wound healing.  We believe that
such an  application  would  have a  large  potential  market  and  would  share
synergies with potential uses for Radilex.

         Our initial  data shows that both  Homspera and Radilex can be produced
quickly and cost-effectively in large quantities,  are easily administered using
an  inhaler  or puffer  device,  are easy to store and have a  reasonable  shelf
lives.  Further,  in that  Radilex  may have  efficacy in the  treatment  of the
life-threatening  effects of radiation exposure,  we believe there may be strong
interest by  government  agencies  to  stockpile  Radilex if it is  successfully
developed.  We believe  this would not only  provide us with an existing  market
opportunity,  but would also require less  infrastructure to market our product,
thereby allowing us to commercialize  Radilex at a substantially  lower cost. We
are currently in discussions with drug  manufacturers and government  officials,
both foreign and domestic, with regard to such possibilities.

         Our principal offices are located at 4021 North 75th Street, Suite 201,
Scottsdale,  Arizona 85251 and our telephone  number is (480)  922-3926.  We are
incorporated  in  Delaware.  We maintain a website at  www.immuneregen.com.  The
reference to our  worldwide  web address does not  constitute  incorporation  by
reference of the information contained on our website.

RECENT EVENTS

         In October 2004, we completed a private  placement,  whereby we sold an
aggregate of  $2,450,000  worth of units to accredited  investors  (the "Private
Placement").  Each unit was sold for $10,000 (the "Unit Price") and consisted of
(a) a number of shares of our common stock determined by dividing the Unit Price
by  $0.125,  and (b) a  warrant  to  purchase,  at any time  prior to the  fifth
anniversary following the date of issuance of the warrant, a number of shares of
our common stock equal to fifty percent  (50%) of the number of shares  included
within the unit, at a price equal to $0.50 per share of common stock.  We issued
in the Private  Placement an aggregate of 27,560,897  shares of our common stock
and warrants to purchase 13,780,449 shares of our common stock. In consideration
of the investment,  we granted to each investor certain  registration rights and
anti-dilution rights.

         Further  to  the  Private  Placement,  we  entered  into  a  settlement
agreement with certain creditors  whereby for full and complete  satisfaction of
claims totaling an aggregate of $157,219 (the "Claim Amount"),  we issued to the
creditors the following:  (a) a number of shares of our common stock  determined
by dividing  the Claim Amount by $0.125,  and (b)  warrants to purchase,  at any
time  prior to the  fifth  anniversary  following  the date of  issuance  of the
warrant,  a number of shares of our common stock equal to fifty percent (50%) of
the number of shares  described  above,  at a price  equal to $0.50 per share of
common stock.  The warrants are identical to the warrants  issued in the Private
Placement. Pursuant to the settlement we issued an aggregate of 1,257,746 shares
of common stock and warrants to purchase  628,873 shares of common stock.  Under
the  terms of the  settlement  agreement,  the  creditors  released  us from all
claims, known or unknown, relating to the Claim Amount.

                                      -5-

<PAGE>

         Pursuant to the terms of a placement agency agreement,  dated September
3, 2004, by and between us and Joseph Stevens & Co.,  Inc., we issued  4,900,000
shares of our common stock to Joseph Stevens & Co., Inc. or its designees,  upon
the closing of the Private  Placement.  The shares were issued as  consideration
for the services of Joseph  Stevens & Co.,  Inc. as our  placement  agent in the
Private Placement.

         We also previously issued convertible promissory notes in the aggregate
principal  amount of  $558,500.  Immediately  upon the  closing  of the  Private
Placement,  and in  accordance  with the  terms  of the  promissory  notes,  all
outstanding  principal and accrued  interest  converted into 6,703,151 shares of
our common stock.

         Effective December 17, 2004, Eric Hopkins resigned from his position as
our Chief Financial Officer.

         Effective  December  22,  2004,  Steven J.  Scronic  resigned  from his
position as our Corporate Secretary.

         Our board of directors appointed John N. Fermanis to serve as our Chief
Financial  Officer,  effective as of December 22,  2004.  Our Board  resolved to
issue  100,000  shares  of  registered  common  stock  to Mr.  Fermanis  for his
acceptance of this position.

         Our board of  directors  appointed  Michelle R. Laroche to serve as our
Corporate Secretary, effective as of December 22, 2004.

         We also previously issued convertible promissory notes in the aggregate
principal amount of $35,000. On December 24, 2004 all outstanding  principal and
accrued  interest was forgiven by the noteholder.  Consideration  of $100.00 was
paid by us to the noteholder.  Under the terms of the agreement,  the noteholder
released us from all claims, known or unknown, relating to the amount owed.

         In  January  2005,  we made a tender  offer to  temporarily  reduce the
exercise  price of certain  warrants  issued in October 2004 from $0.50 to $0.20
per share. The tender offer expired on March 4, 2005. We accepted for exercise a
total of 6,600,778  warrants validly tendered and not withdrawn  pursuant to the
terms of the tender offer,  which represents  approximately 48% of the aggregate
13,780,449 warrants that were subject to the offer.

HOMSPERA AND SUBSTANCE P

         Homspera is a  proprietary  compound  created by  chemically  modifying
substance P to increase desirable properties.  The chemical name for Homspera is
Sar9, Met(O2)11-substance P.

         Substance  P, first  isolated  in 1931,  is a bioactive  11-amino  acid
peptide  belonging to a group of  neurokinins  (small  peptides that are broadly
distributed  in the  central  nervous  system and  peripheral  nervous  system).
Substance  P has  been  found to be  involved  in many  physiological  processes
including pain modulation,  smooth muscle  contraction,  blood pressure control,
kidney  function and water  homeostasis.  The peptide is widely  distributed  in
numerous  tissues and body fluids  including the central and peripheral  nervous
system, gastrointestinal tract, visual system and circulatory system.

         In the 1950s, substance P was considered to be the neurotransmitter for
primary sensory  afferent  fibers,  or the pain  transmitter.  By the 1970s, the
biochemical  properties of purified substance P were found to be a proteinaceous
substance  composed of amino acids that,  subsequently,  could be  synthetically
derived.

         Since then, substance P has been extensively studied by researchers and
scientists worldwide because of its many general  physiological  effects (smooth
muscle  contraction,  inflammation,  neurotransmission,  blood vessel  dilation,
histamine release,  and activation of the immune system) including

                                      -6-

<PAGE>

its potential to stimulate  epithelial  growth;  heal ulcers and ocular  wounds;
and, as a new approach to dulling anxiety and relieving depression and stress.

         Our patents and continued research and development  efforts are derived
from discoveries made during the early 1990s by our Chief Scientific Officer and
Director,  Dr.  Mark  Witten as a spin-off  of an Air Force  grant.  During this
research it was observed  that the exposure of animals to jet fuels  resulted in
pathological  changes in the lung and immune  systems of those  exposed.  It was
also observed  that such exposure  resulted in depletion of substance P from the
lungs of the animals.  These studies further showed that the  administration  of
Sar9,  Met(O2)11-substance  P  prevented  and  reversed  the effects of jet fuel
exposure in the lungs, as well as protecting and regenerating the immune system.
These  findings  led to early  research  on  treatments  for  exposure  to acute
radiation,  toxic  inhalants  and viral  infection  and on the  reversal of lung
damage.

         We believe  that  Homspera and its  derivatives  are able to be used as
treatments  for a diverse  array of ailments  and bodily  injury as it regulates
cellular death and survival. Further, Homspera is highly selective in nature and
as a substance P receptor agonist it blocks the receptor so that other mediators
cannot attach to it and may prevent inflammation and cell death.

PRODUCTS IN DEVELOPMENT

RADILEX(TM)

         We are  currently  focusing  our  development  efforts  on Radilex as a
potential countermeasure for exposure to lethal doses of radiation in humans. As
traditional  efficacy  studies  would  require  healthy  human  volunteers to be
exposed to potentially  lethal effects of radiation,  Radilex is being developed
pursuant to a new rule enacted by the U.S.  Food and Drug  Administration  (FDA)
under which  approval may be granted solely on the basis of proof of efficacy in
relevant animal species and proof of safety in humans. We believe that this will
not only  greatly  accelerate  the  development  of  Radilex(TM)  but also  will
substantially reduce our development costs and allow us to enter the marketplace
more quickly as compared to following a traditional drug development program.

         To date we have completed seven radiation studies using Radilex on mice
to determine  dose  response to radiation,  the maximum  efficacious  dose,  the
impact on survival and to distinguish  survival  response between aerosol versus
intra muscular  delivery.  In each of these studies mice were exposed to varying
levels of  radiation.  In the fifth study we  determined  that  Radilex  aerosol
treatment  at a dose of 50 iM can  induce a  survival  rate of 50% in mice at 90
days  post-radiation  exposure  to an  administered  lethal  (7.75  Gy)  dose of
radiation.  Further,  it was observed  that these mice had normal  immune system
function  at the 90-day  post-radiation  time  point  compared  to  longitudinal
control  mice.  In June 2004 we  performed  our sixth  study,  conducted  at the
request  of  the  Division  of  Counter-Terrorism  of the  U.S.  Food  and  Drug
Administration  to determine the optimum  delivery  method.  In this study a 2iM
dose of Radilex in a 0.05mL solution was delivered  daily via muscle  injection.
In the study we observed that delivery by aerosol was superior  methodology over
direct muscle injection for the administration of Radilex.  In our seventh mouse
study,  we  increased  the  dosage  to 75iM and held the mice in a  Biolevel  II
facility with a low bacterial load. At 17 days  post-exposure  we observed a one
hundred percent survival rate in the mice given Radilex.

         Currently,  we are  finalizing the protocols for an eighth mouse study.
We are designing  this study to achieve  proof of concept,  as well as obtaining
the optimum dosing regime,  drug dosage levels and delivery  method.  This study
will evaluate the survival impact of Radilex following exposure to various gamma
radiation levels; to validate the effects of Radilex on PARP-1 levels/expression
following irradiation; to determine Radilex levels in major organs; to determine
the  impact  of  Radilex  on  survival  when  administered  12,  24 and 36 hours
following  colbalt  radiation  exposure;  and, to validate and compare  survival
rates of aerosol versus intra muscular  delivery.  We expect this study to begin
within the next 60 days.

                                      -7-

<PAGE>

         We are also  finalizing  the protocols that we believe will allow us to
initiate  pivotal large animal  trials that will be necessary  for  establishing
efficacy.  We expect these studies to begin within the next 12 to 18 months.  In
conjunction  with this, we are  establishing  protocols for toxicology and human
safety studies that will be needed to support a New Drug Application (NDA).

         We are also  researching  the  efficacy of Radilex as a  treatment  for
exposure to various  chemical and biological  agents.  We have generated data in
preclinical  studies  indicating  that  Radilex  could  potentially  be  used in
treating  respiratory  failure  caused  by  exposure  to  various  chemical  and
biological  threats,  such as  anthrax,  ricin  poisoning  and  other  poisonous
inhalants, as well as infectious diseases.

Acute Radiation Sickness (ARS)
------------------------------

         Radiation sickness, known as acute radiation sickness or syndrome, is a
serious illness that occurs when the entire body (or most of it) receives a high
dose of radiation,  usually over a short period of time.  Severe body injury can
result from such exposure including: skin damage; lung radiation injury, similar
to Acute Respiratory Distress Syndrome;  hematopoietic syndrome,  which includes
thrombocytopenia  and neutropenia;  and, damage to the body's organs. The chance
of survival for people with ARS decreases with  increasing  radiation dose. Most
people who do not recover from ARS will die within  several  months of exposure.
The cause of death in most cases is the destruction of the person's bone marrow,
which  results in  infections  and internal  bleeding.  For the  survivors,  the
recovery process may last from several weeks up to 2 years.

Market for Our Products
-----------------------

         Because of past  terrorist  events,  people have expressed much greater
concern  about the  possibility  of a  terrorist  attack  involving  radioactive
materials,  possibly  through the use of a "dirty bomb," and the harmful effects
of radiation from such an event.

 The adverse health consequences of a terrorist nuclear attack vary according to
the type of attack and the distance a person is from the attack. In light of the
current risk of terrorism, high-risk areas include military installations, major
metropolitan  areas and those areas  surrounding  nuclear  power plants or spent
fuel facilities.  Additionally,  Radilex could potentially be made available for
distribution in the event of a natural disaster or accident to those individuals
living near nuclear power plants,  spent fuel  facilities and those living along
transport  routes of  radioactive  materials.  The  uncertainties  of terrorism,
natural  disasters and accidents  coupled with a virtually  unlimited  number of
individuals that could  potentially be affected,  presents us with  significant,
untapped market  opportunities  not only  domestically,  but also throughout the
world.

      Based on our studies we believe that Radilex must be  administered as soon
as possible  after  exposure to radiation.  Due to the suddenness of a potential
attack or disaster and the number of people that would be  affected,  we believe
that  Radilex  would  need to be  stockpiled  to be  appropriately  distributed.
Administration  of Radilex  can be done  quickly and cost  effectively  using an
inhaler or puffer device.  In that Radilex may prove  effective in the treatment
of the life-threatening  effects of radiation exposure,  we believe there may be
strong  interest  by  government   agencies  to  stockpile   Radilex  if  it  is
successfully  developed. We are currently in discussions with drug manufacturers
and government officials with regard to such possibilities.

RESEARCH AND DEVELOPMENT

         We have  spent  approximately  $150,091  and  $42,972 in 2004 and 2003,
respectively,  in research and  development  activities.  From our  inception in
October 2002, we have spent $193,063 in research and development activities.

COMPETITION

         We are engaged in segments of the  biopharmaceutical  industry that are
intensely  competitive  and rapidly  changing.  Based on recent world events and
aggressive governmental  legislation,  we believe a large market opportunity has
developed.  Given this  large  potential  market,  numerous  pharmaceutical  and

                                      -8-

<PAGE>

biotechnology  companies have directed their research efforts toward  developing
therapeutics to treat the same indications that we are researching.

         If  successfully  developed  and  approved,  we believe that there is a
significant  market  for  Radilex  relating  to the  treatment  of  exposure  to
radiation and poisonous  inhalants.  We anticipate that, even if we successfully
develop  Homspera and Radilex and they are approved for marketing,  we will face
intense  and  increasing  competition  in the future as new  products  enter the
market and advanced  technologies  become  available.  There can be no assurance
that  existing  products or new  products  for the  treatment  of such  ailments
developed by competitors,  including Hollis-Eden Pharmaceuticals,  Inc., VaxGen,
Inc.,   Acambis   plc,   Emergent   BioSolutions,    Inc.   and   other   larger
biopharmaceutical  companies,  will not be more  effective  or more  effectively
marketed and sold.  Competitive  products or the development by others of a cure
or new treatment  methods may render our technologies and products and compounds
obsolete, noncompetitive or uneconomical prior to our recovery of development or
commercialization  expenses  incurred with respect to any such  technologies  or
products or compounds.

         We believe that due to the global  political  environment  that time to
market is critical in the discovery of an effective  countermeasure to radiation
exposure and other biological and chemical threats. New developments in areas in
which we are conducting our research and development are expected to continue at
a  rapid  pace in both  industry  and  academia.  Many of our  competitors  have
significantly  greater financial,  technical and human resources than us and may
be  better  equipped  to  develop,  manufacture,  sell,  market  and  distribute
products.  In addition,  many of these  companies have  extensive  experience in
preclinical  testing and clinical  trials,  obtaining  FDA and other  regulatory
approvals and manufacturing and marketing pharmaceutical products. Many of these
competitors  also have products for use  individually or in combination  therapy
that have been  approved or are in  late-stage  development  and operate  large,
well-funded research and development programs.  Smaller companies may also prove
to be significant competitors,  particularly through collaborative  arrangements
with large pharmaceutical and biotechnology companies.

         If our product candidates and compounds are successfully  developed and
approved,  we will face competition based on the safety and effectiveness of our
products  and  compounds,   the  timing  and  scope  of  regulatory   approvals,
availability of manufacturing,  sales, marketing and distribution  capabilities,
reimbursement  coverage,  price and patent  position.  There can be no assurance
that  our  competitors  will  not  develop  more  effective  or more  affordable
technology  or  products,   or  achieve  earlier  patent   protection,   product
development or product  commercialization than us. Accordingly,  our competitors
may succeed in  commercializing  products more rapidly or  effectively  than us,
which could have a material adverse effect on our business,  financial condition
and results of operations.

GOVERNMENTAL REGULATION

         Our  technologies  are  subject  to  extensive  government  regulation,
principally  by the U.S.  Food and  Drug  Administration  and  state  and  local
authorities  in  the  United  States  and  by  comparable  agencies  in  foreign
countries.  Governmental  authorities in the United States extensively  regulate
the pre-clinical and clinical testing, safety, efficacy, research,  development,
manufacturing,   labeling,  storage,  record-keeping,   advertising,  promotion,
export,  marketing  and  distribution,  among other  things,  of  pharmaceutical
products  under  various  federal  laws  including  the Federal  Food,  Drug and
Cosmetic  Act,  or FFDCA,  and under  comparable  laws by the states and in most
foreign countries.

Domestic Regulation
-------------------

         In the  United  States,  the FDA,  under the FFDCA,  the Public  Health
Service Act and other federal statutes and regulations,  subject  pharmaceutical
and biologic  products to rigorous  review.  If we do not comply with applicable
requirements,  we may be  fined,  the  government  may  refuse  to  approve  our
marketing  applications  or allow us to  manufacture  or market our  products or
product candidates,  and we may be criminally  prosecuted.  The FDA also has the
authority to  discontinue  or suspend  manufacture  or  distribution,  require a
product   withdrawal   or  recall  or  revoke   previously   granted   marketing
authorizations,  if  we  fail  to  comply  with  regulatory  standards  or if we
encounter problems following initial marketing.

                                      -9-

<PAGE>

PROJECT BIOSHIELD

         The  U.S.  government,  in  response  to the  increased  threat  to its
citizens,  has enacted Project BioShield,  a comprehensive effort to develop and
make available modern, effective drugs and vaccines to protect against attack by
biological and chemical weapons or other dangerous pathogens.  Project BioShield
will:

          o    Ensure that resources are available to pay for  "next-generation"
               medical   countermeasures.   Project  BioShield  will  allow  the
               government  to buy  improved  vaccines  or  drugs  for  smallpox,
               anthrax,  and botulinum toxin. Use of this authority is currently
               estimated  to be $6 billion  over ten years.  Funds would also be
               available  to  buy   countermeasures  to  protect  against  other
               dangerous  pathogens,  such  as  Ebola  and  plague,  as  soon as
               scientists verify the safety and effectiveness of these products.

          o    Strengthen the development capabilities of the National Institute
               of Health ("NIH") by speeding research and development on medical
               countermeasures  based on the most  promising  recent  scientific
               discoveries.

          o    Give  FDA  the  ability  to  make  promising  treatments  quickly
               available in emergency  situations.  This tightly  controlled new
               authority  can make the newest  treatments  widely  available  to
               patients who need it in a crisis.

Project BioShield has three major components:

         1.   Spending  Authority  for the Delivery of  Next-Generation  Medical
              Countermeasures.  This  authority  will enable the  government  to
              purchase  vaccines and other  therapies as soon as experts believe
              that  they  can be made  safe  and  effective,  ensuring  that the
              private sector devotes efforts to developing the countermeasures.

         2.   New NIH  Programs to Speed  Research  and  Development  on Medical
              Countermeasures.  NIH's usual methods for supporting  research and
              development on conventional diseases have been extremely effective
              in those  areas but may not  always  be suited to meet the  urgent
              demands posed by the risk of terrorism.  The new authorities would
              apply only to support  research and  development  on  bioterrorism
              threat agents.

         3.   New  FDA  Emergency  Use   Authorization   for  Promising  Medical
              Countermeasures  Under  Development.  Some of the  most  promising
              treatments  for a  terrorist  agent may still be under  formal FDA
              review  when an  attack  occurs.  This  will  improve  access to a
              potentially  beneficial treatment in an emergency situation,  when
              it is most  likely  to  save  lives,  even if it has not yet  been
              proven to be suitable for routine general use or has not completed
              the formal process for full FDA licensure.

         Project BioShield contains  provisions  enabling the U.S. Department of
Health  and  Human   Services   ("HHS")   to  begin   purchasing   new   medical
countermeasures  for the Strategic  National  Stockpile in advance of formal FDA
approval. This provision,  known as an Emergency Use Authorization,  has already
been implemented for other development stage medical  countermeasures to weapons
of mass destruction.

         As the result of the Project BioShield legislation,  the Administration
has already begun the process of acquiring several new medical  countermeasures.
In late 2004, the HHS issued a Request for Information  ("RFI") for therapeutics
to treat  ARS.  In  December  2004 we filed a formal  response  to this  request
detailing the potential for Radilex in this indication.


         If we are unable to develop  Radilex under the  legislation  enacted by
Project  BioShield,  we will be required to follow the  traditional FDA approval
process  and  guidelines.  We  believe  that  approval  for  Radilex  under  the
traditional process would be considerably more costly and time consuming.

                                      -10-

<PAGE>

FDA Approval Process
--------------------

         To obtain approval of a new product from the FDA, we must,  among other
requirements,  submit data  demonstrating the product's safety and efficacy,  as
well as, detailed  information and reports on the manufacture and composition of
the product candidate.  In most cases, this entails extensive  laboratory tests,
pre-clinical and clinical trials.  This testing and the preparation of necessary
applications  and processing of those  applications by the FDA are expensive and
typically take many years to complete.  The FDA may deny our applications or may
not act  quickly  or  favorably  in  reviewing  these  applications,  and we may
encounter  significant  difficulties  or  costs in our  efforts  to  obtain  FDA
approvals  that could delay or preclude us from  marketing  any  products we may
develop.  The FDA also may require  post-marketing  testing and  surveillance to
monitor the effects of approved  products or place  conditions  on any approvals
that could restrict the commercial  applications of these  products.  Regulatory
authorities may withdraw product  approvals if we fail to comply with regulatory
standards or if we encounter problems following initial marketing.  With respect
to  patented  products  or  technologies,  delays  imposed  by the  governmental
approval process may materially  reduce the period during which we will have the
exclusive right to exploit the products or technologies.

         The FDA does not apply a single  regulatory scheme to human tissues and
the products  derived from human tissue.  On a case-by-case  basis,  the FDA may
choose to regulate such products as transplanted  human tissue,  medical devices
or biologics.  A fundamental difference in the treatment of products under these
classifications   is  that  the  FDA   generally   permits   human   tissue  for
transplantation to be commercially  distributed without marketing  approval.  In
contrast,  products  regulated as medical  devices or biologics  usually require
such approval.

         The process  required  by the FDA before a new drug or biologic  may be
marketed in the United States generally involves the following:

          o    completion  of  pre-clinical   laboratory  tests  or  trials  and
               formulation studies;

          o    submission to the FDA of an IND for a new drug or biologic, which
               must become effective before human clinical trials may begin;

          o    performance of adequate and well-controlled human clinical trials
               to  establish  the safety and  efficacy of the  proposed  drug or
               biologic for its intended use; and,

          o    submission and approval of a New Drug Application,  or NDA, for a
               drug, or a BLA for a biologic.

         Pre-clinical tests include  laboratory  evaluation of product chemistry
formulation and stability,  as well as studies to evaluate toxicity.  In view of
the nature of our product candidates and our prior clinical  experience with our
product  candidates,  we  concluded  that it was  reasonably  safe  to  initiate
clinical trials and that the clinical trials would be adequate to further assess
both  the  safety  and  efficacy  of our  product  candidates.  The  results  of
pre-clinical  testing,  together with  manufacturing  information and analytical
data, are submitted to the FDA as part of an IND application. The FDA requires a
30-day waiting period after the filing of each IND  application  before clinical
trials may begin,  in order to ensure that human  research  subjects will not be
exposed to  unreasonable  health risks. At any time during this 30-day period or
at any time thereafter, the FDA may halt proposed or ongoing clinical trials, or
may authorize trials only on specified  terms.  The IND application  process may
become extremely  costly and  substantially  delay  development of our products.
Moreover,  positive results of pre-clinical tests will not necessarily  indicate
positive results in clinical trials.

         The  sponsor   typically   conducts  human  clinical  trials  in  three
sequential  phases,  which may  overlap.  These  phases  generally  include  the
following:

                                      -11-

<PAGE>

       Phase      I: The product is usually first introduced into healthy humans
                  or, on  occasion,  into  patients,  and is tested for  safety,
                  dosage  tolerance,  absorption,  distribution,  excretion  and
                  metabolism.

       Phase II: The product is introduced into a limited patient population to:

                  o    assess its efficacy in specific, targeted indications;

                  o    assess dosage tolerance and optimal dosage; and,

                  o    identify possible adverse effects and safety risks.

       Phase III: These   are  commonly  referred  to  as  pivotal studies. If a
                  product  is  found to have an acceptable safety profile and to
                  be  potentially  effective in  Phase II clinical  trials,  new
                  clinical  trials  will be  initiated  to  further  demonstrate
                  clinical  efficacy,  optimal  dosage   and  safety   within an
                  expanded    and    diverse     patient      population      at
                  geographically-dispersed clinical study sites.

         If the  FDA  does  ultimately  approve  the  product,  it  may  require
post-marketing  testing,  including  potentially  expensive Phase IV studies, to
monitor its safety and effectiveness.

         Clinical trials must meet requirements for Institutional  Review Board,
or IRB,  oversight,  informed  consent and the FDA's Good Laboratory  Practices.
Prior to commencement of each clinical trial, the sponsor must submit to the FDA
a clinical  plan,  or protocol,  accompanied  by the  approval of the  committee
responsible  for overseeing  clinical trials at one of the clinical trial sites.
The FDA and the IRB at each  institution  at  which a  clinical  trial  is being
performed  may order the  temporary or permanent  discontinuation  of a clinical
trial at any time if it believes that the clinical trial is not being  conducted
in accordance  with FDA  requirements  or presents an  unacceptable  risk to the
clinical trial patients.

         The sponsor must submit to the FDA the results of the  pre-clinical and
clinical trials,  together with, among other things, detailed information on the
manufacturing and composition of the product,  in the form of an NDA, or, in the
case of a biologic, a BLA. Once the submission has been accepted for filing, the
FDA has 180 days to review the  application  and respond to the  applicant.  The
review  process is often  significantly  extended by FDA requests for additional
information or clarification. The FDA may refer the BLA to an advisory committee
for review,  evaluation and  recommendation as to whether the application should
be  approved,  but the FDA is not  bound by the  recommendation  of an  advisory
committee.

         It is  possible  that our  product  candidates  will  not  successfully
proceed  through this approval  process or that the FDA will not approve them in
any specific  period of time,  or at all. The FDA may deny or delay  approval of
applications  that do not meet  applicable  regulatory  criteria,  or if the FDA
determines  that the clinical  data do not  adequately  establish the safety and
efficacy of the product.  Satisfaction of FDA pre-market  approval  requirements
for a new biologic is a process that may take several  years and the actual time
required may vary substantially  based upon the type,  complexity and novelty of
the product or disease.  The FDA reviews these  applications and, when and if it
decides that  adequate  data are available to show that the product is both safe
and effective and that other applicable requirements have been met, approves the
drug or  biologic  for  marketing.  Government  regulation  may delay or prevent
marketing of potential  products  for a  considerable  period of time and impose
costly  procedures upon our  activities.  Success in early stage clinical trials
does not assure  success in later stage  clinical  trials.  Data  obtained  from
clinical  activities is not always  conclusive and may be susceptible to varying
interpretations  that could delay,  limit or prevent regulatory  approval.  Upon
approval,  a  product  candidate  may be  marketed  only for  those  indications
approved  in the BLA or NDA and  may be  subject  to  labeling  and  promotional
requirements or limitations, including warnings, precautions,  contraindications
and use limitations, which could materially impact profitability. Once approved,
the  FDA  may  withdraw  the  product  approval  if  compliance  with  pre-  and
post-market  regulatory  standards is not  maintained or if safety,  efficacy or
other problems occur after the product reaches the marketplace.

                                      -12-

<PAGE>

         The FDA may,  during  its review of an NDA or BLA,  ask for  additional
test data.  If the FDA does  ultimately  approve  the  product,  it may  require
post-marketing  testing,  including  potentially  expensive Phase IV studies, to
monitor the safety and effectiveness of the product.  In addition,  the FDA may,
in some circumstances,  impose restrictions on the use of the product, which may
be difficult  and  expensive to  administer  and may require  prior  approval of
promotional materials.

Ongoing FDA Requirements
------------------------

         Before  approving an NDA or BLA, the FDA will inspect the facilities at
which the product is  manufactured  and will not approve the product  unless the
manufacturing   facilities  are  in  compliance  with  the  FDA's  current  Good
Manufacturing  Practices,  or cGMP,  requirements  which govern the manufacture,
holding and  distribution  of a product.  Manufacturers  of biologics  also must
comply with the FDA's general biological product standards.  Following approval,
the FDA  periodically  inspects  drug and biologic  manufacturing  facilities to
ensure  continued  compliance  with the cGMP  requirements.  Manufacturers  must
continue to expend time,  money and effort in the areas of  production,  quality
control,  record  keeping and  reporting  to ensure full  compliance  with those
requirements.   Failure  to  comply  with  these   requirements   subjects   the
manufacturer  to possible  legal or  regulatory  action,  such as  suspension of
manufacturing,  seizure of product,  voluntary recall of product,  withdrawal of
marketing approval or civil or criminal penalties.  Adverse experiences with the
product  must be  reported  to the FDA and  could  result in the  imposition  of
marketing  restrictions  through  labeling  changes or market  removal.  Product
approvals may be withdrawn if compliance  with  regulatory  requirements  is not
maintained  or if problems  concerning  safety or efficacy of the product  occur
following approval.

         The labeling,  advertising,  promotion, marketing and distribution of a
drug  or  biologic  product  also  must  be  in  compliance  with  FDA  and  FTC
requirements  which  include,  among  others,   standards  and  regulations  for
direct-to-consumer  advertising,  industry-sponsored  scientific and educational
activities,  and promotional  activities involving the internet. The FDA and FTC
have very broad enforcement authority, and failure to abide by these regulations
can result in penalties,  including the issuance of a Warning  Letter  directing
the company to correct deviations from regulatory standards,  a requirement that
future  advertising  and  promotional  materials be  pre-cleared  by the FDA and
enforcement  actions  that  can  include  seizures,   injunctions  and  criminal
prosecution.

         Manufacturers   are  also  subject  to  various  laws  and  regulations
governing laboratory practices,  the experimental use of animals and the use and
disposal of hazardous or  potentially  hazardous  substances in connection  with
their  research.  In each of the above areas,  the FDA has broad  regulatory and
enforcement  powers,  including  the ability to levy fines and civil  penalties,
suspend or delay  issuance of  approvals,  seize or recall  products and deny or
withdraw approvals.

HIPAA Requirements
------------------

         Other  federal  legislation  may affect our  ability to obtain  certain
health  information  in  conjunction  with our research  activities.  The Health
Insurance Portability and Accountability Act of 1996, or HIPAA, mandates,  among
other  things,  the adoption of standards  designed to safeguard the privacy and
security of individually identifiable health information.  In relevant part, the
U.S. Department of Health and Human Services,  or HHS, has released two rules to
date mandating the use of new standards with respect to such health information.
The first rule  imposes new  standards  relating to the privacy of  individually
identifiable  health  information.  These  standards  restrict  the  manner  and
circumstances under which covered entities may use and disclose protected health
information  so as to protect the privacy of that  information.  The second rule
released by HHS  establishes  minimum  standards  for the security of electronic
health  information.  While we do not  believe we are  directly  regulated  as a
covered entity under HIPAA, the HIPAA standards  impose  requirements on covered
entities  conducting  research  activities  regarding the use and  disclosure of
individually   identifiable  health  information  collected  in  the  course  of
conducting the research. As a result, unless they meet these HIPAA requirements,
covered entities conducting clinical trials for us may not be able to share with
us any results from clinical trials that include such health information.

                                      -13-

<PAGE>

         In addition to the statutes and  regulations  described  above,  we are
also subject to  regulation  under the  Occupational  Safety and Health Act, the
Environmental  Protection  Act, the Toxic  Substances  Control Act, the Resource
Conservation  and Recovery Act and other present and potential  future  federal,
state and local regulations.

MANUFACTURING

      We do not have, and do not intend to establish,  manufacturing  facilities
to produce Radilex or any future  products.  We have used and expect to continue
to use third party  manufacturers  to obtain  synthetic  peptides.  We believe a
synthesized version of substance P is readily available at low cost from several
life  science and  technology  companies  that provide  biochemical  and organic
chemical  products  used in  scientific  and  genomic  research,  biotechnology,
pharmaceutical   development   and  the   diagnosis   of  disease  and  chemical
manufacturing.  We believe that the  synthetic  substance P and other  materials
necessary  to produce  Homspera and Radilex are readily  available  from various
sources,  and several  suppliers are capable of supplying  such in both clinical
and commercial  quantities.  We have  established  relationships  to fulfill our
near-term production needs and we have had extensive  discussions to fulfill any
future commercial production needs.

      The manufacture of our product candidates or any future products,  whether
done by  outside  contractors  as  planned  or  internally,  will be  subject to
rigorous  regulations,  including the need to comply with the FDA's current Good
Manufacturing  Practice (GMP)  standards.  As part of obtaining FDA approval for
each product, each of the manufacturing  facilities must be inspected,  approved
by and  registered  with the FDA. In addition to  obtaining  FDA approval of the
prospective   manufacturer's  quality  control  and  manufacturing   procedures,
domestic and foreign manufacturing facilities are subject to periodic inspection
by the FDA and/or foreign regulatory authorities.

DISTRIBUTION

         If  Radilex  receives  approval  from  the  FDA,  we  will  attempt  to
commercialize the product. Upon such approval, we intend to use our best efforts
to market  Radilex as a treatment  to the damaging  effects of radiation  injury
that  result  after  exposure  to total  body  irradiation,  and  possibly  as a
universal  protectant  against  exposure  to  various  biological  and  chemical
threats.  We  intend  to offer  for sale the  product  to  various  governmental
agencies at the local,  state and federal levels,  both domestically and outside
the United States.

         Prior to FDA approval,  Radilex may become eligible for purchase by the
U.S. government.  Project BioShield legislation contains provisions enabling the
HHS to begin purchasing new medical  countermeasures  for the Strategic National
Stockpile  in  advance  of formal  FDA  approval.  This  provision,  known as an
Emergency Use Authorization,  has already been implemented for other development
stage medical  countermeasures  to weapons of mass destruction.  In that Radilex
may have efficacy in the treatment of the life-threatening  effects of radiation
exposure,  we believe  there may be strong  interest by  government  agencies to
stockpile Radilex if it is successfully developed.

PATENTS

         We currently own or have obtained a license to two issued U.S.  patents
and  six  pending  U.S.  patents  applications.  We also  currently  own or have
obtained two issued foreign patents and two pending foreign patent applications.
Our issued patents and patent  applications  primarily cover the methods whereby
Homspera is used in  improving  pulmonary  function and  stimulating  the immune
system. We are in the process of pursuing several other patent applications.

         We believe that patents,  trademarks,  copyrights and other proprietary
rights are important to our business.  We also rely on trade secrets,  know-how,
continuing technological  innovations and licensing opportunities to develop and
maintain our competitive  position. We seek to protect our intellectual property
rights by a variety of means,  including  obtaining  patents,  maintaining trade
secrets  and  proprietary  know-how,  and  technological  innovation  to operate
without  infringing on the  proprietary  rights of others and to

                                      -14-

<PAGE>

prevent others from infringing on our proprietary  rights. Our policy is to seek
to protect our proprietary  position by, among other methods,  actively  seeking
patent protection in the United States and foreign countries.

         Our success  depends in part on our ability to maintain our proprietary
position  through  effective  patent  claims and their  enforcement  against our
competitors.  Although we believe our patents and patent applications  provide a
competitive advantage, the patent positions of companies like ours are generally
uncertain  and  involve  complex  legal and  factual  questions.  We do not know
whether  any of our  patent  applications  will  result in the  issuance  of any
patents.  Our  issued  patents,  those that may be issued in the future or those
acquired by us, may be challenged,  invalidated or circumvented,  and the rights
granted under any issued patent may not provide us with  proprietary  protection
or  competitive  advantages  against  competitors  with similar  technology.  In
particular,  we do not know if competitors will be able to design  variations on
our treatment  methods to circumvent our current and anticipated  patent claims.
Furthermore,  competitors  may  independently  develop  similar  technologies or
duplicate any technology developed by us. Because of the extensive time required
for the development, testing and regulatory review of a potential product, it is
possible that, before any of our products can be commercialized or marketed, any
related  patent  claim may  expire  or  remain in force for only a short  period
following commercialization, thereby reducing the advantage of the patent.

         We  also  rely  upon   trade   secrets,   confidentiality   agreements,
proprietary   know-how  and  continuing   technological   innovation  to  remain
competitive, especially where we do not believe patent protection is appropriate
or obtainable.  We continue to seek ways to protect our  proprietary  technology
and trade secrets, including entering into confidentiality or license agreements
with our employees and consultants,  and controlling  access to and distribution
of our technologies and other  proprietary  information.  While we use these and
other reasonable  security measures to protect our trade secrets,  our employees
or  consultants  may  unintentionally  or  willfully  disclose  our  proprietary
information to competitors.

         Our  commercial  success  will depend in part on our ability to operate
without infringing upon the patents and proprietary rights of third parties.  It
is uncertain whether the issuance of any third party patents would require us to
alter our products or technology,  obtain licenses or cease certain  activities.
Our failure to obtain a license to  technology  that we may require to discover,
develop or commercialize  our future products may have a material adverse impact
on us. One or more third-party  patents or patent applications may conflict with
patent applications to which we have rights. Any such conflict may substantially
reduce the coverage of any rights that may issue from the patent applications to
which we have rights.  If third parties prepare and file patent  applications in
the United  States that also claim  technology  to which we have rights,  we may
have to  participate  in  interference  proceedings  in the  USPTO to  determine
priority of invention.

         We may  collaborate  in the future  with other  entities  on  research,
development  and   commercialization   activities.   Disputes  may  arise  about
inventorship and corresponding  rights in know-how and inventions resulting from
the joint creation or use of intellectual  property by us and our collaborators,
partners, licensors and consultants. As a result, we may not be able to maintain
our proprietary position.

EMPLOYEES

         As of December 31, 2004,  we had five total  employees,  four  contract
employees and one full-time  employee.  Our sole full time employee is our Chief
Executive Officer,  Michael K. Wilhelm,.  None of our employees are covered by a
collective bargaining agreement.

                                      -15-

<PAGE>

RISK FACTORS

         IN  EVALUATING  OUR  BUSINESS,   YOU  SHOULD   CONSIDER  THE  FOLLOWING
DISCUSSIONS OF RISKS, IN ADDITION TO OTHER INFORMATION  CONTAINED IN THIS REPORT
AS WELL AS OUR OTHER PUBLIC FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.
ANY OF THE  FOLLOWING  RISKS COULD  MATERIALLY  ADVERSELY  AFFECT OUR  BUSINESS,
FINANCIAL CONDITION, RESULTS OF OPERATIONS AND PROSPECTS.

WE MAY FAIL TO  BECOME  AND  REMAIN  PROFITABLE  OR WE MAY BE UNABLE TO FUND OUR
CONTINUING LOSSES, IN WHICH CASE OUR BUSINESS MAY FAIL.

         We are  focused  on  product  development  and have not  generated  any
revenue to date. We have incurred operating losses since our inception.  Our net
loss for the  twelve  months  ended  December  31,  2004 was  $5,305,407.  As of
December 31, 2004, we had an accumulated deficit of $7,208,027.

         We currently have no product  candidates for sale in the United States,
and we cannot guarantee that we will ever have marketable products in the United
States.  We must  demonstrate  that  our  product  candidates  satisfy  rigorous
standards of safety and efficacy before the FDA and other regulatory authorities
in the  United  States and abroad  will  approve  the  products  for  commercial
marketing. We will need to conduct significant additional research,  preclinical
testing and clinical  testing before we can file  applications  with the FDA for
approval of our product candidates.  In addition,  to compete  effectively,  our
future  products  must  be  easy  to  use,   cost-effective  and  economical  to
manufacture on a commercial scale. We may not achieve any of these objectives.

         We expect to incur losses as we research,  develop and seek  regulatory
approvals  for our products.  If our products fail in clinical  trials or do not
gain regulatory  approval,  or if our products do not achieve market acceptance,
we will not be profitable.  If we fail to become and remain profitable, or if we
are unable to fund our continuing losses, our business may fail.

OUR  OPERATING  EXPENSES  ARE  UNPREDICTABLE,  WHICH MAY  ADVERSELY  AFFECT  OUR
BUSINESS, OPERATIONS AND FINANCIAL CONDITION.

                                      -16-

<PAGE>

         As a  result  of our  limited  operating  history  and  because  of the
emerging  nature of the markets in which we will compete,  our financial data is
of  limited  value in  planning  future  operating  expenses.  To the extent our
operating expenses precede or are not rapidly followed by increased revenue, our
business,  results of  operations  and  financial  condition  may be  materially
adversely affected. Our expense levels will be based in part on our expectations
concerning future revenues.  A significant portion of our revenue is anticipated
to be derived from  Homspera;  however the size and extent of such  revenues are
wholly dependent upon the choices and demand of individuals, which are difficult
to forecast  accurately.  We may be unable to adjust our  operations in a timely
manner to compensate for any unexpected shortfall in revenues. Further, business
development and marketing  expenses may increase  significantly as we expand our
operations.

WE MAY EXPERIENCE FLUCTUATION OF QUARTERLY OPERATING RESULTS WHICH MAY CAUSE OUR
STOCK PRICE TO FLUCTUATE.

         Our  quarterly  operating  results may fluctuate  significantly  in the
future as a result of a  variety  of  factors,  many of which  are  outside  our
control.  These factors include:  the level of demand for Homspera and any other
products;  our  ability  to  attract  and retain  personnel  with the  necessary
strategic,  technical and creative skills required for effective operations; the
amount and timing of expenditures by customers; the amount and timing of capital
expenditures  and other  costs  relating  to the  expansion  of our  operations;
government regulation and legal developments  regarding the use of Homspera; and
general  economic  conditions.  As  a  strategic  response  to  changes  in  the
competitive environment, we may from time to time make certain pricing, service,
technology or marketing  decisions that could have a material  adverse effect on
our quarterly  results.  Due to all of these factors,  our operating results may
fall below the expectations of securities  analysts,  stockholders and investors
in any future quarter.

IF OUR PLAN IS NOT SUCCESSFUL OR MANAGEMENT IS NOT  EFFECTIVE,  THE VALUE OF OUR
COMMON STOCK MAY DECLINE.

         Our operating subsidiary, ImmuneRegen BioSciences, Inc., was founded in
October  2002. As a result,  we are a  development  stage company with a limited
operating history that makes it impossible to reliably predict future growth and
operating results. Our business and prospects must be considered in light of the
risks and  uncertainties  frequently  encountered  by  companies  in their early
stages of development. In particular, we have not demonstrated that we can:

          o    ensure that our products  function as intended in human  clinical
               applications;

          o    obtain  the  regulatory   approvals  necessary  to  commercialize
               products that we may develop in the future;

          o    manufacture, or arrange for third-parties to manufacture,  future
               products in a manner that will enable us to be profitable;

          o    establish  many of the business  functions  necessary to operate,
               including   sales,   marketing,   administrative   and  financial
               functions, and establish appropriate financial controls;

          o    make, use, and sell future products without infringing upon third
               party intellectual property rights; or

          o    respond effectively to competitive pressures.

         We  cannot  be  sure  that  we  will be  successful  in  meeting  these
challenges and addressing these risks and uncertainties.  If we are unable to do
so, our business will not be successful.

                                      -17-

<PAGE>

WE WILL BE REQUIRED TO RAISE  ADDITIONAL  CAPITAL TO FUND OUR OPERATIONS.  IF WE
CANNOT RAISE  NEEDED  ADDITIONAL  CAPITAL IN THE FUTURE,  WE WILL BE REQUIRED TO
CEASE OPERATIONS.

      As  of  December  31,  2004,  our  cash  and  cash   equivalents   totaled
approximately  $970,114 Based on our current plans,  we believe these  financial
resources, and interest earned thereon, will be sufficient to meet our operating
expenses  and  capital  requirements  for at least the next 12 months.  However,
changes in our research and  development  plans or other  events  affecting  our
operating  expenses may result in the expenditure of such cash before that time.
We may  require  substantial  additional  funds  in order  to  finance  our drug
discovery and development programs,  fund operating expenses,  pursue regulatory
clearances,  develop  manufacturing,   marketing  and  sales  capabilities,  and
prosecute and defend our intellectual  property  rights.  We may seek additional
funding   through   public  or  private   financing  or  through   collaborative
arrangements with strategic partners.


      You should be aware that in the future:

          o    we may not obtain additional  financial  resources when necessary
               or on terms favorable to us, if at all; and

          o    any available additional financing may not be adequate.

      If we cannot raise additional funds when needed,  or on acceptable  terms,
we will not be able to continue to develop our drug candidates.

         We require substantial working capital to fund our operations. Since we
do not expect to generate  significant  revenues in the foreseeable  future,  in
order to fund operations, we will be completely dependent on additional debt and
equity financing arrangements.  There is no assurance that any financing will be
sufficient  to fund our  capital  expenditures,  working  capital and other cash
requirements for the next 12 months. Our working capital as of December 31, 2004
was $(593,533) No assurance can be given that any such  additional  funding will
be available or that, if available, can be obtained on terms favorable to us. If
we are unable to raise needed funds on acceptable  terms, we will not be able to
develop or enhance our  products,  take  advantage  of future  opportunities  or
respond to  competitive  pressures  or  unanticipated  requirements.  A material
shortage of capital will  require us to take drastic  steps such as reducing our
level of  operations,  disposing  of selected  assets or seeking an  acquisition
partner. If cash is insufficient, we will not be able to continue operations.

ALL OUR  APPLICATIONS  ARE ALL DERIVED FROM THE USE OF HOMSPERA.  IF HOMSPERA IS
FOUND TO BE UNSAFE OR INEFFECTIVE, OUR BUSINESS WOULD BE MATERIALLY HARMED.

         All our potential applications are derived from the use of Homspera. In
addition,  we  expect to  utilize  Homspera  in the  development  of any  future
products we market.  If these current or future  products are found to be unsafe
or  ineffective  due to the use of  Homspera,  we may  have to  modify  or cease
production of the products.  As all of our applications  utilize or will utilize
Homspera,  any findings that Homspera is unsafe or  ineffective  would  severely
harm our business operations,  since all of our primary revenue sources would be
negatively affected by such findings.

IF WE FAIL TO SUCCESSFULLY DEVELOP AND COMMERCIALIZE  PRODUCTS,  WE WILL HAVE TO
CEASE OPERATIONS.

         Our failure to develop and  commercialize  products  successfully  will
cause us to cease operations.  Our potential  therapies  utilizing Homspera will
require  significant  additional research and development efforts and regulatory
approvals  prior  to  potential  commercialization  in  the  future.  We  cannot
guarantee that we, or our corporate collaborators,  if any, will ever obtain any
regulatory   approvals  of  Homspera.   We  currently   are  focusing  our  core
competencies  on Homspera  although  there may be no  assurance  that we will be
successful in so doing.

                                      -18-

<PAGE>

         Our therapies and technologies utilizing Homspera is at early stages of
development  and may not be shown to be safe or effective  and may never receive
regulatory  approval.  Our  technologies  utilizing  Homspera  have not yet been
tested in  humans.  Regulatory  authorities  may not  permit  human  testing  of
potential  products  based  on these  technologies.  Even if  human  testing  is
permitted,  any  potential  products  based on Homspera may not be  successfully
developed or shown to be safe or effective.

         The results of our  preclinical  studies and clinical trials may not be
indicative  or future  clinical  trial  results.  A  commitment  of  substantial
resources to conduct time-consuming  research,  preclinical studies and clinical
trials will be required  if we are to develop  any  products.  Delays in planned
patient enrollment in our clinical trials may result in increased costs, program
delays or both. None of our potential products may prove to be safe or effective
in clinical trials.  Approval of the Unites States Food and Drug Administration,
the FDA, or other regulatory  approvals,  including export license  permissions,
may not be  obtained  and  even if  successfully  developed  and  approved,  our
potential  products may not achieve market  acceptance.  Any products  resulting
from our programs may not be successfully  developed or  commercially  available
for a number of years, if at all.

         Moreover, unacceptable toxicity or side effects could occur at any time
in the course of human  clinical  trials or, if any  products  are  successfully
developed  and  approved  for  marketing,  during  commercial  use of any of our
proposed products.  The appearance of any unacceptable  toxicity or side effects
could  interrupt,  limit,  delay or abort the development of any of our proposed
products or, if  previously  approved,  necessitate  their  withdrawal  from the
market.

THE MARKET FOR TREATING ACUTE RADIATION  SYNDROME IS UNCERTAIN AND WE MAY NOT BE
ABLE TO SUCCESSFULLY COMMERCIALIZE RADILEX.

         We do not believe any drug has ever been  approved  and  commercialized
for the treatment of severe acute radiation injury.  In addition,  the incidence
of  large-scale  exposure  to  nuclear  or  radiological  events  has been  low.
Accordingly,  even if Radilex,  our lead drug candidate to treat Acute Radiation
Syndrome (ARS), is approved by the FDA, we cannot predict with any certainty the
size of this market.  The potential  market for Radilex is largely  dependent on
the  size of  stockpiling  orders,  if any,  procured  by the U.S.  and  foreign
governments. While a number of governments have historically stockpiled drugs to
treat  indications such as smallpox,  anthrax  exposure,  plague,  tularemia and
certain  long-term  effects  of  radiation  exposure,  we  are  unaware  of  any
significant  stockpiling  orders for drugs to treat  ARS.  While we have filed a
formal response to the U.S.  Department of Health and Human Services Request for
Information  (RFI) for therapeutics to treat ARS, at least one other company has
responded  to this RFI,  and we cannot  guarantee  that our response to this RFI
will  result in a U.S.  Department  of Health  and Human  Services  Request  for
Proposal (RFP) or any stockpiling  orders. A decision by the U.S.  Government to
enter into a commitment to purchase Radilex prior to FDA approval is largely out
of our control.  Our  development  plans and  timelines  may vary  substantially
depending  on  whether  we  receive  such a  commitment  and  the  size  of such
commitment,  if any. In  addition,  even if Radilex is  approved  by  regulatory
authorities, we cannot guarantee that we will receive any stockpiling orders for
Radilex,  that any such order would be  profitable  to us or that  Radilex  will
achieve market acceptance by the general public.

THE LENGTHY PRODUCT  APPROVAL  PROCESS AND UNCERTAINTY OF GOVERNMENT  REGULATORY
REQUIREMENTS MAY DELAY OR PREVENT US FROM COMMERCIALIZING PROPOSED PRODUCTS.

         Clinical  testing,  manufacture,  promotion,  export  and  sale  of our
proposed products are subject to extensive  regulation by numerous  governmental
authorities in the United States,  principally the FDA, and corresponding  state
and foreign  regulatory  agencies.  This regulation may delay or prevent us from
commercializing  proposed products.  Noncompliance with applicable  requirements
can result in, among other things, fines, injunctions, seizure or recall of such
products,  total or partial  suspension of product  manufacturing and marketing,
failure of the government to grant premarket  approval,  withdrawal of marketing
approvals and criminal prosecution.

         The regulatory process for new therapeutic drug products, including the
required preclinical studies and clinical testing, is lengthy and expensive.  We
may not receive necessary FDA clearances for

                                      -19-

<PAGE>

any of our potential  products in a timely manner,  or at all. The length of the
clinical  trial  process and the number of patients  the FDA will  require to be
enrolled in the clinical trials in order to establish the safety and efficacy of
our proposed products is uncertain.

         Even  if  human   clinical   trials  of  Homspera  are   initiated  and
successfully completed, the FDA may not approve Homspera for commercial sale. We
may  encounter  significant  delays or excessive  costs in our efforts to secure
necessary approvals.  Regulatory requirements are evolving and uncertain. Future
United States or foreign  legislative or administrative  acts could also prevent
or delay regulatory  approval of our products.  We may not be able to obtain the
necessary  approvals for clinical  trials,  manufacturing or marketing of any of
our products  under  development.  Even if commercial  regulatory  approvals are
obtained,  they may include  significant  limitations  on the indicated uses for
which a product may be marketed.

        The FDA has not  designated  expanded  access  protocols for Homspera as
"treatment" protocols.  The FDA may not determine that Homspera meets all of the
FDA's  criteria for use of an  investigational  drug for treatment  use. Even if
Homspera  is allowed  for  treatment  use,  third  party  payers may not provide
reimbursement  for the costs of treatment  with  Homspera.  The FDA also may not
consider  Homspera to be an  appropriate  candidate  for  accelerated  approval,
expedited review or fast track designation.

IF WE OBTAIN  REGULATORY  APPROVAL  OF OUR  PRODUCTS,  THEY WILL BE  SUBJECT  TO
CONTINUING REVIEW AND EXTENSIVE REGULATORY REQUIREMENTS,  WHICH COULD AFFECT THE
MANUFACTURING AND MARKETING OF OUR PRODUCTS.

         A marketed product is subject to continual FDA review.  Later discovery
of  previously  unknown  problems  or  failure  to  comply  with the  applicable
regulatory requirements may result in restrictions on the marketing of a product
or  withdrawal  of the  product  from the market,  as well as possible  civil or
criminal  sanctions.  The FDA could withdraw a previously  approved product from
the market upon receipt of newly discovered information,  including a failure to
comply with regulatory  requirements,  the occurrence of unanticipated  problems
with products following approval, or other reasons, which could adversely affect
our operating results.

         Among the other requirements for regulatory approval is the requirement
that  prospective   manufacturers   conform  to  the  FDA's  Good  Manufacturing
Practices,  or GMP, requirements.  In complying with the FDA's GMP requirements,
manufacturers  must  continue to expend  time,  money and effort in  production,
record  keeping and  quality  control to assure that  products  meet  applicable
specifications and other requirements. Failure to comply and maintain compliance
with  the  FDA's  GMP  requirements  subjects   manufacturers  to  possible  FDA
regulatory action and as a result, may have a material adverse effect on us. We,
or our contract  manufacturers,  if any, may not be able to maintain  compliance
with the FDA's GMP  requirements  on a  continuing  basis.  Failure to  maintain
compliance could have a material adverse effect on us.

         Additionally,  the FDA's policies may change and additional  government
regulations may be enacted,  which could prevent or delay regulatory approval of
our applications.  We cannot predict the likelihood, nature or extent of adverse
government  regulation that may arise from future  legislation or administrative
action,  either in the United  States or abroad.  If we are not able to maintain
regulatory  compliance,  we might not be permitted to market our future products
and our business could suffer.

IF WE FAIL TO OBTAIN APPROVAL FROM FOREIGN REGULATORY  AUTHORITIES,  WE WILL NOT
BE ALLOWED TO MARKET OR SELL OUR PRODUCTS IN OTHER COUNTRIES.

         Marketing any drug  products  outside of the United States will subject
us to numerous and varying foreign regulatory  requirements governing the design
and conduct of human clinical trials and marketing approval.  Additionally,  our
ability to export  drug  candidates  outside the United  States on a  commercial
basis will be subject to the receipt  from the FDA of export  permission,  which
may not be available on a timely basis, if at all.

                                      -20-

<PAGE>

         Approval  procedures  vary among  countries and can involve  additional
testing,  and the time required to obtain approval may differ from that required
to obtain FDA approval. Foreign regulatory approval processes include all of the
risks  associated  with obtaining FDA approval set forth above,  and approval by
the FDA does not ensure approval by the health authorities of any other country.

SIGNIFICANT  DELAY OR FAILURE TO OBTAIN  REGULATORY  APPROVALS  WOULD IMPEDE OUR
ABILITY TO GENERATE REVENUE.

         The process of  obtaining  FDA and other  regulatory  approvals is time
consuming,  expensive and difficult to design and implement. Clinical trials are
required and the marketing and  manufacturing of our applications are subject to
rigorous testing  procedures.  Significant delays in clinical trials will impede
our ability to  commercialize  our  applications  and generate revenue and could
significantly increase our development costs. The commencement and completion of
clinical trials for our  Homspera-based  applications or any of our applications
could be delayed or prevented by a variety of factors, including:

          o    delays in obtaining regulatory approvals to commence a study;

          o    delays in identifying and reaching  agreement on acceptable terms
               with prospective clinical trial sites;

          o    delays in the enrollment of patients;

          o    lack of efficacy during clinical trials; or,

          o    unforeseen safety issues.

         Even if marketing approval from the FDA is received, the FDA may impose
post-marketing requirements, such as:

          o    labeling   and   advertising   requirements,    restrictions   or
               limitations,  including the  inclusion of warnings,  precautions,
               contra-indications  or use limitations that could have a material
               impact on the future profitability of our applications;

          o    testing and surveillance to monitor our future products and their
               continued compliance with regulatory requirements;

          o    submitting products for inspection and, if any inspection reveals
               that the product is not in  compliance,  prohibiting  the sale of
               all products;

          o    suspending manufacturing; or,

          o    withdrawing marketing clearance.

CLINICAL  TRIALS  MAY  FAIL  TO  DEMONSTRATE  THE  SAFETY  AND  EFFICACY  OF OUR
APPLICATIONS, WHICH COULD PREVENT OR SIGNIFICANTLY DELAY REGULATORY APPROVAL.

         Prior to receiving approval to commercialize any of our applications or
therapies,  we must demonstrate with substantial  evidence from  well-controlled
clinical  trials,  and to the  satisfaction  of the  FDA  and  other  regulatory
authorities in the United States and abroad, that our applications are both safe
and  effective.  We will need to  demonstrate  our  applications'  efficacy  and
monitor their safety  throughout the process.  If any future clinical trials are
unsuccessful,  our business and  reputation  would be harmed and our stock price
would be adversely affected.

         All of our  applications  are prone to the risks of failure inherent in
biologic  development.  The  results  of  early-stage  clinical  trials  of  our
applications  do not  necessarily  predict the results of  later-stage  clinical
trials.  Applications  in later-stage

                                      -21-

<PAGE>

clinical  trials may fail to show  desired  safety and efficacy  traits  despite
having progressed through initial clinical testing.  Even if we believe the data
collected from clinical trials of our  applications is promising,  this data may
not be  sufficient  to support  approval by the FDA or any other U.S. or foreign
regulatory  approval.  Preclinical  and  clinical  data  can be  interpreted  in
different  ways.  Accordingly,  FDA  officials  could  interpret  such  data  in
different  ways than we do,  which  could  delay,  limit or  prevent  regulatory
approval. The FDA, other regulatory authorities,  or we may suspend or terminate
clinical  trials at any time.  Any failure or  significant  delay in  completing
clinical trials for our applications,  or in receiving  regulatory  approval for
the sale of any products resulting from our applications,  may severely harm our
business and reputation.

DELAYS IN THE CONDUCT OR COMPLETION OF OUR  PRECLINICAL  OR CLINICAL  STUDIES OR
THE ANALYSIS OF THE DATA FROM OUR PRECLINICAL OR CLINICAL  STUDIES MAY RESULT IN
DELAYS IN OUR PLANNED FILINGS FOR REGULATORY APPROVALS,  OR ADVERSELY AFFECT OUR
ABILITY TO ENTER INTO COLLABORATIVE ARRANGEMENTS.


      We may  encounter  problems  with some or all of our  completed or ongoing
studies  that may cause us or  regulatory  authorities  to delay or suspend  our
ongoing  studies or delay the  analysis  of data from our  completed  or ongoing
studies.  If the  results  of our  ongoing  and  planned  studies  for our  drug
candidates  are not available when we expect or if we encounter any delay in the
analysis of the results of our studies for our drug candidates:

          o    we may not have the financial  resources to continue research and
               development of any of our drug  candidates;  and,

          o    we may not be  able  to  enter  into  collaborative  arrangements
               relating  to any drug  candidate  subject to delay in  regulatory
               filing.

     Any of the  following  reasons,  among  others,  could delay or suspend the
completion of our ongoing and future studies:

          o    delays in enrolling volunteers;

          o    interruptions  in the  manufacturing  of our drug  candidates  or
               other  delays  in the  delivery  of  materials  required  for the
               conduct of our studies;

          o    lower than anticipated retention rate of volunteers in a trial;

          o    unfavorable efficacy results;

          o    serious side effects  experienced by study participants  relating
               to the  drug  candidate;

          o    new communications  from regulatory agencies about how to conduct
               these studies; or

          o    failure to raise additional funds.

IF  THE   MANUFACTURERS  OF  OUR  PRODUCTS  DO  NOT  COMPLY  WITH  CURRENT  GOOD
MANUFACTURING PRACTICES REGULATIONS, OR CANNOT PRODUCE THE AMOUNT OF PRODUCTS WE
NEED  TO  CONTINUE  OUR  DEVELOPMENT,  WE  WILL  FALL  BEHIND  ON  OUR  BUSINESS
OBJECTIVES.

      Manufacturers  producing  our drug  candidates  must follow  current  Good
Manufacturing  Practices,  or GMP,  regulations  enforced by the FDA and foreign
equivalents.  If a manufacturer  of our drug  candidates does not conform to the
GMP regulations and cannot be brought up to such a standard, we will be required
to find  alternative  manufacturers  that do  conform.  This  may be a long  and
difficult  process,  and  may  delay  our  ability  to  receive  FDA or  foreign
regulatory approval of our products.

      We also rely on our manufacturers to supply us with a sufficient  quantity
of our drug candidates to conduct clinical trials.  If we have difficulty in the
future  obtaining  our  required  quantity  and  quality  of  supply,  we  could
experience  significant  delays  in  our  development  programs  and  regulatory
process.

                                      -22-

<PAGE>

OUR  LACK  OF  COMMERCIAL  MANUFACTURING,   SALES,  DISTRIBUTION  AND  MARKETING
EXPERIENCE MAY PREVENT US FROM SUCCESSFULLY COMMERCIALIZING PRODUCTS.

         The  manufacturing  process of our  proposed  products  is  expected to
involve a number of steps and requires compliance with stringent quality control
specifications imposed by us and by the FDA. We have no experience in the sales,
marketing and distribution of pharmaceutical or biotechnology  products. We have
not  manufactured  any of our  products  in  commercial  quantities.  We may not
successfully make the transition from manufacturing clinical trial quantities to
commercial   production   quantities   or  be  able  to  arrange  for   contract
manufacturing and this could prevent us from  commercializing  products or limit
our profitability from our products.

WE RELY ON THIRD  PARTY  MANUFACTURERS  FOR THE  MANUFACTURE  OF  HOMSPERA.  OUR
INABILITY TO MANUFACTURE HOMSPERA, AND OUR DEPENDENCE ON SUCH MANUFACTURERS, MAY
DELAY OR IMPAIR OUR  ABILITY  TO  GENERATE  REVENUES,  OR  ADVERSELY  AFFECT OUR
PROFITABILITY.

         We may enter into arrangements with contract manufacturing companies in
order  to  meet   requirements  for  our  products  or  to  attempt  to  improve
manufacturing  efficiency.  If we choose to contract for manufacturing services,
we may encounter costs, delays and/or other difficulties in producing, packaging
and distributing  our clinical trials and finished  product.  Further,  contract
manufacturers must also operate in compliance with the GMP requirements; failure
to do so could  result in, among other  things,  the  disruption  of our product
supplies. Our potential dependence upon third parties for the manufacture of our
proposed  products may  adversely  affect our profit  margins and our ability to
develop and deliver proposed products on a timely and competitive basis.

         For the manufacture of the applications  under  development,  we obtain
synthetic  peptides from third party  manufacturers.  A  synthesized  version of
Homspera  is  readily  available  at low cost  from  several  life  science  and
technology  companies that provide biochemical and organic chemical products and
kits used in  scientific  and genomic  research,  biotechnology,  pharmaceutical
development and the diagnosis of disease and chemical  manufacturing.  If any of
these  proposed  manufacturing  operations  prove  inadequate,  there  may be no
assurance  that any other  arrangements  may be established on a timely basis or
that  we  could  establish  other  manufacturing  capacity  on a  timely  basis.
Although,  we  believe  that  the  synthetic  substance  P and  other  materials
necessary to produce Homspera are readily  available from various  sources,  and
several  suppliers  are capable of  supplying  substance P in both  clinical and
commercial quantities, our dependence on such manufacturers, may delay or impair
our ability to generate revenues, or adversely affect our profitability.

ADVERSE  DETERMINATIONS  CONCERNING  PRODUCT PRICING,  REIMBURSEMENT AND RELATED
MATTERS COULD PREVENT US FROM SUCCESSFULLY COMMERCIALIZING HOMSPERA.

         Our  ability  to earn  sufficient  revenue  on  Homspera  or any  other
proposed  products will depend in part on the extent to which  reimbursement for
the  costs of such  products  and  related  treatments  will be  available  from
government health administration authorities,  private health coverage insurers,
managed  care   organizations  and  other   organizations.   Failure  to  obtain
appropriate  reimbursement  may  prevent  us from  successfully  commercializing
Homspera  or  any  proposed   products.   Third-party  payers  are  increasingly
challenging the prices of medical products and services.  If purchasers or users
of Homspera or any such other proposed  products are not able to obtain adequate
reimbursement  for the cost of using  such  products,  they may forego or reduce
their use.  Significant  uncertainty  exists as to the  reimbursement  status of
newly  approved  health care products and whether  adequate third party coverage
will be available.

THE MEDICAL COMMUNITY MAY NOT ACCEPT AND UTILIZE  HOMSPERA,  WHICH WOULD PREVENT
US FROM SUCCESSFULLY COMMERCIALIZING THE PRODUCT.

         Our  ability  to  market  and  commercialize  Homspera  depends  on the
acceptance and utilization of Homspera by the medical community. We will need to
develop  commercialization  initiatives  designed to increase awareness about us
and Homspera among targeted  audiences,  including  public health  activists and
community-based  outreach  groups  in  addition  to  the  investment  community.
Currently,  we have not

                                      -23-

<PAGE>

developed any such initiatives. Without such acceptance of Homspera, the product
upon  which  we  expect  to be  substantially  dependent,  we may not be able to
successfully commercialize Homspera or generate revenue.

PRODUCT LIABILITY EXPOSURE MAY EXPOSE US TO SIGNIFICANT LIABILITY OR COSTS.

         We face an inherent  business risk of exposure to product liability and
other  claims  and  lawsuits  in the event  that the  development  or use of our
technology  or  prospective  products  is  alleged to have  resulted  in adverse
effects. We may not be able to avoid significant  liability exposure. We may not
have sufficient  insurance  coverage and we may not be able to obtain sufficient
coverage  at a  reasonable  cost.  An  inability  to  obtain  product  liability
insurance at acceptable cost or to otherwise  protect against  potential product
liability claims could prevent or inhibit the commercialization of our products.
A product  liability  claim  could hurt our  financial  performance.  Even if we
avoids liability  exposure,  significant costs could be incurred that could hurt
our financial performance.

AS A RESULT OF OUR INTENSELY COMPETITIVE INDUSTRY, WE MAY NOT GAIN ENOUGH MARKET
SHARE TO BE PROFITABLE.

      The biotechnology and pharmaceutical industries are intensely competitive.
We have numerous competitors in the United States and elsewhere.  Because we are
pursuing  potentially large markets, our competitors include major multinational
pharmaceutical  companies,  specialized biotechnology firms and universities and
other research institutions. Several of these entities have already successfully
marketed  and  commercialized  products  that will  compete  with our  products,
assuming  that  our  products  gain  regulatory  approval.  Competitors  such as
Hollis-Eden Pharmaceuticals,  Inc. have developed or are developing products for
the treatment of severe acute radiation injury.  Companies such as VaxGen, Inc.,
Acambis plc and Emergent  BioSolutions have developed or are developing vaccines
against infectious diseases, including anthrax.


      Many of our competitors have greater financial and other resources, larger
research and development  staffs and more effective  marketing and manufacturing
organizations than we do. In addition, academic and government institutions have
become  increasingly  aware of the commercial value of their research  findings.
These  institutions  are now more  likely  to  enter  into  exclusive  licensing
agreements with commercial  enterprises,  including our competitors,  to develop
and market commercial products.


      Our  competitors may succeed in developing or licensing  technologies  and
drugs that are more  effective  or less costly than any we are  developing.  Our
competitors may succeed in obtaining FDA or other regulatory  approvals for drug
candidates before we do. If competing drug candidates prove to be more effective
or less costly than our drug candidates,  our drug candidates,  even if approved
for sale, may not be able to compete successfully with our competitors' existing
products  or new  products  under  development.  If we  are  unable  to  compete
successfully, we may never be able to sell enough products at a price sufficient
to permit us to generate profits.

IF WE FAIL TO ATTRACT AND RETAIN HIGHLY SKILLED SCIENTIFIC PERSONNEL, OUR GROWTH
COULD BE  LIMITED,  WHICH MAY  ADVERSELY  AFFECT OUR RESULTS OF  OPERATIONS  AND
FINANCIAL POSITION.

         Our future  success  depends in large part upon our  ability to attract
and  retain  highly  skilled  scientific  personnel.   The  competition  in  the
scientific industry for such personnel is intense, and we cannot be sure that we
will be successful  in attracting  and  retaining  such  personnel.  Most of our
consultants  and employees and several of our executive  officers  began working
for us  recently,  and all  employees  are subject to "at will"  employment.  We
cannot guarantee that we will be able to replace any of our scientific personnel
in the event their services become unavailable.

                                      -24-

<PAGE>

WE MAY FAIL TO PROTECT ADEQUATELY OUR PROPRIETARY TECHNOLOGY,  WHICH WOULD ALLOW
COMPETITORS TO TAKE ADVANTAGE OF RESEARCH AND DEVELOPMENT EFFORTS.

         We own or have obtained a license to 4 issued U.S. and foreign  patents
and 8 pending U.S. and foreign patent  applications.  Our success will depend in
part on our  ability  to obtain  additional  United  States and  foreign  patent
protection for our drug candidates and processes, preserve our trade secrets and
operate  without  infringing the proprietary  rights of third parties.  We place
considerable  importance on obtaining  patent  protection  for  significant  new
technologies, products and processes.

         Our  long-term  success  largely  depends  on  our  ability  to  market
technologically  competitive  processes  and  products.  If we fail to obtain or
maintain  these  protections  we may not be able to prevent  third  parties from
using  our  proprietary   rights.   Our  currently   pending  or  future  patent
applications  may not result in issued  patents.  In the United  States,  patent
applications  are  confidential  until patent  applications are published or the
patent is issued,  and because third parties may have filed patent  applications
for technology covered by our pending patent applications without us being aware
of those  applications,  our patent  applications may not have priority over any
patent  applications of others. In addition,  our issued patents may not contain
claims  sufficiently  broad to protect us against  third  parties  with  similar
technologies  or products  or provide us with any  competitive  advantage.  If a
third party initiates  litigation  regarding our patents,  and is successful,  a
court could revoke our patents or limit the scope of coverage for those patents.

         Legal   standards   relating  to  the  validity  of  patents   covering
pharmaceutical  and biotechnology  inventions and the scope of claims made under
such patents are still  developing.  In some of the countries in which we intend
to market our products,  pharmaceuticals  are either not patentable or have only
recently become patentable.  Past enforcement of intellectual property rights in
many of these countries has been limited or non-existent.  Future enforcement of
patents and  proprietary  rights in many other  countries may be  problematic or
unpredictable. Moreover, the issuance of a patent in one country does not assure
the issuance of a similar patent in another country.  Claim  interpretation  and
infringement  laws vary by nation,  so the extent of any  patent  protection  is
uncertain and may vary in different jurisdictions.

         The U.S.  Patent and  Trademark  Office,  commonly  referred  to as the
USPTO,  and the  courts  have not  consistently  treated  the  breadth of claims
allowed in  biotechnology  patents.  If the USPTO or the  courts  begin to allow
broader claims,  the incidence and cost of patent  interference  proceedings and
the risk of infringement  litigation will likely increase. On the other hand, if
the  USPTO or the  courts  begin  to allow  narrower  claims,  the  value of our
proprietary rights may be limited. Any changes in, or unexpected interpretations
of the  patent  laws may  adversely  affect our  ability  to enforce  our patent
position.

         We also rely upon trade  secrets,  proprietary  know-how and continuing
technological innovation to remain competitive. We protect this information with
reasonable  security measures,  including the use of confidentiality  agreements
with our employees, consultants and corporate collaborators. It is possible that
these  individuals  will breach  these  agreements  and that any  remedies for a
breach will be insufficient to allow us to recover our costs.  Furthermore,  our
trade secrets,  know-how and other  technology may otherwise  become known or be
independently discovered by our competitors.

OUR PATENTS AND  PROPRIETARY  TECHNOLOGY MAY NOT BE ENFORCEABLE  AND THE PATENTS
AND  PROPRIETARY  TECHNOLOGY  OF  OTHERS  MAY  PREVENT  US FROM  COMMERCIALIZING
PRODUCTS.

         Although  we believe our  inventions  to be  protected  and our patents
enforceable,  the failure to obtain meaningful  patent  protection  products and
processes  would  greatly  diminish  the  value of our  potential  products  and
processes.

         In addition, whether or not our applications are issued, or issued with
limited coverage, others may receive patents, which contain claims applicable to
our products.  Patents we are not aware of may  adversely  affect our ability to
develop and commercialize products.

                                      -25-

<PAGE>

         The patent positions of biotechnology and pharmaceutical  companies are
often  highly  uncertain  and  involve  complex  legal  and  factual  questions.
Therefore,  the breadth of claims allowed in  biotechnology  and  pharmaceutical
patents cannot be predicted.  We also rely upon  non-patented  trade secrets and
know how, and others may independently  develop  substantially  equivalent trade
secrets or know how. We also rely on protecting  our  proprietary  technology in
part through  confidentiality  agreements with our current and former  corporate
collaborators,  employees, consultants and certain contractors. These agreements
may be breached,  and we may not have adequate  remedies for any such  breaches.
Litigation may be necessary to defend against claims of infringement, to enforce
our patents or to protect trade secrets.  Litigation or other disputes regarding
patents and other proprietary rights may be expensive,  cause delays in bringing
products  to market and harm our  ability to operate.  In  addition,  litigation
could result in substantial costs and diversion of management efforts regardless
of the results of the litigation.  An adverse result in litigation could subject
us to significant  liabilities to third parties,  require  disputed rights to be
licensed or require us to cease using certain technologies.

         Our products  could  infringe on the  intellectual  property  rights of
others,  which  may  cause  us to  engage  in  costly  litigation  and,  if  not
successful,  could  cause us to pay  substantial  damages  and  prohibit us from
selling our products.  Because patent  applications in the United States are not
publicly  disclosed  until the patent  application is published or the patent is
issued,  applications  may have been filed which  relate to products  similar to
those offered by us. We may be subject to legal proceedings and claims from time
to time in the  ordinary  course of our  business,  including  claims of alleged
infringement of the trademarks and other  intellectual  property rights of third
parties.

         If our  products  violate  third-party  proprietary  rights,  we cannot
assure  you that we  would  be able to  arrange  licensing  agreements  or other
satisfactory resolutions on commercially reasonable terms, if at all. Any claims
made against us relating to the  infringement  of third-party  propriety  rights
could  result  in  the  expenditure  of  significant  financial  and  managerial
resources and injunctions  preventing us from developing and commercializing our
products. Such claims could severely harm our financial condition and ability to
compete.

         In addition, if another party claims the same subject matter or subject
matter  overlapping  with the subject  matter  that we have  claimed in a United
States patent application or patent, we may decide or be required to participate
in interference  proceedings in the United States Patent and Trademark Office in
order to  determine  the  priority of  invention.  Loss of such an  interference
proceeding would deprive us of patent protection  sought or previously  obtained
and could prevent us from  commercializing  our products.  Participation in such
proceedings  could  result in  substantial  costs,  whether or not the  eventual
outcome  is  favorable.  These  additional  costs  could  adversely  affect  our
financial results.

COMPLIANCE WITH  ENVIRONMENTAL LAWS OR REGULATIONS COULD HAVE A MATERIAL ADVERSE
EFFECT ON OUR BUSINESS.

         We may be required to incur significant costs to comply with current or
future  environmental  laws  and  regulations.  Although  we  do  not  currently
manufacture  commercial  quantities  of our  proposed  products,  we do  produce
limited  quantities of these products for our clinical trials.  Our research and
development and manufacturing  processes involve the controlled storage, use and
disposal of hazardous materials,  biological hazardous materials and radioactive
compounds.  We are  subject to  federal,  state and local  laws and  regulations
governing  the  use,  manufacture,  storage,  handling  and  disposal  of  these
materials  and  some  waste  products.  Although  we  believe  that  our  safety
procedures  for  handling  and  disposing  of these  materials  comply  with the
standards prescribed by these laws and regulations, the risk of contamination or
injury from these materials cannot be completely eliminated.  In the event of an
incident,  ImmuneRegen  BioSciences,  Inc.  could be held liable for any damages
that result,  and any liability  could exceed our  resources.  Current or future
environmental  laws or  regulations  may have a material  adverse  effect on our
operations, business and assets.

                                      -26-

<PAGE>

WE DEPEND ON THE CONTINUED  SERVICES OF OUR EXECUTIVE OFFICERS AND THE LOSS OF A
KEY EXECUTIVE COULD SEVERELY IMPACT OUR OPERATIONS.

         The  execution of our present  business  plan depends on the  continued
services of Michael K. Wilhelm, our Chief Executive Officer and President,  Mark
L. Witten,  Ph.D.,  our acting Chief  Scientific  Officer.  We do not  currently
maintain key-man insurance on their lives. While we have entered into employment
agreements  with  each of  them,  the  loss of any of  their  services  would be
detrimental  to us and could have a  material  adverse  effect on our  business,
financial condition and results of operations.

OUR  COMPLIANCE  WITH  SECURITIES  LAWS,  RULES AND  REGULATIONS TO WHICH WE ARE
SUBJECT  COULD   SUBSTANTIALLY   INCREASE  OUR  OPERATING  EXPENSES  AND  DIVERT
MANAGEMENT'S ATTENTION FROM THE OPERATION OF OUR BUSINESS.

         Because  our  common  stock is  publicly  traded,  we are  subject to a
variety of rules and regulations of federal, state and financial market exchange
entities charged with the protection of investors and the oversight of companies
whose  securities are publicly  traded.  These entities,  including the SEC, the
Public Company Accounting  Oversight Board and the NASD OTC Bulletin Board, have
recently issued new  requirements  and regulations and are currently  developing
additional  regulations  and  requirements in response to recent laws enacted by
Congress,  most notably the Sarbanes-Oxley Act of 2002. As certain rules are not
yet  finalized,  we do not know the level of resources we will have to commit in
order to be in  compliance.  Our  compliance  with current and proposed rules is
likely to  require  the  commitment  of  significant  financial  and  managerial
resources.  As a result, our management's attention might be diverted from other
business concerns, which could negatively affect our business.

OUR  EXECUTIVE  OFFICERS,  DIRECTORS  AND  PRINCIPAL  STOCKHOLDERS  CONTROL  OUR
BUSINESS AND MAY MAKE DECISIONS THAT ARE NOT IN OUR BEST INTERESTS.

         Our  officers,   directors  and  principal   stockholders,   and  their
affiliates,  in the aggregate,  own over a majority of the outstanding shares of
our common stock. As a result, such persons,  acting together,  have the ability
to  substantially  influence  all  matters  submitted  to our  stockholders  for
approval,  including  the  election  and  removal of  directors  and any merger,
consolidation or sale of all or substantially all of our assets,  and to control
our management and affairs.  Accordingly,  such  concentration  of ownership may
have the effect of delaying,  deferring or preventing a change in discouraging a
potential acquirer form making a tender offer or otherwise  attempting to obtain
control of our business, even if such a transaction would be beneficial to other
stockholders.

TRADING IN OUR SECURITIES  COULD BE SUBJECT TO EXTREME PRICE  FLUCTUATIONS  THAT
COULD ADVERSELY AFFECT YOUR INVESTMENT.

      The market prices for securities of life sciences companies,  particularly
those that are not profitable,  have been highly volatile,  especially recently.
Publicized events and announcements may have a significant  impact on the market
price of our common stock. For example:

          o    biological or medical discoveries by competitors;

          o    public concern about the safety of our drug candidates;

          o    delays in the conduct or analysis of our  preclinical or clinical
               studies;

          o    unfavorable results from preclinical or clinical studies;

          o    unfavorable  developments concerning patents or other proprietary
               rights; or

          o    unfavorable domestic or foreign regulatory developments;

                                      -27-

<PAGE>

may have the effect of temporarily or permanently  driving down the price of our
common  stock.  In  addition,  the stock  market  from time to time  experiences
extreme  price and  volume  fluctuations  which  particularly  affect the market
prices for emerging and life  sciences  companies,  such as ours,  and which are
often  unrelated to the operating  performance  of the affected  companies.  For
example,  our stock price has ranged from $0.09 to $1.00 between January 1, 2004
and April 3, 2005.

      These broad  market  fluctuations  may  adversely  affect the ability of a
stockholder  to dispose of his shares at a price  equal to or above the price at
which the shares were purchased.  In addition, in the past, following periods of
volatility   in  the  market  price  of  a  company's   securities,   securities
class-action  litigation  has often been  instituted  against that company.  Any
litigation against our company, including this type of litigation,  could result
in substantial  costs and a diversion of  management's  attention and resources,
which could materially  adversely affect our business,  financial  condition and
results of operations.

A LIMITED  PRIOR PUBLIC  MARKET AND TRADING  MARKET MAY CAUSE  VOLATILITY IN THE
PRICE OF OUR COMMON STOCK.

         Our  common  stock is  currently  traded on a limited  basis on the OTC
Bulletin  Board  (the  "OTCBB")  under  the  symbol  "IRBO".  The  OTCBB  is  an
inter-dealer, Over-The-Counter market that provides significantly less liquidity
than the NASDAQ Stock  Market.  Quotes for stocks  included on the OTCBB are not
listed in the financial sections of newspapers as are those for the NASDAQ Stock
Market.  Therefore,  prices  for  securities  traded  solely on the OTCBB may be
difficult  to obtain and holders of common  stock may be unable to resell  their
securities at or near their original offering price or at any price.

         The NASD has enacted  recent  changes that limit  quotations on the OTC
Bulletin  Board to securities of issuers that are current in their reports filed
with the  Securities  and  Exchange  Commission.  The effect on the OTC Bulletin
Board of these rule changes and other  proposed  changes cannot be determined at
this time.

         The  quotation  of our common stock on the OTCBB does not assure that a
meaningful, consistent and liquid trading market currently exists, and in recent
years such market has  experienced  extreme price and volume  fluctuations  that
have particularly  affected the market prices of many smaller companies like us.
Our common stock is thus subject to this volatility.

BROKER-DEALER REQUIREMENTS FOR "PENNY STOCK" TRANSACTIONS MAY AFFECT THE ABILITY
OF OUR INVESTORS TO RESELL THEIR SECURITIES.

         Our common stock is considered to be a "penny stock" since it meets one
or more of the  definitions  in Rules  15g-2  through  15g-6  promulgated  under
Section 15(g) of the Securities Exchange Act of 1934, as amended.  Section 15(g)
of the Securities  Exchange Act of 1934, as amended,  and Rule 15g-2 promulgated
thereunder by the SEC require  broker-dealers dealing in penny stocks to provide
potential  investors with a document disclosing the risks of penny stocks and to
obtain a  manually  signed and dated  written  receipt  of the  document  before
effecting  any  transaction  in  a  penny  stock  for  the  investor's  account.
Compliance  with  this and other  requirements  may make it more  difficult  for
holders  of our  common  stock to resell  their  shares to third  parties  or to
otherwise dispose of them in the market or otherwise.

SALES OR ISSUANCES OF ADDITIONAL  EQUITY  SECURITIES  MAY  ADVERSELY  AFFECT THE
MARKET PRICE OF OUR COMMON STOCK AND YOUR RIGHTS IN US MAY BE REDUCED.

         Certain of our stockholders  have the right to register  securities for
resale that they hold pursuant to registration  rights agreements.  We expect to
continue to incur product  development and selling,  general and  administrative
costs,  and in order to satisfy our funding  requirements,  we will need to sell
additional  equity  securities,  which may be subject  to  similar  registration
rights. The sale or the proposed sale of substantial amounts of our common stock
in the public markets may adversely affect the market price of our common stock.
On November 24, 2004, we filed a registration statement on Form SB-2 to register
shares of our  common  stock  that may be sold from time to time by the  selling
stockholders  named therein.

                                      -28-

<PAGE>

The  registration and subsequent sales of shares of our common stock will likely
have an adverse effect on the market price of our common stock.

         From time to time, certain  stockholders of our company may be eligible
to sell all or some of  their  shares  of  common  stock  by  means of  ordinary
brokerage  transactions  in the open market  pursuant  to Rule 144,  promulgated
under the Act ("Rule 144"), subject to certain limitations. In general, pursuant
to Rule 144, a stockholder (or stockholders whose shares are aggregated) who has
satisfied a one-year  holding  periods 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 our 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 limitations,  by a non-affiliate of our company who has
satisfied a two-year  holding period.  Any substantial  sale of our common stock
pursuant to Rule 144 or pursuant  to any resale  prospectus  may have an adverse
effect on the market price of our securities.

         Our stockholders may experience substantial dilution and a reduction in
the price that they are able to obtain upon sale of their shares.  Also, any new
equity securities issued, including any new series of preferred stock authorized
by our board of directors,  may have greater  rights,  preferences or privileges
than our  existing  common  stock.  To the extent stock is issued or options and
warrants  are  exercised,  holders of our common stock will  experience  further
dilution.  In addition,  as in the case of the  warrants,  in the event that any
future  financing  should be in the form of, be convertible into or exchangeable
for, equity  securities and upon the exercise of options and warrants,  security
holders may experience additional dilution.

ITEM 2. DESCRIPTION OF PROPERTIES

         Our  corporate  headquarters  are  currently  located  at 4021 N.  75th
Street, Suite 201, Scottsdale, Arizona 85251, where we have leased approximately
1,800 square feet of office space through  September 30, 2005.  Our rent expense
is $2,614 per month. We believe that our facilities are adequate for our current
needs and  suitable  additional  or  substitute  space will be  available in the
future  to  replace  our  existing  facilities,  if  necessary,  or  accommodate
expansion of our operations.

ITEM 3. LEGAL PROCEEDINGS

         On  December  13,  2001,  service of process was  effectuated  upon GPN
Network,  Inc.  with regard to a fee  agreement  between GPN  Network,  Inc. and
Silver & Deboskey, a Professional  Corporation located in Denver,  Colorado. The
complaint sought  compensation for legal services  allegedly rendered to DermaRx
Corp.  On November 7, 2002,  the  District  Court in Denver,  Colorado  rendered
judgment in favor of Silver & Deboskey in the amount of $28,091. At December 31,
2004, we had not paid any of this amount.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters  were  submitted  to a vote of security  holders  during the
fourth quarter of 2004.

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

         Our common  stock is approved  for  quotation  on the NASD OTC Bulletin
Board under the symbol "IRBO".

         From July 2, 2003 through April 6, 2004, the  ImmuneRegen  traded under
the symbol "IRBH". Previous to July 2, 2003, the Company traded under the symbol
"GPNN".  The  following  table  sets  forth the high and low bid  prices for the
Company's  common stock for the periods noted, as reported by the National Daily
Quotation Service and the  Over-The-Counter  Bulletin Board.  Quotations reflect
inter-dealer prices, without retail mark-up,  markdown or commission and may not
represent actual transactions.

                                      -29-

<PAGE>

         COMMON STOCK                   HIGH              LOW
         ------------------------------------------------------
         2003
                  1st Quarter          $ 0.01           $ 0.01
                  2nd Quarter          $ 0.20           $ 0.01
                  3rd Quarter          $ 4.50           $ 0.55
                  4th Quarter          $1.125           $0.275

         2004
                  1st Quarter          $ 1.00           $ 0.32
                  2nd Quarter          $ 0.51           $ 0.11
                  3rd Quarter          $ 0.19           $ 0.09
                  4th Quarter          $ 0.40           $ 0.15

         On April 3, 2005,  the closing price of our common stock as reported by
the OTC  Bulletin  Board was $0.45  per  share.  There  were  approximately  520
shareholders  of record and  beneficial  stockholders  of our common stock as of
such date.  We have not paid any  dividends on our common stock since  inception
and do not intend to do so in the foreseeable future.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

         In October 2004 we entered into a settlement  agreement  with a certain
creditor  whereby  for  full  and  complete   satisfaction  of  claims  totaling
$5,071.00,  we issued to the creditor the  following:  (a) 67,614  shares of our
common stock, determined by dividing the amount owed by $0.075, and (b) warrants
to purchase,  at any time prior to the fifth  anniversary  following the date of
issuance  of the  warrant,  a number of shares of our common  stock equal to two
thousand  five  hundred  (2,500),  at a price equal to $0.50 per share of common
stock.  Under the terms of the settlement  agreement,  the creditor  released us
from all claims,  known or unknown,  relating to the amount owed. The securities
were issued in reliance upon  exemptions from  registration  pursuant to Section
4(2) under the  Securities  Act of 1933,  as amended,  and Rule 506  promulgated
thereunder. The creditor qualified as an accredited investor (as defined by Rule
501 under the Securities Act of 1933, as amended).

         On November 18, 2004 we issued warrants to a member of our Bioterrorism
Preparedness  Advisory  Board  to  purchase,  at any  time  prior  to the  third
anniversary following the date of issuance of the warrant, a number of shares of
our common stock equal to 50,000, at a price equal to $0.125 per share of common
stock for  advice on  logistics,  introductions  to  various  organizations  and
attendance of meetings.  The securities  were issued in reliance upon exemptions
from registration  pursuant to Section 4(2) under the Securities Act of 1933, as
amended,  and Rule 506  promulgated  thereunder.  The  investor  qualified as an
accredited investor (AS defined by Rule 501 under the Securities Act of 1933, as
amended).

         On December 16, 2004 we issued warrants to a member of our Oncology and
Dermatology  Advisory  Board  to  purchase,  at any  time  prior  to  the  third
anniversary following the date of issuance of the warrant, a number of shares of
our common stock equal to 10,000,  at a price equal to $0.50 per share of common
stock for advice on potential oncology applications for Homspera. The securities
were issued in reliance upon  exemptions from  registration  pursuant to Section
4(2) under the  Securities  Act of 1933,  as amended,  and Rule 506  promulgated
thereunder. The investor qualified as an accredited investor (as defined by Rule
501 under the Securities Act of 1933, as amended)..

         In  January  2005,  we made a tender  offer to  temporarily  reduce the
exercise  price of certain  warrants  issued in October 2004 from $0.50 to $0.20
per share. The tender offer expired on March 4, 2005. We accepted for exercise a
total of 6,600,778  warrants validly tendered and not withdrawn  pursuant to the
terms of the tender offer,  which represents  approximately 48% of the aggregate
13,780,449 warrants that were subject to the offer. The tender offer was made in
reliance upon exemption from registration  pursuant to Sections  3(a)(9),  which
provide an exemption for any security  exchanged by the issuer with its existing

                                      -30-

<PAGE>

security  holders  where no commission  or other  remuneration  is paid or given
directly or indirectly for soliciting such exchange.  We did not pay or give any
commission or other  remuneration to any person for soliciting the tender offer.
The tender offer also falls within  Section 4(2) of the Securities Act since all
the investors were current holders of the warrants and received their securities
from the October  2004  private  placement  or from  issuances  in October  2004
pursuant to the terms of settlement agreements or convertible  promissory notes.
These  transactions  were  conducted  under  Section  4(2)  and  the  rules  and
regulations promulgated thereunder, including Regulation D.

DIVIDENDS AND DISTRIBUTIONS

         We have not paid any cash  dividends  to date.  We intend to retain our
future earnings,  if any, and we do not anticipate  paying cash dividends on our
common stock in the foreseeable future.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

         THE  FOLLOWING  DISCUSSION  CONTAINS  FORWARD-LOOKING  STATEMENTS  THAT
INVOLVE RISKS AND UNCERTAINTIES.  SEE  "FORWARD-LOOKING  STATEMENTS" ABOVE. THIS
DISCUSSION  AND  ANALYSIS  SHOULD  BE READ IN  CONJUNCTION  WITH  THE  FINANCIAL
STATEMENTS AND NOTES INCLUDED ELSEWHERE IN THIS REPORT.

This annual report on Form 10-KSB contains forward-looking statements within the
meaning of Section 27A of the  Securities  Act of 1933, as amended,  and Section
21E of the  Securities  Exchange Act of 1934,  as amended.  Please note that the
safe harbor for forward-looking  statements under the Securities Act of 1933 and
the  Securities  Exchange  Act do not apply to our company.  Our actual  results
could  differ  materially  from those set forth as a result of general  economic
conditions and changes in the  assumptions  used in making such  forward-looking
statements. The following discussion and analysis of our financial condition and
results of  operations  should be read  together  with the audited  consolidated
financial statements and accompanying notes and the other financial  information
appearing  else where in this  report.  The analysis set forth below is provided
pursuant to applicable Securities and Exchange Commission regulations and is not
intended to serve as a basis for projections of future events.

EXCEPT FOR HISTORICAL  INFORMATION  CONTAINED  HEREIN,  THE MATTERS DISCUSSED IN
THIS ANNUAL REPORT ARE  FORWARD-LOOKING  STATEMENTS  THAT ARE SUBJECT TO CERTAIN
RISKS AND  UNCERTAINTIES  THAT COULD CAUSE ACTUAL  RESULTS TO DIFFER  MATERIALLY
FROM THOSE SET FORTH IN SUCH  FORWARD-LOOKING  STATEMENTS.  SUCH FORWARD-LOOKING
STATEMENTS MAY BE IDENTIFIED BY THE USE OF CERTAIN FORWARD-LOOKING  TERMINOLOGY,
SUCH AS "MAY,"  "EXPECT,"  "ANTICIPATE,"  "INTEND,"  "ESTIMATE,"  "BELIEVE,"  OR
COMPARABLE  TERMINOLOGY  THAT  INVOLVES  RISKS OR  UNCERTAINTIES.  ACTUAL FUTURE
RESULTS  AND  TRENDS MAY  DIFFER  MATERIALLY  FROM  HISTORICAL  AND  ANTICIPATED
RESULTS,  WHICH MAY OCCUR AS A RESULT OF A VARIETY  OF  FACTORS.  SUCH RISKS AND
UNCERTAINTIES  INCLUDE,  WITHOUT  LIMITATION,  FACTORS DISCUSSED IN MANAGEMENT'S
DISCUSSION  AND ANALYSIS OF FINANCIAL  CONDITION AND RESULTS OF  OPERATIONS  SET
FORTH  BELOW,  AS WELL AS IN "RISK  FACTORS"  SET FORTH  HEREIN.  EXCEPT FOR OUR
ONGOING  OBLIGATION  TO  DISCLOSE  MATERIAL  INFORMATION  AS REQUIRED BY FEDERAL
SECURITIES  LAWS, WE DO NOT INTEND TO UPDATE YOU CONCERNING ANY FUTURE REVISIONS
TO ANY FORWARD-LOOKING  STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES  OCCURRING
AFTER THE DATE OF THIS ANNUAL REPORT.

OVERVIEW

         We were originally incorporated in Delaware in June 1985 under the name
Vocaltech,  Inc. to develop,  design,  manufacture and market products utilizing
proprietary  speech-generated tactile feedback devices. We completed our initial
public  offering  of our  securities  in October  1987.  We changed  our name to
InnoTek, Inc. in November 1992. In January 1992, we effected a 1-for-6.3 reverse
stock split of our common  stock.  In  December  1994,  we  acquired  all of the
outstanding  stock of  InnoVisions,  Inc.,  a  developer  and  marketer  of skin
protective  products,  discontinued  our prior  operations in their entirety and
changed our name to DermaRx  Corporation.  In April 2000,  we effected a reverse
merger  with a  subsidiary  of Go Public  Network,  Inc.,  which was  engaged in
assisting  early-stage  development and emerging growth companies with financial
and business development services. We changed our name to GoPublicNow.com, Inc.,
effected a 1-for-5 reverse stock split and  discontinued our prior operations in
their  entirety.  In November 2000, we changed our name to GPN Network,  Inc. In
July 2001, we discontinued

                                      -31-

<PAGE>

the  operations  of GPN Network,  Inc. in their  entirety and began  looking for
appropriate  merger  partners.  Our  objective  became  the  acquisition  of  an
operating  company with the potential for growth in exchange for our securities.
In July 2003, we effected a reverse merger with  ImmuneRegen  BioSciences,  Inc.
and adopted our current  business  model.  In July 2003,  we effected a 1-for-20
reverse  stock  split,  and in April 2004,  we effected a 2-for-1  stock  split.
ImmuneRegen BioSciences,  Inc. was incorporated in October 2002; all information
contained herein refers to the operations of ImmuneRegen BioSciences,  Inc., our
wholly-owned operational subsidiary.

GENERAL

         IR BioSciences Holdings, Inc. is a development-stage  biopharmaceutical
company. Through our wholly owned subsidiary,  ImmuneRegen BioSciences, Inc., we
are engaged in the research and  development  of health  enhancing and potential
life saving  products.  Our product  development is focused around  Homspera,  a
proprietary  compound that is derived from homeostatic  substance P, a naturally
occurring  peptide.  We believe  Homspera can be used as  treatment  for various
medical  conditions as our preclinical animal studies have shown the compound to
have  very  high   anti-inflammatory  and   immunostimulatory   properties  when
introduced  into the body.  To date,  results  from several  animal  studies and
initial  toxicology  data have shown Homspera to be safe.  Currently,  we own or
have obtained a license to 4 issued U.S. and foreign  patents and 8 pending U.S.
and foreign  patent  applications.  As we continue our research and  development
efforts we will look to add to our portfolio of patents and trademarks.

PLAN OF OPERATIONS

         We expect to  continue  to incur  increasing  operating  losses for the
foreseeable  future,  primarily  due to our continued  research and  development
activities   attributable   to  new  and  existing   products  and  general  and
administrative activities.

         Due to our  liquidity  and  limited  cash  available  our  spending  on
research and  development  activities  in 2003 and most of 2004 was limited.  We
spent  approximately  $150,091  and $42,972 in 2004 and 2003,  respectively,  in
research and development  activities  related to the development of Radilex as a
universal protectant against the effects of chemical,  biological,  radiological
and nuclear threats.  From our inception in October 2002, we have spent $193,063
in research and development activities.  These costs include the manufacture and
delivery of our drug by third party manufacturers, payments to Contract Research
Organizations  ("CRO")  for  consulting  related  to our  studies  and  costs of
performing such studies.

         We  anticipate  that  during  the next 12 months we will  increase  our
research and  development  activities  by  approximately  $450,000 to a total of
approximately  $600,000 in an effort to further  develop  Radilex as a universal
protectant against chemical,  biological,  radiological and nuclear threats. The
drug development,  clinical trial and regulatory  process is lengthy,  expensive
and uncertain and subject to numerous risks including,  without limitation,  the
following risks discussed under "Risk Factors" - "All Our  Applications  Are All
Derived  From  The Use Of  Homspera.  If  Homspera  Is  Found  To Be  Unsafe  Or
Ineffective,  Our  Business  Would  Be  Materially  Harmed.,"  "If  We  Fail  To
Successfully  Develop  And  Commercialize   Products,  We  Will  Have  To  Cease
Operations.;"  and, "The Lengthy  Product  Approval  Process And  Uncertainty Of
Government Regulatory  Requirements May Delay Or Prevent Us From Commercializing
Proposed Products."

                                      -32-

<PAGE>

         Our major research and development projects include:

Development of Radilex as a  countermeasure  to the effects of radiological  and
--------------------------------------------------------------------------------
nuclear threats.
---------------

         Because of the high anti-inflammatory and immunostimulatory  properties
of Radilex that we have  witnessed,  we believe the compound is well-suited  for
treating  the  damaging  effects of radiation  injury when given  shortly  after
exposure to total body irradiation.  We have generated a large amount of data in
rodent animal models relating to the activity and safety of Radilex.

         We are currently  preparing the protocols for our eighth mouse study in
which we will further  validate our prior studies by collecting  additional data
as  requested by the FDA and NIH. We expect to begin the eighth study within the
next 60 days. We estimate that the study will be completed  within 3 months upon
commencement   at  an  estimated  cost  of  $70,000.   Upon  completion  of  the
aforementioned  study we will prepare the  protocols  necessary  for a non-human
primate study to test the efficacy of Radilex as a treatment to acute  radiation
sickness.  We expect  this study to begin  within  the next  twelve  months.  We
believe that preliminary results will be available within 90 days from beginning
of study,  with  analysis  within an  additional 60 to 90 days. We have budgeted
approximately  $310,000  for  expenses  related to this study in our fiscal year
ending  December 31, 2005. We expect an additional  $450,000 will be required to
complete this study in 2006.

         If we are  successful in  completing  the study and achieve the desired
results,  we will  submit  the  necessary  documentation  to the  FDA and  other
regulatory  agencies for approval.  We believe that Radilex can be developed and
approval  granted under Project  BioShield,  if so, we believe that the approval
process will be significantly shortened and less costly. If approval for Radilex
is granted in a timely manner,  we expect to begin to commercialize  our product
immediately  thereafter.  We are anticipating  revenues from the sale of Radilex
beginning in calendar  year  2006/2007  as a treatment to the effects  caused by
irradiation.

         If product development or approval does not occur as scheduled our time
to  reach  market  will  be  lengthened  and our  costs  will  likely  increase.
Additionally,  we may be requested  to expand our findings to gather  additional
data or we may not achieve the desired results. If so, we may have to design new
protocols and conduct additional studies. This will increase our costs and delay
the time to market for Radilex.  Any of these  occurrences would have a material
negative  impact on our  business  and our  liquidity as it may cause us to seek
additional   capital   sooner  than  expected  and  allow  our   competitors  to
successfully enter the market ahead of us.

Development  of Radilex as a  countermeasure  to the  effects  of  chemical  and
--------------------------------------------------------------------------------
biological threats.
-------------------

         We are  currently  continuing  to research the efficacy of Radilex as a
universal  protectant  to be used also as a  treatment  for  exposure to various
chemical and biological  threats.  We have generated data in preclinical studies
indicating  that  Radilex  could  potentially  be used in  treating  respiratory
failure caused by exposure to various  chemical and biological  agents,  such as
anthrax,  ricin poisoning and other poisonous inhalants,  as well as, infectious
diseases  such as avian flu and SARS.  We are  continuing  to design and perform
studies for the further development of Radilex for these  applications.  We have
budgeted  approximately  $35,000 for studies  related to the use of Radilex as a
treatment for exposure to various chemical and biological threats. We anticipate
additional studies to begin in the third or fourth quarters of calendar 2005 and
continue on an ongoing basis over the next three years.  If we are successful in
achieving desirable results, we intend to design the protocols and begin studies
for these  indications,  when capital is  available.  As we have only  collected
preliminary data and additional studies are required, we cannot predict when, if
ever, a viable treatment can be commercialized. If we do not observe significant
results or we lack the capital to further the  development,  we may abandon such
research  and  development  efforts;   thereby  limiting  our  future  potential
revenues.


                                      -33-

<PAGE>

Development of Homspera in the promotion of wound healing.
----------------------------------------------------------

         We have observed in early preclinical studies that Homspera may have an
effect in promoting or accelerating wound healing.  Within the next three months
we plan to begin  preclinical  studies to determine  if Homspera  could become a
candidate  for  further  development  as a compound  used in wound  healing.  We
believe that such an application  would have a large potential  market and would
share  synergies with potential uses for Radilex as a universal  protectant.  We
expect to begin studies  regarding the use of Homspera in the promotion of wound
healing in the third  quarter of calendar  2005. We do not have any research and
development  expenses  associated  with the use of Homspera in wound  healing in
2004 or 2003, as our observations we generated in our radiation studies. We have
budgeted  approximately  $60,000  for the  costs of such  studies  over the next
twelve months.  We anticipate the completion of such studies within eight months
of commencement of the studies.  If we achieve desirable results, we will design
the  protocols  and  begin  studies  for  these  indications,  when  capital  is
available. As we have only collected preliminary data and additional studies are
required,   we  cannot   predict  when,  if  ever,  a  viable   product  can  be
commercialized.  If we do not observe significant results or we lack the capital
to further  the  development,  we may  abandon  such  research  and  development
efforts; thereby limiting our future potential revenues.

         We will need to generate significant revenues from product sales and or
related royalties and license agreements to achieve and maintain  profitability.
Through December 31, 2004, we had no revenues from any product sales,  royalties
or licensing fees, and have not achieved  profitability on a quarterly or annual
basis.  Our ability to achieve  profitability  depends upon, among other things,
our ability to develop products,  obtain regulatory  approval for products under
development and enter into agreements for product development, manufacturing and
commercialization.  Moreover,  we may  never  achieve  significant  revenues  or
profitable operations from the sale of any of our products or technologies.

OFF-BALANCE SHEET ARRANGEMENTS

         There were no off-balance sheet arrangements made in 2004.

REVENUES

         We have not generated any revenues from  operations from our inception.
We believe we will begin earning  revenues from operations  during calendar year
2007 as we  transition  from a  development  stage  company to that of an active
growth and acquisition stage company.

COSTS  and EXPENSES

         From our inception  through  December 31, 2004, we have incurred losses
of $7,208,027.  These expenses were  associated  principally  with  equity-based
compensation  to  employees  and  consultants,  product  development  costs  and
professional services.

LIQUIDITY AND CAPITAL RESOURCES

         At December 31, 2004, we had current  assets of $976,827  consisting of
cash of $970,114 and prepaid services of $6,713.  Also, at December 31, 2004, we
had current liabilities of $383,294, consisting of notes payable net of discount
of $75,993 and  accounts  payable  and accrued  liabilities  of  $307,301.  This
resulted in working capital of $593,533. During the twelve months ended December
31, 2004, we used cash in operating  activities of $1,041,182.  From the date of
inception  (October  30,  2002)  to  December  31,  2004,  we had a net  loss of
$7,208,027 and used cash of $2,074,345 in operating activities.  We met our cash
requirements  from our  inception  through  December  31,  2004 via the  private
placement of  $2,069,046  of our common stock and $983,500  from the issuance of
notes  payable,  net of  repayments.  In October  2004,  we  completed a private
placement  whereby  we sold  an  aggregate  of  $2,450,000  worth  of  units  to
accredited  investors.  Each unit was sold for  $10,000 and  consisted  of (a) a
number of shares of our common  stock  determined  by dividing the unit price of
$10,000 by $0.125, and (b) a warrant to purchase, at any time prior to the fifth
anniversary following the date of issuance of the warrant, a number of shares of
our common stock equal to fifty percent  (50%) of the number of shares  included
within the unit, at a price equal to $0.50 per share of common stock.  We issued
an aggregate of  27,560,897  shares of our common stock and warrants to purchase
13,780,449   shares  of  our  common  stock  in  this  private   placement.   In
consideration   of  the  investment,   we  granted  to  each  investor   certain
registration rights and anti-dilution rights.

                                      -34-

<PAGE>

         In  January  2005,  we made a tender  offer to  temporarily  reduce the
exercise  price of certain  warrants  issued in October 2004 from $0.50 to $0.20
per share. The tender offer expired on March 4, 2005. We accepted for exercise a
total of 6,600,778  warrants validly tendered and not withdrawn  pursuant to the
terms of the tender offer,  which represents  approximately 48% of the aggregate
13,780,449  warrants  that were subject to the offer.  We raised an aggregate of
$1,211,000 from the tender offer, net of costs.

         Since  our  inception,  we have  been  seeking  additional  third-party
funding.  During such time,  we have  retained a number of different  investment
banking firms to assist us in locating available funding;  however,  we have not
yet been successful in obtaining any of the long-term  funding needed to make us
into a commercially viable entity.  During the period from October 2004 to March
2005, we were able to obtain  financing of  $3,590,136  from a series of private
placements  of  our  securities  (which  resulted  in  net  proceeds  to  us  of
$3,182,845). All of our current funding is expected to be depleted by the end of
January,  2006. Although we are continuing with our efforts to obtain funding to
maintain our  operations , we cannot  assure you that we will be  successful  or
that  any  funding  we  receive  will  be  received  timely  or on  commercially
reasonable  terms.  Due  to our  working  capital  deficiency,  and if we do not
receive adequate  financing,  we will be unable to pay our vendors,  lenders and
other  creditors if we cease our operations,  since the net realizable  value of
our  non-current  assets will not generate  adequate  cash. We currently have no
commitments  for financing.  There is no guarantee that we will be successful in
raising the funds required.

         Until such time, if at all, as we receive adequate  funding,  we intend
to  continue  to defer  payment of all of our  obligations  which are capable of
being  deferred,  which  actions have  resulted in some vendors  demanding  cash
payment for their goods and services in advance,  and other vendors  refusing to
continue  to do  business  with  us.  In the  event  that we are  successful  in
obtaining third-party funding, we do not expect to generate a positive cash flow
from our operations  for at least several  years,  if at all, due to anticipated
expenditures  for  research  and  development  activities,   administrative  and
marketing activities, and working capital requirements and expect to continue to
attempt to raise further capital through one or more further private placements.

          While we have successfully  raised capital to meet our working capital
and financing needs in the past through debt and equity  financings,  additional
financing  will be required in order to implement  our business plan and to meet
our current and projected cash flow deficits from  operations  and  development.
There can be no  assurance  that we will be able to  consummate  future  debt or
equity  financings in a timely manner on a basis  favorable to us, or at all. If
we are unable to raise needed  funds,  we will not be able to develop or enhance
our products,  take advantage of future  opportunities or respond to competitive
pressures or  unanticipated  requirements.  A material  shortage of capital will
require us to take  drastic  steps  such as  reducing  our level of  operations,
disposing of selected assets or seeking an acquisition partner.

         By  adjusting  our   operations   and   development  to  the  level  of
capitalization,  we believe that we have  sufficient  capital  resources to meet
projected  cash flow  deficits  through  the next  twelve  months.  However,  if
thereafter,  we are not  successful  in  generating  sufficient  liquidity  from
operations  or in  raising  sufficient  capital  resources,  this  would  have a
material  adverse effect on our business,  results of operations,  liquidity and
financial condition.

         At December  31,  2004,  we were in default on one note of $53,900 plus
accrued  interest  of $12,093.  Another  note for  $10,000  was  outstanding  on
December 31, 2004 but was  subsequently  repaid.  Fifteen notes in the aggregate
amount of $558,500 plus accrued  interest of $56,757 were converted to equity in
October 2004. We are negotiating  revised terms which may include  converting to
equity on the note in default at December  31, 2004 in the  aggregate  amount of
$53,900 plus accrued interest of $12,093.

         Pursuant  to  our  employment   agreement  with  Michael  Wilhelm,  our
President and Chief Executive Officer, dated December 16, 2002, we paid a salary
of $125,000 and $175,000 to Mr. Wilhelm during the first and second years of his
employment, respectively.  Thereafter we paid, and will continue to pay, through
the  term of Mr.  Wilhelm's  employment,  an  annual  salary  of  $250,000.  Mr.
Wilhelm's  salary is payable  in regular  installments  in  accordance  with the
customary payroll practices of our company.

         Pursuant to our  employment  agreement  with John  Fermanis,  our Chief
Financial  Officer,  dated  February 15, 2005, we paid a salary of $60,000 until
the company completed a financing of $500,000 or more. This occurred on March 4,
2005 when the company completed a Tender Offer for warrants totaling  $1,211,000
net of fees. From March 4, 2005,  until December 31, 2005, we will pay an annual
salary of $85,000.  Thereafter,  we will pay an annual salary of $98,000 for the
second year ending  December  31, 2006 and an annual  salary of $112,000 for the
third year ending December 31, 2007. Mr.  Fermanis' salary is payable in regular
installments in accordance with the customary payroll practices of our company.

         Under the terms of our consulting  agreement with Dr. Mark Witten,  one
of our founders,  we will pay to Dr. Witten a non-refundable fee equal to $5,000
per month.

                                      -35-

<PAGE>

Acquisition or Disposition of Plant and Equipment
-------------------------------------------------

         We do not anticipate  the sale of any  significant  property,  plant or
equipment during the next twelve months. We do not anticipate the acquisition of
any significant property, plant or equipment during the next 12 months.

Number of Employees
-------------------

From our inception through the period ended December 31, 2004, we have relied on
the services of outside  consultants for services and currently have 3 full time
employees.  In  order  for  us to  attract  and  retain  quality  personnel,  we
anticipate we will have to offer competitive salaries to future employees. We do
not anticipate our employment base will significantly  change during the next 12
months,  other than the addition of one senior level appointment to the position
of Senior Vice President of Scientific Development. As we continue to expand, we
will incur additional cost for personnel.  This projected  increase in personnel
is dependent  upon our generating  revenues and obtaining  sources of financing.
There is no guarantee  that we will be successful in raising the funds  required
or generating  revenues  sufficient to fund the projected increase in the number
of employees.

CRITICAL ACCOUNTING POLICY

         The preparation of our consolidated  financial statements in conformity
with accounting  principles  generally accepted in the United States requires us
to make  estimates and judgments that affect our reported  assets,  liabilities,
revenues, and expenses, and the disclosure of contingent assets and liabilities.
We base our  estimates and  judgments on  historical  experience  and on various
other  assumptions we believe to be reasonable under the  circumstances.  Future
events,   however,  may  differ  markedly  from  our  current  expectations  and
assumptions.  While  there  are a  number  of  significant  accounting  policies
affecting  our  consolidated  financial  statements;  we believe  the  following
critical  accounting  policy involve the most complex,  difficult and subjective
estimates and judgments:

     o    stock-based compensation


Stock-Based Compensation
------------------------

         In  December  2002,  the FASB  issued  SFAS No.  148 -  Accounting  for
Stock-Based Compensation - Transition and Disclosure. This statement amends SFAS
No. 123 - Accounting for Stock-Based Compensation, providing alternative methods
of voluntarily transitioning to the fair market value based method of accounting
for stock based employee  compensation.  FAS 148 also requires disclosure of the
method used to account for stock-based  employee  compensation and the effect of
the method in both the annual and interim financial  statements.  The provisions
of this statement  related to transition  methods are effective for fiscal years
ending  after  December  15,  2002,  while  provisions   related  to  disclosure
requirements  are effective in financial  reports for interim periods  beginning
after December 31, 2003.

         We elected to continue to account for  stock-based  compensation  plans
using the intrinsic  value-based method of accounting  prescribed by APB No. 25,
"Accounting for Stock Issued to Employees," and related  interpretations.  Under
the provisions of APB No. 25, compensation expense is measured at the grant date
for the difference between the fair value of the stock and the exercise price.

         From its  inception,  the Company  has  incurred  significant  costs in
connection with the issuance of equity- based  compensation,  which is comprised
primarily  of our common  stock and  warrants  to acquire our common  stock,  to
non-employees.  The Company anticipates  continuing to incur such costs in order
to  conserve  its  limited  financial   resources.   The  determination  of  the
volatility, expected term and other assumptions used to determine the fair value
of equity based  compensation  issued to  non-employees  under SFAS 123 involves
subjective judgment and the consideration of a variety of factors, including our
historical  stock  price,  option  exercise  activity  to date and the review of
assumptions used by comparable enterprises.

         We account for equity based  compensation,  issued to  non-employees in
exchange for goods or services , in accordance  with the  provisions of SFAS No.
123 and EITF No. 96-18,  "Accounting for Equity  Instruments  That are Issued to
Other Than Employees for Acquiring,  or in  Conjunction  with Selling,  Goods or
Services".

                                      -36-

<PAGE>

Recent Accounting Pronouncements
--------------------------------

         In April  2003,  the FASB  issued  Statement  of  Financial  Accounting
Standards  (SFAS)  No.  149,  Amendment  of  Statement  No.  133  on  Derivative
Instruments  and  Hedging  Activities.  SFAS 149 amends  SFAS No. 133 to provide
clarification   on  the  financial   accounting   and  reporting  of  derivative
instruments  and hedging  activities  and requires that  contracts  with similar
characteristics  be accounted for on a comparable  basis. The provisions of SFAS
149 are effective for  contracts  entered into or modified  after June 30, 2003,
and for hedging  relationships  designated  after June 30, 2003. The adoption of
SFAS 149 did not have a material  impact on the Company's  results of operations
or financial position.

         In May 2003,  the FASB  issued  SFAS No.  150,  Accounting  for Certain
Financial  Instruments with Characteristics of Both Liabilities and Equity. SFAS
150  establishes  standards on the  classification  and  measurement  of certain
financial  instruments with  characteristics of both liabilities and equity. The
provisions of SFAS 150 are effective for financial  instruments  entered into or
modified  after May 31, 2003 and to all other  instruments  that exist as of the
beginning of the first interim  financial  reporting period beginning after June
15,  2003.  The  adoption  of SFAS 150 did not  have a  material  impact  on the
Company's results of operations or financial position.

         In  December  2003,  the  FASB  issued  a  revision  of SFAS  No.  132,
"Employers' Disclosures About Pensions And Other Postretirement  Benefits." This
pronouncement,  SFAS No. 132-R,  expands  employers'  disclosures  about pension
plans and other post-retirement benefits, but does not change the measurement or
recognition of such plans required by SFAS No. 87, No. 88, and No. 106. SFAS No.
132-R retains the existing disclosure requirements of SFAS No. 132, and requires
certain  additional  disclosures  about defined benefit  post-retirement  plans.
Except as described in the following  sentence,  SFAS No. 132-R is effective for
foreign  plans for fiscal years ending after June 15, 2004;  after the effective
date, restatement for some of the new disclosures is required for earlier annual
periods. Some of the interim-period disclosures mandated by SFAS No. 132-R (such
as the components of net periodic benefit cost, and certain key assumptions) are
effective  for foreign  plans for quarters  beginning  after  December 15, 2003;
other interim-period  disclosures will not be required for the Company until the
first  quarter of 2005.  Since the  Company  does not have any  defined  benefit
post-retirement  plans,  the  adoption  of this  pronouncement  did not have any
impact on the Company's results of operations or financial condition.

         In November  2004,  the  Financial  Accounting  Standards  Board (FASB)
issued SFAS 151,  Inventory  Costs-- an amendment of ARB No. 43, Chapter 4. This
Statement amends the guidance in ARB No. 43, Chapter 4, "Inventory  Pricing," to
clarify the accounting for abnormal amounts of idle facility  expense,  freight,
handling costs, and wasted material  (spoilage).  Paragraph 5 of ARB 43, Chapter
4, previously  stated that ". . . under some  circumstances,  items such as idle
facility expense,  excessive spoilage,  double freight, and rehandling costs may
be so abnormal as to require  treatment as current period  charges.  . . ." This
Statement  requires  that those items be recognized  as  current-period  charges
regardless  of whether they meet the  criterion of "so  abnormal."  In addition,
this Statement  requires that  allocation of fixed  production  overheads to the
costs  of  conversion  be  based  on  the  normal  capacity  of  the  production
facilities.  This  Statement is effective for inventory  costs  incurred  during
fiscal  years  beginning  after June 15, 2005.  Management  does not believe the
adoption  of this  Statement  will  have any  immediate  material  impact on the
Company.  In December  2004, the FASB issued SFAS No.152,  "Accounting  for Real

                                      -37-
<PAGE>

Estate Time-Sharing Transactions--an amendment of FASB Statements No. 66 and 67"
("SFAS 152) The  amendments  made by Statement  152 This  Statement  amends FASB
Statement  No.  66,  Accounting  for  Sales of Real  Estate,  to  reference  the
financial  accounting  and  reporting  guidance  for  real  estate  time-sharing
transactions  that is  provided  in AICPA  Statement  of  Position  (SOP)  04-2,
Accounting for Real Estate Time-Sharing Transactions. This Statement also amends
FASB Statement No. 67,  Accounting  for Costs and Initial  Rental  Operations of
Real Estate Projects,  to state that the guidance for (a) incidental  operations
and (b) costs  incurred  to sell  real  estate  projects  does not apply to real
estate time-sharing transactions.  The accounting for those operations and costs
is  subject  to the  guidance  in SOP 04-2.  This  Statement  is  effective  for
financial  statements  for fiscal  years  beginning  after June 15,  2005.  with
earlier  application  encouraged.  The  Company  does  not  anticipate  that the
implementation  of this  standard  will have a material  impact on its financial
position,  results of  operations  or cash flows.  On  December  16,  2004,  the
Financial  Accounting  Standards Board ("FASB") published Statement of Financial
Accounting Standards No. 123 (Revised 2004), Share-Based Payment ("SFAS 123R").

         SFAS 123R  requires  that  compensation  cost  related  to  share-based
payment  transactions  be recognized in the  financial  statements.  Share-based
payment  transactions  within  the scope of SFAS  123R  include  stock  options,
restricted stock plans, performance-based awards, stock appreciation rights, and
employee share purchase  plans.  The provisions of SFAS 123R are effective as of
the first  interim  period that begins  after June 15,  2005.  Accordingly,  the
Company will implement the revised  standard in the third quarter of fiscal year
2005.  Currently,  the Company accounts for its share-based payment transactions
under  the  provisions  of APB  25,  which  does  not  necessarily  require  the
recognition  of  compensation  cost in the financial  statements.  Management is
assessing the implications of this revised standard, which may materially impact
the Company's results of operations in the third quarter of fiscal year 2005 and
thereafter.  On December 16, 2004, FASB issued Statement of Financial Accounting
Standards No. 153, Exchanges of Nonmonetary  Assets, an amendment of APB Opinion
No. 29,  Accounting for Nonmonetary  Transactions (" SFAS 153").  This statement
amends APB Opinion 29 to eliminate the exception  for  nonmonetary  exchanges of
similar productive assets and replaces it with a general exception for exchanges
of nonmonetary assets that do not have commercial substance.  Under SFAS 153, if
a nonmonetary exchange of similar productive assets meets a commercial-substance
criterion and fair value is determinable,  the transaction must be accounted for
at fair  value  resulting  in  recognition  of any  gain or  loss.  SFAS  153 is
effective for  nonmonetary  transactions in fiscal periods that begin after June
15,  2005.  The Company  does not  anticipate  that the  implementation  of this
standard  will have a  material  impact on its  financial  position,  results of
operations or cash flows.



                                      -38-

<PAGE>


ITEM 7. FINANCIAL STATEMENTS

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549



                       FINANCIAL STATEMENTS AND SCHEDULES

                           DECEMBER 31, 2004 AND 2003



                        FORMING A PART OF ANNUAL REPORT
                PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934

                         IR BIOSCIENCES HOLDINGS, INC.

                                      F-1
<PAGE>


IR Biosciences Holdings, Inc.

Index to Financial Statements

                                                                        Page No.
                                                                        --------

Report of Independent Registered Certified Public Accounting Firm............F-3

Consolidated Balance Sheet at December 31, 2004..............................F-4

Consolidated Statements of Losses for the two years ended
December 31, 2004 and 2003 and the period October 30, 2002
(Date of Inception) through December 31, 2004................................F-5

Consolidated Statements of Stockholders' Equity for the period
October 30, 2002 (Date of Inception) through December 31, 2004........F-6 to F-7

Consolidated Statements of Cash Flows for the two years ended
December 31, 2004 and 2003 and the period October 30, 2002
(Date of Inception) through December 31, 2004.........................F-8 to F-9

Notes to Consolidated Financial Statements..........................F-10 to F-25

                                      F-2

<PAGE>


                    RUSSELL BEDFORD STEFANOU MIRCHANDANI LLP
                          CERTIFIED PUBLIC ACCOUNTANTS


        REPORT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM

Board of Directors
I R Biosciences Holdings, Inc.
Scottsdale, Arizona

We have audited the accompanying  consolidated balance sheets of I R Biosciences
Holdings,  Inc.,  development stage company,  (the "Company") as of December 31,
2004 and the related consolidated  statements of losses,  stockholders'  equity,
and cash  flows  for the two years  December  31,  2004 and 2003 and the  period
October 30, 2002 (date of inception)  through December 31, 2004. These financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility is to express an opinion on these financial statements based upon
our audits.

We conducted  our audits in  accordance  with  standards  of the Public  Company
Accounting  Oversight Board (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  misstatements.  An audit includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial  statements.  An audit also  includes  assessing  the  accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall financial statement  presentation.  We believe our audits
provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the consolidated  financial  position of IR
Biosciences  Holdings,  Inc. , a development  stage company,  as of December 31,
2004 , and the results of its  operations and its cash flows for the years ended
December  31,  2004  and 2003  and for the  period  October  30,  2002  (date of
inception) through December 31, 2004 , in conformity with accounting  principles
generally accepted in the United States of America.

                                    /s/ RUSSELL BEDFORD STEFANOU MIRCHANDANI LLP
                                    --------------------------------------------
                                        Russell Bedford Stefanou Mirchandani LLP



New York, New York
March  4, 2005

                                      F-3

<PAGE>



                  IR BioSciences Holdings, Inc. and Subsidiary
                          (A Development Stage Company)
                           Consolidated Balance Sheet

<TABLE>
<CAPTION>
                                                                       December 31,
                                                                           2004
                                                                       -----------
<S>                                                                    <C>
Assets
Current assets

    Cash and cash equivalents                                          $   970,114
    Prepaid services and other current assets                                6,713
                                                                       -----------

      Total current assets                                                 976,827

    Licensed proprietary rights, net                                         7,320
    Furniture and equipment, net                                             6,500
                                                                       -----------

Total assets                                                           $   990,647
                                                                       ===========

Liabilities and Stockholders' Equity
Current liabilities
   Current portion of notes payable, net of discount                        75,993
   Accounts payable and accrued liabilities                                307,301
                                                                       -----------
      Total current liabilities                                            383,294

Commitments and Contingencies

Stockholders' Equity
   Preferred stock, 0.001 par value:
      10,000,000 shares authorized, no shares issued and outstanding             0
   Common stock, $0.001 par value; 100,000,000 shares authorized;
      62,423,388 shares issued and outstanding at December 31, 2004         62,423
   Additional paid-in capital                                            7,922,943
   Deferred compensation                                                  (169,986)
   Deficit accumulated during the Development Stage                     (7,208,027)
      Total stockholder's equity                                           607,353
                                                                       -----------
Total liabilities and stockholders' equity                             $   990,647
                                                                       ===========
</TABLE>

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

                                      F-4
<PAGE>

                  IR BioSciences Holdings, Inc. and Subsidiary
                          (A Development Stage Company)
                        Consolidated Statements of Losses

<TABLE>
<CAPTION>
                                                                                 Cumulative from
                                                 For the Twelve  For the Twelve     Inception
                                                  Months Ended    Months Ended  (October 30, 2002)
                                                  December 31,    December 31,   to December 31,
                                                      2004            2003            2004
                                                  ------------    ------------    ------------
<S>                                               <C>             <C>            <C>

Operating expenses:

   Selling, general and administrative expenses   $  4,498,390    $  1,045,776    $  5,589,884
   Merger fees and costs                                     0         350,000         350,000
   Financing cost                                            0          90,000          90,000
                                                  ------------    ------------    ------------
      Total operating expenses                       4,498,390       1,485,776       6,029,884

Operating loss                                      (4,498,390)     (1,485,776)     (6,029,884)

Other expense:
   Interest expense                                    807,017         370,926       1,178,143
                                                  ------------    ------------    ------------
      Total other expense                              807,017         370,926       1,178,143

  Loss before income taxes                          (5,305,407)     (1,856,702)     (7,208,027)

   Provision for income taxes                               --              --              --
                                                  ------------    ------------    ------------

Net loss                                          $ (5,305,407)   $ (1,856,702)   $ (7,208,027)
                                                  ============    ============    ============

Net loss per share - basic and diluted            $      (0.16)   $      (0.09)   $      (0.28)
                                                  ============    ============    ============
Weighted average shares outstanding -
   basic and diluted                                33,510,168      21,317,292      25,698,261
                                                  ============    ============    ============
</TABLE>

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

                                      F-5
<PAGE>


                   IR Biosciences Holding, Inc. and Subsidiary
                          (A Development Stage Company)
                            Consolidated Statement of
                   Stockholders' Equity (Deficit) From Date of
                Inception (October 30, 2002) to December 31, 2004

<TABLE>
<CAPTION>
                                                          Common Stock       Additional
                                                  ------------------------    Paid-In      Deferred    Accumulated
                                                    Shares         Amount      Capital   Compensation    Deficit       Total
                                                  -----------  -----------  -----------  ------------  -----------  -----------
<S>                                              <C>          <C>           <C>         <C>            <C>         <C>
Balance at October 30, 2002 (date of inception)            --  $        --  $        --            --  $        --  $        --

Shares of common stock issued at $0.0006
   per share to founders for license of
   proprietary right in December 2002              16,612,276       16,612       (7,362)           --           --        9,250

Shares of common stock issued at $0.0006 per
   share to founders for services rendered in
   December 2002                                    1,405,310        1,405         (623)           --           --          782

Shares of common stock issued at $0.1671 per
   share to consultants for services rendered
   in December 2002                                    53,878           54        8,946        (9,000)          --           --

Sale of common stock for cash  at $0.1671 per
   share in December 2002                             185,578          186       30,815            --           --       31,001

Net loss for the period from inception
   (October 30, 2002) to December 31, 2002                 --           --           --            --      (45,918)     (45,918)
                                                  -----------  -----------  -----------  ------------  -----------  -----------
Balance at December 31, 2002 (reflective of
   stock splits)                                   18,257,042       18,257       31,776        (9,000)     (45,918)      (4,885)

Shares granted to consultants at $0.1392 per
   share for services rendered in January 2003         98,776           99       13,651            --           --       13,750

Sale of shares of common stock for cash at
   $0.1517 per share in January 2003                  329,552          330       49,670            --           --       50,000

Shares granted to consultants at $0.1392 per
   share for services rendered in March 2003          154,450          154       21,346            --           --       21,500

Conversion of notes payable to common stock
   at $0.1392 per share in April 2003               1,436,736        1,437      198,563            --           --      200,000

Shares granted to consultants at $0.1413 per
   share for services rendered in April 2003           14,368           14        2,016            --           --        2,030

Sale of shares of common stock for cash at
   $0.2784 per share in May 2003                       17,960           18        4,982            --           --        5,000

Sales of shares of common stock for cash at
   $0.2784 per share in June 2003                      35,918           36        9,964            --           --       10,000

Conversion of notes payable to common stock
   at $0.1392 per share in June 2003                  718,368          718       99,282            --           --      100,000

Beneficial conversion feature associated with
   notes issued in June 2003                               --           --       60,560            --           --       60,560

Amortization of deferred compensation                      --           --           --         9,000           --        9,000

Costs of GPN Merger in July 2003                    2,368,130        2,368     (123,168)           --           --     (120,799)

Value of warrants issued with extended notes
   payable in October 2003                                 --           --      189,937            --           --      189,937

Value of Company warrants issued in
   conjunction with fourth quarter notes
   payable issued October through
   December 2003                                           --           --      207,457            --           --      207,457

 Value of warrants contributed by founders
   in conjunction with fourth quarter notes
   payable issued October through
   December 2003                                           --           --      183,543            --           --      183,543

 Value of warrants issued for services in
   October through December 2003                           --           --       85,861            --           --       85,861

 Net loss for the twelve month period ended
   December 31, 2003                                       --           --           --            --   (1,856,702)  (1,856,702)
                                                  -----------  -----------  -----------  ------------  -----------  -----------
 Balance at December 31, 2003                      23,431,300       23,431    1,035,441            --   (1,902,620)    (843,748)

 Shares granted at $1.00 per share pursuant to
   the Senior Note Agreement in January 2004          600,000          600      599,400      (600,000)          --           --

 Shares issued at $1.00 per share to a
   consultant for services rendered in
   January 2004                                       800,000          800      799,200      (800,000)          --           --

Shares issued to a consultant at $0.62
   per share for services rendered in
   February 2004                                       40,000           40       24,760       (24,800)          --           --

 Shars issued to a consultant at $0.40 per
   share for services rendered in March 2004        1,051,600        1,051      419,589      (420,640)          --           --

 Shares issued to a consultant at $0.50 per
   share  for services rendered in March 2004         500,000          500      249,500      (250,000)          --           --

Shares sold for cash at $0.15 per share
   in March, 2004                                       8,000            8        1,192            --           --        1,200

 Shares issued at $0.50 per share to
   consultants for services rendered in
   March 2004                                          20,000           20        9,980            --           --       10,000

Shares issued to a consultant at  $0.40 per
   share  for services rendered in March 2004           2,000            2          798            --           --          800

Shares issued to consultants at $0.32 per
   share for services rendered in March 2004           91,600           92       29,220            --           --       29,312

Shares to be issued to consultant at $0.41 per
   share in April 2004 for services to be
   rendered through March 2005                             --           --           --       (82,000)          --      (82,000)

Shares granted pursuant to the New Senior Note
   Agreement in April 2004                            600,000          600      149,400      (150,000)          --           --

Shares issued to officer at $0.32 per share for
   services rendered in April 2004                    200,000          200       63,800            --           --       64,000

Conversion of note payable to common stock at
   $0.10 per share in May 2004                        350,000          350       34,650            --           --       35,000


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

                                      F-6
<PAGE>


                   IR Biosciences Holding, Inc. and Subsidiary
                          (A Development Stage Company)
                            Consolidated Statement of
                   Stockholders' Equity (Deficit) From Date of
          Inception (October 30, 2002) to December 31, 2004 (continued)


                                                          Common Stock       Additional
                                                  ------------------------    Paid-In      Deferred    Accumulated
                                                    Shares         Amount      Capital   Compensation    Deficit       Total
                                                  -----------  -----------  -----------  ------------  -----------  -----------

Beneficial Conversion Feature associated with
   note payable in May 2004                                --           --       35,000            --           --       35,000

Issuance of warrants to officers and founder
   for services rendered in May 2004                       --           --      269,208            --           --      269,208

Shares to a consultant at $0.20 per share as a
   due dilligence fee in May 2004                     125,000          125       24,875            --           --       25,000

Shares issued to a consultant at $1.00 per
   share for services to be rendered over
   twelve months beginning May 2004                   500,000          500      499,500      (500,000)          --           --

Benefial Conversion Feature associated with
   notes payable issued in June 2004                       --           --        3,000            --           --        3,000

Issuance of warrants to note holders in April,
   May, and June 2004                                      --           --       17,915            --           --       17,915

Issuance of warrants to employees and
   consultants for services rendered in
   April through June 2004                                 --           --        8,318            --           --        8,318

Shares issued in July  to a consultant at
   $0.10 for services to be rendered through
   July 2005                                          250,000          250       24,750       (25,000)          --           --

Shares issued to a consultant in July and
   September at $0.41 per share for services
   to be rendered through April 2005                  200,000          200       81,800            --           --       82,000

Shares issued to a consultant in September at
   $0.12 to $0.22 for services rendered
   through September 2004                             127,276          127       16,782            --           --       16,909

Shares issued in July to September 2004 as
   interest on note payable                           300,000          300       35,700            --           --       36,000

Issuance of warrants with notes payable in
   July and August 2004                                    --           --       72,252            --           --       72,252

Accrued deferred compensation in August 2004
   to a consultant for 100,000 shares at $0.10
   per share, committed but unissued                       --           --           --       (10,000)          --      (10,000)

Shares issued in August 2004 at $0.14 to a
   consultant for services to be performed
   through October 2004                               100,000          100       13,900       (14,000)          --           --

Shares issued in August 2004 at $0.125 per
   share for conversion of $30,000 demand loan        240,000          240       29,760            --           --       30,000

Shares issued in August 2004 at $0.16 per
   share to a consultant for services provided        125,000          125       19,875            --           --       20,000

Shares issued to employees at $0.16 to
   $0.25 per share                                     48,804           49        8,335            --           --        8,384

Commitment to issue 100,000 shares of stock to
   a consultant at $0.23 per share for services
   to be provided through September 2005                   --           --           --       (23,000)          --      (23,000)

Sale of stock for cash in Ocober at $0.125 per
   share, net of costs of $298,155                 18,160,000       18,160    1,345,763            --           --    1,363,923

Value of warrants issued with sale of common
   stock in October, net of costs                          --           --      607,922            --           --      607,922

Issuance of warrant to officer in October                  --           --      112,697            --           --      112,697

Issuance of stock to investment bankers in
   October 2004 for commissions earned              4,900,000        4,900       (4,900)           --           --           --

Conversion of accounts payable to stock in
   October at $0.125 per share                      1,257,746        1,258      107,382            --           --      108,640

Value of warrants issued with accounts
   payable conversions                                     --           --       48,579            --           --       48,579

Conversion of demand loan to stock in October
   at $0.11 per share                                  93,300           93       10,170            --           --       10,263

Forgiveness of notes payable in October 2004               --           --       36,785            --           --       36,785

Issuance of stock to officer and director at
   $0.125 per share in October for conversion
   of liability                                     1,440,000        1,440      122,493            --           --      123,933

Value of warrants issued with officer and
   director conversion of liabilities                      --           --       56,067            --           --       56,047

Conversion of debt and accrued interest to
   common stock at $0.075 to $0.125 per share       6,703,151        6,703      417,514            --           --      424,217

Value of warrants issued with conversion
   of debt                                                 --           --      191,111            --           --      191,111

Conversion of note payable in October into
   common stock at $0.075 per share                    67,613           68        4,932            --           --        5,000

Issuance of warrants to note holders in
   October 2004                                            --           --      112,562            --           --      112,562

Value of shares issued to CFO as compensation         100,000          100       34,900            --           --       35,000

Value of warrants issued to members of
   advisory committees in in November
   and December                                            --           --       16,348            --           --       16,348

Beneficial conversion feature associated with
   notes  payable                                          --           --      124,709            --           --      124,709

Shares issued in error to be cancelled                 (9,002)          (9)           9            --           --           --

Amortization of deferred compensation through
   December 31, 2004                                       --           --           --     2,729,454           --    2,729,454

Loss for the twelve months ended
   December 31, 2004                                       --           --           --            --   (5,305,407)  (5,305,407)
                                                  -----------  -----------  -----------  ------------  -----------  -----------
Balance at December 31, 2004                       62,423,388       62,423    7,922,943      (169,986)  (7,208,027)     607,353
                                                  ===========  ===========  ===========  ============  ===========  ===========
</TABLE>

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


                                      F-7
<PAGE>

                  IR BioSciences Holdings, Inc. and Subsidiary
                          (A Development Stage Company)
                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                                              Cumulative
                                                                                            from Inception
                                                             For the Twelve For the Twelve   (October 30,
                                                              Months Ended   Months Ended      2002) to
                                                              December 31,   December 31,     December 31,
                                                                  2004           2003            2004
                                                              -----------    -----------    --------------
<S>                                                           <C>            <C>           <C>
Cash flows from operating activities:
   Net loss                                                   $(5,305,407)   $(1,856,702)   $(7,208,027)

  ADJUSTMENTS TO RECONCILE NET LOSS TO NET
  CASH USED IN OPERATING ACTIVITIES:
  Non-cash compensation                                         3,284,577        114,641      3,400,000
  Interest expense                                                 83,776         68,624        152,400
  Amortization of discount on notes payable                       704,633        302,302      1,006,935
  Depreciation and amortization                                    13,255         12,685         26,017
  Changes in operating assets and liabilities:
        Prepaid services and other assets                          29,130        (35,842)        (6,712)
        Accounts payable and accrued expenses                     148,854        397,402        555,042
                                                              -----------    -----------    -----------
   NET CASH USED IN OPERATING ACTIVITIES                       (1,041,182)      (996,890)    (2,074,345)

Cash flows from investing activities:
   Acquisition of property and equipment                           (4,783)        (3,304)        (8,087)
                                                              -----------    -----------    -----------
   NET CASH USED IN INVESTING ACTIVITIES                           (4,783)        (3,304)        (8,087)

Cash flows from financing activities:
   Net proceeds from notes payable                                 32,500      1,186,000      1,233,500
   Principal payments on notes payable                                 --      (250,000)       (250,000)
   Shares of stock sold for cash                                1,973,045         65,000      2,069,046
   Officer repayment of amounts paid on behalf of officer              --         19,880         19,880
   Cash paid on behalf of officer                                      --        (19,880)       (19,880)
   Cash paid on amount due to officer                                  --        (22,427)       (22,427)
                                                              -----------    -----------    -----------
   NET CASH PROVIDED BY FINANCING ACTIVITIES                    2,005,545        978,573      3,030,119

Net increase in cash and cash equivalents                         959,580        (21,621)       947,687

Cash and cash equivalents at beginning of period                   10,534         32,155             --
                                                              -----------    -----------    -----------
Cash and cash equivalents at end of period                    $   970,114    $    10,534    $   970,114
                                                              ===========    ===========    ===========

</TABLE>

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

                                      F-8

<PAGE>
                  IR BioSciences Holdings, Inc. and Subsidiary
                          (A Development Stage Company)
                Consolidated Statements of Cash Flows (continued)

Non-cash investing and financing activities:

<TABLE>
<CAPTION>
                                                                                              Cumulative
                                                                                            from Inception
                                                             For the Twelve For the Twelve   (October 30,
                                                              Months Ended   Months Ended      2002) to
                                                              December 31,   December 31,     December 31,
                                                                  2004           2003            2004
                                                              -----------    -----------    --------------
<S>                                                           <C>            <C>           <C>

Supplemental Disclosures of Cash Flow Information:

Acquisition and Capital Restructure:
Assets acquired                                               $         -    $         -    $           -
Liabilities assumed                                                     -       (120,799)         (120,799)
Common stock retained                                                   -         (2,369)           (2,369)
Adjustment to additional paid in capital                                -        123,168           123,168
Organization costs                                                      -        350,000           350,000
                                                              -----------    -----------    --------------
Total consideration paid                                      $         -    $   350,000    $      350,000
                                                              ===========    ===========    ==============

Cash paid during the period for interest                      $        54    $    41,793    $       41,847
                                                              ===========    ===========    ==============

Cash paid during the period for taxes                         $        --    $        --    $           --
                                                              ===========    ===========    ==============

Commmon stock issued in exchange for proprietary rights       $        --    $        --    $        9,250
                                                              ===========    ===========    ==============

Common stock issued in exchange for services                  $ 2,878,006    $    37,280    $    2,915,286
                                                              ===========    ===========    ==============

Common stock issued in exchange for previously incurred
debt and accrued interest                                     $   695,591    $   300,000    $      995,591
                                                              ===========    ===========    ==============

Common stock issued in exchange as  interest                  $    36,000    $        --    $       36,000
                                                              ===========    ===========    ==============

Amortization of beneficial conversion feature                 $   162,709    $    60,560    $      223,269
                                                              ===========    ===========    ==============

Stock options and warrants issued in exchange for
services rendered                                             $   406,571    $    85,861    $      492,432
                                                              ===========    ===========    ==============

Debt and accrued interest forgiveness from
note holders                                                  $    36,785    $        --    $       36,785
                                                              ===========    ===========    ==============

Common stock issued in satisfaction of
accounts payable                                              $   157,219    $        --    $      157,219
                                                              ===========    ===========    ==============

Common stock issued in satisfaction of
amounts due to an Officer and a Director                      $   180,000    $        --    $      180,000
                                                              ===========    ===========    ==============

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


</TABLE>

                                      F-9
<PAGE>

                  IR BIOSCIENCES HOLDINGS, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
                    AND FOR THE PERIOD FROM OCTOBER 30, 2002
                        (INCEPTION) TO DECEMBER 31, 2004

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant  accounting  policies applied in the preparation of
the accompanying consolidated financial statements follows.

Nature of Business
------------------

IR Biosciences Holdings Inc.  ("Company") formerly GPN Network,  Inc. ("GPN") is
currently a  development  stage  company  under the  provisions  of Statement of
Financial  Accounting   Standards  ("SFAS")  No.  7.  The  Company,   which  was
incorporated  under the laws of the State of Delaware on October 30, 2002,  is a
biotechnology  company  and plans to develop and market  applications  utilizing
modified substance P, a naturally occurring immunomodulator.  From its inception
through the date of these  financial  statements,  the  Company  has  recognized
minimal revenues and has incurred significant operating expenses.

The consolidated  financial  statements  include the accounts of the Company and
its  wholly-owned  subsidiary,   ImmuneRegen   BioSciences,   Inc..  Significant
intercompany transactions have been eliminated in consolidation.

Acquisition and Corporate Restructure
-------------------------------------

On July 20, 2003  ImmuneRegen  Biosciences Inc.  ("ImmuneRegen")entered  into an
Agreement of Plan and Merger  ("Agreement")  with GPN Network,  Inc.  ("GPN") an
inactive  publicly  registered shell  corporation with no significant  assets or
operations.  In  accordance  with SFAS No. 141,  the  Company was the  acquiring
entity.  While the  transaction  is accounted  for using the purchase  method of
accounting,  in substance the Agreement is a  recapitalization  of the Company's
capital structure.

For  accounting  purposes,  the Company has accounted for the  transaction  as a
reverse  acquisition  and the Company shall be the surviving  entity.  The total
purchase price and carrying value of net assets  acquired was $0. From July 2001
until the date of the Agreement  the Company was  inactive.  The Company did not
recognize goodwill or any intangible assets in connection with the transaction.

Effective with the Agreement, all previously outstanding common stock, preferred
stock,  options and warrants owned by the Company's  shareholders were exchanged
for an aggregate of  21,063,170  (post-split)  shares of GPN common  stock.  The
value of the stock that was issued was the historical cost of GPN's net tangible
assets, which did not differ materially from their fair value.

Effective  with the Agreement,  GPN changed its name to IR Biosciences  Holdings
Inc.

The  accompanying   financial   statements  present  the  historical   financial
condition,  results of  operations  and cash flows of the  Company  prior to the
merger with GPN.

Use of Estimates
----------------

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements,  and the  reported  amounts of revenues and expenses
during the reported  periods.  Actual results could materially differ from those
estimates.

                                      F-10

<PAGE>

                  IR BIOSCIENCES HOLDINGS, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
                    AND FOR THE PERIOD FROM OCTOBER 30, 2002
                        (INCEPTION) TO DECEMBER 31, 2004

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Cash and Cash  Equivalents
--------------------------

For purposes of the statement of cash flows, cash equivalents include all highly
liquid debt instruments  with original  maturities of three months or less which
are not securing any corporate obligations.

Long-lived Assets
-----------------

The Company has adopted  Statement of  Financial  Accounting  Standards  No. 144
(SFAS  144).  The  Statement   requires  that  long-lived   assets  and  certain
identifiable intangibles held and used by the Company be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable.  Events relating to recoverability  may include
significant  unfavorable changes in business conditions,  recurring losses, or a
forecasted  inability to achieve  break-even  operating results over an extended
period. The Company evaluates the recoverability of long-lived assets based upon
forecasted  undercounted cash flows. Should an impairment in value be indicated,
the carrying value of intangible assets will be adjusted,  based on estimates of
future discounted cash flows resulting from the use and ultimate  disposition of
the asset.  SFAS No. 144 also  requires  assets to be disposed of be reported at
the lower of the carrying amount or the fair value less costs to sell.

Income Taxes
------------

The Company has implemented the provisions on Statement of Financial  Accounting
Standards No. 109,  "Accounting  for Income Taxes" (SFAS 109). SFAS 109 requires
that income tax accounts be computed using the liability method.  Deferred taxes
are  determined  based  upon the  estimated  future tax  effects of  differences
between  the  financial   reporting  and  tax  reporting  bases  of  assets  and
liabilities given the provisions of currently enacted tax laws.

Net Loss Per Common Share
-------------------------

The Company computes earnings per share under Financial  Accounting Standard No.
128,  "Earnings Per Share" (SFAS 128).  Net loss per common share is computed by
dividing net loss by the weighted  average  number of shares of common stock and
dilutive common stock equivalents  outstanding during the year.  Dilutive common
stock  equivalents  consist of shares  issuable upon  conversion of  convertible
notes and the exercise of the Company's  stock options and warrants  (calculated
using the  treasury  stock  method).  During 2004,  2003 and 2002,  common stock
equivalents are not considered in the calculation of the weighted average number
of common  shares  outstanding  because  they  would be  anti-dilutive,  thereby
decreasing the net loss per common share.

Liquidity
---------

As shown in the accompanying  financial  statements,  the Company has incurred a
net loss of  $7,208,027  from its  inception  through  December  31,  2004.  The
Company's has net working capital of $593,533, with cash and cash equivalents of
$970,114 of this amount as of December 31, 2004.


                                      F-11
<PAGE>

                  IR BIOSCIENCES HOLDINGS, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
                    AND FOR THE PERIOD FROM OCTOBER 30, 2002
                        (INCEPTION) TO DECEMBER 31, 2004

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Research and Development
------------------------

The Company  accounts for research and development  costs in accordance with the
Financial   Accounting  Standards  Board's  Statement  of  Financial  Accounting
Standards  No. 2 ("SFAS 2"),  "Accounting  for Research and  Development  Costs.
Under SFAS 2, all research and  development  costs must be charged to expense as
incurred.  Accordingly,  internal research and development costs are expensed as
incurred.  Third-party  research and  developments  costs are expensed  when the
contracted  work has been performed or as milestone  results have been achieved.
Company-sponsored  research and  development  costs  related to both present and
future  products  are expensed in the period  incurred.  Total  expenditures  on
research and product  development for the years 2004,  2003, and the period from
October 30, 2002 (date of inception) to December 31, 2004 were $150,091, $42,972
and $193,063, respectively.

Concentrations of Credit Risk
-----------------------------

Financial  instruments and related items, which potentially  subject the Company
to  concentrations  of credit risk,  consist primarily of cash, cash equivalents
and related party  receivables.  The Company  places its cash and temporary cash
investments with credit quality institutions.  At times, such investments may be
in excess of the FDIC  insurance  limit.  The Company  periodically  reviews its
trade receivables in determining its allowance for doubtful  accounts.  There is
no allowance for doubtful accounts established as of December 31, 2004.

Comprehensive Income
---------------------

Statement of Financial  Accounting  Standards No. 130 ("SFAS  130"),  "Reporting
Comprehensive  Income,"  establishes  standards for reporting and  displaying of
comprehensive  income,  its components and accumulated  balances.  Comprehensive
income is defined to include all changes in equity except those  resulting  from
investments by owners and distributions to owners. Among other disclosures, SFAS
130 requires  that all items that are required to be  recognized  under  current
accounting  standards as  components  of  comprehensive  income be reported in a
financial  statement  that is  displayed  with  the  same  prominence  as  other
financial  statements.  The  Company  does not have any  items of  comprehensive
income in any of the periods presented.


Stock Based Compensation
------------------------

In December  2002,  the FASB issued SFAS No. 148,  "Accounting  for  Stock-Based
Compensation-Transition and Disclosure-an amendment of SFAS 123." This statement
amends SFAS No.  123,  "Accounting  for  Stock-Based  Compensation,"  to provide
alternative methods of transition for a voluntary charge to the fair value based
method of accounting for stock-based employee  compensation.  In addition,  this
statement  amends  the  disclosure  requirements  of  SFAS  No.  123 to  require
prominent  disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of the
method used on reported  results.  The Company has chosen to continue to account
for stock-based  compensation using the intrinsic value method prescribed in APB
Opinion No. 25 and related  interpretations.  Accordingly,  compensation expense
for stock options is measured as the excess, if any, of the fair market value of
the  Company's  stock at the date of the grant  over the  exercise

                                      F-12
<PAGE>

                  IR BIOSCIENCES HOLDINGS, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
                    AND FOR THE PERIOD FROM OCTOBER 30, 2002
                        (INCEPTION) TO DECEMBER 31, 2004

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Stock Based Compensation (continued)
------------------------------------

price of the related  option.  The  Company  has  adopted the annual  disclosure
provisions of SFAS No. 148 in its financial  reports for the year ended December
31,  2004 and 2003 and for  subsequent  periods.  The  Company did not issue any
stock-based  employee  compensation during the years ended December 31, 2004 and
2003.

Segment Information
-------------------

Statement of Financial Accounting Standards No. 131, "Disclosures about Segments
of an Enterprise and Related Information" ("SFAS 131") establishes standards for
reporting   information   regarding   operating  segments  in  annual  financial
statements and requires selected  information for those segments to be presented
in interim financial  reports issued to stockholders.  SFAS 131 also establishes
standards for related  disclosures  about  products and services and  geographic
areas.  Operating  segments are identified as components of an enterprise  about
which separate discrete financial information is available for evaluation by the
chief operating  decision maker, or  decision-making  group, in making decisions
how to allocate  resources and assess  performance.  The  information  disclosed
herein  materially  represents all of the financial  information  related to the
Company's principal operating segment.

Fair Value of Financial Instruments
-----------------------------------

The Company  measures its financial  assets and  liabilities in accordance  with
accounting  principles  generally accepted in the United States of America.  The
estimated fair values approximate their carrying value because of the short-term
maturity of these  instruments  or the stated  interest  rates are indicative of
market interest rates.

Property and  Equipment
-----------------------

Property and equipment are valued at cost.  Depreciation  and  amortization  are
provided  over  the  estimated   useful  lives  up  to  seven  years  using  the
straight-line  method. The estimated service lives of property and equipment are
as follows:

Computer equipment                3 years
Furniture                         7 years



Website Development Costs
-------------------------

The Company  recognizes  website  development  costs in accordance with Emerging
Issue Task Force ("EITF") No. 00-02, "Accounting for Website Development Costs."
As such, the Company expenses all costs incurred that relate to the planning and
post implementation phases of development of its website.  Direct costs incurred
in the  development  phase are  capitalized  and  recognized  over the estimated
useful  life of two years.  The Company  follows  the policy of  charging  costs
associated with repair or maintenance for the website to expenses incurred.

Advertising
-----------

The Company  follows the policy of charging the costs of advertising to expenses
incurred.  The Company has not incurred any  advertising  costs during the years
ended  December  31,  2004 or 2003,  or for the period  from  October  30,  2002
(inception) through December 31, 2004.

                                      F-13
<PAGE>

                  IR BIOSCIENCES HOLDINGS, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
                    AND FOR THE PERIOD FROM OCTOBER 30, 2002
                        (INCEPTION) TO DECEMBER 31, 2004

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Reclassifications
-----------------

Certain reclassifications have been made in prior year's financial statements to
conform to classifications used in the current year.

New Accounting Pronouncements
-----------------------------

In November  2004,  the  Financial  Accounting  Standards  Board  (FASB)  issued
SFAS151,  Inventory Costs- an amendment of ARB No. 43, Chapter 4. This Statement
amends the guidance in ARB No. 43,  Chapter 4,  "Inventory  Pricing," to clarify
the accounting for abnormal amounts of idle facility expense,  freight, handling
costs,  and  wasted  material  (spoilage).  Paragraph  5 of ARB 43,  Chapter  4,
previously  stated that "under some  circumstances,  items such as idle facility
expense,  excessive  spoilage,  double freight,  and rehandling  costs may be so
abnormal as to require  treatment  as current  period  charges"  This  Statement
requires that those items be recognized as current-period  charges regardless of
whether they meet the criterion of "so  abnormal." In addition,  this  Statement
requires  that  allocation  of  fixed  production  overheads  to  the  costs  of
conversion be based on the normal  capacity of the production  facilities.  This
Statement  is  effective  for  inventory  costs  incurred  during  fiscal  years
beginning after June 15, 2005.  Management does not believe the adoption of this
Statement will have any immediate material impact on the Company.

In  December  2004,  the FASB issued SFAS  No.152,  "Accounting  for Real Estate
Time-Sharing  Transactions-an amendment of FASB Statements No. 66 and 67" ("SFAS
152) The amendments made by Statement 152. This Statement  amends FASB Statement
No.  66,  Accounting  for  Sales of Real  Estate,  to  reference  the  financial
accounting and reporting guidance for real estate time-sharing transactions that
is  provided in AICPA  Statement  of Position  (SOP) 04-2,  Accounting  for Real
Estate Time-Sharing Transactions.  This Statement also amends FASB Statement No.
67,  Accounting for Costs and Initial Rental Operations of Real Estate Projects,
to state that the guidance for (a) incidental  operations and (b) costs incurred
to sell  real  estate  projects  does  not  apply  to real  estate  time-sharing
transactions.  The accounting  for those  operations and costs is subject to the
guidance in SOP 04-2.  This Statement is effective for financial  statements for
fiscal years beginning after June 15, 2005. with earlier application encouraged.
The Company does not anticipate  that the  implementation  of this standard will
have a material impact on its financial position,  results of operations or cash
flows.

On  December  16,  2004,  the  Financial  Accounting  Standards  Board  ("FASB")
published  Statement of Financial  Accounting  Standards No. 123 (Revised 2004),
Share-Based  Payment ("SFAS 123R").  SFAS 123R requires that  compensation  cost
related to  share-based  payment  transactions  be  recognized  in the financial
statements.  Share-based  payment  transactions  within  the  scope of SFAS 123R
include stock options,  restricted stock plans,  performance-based awards, stock
appreciation  rights,  and employee share purchase plans. The provisions of SFAS
123R are  effective  as of the first  interim  period that begins after June 15,
2005. Accordingly,  the Company will implement the revised standard in the third
quarter of fiscal year 2005. Currently, the Company accounts for its share-based
payment  transactions under the provisions of APB 25, which does not necessarily
require  the  recognition  of  compensation  cost in the  financial  statements.
Management is assessing the  implications  of this revised  standard,  which may
materially  impact the  Company's  results of operations in the third quarter of
fiscal year 2005 and thereafter.

On December 16, 2004, FASB issued  Statement of Financial  Accounting  Standards
No. 153,  Exchanges of Nonmonetary  Assets,  an amendment of APB Opinion No. 29,
Accounting for Nonmonetary Transactions (" SFAS 153"). This statement amends APB
Opinion 29 to  eliminate  the  exception  for

                                      F-14
<PAGE>

                  IR BIOSCIENCES HOLDINGS, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
                    AND FOR THE PERIOD FROM OCTOBER 30, 2002
                        (INCEPTION) TO DECEMBER 31, 2004

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

New Accounting Pronouncements (continued)
-----------------------------------------

nonmonetary  exchanges  of  similar  productive  assets and  replaces  it with a
general  exception  for  exchanges  of  nonmonetary  assets  that  do  not  have
commercial  substance.  Under SFAS 153,  if a  nonmonetary  exchange  of similar
productive  assets  meets a  commercial-substance  criterion  and fair  value is
determinable,  the transaction  must be accounted for at fair value resulting in
recognition  of any  gain  or  loss.  SFAS  153  is  effective  for  nonmonetary
transactions  in fiscal periods that begin after June 15, 2005. The Company does
not  anticipate  that the  implementation  of this standard will have a material
impact on its financial position, results of operations or cash flows.

NOTE B - PROPERTY, PLANT AND EQUIPMENT

The  Company's  property  and  equipment  at December  31, 2004  consists of the
following:

                                                             2004
                                                           -------
  Office Equipment                                          $6,665
  Office Fixtures and Furniture                              1,423
                                                           -------
                                                             8,088
  Accumulated Depreciation                                  (1,588)
                                                           -------
                                                            $6,500
                                                           =======

Depreciation  expense  included as a charge to income amounted to $1,078,  $510,
and $1,588 for the years ended  December 31, 2004 and 2003 and from inception to
December 31, 2004, respectively.

NOTE C - INTANGIBLE  ASSETS

The Company has adopted  SFAS No. 142,  Goodwill  and Other  Intangible  Assets,
whereby the Company periodically tests its intangible assets for impairment.  On
an annual basis, and when there is reason to suspect that their values have been
diminished  or  impaired,  these  assets  will be  tested  for  impairment,  and
write-downs to be included in results from operations may be necessary.

The Company has licensed from its founders certain  proprietary rights which the
Company intends to utilize in the execution of its business plan . Consideration
for this  license was the  issuance of  16,612,276  shares  (post-split)  of the
Company's  restricted  common,  valued at the  shares'  par value of $0.001  per
share,  aggregating $ 9,250.  These proprietary  rights are being amortized over
the term of the license agreement, or ten years.

The costs and accumulated  amortization of intangible  assets at December 31 are
summarized as follows:

                                                                   2004
                                                                --------
                 Technology License                               $9,250
                 Website                                          22,500
                 Less:  accumulated amortization                 (24,430)
                                                                --------
                 Intangible assets, net                           $7,320
                                                                ========

Amortization  expense  included  as a charge to income  amounted  to $12,177 and
$12,175  and $24,430 for the years  ended  December  31, 2004 and 2003,  and the
period from inception to December 31, 2004, respectively.

                                      F-15
<PAGE>

                  IR BIOSCIENCES HOLDINGS, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
                    AND FOR THE PERIOD FROM OCTOBER 30, 2002
                        (INCEPTION) TO DECEMBER 31, 2004

NOTE D - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities at December 31, 2004 are as follows:

                                                                2004
                                                              --------
        Accounts payable & accrued liabilities                $292,190
        Accrued interest                                         8,946
        Accrued payroll and payroll taxes                        6,165
                                                              --------
        Total                                                 $307,301
                                                              ========

NOTE E - RELATED-PARTY TRANSACTIONS

Consulting Agreements
---------------------

On December  16,  2002,  the Company  entered into  consulting  agreements  (the
"Consulting  Agreements")  with its two founders and chief  research  scientists
(the "Consultants").  The Consulting  Agreements were on a month-to-month basis.
Under the terms of the Consulting Agreements, the Consultants agreed to place at
the disposal of the Company  their  judgment and  expertise in the area of acute
lung injury. In consideration for these services, the Company agreed to pay each
consultant a  non-refundable  fee of $5,000 per month,  which shall accrue until
such time as the Company raises at least $2,000,000 in equity or debt financing,
at which time such accrued  amount will become due and payable.  Pursuant to the
Consulting  Agreements,  during the period from  January 1, 2003 to December 31,
2003, the Company accrued  $120,000 in consulting  fees.  During the period from
January 1, 2004 to December 31, 2004, the Company accrued an additional  $90,000
in consulting  fees.  The amounts due the  Consultants  at December 31, 2003 was
$125,000 and was included in accounts payable and accrued expenses.

In October  2004,  the Company  achieved the  threshold  amount of $2,000,000 in
equity or debt  financing  (see  Note I). As of  October,  2004,  the  aggregate
amounts due the Consultants under the Consulting Agreements was $215,000.

In October,  2004, one of the Consultants  elected to exchange 724,000 shares of
the  Company's  common  stock and a warrant to  purchase an  additional  362,000
(post-split)  shares of common stock at an exercise price of $0.50  (post-split)
in exchange  for $90,500 of the  $107,500 of the  previously  accrued and unpaid
fees due him under the Consulting Agreement, and the balance of $17,000 was paid
to the  consultant.  At  December  31,  2004,  there  is no  balance  due to the
Consultant.

In October 2004,  because the remaining  Consultant had not taken an active role
in the  management  of the  Company,  he agreed  that would  forgive  the amount
accrued to him under the Consulting agreement of $107,500. The Company accounted
for the  transaction as a forgiveness of  indebtedness  under FAS No. 140 during
the period ended December 31, 2004.

Proprietary Rights Agreement
----------------------------

In December 2002, the Company entered into a royalty-free license agreement (the
"License  Agreement")  with  its two  founders  and  largest  shareholders  (the
"Licensors").  Under the terms of the License Agreement,  the Licensors grant to
the Company an exclusive license to use and sublicense certain patents,  medical
applications,  and other technologies developed by the Licensors.  The Company's
obligations  under the  License  Agreement  include  (i)  reasonable  efforts to
protect  any  licensed  patents  or  other  associated   property  rights;  (ii)
reasonable efforts to maintain  confidentiality of any proprietary  information;
(iii) upon the granting by the U. S. Food and Drug Administration to the Company
the right to market a product,  the

                                      F-16
<PAGE>

                  IR BIOSCIENCES HOLDINGS, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
                    AND FOR THE PERIOD FROM OCTOBER 30, 2002
                        (INCEPTION) TO DECEMBER 31, 2004

NOTE E - RELATED-PARTY TRANSACTIONS (CONTINUED)

Proprietary Rights Agreement (continued)
---------------------------------------

Company  will  maintain a broad form  general  liability  and product  liability
insurance (see Note C).

Office Lease
------------

During the period from  December 1, 2002 through  August 31,  2004,  the Company
leased office space from an entity  controlled by the Company's  Chief Executive
Officer  under a sub-let  agreement  . The  rental  cost of $2,734 per month was
passed  through to the Company at the same rental rate charged by the facility's
primary landlord.

In July 2004, the Company  leased a new office  facility from a third party (see
Note J).

InOne Contract
--------------

The Company has  entered into a series of  contracts  with InOne  Advertising  &
Design,  Inc. ("InOne").  At the time of the initiation of the contracts,  InOne
employed the spouse of the Company's  Chief Executive  Officer.  These contracts
include (i) a three-year  agreement  dated  January 13, 2003 whereby  InOne will
design and create certain corporate identity and marketing materials in exchange
for 72,000 shares (post split) of the Company's  common stock and $15,000.  This
Agreement  also provides that InOne will bill the Company on an hourly basis for
additional  services,  as well as a $100,000 termination fee if the agreement is
terminated  as a result  of a merger  or  acquisition  of the  Company;  (ii) an
Agreement dated March 14, 2003 whereby InOne will design, create,  maintain, and
host the  Company's  website for one year in exchange  for 140,000  shares (post
split) of the  Company's  common  stock and  $4,200;  (iii) an  Agreement  dated
December  30, 2003 whereby  InOne will name and design a logo for the  Company's
new  product  for SARS  application  in  exchange  for  $5,000  and a warrant to
purchase 20,000 shares  (post-split) of the Company's common stock at a price of
$0.125;  (iv) an Agreement  dated  December 31, 2003 whereby InOne will name and
design a logo for the Company's new product for ARDS application in exchange for
$5,000 and a warrant to purchase  20,000  shares  (post-split)  of the Company's
common stock at a price of $0.125.

At December 31, 2004,  InOne no longer employs or has any business  relationship
with the spouse of the Company's Chief Executive officer, and InOne is no longer
considered a related party to the Company.

The  amounts due InOne at  December  31,  2004 and 2003 are $2,700 and  $19,565,
respectively.

Notes payable to related parties at December 31, 2004 consists of the following:


                                                                2004
                                                              -------
  Promissory  notes  payable and accrued interest
     of $12,093 to Company shareholders, interest
     at 6% per annum, unsecured; The Company is
     in default under these agreements                        $65,993

  Less: current portion                                       (65,993)
                                                              -------
                                                             $     --
                                                              =======

                                      F-17
<PAGE>

                  IR BIOSCIENCES HOLDINGS, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
                    AND FOR THE PERIOD FROM OCTOBER 30, 2002
                        (INCEPTION) TO DECEMBER 31, 2004

NOTE F - NOTES PAYABLE

Notes payable at December 31, 2004 consists of the following:

                                                              2004
                                                            --------
  Convertible note payable, interest at 8% per annum,
  due in August 2004; Noteholder has the option, with
  the consent of the Company, to convert unpaid note
  principal together with accrued and unpaid interest
  to the Company's common stock at a price equal to
  $.835 per share, under certain terms and conditions.
  In addition, the Company granted the noteholder a
  warrant to acquire 26,938 shares of the Company's
  common stock at a price equal to $0.835 per share.
  The Company is in default under this note agreement.      $ 10,000
  Less: current portion                                      (10,000)
                                                            --------
                                                            $     --
                                                            ========


At  December  31,  2003,  the Company had  outstanding  17 notes  payable in the
aggregate amount of $713,171.  During the twelve months ended December 31, 2004,
the Company  entered into 14 other note  agreements in the  aggregate  amount of
$575,100.  The Company  repaid  principal in the amount of $572,600  under these
notes,  and converted  principal in the amount of $638,500 plus accrued interest
of $57,091  into  7,445,062  shares of common  stock.  Two of these notes in the
aggregate  amount of $35,000 plus accrued  interest of $1,885 were  forgiven for
consideration of $100 during the twelve months ended December 31, 2004.

NOTE G - CAPITAL STOCK

The Company is authorized to issue  10,000,000  shares of preferred  stock,  par
value  $0.001 per share.  No shares of  preferred  stock have been  issued as of
December  31,  2004.  The company has  authorized  100,000,000  shares of common
stock,  with a par  value of $.001 per  share.  In July,  2003 a one for  twenty
reverse  stock split of the  Company's  common  stock was effected . On April 6,
2004,  the Company  effected a 2 for 1 forward split of its common stock.  Total
authorized shares and par value remain the unchanged. Accordingly, the effect of
the reverse and subsequent  forward split has been presented in the accompanying
financial  statement  and footnote  disclosures.  As of December  31, 2004,  the
Company has 62,423,388 shares of common stock issued and outstanding.

During the period ended  December 31, 2002,  the Company  issued an aggregate of
1,459,188  shares of common stock to employees and  consultants  for services in
the amount of $ 9,782.  All  valuations of common stock issued for services were
based upon the value of the services  rendered,  which did not differ materially
from the fair value of the Company's common stock during the period the services
were rendered. In addition, the Company issued 16,612,276 shares of common stock
to its founders in exchange for a  proprietary  license  charged to  operations,
valued at $ 9,250 (see Note C) . The Company also issued an aggregate of 185,578
shares of common stock in exchange for $ 31,001, net of costs and fees.

During the year ended  December  31,  2003,  the Company  issued an aggregate of
267,594  shares of common  stock to  consultants  for  services in the amount of
$37,280.  All valuations of common stock issued for services were based upon the
value of the services  rendered,  which did not differ  materially from the fair
value of the  Company's  common  stock  during  the  period  the  services  were
rendered.  In addition,  the Company issued  2,155,104 shares of common stock in
exchange for $ 300,000 of previously  incurred  debt. The Company also issued an
aggregate of 383,430 shares of common stock in exchange for $ 65,000 net of

                                      F-18
<PAGE>

                  IR BIOSCIENCES HOLDINGS, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
                    AND FOR THE PERIOD FROM OCTOBER 30, 2002
                        (INCEPTION) TO DECEMBER 31, 2004

NOTE G - CAPITAL STOCK (CONTINUED)

costs and fees. In July,  2003, the Company issued  2,368,130 in connection with
the Company's acquisition and merger with GPN Network, Inc. (see Note A.)

During the year ended  December  31,  2004,  the Company  issued an aggregate of
5,481,280  shares of common stock to  consultants  for services in the amount of
$2,877,872.  All  valuations of common stock issued for services were based upon
the value of the services  rendered,  which did not differ  materially  from the
fair value of the  Company's  common stock  during the period the services  were
rendered. In addition, the Company issued 300,000 shares of common stock as with
a fair  value  of  $36,000  as  interest  on a note  payable.  In  addition,  in
conjunction  with a private  placement of stock (see below),  the Company issued
6,855,062  shares of  common  stock in  exchange  for $  630,591  of  previously
incurred debt and accrued  interest.  In addition,  the Company  issued  590,000
shares of common  stock in in exchange  for $65,000 of  previously  issued debt.
Total debt  exchanged  for stock  during the year ended  December  31,  2004 was
$695,591 of debt and interest for 7,745,062  shares of common stock. The Company
also sold an  aggregate of  18,160,000  shares of common stock in exchange for $
1,971,045  cash,  net of costs and fees.  The Company  also sold 8,000 shares of
common  stock for $1,200.  The Company  also issued an  aggregate  of  4,900,000
shares of common  stock to its  investment  bankers as fees.  The  Company  also
issued  1,257,746  shares of common stock in  settlement of $157,219 of accounts
payable. In addition, the Company issued an aggregate 1,440,000 shares of common
stock to an officer and a director in satisfaction $180,000 of liabilities.

Private Placement of Common Stock
---------------------------------

In October 2004, the Company  completed a private  placement of its common stock
(the  "Private  Placement")  whereby the Company sold an aggregate of $2,450,000
worth of units  (each a "Unit" and  collectively,  the  "Units")  to  accredited
investors (as defined by Rule 501 under the  Securities Act of 1933, as amended)
(the transaction is referred to herein as the "Private Placement").  The Company
received  proceeds  of  $1,971,845  after  costs of the  issuance  of  $298,155.
Included in the $2,450,000 sale was conversion of $180,000 of accrued salary and
consulting fees due to an officer and an director of the Company.  The number of
shares of common stock issued pursuant to the Private  Placement was 19,600,000,
along with warrants to purchase an additional 9,080,000 shares, plus warrants to
purchase an additional  720,000  shares issued to the officer and director.  The
Company  also  issued an  additional  4,900,000  shares  of common  stock to its
investment  banker as  commission.  The  investment  bankers did not acquire any
warrants pursuant to this transaction.

Pursuant to the terms of the Private  Placement,  each Unit was sold for $10,000
(the "Unit Price") and consisted of the following:

         (a)  a  number  of  shares  (the  "Shares")  of  common  stock  of  the
Registrant,  par value  $0.001 per share (the  "Common  Stock"),  determined  by
dividing: (i) the Unit Price by (ii) $0.125; and

         (b) a warrant (each a "Warrant" and  collectively,  the  "Warrants") to
purchase, at any time prior to the fifth (5th) anniversary following the date of
issuance  of the  Warrant,  a number of shares  of Common  Stock  equal to fifty
percent (50%) of the number of Shares included within the Unit, at a price equal
to fifty  cents  ($0.50)  per share of Common  Stock.  A form of the  Warrant is
attached hereto as Exhibit 4.1.

In consideration of the investment, the Company granted to each investor certain
registration rights and anti-dilution rights. The Company is obligated to file a
registration  statement  for the shares of common  stock  issued in the  private
placement  and shares of common  stock  underlying  the  warrants  issued in the
private  placement within 30 days of the final closing date of October 26, 2004,
or  November  25,  2004.  The  Company  is  also  obligated  to  effectuate  the
registration  statement  within 90 days of the final closing date of October 26,
2004, or January 24, 2005.  Failure to meet either of these deadlines results in
the Company  subject to a penalty of a 2% increase in the number of shares to be
registered,  or 461,200  shares and warrants to purchase an  additional  181,600
shares,  for every 30 day period beyond the deadline  date.  The Company filed a
registration  statement  on November 24, 2004.  However,  at March 7, 2005,  the
registration  statement has not yet been deemed  effective by the Securities and
Exchange  Commission.  Accordingly,  at April 3, 2005, the Company has accrued a
penalty of two 30-day  periods,  or 922,400  shares and  warrants to purchase an
additional  363,200  shares.  If the Company fails to complete a registration by
April 24, 2005, an additional penalty of 461,200 shares and warrants to purchase
181,600 shares will be incurred.

                                      F-19
<PAGE>

                  IR BIOSCIENCES HOLDINGS, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
                    AND FOR THE PERIOD FROM OCTOBER 30, 2002
                        (INCEPTION) TO DECEMBER 31, 2004

NOTE G - CAPITAL STOCK

Private Placement of Common Stock (continued)
---------------------------------------------

Also in October  2004,  the Company  converted  certain  notes  payable  with an
aggregate  principal  amount of $573,500 plus accrued  interest of $57,091 for a
total of $630,328 into Units with terms identical to those provided to investors
in the Private Placement.  The number of shares of common stock issued via these
note  conversions  was  6,855,062  along with warrants to purchase an additional
3,427,531 shares (see Note H).

Also in October  2004,  the Company  entered into a settlement  agreements  with
certain creditors whereby for full and complete  satisfaction of claims totaling
an aggregate of $157,219 the Company issued Units with terms  identical to those
provided to investors in the Private  Placement.  The number of shares of common
stock issued via these creditor  conversions was 1,257,746,  along with warrants
to purchase an additional 628,873 shares.

NOTE H - STOCK OPTIONS AND WARRANTS

Employee Stock Options
----------------------

The Company has adopted the 2003 Stock  Option,  Deferred  Stock and  Restricted
Stock Plan (the "Plan")  which  authorizes  the Board of Directors in accordance
with the  terms of the  Plan,  among  other  things,  to grant  incentive  stock
options, as defined by Section 422(b) of the Internal Revenue Code, nonstatutory
stock options (collectively, the "Stock Options") and awards of restricted stock
and deferred  stock and to sell shares of common  stock of the Company  ("Common
Stock") pursuant to the exercise of such stock options for up to an aggregate of
6,465,316 shares . The options will have a term not to exceed ten years from the
date of the grant. There have been no options granted under this Plan.

Through  December 31, 2002, GPN had granted  pre-merger stock options to certain
employees and  consultants  which are  exercisable  over various periods through
March 2010. These stock options are currently held by the Company outside of the
Plan.

The  following  table  summarizes  the  changes in options  outstanding  and the
related prices for the shares of the Company's  common stock issued to employees
of the Company under a non-qualified employee stock option plan.

<TABLE>
<CAPTION>
                       Options Outstanding                                  Options Exercisable
    -----------------------------------------------------    ----------------------------------------------
                                       Weighted Average          Weighted                      Weighted
                        Number       Remaining Contractual       Average         Number        Average
   Exercise Prices    Outstanding        Life (Years)         Exercise Price   Exercisable   Exercise Price
----------------------------------------------------------   ----------------------------------------------
<S>                     <C>             <C>                    <C>             <C>             <C>
        $25.00           63,212              5.25                 $25.00        63,212          $25.00
</TABLE>

Transactions  involving  stock  options  issued to employees  are  summarized as
follows:

                                      F-20
<PAGE>

                  IR BIOSCIENCES HOLDINGS, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
                    AND FOR THE PERIOD FROM OCTOBER 30, 2002
                        (INCEPTION) TO DECEMBER 31, 2004

NOTE H - STOCK OPTIONS AND WARRANTS (CONTINUED)

Employee Stock Options (continued)
----------------------------------

                                                         Weighted Average
                                     Number of Shares     Price Per Share
                                     ----------------    ----------------
Outstanding at January 1, 2003            63,212             $25.00
   Granted (as restated)                      --
   Exercised                                  --
   Canceled or expired                        --
                                          ------
Outstanding at December 31, 2003          63,212              25.00
   Granted                                    --
   Exercised                                  --
   Canceled or expired                        --
                                          ------
Outstanding at December 31, 2004          63,212             $25.00
                                          ======             ======


The Company did not issue options to employees  during the years ended  December
31, 2003 and 2004.

Warrants
--------

The  following  table  summarizes  the changes in warrants  outstanding  and the
related  prices  for  the  shares  of  the  Company's  common  stock  issued  to
non-employees  of the  Company.  These  warrants  were  granted  in lieu of cash
compensation for services performed or financing expenses and in connection with
placement of convertible debentures.

<TABLE>
<CAPTION>
                    Warrants Outstanding                            Warrants Exercisable
     ------------------------------------------------    ------------------------------------------------
                                    Weighted Average       Weighed                    Weighted Average
                       Number          Remaining           Average                        Remaining
     Exercise       Outstanding    Contractual Life       Exercise        Number       Contractual Life
       Prices                           (Years)             Price      Exercisable          (Years)
-----------------------------------------------------    ---------------------------------------------------
<S>                    <C>              <C>               <C>            <C>                  <C>
       $0.05-0.10         480,698         4.60             $0.05-0.10       480,698            4.60
       0.125-0.70         778,511         4.46             0.125-0.70       778,511            4.46
        0.25-0.56      15,498,021         4.68              0.25-0.56    15,498,021            4.68
             1.00         741,400         2.98                   1.00       741,400            2.98
             2.00         167,580         4.51                   2.00       167,580            4.51
                       ----------        -----                           ----------            ----
                       17,666,210         4.59                           17,666,210            4.59
                       ==========        =====                           ==========            ====
</TABLE>

Transactions involving warrants are summarized as follows:

                                        Number of Shares    Weighted Average
                                          (post-split)      Price Per Share
                                                              (post-split)
                                         ---------------    ------------------

   Outstanding at January 1, 2003                 26,938           $    .84
      Granted                                    805,572                .89
      Exercised                                       --
      Canceled or expired                             --
                                              ----------           --------
   Outstanding at December 31, 2003              832,510                .89
      Granted                                 16,833,699                .47
      Exercised                                       --                 --
      Canceled or expired                             --                 --
   Outstanding at December 31, 2004           17,666,210           $    .49
                                              ==========           ========

                                      F-21
<PAGE>

                  IR BIOSCIENCES HOLDINGS, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
                    AND FOR THE PERIOD FROM OCTOBER 30, 2002
                        (INCEPTION) TO DECEMBER 31, 2004

NOTE H - STOCK OPTIONS AND WARRANTS (CONTINUED)

Warrants (continued)
--------------------

The estimated value of the  compensatory  warrants  granted to  non-employees in
exchange  for  services  and  financing   expenses  was  determined   using  the
Black-Scholes pricing model and the following assumptions:

                                                       2004         2003
                                                       ----         ----

 Significant assumptions (weighted-average):
     Risk-free interest rate at grant date             3.75%        2.375%
     Expected stock price volatility             163% to 262%         312%
     Expected dividend payout                             --           --
     Expected option life-years (a)                        5            5


(a) The expected option life is based on contractual expiration dates.

The  amount of the  expense  charged to  operations  for  compensatory  warrants
granted in exchange for services was $406,571 and $85,861 during the years ended
December 31, 2004 and 2003, respectively.

The Company  also  capitalized  financing  costs of $184,814  and  $397,394  for
warrants granted in connection with placement of convertible  debentures for the
years ended December 31, 2004 and 2003, respectively.  The unamortized financing
costs were written off as of December 31, 2003  commensurate with the conversion
of the debentures.

At December 31, 2002, the Company had  outstanding  warrants to purchase  26,939
shares (post-split) of common stock at $0.835 per share (post-split).

During the twelve months ended December 31, 2003, the Company issued warrants to
purchase  169,572  shares  (post-split)  of common stock at prices  ranging from
$0.125 to $1.00 per share (post-split) to eight service  providers.  The Company
valued the warrants using the Black-Scholes  calculation model, and the warrants
were  deemed to have a combined  value of  $85,860.  This  amount was charged to
expense on the  Company's  financial  statements  for the twelve  months  ending
December 31, 2003.

In October 2003, pursuant to the Amended Note agreements, the Company issued the
Amended Note  Warrants to purchase  245,000  shares  (post-split)  of its common
stock at a price of $1.00 per share (post-split). The Company valued the Amended
Note Warrants using the Black-Scholes  calculation  model, and the warrants were
deemed to have a combined  value of  $189,937.  This  amount was  recorded  as a
discount  to the  Amended  Notes and an  addition  to paid-in  capital,  and was
charged to expense  over the term of the notes,  or 180 days.  During the twelve
months ended  December 31, 2003,  the Company  recognized  $84,169 of expense in
relation to these  warrants.  During the twelve months ended  December 31, 2004,
the remaining $105,768 was charged to operations.

In October,  November,  and December  2003,  pursuant to the Fourth Quarter Note
agreements,  the Company issued the Fourth Quarter Company  Warrants to purchase
391,000  shares  (post-split)  of its common stock at a price of $1.00 per share
(post-split).

As an additional  incentive to investors in the Secured  Convertible  Promissory
Notes, the Company provided  five-year warrants (the "Secured Note Warrants") to
purchase  that number of shares of common  stock  equal to one-half  the initial
principal amount of the Secured  Convertible  Promissory Notes. For example,  an
investor  who  purchased a $10,000  Secured  Convertible  Promissory  Note would
receive a warrant to purchase  8,979 shares  (post-split)  of common stock.  The
exercise  price of the  Secured  Note  Warrants is equal to 60% of the price per
share  paid by  investors  in a future  equity  financing  (the  "Reorganization
Financing").  The Secured Note  Warrants are not  considered  granted  until the
completion  of the  Reorganization  Financing.  In  accordance  with EITF 00-27,
because the Reorganization  Financing had not occurred at December 31, 2003, the
Company  ascribed no value to the Secured Note Warrants at December 31, 2003. At
the time of the first closing of the Private Placement in October 2004, warrants
to purchase a total of 444,490 shares (post-split) of common stock at $0.075 per
share  (post-split)  were issued under the Secured Note  Warrants.  The value of
these warrants was computed utilizing the Black-Scholes valuation model, and the
total value of these warrants,  or $112,562 was charged to operations during the
twelve months ended December 31, 2004.

                                      F-22
<PAGE>

                  IR BIOSCIENCES HOLDINGS, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
                    AND FOR THE PERIOD FROM OCTOBER 30, 2002
                        (INCEPTION) TO DECEMBER 31, 2004

NOTE H - STOCK OPTIONS AND WARRANTS (CONTINUED)

Warrants (continued)
--------------------

The Company has outstanding  warrants to purchase 250,000 shares of common stock
at $0.30 per share  which were  issued in 2002 by its  predecessor  company  GPN
Network.

In April  through  June 2004,  the Company  issued  warrants to purchase  32,500
shares  (post-split)  at price  ranging from $0.25 to $2.00 to  consultants  for
services  performed.  The Company valued these warrants using the  Black-Scholes
valuation  model,  and  charged  the amount of $8,318 to  operations  during the
twelve months ended December 31, 2004.

In May 2004,  the Company  issued a warrant to its  president and a warrant to a
director,  each warrant to purchase 500,000 shares  (post-split) of common stock
at a price  of $0.25  per  share  (post-split).  The  warrants  were  issued  as
performance  bonuses.  The Company valued these warrants using the Black-Scholes
model,  and  charged  the amount of  $134,604  for each  warrant,  or a total of
$269,208, to operations during the twelve months ended December 31, 2004.

In October  2004,  the  Company  issued a warrant to its  president  to purchase
448,980 shares  (post-split)  at a price of $0.125 per share  (post-split)  as a
performance  bonus for achieving  certain  objectives.  The Company  valued this
warrant  using the  Black-Scholes  valuation  model,  and  charged the amount of
$112,697 to operations during the twelve months ended December 31, 2004.

In November and December 2004,  the Company issued a warrant to purchase  50,000
shares  (post-split)  of its  common  stock  at a  price  of  $0.125  per  share
(post-split) and a warrant to purchase 10,000 shares  (post-split) of its common
stock at a price of $0.075 per share (post-split) to two members of its advisory
boards.  The Company  valued these warrants  using the  Black-Scholes  valuation
model,  and charged the  aggregate  amount of $16,348 to  operations  during the
twelve months ended December 31, 2004.

In October  2004,  the Company  issued  warrants to  purchase  9,080,000  shares
(post-split)  of its common stock at a price of $0.50 per share  (post-split) to
the  investors  in its  private  placement  of equity  securities.  The  Company
allocated  $607,922 of the total  proceeds of $1,971,845  to the  warrants,  and
charged this amount to additional paid-in capital during the twelve months ended
December 31, 2004.

In October 2004, the Company issued warrants to purchase an aggregate of 720,000
shares  (post-split)  of  its  common  stock  at a  price  of  $0.50  per  share
(post-split) to the an officer and a director for converting a total of $180,000
of amounts owed to these  individuals for accrued salary and accrued  consulting
fees.  The Company  allocated  $56,067 of the total  proceeds of $180,000 to the
warrants,  and charged  this amount to  additional  paid-in  capital  during the
twelve months ended December 31, 2004.

In October  2004,  the Company  issued  warrants to  purchase  3,347,076  shares
(post-split)  of its common stock at a price of $0.50 per share  (post-split) to
the  convertible  note  holders who  invested  its private  placement  of equity
securities via conversion of their notes. The Company allocated  $191,111 of the
total amount  converted of $615,328 to the warrants,  and charged this amount to
additional paid-in capital during the twelve months ended December 31, 2004.

In October  2004,  the  Company  issued  warrants  to  purchase  628,873  shares
(post-split)  of its common stock at a price of $0.50 per share  (post-split) to
the vendors  who  invested in its private  placement  of equity  securities  via
conversion of amounts owed to them by the Company. The Company allocated $48,579
of the total  amount  converted  of $157,219 to the  warrants,  and charged this
amount to additional paid-in capital during the twelve months ended December 31,
2004.

In April  through  June 2004,  the Company  issued  warrants to purchase  77,500
shares  (post-split)  of its common stock at prices  ranging from $0.25 to $2.00
per share (post-split) to certain investors as additional  incentive under notes
payable  agreements.  The Company valued these warrants using the  Black-Scholes
model,  and charged the amount of $17,915 to additional  paid-in  capital during
the twelve months ended December 31, 2004.

In July and August 2004, the Company issued warrants to purchase  744,280 shares
(post-split) of its common stock at prices ranging from $0.05 to $2.00 per share
(post-split)  to certain  investors as additional  incentive under notes payable
agreements. The Company valued these warrants using the Black-Scholes model, and
charged the amount of $72,252 to additional  paid-in  capital  during the twelve
months ended December 31, 2004.


NOTE I - COMMITMENTS AND CONTINGENCIES

Office Leases
-------------

The  Company  lease  office  space  under a short term  agreement,  expiring  in
September  2005.  Rent expense  amounted to $31,369 for the years ended December
31, 2003,  $41,051 for the year ended  December  31,  2004,  and $75,154 for the
period from October 30, 2002 (inception) through December 31, 2004.

                                      F-23
<PAGE>

                  IR BIOSCIENCES HOLDINGS, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
                    AND FOR THE PERIOD FROM OCTOBER 30, 2002
                        (INCEPTION) TO DECEMBER 31, 2004

NOTE I - COMMITMENTS AND CONTINGENCIES (CONTINUED)


Employment and Consulting Agreements
------------------------------------

The  Company  has  employment  agreements  with all of its  President  and Chief
Executive Officer. In addition to salary and benefit provisions,  the agreements
include non-disclosure and confidentiality  provisions for the protection of the
Company's proprietary information.

The  Company has  consulting  agreements  with  outside  contractors  to provide
marketing and financial  advisory  services.  The Agreements are generally for a
term of 12 months from inception and renewable  automatically  from year to year
unless either the Company or Consultant  terminates  such  engagement by written
notice.

The Company has a  three-year  contract  for the period  January 2003 to January
2006 with its advertising and design agency. This contract stipulates that there
will be a minimum guaranteed annual fee for consultation, planning, creative and
account  service of  $100,000  for each of the three  years of the  contract  if
termination  of the  contract  is the result of a merger or  acquisition  of the
Company. The contract was not terminated upon the GPN Merger Agreement.

Litigation
----------

On December 13, 2001, service of process was effectuated upon GPN with regard to
a fee agreement between GPN and Silver and Deboskey, a Professional  Corporation
located in Denver, Colorado. On November 27, 2002, judgment was entered in favor
of Silver & Deboskey in the amount of $28,091 and the amount of the  judgment is
included in accounts payable at December 31, 2004.

The Company is subject to other legal  proceedings and claims which arise in the
ordinary  course of its  business.  Although  occasional  adverse  decisions  or
settlements may occur, the Company  believes that the final  disposition of such
matters  should not have a material  adverse  effect on its financial  position,
results of operations or liquidity.

Obligation to Register Shares
-----------------------------

In October  2004,  the Company sold shares of its common stock to investors in a
private placement  transaction.  The Company is obligated to file a registration
statement  for the shares of common  stock issued in the private  placement  and
shares of common stock  underlying the warrants issued in the private  placement
within 30 days of the final  closing date of October 26,  2004,  or November 25,
2004.  The Company is also obligated to effectuate  the  registration  statement
within 90 days of the final  closing  date of October 26,  2004,  or January 24,
2005.  Failure to meet either of these deadlines  results in the Company subject
to a penalty  of a 2%  increase  in the  number of shares to be  registered,  or
461,200 shares and warrants to purchase an additional  181,600 shares, for every
30 day  period  beyond the  deadline  date.  The  Company  filed a  registration
statement on November  24, 2004.  However,  at March 7, 2005,  the  registration
statement  has not yet been deemed  effective  by the  Securities  and  Exchange
Commission.  Accordingly, at April 3, 2005, the Company has accrued a penalty of
two 30-day  periods,  or 922,400  shares and warrants to purchase an  additional
363,200  shares.  If the Company fails to complete a  registration  by April 24,
2005, an additional  penalty of 461,200 shares and warrants to purchase  181,600
shares will be incurred.

NOTE J - INCOME TAXES

The Company has adopted Financial Accounting Standard No. 109 which requires the
recognition of deferred tax  liabilities  and assets for the expected future tax
consequences of events that have been included in the financial statement or tax
returns.  Under this method,  deferred tax liabilities and assets are determined
based on the difference between financial statements and tax bases of assets and
liabilities  using  enacted  tax  rates in  effect  for the  year in  which  the
differences  are  expected to reverse.  Temporary

                                      F-24
<PAGE>

                  IR BIOSCIENCES HOLDINGS, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
                    AND FOR THE PERIOD FROM OCTOBER 30, 2002
                        (INCEPTION) TO DECEMBER 31, 2004

NOTE J - INCOME TAXES (CONTINUED)

differences between taxable income reported for financial reporting purposes and
income tax purposes are insignificant.

For income tax reporting purposes,  the Company's aggregate unused net operating
losses approximate  $7,200,000 which expire through 2023, subject to limitations
of Section 382 of the Internal Revenue Code, as amended.  The deferred tax asset
related  to the  carryforward  is  approximately  $2,400,000.  The  Company  has
provided a valuation  reserve  against the full amount of the net operating loss
benefit,  because in the opinion of management based upon the earning history of
the Company, it is more likely than not that the benefits will not be realized.

Components of deferred tax assets as of December 31, 2004 are as follows:

Non Current:
       Net operating loss carryforward   $ 2,400,000
       Valuation allowance                (2,400,000)
                                         -----------
       Net deferred tax asset            $        --
                                         ===========

NOTE K - LOSSES PER COMMON SHARE

The following  table  presents the  computations  of basic and dilutive loss per
share:

<TABLE>
<CAPTION>
                                                                          For the Period From
                                                                          October 30, 2002
                                                                          (Date of Inception)
                                                2004           2003       Through December 31, 2004
                                             ------------  -------------  --------------------------
<S>                                          <C>            <C>            <C>
Net loss available to common shareholders    $ (5,305,407)  $ (1,856,702)  $ (7,208,027)
                                             ============   ============   ============

Basic and fully diluted loss per share       $      (0.16)  $      (0.09)  $      (0.28)
                                             ============   ============   ============

Weighted average common shares outstanding     33,510,168     21,317,292     25,698,261
                                             ============   ============   ============
</TABLE>

Net loss per share is based upon the weighted  average of shares of common stock
outstanding.  In June , 2003 a .897960946 for one (1) reverse stock split of the
Company's  common stock was effected (See Note A).  Accordingly,  all historical
weighted  average  share and per share amounts have been restated to reflect the
reverse stock split.

On April 6, 2004,  the  Company  effected a 2 for 1 forward  split of its common
stock.  Accordingly,  the effect of the forward split has been  presented in the
accompanying financial statement and footnote disclosures.

NOTE L - SUBSEQUENT EVENTS

In January,  2005,  the Company  made a tender offer to  temporarily  reduce the
exercise price of certain  warrants issued in October,  2004 from $0.50 to $0.20
per share. The tender offer expired on March 4, 2005. We accepted for exercise a
total of 6,600,778  warrants validly tendered and not withdrawn  pursuant to the
terms of the tender offer,  which represents  approximately 48% of the aggregate
13,780,449  warrants that were available in the tender offer. The Company raised
net proceeds of $1,211,000 via the tender offer.

                                      F-25
<PAGE>

ITEM 8. CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
        FINANCIAL DISCLOSURE

         On April  21,  2004,  the  Company  terminated  its  relationship  with
Stonefield Josephson, Inc. and engaged Russell Bedford Stefanou Merchandani, LLP
as the  Company's  independent  certified  public  accountants.  The decision to
change accountants was approved by the Company's Board of Directors.  Stonefield
Josephson's  report on the  consolidated  financial  statements  of  ImmuneRegen
BioSciences,  Inc.  for the year  ended  December  31,  2002 did not  contain an
adverse  opinion or a disclaimer of opinion and was not modified or qualified as
to  uncertainty,  audit scope or  accounting  principles;  however,  such report
contained an explanatory  paragraph  relating to substantial doubt regarding the
uncertainty of the Company's ability to continue as a going concern.

ITEM 8A.  CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures.
-------------------------------------------------

         Disclosure  controls and procedures  are controls and other  procedures
that are designed to ensure that  information  required to be disclosed by us in
the  reports  that  we  file or  submit  under  the  Exchange  Act is  recorded,
processed,  summarized  and reported,  within the time periods  specified in the
Securities and Exchange  Commission's rules and forms.  Disclosure  controls and
procedures  include,  without  limitation,  controls and procedures  designed to
ensure that  information  required to be  disclosed by us in the reports that we
file under the Exchange Act is accumulated  and  communicated to our management,
including our principal  executive and financial  officers,  as  appropriate  to
allow timely decisions regarding required disclosure.

         As of the end of the period covered by this Annual Report, we conducted
an evaluation,  under the  supervision and with the  participation  of our chief
executive officer and chief financial  officer,  of our disclosure  controls and
procedures (as defined in Rules  13a-15(e) of the Exchange  Act).  Based on this
evaluation,  our chief executive  officer and chief financial  officer concluded
that our  disclosure  controls  and  procedures  need  improvement  and were not
adequately effective as of December 31, 2004 to ensure timely reporting with the
Securities and Exchange Commission.

         Our  management  is in the  process of  identifying  deficiencies  with
respect to our disclosure  controls and procedures and  implementing  corrective
measures,  which include the  establishment of new internal  policies related to
financial reporting.

Changes in internal controls
----------------------------

There have been no changes in our  internal  control  over  financial  reporting
identified in connection  with the evaluation  required by paragraph (d) of Rule
13a-15 or 15d-15 under the Exchange Act that  occurred  during the quarter ended
December  31, 2004 that has  materially  affected,  or is  reasonably  likely to
materially affect, our internal control over financial reporting.

ITEM 8B.

         Effective December 22, 2004, David T. Harris,  Ph.D.  resigned from his
position  as a  member  of  the  Board  of  Directors  and  as a  consultant  to
ImmuneRegen BioSciences, Inc.

         Effective  December  22,  2004,  Steven J.  Scronic  resigned  from his
position as our Corporate Secretary.

         Our  board of  directors  appointed  Michelle  Laroche  to serve as our
Corporate  Secretary,  effective  as of December 22, 2004.  Ms.  Laroche  joined
ImmuneRegen in July of 2003 as Director of Operations.  She plays a diverse role
in her current  position;  working on  accounting,  securities,  contracts,  and
office  management.  September of 2002 through June of 2003 Ms.  Laroche  worked
within the Credit  Department  of Mayo  Clinic  where her main focus was account
resolution in  preparation  for a major software

                                      -39-

<PAGE>

conversion.  From  September of 1999 through August of 2002 Ms. Laroche held the
position of  Executive  Assistant  at Foresight  Capital  Corporation  where she
assisted in all aspects of client relations and office management.  There are no
family  relationships  between Ms. Laroche and any of our directors or executive
officers. There have been no transactions between Ms. Laroche and the Company or
its  subsidiary  that is  required  to be  reported  pursuant  to Item 404(a) of
Regulation S-B. Ms. Laroche does not have an employment agreement with us.

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16(A) OF THE EXCHANGE ACT

      The information  required by this Item 9 is incorporated by reference from
our  definitive  proxy  statement on Schedule 14A, or, if our  definitive  proxy
statement is not filed within that time, the  information  will be filed as part
of an amendment to this Annual Report on Form  10-KSB/A,  not later than the end
of the 120-day period.

ITEM 10. EXECUTIVE COMPENSATION

         The  information  required by this Item 10 is incorporated by reference
from our definitive proxy statement on Schedule 14A, or, if our definitive proxy
statement is not filed within that time, the  information  will be filed as part
of an amendment to this Annual Report on Form  10-KSB/A,  not later than the end
of the 120-day period.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The  information  required by this Item 11 is incorporated by reference
from our definitive proxy statement on Schedule 14A, or, if our definitive proxy
statement is not filed within that time, the  information  will be filed as part
of an amendment to this Annual Report on Form  10-KSB/A,  not later than the end
of the 120-day period.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The  information  required by this Item 12 is incorporated by reference
from our definitive proxy statement on Schedule 14A, or, if our definitive proxy
statement is not filed within that time, the  information  will be filed as part
of an amendment to this Annual Report on Form  10-KSB/A,  not later than the end
of the 120-day period.

ITEM 13.  EXHIBITS

                                    EXHIBITS

EXHIBIT
NUMBER            DESCRIPTION
--------------------------------------------------------------------------------
2.1               Agreement  and Plan of Merger  dated  July 2,  2003  among the
                  Registrant,   GPN  Acquisition   Corporation  and  ImmuneRegen
                  BioSciences,  Inc.  (incorporated by reference to exhibit 2 of
                  the  Registrant's  current  report on Form 8-k filed  with the
                  Securities and Exchange Commission on July 7, 2003).

3.1               Certificate of Incorporation filed with the Delaware Secretary
                  of State on June 4, 1985 (incorporated by reference to exhibit
                  3.1 of the  Registrant's  annual report on Form 10-KSB for the
                  year ended  December  31, 2001 filed with the  Securities  and
                  Exchange Commission on April 16, 2002).

3.1(a)            Certificate of Amendment filed with the Delaware  Secretary of
                  State on July 16, 1987  (incorporated  by reference to exhibit
                  3.1(a) of the  Registrant's  annual  report on Form 10-KSB for
                  the year ended December 31, 2001 filed with the Securities and
                  Exchange Commission on April 16, 2002).

                                      -40-

<PAGE>

EXHIBIT
NUMBER            DESCRIPTION
--------------------------------------------------------------------------------
3.1(b)            Certificate of Amendment filed with the Delaware  Secretary of
                  State on  February  3,  1992  (incorporated  by  reference  to
                  exhibit  3.1(b)  of the  Registrant's  annual  report  on Form
                  10-KSB for the year  ended  December  31,  2001 filed with the
                  Securities and Exchange Commission on April 16, 2002).

3.1(c)            Certificate of Amendment filed with the Delaware  Secretary of
                  State on  November  23, 1992  (incorporated  by  reference  to
                  exhibit  3.1(c)  of the  Registrant's  annual  report  on Form
                  10-KSB for the year  ended  December  31,  2001 filed with the
                  Securities and Exchange Commission on April 16, 2002).

3.1(d)            Certificate of Amendment filed with the Delaware  Secretary of
                  State on  December  15, 1994  (incorporated  by  reference  to
                  exhibit  3.1(d)  of the  Registrant's  annual  report  on Form
                  10-KSB for the year  ended  December  31,  2001 filed with the
                  Securities and Exchange Commission on April 16, 2002).

3.1(e)            Certificate of Amendment filed with the Delaware  Secretary of
                  State on  November  7,  1995  (incorporated  by  reference  to
                  exhibit  3.1(e)  of the  Registrant's  annual  report  on Form
                  10-KSB for the year  ended  December  31,  2001 filed with the
                  Securities and Exchange Commission on April 16, 2002).

3.1(f)            Certificate of Amendment filed with the Delaware  Secretary of
                  State on  December  30, 1996  (incorporated  by  reference  to
                  exhibit  3.1(f)  of the  Registrant's  annual  report  on Form
                  10-KSB for the year  ended  December  31,  2001 filed with the
                  Securities and Exchange Commission on April 16, 2002).

3.1(g)            Certificate of Amendment filed with the Delaware  Secretary of
                  State on  November  8,  2000  (incorporated  by  reference  to
                  exhibit  3.1(h)  of the  Registrant's  annual  report  on Form
                  10-KSB for the year  ended  December  31,  2001 filed with the
                  Securities and Exchange Commission on April 16, 2002).

3.2               Amended  and  Restated  Bylaws of the  Registrant  dated as of
                  January 1, 2002  (incorporated by reference to exhibit 3(b) of
                  the  Registrant's  annual  report on Form  10-KSB for the year
                  ended December 31, 2001 filed with the Securities and Exchange
                  Commission on April 16, 2002).

4.1               Specimen  Stock  Certificate  (incorporated  by  reference  to
                  exhibit 4.1 of the Registrant's registration statement on Form
                  SB-2  (File No.  333-120784)  filed  with the  Securities  and
                  Exchange Commission on November 24, 2004).

4.2               2003 Stock Option,  Deferred Stock and  Restricted  Stock Plan
                  (incorporated  by reference to exhibit 4.1 of the Registrant's
                  registration statement on Form S-8 (File No. 333-113511) filed
                  with the  Securities  and  Exchange  Commission  on March  11,
                  2004).

4.3               Form of Warrant by and between the  Registrant and each of the
                  Investors or  Creditors,  as the case may be, who entered into
                  an  Agreement  filed  as  Exhibit  10.6,  10.7,  10.8  or 10.9
                  herewith  (incorporated  by  reference  to exhibit  4.1 of the
                  Registrant's  current  report  on  Form  8-K  filed  with  the
                  Securities and Exchange Commission on October 19, 2004).

4.4               Form  of   Registration   Rights  (Annex  A  to   Subscription
                  Agreement)  by and  between  the  Registrant  and  each of the
                  Investors  who entered into the  Agreements  filed as Exhibits
                  10.6 and 10.8 herewith  (incorporated  by reference to exhibit
                  4.2 of the Registrant's  current report on Form 8-K filed with
                  the Securities and Exchange Commission on October 19, 2004).

4.5               Form  of   Anti-Dilution   Rights  (Annex  B  to  Subscription
                  Agreement)  by and  between  the  Registrant  and  each of the
                  Investors  who entered into the  Agreements  filed as Exhibits
                  10.6 and 10.8 herewith  (incorporated  by reference to exhibit
                  4.3 of the Registrant's  current report on Form 8-K filed with
                  the Securities and Exchange Commission on October 19, 2004).

4.6               Promissory  Note issued from the Registrant to SBM Certificate
                  Company as of April 28, 2004  (incorporated  by  reference  to
                  exhibit 4.6 of the Registrant's registration statement on Form
                  SB-2  (File No.  333-120784)  filed  with the  Securities  and
                  Exchange Commission on November 24, 2004).

                                      -41-

<PAGE>

EXHIBIT
NUMBER            DESCRIPTION
--------------------------------------------------------------------------------
10.1              Employment   Agreement   dated   December   16,  2002  between
                  ImmuneRegen BioSciences, Inc., a subsidiary of the Registrant,
                  and Michael Wilhelm (incorporated by reference to exhibit 10.1
                  of the Registrant's  registration statement on Form SB-2 (File
                  No.   333-120784)  filed  with  the  Securities  and  Exchange
                  Commission on November 24, 2004).

10.2              Consulting   Agreement   dated   December   16,  2002  between
                  ImmuneRegen BioSciences, Inc., a subsidiary of the Registrant,
                  and David Harris (incorporated by reference to exhibit 10.2 of
                  the Registrant's registration statement on Form SB-2 (File No.
                  333-120784) filed with the Securities and Exchange  Commission
                  on November 24, 2004).

10.2(a)           First  Amendment to  Consulting  Agreement  dated January 2003
                  between  ImmuneRegen  BioSciences,  Inc., a subsidiary  of the
                  Registrant,  and David  Harris  (incorporated  by reference to
                  exhibit 10.2(a) of the Registrant's  registration statement on
                  Form SB-2 (File No.  333-120784) filed with the Securities and
                  Exchange Commission on November 24, 2004).

10.3              Consulting   Agreement   dated   December   16,  2002  between
                  ImmuneRegen BioSciences, Inc., a subsidiary of the Registrant,
                  and Mark Witten  (incorporated by reference to exhibit 10.3 of
                  the Registrant's registration statement on Form SB-2 (File No.
                  333-120784) filed with the Securities and Exchange  Commission
                  on November 24, 2004).

10.3(a)           First  Amendment to  Consulting  Agreement  dated January 2003
                  between  ImmuneRegen  BioSciences,  Inc., a subsidiary  of the
                  Registrant,  and Mark Witten  (incorporated  by  reference  to
                  exhibit 10.3(a) of the Registrant's  registration statement on
                  Form SB-2 (File No.  333-120784) filed with the Securities and
                  Exchange Commission on November 24, 2004).

10.4              License  Agreement  dated December 16, 2002 among  ImmuneRegen
                  BioSciences,  Inc.,  a  subsidiary  of the  Registrant,  David
                  Harris and Mark Witten  (incorporated  by reference to exhibit
                  10.4 of the Registrant's  registration  statement on Form SB-2
                  (File No.  333-120784)  filed with the Securities and Exchange
                  Commission on November 24, 2004).

10.4(a)           First  Amendment to License  Agreement dated December 20, 2002
                  among  ImmuneRegen  BioSciences,  Inc.,  a  subsidiary  of the
                  Registrant,  David  Harris and Mark  Witten  (incorporated  by
                  reference to exhibit 10.4(a) of the Registrant's  registration
                  statement  on Form SB-2 (File No.  333-120784)  filed with the
                  Securities and Exchange Commission on November 24, 2004).

10.4(b)           Second  Amendment  to License  Agreement  dated June 26,  2003
                  among  ImmuneRegen  BioSciences,  Inc.,  a  subsidiary  of the
                  Registrant,  David  Harris and Mark  Witten  (incorporated  by
                  reference to exhibit 10.4(b) of the Registrant's  registration
                  statement  on Form SB-2 (File No.  333-120784)  filed with the
                  Securities and Exchange Commission on November 24, 2004).

10.5              Lease  Agreement  dated  July  1,  2004  between   ImmuneRegen
                  BioSciences,  Inc., a subsidiary  of the  Registrant,  and The
                  Clayton  Companies  (incorporated by reference to exhibit 10.5
                  of the Registrant's  registration statement on Form SB-2 (File
                  No.   333-120784)  filed  with  the  Securities  and  Exchange
                  Commission on November 24, 2004).

10.6              Form of Subscription  Agreement entered into as of October 13,
                  2004  between the  Registrant  and each of the  Investors  set
                  forth on the Schedule of Investors  thereto  (incorporated  by
                  reference to exhibit 10.1 of the  Registrant's  current report
                  on Form 8-K filed with the Securities and Exchange  Commission
                  on October 19, 2004).

10.7              Form of  Settlement  Agreement  entered into as of October 13,
                  2004  between the  Registrant  and each of the  Creditors  set
                  forth on the Schedule of Creditors  thereto  (incorporated  by
                  reference to exhibit 10.2 of the  Registrant's  current report
                  on Form 8-K filed with the Securities and Exchange  Commission
                  on October 19, 2004).

10.8              Form of Subscription  Agreement entered into as of October 26,
                  2004  between the  Registrant  and each of the  Investors  set
                  forth on the Schedule of Investors  thereto  (incorporated  by
                  reference to exhibit 10.1 of the  Registrant's  current report
                  on Form 8-K filed with the Securities and Exchange  Commission
                  on October 27, 2004).

                                      -42-

<PAGE>

EXHIBIT
NUMBER            DESCRIPTION
--------------------------------------------------------------------------------
10.9              Form of  Settlement  Agreement  entered into as of October 26,
                  2004  between the  Registrant  and each of the  Creditors  set
                  forth on the Schedule of Creditors  thereto  (incorporated  by
                  reference to exhibit 10.2 of the  Registrant's  current report
                  on Form 8-K filed with the Securities and Exchange  Commission
                  on October 27, 2004).

21.1              Subsidiaries of the Registrant  (incorporated  by reference to
                  exhibit  21.1 of the  Registrant's  registration  statement on
                  Form SB-2 (File No.  333-120784) filed with the Securities and
                  Exchange Commission on November 24, 2004).

23.1              Consent of Russell Bedford Stefanou Mirchandani LLP

31.1              Certification  of Chief  Executive  Officer  pursuant  to Item
                  601(b)(31) of Regulation  S-B, as adopted  pursuant to Section
                  302 of the Sarbanes-Oxley Act of 2002.

31.2              Certification  of Chief  Financial  Officer  pursuant  to Item
                  601(b)(31) of Regulation  S-B, as adopted  pursuant to Section
                  302 of the Sarbanes-Oxley Act of 2002.

32.1              Certifications  of  Chief  Executive  Officer  pursuant  to 18
                  U.S.C.  Section 1350 as adopted pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002.*

32.2              Certifications  of  Chief  Financial  Officer  pursuant  to 18
                  U.S.C.  Section 1350 as adopted pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002.*

* This  exhibit  shall not be deemed  "filed" for  purposes of Section 18 of the
Securities  Exchange Act of 1934 or otherwise subject to the liabilities of that
section,  nor shall it be deemed  incorporated  by reference in any filing under
the Securities Act of 1933 or the Securities  Exchange Act of 1934, whether made
before or after the date hereof and  irrespective  of any general  incorporation
language in any filings.

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

         The  information  required by this Item 14 is incorporated by reference
from our definitive proxy statement on Schedule 14A, or, if our definitive proxy
statement is not filed within that time, the  information  will be filed as part
of an amendment to this Annual Report on Form  10-KSB/A,  not later than the end
of the 120-day period.

                                      -43-

<PAGE>

                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on April 15, 2005

                          IR BIOSCIENCES HOLDINGS, INC.

                        By: /s/ Michael K. Wilhelm
                           -------------------------------------------------
                                Michael K. Wilhelm
                                President and Chief Executive Officer

In accordance  with the  Securities  Exchange Act of 1934,  this report has been
signed below by the  following  persons on behalf of the  Registrant  and in the
capacities and on the dates indicated.

 SIGNATURE                               TITLE                         DATE
 ---------                               -----                         ----

/s/ Michael K. Wilhelm    Chief Executive Officer, President and  April 19, 2005
-----------------------   Director (Principal Executive Officer)
Michael K. Wilhelm

/s/ John N. Fermanis      Chief Financial Officer (Principal      April 19, 2005
-----------------------   Financial and Accounting Officer)
John N. Fermanis

/s/ Theodore E. Staahl    Director                                April 19, 2005
-----------------------
Theodore E. Staahl, M.D.

                                      -44-