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


                                  FORM 10-KSB/A
                                 AMENDMENT NO. 1


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

                  For the fiscal year ended December 31, 2005.

                                       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 is not required to file reports  pursuant to Section 13
or Section 15(d) of the Exchange Act. [ ].

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  X         NO
   -----        ------

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/A or any amendment to this Form 10-KSB/A. [ ]

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

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 March 24,  2006
(based on the  average of the bid and asked  prices as  reported by the NASD OTC
Bulletin Board as of that date) was approximately $21,208,577.

The number of shares outstanding of Registrant's  Common Stock, par value $0.001
as of March 24, 2006: 69,536,319.


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 that  will be  filed  no later  than the end of the
120-day  period   following  the  Registrant's   fiscal  yearend,   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>



                                 EXPLANATORY PARAGRAPH

We are filing this  amendment to Form 10-KSB for the fiscal year ended  December
31, 2005,  filed with the Securities and Exchange  Commission on March 28, 2006,
to correct the following typographical errors:

(1) The filing date of Russell  Bedford  Stefanou  Mirchandani  LLP's  Report of
Independent Registered Public Accounting Firm

(2)  The  inclusion  of two  (2)  reconciling  items  in the  2005  Consolidated
Statements  of Cash Flows that were  dropped  in the  conversion  of the file to
EDGAR format

(3) The inclusion of two (2) items in Footnote D,  Accounts  Payable and Accrued
Liabilities , to the financial statements that were dropped in the conversion of
the file to EDGAR format


For ease of reference, this Form 10-KSB/A is being re-filed in its entirety with
this Form 10-KSB/A.


<PAGE>

                                TABLE OF CONTENTS

                                                                          Page
                                                                          ----



                                     PART I



Item 1.  Description of Business............................................ 4



Item 2.  Description of Property............................................37



Item 3.  Legal Proceedings..................................................37



Item 4.  Submission of Matters to a Vote of Security Holders................37



                                     PART II


Item 5.  Market for Registrant's Common Stock, Related Stockholder
         Matters............................................................38



Item 6.  Management's Discussion and Analysis or Plan of Operation..........39



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



Item 8.  Changes in and Disagreements with
         Accountants on Accounting and Financial Disclosure................ 48



Item 8A. Controls and Procedures............................................48



Item 8B.  Other Information.................................................48



                                    PART III



Item 9.  Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act...........................49



Item 10. Executive Compensation.............................................50



Item 11. Security Ownership of Certain Beneficial Owners and
         Management and Related Stockholder Matters.........................53



Item 12. Certain Relationships and Related Transactions.....................55



Item 13. Exhibits...........................................................58



Item 14. Principal Accountant Fees and Services.............................63

<PAGE>




                           FORWARD-LOOKING STATEMENTS

THIS ANNUAL REPORT ON FORM 10-KSB/A  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.





                                       3
<PAGE>


                                     PART I


ITEM 1. DESCRIPTION OF BUSINESS

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  potential  therapeutics  for a
number of  applications.  All therapeutics in development are based on Sar9, Met
(O2)11-Substance  P, an analog of the  naturally  occurring  human  neuropeptide
Substance P. This  neuropeptide can be found  throughout the body,  including in
the airways of humans and many other  species.  We use the generic name Homspera
to refer to the  synthetic  Sar9,  Met  (O2)11-Substance  P peptide.  All of our
research and development efforts are early,  pre-clinical stage and Homspera has
only undergone  exploratory studies to evaluate its biological activity in small
animals.

         Currently,  the majority of our development efforts are centered on two
potential  therapeutic  applications  for the  active  ingredient  in  Homspera.
Radilex is being formulated  specifically  for the potential  treatment of acute
exposure to radiation.  Viprovex is being formulated  specifically for potential
applications relating to the treatment of maladies caused by exposure to various
chemical and biological agents. We are currently sponsoring ongoing pre-clinical
studies in these areas, specifically two mouse radiation studies on the efficacy
of  Radilex in  treating  acute  radiation  exposure  and a rodent  study on the
efficacy  of Viprovex in treating  exposure  to anthrax.  We are  designing  the
protocols for additional radiation studies in mice using Radilex.  Additionally,
we are designing  the  protocols for an avian flu study in mice using  Viprovex.
Both studies have institutions  with facilities  committed to perform them when,
and if, protocols and funding are finalized.

         To date we have submitted  preliminary  study data to the U.S. Food and
Drug Administration (FDA) and have been issued two  Pre-Investigational New Drug
(PIND)  numbers,  one for the potential use of Radilex in the treatment of acute
radiation  syndrome  and the  other for the  potential  use of  Viprovex  in the
treatment of avian  influenza.  In addition,  we have recently  submitted a PIND
data  package  for the use of Viprovex in the  potential  treatment  of chemical
exposure.  We intend to file final  radiation  study data from mice with the FDA
within  six  months,  and at this time we will  request  a meeting  with the FDA
regarding  the  authorization  of a large  animal  study  protocol  to test  the
efficacy of Radilex as a potential treatment for acute radiation syndrome.  Also
within the next six to twelve months, we plan to submit an  Investigational  New
Drug (IND)  application  for the  potential  use of Viprovex  in treating  Acute
Respiratory Distress Syndrome (ARDS).

         We have filed patent applications and provisional patent  applications,
where  applicable,  in many  jurisdictions,  inside  and  outside  of the United
States,  for the use of the active  ingredient Sar9, Met  (O2)11-Substance  P in
applications  that we are  researching.  We own two issued  U.S.  and two issued
foreign patents and two pending Patent  Cooperation  Treaty (PCT)  applications,
seven  pending  U.S.  provisional  patent  applications  and 16 pending  foreign
provisional patent applications.

         Our current  potential drug candidates,  Radilex and Viprovex and other
technologies  utilizing Homspera, are at early stages of development and may not
be shown to be safe or  effective  and may never  receive  regulatory  approval.
Neither Radilex nor Viprovex nor our  technologies  utilizing  Homspera have yet
been tested in humans.  There is no guarantee that regulatory  authorities  will
ever permit human testing of Radilex,  Viprovex or any other potential  products
derived from  Homspera.  Even if human  testing is  permitted,  none of Radilex,
Viprovex or any other potential drug  candidates,  if any, derived from Homspera
may be successfully developed or shown to be safe or effective.

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

         To date, we have not obtained regulatory approval for or commercialized
any  applications  using  Homspera or any of its  derivatives.  We have incurred
significant  losses since our inception and we expect to incur annual losses for
at least  the  next  three  years as we  continue  with  our drug  research  and
development efforts.

                                       4
<PAGE>

COMPANY HISTORY

         We were  originally  incorporated in the State of 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. In
January 1992,  we effected a 1-for-6.3  reverse stock split of our common stock.
We changed our name to InnoTek,  Inc. in November  1992.  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  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.,  adopted our current business model
and thereafter changed our name to IR BioSciences  Holdings,  Inc. 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.

RECENT EVENTS

         On December 13, 2005 the Board  granted 1,000  discretionary  incentive
stock options to an employee.  The options have an exercise price of $0.31 and a
term of five years.

         On August 10, 2005, we entered into a new employment agreement with our
President  and Chief  Executive  Officer,  Michael K.  Wilhelm.  The  employment
agreement  calls for a salary at the rate of $275,000 per annum and provides for
bonus incentives. Our Board of Directors granted 103,030 discretionary incentive
stock options to our Chief Executive Officer,  Michael K. Wilhelm,  per this new
employment agreement.  The options have an exercise price of $0.33 and a term of
five years.

         In June 2005, we issued  80,000 shares of common stock  pursuant to the
exercise of a warrant at a price of $0.05 per share.

         On May 20, 2005, our Board of Directors  granted 150,000  discretionary
incentive stock options to our Chief Executive Officer,  Michael K. Wilhelm, per
his employment agreement. The options have an exercise price of $0.44 and a term
of five years.

         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.

         On  December  9,  2004 we  filed  for  trademarks  with US  Patent  and
Trademark Office (USPTO) for Homspera,  Radilex and Viprovex.  Federal trademark
applications are pending.  As of the date of this report, no similar  registered
or pending marks have been found which would bar registration.

         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 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
19,600,000 shares of our common stock and warrants to purchase  9,800,000 shares
of our common stock.  In  consideration  of the  investment,  we granted to each
investor certain  registration  rights and  anti-dilution  rights.  We agreed to
register these shares along with the shares  underlying  these  warrants  within
ninety  days  from the  closing  date of the  transaction,  or we would  incur a
penalty  equivalent  to an  additional  2% of  the  shares  and  warrants  to be
registered  for every 30 days that we fail to complete this  registration.  This
penalty  amounts to an aggregate of 461,200  shares and 181,600  warrants per 30
day period until such a time as a  registration  statement  that includes  these
shares and warrants is made effective.  As of December 31, 2005, we are required
to issue an additional 5,242,307 shares of common stock and warrants to purchase
an additional  2,064,187  shares of common stock. At the time these  liabilities
were incurred, the shares were valued at $1,991,923 and the warrants were valued
at $638,838.  The shares were valued at the market price of the Company's common
stock at the time the  liabilities  were  incurred.  The  warrants  were  valued
utilizing the Black-Scholes  valuation model. The aggregate amount of $2,630,761
was charged to  operations  as cost of Penalty for late  registration  of shares
during the year ended December 31, 2005.



                                       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.

         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  $157,218,  we issued to the  creditors  the
following: (a) a number of shares of our common stock determined by dividing the
$157,218 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 $157,218 claim amount.

         Between June 2003 and August 2004 eleven investors entered into fifteen
convertible  promissory  notes  totaling  $558,500 with  interest  rates ranging
between 8% and 12% and having various  maturities.  In October 2004, these notes
were  converted  into equity in the  aggregate  amount of $558,500  plus accrued
interest of $56,757.  For full and complete  satisfaction  of debt, we issued to
the note  holders  the  following:  (a) a number of shares of our  common  stock
determined by dividing the debt amount by an amount  between  $0.075 and $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 October 2004 private placement.  Pursuant to the debt
conversion  we issued  an  aggregate  of  6,694,149  shares of common  stock and
warrants to purchase  3,347,076  shares of common stock.  Under the terms of the
conversion  agreement,  the note holders  released us from all claims,  known or
unknown, relating to the debt amount.

         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.

         Effective December 17, 2004, Eric Hopkins resigned from his position as
our Chief Financial Officer. Effective December 22, 2004, our Board of Directors
appointed John N. Fermanis to serve as our Chief  Financial  Officer.  Our Board
resolved to issue 100,000 shares of registered  common stock to Mr. Fermanis for
his acceptance of this position. These shares were issued to Mr. Fermanis in May
2005.

         Effective December 22, 2004, Dr. Harris resigned from his position as a
member of our Board of  Directors  and a member  of the  Board of  Directors  of
ImmuneRegen BioSciences, Inc., our subsidiary

         Effective  December  22,  2004,  Steven J.  Scronic  resigned  from his
position as our Corporate  Secretary.  Effective December 22, 2004, our board of
directors appointed Michelle R. Laroche to serve as our Corporate Secretary.

APPLICATIONS IN DEVELOPMENT

SUBSTANCE P AND HOMSPERA (Sar9, Met (O2)11-Substance P)
-------------------------------------------------------

         Substance P, discovered in 1931, is a naturally occurring small (1348 D
molecular  weight) peptide of 11 amino acids that is found  throughout the body.
Relevant to our current  studies,  Substance P is localized to the nerves in the
airways of many species,  including humans. It is believed to be the most potent
member of the tachykinin family of neuropeptides,  which are widely  distributed
in the peripheral and central nervous systems and have direct, receptor-mediated
actions on most tissues and organs.

         In an attempt to find a  commercially  viable  Substance  P analog with
similar or expanded capabilities,  scientists,  including our co-founders,  Drs.
Mark Witten and David  Harris,  working in the area of Substance P and pulmonary
function developed a Substance P analog (Sar9, Met  (O2)11-Substance  P). In the
opinion of management,  this compound has been shown to have Neurokinin-1  (NK1)
receptor  specificity,   which  has  become  the  basis  for  our  research  and
development  efforts.  Homspera  is the name by  which we refer to the  chemical
Sar9, Met (O2)11-Substance P in the context of our research and development.

                                       6
<PAGE>

Radilex and Viprovex
--------------------

         The  majority  of our  development  efforts  are  centered  on two drug
candidates   formulated  from  Homspera,   Radilex  and  Viprovex.   The  active
ingredient,  Homspera, is chemically equivalent in both Radilex and Viprovex. As
they are used in differing  indications and the formulations and dosing regimens
may  ultimately  also  differ,  we have  created  trade  names  to  more  easily
differentiate  the two potential  applications with respect to their development
and  potential  future  market  opportunities.   Radilex  is  the  name  of  the
preparation  being tested to potentially  protect  against  radiation  exposure.
Viprovex  is  the  name  of  the  anti-viral   preparation  for  indications  to
potentially protect against exposure to various chemical and biological agents.

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------
                                                                                  Trade names for different
              Chemical Name and Amino Acid Sequence            Generic Name      formulations / indications
-----------------------------------------------------------------------------------------------------------
<S>                             <C>                            <C>               <C>             <C>
Sar9, Met (O2)11-Substance P    Arg-Pro-Lys-Pro-Gln-Gln-Phe-      Homspera        Radilex         Viprovex
                                Phe-Sar-Leu-Met(O2)-NH2
-----------------------------------------------------------------------------------------------------------
</TABLE>

Applications

         Our  potential  applications  are  based  on  various  formulations  of
Homspera.  We  currently  have  potential  applications  at  various  stages  of
pre-clinical  development.  Our initial  pre-clinical  applications are in acute
radiation  syndrome  (Radilex)  and  infectious  disease and  chemical  exposure
(Viprovex.)

         The basis for our  development of potential uses of Homspera is derived
from  observations  made  during  research  funded  by the Air  Force  Office of
Scientific  Research  in early 1994 by our  co-founders  Dr. Mark Witten and Dr.
David Harris.  During this research it was observed that the exposure of animals
to jet fuel  (JP-8)  resulted  in  pathological  changes in the lungs and immune
systems of those exposed.  In the opinion of management,  these studies  further
showed that the  administration  of Sar9,  Met(O2)11-Substance  P prevented  and
reversed  the  effects  of JP-8  jet  fuel  exposure  in the  lungs,  as well as
protected and  regenerated the immune system.  It is our opinion that,  based on
the  results of these  studies,  Homspera  directly  treats the effects of toxic
exposure on living cells by  inhibiting  cell  apoptosis  (cell-initiated  death
process).  We continue to explore the multiple  potential  capabilities of Sar9,
Met  (O2)11-Substance  P and to better  understand  the mechanisms by which this
compound can potentially provide protection against gamma radiation, respiratory
viruses and various chemical and biological agents.

         As traditional  efficacy studies would require healthy human volunteers
to be exposed to the  potentially  lethal agents or  pathogens,  which cannot be
done,  we intend to apply for approval  based upon a new rule adopted by the FDA
in 2002,  titled  "Approval  of New Drugs When Human  Efficacy  Studies  Are Not
Ethical or Feasible" (Code of Federal  Regulations,  Title 21, Part 314, Subpart
I), which is also referred to as the "animal  efficacy  rule."  Pursuant to this
new rule, in situations where it would be unethical to conduct traditional Phase
II  and  Phase  III  efficacy  studies  in  humans,  as is  the  case  with  our
applications  relating to the  treatment of maladies  caused by exposure to high
level gamma radiation and various chemical and biological  agents,  the FDA will
review new drugs for  approval on the basis of safety in humans and  efficacy in
relevant  animal models.  Through  development  under this paradigm,  management
believes near-term development opportunities may exist and development costs are
lessened  compared to the more traditional  drug development  model, as Phase II
and Phase III of the FDA required drug approval process are not required.  Under
either scenario,  we will not have marketable  applications unless and until our
drug  candidates  complete all required  safety studies and clinical  trials and
receive FDA  approval in the United  States or approval by  regulatory  agencies
outside of the United States.

                                       7
<PAGE>

         The table below  illustrates our current  product  candidates and their
stage of development within the FDA approval process.

<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------
Product Candidate      Pharmacological    Animal      Pre-Clinical
                       Identification     Safety      Mechanistic       Phase I     Phase II*   Phase III*
----------------------------------------------------------------------------------------------------------
<S>     <C>            <C>                <C>         <C>               <C>         <C>         <C>
Acute Radiation
Syndrome
     Radilex             In-progress      Planned     In-progress

Infectious disease
     Viprovex            In-progress      Planned     In-progress

Chemical exposure
     Viprovex            In-progress
----------
</TABLE>

* In  development  under the  animal  efficacy  rule  Phase II and Phase III are
potentially not required.

         To date we have been  issued two  Pre-Investigational  New Drug  (PIND)
numbers  by the  U.S.  Food & Drug  Administration  (FDA)  - one  for the use of
Radilex in the  treatment  of acute  radiation  syndrome  and one for the use of
Viprovex in the  treatment of avian  influenza.  In addition,  we have  recently
submitted a PIND for the use of Viprovex in the treatment of chemical  exposure.
We expect to file a final  radiation  study using data  collected  from our mice
studies  with the FDA within six months.  At this time we will request a meeting
regarding the establishment of the protocols  necessary for a large animal study
to test the  efficacy of Radilex as a potential  treatment  for acute  radiation
syndrome.   Also  within  the  next  twelve  months,  we  expect  to  submit  an
Investigational   New  Drug  (IND)  application  for  the  use  of  Viprovex  in
potentially treating Acute Respiratory Distress Syndrome (ARDS).

RADILEX

         To date we have sponsored five studies and co-sponsored three radiation
studies all of which were conducted utilizing rodents to determine dose response
to radiation,  the maximum  efficacious dose of Radilex,  the impact on survival
and to distinguish  survival  response  between  aerosol  delivery  versus intra
muscular delivery.  In each of these studies mice were exposed to varying levels
of radiation.  In the opinion of management,  these studies have demonstrated in
C57BL/6 mouse model studies that  Radilex-treated  mice exhibited survival rates
of up to 50% at 90 days  post-radiation  exposure to an otherwise lethal dose of
whole body ionizing radiation. Additionally, it was observed that these mice had
normal immune system function at the 90-day  post-radiation  time point compared
to  longitudinal  control mice.  Thus far, in our opinion,  the results from our
sponsored and co-sponsored rodent studies using Radilex demonstrate  efficacy in
treating  acute  radiation  syndrome  when  administered  via an inhaler  device
without requiring any prophylactic treatment. If these results can be reproduced
in  further  studies,  including  large  animal  studies,  we  believe  that our
treatment could potentially  increase an individual's  chance of survival in the
event of exposure to radiation.

         Currently, we are sponsoring additional pre-clinical studies on mice to
confirm the potential efficacy of Radilex in treating acute radiation  syndrome.
In parallel with these  studies we are also  determining  the protocols  that we
believe  will allow us to initiate  large  animal  clinical  trials that will be
necessary  for  establishing  efficacy per the animal  efficacy  rule.  Assuming
adequate  funding is available  to us, we expect  these large animal  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 also be
needed to support a New Drug Application (NDA).

         Prior to our formation,  initial  studies were conducted using Homspera
(now Radilex)  under the direction of our  co-founders,  Dr. Mark Witten and Dr.
David Harris. These studies are summarized below.

            o     Mouse  radiation  study number one was an initial  pilot study
                  using  C57BL/6 male mice  sponsored by the Air Force Office of
                  Scientific  Research (AFOSR).  This study was initiated at the
                  University of Arizona College of Medicine,  Tucson, Arizona on
                  September 24, 2002.  This study  attempted to identify an LD50
                  value,  that is, the dose of radiation  after which 50% of the
                  mice will die, for subsequent standardization of exposure. The
                  study found that, in the opinion of the lead  scientists,  the
                  dose rate  being  delivered  in the model  system was so great
                  that an LD50 value could not be  determined,  therefore  lower
                  doses were to be explored in subsequent studies.

                                       8
<PAGE>

            o     Mouse  radiation  study number two was a pilot study sponsored
                  by the AFOSR.  This study was  initiated at the  University of
                  Arizona  College of Medicine,  Tucson,  Arizona on January 24,
                  2003. This study lowered the radiation dosage (from 10 Gy to 9
                  Gy) and administered now Radilex via aerosol administration to
                  determine if the drug had efficacy by increasing survival time
                  from  the  potentially  lethal  dose of  radiation.  The  lead
                  scientists  believe that this study  demonstrated that Radilex
                  treatment after 9 Gy radiation may have efficacy against acute
                  radiation  syndrome and that the  radiation  exposed,  Radilex
                  treated  mice  lived  an  average  of  two  days  longer  than
                  untreated, radiation exposed mice.

         Our sponsored and  co-sponsored  studies  completed to date, as well as
current  and  planned  studies  with  regard to the  development  of Radilex are
summarized below.

            o     Pilot mouse radiation study number 3,  co-sponsored by us, was
                  performed at the  University  of Arizona  College of Medicine,
                  Tucson,  Arizona,  starting on April 10,  2003.  The study was
                  intended to determine if Radilex  treatment would prolong life
                  in  C57BL/6   male  mice   exposed  to  a  single  total  body
                  irradiation 7.75 Gy dose of Gamma radiation. In the opinion of
                  management,  this study  demonstrated that a treatment of a 50
                  micromolar dose of Radilex kept 25% of the mice alive until 37
                  days after radiation until the experiment was terminated.  The
                  U.S.  Food &  Drug  Administration  and  the  National  Cancer
                  Institute  utilize a 30-day  survival  time limit to determine
                  recovery from acute radiation syndrome.

            o     Pilot mouse radiation  study number 4,  co-sponsored by us was
                  initiated at the  University  of Arizona  College of Medicine,
                  Tucson,  Arizona on June 16, 2003. This study was conducted to
                  analyze  whether higher  concentrations  of Radilex  treatment
                  would  prolong  life in C57BL/6  male mice exposed to a single
                  total  body  dose  of  lethal  radiation.  In the  opinion  of
                  management,  this study demonstrated that the treatment at the
                  higher  concentration  level was not efficacious in increasing
                  mouse  survival time from a  potentially  lethal dose of gamma
                  radiation.

            o     Pilot mouse  radiation  study number 5, sponsored by the AFOSR
                  and  co-sponsored  by us was  initiated at the  University  of
                  Arizona College of Medicine, Tucson, Arizona on July 11, 2003.
                  This study was  designed to confirm  radiation  lethality  and
                  Radilex  efficacy of Radilex in preventing  lethality in mice.
                  In the opinion of management,  this study,  replicating  pilot
                  radiation  mouse  study  number 3,  demonstrated  efficacy  in
                  increasing  mouse  survival from a potentially  lethal dose of
                  radiation.  50%  of  radiation-exposed,  Radilex-treated  mice
                  survived to 90 days post exposure  when they were  euthanized.
                  Further,  in the opinion of  management,  results of the study
                  showed  that  when  compared  with  non-irradiated  mice,  the
                  Radilex-treated,  radiation-exposed mice showed no significant
                  differences in their immune system.

            o     Pilot mouse  radiation  study  number 6,  sponsored by us, was
                  initiated at the  University  of Arizona  College of Medicine,
                  Tucson,  Arizona on June 28, 2004. This study was initiated at
                  the  request of the US FDA to  determine  efficacy in treating
                  radiation  exposure with Radilex by  intramuscular  injection,
                  rather than inhalation.

                  The test subjects  consisted of 300 mice  separated into three
                  groups of 100.  Each group was exposed to different  levels of
                  radiation - 7 Gy, 8 Gy (lethal  dose) and 9 Gy (lethal dose) -
                  and  consisted of 25 male subjects  treated with  Radilex,  25
                  female subjects  treated with Radilex,  and the  corresponding
                  control  subjects.  Each  mouse  was  given a  single  dose of
                  radiation,  and then all  non-control  mice received a dose of
                  Radilex by direct  muscle  injection  on a daily  basis for 60
                  consecutive days.

                  In the  opinion of  management,  based on the  findings of the
                  study,  direct  muscle  injection  was  observed  to  be  less
                  effective  at  similar  dosing  parameters.  We  believe  this
                  finding may be due to a difference of neurokinin  receptors in
                  the  lungs of the mice to those  in the  skeletal  muscle,  as
                  Radilex is believed  to be a  neurokinin-1  receptor  agonist.
                  Past research has shown the predominant neurokinin receptor in
                  the  lungs  is  the  neurokinin-1   receptor,   whereas,   the
                  predominant  neurokinin receptor in rodent skeletal muscle was
                  demonstrated to be the neurokinin-2 receptor.

                                       9
<PAGE>

                  Furthermore,  while conducting this study,  scientists believe
                  that they  witnessed  potential  wound  healing  properties of
                  Radilex.  During the testing,  some of the subjects  developed
                  open  wounds  from  natural  causes.  At the end of the 60-day
                  study,  the injuries of the control group remained,  while the
                  wounds of the Radilex treated mice had healed. We have filed a
                  provisional  patent for the use of Radilex in the promotion of
                  wound healing.  If additional funding becomes available in the
                  future,  we may look to further  study this  potential  use of
                  Radilex.

            o     Pilot  mouse   radiation   study   number  7,   sponsored   by
                  ImmuneRegen,  was  initiated  at  the  University  of  Arizona
                  College of  Medicine,  Tucson,  Arizona on November  20, 2004.
                  This study was intended to find a maximum  efficacious dose of
                  Homspera  in mice  exposed to total body 7.75 Gy dose of Gamma
                  radiation.   All  mice  remained  alive  until  17  days  post
                  exposure,   when  they  were  exposed  to  a  second  dose  of
                  radiation,  at 9 Gy. All of the mice died at roughly  the same
                  time. In the opinion of  management,  this study may have been
                  confounded  by the fact that the mice spent their first 7 days
                  post-exposure in Biolevel 2 conditions which maintains a lower
                  bacterial  load,  masking  the   immunocompromised   subjects'
                  vulnerability to elements that would impact study results.

            o     A blood  profile  study  sponsored by us was  conducted at the
                  University  of Arizona  College of Medicine,  Tucson,  Arizona
                  beginning on August 25, 2005.  This was an  exploratory  pilot
                  study  to   demonstrate   protection   of  C57BL/6  mice  from
                  neutropenia  and   thrombocytopenia   (decreases  in  systemic
                  neutrophils   and  platelets,   respectively)   and  lethality
                  following a single  dosage of gamma  radiation  of 8.25 Gy. In
                  the opinion of management,  efficacy was demonstrated,  as the
                  treated mice trended  toward  restored blood and platelet cell
                  numbers with  normalized  pathology of bone marrow compared to
                  the control group.  Although the study demonstrated  efficacy,
                  we were unable to  demonstrate  mechanistic  effects due to an
                  inability to collect enough blood for adequate study.

            o     On  January  9,  2006,   based  on  these  studies  and  other
                  pre-clinical   observations,    we   sponsored   a   radiation
                  sensitivity  animal  model  study  using  C57BL/6  mice at the
                  University of Arizona College of Medicine, Tucson. We designed
                  this  radiation  study to further the proof of concept for the
                  formulation of Sar9, Met  (O2)11-Substance P with either a TFA
                  salt or HCl salt.  We expect  this  study to be  completed  by
                  April 2006.

            o     We have  finalized  the  protocols for what we believe will be
                  our final phase of rodent studies. Based on these protocols we
                  are currently sponsoring a radiation study on mice. This study
                  commenced on February  28, 2006 and is being  conducted at Oak
                  Ridge National  Laboratory.  This study was designed to follow
                  the AFRRI model for  radiation  sickness.  The purpose of this
                  study  is to  provide  confirmation  evidence  supporting  the
                  efficacy  of  Radilex  as a  treatment  to a  lethal  dose  of
                  radiation  exposure.  Several  factors are being  evaluated in
                  this study, including dosage, route of administration, and the
                  need  for,  and  extent  of,  required  pretreatment.  In  our
                  opinion, if these studies are deemed  successfully  completed,
                  under the current  animal  efficacy  rule,  we will qualify to
                  move to studies in large  animals.  We  estimate  the  initial
                  study of this phase of rodent studies will be concluded within
                  90 days of initiation at a cost of approximately $90,000.

         On  January  14,  2004,  we  received  a  Pre-Investigational  New Drug
Application  (PIND)  number  for the use of  Radilex  (PIND No.  63,255)  in the
treatment of acute radiation  syndrome.  We are currently inserting new data and
summarizing  recent study results.  We expect to file an updated PIND submission
for the use of Radilex in the  treatment of acute  radiation  syndrome with this
new data to the FDA's Department of  Counterterrorism  within the next 120 days.
If desirable  results are achieved,  we anticipate filing the results of the Oak
Ridge National  Laboratory study with the FDA's  Department of  Counterterrorism
within the next 6 to 9 months. At such time, we would request a meeting with the
FDA to establish a protocol for a Radilex study on primates.

VIPROVEX

         We are  also  researching  the  efficacy  of  Viprovex  as a  potential
treatment  for exposure to various  chemical  agents,  including  formalin,  and
biological  agents,  including  influenza  and  anthrax,  as well as a potential
treatment  for  acute  respiratory  distress  syndrome  (ARDS).  Based  on  past
research,  the active ingredient in Viprovex (Sar9, Met  (O2)11-Substance P), in
the opinion of management, plays an important role during early responses of the
lungs to various substances,  including, what we believe to be a blocking of the
inflammatory cascade that potentially leads to the destruction of lung tissue.

                                       10
<PAGE>

         To date, we have only conducted limited preclinical studies with regard
to the  development  of  Viprovex.  In the  opinion of  management,  preliminary
results  from pilot  studies  reveal the  potential  effects of  Viprovex on the
immune system,  including  protection  and  replenishment,  increased  cytokines
(TNF(alpha),   interferon-gamma)   that  reflect  system  activation,   enhanced
phagocytotic activity, potential dendritic cell/T cell activation, inhibition of
apoptosis and increased T cell mitogenesis. It is the opinion of management that
these  results may  underlie  the  potential  ability of Viprovex to enhance flu
therapies,  minimize the respiratory  impact of influenza  infection and augment
the capability of vaccination to induce a protective immune response.

         Prior to our formation,  initial  studies were conducted using Homspera
(now  Viprovex)  under the direction of our  co-founder  and Director,  Dr. Mark
Witten. These studies were the basis for our research and development efforts. A
series of initial  studies  were  conducted  on the  efficacy of  Homspera  (now
Viprovex) in treating JP-8 jet fuel induced  immunotoxicity  in mice.  Mice were
administered a dose of JP-8 jet fuel to develop a  chemically-induced  AIDS with
the near  total  destruction  of all  immune  system  cells.  In the  opinion of
management,  aerosol treatment with Viprovex directly  stimulated the production
of immune system cells which remained viable after Viprovex treatment.

         Pilot  studies  to  date  and  current   studies  with  regard  to  the
development of Viprovex are summarized below.

            o     In September  2003, a third party pilot study was conducted at
                  the  University of Arizona,  Arizona Health  Sciences  Center,
                  Lung Injury  Laboratory  using  Homspera  (now  Viprovex) as a
                  potential  treatment  for mice infected with the LP-BM5 murine
                  leukemia  retrovirus.  In the mice  infected  with the  LP-BM5
                  murine  leukemia  retrovirus,  it is the opinion of management
                  that Viprovex treatment caused a seven-fold increase in spleen
                  interferon-gamma  production  and a  significant  increase  in
                  spleen T-cell mitogenesis.  Based on these findings, it is the
                  opinion of  management  that the  administration  of exogenous
                  interferon-gamma  has  potential  efficacy,   suggesting  that
                  increased endogenous production may enhance protection against
                  some respiratory viruses.

            o     In October 2003 the AFOSR sponsored  preliminary  studies with
                  the  Hong  Kong  influenza  virus  (A/Hong  Kong/8/68)  at the
                  University of Arizona,  Arizona Health Sciences  Center,  Lung
                  Injury Laboratory. These studies demonstrated,  in the opinion
                  of  management,  that in mice exposed to the irritant JP-8 jet
                  fuel and then inoculated with the Hong Kong respiratory  virus
                  (HKV),  the  elevated  levels of  inflammatory  cells in their
                  lungs were reduced in animals also treated with  Viprovex.  In
                  contrast to  hydrocarbon-weakened  control  animals exposed to
                  the virus,  animals also treated with Viprovex did not develop
                  the clinical  symptoms of viral  infection,  the  increases in
                  alveolar   macrophages  and  neutrophils  in  broncho-alveolar
                  lavage fluid, and the loss of ciliated  epithelium (the latter
                  as determined by electron  microscopy).  Treated  animals also
                  had lower  levels of  leukotriene  B4 than animals not treated
                  with  Viprovex.  Elevated LTB4 would attract the  inflammatory
                  cells, particularly neutrophils,  which would follow infection
                  with virus.  Electron micrographs showed no virus particles in
                  the  Viprovex-treated  animals,  in contrast  to the  HKV/JP-8
                  controls,  suggesting,  in our opinion, that Viprovex actually
                  prevented  viral   replication   and  pathology,   perhaps  by
                  stimulating  the pulmonary  alveolar  macrophages  to actively
                  phagocytose the virus more effectively.  Without virons in the
                  lungs, there would be no need to mount an immune response.

                  Based on the  results  of this  study,  it is the  opinion  of
                  management  that Viprovex may be used to enable the body's own
                  immune  system to naturally  fight off flu  strains.  Thereby,
                  opening up the possibility  that Viprovex could be used either
                  as a stand  alone  treatment  or as an adjunct to a vaccine or
                  other therapy.  Further,  based on the results from this study
                  we are pursuing government and military collaborations to test
                  Viprovex on treating avian influenza (H5N1).

            o     We  co-sponsored  an  asthma  pilot  study in  February,  2005
                  initiated at the University of Arizona by Dr. Mark Witten. The
                  pilot study was to  determine  if Viprovex  is  effaceable  in
                  blocking the development of airway hyperactivity. Twenty-three
                  male C57BL/6 mice, seven of which were controls,  were exposed
                  to   cigarette/cigar   smoke  to   induce   an   "asthma-like"
                  bronchoconstrictive  condition.  The mice  were  divided  into
                  cigar or cigarette  smoking groups and half of each received a
                  daily   aerosol   treatment  of  Viprovex.   Dr.  Witten  then
                  administered  one hour smoke exposure for five days a week for
                  three  consecutive  weeks.  In the opinion of management,  the
                  results  indicated that Viprovex  treatments could be utilized
                  to attenuate the  development  of airway  hyperactivity  after
                  toxic exposure to either cigarette or cigar smoke.

                                       11
<PAGE>

            o     A third party  formalin  pilot study in rats was  initiated at
                  the University of Arizona College of Medicine, Tucson, Arizona
                  sponsored  by Dr.  Witten on August 22,  2005.  This study was
                  designed  to  determine  if  aerosolized   Viprovex  would  be
                  efficacious   in   attenuating   lung  injury  after  chemical
                  (formalin)  exposure.  The data  collected  from the study was
                  given to us by Dr.  Witten and, in the opinion of  management,
                  indicates that Viprovex  treatment before formalin exposure to
                  the lungs greatly  attenuated the lung injury normally induced
                  by  formalin  as   evidenced  by  electron   micrographs   and
                  lethality.  Based on these results, as additional research and
                  development funding is made available to us we plan to conduct
                  additional  studies on the use of Viprovex as a treatment  for
                  chemical  exposure,  to include chemicals such as formalin and
                  ricin.

            o     We  are   sponsoring  a  series  of  studies   with   Hyperion
                  Biotechnology  Inc. at their laboratory  facilities located at
                  Brooks City-Base in San Antonio, Texas with the cooperation of
                  the U.S. Air Force School of Aerospace Medicine (USAFSAM).  We
                  designed  these studies based on our opinion that Viprovex may
                  block  the   inflammatory   cascade   that  can  lead  to  the
                  destruction  of lung tissue and our  conjecture  that Viprovex
                  may have a similar  effect on  combating  exposure  to anthrax
                  spores.

                  These studies are being  conducted in hope of determining  the
                  efficacy of Viprovex in treating  exposure to anthrax bacilli.
                  The purpose of these  studies is to determine if Viprovex will
                  reduce the mortality rate of an active  infection of pulmonary
                  anthrax.  These tests will also look for  efficacy of Viprovex
                  as a preventive to pulmonary anthrax sickness.

                  The first of these  studies  was  initiated  in October  2005.
                  Logistical   considerations   related  to  number  of  animals
                  requiring   exposure  and   performance  of  a  full  Viprovex
                  dose-response  curve within  specified  time limits  following
                  anthrax  exposure  required the experiment be performed in two
                  sections,  and it is incomplete at this time.  The second half
                  of the full dose-ranging experiment began in February, 2006.

         On  November  29,  2005 we applied  for a PIND from the  Department  of
Health and Human  Services  (HHS) for the use of  Viprovex in the  treatment  of
avian  influenza.  The PIND number for the use of Viprovex in treating avian flu
was issued on  December  19,  2005 (PIND No.  73,709).  We expect to continue to
investigate the efficacy of Viprovex in the treatment of avian  influenza,  with
the goal of submitting an application  for an IND under the animal efficacy rule
within the next 12 to 18 months.

         Based on the results of this  formalin  pilot study in rats, we applied
for a PIND from the HHS for the use of Viprovex in treating chemical exposure on
November 28, 2005. As we await PIND status, we intend to plan additional studies
to  further  our  research  and  development  activities  as it  relates to this
indication.

         Based on data from early initial and subsequent  studies indicating the
potential use of Viprovex in treating chemically induced ARDS, we plan to submit
an IND  application  to the FDA for the  treatment  of the effects of ARDS using
Viprovex within the next 12 to 18 months.

         Due to our  liquidity  and  limited  cash  available  our  spending  on
research  and  development  activities  in 2004 and 2005 was  limited.  We spent
approximately $113,731 and $150,091 in 2005 and 2004, respectively,  in research
and development activities related to the development of Radilex and Viprovex as
protectants  against  the  effects of  chemical,  biological,  radiological  and
nuclear  threats.  From our inception in October 2002, we have spent $306,794 in
research and  development  activities.  These costs only include the manufacture
and delivery of our drug by third party  manufacturers  and payments to Contract
Research  Organizations  for  consulting  related  to our  studies  and costs of
performing such studies. Significant costs relating to research and development,
such as  consulting  fees for Drs.  Witten and Siegel  among  others,  have been
classified in consulting fees for consistency of financial reporting.

         If we are successful in obtaining  additional funding through grants or
investment  capital,  we  anticipate  that  during  the next 12  months  we will
increase  our  research  and  development  spending to a total of  approximately
$3,500,000 in an effort to further develop  Radilex and Viprovex.  This research
and development cost estimate includes a radiation study on large animals, which
we estimate  will cost up to $2,500,000  depending on the choice of  contractor,
additional animal pharmacology studies,  formulation and animal  safety/toxicity
studies,  as well as, small pilot  pharmacological  studies  exploring  possible
additional  indications.  If we are  unable  to raise  additional  capital,  our
research and development activities may be lessened.

                                       12
<PAGE>

         The preliminary  results of our  pre-clinical  studies using Radilex or
Viprovex may not be indicative of results that will be obtained from  subsequent
studies or from more extensive  trials.  Further,  our  pre-clinical or clinical
trials  may not be  successful,  and we may not be able to obtain  the  required
regulatory approvals in a timely fashion, or at all. See "Risk Factors."

POTENTIAL FUTURE PIPELINE APPLICATIONS

         During our research and development efforts, we may, from time to time,
observe results that may lead to other potential applications using Homspera. At
the time of such an observation,  we may design studies to further  evaluate the
use  for  the   indication.   If  these  further  studies  support  our  initial
observations,  we may  file  provisional  patent  applications  for  the  use of
Homspera with the hope of protecting future development rights until we have the
ability to design  additional  studies and protocols  and perform  research with
regard to such applications.

         To  date,   we  have  filed  use  patent   applications   in   multiple
jurisdictions,  inside and outside of the U.S., for use of the active ingredient
in Homspera for:  ameliorating or preventing  damage caused by cigarette  smoke,
for treating  patients  with SARS (Severe  Acute  Respiratory  Syndrome) or ARDS
(Acute  Respiratory  Distress  Syndrome)  or to prevent  those  exposed to their
causative  agents,  for  inducing new hair growth or  retarding  hair loss,  for
reducing certain ageing effects,  such as interrupted  sleep patterns,  residual
muscle pain, short term memory loss, diminished visual accommodation,  decreased
muscle  strength,  and  arthritic  pain,  for  stimulating  wound  healing  in a
radiation-exposed  mammal, for treating asthma,  for treating skin diseases,  in
particular,   eczema,   psoriasis,   acne,   and  basal  cell   carcinoma,   for
prophylactically  treating domestic fowl to prevent respiratory infections,  and
for maintaining or inducing hair color.  To date, our development  activities in
these areas have been limited to only small pilot  exploratory  studies in order
to observe and collect data that would justify  filing use patent  applications.
In the future, we may choose to conduct  additional  research and development to
further our observations in these areas.

DEVELOPMENT PROGRAM

Use of Contract Research Organizations (CRO)
--------------------------------------------

         It is understood that extensive time and money is spent  developing new
drug applications by the time they are approved by required  regulatory agencies
for use on the market.  In order to efficiently and  expeditiously  navigate the
research,  development and regulatory  approval process in hopes of bringing our
applications to market,  our  development  program relies on the use of Contract
Research Organizations (CRO's).

         CRO's  are  independent  laboratories,  registered  with the FDA,  that
provide  contract  services to the  pharmaceutical  industry.  These CRO's offer
broad therapeutic  expertise,  advanced technologies and extensive resources for
drug discovery and drug and device development, and in some instances partnering
opportunities.  In the opinion of management,  using these outside organizations
helps to maximize our flexibility and minimize our one-time costs in outsourcing
very  expensive   programs  to  those  companies  that  maintain  the  necessary
infrastructure to perform these  cost-effectively  according to  internationally
recognized  standards.  Further, as product demands change, we believe that this
structure  will  allow us to move our  resources  to more  appropriate  contract
research or  development  or formulation  or  manufacturing  facilities  without
incurring  loss of time or money on outdated  projects and programs.  As we move
our candidate  products into FDA-compliant  animal safety testing,  we expect to
contract with specialty groups,  organizations or companies that meet regulatory
requirements and have adequate and appropriate  technical  capabilities,  rather
than  develop and  maintain an animal use and care  facility  ourselves  that is
compliant with current Good Laboratory Practices.

         In September, 2003, we contracted with Synergos, Inc. of The Woodlands,
Texas,  a CRO,  to  represent  us in all FDA  communications  and to contact and
interact with the FDA on our behalf.  Likewise,  in October,  2003 we contracted
with  Huntingdon  Life Sciences of East  Millstone,  New Jersey to conduct a two
week  inhalation  toxicity  study  of  Homspera  in  rats.  Further  studies  on
analytical techniques,  toxicology and formulation of Homspera were conducted by
AppTec Laboratory Services of San Jose,  California  starting in November,  2003
through August, 2005.

GRANTS

         From time to time, we may apply for governmental  grants and respond to
formal requests from the government for additional information, thereby possibly
allowing us to be  included as a candidate  for  potential  future  grants.  The
submission of grants by us is summarized below.

         In May,  2003 we applied for a grant with the  Department of Health and
Human  Services  (DHHS),  solicitation  Number  266-01-SARS,  Treatment from the
National  Institute of Allergy and Infectious  Diseases.  The agency was seeking
potential  treatments  for the SARS virus  infection.  Our  proposal  called for
$771,000 to research Viprovex (then Homspera) as a potential treatment for SARS.
Our application for grant funding was not accepted.

                                       13
<PAGE>

         On September 20, 2004 we submitted a grant  application  to the DHHS in
response to its Request for Application (RFA) entitled Biodefense Countermeasure
Development:  Project  Bioshield.  Our proposal  called for  $1,500,000 to study
Radilex  (then  Homspera)  as  a  countermeasure  for  radiation  exposure.  Our
application for grant funding was not accepted.

         In October  2004,  the DHHS  released a Request for  Information  (RFI)
regarding potential therapeutics for the treatment for acute radiation syndrome,
entitled Therapeutics to Treat Neutropenia and Thrombocytopenia  associated with
Acute  radiation  Syndrome.  We  notified  the DHHS of our  intent  to submit in
December 2004. In June 2005, the terms of the RFI were changed by the DHHS and a
Request for  Proposal  (RFP) was  issued.  Although we intended to apply for the
RFP, no proposal was submitted as we believed that our  technology  did not meet
the specific criteria under the new terms of the RFP.

         On March 11, 2005,  we submitted a final  response to an  invitation to
participate in the Canadian Defense Ministry's "Universal  Protectants Proposal"
respective to the use of Radilex for potentially  treating the negative  effects
of acute radiation syndrome and/or other health threats,  such as anthrax,  that
may result from chemical, biological,  radiological and nuclear (CBRN) terrorist
threats. The goal of this program was to find a "universal"  treatment for these
CBRN  threats.  The  proposal is under the  auspices of the Ottawa and  Suffield
provincial  branches of the Canadian Defense Ministry's research and development
program,  the CBRN  Research  and  Technology  Initiative.  We responded to this
initiative  as we believe  Radilex may have the potential to be a candidate as a
universal   protectant   against   maladies  caused  by  chemical,   biological,
radiological and nuclear (CBRN) attacks.  We are led to this conclusion  because
in  management's  opinion  the  methods  of  action  of  Radilex  do not  simply
neutralize the attacking  agent,  but actually  increase immune system activity,
thereby  allowing  the body's own immune  system to attack and overcome the CBRN
agent.  This  program was  abandoned by the Canadian  government  for  budgetary
reasons prior to the acceptance of any companies into the study.

         On October  11,  2005 we  submitted  a grant  proposal  for the US Army
Research Office's Broad Agency Announcement (BAA) W911NF-05-R-0011.  The purpose
of the BAA was to develop  new  technologies  for the  Department  of  Defense's
Chemical and Biological Defense Transformational Medical Technologies Initiative
Fund. We signed a letter of intent with Battelle  Laboratories  Medical Research
and  Evaluation  Facility in West  Jefferson,  Ohio to conduct the Bio-level III
containment  studies  with  Viprovex  and avian  influenza  if our  proposal  is
accepted.  The amount of funding sought in the grant proposal was  approximately
$1,000,000. Our application for grant funding was not accepted.

         On January  6, 2006,  we  applied  for a grant  offered by the  Defense
Threat  Reduction  Agency  (DTRA),  solicitation  number  DTRA01-06-BAA-01.  The
objective  of our grant  proposal,  entitled  "Advanced  Proteomic  Analysis  of
Putative  Universal  Protectant  Mechanisms of a Biologically  Active  Synthetic
Peptide,"  is: (i) to identify  biomarkers  for further  defining  our  previous
observations  relating to  Radilex/Viprovex-modulated  resistance  to  chemical,
biological and  radiological  stress and (ii)  developing a model of mechanistic
pathways for potential chemical,  biological and radiological injury protection.
We have entered into an agreement  with Pacific  Northwest  National  Laboratory
(PNNL) for this research if our application is accepted.  The research  involved
would be  performed  through  the  National  Institute  of  Health  (NIH)-funded
Proteomics  Research Resource of Integrative Biology at PNNL. The funding sought
for this grant application is $2,325,000.  As of March 20, 2006, the awarding of
the grants is still pending.

         On January 31, 2006 we  submitted a response to sources  sought  notice
W9113M-06-S-0002  issued by the Department of Defense (DoD). The purpose of this
announcement was to identify companies that believe they have a viable candidate
for  drugs  that can be  expeditiously  developed  and will  provide  a safe and
effective  countermeasure against radiation injury. We are anticipating a formal
RFP to be issued by the DoD. As of March 20, 2006, an RFP is still pending.


         On  February  7, 2006 we  submitted  a grant  proposal  to the  Defense
Advanced  Research  Projects  Agency's (DARPA) Broad Agency  Announcement  (BAA)
BAA-05-19.  The purpose of the BAA was to develop new  technologies  for DARPA's
Defense Science Office (DSO) program.  The specific aim for us in this grant was
the development of defense against weapons of mass destruction:  technologies to
render  biological,  chemical,  nuclear,  or radiation  attacks against the U.S.
military  harmless.  More  specifically,  we focused on medical  countermeasures
against both known and unknown  pathogens and  infectious  disease,  accelerated
manufacture of biologics,  including vaccines and immune modifiers,  and medical
countermeasures  against  radiation  exposure.  We proposed  collaboration  with
Pacific Northwest  National  Laboratory (PNNL) in Richland,  Washington in which
studies   would  be   conducted  to  explore  the   mechanism  of  Sar(9),   Met
(O2)(11)-Substance P to mitigate or prevent  mortality/morbidity  resulting from
exposure  to inhaled  viruses,  chemical  toxicants  and whole  body  radiation.
Through   multiplexed   cytokine   analysis  and  evaluation  of  the  proteomic
modifications induced by Sar(9), Met  (O2)(11)-Substance P, we hoped to identify
common pathogenesis  pathways for use of our compound as a universal protectant.
Our application for grant funding was not accepted.

Correspondence with the Food and Drug Administration(FDA), National Institute of
Health(NIH) and other government agencies

         The following is a chronological summary of our correspondence with the
U.S. Food and Drug Administration (FDA), the National Institutes of Health (NIH)
and other government agencies.

         On October 16, 2003,  Jennifer L. Wike of Synergos,  Inc., our Contract
Research  Organization (CRO), spoke with Sandy Barnes, FDA Project Manager.  Ms.
Barnes  inquired as to whether our ARDS Pre-IND  meeting package was ready to be
sent to the FDA. Further,  she informed us that she had put ImmuneRegen on their
meeting  agenda for two possible  dates in November  2003.  Twelve copies of the
meeting information package were subsequently sent to the FDA by the Company.

                                       14
<PAGE>

         On  October  30,  2003,  Jennifer  L. Wike  returned  a call to Dr. Ray
Anthracite,  FDA Medical Reviewer.  Dr. Anthracite had called to further inquire
about the amino acid comprising the structure of Sar9,Met(O2)11-SubstanceP.  Dr.
Anthracite  confirmed that he is the medical reviewer for our potential product;
however,  he could not  confirm a date for the  Pre-IND  teleconference.  He did
state that the agency had an internal meeting for our potential  product set for
November 5, 2003.

         On November 4, 2003, Jaye Thompson,  Ph.D. of Synergos, Inc. received a
call from Cheryl  Turner of the FDA  Division  of  Counterterrorism  (DCT).  Ms.
Turner  stated that the division  wanted to have an  introductory  call with the
Company.  A date of  November  17,  2003 at  2:00PM  EST was  selected.  We were
informed that Mary Purucker, MD, Division Director, DCT would be present for the
meeting  and that  despite  the  delays  in  contacting  us,  her  division  was
interested in the potential of Sar9, Met  (O2)11-Substance  P for treating acute
radiation syndrome (ARS).

         On November 17, 2003 we and regulatory consultants from Synergos,  Inc.
engaged in a  teleconference  with  representatives  from the FDA's  Division of
Counterterrorism  (DCT) to discuss the  development  of Homspera  for use in the
event of a radiological  terrorist event.  Although the  counterterrorism  group
could not comment upon the specifics of the planned studies, they indicated that
development  of this product would be regulated  according to the  provisions of
the  animal  efficacy  rule.  They  also  indicated  that,  with  submission  of
appropriate toxicity data, the selected animal model would be acceptable.

         On January 14, 2004, we received a communication from Ryan Barraco, FDA
Consumer  Safety  Officer via  facsimile  confirming a meeting date of March 12,
2004 at 1:30PM EST in Rockville,  MD in relation to a Pre-IND meeting to discuss
Homspera and the  potential of a derivative  to have  potential  efficacy in the
treatment of acute radiation  syndrome.  The  confirmation  also stated that the
agency  required  receipt  of 33  hard  copies  and one  disk  of the  company's
background package no later than February 13, 2004.

         Also on January 14, 2004 the company received a fax from Cheryl Turner,
FDA Division of Counter-Terrorism with a summary of the Pre-IND meeting that was
held on November 17, 2003 to determine the  appropriate  division for submitting
"Homspera for Treatment of Acute Radiation Syndrome (ARS)."

         On February  18, 2004 our Pre-IND  63,255  (Treatment  of ARS)  Meeting
Package was sent to Ryan Barraco of the FDA for use in the corresponding meeting
set for March 12, 2004.

         On March 12, 2004,  we met with  representatives  of the FDA  regarding
Radilex to discuss  pre-clinical studies that will need to be completed prior to
submission of a marketing  application,  other requirements for product approval
and the study design of the proposed  post-marketing  study. The representatives
from  the FDA  suggested  that we  perform  additional  studies  using  specific
guidelines,  i.e. number of mice,  gender of mice, range of radiation dosage and
additional  potential  methods  of  administration.   The  representatives  also
suggested  that the  company  develop  a  "response  team"  that can be  rapidly
deployed  to an  incident  site to  help in  implementation,  conduct  and  data
acquisition of the proposed study.

         On October 21, 2004 Dr. Helen Quill of the National Institute of Health
(NIH) contacted us to request that  Homspera's  mechanisms of action were needed
in  conjunction  with a Request for  Information  (RFI)  submission.  These were
subsequently electronically sent to Dr. Quill on November 1, 2004.

         On January  11,  2005,  we  received a meeting  confirmation  from Ryan
Barraco,  FDA  Consumer  Safety  Officer via fax. A meeting date of February 17,
2005 at 11:30AM EST in Rockville,  MD was set in relation to Pre-IND  63,255 for
Radilex (Homspera). The confirmation letter also stated that the agency required
receipt of 18 hard copies and one electronic  copy of our background  package no
later than January 20, 2005.

                                       15
<PAGE>

         On February 15, 2005 we received a fax from Ryan Barraco,  FDA Consumer
Safety  Officer,  regarding  responses  from  the  FDA to our  questions  in the
background package.

         On February 22, 2005 our representatives met with members of the NIH to
discuss:  the potential use of Viprovex in an anthrax model;  conducting further
studies under an AFRRI model using  Radilex for a treatment for acute  radiation
syndrome; as well as, additional pharmacokinetic and dose-timing research.

         On July 1, 2005 Mui  Erkun,  Director  of  Procurement,  Department  of
Homeland  Security  (DHS),  contacted  us to  request  a meeting  regarding  our
potential therapeutics with interest in assisting the company with communication
to government officials and or agencies.

         On September 6, 2005 Michael Wilhelm,  our CEO, and Dr. Hal Siegel, our
Director of Product  Development and Regulatory  Affairs met with the Department
of Homeland  Security in  Washington,  DC. They met with Drs. Vitko and Pilai in
order to discuss our potential therapeutics and efficacy. Also discussed was our
request for support.  Both doctors indicated interest,  but mentioned that until
the Chief  Medical  Officer,  Jeff Runge,  took office with DHS the office would
only be focused on consequence  management involving logistical  preparation and
detection, not therapeutics.

         On  September  21, 2005  Michael  Wilhelm,  Dr. Hal Siegel and Dr. Mark
Witten  presented to Armed Forces  Radiobiology  Research  Institute  (AFRRI) at
their offices in Bethesda,  Maryland.  They presented their findings of possible
efficacy in treating acute radiation syndrome with Radilex. We mentioned that we
have  used  survival  as an end point to the  lethal  exposure  in our  studies.
Further,  we reported  our  observations  that we believe  that the best form of
administration of our potential therapeutic is via inhalation. AFRRI researchers
confirmed that a study using the preexisting  AFRRI rodent  radiation model as a
guide needs to be completed.

         On  December  19,  2005 we  received  a  letter  via US Mail  from  the
Department  of Health and Human  Services  (DHHS)  thanking us for our Avian Flu
Pre-IND  Submission.  A Pre-IND number was assigned (73,709).  The letter stated
that a panel of experts is further  reviewing our submission and will assemble a
letter with comments/advice to be sent out to us within the next several weeks.


COLLABORATORS AND CONTRACTORS

         We have  fostered  and managed  relationships  with other  laboratories
working in related areas of research and government  agencies who are interested
in  learning  more of our  applications,  and  perhaps  helping to bring them to
commercialization. Collaborators and Contractors who we have already worked with
or are implementing a program are described below.

            o     We have sponsored or co-sponsored six mouse radiation  studies
                  and  co-sponsored  one  inhalation  study at the University of
                  Arizona  College of Medicine,  Tucson,  Arizona since January,
                  2005.  Additionally,  we are currently  sponsoring a radiation
                  study which  began on January 9, 2006.  In  addition,  the Air
                  Force Office of  Scientific  Research,  AFOSR,  has  sponsored
                  additional  studies at the  University  of Arizona  College of
                  Medicine utilizing Homspera Radilex and Viprovex.

            o     Hyperion  Biotechnology Inc. performs research programs in the
                  areas of probiotics,  biomarker discovery,  infectious disease
                  and human performance enhancement. We have contracted a series
                  of  anthrax  studies  with  Hyperion  testing  Viprovex  as  a
                  treatment to anthrax infection. These studies are conducted by
                  Hyperion  at its  research  facility  located on the U.S.  Air
                  Force School of Aerospace  Medicine (USAFSAM) campus in Brooks
                  City-Base in San Antonio, Texas.

            o     St. Joseph's  Hospital and Medical Center  (Phoenix,  Arizona)
                  has performed  assays on Homspera for us on a  sub-contracting
                  basis.

            o     Battelle Memorial  Institute's Medical Research and Evaluation
                  Facility (MREF) (Columbus, Ohio) has issued a letter of intent
                  to support us in our testing of Homspera as an Avian Influenza
                  therapeutic  in mice.  The letter of intent was  included in a
                  grant  application we submitted to the Army Research Office in
                  October,  2005 in response to their Broad Agency  Announcement
                  Grant   #    W911NF-05-R-0010    for   therapeutics    against
                  bio-terrorism.

                                       16
<PAGE>

            o     Pacific Northwest National  Laboratory  (Redmond,  Washington)
                  has issued a letter of intent to support us in our  testing of
                  Homspera as a Universal Protectant therapeutic.  The letter of
                  intent was included in a grant application we submitted to the
                  Defense  Threat  Reduction  Agency (DTRA) in January,  2006 in
                  response  to  their  Broad   Agency   Announcement,   Grant  #
                  DTRA01-06-BAA-01 for therapeutics against bio-terrorism.

            o     We have  contracted  with Oak Ridge National  Laboratory  (Oak
                  Ridge,  Tennessee)to  conduct Proof of Concept mouse radiation
                  studies  that began in February,  2006 and to help  facilitate
                  additional pre-clinical and future clinical trials with regard
                  to  determining  the  potential   efficacy  of  Radilex  as  a
                  treatment for acute radiation syndrome.

ADVISORY BOARDS AND CONSULTANTS

      To assist us in the research and  development of our various  applications
we make use of outside consultants and advisory boards.

Consultants

    We currently contract three outside  consultants related to the research and
development, including regulatory affairs, of our potential products.

    Hal Siegel,  Ph.D.,  through his  consulting  company,  Siegel  Consultancy,
provides  strategic and tactical  expertise to life science  companies,  helping
them meet FDA  requirements  from  pre-clinical  studies  through the regulatory
submission process and into the post-approval marketplace.  He has over a decade
of  experience  delivering   scientific,   clinical  and  regulatory  compliance
assistance as well as submission  preparation  and  management  services to life
sciences client companies developing drugs,  therapeutic biologics,  combination
products,  traditional devices and in vitro diagnostic products. His degrees are
from  Rensselaer  Polytechnic  Institute  and SUNY Buffalo  (Ph.D.,  Biochemical
Pharmacology).  Our contract with Siegel Consultancy,  signed on March 16, 2005,
calls for the  consultant to provide  initial and ongoing  product  development,
quality control compliance,  regulatory consulting and submission preparation as
needed.  Compensation is at an hourly rate and includes reimbursement for travel
and documented expenses. There is no set termination date with this contract.

    Kelly  McQueen,  MD,  MPH,  PLLC was  engaged on July 29, 2005 for a term of
three  months to  provide  comprehensive  public  health  consulting  and act as
liaison with United States military services to pursue collaborative research in
the area of infectious diseases and upper respiratory  illnesses.  Kelly McQueen
is a  practicing  anesthesiologist  and public  health  consultant  in  Phoenix,
Arizona.  She  currently  works with the United  States  (U.S.)  Army and the US
Northern  Combatant Command on Infectious  Disease,  Disaster Planning and other
public health projects.  She also teaches  infectious  disease threat management
and treatment for the International Committee for the Red Cross (ICRS) course on
Health  Emergencies in Large Populations  (HELP). Ms. McQueen's contract with us
provides for cash  compensation on an hourly basis and  reimbursement for travel
and expenses.  We have mutually  agreed to extend the contract at the same terms
on a month by month basis.

    Dr. Jack  Caravelli,  Ph.D.  was  contracted  on November 5, 2005 to provide
advisory  services  in  support of  ImmuneRegen's  initiative  to  commercialize
radiation sickness treatments, bio-defense applications and countermeasures.  He
is  presently a senior  Advisor for the Threat  Reduction  Cooperation  with the
Office of Policy at the U.S.  Department  of Energy  (D.O.E.).  Dr.  Caravelli's
contract calls for cash compensation at an hourly rate and reimbursement for any
related travel and expenses.  The initial  contract had a term of two months and
we have  mutually  agreed to extend the contract at the same terms on a month by
month basis.

Advisory Board
--------------

      We currently  have three advisory  boards:  Drug  Development,  Oncology &
Dermatology and Bioterrorism Preparedness.  Advisory board members are appointed
for one-year  terms by our  management.  For services  rendered,  members of our
advisory  boards are  compensated on a quarterly  basis in common stock purchase
warrants.

    The Drug  Development  and  Oncology &  Dermatology  Boards  were  formed to
educate and provide  direction with regard to the  development  of  applications
using Homspera in the areas of expertise of the various advisory board members.

The following individuals comprise our Drug Development Advisory Board:

         Moshe Arditi,  M.D.,  Senior Advisor:  Director,  Division of Pediatric
         Infectious Diseases, Cedars-Sinai Medical Center, Los Angeles, CA,

         Mr. Ralph Di Libero, Associate Advisor: Vice President,  European Sales
         and Marketing, PolyPeptide Laboratories A/S in Denmark

         K.A. Kelly McQueen, M.D., MPH, Associate Advisor:  Anesthesiologist and
         Public Health Consultant;  Infectious Disease and Disaster Planning for
         U.S. Army and US Northern Combatant Command

                                       17
<PAGE>

         Hal  Siegel,   Ph.D.,   Associate   Advisor:   Principal  and  Founder,
         Scientific, Clinical, and Regulatory Compliance, Siegel Consulting

         Simon Wong, M.D., MPH, Associate Advisor: Research Assistant Professor,
         University of Arizona Health Science Center, Department of Pediatrics.

The following  individuals comprise our Oncology & Dermatology Advisory Board:

         Dr. John Dann, M.D., D.D.S., Senior Advisor

         Dr. Jeffery Friedman, M.D., Senior Advisor: Diplomat, American Board of
         Cosmetic  Surgery,  American  Board  of  Otolaryngology  Head  and Neck
         Surgery, Fellow of the American Academy of Cosmetic Surgery

         Elizabeth   Ceilley   Hyslop,   M.D.,   Associate   Advisor:   Clinical
         Practitioner, Durango Cancer Center.

         The  Bioterrorism  Preparedness  Advisory  Board,  was  formed  at  the
suggestion  of the  U.S.  Food  and  Drug  Administration's  (FDA)  Division  of
Counterrorism (DCT) to develop a "response team" that can be rapidly deployed to
an incident site in the event of a biological or radiological  attack to help in
implementation,  conduct  and data  acquisition.  As  there  are  several  first
responder  teams already in place, we opted to concentrate on forming a group to
discuss  logistics and  coordination  between agencies and these first responder
groups in the event of an attack.  We have  attempted  to appoint  knowledgeable
military and private  citizens  that  possess  first hand  experience  in combat
casualty and mass trauma  scenarios,  including  preparation  for a bioterrorist
attack  and/or  medical  or  scientific  expertise.  The  following  individuals
comprise our Bioterrorism Preparedness Advisory Board:

         James R. Campbell,  PhD, M.P.H,  Senior Advisor:  Commanding Officer of
         the Office of Naval Research Global, United States NAVY, Medical Corps,
         (Ret.),  Manager  for  Biosecurity  and  Biodefense,  in  the  National
         Security Directorate at the Pacific Northwest National Laboratory.

         The  Honorable  Asa  Hutchinson,  J.D.  Senior  Advisor:  former  Under
         Secretary for Border and  Transportation  Security at the Department of
         Homeland Security, Partner and chair of Venable LLP's Homeland Security
         Group.

         Dennis E. Amundson, D.O., Senior Advisor:  Captain, United States Navy,
         Medical Corps, Naval Medical Center, San Diego, Pulmonary Medicine

         Moshe Arditi,  M.D.,  Senior Advisor:  Director,  Division of Pediatric
         Infectious Diseases, Cedars-Sinai Medical Center, Los Angeles, CA

         Mr. Michael Caridi, Senior Advisor:  Chairman, MAJIC Development Group,
         SRC Industries Inc. and Protection Plus Security Consultants, Inc.

         Paul Carlton,  M.D., Senior Advisor: Lt. General,  USAF, Medical Corps,
         (Ret.),  Director,  Homeland Security for The Health Science Center The
         Texas A&M University System, Former USAF Surgeon General

         Mr. Ralph Di Libero, Associate Advisor: Former-Vice President, European
         Sales and Marketing, PolyPeptide Laboratories A/S in Denmark

         William Hoehn, Ph.D.,  Associate Advisor:  Visiting Professor,  Georgia
         Tech,   Sam  Nunn   School  of   International   Affairs,   Center  for
         International Strategy, Technology, and Policy

         Col. Kerrie Lindberg (Ret.),  Associate Advisor:  Colonel,  USAF, Nurse
         Corps,   (Ret.),   Former  Director,   Defense  Institute  for  Medical
         Operations (DIMO), Brooks City-Base, Texas

         Mr. Michael Deutsch,  Associate  Advisor:  Homeland  Security  Liaison,
         Principal, Immediate Solutions, LLC

         Additionally,  as part of the process of researching a deployment  plan
and keeping the  Bioterrorism  Preparedness  Advisory  Board current with recent
events, our management has met with several  congressional  leaders  responsible
for legislation  relating to Homeland Security,  including the office of Senator
Joseph Lieberman and the office of House  Representative  J.D.  Hayworth to have
the  opportunity  to  ascertain  their  viewpoints  on  emerging   preparedness.
Additionally, in February 2005, management met with the New York State Office of
Public/Homeland   Security  (NYSOPS),  the  agency  responsible  for  detection,
identification,  response, prevention and recovery for a terrorist act or threat
in New York State.

MANUFACTURING

         Management  expects  that  Radilex and Viprovex  will  ultimately  have
distinct  formulations  and dosing  regimens,  however,  at this early  stage of
development,  the  formulations  used are identical.  We do not have, and do not
intend to establish,  manufacturing  facilities to produce Homspera,  Radilex or
Viprovex or any potential products,  if any, derived from Homspera. We have used
and expect to  continue  to use third party  manufacturers  to obtain  synthetic
Sar9, Met (O2)11-Substance P. We believe Sar9, Met (O2)11-Substance P is readily
available at low cost from several life science and  technology  companies  that


                                       18
<PAGE>

provide biochemical and organic chemical products used in scientific and genomic
research, biotechnology, pharmaceutical development and the diagnosis of disease
and  chemical   manufacturing.   Further,   we  believe   that  the  Sar9,   Met
(O2)11-Substance  P is readily  available  from  various  sources,  and  several
suppliers are capable of supplying such in both clinical and initial  commercial
quality and quantities.

         To date,  we have acquired  Sar9,  Met  (O2)11-Substance  P (Homspera),
which is the active  ingredient  in  experimental  formulations  of Radilex  and
Viprovex from three different  manufacturers.  These are Sigma Aldrich,  Inc. of
Dallas  Texas,  PolyPeptide  Laboratories  A/S of Hillerod,  Denmark and C S Bio
Company Inc. of Menlo Park,  California.  Since we are only purchasing  research
quantities  of the drug at this time,  we have not entered into any contracts or
agreements   with  any  third   party   manufacturers,   other   than   standard
non-disclosure agreements.

         The manufacture of Radilex, Viprovex or any potential products, if any,
derived from  Homspera,  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 (cGMP) 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.

PATENTS AND PROPRIETARY RIGHTS

         Patents and other proprietary rights are essential to our business.  We
file  patent   applications  to  protect  our  technologies,   inventions,   and
improvements to our inventions that we consider  important to the development of
our  business.   We  also  rely  upon  trade   secrets,   know-how,   continuing
technological  innovations and licensing  opportunities  to develop and maintain
our competitive position.

         The active ingredient in Homspera, Radilex and Viprovex is the compound
Sar9, Met (O2)11-Substance P. The intellectual  property owned by us, as further
described below, is for the various potential uses of Sar9, Met (O2)11-Substance
P.  Additionally,  we are in the  process of pursuing  several  other use patent
applications based on the use of Homspera.

         We  currently  hold  issued  patents in the U.S.  for use of Sar9,  Met
(O2)11-Substance P, the active ingredient in Homspera, Radilex, and Viprovex for
inhibiting tumor growth and/or metastasis in cancer patients and for stimulating
the  immune  system of  immunocompromised  individuals  such as Acute  Radiation
Syndrome victims. Similar patent rights are held in Europe and Australia. In the
latter two regions, we also have been issued patent rights for use of the active
ingredient in Homspera, Radilex and Viprovex for stimulating the maturation of a
juvenile  immune  system,  for  stimulating  an  immune  response  to a viral or
bacterial infection, and for reducing the risk of cancer.

         We have also filed patent  applications in many  jurisdictions,  inside
and outside of the U.S., for use of the active ingredient in Homspera,  Radilex,
and Viprovex for  ameliorating or preventing  damage caused by cigarette  smoke;
for treating  patients  with SARS (Severe  Acute  Respiratory  Syndrome) or ARDS
(Acute  Respiratory  Distress  Syndrome) or to prevent these conditions in those
exposed to putative  causative agents; for inducing new hair growth or retarding
hair loss;  for  reducing  certain  aging  effects,  such as  interrupted  sleep
patterns,  residual  muscle  pain,  short term memory  loss,  diminished  visual
accommodation,  decreased muscle  strength,  and arthritic pain; for stimulating
wound healing in a  radiation-exposed  mammal; for treating asthma; for treating
skin diseases, in particular, eczema, psoriasis, acne, and basal cell carcinoma;
for prophylactically  treating domestic fowl to prevent respiratory  infections,
and for maintaining or inducing hair color.  Because these applications have not
yet been granted, the rights in these subject matters remain potential.

         The  following  is a list of the  registered  patents  and  provisional
patent applications in our portfolio. All of the inventor rights for all patents
and all patent  applications  listed have been assigned to us by the  inventors,
Dr. Mark Witten  and/or Dr.  David  Harris.  Some of our research has been or is
being funded by the Air Force Office of  Scientific  Research and has been or is
being conducted at the University of Arizona. We have received waivers of rights
to the invention  from the United States Air Force and the University of Arizona
in regard to patent  and patent  applications  for  Substance  P  Treatment  for
Immunostimulation.  We are expecting to receive  similar waivers from the United
States  Air  Force  and the  University  of  Arizona  for the  remaining  patent
applications  in our  intellectual  property  portfolio.  In total,  our  patent
portfolio  consists of two issued U.S.  and two issued  foreign  patents and two
pending  Patent  Cooperation  Treaty  (PCT)  applications,  seven  pending  U.S.
applications  and  16  pending  foreign  patent  applications.   The  assignment
documents are included as Exhibits.



                                       19
<PAGE>


Registered Patents:
-------------------

Title                                         Serial No.
-----                                         ----------
Substance P Treatment for  Immunostimulation  US 5,945,508 Substance P Treatment
for  Immunostimulation US 5,998,376 Substance P Treatment for  Immunostimulation
Australia 737201 Substance P Treatment for Immunostimulation European 0957930

PATENTS PENDING:

Title                                         Serial No.
-----                                         ----------
Acute Respiratory Syndromes                   US 10/553232
Acute Respiratory Syndromes                   Europe (Application number TBA)
Acute Respiratory Syndromes                   Singapore (Application number TBA)
Acute Respiratory Syndromes                   Vietnam 1-2005-015
Amelioration of Effects of Cigarette Smoke    US 10/645,839
Amelioration of Effects of Cigarette Smoke    Singapore 2005 01072-3
Amelioration of Effects of Cigarette Smoke    Vietnam 1-2005-00215
Amelioration of Effects of Cigarette Smoke    Japan 2004-532943
Amelioration of Effects of Cigarette Smoke    European Union 3791722.6
Amelioration of Effects of Cigarette Smoke    Canada -2496447
Anti-Aging Effects of Substance P             PCT/US05/13113
Inducing and Maintaining Hair Color           PCT/US05/13112
Method to Promote Wound Healing               US 60/622,015
Prevention of Respiratory Diseases in Fowl    US 60/641153
Prevention of Respiratory Diseases in Fowl    Singapore 200500467-6
Prevention of Respiratory Infection in Fowl   Vietnam 1-2005-00599
Prevention of Respiratory Infection in Fowl   Thailand 097659
Stimulation of Hair Growth                    US 10/539/734
Substance P Treatment for Immunostimulation   Canada 2,261,885
Treatment of Asthma                           US 60/667,062
Treatment of Asthma                           Singapore 200504104-1
Treatment of Skin Diseases                    US 60/642,996
Treatment of Skin Diseases                    Vietnam 1-2005-00598
Treatment of Skin Diseases                    Thailand 098080
Treatment of Skin Diseases                    Singapore 200500466-8

         Our rights to the US Patent Nos.  5,945,508 and 5,998,376,  Substance P
Treatment for  Immunostimulation,  have certain  limitations with respect to the
University  of Arizona and the United  States Air Force as described  below.  If
patents  are  issued  for  any of our  pending  patent  applications,  the  same
limitations would most likely apply.

         Our  agreements  with the  University of Arizona  outline very specific
rights in regard to our  sponsored-supported  projects.  In accordance  with our
sponsored-supported  project  agreements,  the University of Arizona retains the
right to use data developed during these projects for  non-commercial  purposes,
including  teaching,  research  and  education.  ImmuneRegen  BioSciences,  Inc.
retains the rights to trade secrets, inventions, developments and discoveries as
limited by the  University  of Arizona's  employment  contracts in effect at the
time the intellectual property was created. Further to this point, the principal
investigator at the University of Arizona,  Dr. Mark Witten, was a consultant to
ImmuneRegen  BioSciences,  and,  under  the terms of his  consulting  agreement,
ImmuneRegen BioSciences,  Inc. retains rights to any developments or discoveries
that he made in the course of working for us.

         As a result of governmental  funding,  the U.S.  Government has certain
rights in the  technology  developed  with such funds.  These  rights  include a
non-exclusive,   paid-up,  worldwide  license  under  such  inventions  for  any
governmental purpose. In addition, the government has the right to require us to
grant an exclusive  license under any of such inventions to a third party if the
government   determines  that:  (i)  adequate  steps  have  not  been  taken  to
commercialize  such  inventions,  (ii) such action is  necessary  to meet public
health or safety needs,  or (iii) such action is necessary to meet  requirements
for public use under federal regulations.


         In  this   regard,   the  United   States  Air  Force  has  reserved  a
non-exclusive license to the patents (US Patent Nos. 5,945,508 and 5,998,376) in
connection  with  Air  Force  grant  F49620-94-1-0297  and  may,  under  certain
conditions,  have commensurate or additional  license rights under the Bayh-Dole
Act. Those rights are set forth in 35 USC 202(c)(4) and 37 CFR 401.9 and 14(a).

         Under the federal  Bayh Dole Act, a party which  acquires an  exclusive
license for an invention that was partially  funded by a federal  research grant
is subject to the following  government rights: (i) products using the invention
which  are sold in the U.S.  are to be  manufactured  substantially  in the U.S.
unless a waiver is  obtained;  (ii) the  government  may force the granting of a
license  to a third  party  who will  make and sell the  needed  product  if the
licensee does not pursue reasonable  commercialization of a needed product using
the invention;  and (iii) the U.S.  Government may use the invention for its own
needs.



                                       20
<PAGE>

         Moreover,  besides  the  rights  that  have  been  granted  to the U.S.
Government,  the  validity and breadth of claims in medical  technology  patents
involve  complex  legal and  factual  questions  and,  therefore,  may be highly
uncertain.  No assurance can be given that any patents  based on pending  patent
applications or any future patent  applications  by us will be issued,  that the
scope of any patent protection will exclude  competitors or provide  competitive
advantages  to us, that any of the patents that have been or may be issued to us
will be held valid if  subsequently  challenged  or that  others  will not claim
rights in or ownership of the patents and other  proprietary  rights held by us.
Furthermore,  there can be no assurance  that others have not  developed or will
not develop similar products, duplicate any of our products or design around any
patents that have been or may be issued to us. Since patent  applications in the
U.S. are maintained in secrecy until shortly before a patent's issuance, we also
cannot be certain  that others did not first file  applications  for  inventions
covered by our pending patent  applications,  nor can we be certain that we will
not infringe any patents that may be issued to others on such applications.

         We also rely on trade secrets and unpatentable know-how that we seek to
protect, in part, by confidentiality agreements. It is our policy to require our
employees,   consultants,   contractors,   manufacturers,   outside   scientific
collaborators   and  sponsored   researchers   and  other  advisors  to  execute
confidentiality  agreements  upon the  commencement  of employment or consulting
relationships   with  us.  These   agreements   provide  that  all  confidential
information  developed or made known to the individual  during the course of the
individual's  relationship  with us is to be kept confidential and not disclosed
to third  parties  except in specific  limited  circumstances.  We also  require
signed  confidentiality or material transfer agreements from any company that is
to receive our confidential information.  In the case of employees,  consultants
and contractors,  the agreements generally provide that all inventions conceived
by the individual while rendering  services to us shall be assigned to us as our
exclusive property.  There can be no assurance,  however,  that these agreements
will not be breached,  that we would have adequate  remedies for any breach,  or
that our trade secrets or unpatentable  know-how will not otherwise become known
or be independently developed by competitors.

         Our  potential  success  will  also  depend in part on our  ability  to
develop  commercially  viable products without infringing the proprietary rights
of others. We have not conducted freedom of use patent searches and no assurance
can be given that patents do not exist or could not be filed which would have an
adverse affect on our ability to market our products or maintain our competitive
position with respect to our products.  If our technology  components,  devices,
designs,  products,  processes or other  subject  matter are claimed under other
existing  U.S. or foreign  patents,  or are  otherwise  protected by third party
proprietary rights, we may be subject to infringement actions. In such event, we
may challenge the validity of such patents or other proprietary rights or we may
be  required  to  obtain  licenses  from  such  companies  in order to  develop,
manufacture or market our products.  There can be no assurances that we would be
able to obtain  such  licenses or that such  licenses,  if  available,  could be
obtained on commercially reasonable terms. Furthermore, the failure to either
develop a commercially  viable  alternative or obtain such licenses could result
in delays in marketing  our proposed  products or the  inability to proceed with
the development,  manufacture or sale of products requiring such licenses, which
could have a material  adverse affect on our business,  financial  condition and
results of operations. If we are required to defend ourselves against charges of
patent  infringement or to protect our proprietary rights against third parties,
substantial costs will be incurred regardless of whether we are successful. Such
proceedings are typically  protracted  with no certainty of success.  An adverse
outcome could subject us to  significant  liabilities to third parties and force
us to curtail or cease our development and sale of our products and processes.

         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.

RESEARCH AND LICENSE AGREEMENTS

         Our patents and continued research on Sar9, Met  (O2)11-Substance P are
derived from  discoveries  made during research  studies funded by the Air Force
Office of Scientific Research in early 1994 by our Director, Dr. Mark Witten. In
December 2002 we entered into consulting  agreements on a  month-to-month  basis
with Dr. Mark Witten and Dr. David Harris,  who are our two founders and largest
shareholders.  Under the terms of these agreements, Drs. Witten and Harris agree
to place at the disposal of us their judgment and expertise in the area of acute
lung injury. In consideration for these services,  we agreed to pay each of Drs.
Witten and Harris a  non-refundable  fee of $5,000 per month.  We and Dr. Harris
agreed to terminate  the  consulting  agreement for Dr. Harris in March 2005. In
January 2006, the company received  correspondence  from Dr. Witten stating that
he would terminate his consulting contract if his specific requirements were not
met. We subsequently accepted his termination effective February 1, 2006.

         In December 2002, we entered into a royalty-free license agreement with
Drs. Witten and Harris.  Under the terms of the license  agreement,  Drs. Harris
and Witten  granted to us an  exclusive  license to use and  sublicense  certain
patents,  medical  applications,  and other technologies  developed by them. Our


                                       21
<PAGE>

obligations under this 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 us the right to market a product,
we  will,  for so long as we sell  any  product  or  medical  application  which
incorporates  or  utilizes  the  patents,   medical   applications,   and  other
technologies  developed  by Drs.  Witten and Harris,  maintain in full force and
effect  policies  of  general  liability  insurance  (with  Broad  Form  General
Liability  and  Product  Liability  endorsements)  with  limits of not less than
$1,000,000 per occurrence and $1,000,000 annual aggregate. The license agreement
will  terminate  ten years after the date of the  expiration  of the last patent
issued or issuing with respect to the licensed  patents,  medical  applications,
and other  technologies.  The  resignation  of Dr.  Harris as a director  of our
company in  December  2004 and as a  consultant  in March 2005 does not have any
impact upon the terms of the license agreement. The resignation of Dr. Witten as
a consultant  to our company in February  2006 does not have any impact upon the
terms of the license agreement.

         In February 2005, Drs. Witten and Harris executed assignment  documents
in which, for good and valuable  consideration,  patent applications and patents
developed by them were assigned to ImmuneRegen BioSciences,  Inc. The assignment
documents  included  all of the  patents  and  patent  applications  which  were
included in and covered by the Licensing Agreement,  as amended. Drs. Witten and
Harris have also assigned all  proprietary  technology  developed at ImmuneRegen
subsequent to the execution of the February 2005 assignment documents.

GOVERNMENTAL REGULATION

         Our research  and  development  activities  and the  manufacturing  and
marketing  of our  applications  are  subject  to the  laws and  regulations  of
governmental   authorities  in  the  U.S.  and  other  countries  in  which  our
applications may be potentially  marketed.  Specifically,  in the U.S., the FDA,
among other activities,  regulates new product approvals to establish safety and
efficacy of these  applications.  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.   Governments  in  other  countries  have  similar
requirements for testing and marketing.  In the U.S., in addition to meeting FDA
regulations,  we are also subject to other federal laws as well as certain state
laws.

REGULATORY PROCESS IN THE UNITED STATES

         In the United  States,  the FDA,  under the  Federal  Food,  Drug,  and
Cosmetic Act (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.

         Approval of new pharmaceutical  (and biological)  products is a lengthy
procedure  leading from  development of a new product through  pre-clinical  and
clinical  testing.  This process takes a number of years and the  expenditure of
significant  resources.  There can be no assurance  that our product  candidates
will ultimately receive regulatory approval.

         Regardless of how our product  candidates are regulated,  the FFDCA and
other  Federal  statutes  and  regulations  govern or  influence  the  research,
testing,  manufacture,  safety,  labeling,  storage,  record-keeping,  approval,
distribution,  use,  product  reporting,   advertising  and  promotion  of  such
products.  Noncompliance  with  applicable  requirements  can  result  in  civil
penalties,  recall, injunction or seizure of products, refusal of the government
to approve or clear product  approval  applications or to allow us to enter into
government supply contracts,  withdrawal of previously approved applications and
criminal prosecution.

PRODUCT APPROVAL IN THE UNITED STATES

         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

                                       22
<PAGE>

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 Biologics  License  Application,  or BLA,  for a
                  biologic.

         Pre-clinical tests include laboratory  evaluation of product chemistry,
formulation and stability,  as well as studies to evaluate toxicity. 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:

         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 statistically significant clinical efficacy,
                        optimal dosage and safety within an expanded and diverse
                        patient population at geographically-dispersed  clinical
                        study sites.

         As described  above,  for several of the product  opportunities  we are
pursuing,  we may apply for approval based upon a new rule adopted by the FDA in
2002,  titled "Approval of New Drugs When Human Efficacy Studies Are Not Ethical
or Feasible" (Code of Federal Regulations, Title 21, Part 314, Subpart I), which
is also referred to as the "animal efficacy rule." Pursuant to this new rule, in
situations where it would be unethical to conduct traditional Phase II and Phase
III efficacy studies in humans, as is the case with our applications relating to
the treatment of maladies caused by exposure to various  chemical and biological
agents,  the FDA will  review new drugs for  approval  on the basis of safety in
humans and efficacy in relevant animal models.

         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.

                                       23
<PAGE>

         Clinical trials must meet requirements for Institutional  Review Board,
or IRB, oversight, informed consent and the FDA's Good Clinical 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.

         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.

                                       24
<PAGE>

         Manufacturers  are also  subject to various  state and Federal laws and
regulations  governing laboratory practices  (specifically,  the requirement for
certain  studies  to  comply  with  current  Good  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.

         Some  of  our  drug  candidates  may  need  to  be  administered  using
specialized drug delivery systems. We may rely on drug delivery systems that are
already approved to deliver drugs like ours to similar  physiological  sites or,
in some  instances,  we may need to modify the design or labeling of the legally
available  device for delivery of our product  candidate.  In such an event, the
FDA may  regulate  the product as a  combination  product or require  additional
approvals or  clearances  for the modified  device.  Further,  to the extent the
delivery  device is owned by  another  company,  we would  need  that  company's
cooperation  to implement the necessary  changes to the device and to obtain any
additional  approvals or  clearances.  Obtaining  such  additional  approvals or
clearances,   and  cooperation  of  other  companies,   when  necessary,   could
significantly  delay,  and increase the cost of obtaining,  marketing  approval,
which could reduce the commercial viability of a drug candidate.

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.

         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.

SECURITIES LAWS

         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 Securities
and Exchange  Commission,  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.

DISTRIBUTION

         If Radilex or Viprovex  receives approval from the FDA, we will attempt
to commercialize these applications. Upon such approval, if Radilex we intend to
use our best  efforts to market it as a  treatment  to the  damaging  effects of
radiation  injury  that result  after  exposure  to total body  irradiation.  If
Viprovex,  we  intend  to  use  our  best  efforts  to  market  it as a  medical
countermeasure  to the effects of exposure to various  biological  and  chemical
agents. We intend to offer for sale these  applications to various  governmental
agencies  at  the  local,  state  and  federal  levels,  both  domestically  and
potentially outside the United States.

         Prior to FDA  approval,  Radilex and Viprovex  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


                                       25
<PAGE>

for  other  development  stage  medical   countermeasures  to  weapons  of  mass
destruction.  In that our studies,  in the opinion of management,  indicate that
Radilex may have  efficacy in the treatment of the  life-threatening  effects of
radiation  exposure and Viprovex to exposure to various  biological and chemical
agents,  we believe  there may be interest by  government  agencies to stockpile
Radilex and/or Viprovex if it is successfully  developed.  However,  there is no
assurance  that any of such orders will be  forthcoming  and we have received no
indication  from  Project  BioShield  or any other  agency  that it  intends  to
purchase any quantities of Radilex or Viprovex.

COMPETITIVE ENVIRONMENT

         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 Amgen Inc.,  Hollis-Eden  Pharmaceuticals,  Inc.  and Akorn,  Inc.  have
developed  or are  developing  products  for  treating  aspects 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 the potential  products 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 of our
potential products at a price sufficient to permit us to generate profits.

         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.  It is due to these reasons that we
believe that competition will be driven by time to market.

         If our proposed  product  candidates  are  successfully  developed  and
approved,  we will face competition based on the safety and effectiveness of our
proposed products, 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.

EMPLOYEES

         From our inception  through the period ended December 31, 2005, we have
relied on the services of outside  consultants  for services and currently  have
five total employees,  two contract employees and three full-time employees. Our
full-time  employees are Michael K. Wilhelm,  our Chief Executive Officer;  John
Fermanis,   our  Chief   Financial   Officer;   and,  the  third  serves  in  an
administrative role. 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
twelve  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 costs 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.

         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.

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<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.


                     RISKS RELATED TO OUR FINANCIAL RESULTS

WE HAVE  LIMITED CASH  RESOURCES,  AN  ACCUMULATED  DEFICIT,  ARE NOT  CURRENTLY
PROFITABLE AND EXPECT TO INCUR SIGNIFICANT EXPENSES IN THE NEAR FUTURE.


         As  of  December  31,  2005,  we  had  a  working  capital  deficit  of
$2,273,444.  This  amount  consists of cash of  $265,860  and current  assets of
$24,507,  accounts payable of $243,703,  accrued current liabilities of $258,426
and an accrued current liability of $2,061,683 related to a penalty for the late
registration  of the securities sold in our October 2004 private  placement.  We
anticipate  settling  this late  registration  penalty in  additional  shares of
common stock and warrants to purchase additional shares of common stock. If this
non-cash  liability were to be removed from our working  capital  position as of
December 31, 2005, we would have a working capital deficit of $211,761.  We have
incurred a  substantial  net loss for the period from our  inception  in October
2002 to December 31, 2005, and are currently experiencing negative cash flow. We
expect to continue to experience negative cash flow and operating losses through
at least 2009 and  possibly  thereafter.  As a result,  we will need to generate
significant revenues to achieve profitability.

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 do not  believe  we  will  begin  earning  revenues  from
operations  until the calendar  year 2009 as we  transition  from a  development
stage company. We have incurred operating losses since our inception. Our net
loss for the fiscal year ended December 31, 2005 was $4,591,107.  As of December
31, 2005, we had an accumulated deficit of $11,799,134.

OUR INDEPENDENT OUTSIDE AUDITORS HAVE RAISED SUBSTANTIAL DOUBT ABOUT OUR ABILITY
TO CONTINUE AS A GOING CONCERN.

Our  independent  certified  public  accountants  have  stated  in their  report
included in this Form  10-KSB/A  that the  Company  has  incurred a net loss and
negative cash flows from operations of $4,591,107 and $1,884,113,  respectively,
for the year ended December 31, 2005, and a lack of operational  history,  among
other matters,  that raise  substantial doubt about its ability to continue as a
going concern, which contemplates, among other things, the realization of assets
and satisfaction of liabilities in the normal course of business.  The effect of
this going concern would  materially  and adversely  affect our ability to raise
capital, our relationship with potential suppliers and customers, and have other
unforeseen effects.

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.

         Based  on  our  current  plans,  we  believe  our  existing   financial
resources, and interest earned thereon, will be sufficient to meet our operating
expenses and capital  requirements  through March 2006. 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 estimate that we
will  require  approximately  $5  million  over the next 12  months  in order to
finance our research and development  efforts,  fund operating expenses,  pursue
regulatory clearances and prosecute and defend our intellectual property rights.
We may seek such  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  beyond March 2006. Our working  capital deficit as of December 31,
2005 was  $211,761  net of the  accrual of  securities  pursuant  to the penalty


                                       27
<PAGE>

provision of our October 2004 private placement.  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 any 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.

WE HAVE DEFERRED, AND MAY CONTINUE TO DEFER, PAYMENT OF SOME OF OUR OBLIGATIONS,
WHICH MAY  ADVERSELY  AFFECT OUR  ABILITY TO OBTAIN  GOODS AND  SERVICES  IN THE
FUTURE.

         We estimate that we will require  approximately  $5 million to meet our
expenses  for the next 12  months.  Until such  time,  if at all,  as we receive
adequate funding,  we intend to defer payment of all of our obligations that are
capable of being  deferred.  Such  deferment  has resulted in the past,  and may
result in the future, in some vendors demanding cash payment for their goods and
services in advance,  and other vendors refusing to continue to do business with
us, which may  adversely  affect our ability to obtain goods and services in the
future, or to do so on favorable terms.

WE WILL NEED TO CONDUCT SIGNIFICANT ADDITIONAL RESEARCH, PRECLINICAL TESTING AND
CLINICAL  TESTING AND EXPECT TO INCUR  LOSSES AS WE  RESEARCH,  DEVELOP AND SEEK
REGULATORY APPROVALS FOR OUR POTENTIAL PRODUCTS.

         All of our research  and  development  efforts are early,  pre-clinical
stage and  Homspera  has only  undergone  exploratory  studies to  evaluate  its
biological  activity  in small  animals.  We will  need to  conduct  significant
additional  research,  pre-clinical  testing and clinical  testing before we can
file applications with the FDA for approval of our product  candidates.  To date
we have  not yet  made  applications  with  the  FDA or any  other  governmental
regulatory  agency for approval for our drug  candidates,  nor have we been in a
position  to seek such  approval.  Until  such time as we are able to file a New
Drug Application  (NDA),and it is subsequently  approved, we will not be able to
market or manufacture any products.

         If our  potential  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. In addition,  to
compete effectively, any 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.

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

         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.  We currently  anticipate that a significant portion
of any revenue would be derived from Radilex and Viprovex; however, the size and
extent of such  revenues,  if any,  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.

                          RISKS RELATED TO OUR BUSINESS

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 any potential drug candidate  would function as intended
            in large animal studies or 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;

                                       28
<PAGE>

         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.

IF WE DO NOT OBTAIN GOVERNMENT  REGULATORY APPROVAL FOR OUR PRODUCTS,  WE CANNOT
SELL OUR PRODUCTS AND WE WILL NOT GENERATE REVENUES.

         Our principal development efforts are currently centered on Radilex and
Viprovex,  which are potential drug candidates  derived from Homspera.  All drug
candidates  require  U.S.  Food  and Drug  Administration  ("FDA")  and  foreign
government approvals before they can be commercialized. These regulations change
from  time  to  time  and new  regulations  may be  adopted.  Our  research  and
development efforts for our drug candidates are at a very early stage; they have
not been, and may not be,  approved for commercial  sale by the FDA or any other
governmental  regulatory agency. We may incur significant  additional  operating
losses over the next several years as we fund development,  clinical testing and
other  expenses  while seeking  regulatory  approval.  To date we have conducted
limited  pre-clinical  studies of our potential  drug  candidates  using various
small animal models;  significant additional trials are required, and we may not
be able to demonstrate  that these drug candidates are safe or effective.  If we
are unable to  demonstrate  the safety and  effectiveness  of a particular  drug
candidate to the satisfaction of regulatory authorities, the drug candidate will
not obtain  required  government  approval.  If we do not receive FDA or foreign
approvals for our products,  we will not be able to sell our potential  products
and will not  generate  revenues.  Even if we receive  regulatory  approval of a
potential  product,  such approval may impose  limitations on the indicated uses
for which we may market the  product,  which may limit our  ability to  generate
significant revenues.

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

         Our  current  potential  drug  candidates,  Radilex and  Viprovex,  are
derived  from  Homspera.  In  addition,  we  plan  to  utilize  Homspera  in the
development of any future products we market. If these current or future product
candidates 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 current potential drug candidates, Radilex and
Viprovex,  will require significant  additional research and development efforts
and regulatory approvals prior to potential  commercialization in the future. We
cannot guarantee that we will ever obtain any regulatory  approvals of Homspera.
We currently are focusing our core  competencies  on the  development of Radilex
and Viprovex although there may be no assurance that we will be successful in so
doing.

         Our  current  potential  drug  candidates,  Radilex,  Viprovex  and our
technologies  utilizing  Homspera are at early stages of development and may not
be shown to be safe or  effective  and may never  receive  regulatory  approval.
Neither Radilex nor Viprovex nor our  technologies  utilizing  Homspera have yet
been tested in large animals or humans.  Regulatory  authorities  may not permit
large  animal or human  testing  of  Radilex,  Viprovex  or any other  potential
products  derived  from  Homspera.  Even if large  animal  or human  testing  is
permitted,  none of Radilex,  Viprovex or any other potential drug candidate, if
any, derived from Homspera may be successfully  developed or shown to be safe or
effective.

         The results of our pre-clinical studies may not be indicative of future
pre-clinical or clinical trial results. A commitment of substantial resources to
conduct time-consuming  research,  pre-clinical 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 or technologies may prove to be safe or
effective  in  clinical  trials.  Approval  of  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 potential 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


                                       29
<PAGE>

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 ASPECTS OF ACUTE RADIATION SYNDROME AND EXPOSURE TO
VARIOUS CHEMICAL AND BIOLOGICAL AGENTS IS UNCERTAIN AND IF WE ARE UNABLE TO
SUCCESSFULLY COMMERCIALIZE RADILEX OR VIPROVEX, WE WILL NOT RECOGNIZE A
SIGNIFICANT PORTION OF OUR FUTURE REVENUES, IF ANY.

         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,  radiological or biological agents has been
low.  Accordingly,  even if Radilex, our current drug candidate to treat aspects
of acute  radiation  syndrome  (ARS) and Viprovex,  our drug  candidate to treat
exposure  to various  biological  agents,  are  approved  by the FDA,  we cannot
predict  with any  certainty  the size of the  markets  for  them,  if any.  The
potential  market for Radilex and  Viprovex 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.

         To date,  although  we have  filed  formal  responses  to  governmental
grants,  Request  for  Information  (RFI) and  Request  for  Proposal  (RFP) for
therapeutics  to treat ARS and  exposure  to  various  chemical  and  biological
agents,  none have  resulted in funding,  stockpiling  orders or a commitment to
purchase our potential products, if any. Additionally,  we cannot guarantee that
our  response to any future RFI,  RFP or other grant will result in  stockpiling
orders or a commitment to purchase our potential products, if any.

         Any  decision  by the U.S.  Government  to enter into a  commitment  to
purchase  Radilex  or  Viprovex  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 or Viprovex is approved by regulatory authorities,  we
cannot  guarantee  that we will  receive any  stockpiling  orders for Radilex or
Viprovex,  that any such  order  would be  profitable  to us or that  Radilex or
Viprovex 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, AND
THEREFORE ADVERSELY AFFECT THE TIMING AND LEVEL OF FUTURE REVENUES, IF ANY.

         The process of  obtaining  FDA and other  regulatory  approvals is time
consuming,  expensive  and difficult to design and  implement.  Our current drug
candidates,  Radilex and Viprovex,  will have to undergo clinical trials and the
marketing and manufacturing of these drug candidates, if any, will be subject to
rigorous testing procedures.  Our research and development efforts are at a very
early stage and Radilex and Viprovex have only undergone pre-clinical testing in
mice. We may not be able to obtain the necessary  approvals for clinical trials,
manufacturing  or  marketing  of Radilex  and  Viprovex  or any other  potential
products,  if any, derived from Homspera.  Moreover,  any 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 Radilex,  Viprovex or any
other potential  products,  if any,  derived from Homspera,  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.

         Additionally,  the FDA's policies may change and additional  government
regulations may be enacted which could prevent or delay  regulatory  approval of


                                       30
<PAGE>

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.

         Even if  human  clinical  trials  of  Radilex,  Viprovex  or any  other
potential products, if any, derived from Homspera are initiated and successfully
completed,  the FDA may not  approve  any of them 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  potential  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 Radilex or
Viprovex as  "treatment"  protocols.  The FDA may not determine  that Radilex or
Viprovex meet all of the FDA's criteria for use of an  investigational  drug for
treatment  use. Even if Radilex or Viprovex are allowed for treatment use, third
party payers may not provide  reimbursement  for the costs of treatment with any
of them. The FDA also may not consider  Radilex or Viprovex to be an appropriate
candidate for acceptance as Emergency Use  Authorization  for Promising  Medical
Countermeasures  Under Development,  accelerated  approval,  expedited review or
fast track designation.

IF WE FAIL TO OBTAIN APPROVAL FROM FOREIGN REGULATORY  AUTHORITIES,  WE WILL NOT
BE ALLOWED TO MARKET OR SELL OUR POTENTIAL  PRODUCTS IN OTHER  COUNTRIES,  WHICH
WOULD ADVERSELY AFFECT OUR LEVELS OF FUTURE REVENUES, IF ANY.

         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 our potential 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.

         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.

CLINICAL TRIALS MAY FAIL TO DEMONSTRATE THE SAFETY AND EFFICACY OF OUR POTENTIAL
DRUG  CANDIDATES,  THE  EFFECT OF WHICH  COULD  PREVENT OR  SIGNIFICANTLY  DELAY
REGULATORY  APPROVAL  AND  THEREFORE  ADVERSELY  AFFECT  THE TIMING AND LEVEL OF
FUTURE REVENUES, IF ANY.

         Prior to receiving approval to commercialize  Radilex,  Viprovex or any
other potential  products,  if any,  derived from Homspera,  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 they are both safe and effective.  We will need to demonstrate
such  potential  products'  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  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.  Pre-clinical 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  PRE-CLINICAL OR CLINICAL  STUDIES OR
THE ANALYSIS OF THE DATA FROM OUR PRE-CLINICAL OR CLINICAL STUDIES MAY RESULT IN
DELAYS IN OUR PLANNED FILINGS FOR REGULATORY  APPROVALS OR ADVERSELY  AFFECT OUR
ABILITY TO ENTER INTO COLLABORATIVE ARRANGEMENTS.

                                       31
<PAGE>

         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.

         The  manufacture  of our  product  candidates  or any future  products,
whether done by outside  contractors as planned or internally,  must comply with
current Good Manufacturing  Practices,  or cGMP, regulations enforced by the FDA
and foreign  equivalents.  If a  manufacturer  of our drug  candidates  does not
conform to the cGMP 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 such
supply, we could experience  significant delays in our development  programs and
regulatory process.

OUR  LACK  OF  COMMERCIAL  MANUFACTURING,   SALES,  DISTRIBUTION  AND  MARKETING
EXPERIENCE  MAY PREVENT US FROM  SUCCESSFULLY  COMMERCIALIZING  PRODUCTS,  WHICH
WOULD ADVERSELY AFFECT OUR LEVEL OF FUTURE REVENUES, IF ANY.

         The manufacturing  process of Radilex,  Viprovex or any other potential
products, if any, derived from Homspera 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  and we  have  not
manufactured  any of the limited  quantities of Radilex and Viprovex used in our
studies to date. We may not successfully  arrange for contract  manufacturing of
Radilex, Viprovex or any other potential products, if any, derived from Homspera
in production quantities and this could prevent us from commercializing products
or limit our profitability from any such proposed products.

WE RELY ON THIRD PARTY  MANUFACTURERS  FOR THE MANUFACTURE OF RADILEX,  VIPROVEX
AND HOMSPERA.  OUR INABILITY TO MANUFACTURE RADILEX,  VIPROVEX AND 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 Radilex,  Viprovex and Homspera 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,  if any.
Further,  contract  manufacturers  must also operate in compliance with the cGMP
requirements;  failure  to do so  could  result  in,  among  other  things,  the
disruption of our proposed product supplies.  Our planned  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.

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<PAGE>

         For the  manufacture  of  Radilex,  Viprovex  and  Homspera,  we obtain
synthetic  peptides  from third party  manufacturers.  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 Radilex,
Viprovex and Homspera are readily  available from various  sources,  and several
suppliers  are capable of supplying  Homspera 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.



<PAGE>


ADVERSE  DETERMINATIONS  CONCERNING  PRODUCT PRICING,  REIMBURSEMENT AND RELATED
MATTERS COULD PREVENT US FROM SUCCESSFULLY COMMERCIALIZING RADILEX, VIPROVEX AND
HOMSPERA WHICH WOULD ADVERSELY AFFECT OUR LEVEL OF FUTURE REVENUES, IF ANY.

         Our  ability to earn any  revenue  on  Radilex,  Viprovex  or any other
potential  products,  if any,  derived from  Homspera 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 Radilex, Viprovex or any other potential products,
if any, derived from Homspera.  Third-party payers are increasingly  challenging
the prices of medical products and services.  If purchasers or users of Radilex,
Viprovex or any such other potential products, if any, derived from Homspera 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 RADILEX,  VIPROVEX OR ANY OTHER
POTENTIAL  PRODUCT,  IF ANY,  DERIVED FROM  HOMSPERA,  THE EFFECT OF WHICH WOULD
PREVENT US FROM SUCCESSFULLY  COMMERCIALIZING ANY PROPOSED PRODUCT AND ADVERSELY
AFFECT OUR LEVEL OF FUTURE REVENUE, IF ANY.

         Our ability to market and commercialize Radilex,  Viprovex or any other
potential  product,  if any,  derived from Homspera depends on the acceptance of
potential drug candidates  based on 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 developed any such initiatives.  Without such
acceptance of potential drug candidates based on Homspera, we may not be able to
successfully commercialize any proposed products or generate revenue.

PRODUCT LIABILITY EXPOSURE MAY EXPOSE US TO SIGNIFICANT LIABILITY OR COSTS WHICH
WOULD ADVERSELY  IMPART OUR FUTURE  OPERATING  RESULTS AND DIVERT FUNDS FROM THE
OPERATION OF OUR BUSINESS.

         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 avoid
liability  exposure,  significant  costs could be  incurred  that could hurt our
financial performance.

WE MAY FAIL TO PROTECT ADEQUATELY OUR PROPRIETARY TECHNOLOGY,  WHICH WOULD ALLOW
COMPETITORS  TO TAKE  ADVANTAGE  OF OUR RESEARCH AND  DEVELOPMENT  EFFORTS,  THE
EFFECT OF WHICH COULD ADVERSELY AFFECT ANY COMPETITIVE ADVANTAGE WE MAY HAVE.

         We own two issued U.S. and two issued  foreign  patents and two pending
Patent Cooperation  Treaty (PCT)  applications,  seven pending U.S.  provisional
patent applications and 16 pending foreign provisional 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


                                       33
<PAGE>

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, WHICH WOULD ADVERSELY AFFECT OUR LEVEL OF FUTURE REVENUES, IF ANY.

         Although we believe our proprietary  technology to be protected and our
patents enforceable,  the failure to obtain meaningful patent protection for our
potential  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 that contain claims applicable to
our potential  products.  Patents we are not aware of may  adversely  affect our
ability to develop and commercialize any potential products.


         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 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 potential  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 services  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 potential 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  proprietary  rights
could  result  in  the  expenditure  of  significant  financial  and  managerial
resources and  injunctions  preventing us from providing  services.  Such claims
could severely harm our financial condition and ability to compete.

                                       34
<PAGE>

         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 USPTO 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 potential 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.

FAILURE TO COMPLY WITH  ENVIRONMENTAL  LAWS OR  REGULATIONS  COULD  EXPOSE US TO
SIGNIFICANT  LIABILITY  OR COSTS  WHICH  WOULD  ADVERSELY  IMPACT OUR  OPERATING
RESULTS AND DIVERT  FUNDS FROM THE  OPERATION  OF OUR  BUSINESS  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.   Our  research  and  development
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, IR BioSciences Holdings,
Inc. or 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.

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.  We
currently  maintain a key-man  insurance  policy for $1,000,000,  payable to the
company, on his life. While we have entered into employment  agreements with Mr.
Wilhelm,  the loss of any of his services  would be  detrimental to us and could
have a material adverse effect on our business,  financial condition and results
of operations.

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  ownership
discouraging  a  potential  acquirer  from  making a tender  offer or  otherwise
attempting to obtain control of our business,  even if such a transaction  would
be beneficial to other stockholders.

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 OTCBB
to  securities  of  issuers  that are  current in their  reports  filed with the
Securities  and  Exchange  Commission.  The  effect on the  OTCBB 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.

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


                                       35
<PAGE>

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.
An aggregate of 58,194,009  shares of our common stock are being registered with
the SEC in a Form SB-2 registration  statement.  The registration and subsequent
sales of such shares of common  stock will likely have an adverse  effect on the
market price of our common stock.

         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.

         The  366,420  shares of our common  stock,  and  450,000  shares of our
common stock issuable upon warrants  presently  issued and outstanding as of the
date hereof are held by promoters of our prior company,  GPN Networks,  Inc., or
such promoters'  affiliates and assignees,  or their  transferees.  It should be
noted that because GPN Network, Inc. was a "blank check" company as that term is
defined  under  the  Securities  Act,  these  shares  may not be  sold by  these
promoters or their affiliates and assignees,  or their transferees,  pursuant to
Rule 144 of the  Securities  Act.  The  position of the staff of the Division of
Corporation Finance of the Securities and Exchanges  Commission is that any such
resale  transaction  under Rule 144 would appear to be designed to distribute or
redistribute  such shares to the public without  coming within the  registration
requirements  of  the  Securities  Act.  Therefore,  these  promoters  or  their
affiliates and assignees, or their transferees,  can only resell the shares they
hold as of the date  hereof  through a  registration  statement  filed under the
Securities Act. All of these shares are being registered hereunder.

THERE IS NO CAP ON THE SHARES AND WARRANTS WE MAY ISSUE  PURSUANT TO THE DELAYED
REGISTRATION  PENALTY PROVISION UNDER THE OCTOBER 2004 PRIVATE PLACEMENT,  WHICH
MAY ADVERSELY AFFECT THE MARKET PRICE OF OUR STOCK.

         Under the October  2004  private  placement,  we agreed to register the
shares sold in the  transaction,  along with the shares  underlying the warrants
sold within ninety days from the closing date of the private placement. If these
securities  were not so  registered,  we would incur a penalty  equivalent to an
additional 2% of the shares and warrants to be registered for every 30 days that
we failed to complete the registration.  Through March 20, 2006, we have accrued
6,456,800 shares and 2,542,400 warrants pursuant to this penalty  provision.  No
cap exists to limit the penalty for failure to register  the shares and warrants
in the October 2004 private  placement.  Accordingly,  the amount of  additional
equity  securities  we issue  pursuant to the delayed  registration  penalty may
adversely  affect  the market  price of our  common  stock and the rights of our
stockholders  may be  substantially  reduced.  Moreover,  as of the date of this
report,  our authorized  capital consists of 100,000,000 shares of common stock.
As of March 20, 2006,  we have fully diluted  90,633,160  shares of common stock
outstanding.  Therefore,  because no cap exists to limit the issuance of penalty
shares,  we may not have a sufficient  number of authorized shares available for
the settlement of the registration  penalty. As a result, the investors entitled
to these shares may take legal or other action against us, which may cause us to
pay substantial damages and adversely affect our business.

OUR COMMON  STOCK IS  CONSIDERED A "PENNY  STOCK," AND IS SUBJECT TO  ADDITIONAL
SALE AND TRADING REGULATIONS THAT MAY MAKE IT MOVE DIFFICULT TO SELL.

         Our common stock is  considered to be a "penny stock" since it does not
qualify for one of the  exemptions  from the  definition  of "penny stock" under
Section 3a51-1 of the Securities Exchange Act for 1934 as amended (the "Exchange
Act").  Our common stock is a "penny stock"  because it meets one or more of the


                                       36
<PAGE>

following  conditions (i) the stock trades at a price less than $5.00 per share;
(ii) it is NOT  traded  on a  "recognized"  national  exchange;  (iii) it is NOT
quoted on the Nasdaq  Stock  Market,  or even if so, has a price less than $5.00
per share;  or (iv) is issued by a company  that has been in business  less than
three years with net tangible assets less than $5 million.


         The principal  result or effect of being  designated a "penny stock" is
that securities  broker-dealers  participating in sales of our common stock will
be subject  to the "penny  stock"  regulations  set forth in Rules 15-2  through
15g-9  promulgated  under the Exchange  Act. For  example,  Rule 15g-2  requires
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 at least two  business  days before
effecting any transaction in a penny stock for the investor's account. Moreover,
Rule 15g-9 requires broker-dealers in penny stocks to approve the account of any
investor for  transactions in such stocks before selling any penny stock to that
investor.  This  procedure  requires  the  broker-dealer  to (i) obtain from the
investor  information  concerning  his or her  financial  situation,  investment
experience and investment objectives;  (ii) reasonably determine,  based on that
information, that transactions in penny stocks are suitable for the investor and
that the investor has  sufficient  knowledge and  experience as to be reasonably
capable of evaluating the risks of penny stock  transactions;  (iii) provide the
investor  with a  written  statement  setting  forth  the  basis  on  which  the
broker-dealer  made the  determination  in (ii) above; and (iv) receive a signed
and  dated  copy  of  such  statement  from  the  investor,  confirming  that it
accurately reflects the investor's  financial situation,  investment  experience
and investment  objectives.  Compliance with these requirements may make it more
difficult  and time  consuming  for holders of our common  stock to resell their
shares  to third  parties  or to  otherwise  dispose  of them in the  market  or
otherwise.


ITEM 2. DESCRIPTION OF PROPERTY

         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, 2007.  Our rent expense
is $2,320  per  month in year one and will  increase  to $2,380 in year two.  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.

         The  judgment  was  subsequently  settled in full for a cash payment of
$35,107  paid on August  2, 2005  releasing  us from all  obligations  under the
judgment.


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 2005.







                                       37
<PAGE>

                                     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".  The following  table sets forth the high and low
bid  prices for our 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.

                                                     2006
                                       ----------------------------------
                                            High               Low
                                       --------------     --------------
1st Quarter (through March 24, 2006)   $         0.35     $        0.20


                                                     2005
                                       ----------------------------------
                                            High               Low
                                       --------------     --------------
1st Quarter                            $         1.00     $        0.33
2nd Quarter                                      0.52              0.26
3rd Quarter                                      0.48              0.28
4th Quarter                                      0.52              0.19


                                                     2004
                                       ---------------------------------
                                            High               Low
                                       --------------     --------------
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 March 24, 2006, the closing price of our common stock as reported by
the OTC  Bulletin  Board was $0.31  per  share.  There  were  approximately  520
shareholders  of record and  beneficial  stockholders  of our common stock as of
March  10,  2006.  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

         During the three months ended  December  31, 2005,  the Company  issued
warrants to purchase 62,467 shares of common stock at prices ranging from $0.125
to $1.00 per share. Pursuant to the terms of their respective agreement with us,
these  warrants  were granted to current  members of the  Bioterrorism  Advisory
Board, Drug Development Advisory Board and the Oncology and Dermatology Advisory
Board for participation during the quarter ended December 31, 2005. The warrants
will bear a  restrictive  legend  regarding  the sale or transfer of such or the
underlying securities. The warrants 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.  There were less than 35 investors
and each investor had such  knowledge  and  experience in financial and business
matters  that the  investor  was capable of  evaluating  the merits and risks of
investing in the warrants. No general solicitation or advertising was undertaken
in connection  with the offer and sale of these  shares.  Each investor was also
provided with access to our Exchange Act reports  including our annual report on
Form 10-KSB and our quarterly reports on Form 10-QSB.

         During the fiscal year ended December 31, 2005, the Company accrued the
issuance  of  5,242,307  shares of common  stock and  warrants  to  purchase  an
additional  2,064,187  shares of common stock pursuant to a penalty  calculation
with regard to the late  registration  of shares sold in a private  placement in
October 2004.




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.

                                       38
<PAGE>

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/A 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 the State of 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. In
January 1992,  we effected a 1-for-6.3  reverse stock split of our common stock.
We changed our name to InnoTek,  Inc. in November  1992.  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  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.,  adopted our current business model
and thereafter changed our name to IR BioSciences  Holdings,  Inc. 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  potential  therapeutics  for a
number of applications.  All potential  therapeutics in development are based on
Sar9,  Met  (O2)11-Substance  P, an  analog  of the  naturally  occurring  human
neuropeptide  Substance P. This  neuropeptide  can be found throughout the body,
including  in the airways of humans and many other  species.  We use the generic
name Homspera to refer to the synthetic  Sar9, Met  (O2)11-Substance  P peptide.
All of our research and development  efforts are early,  pre-clinical  stage and
Homspera  has only  undergone  exploratory  studies to evaluate  its  biological
activity in small animals.

         Currently,  the majority of our development efforts are centered on two
potential  therapeutic  applications  for the  active  ingredient  in  Homspera.
Radilex is being formulated  specifically for the treatment of acute exposure to
radiation.  Viprovex is being formulated  specifically for applications relating
to the  treatment  of  maladies  caused by  exposure  to  various  chemical  and


                                       39
<PAGE>

biological agents. We are currently  sponsoring ongoing  pre-clinical studies in
these areas, specifically two mouse radiation studies on the efficacy of Radilex
in treating acute radiation  exposure and a study on the efficacy of Viprovex in
treating  exposure to anthrax.  In addition,  we have designed the protocols for
additional  radiation  studies in mice using  Radilex  and an avian flu study in
mice using Viprovex. Both studies have institutions with facilities committed to
perform them when, and if, protocols and funding are finalized.

         To date we have submitted  preliminary  study data to the U.S. Food and
Drug Administration (FDA) and have been issued two  Pre-Investigational New Drug
(PIND) numbers,  one for use of Homspera (now Radilex) in the treatment of acute
radiation  syndrome and the other for use of Viprovex in the  treatment of avian
influenza.  In addition,  we have recently submitted a PIND data package for the
use of Viprovex in the treatment of chemical  exposure.  We intend to file final
radiation study data from mice with the FDA within six months,  and at that time
we plan to request a meeting with the FDA regarding the authorization of a large
animal study  protocol to test the efficacy of Radilex as a treatment  for acute
radiation  syndrome.  Also  within  the next six  months,  we plan to  submit an
Investigational  New Drug (IND)  application for the use of Viprovex in treating
Acute Respiratory Distress Syndrome (ARDS)

         We have filed patent applications and provisional patent  applications,
where  applicable,  in many  jurisdictions,  inside  and  outside  of the United
States,  for the use of the active  ingredient Sar9, Met  (O2)11-Substance  P in
applications  that we are  researching.  We own two issued  U.S.  and two issued
foreign patents and two pending Patent  Cooperation  Treaty (PCT)  applications,
seven  pending  U.S.  provisional  patent  applications  and 16 pending  foreign
provisional patent applications.

         Our current  potential drug candidates,  Radilex and Viprovex and other
technologies  utilizing Homspera, are at early stages of development and may not
be shown to be safe or  effective  and may never  receive  regulatory  approval.
Neither Radilex nor Viprovex nor our  technologies  utilizing  Homspera have yet
been tested in humans.  There is no guarantee that regulatory  authorities  will
ever permit human testing of Radilex,  Viprovex or any other potential  products
derived from  Homspera.  Even if human  testing is  permitted,  none of Radilex,
Viprovex or any other potential drug  candidates,  if any, derived from Homspera
may be successfully developed or shown to be safe or effective.

         The results of our  preclinical  studies and clinical trials may not be
indicative  of 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 commercial  applications  using
Homspera or any derivates  thereof.  Delays in planned patient enrollment in our
clinical trials may result in increased  costs,  program delays or both. None of
our potential applications may prove to be safe or effective in clinical trials.
Approval of the FDA or other  regulatory  approvals,  including  export  license
permissions,  may  not be  obtained  and  even  if  successfully  developed  and
approved,  our potential  applications  may not achieve market  acceptance.  Any
applications  resulting from our programs may not be  successfully  developed or
commercially available for a number of years, if at all.

         As traditional  efficacy studies would require healthy human volunteers
to be exposed to the  potentially  lethal  agents or  pathogens,  this cannot be
done. Therefore,  we may apply for approval based upon a new rule adopted by the
FDA in 2002,  titled  "Approval of New Drugs When Human Efficacy Studies Are Not
Ethical or Feasible" (Code of Federal  Regulations,  Title 21, Part 314, Subpart
I), which is also referred to as the "animal  efficacy  rule."  Pursuant to this
new rule, in situations where it would be unethical to conduct traditional Phase
II  and  Phase  III  efficacy  studies  in  humans,  as is  the  case  with  our
applications  relating to the  treatment of maladies  caused by exposure to high
level gamma radiation and various chemical and biological  agents,  the FDA will
review new drugs for approval on the basis of safety in humans and efficacy in
relevant  animal models.  Through  development  under this paradigm,  management
believes near-term development opportunities may exist and development costs are
lessened  compared to the more traditional  drug development  model, as Phase II
and Phase III of the FDA required drug approval process are not required.  Under
either scenario,  we will not have marketable  applications unless and until our
drug  candidates  complete all required  safety studies and clinical  trials and
receive FDA  approval in the United  States or approval by  regulatory  agencies
outside of the United States.

         Prior to FDA  approval,  Radilex and Viprovex  may become  eligible for
purchase  by  the  U.S.  government.   Project  BioShield  legislation  contains
provisions enabling the U.S. Department of Health and Human Services, or 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 our
studies,  in the opinion of management,  indicate that Radilex may have efficacy
in the  treatment  of the  life-threatening  effects of  radiation  exposure and
Viprovex to exposure to various biological and chemical agents, we believe there
may be interest by government  agencies to stockpile  Radilex and/or Viprovex if
it is successfully  developed.  However,  there is no assurance that any of such
orders will be  forthcoming  and we have  received no  indication  from  Project
BioShield  or any other  agency that it intends to purchase  any  quantities  of
Radilex or Viprovex.

                                       40
<PAGE>

         To date, we have not obtained regulatory approval for or commercialized
any  applications  using  Homspera or any of its  derivatives.  We have incurred
significant  losses since our inception and we expect to incur annual losses for
at least the next 3 years as we continue with our drug discovery and development
efforts.

         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 State of 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.

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 Radilex,  Viprovex or any other proposed product, if
any, derived from Homspera and general and administrative activities.

         Due to our  liquidity  and  limited  cash  available  our  spending  on
research  and  development  activities  in 2004 and 2005 was  limited.  We spent
approximately $113,731 and $150,091 in 2005 and 2004, respectively,  in research
and development activities related to the development of Radilex and Viprovex as
potential protectants against the effects of chemical, biological,  radiological
and nuclear threats.  From our inception in October 2002, we have spent $306,794
in research and development activities. These costs only include the manufacture
and delivery of our drug by third party  manufacturers  and payments to Contract
Research  Organizations  for  consulting  related  to our  studies  and costs of
performing such studies. Significant costs relating to research and development,
such as consulting  fees for Drs.  Witten and Seigel,  among  others,  have been
classified in consulting fees for consistency of financial reporting.

         We  anticipate  that  during  the next 12 months we will  increase  our
research and development  spending to a total of approximately  $3,500,000 in an
effort to further develop Radilex and Viprovex.  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,  and  therefore  adversely
affect the timing and level of future revenues, if any."

PRODUCT RESEARCH AND DEVELOPMENT

         We incurred an expense of $113,731 for the year ended December 31, 2005
in research and development activities related to the development of Radilex and
Viprovex versus an expense of $150,091 for the year ended December 31, 2004. Due
to our  liquidity  and limited  cash  available,  our  spending on research  and
development  activities was limited. From our inception in October 2002, we have
spent $306,794 in research and development activities.  These costs only include
the  manufacture  and  delivery  of our drug by third  party  manufacturers  and
payments  to  Contract  Research  Organizations  for  consulting  related to our
studies and costs of performing  such  studies.  Significant  costs  relating to
research and  development,  such as consulting  fees for Drs. Witten and Seigel,
among  others,  have been  classified  in  consulting  fees for  consistency  of
financial reporting.

         If we are successful in obtaining  additional funding through grants or
investment  capital,  we  anticipate  that  during  the next 12  months  we will
increase  our  research  and  development  spending to a total of  approximately
$3,500,000 in an effort to further develop Radilex, as a medical  countermeasure
against radiological threats, and Viprovex, as a protectant against threats from
various  biological  agents.  The  research  and  development  cost  includes  a
radiation  study on large animals,  which we estimate will cost up to $2,500,000
depending on the choice of contractor,  additional animal pharmacology  studies,
formulation  and  animal  safety/toxicity  studies,  as  well  as,  small  pilot
pharmacological  studies exploring possible  additional  indications.  If we are
unable to raise additional capital, our research and development  activities may
be lessened.  The drug  development,  clinical trial and  regulatory  process is
lengthy, expensive and uncertain and subject to numerous risks.

         We intend to apply to the FDA for  approval  for the use of Radilex for
the  treatment  of acute  radiation  syndrome  and for  approval  for the use of
Viprovex  for the  treatment  of  maladies  caused by  chemical  and  biological
exposure based upon the "animal efficacy rule." We believe near-term development
opportunities  may exist and  development  costs could  potentially  be lessened
compared to the more traditional  drug development  model, as Phase II and Phase
III of the FDA required drug approval  process are not required.  Even if we are
able to develop this potential  application  under the animal  efficacy rule, we
will not have  marketable  applications  unless  and until  our drug  candidates
complete  all  required  safety  studies  and  clinical  trials and  receive FDA


                                       41
<PAGE>

approval in the United States or approval by regulatory  agencies outside of the
United  States.  If we are  successful in  completing  the study and achieve the
desired results, we intend to submit the necessary  documentation to the FDA and
other regulatory agencies for approval.  If approval for Radilex and/or Viprovex
is granted,  we expect to begin efforts to  commercialize  our product,  if any,
immediately thereafter.  If approved, we are anticipating revenues from the sale
of Radilex and Viprovex, if any, beginning in calendar year 2009.

         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, 2005, 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  potential  products  or
technologies.


         Our major research and development projects include:

         Research and Development of Radilex in Radiological Exposure
         Applications.
         ------------------------------------------------------------

         We have  commenced  initial  testing of Radilex to record its potential
therapeutic  effects on the treatment of toxic radiation  exposure.  Our current
and past studies are based on initial studies conducted by our co-founders, Drs.
Mark  Witten  and  David  Harris.   Subsequently,   we  have  sponsored   and/or
co-sponsored  six radiation  studies on rodents.  In addition,  we are currently
sponsoring two ongoing radiation  studies,  one at the University of Arizona and
one at Oak Ridge National Laboratory.

         We prepared the  protocols  for what we believe will be our final phase
of rodent studies for a radiation  sensitivity  study on rodents to be conducted
at the Oak  Ridge  National  Laboratory  in which  we will  attempt  to  further
validate our prior  studies.  This study  commenced  on February  28,  2006.  We
estimate that the study will be completed  within 3 months at an estimated  cost
of $90,000.  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 potential  treatment to acute  radiation  sickness.  We expect this
study to begin  within the next 12 to 18 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 expect up to an  additional  $2,500,000
will be required to complete  this study.  We estimate  the  completion  of this
study will be in 18 to 24 months.

         If product development or approval does not occur as scheduled our time
to reach market will be lengthened  and our costs will  substantially  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 as a possible therapeutic for radiation exposure.
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.

         Research  and  Development  of  Viprovex  in  Chemical  and  Biological
         Exposure Applications.
         -----------------------------------------------------------------------

         We are sponsoring a series of studies with Hyperion  Biotechnology Inc.
at their laboratory facilities located at Brooks City-Base in San Antonio, Texas
with  the  cooperation  of the U.S.  Air  Force  School  of  Aerospace  Medicine
(USAFSAM).  The first of these studies was initiated in October 2005. Logistical
considerations  related to number of animals requiring  exposure and performance
of a full Viprovex  dose-response  curve within  specified time limits following
anthrax exposure required the experiment be performed in two sections, and it is
incomplete  at this time.  The second half of the full  dose-ranging  experiment
began in February,  2006. We estimate that the study will be completed  within 3
months at an  estimated  cost of  $51,450.  If we are  successful  in  achieving
desirable  results against anthrax,  we intend to design the protocols and begin
further studies for this and other 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 anthrax 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.

OFF-BALANCE SHEET ARRANGEMENTS

         There were no off-balance sheet arrangements made in 2005.

REVENUES

         We have not generated any revenues from  operations from our inception.
We believe we will begin earning  revenues from operations  during calendar year
2009 as we transition from a development stage company.

                                       42
<PAGE>

COSTS AND EXPENSES

         From our inception  through  December 31, 2005, we have incurred losses
of $11,799,134.  These expenses were associated  principally  with  equity-based
compensation  to  employees  and  consultants,  product  development  costs  and
professional services.

NET LOSS
--------

         For the reasons stated above, our net loss for the twelve months ending
December  31,  2005 was  $4,591,107,  or $0.07  per  shares.  For the  period of
inception  (October  30,  2002)  through  December  31,  2005,  our net loss was
$11,799,134, or $0.30 per share. We expect that losses will continue through the
period ending December 31, 2009.

         Our  independent  certified  public  accountants  have  stated in their
report  included  in this Form  10-KSB/A  that we have  incurred  a net loss and
negative cash flows from operations of $4,591,107 and $1,884,113,  respectively,
for the year ended  December  31,  2005.  This loss,  in  addition  to a lack of
operational history, raises substantial doubt about our ability to continue as a
going concern. In the absence of significant  revenue and profits,  and since we
do not expect to generate significant revenues in the foreseeable future, we, in
order to fund  operations,  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 fiscal year ending  December 31, 2006. 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.

Penalties for Late Registration
-------------------------------

         During the fiscal year  December 31,  2005,  we accrued the issuance of
5,242,307  shares of  common  stock  and  warrants  to  purchase  an  additional
2,064,187  shares of common stock pursuant to a penalty  calculation with regard
to the late registration of shares sold in a private placement in October 2004.


         In October 2004, we completed a private placement sale of shares of our
common  stock and warrants to purchase  additional  shares of common  stock.  We
issued in the private  placement an aggregate of 19,600,000 shares of our common
stock and warrants to purchase  9,800,000  shares of our common stock. We agreed
to register these shares along with the shares  underlying these warrants within
ninety  days  from the  closing  date of the  transaction,  or we would  incur a
penalty  equivalent  to an  additional  2% of  the  shares  and  warrants  to be
registered  for every 30 days that we fail to complete this  registration.  This
penalty  amounts to an aggregate of 461,200  shares and 181,600  warrants per 30
day period until such a time as this  registration  statement is made effective.
As of December 31, 2005, we are required to issue an additional 5,242,307 shares
of common  stock and  warrants  to purchase an  additional  2,064,187  shares of
common  stock.  At the time these  liabilities  were  incurred,  the shares were
valued at $1,991,923  and the warrants were valued at $638,838.  The shares were
valued  at the  market  price  of the  Company's  common  stock  at the time the
liabilities were incurred.  The warrants were valued utilizing the Black-Scholes
valuation model. The aggregate amount of $2,630,761 was charged to operations as
cost of Penalty for late  registration  of shares during the year ended December
31, 2005.  The shares and warrants were re-valued at December  31,2005,  and the
result of this  re-valuation was to decrease the value of the shares by $314,385
and to decrease  the value of the  warrants by $254,693.  These  decreases  were
credited to other  (income)  expense during the year ended December 31, 2005. At
December 31, 2005, the fair value of the common stock issuable under the penalty
for late  registration  of  shares  is  $1,677,538,  and the  fair  value of the
warrants issuable under the penalty for late registration of shares is $384,145.
These  amounts  appear  as  current   liabilities  on  the  Company's  condensed
consolidated balance sheet at December 31, 2005.

         We anticipate  completing the  registration  of these shares during the
quarter   ended  June  30,  2006,   but  expect  that  an  obligation  to  issue
approximately 2,136,893 additional shares and 841,413 additional warrants at an
aggregate cost of approximately $840,000 will be incurred. There is no guarantee
that we  will  be able to  complete  the  registration  within  the  anticipated
timeframe.

LIQUIDITY AND CAPITAL RESOURCES

         At December 31, 2005, we had current  assets of $290,367  consisting of
cash of $265,860 and prepaid services of $24,507. Also, at December 31, 2005, we
had current  liabilities  of  $2,563,811,  consisting  of  accounts  payable and
accrued liabilities of $2,563,811. This resulted in a working capital deficit of
$2,273,444.  During the twelve  months ended  December 31, 2005, we used cash in

                                       43
<PAGE>
operating  activities  of  $1,884,113.  From the date of inception  (October 30,
2002) to December 31, 2005,  we had a net loss of  $11,799,134  and used cash of
$3,958,458  in  operating  activities.  We met our  cash  requirements  from our
inception  through December 31, 2005 via the private  placement of $3,263,902 of
our  common  stock and  $968,503  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 19,600,000  shares
of our common  stock and  warrants  to purchase  9,800,000  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.

         We currently  have no revenue.  There is no guarantee that our business
model will be successful, or that we will be able to generate sufficient revenue
to fund future operations.  As a result, we expect our operations to continue to
use net cash,  and that we will be  required to seek  additional  debt or equity
financings  during the coming quarters.  Since  inception,  we have financed our
operations  through debt and equity  financing.  While we have raised capital to
meet our working capital and financing needs in the past,  additional  financing
is required in order to meet our current and  projected  cash flow deficits from
operations  and  development  of our product line. We met our cash  requirements
from our  inception  through  December  31,  2005 via the private  placement  of
$3,263,902  net of costs of our common  stock,  $1,194,856  of this was from the
exercise of common stock purchase warrants net of costs. An additional  $968,503
was received from the issuance of notes payable, net of repayments.

         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
$1,190,856 from the tender offer, net of costs.

         During the year ended  December 31, 2005, we repaid two notes  payable,
$14,997 in cash and $65,003 by converting  into 232,153  shares of common stocks
at $0.28 per share pursuant to the terms of the promissory  note dated September
26,  2001.  The first note which  accrued  interest at 8% was repaid in full for
$4,998 ($3,900 principal & $1,097 accrued interest) on April 11, 2005, releasing
us from further  obligations under the note. On June 7, 2005, the remaining note
in the  principal  amount of $50,000  and all accrued  interest of $15,003  were
converted  into  232,153  shares  of our  common  stock in  accordance  with the
original terms of the note.

         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 note holder.  Consideration of $100.00 was
paid by us to the note holder. Under the terms of the agreement, the note holder
released us from all claims, known or unknown, relating to the amount owed.

         On June 13, 2005,  we issued  80,000 shares of common stock for cash of
$4,000 pursuant to the exercise of a warrant at $0.05 per share.

         Between June 2003 and August 2004 eleven investors entered into fifteen
convertible  promissory  notes  totaling  $558,500 with  interest  rates ranging
between 8% and 12% and having various  maturities.  In October 2004, these notes
were  converted  into equity in the  aggregate  amount of $558,500  plus accrued
interest of $56,757.  For full and complete  satisfaction  of debt, we issued to
the note  holders  the  following:  (a) a number of shares of our  common  stock
determined  by dividing the debt amount by an amount  between  $0.075 and $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 debt conversion we
issued an aggregate of 6,694,149 shares of common stock and warrants to purchase
3,347,076 shares of common stock.  Under the terms of the conversion  agreement,
the note holders released us from all claims, known or unknown,  relating to the
debt amount.

         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 through August 10, 2005, an annual
salary of  $250,000.  On August  10,  2005,  we  entered  into a new  employment
agreement with Mr. Wilhelm.  The new employment  agreement calls for a salary at
the rate of $275,000 per annum and provides for bonus incentives.  Mr. Wilhelm's
salary is payable in  regular  installments  in  accordance  with the  customary
payroll practices of our company.

                                       44
<PAGE>
         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.

         On  December  16,  2002 we entered  into a  consulting  agreement  on a
month-to-month basis with Dr. Mark Witten, our Director. Under the terms of this
agreement,  Dr.  Witten  agrees to place at the  disposal of us his judgment and
expertise in the area of acute lung injury. In consideration for these services,
we agreed to pay Dr. Witten a non-refundable fee of $5,000 per month. In January
2006, the company received  correspondence from Dr. Witten stating that he would
terminate his consulting contract if his specific  requirements were not met. We
subsequently accepted his termination effective February 1, 2006.

         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
September 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
$3,162,702).  Based on our current plan of operations all of our current funding
is expected to be depleted by the end of March 2006. If we are not successful in
generating sufficient liquidity from operations or in raising sufficient capital
resources,  it would have a material adverse effect on our business,  results of
operations, liquidity and financial condition.

         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 potential  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.

         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.
Based  on our  operating  expenses  and  anticipated  research  and  development
activities, we believe that we will require an additional $5 million to meet our
expenses over the next 12 months.

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

         We did not  dispose  or  acquire  any  significant  property,  plant or
equipment  for the year  ended  December  31,  2005.  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, 2005, we have
relied on the services of outside  consultants  for services and currently  have
five total employees,  two contract employees and three full-time employees. Our
full-time  employees are Michael K. Wilhelm,  our Chief Executive Officer;  John
Fermanis,   our  Chief   Financial   Officer;   and,  the  third  serves  in  an
administrative role. 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
twelve  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.

                                       45
<PAGE>

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 involves the most complex,  difficult and subjective
estimates and judgments:

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".

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

         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
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


                                       46
<PAGE>

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  it's
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.




                                       47
<PAGE>


ITEM 7. FINANCIAL STATEMENTS

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549



                       FINANCIAL STATEMENTS AND SCHEDULES

                           DECEMBER 31, 2005 AND 2004



                        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, 2005..............................F-4

Consolidated  Statements of Losses for the two years ended
December 31, 2005 and 2004 and the period October 30, 2002
(Date of Inception) through December 31, 2005................................F-5

Consolidated Statements of Stockholders' Equity (Deficit) for the period
October 30, 2002 (Date of Inception) through December 31, 2005........F-6 to F-9

Consolidated  Statements of Cash Flows for the two years ended
December 31, 2005 and 2004 and the period October 30, 2002
(Date of Inception) through December 31, 2005.......................F-10 to F-11

Notes to Consolidated Financial Statements..........................F-12 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
IR BioSciences Holdings, Inc.
Scottsdale, Arizona




We have audited the accompanying  consolidated  balance sheets of IR BioSciences
Holdings,  Inc. a  development  stage  company as of  December  31, 2005 and the
related consolidated  statements of losses,  deficiency in stockholders' equity,
and cash flows for the years  ended  December  31,  2005 and 2004 and the period
October 22, 2002 (date of inception)  through December 31, 2005. These financial
statements   are  the   responsibility   of  the   company's   management.   Our
responsibility  is to express an opinion on the financial  statements based upon
our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of IR BioSciences Holdings, Inc. a
development stage company at December 31, 2005 and the results of its operations
and its cash  flows for the years  ended  December  31,  2005 and 2004,  and the
period  October  22,  2002 (date of  inception)  through  December  31,  2005 in
conformity with accounting principles generally accepted in the United States of
America.

The accompanying  financial  statements have been prepared  assuming the Company
will continue as a going concern. As discussed in the Note A to the accompanying
financial  statements,  the  Company  is in the  development  stage  and has not
established  a source of  revenues.  This  raises  substantial  doubt  about the
company's  ability to continue as a going concern.  The financial  statements do
not  include  any  adjustments  that  might  result  from  the  outcome  of this
uncertainty.

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

New York, New York
March 24, 2006*

*Adjusted for typographical error




                                      F-3
<PAGE>

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


                                                                   December 31,
                                                                       2005
                                                                  -------------
Assets
Current assets

   Cash and cash equivalents                                      $     265,860
   Prepaid services and other current assets                             24,507
                                                                  -------------

      Total current assets                                              290,367

   Deposits and other assets                                              2,260
   Furniture and equipment, net of accumulated
      depreciation of $3,862                                              4,226
                                                                  -------------

Total assets                                                      $     296,853
                                                                  =============

Liabilities and Stockholders' Deficit
Current liabilities

   Accounts payable and accrued liabilities                             502,128
   Warrant portion of penalty for late registration
      of shares - with registration rights (See note E)                 384,145
   Commom stock portion of penalty for late
      Registration of shares (See note E)                             1,677,538
                                                                  --------------

      Total current liabilities                                       2,563,811

Commitments and Contingencies                                               --

Stockholders' deficit
   Preferred stock, 0.001 par value:
      10,000,000 shares authorized, no shares
      issued and outstanding                                                --
   Common stock, $0.001 par value; 100,000,000
      shares authorized;  69,436,319 shares issued
      and outstanding at December 31, 2005                               69,435

   Additional paid-in capital                                         9,465,501
   Deferred compensation                                                 (2,760)
   Deficit Accumulated during the Development Stage                 (11,799,134)
                                                                  -------------
      Total stockholder's deficit                                    (2,266,958)
                                                                  -------------

Total liabilities and stockholders' deficit                       $     296,853
                                                                  =============



              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>


                                                                                         For the Period
                                                            For the          For the       October 30,
                                                          Year  Ended      Year Ended       2002 to
                                                           December 31,    December 31,   December 31,
                                                              2005            2004            2005
                                                          ------------    ------------    ------------
<S>                                                       <C>             <C>             <C>
Operating expenses:

   Selling, general and administrative expenses           $  2,534,417    $  4,498,390    $  8,124,301
   Merger fees and costs                                           --              --          350,000
   Financing cost                                                  --              --           90,000
   Impairment of intangible asset                                6,393             --            6,393
                                                          ------------    ------------    ------------

      Total operating expenses                               2,540,810       4,498,390       8,570,694
                                                          ------------    ------------    ------------

Operating loss                                              (2,540,810)     (4,498,390)     (8,570,694)

Other expense:
   Cost of penalty for late registration of shares           2,630,761             --        2,630,761
   Gain from marking to market - warrant portion
      of penalty for late registration of shares              (254,693)            --         (254,693)
   Gain from marking to market - stock portion
      of penalty for late registration of shares              (314,385)            --         (314,385)
   Interest (income) expense, net                              (11,386)        807,017       1,166,757
                                                          ------------    ------------    ------------

      Total other (income) expense                          (2,050,297)        807,017       3,228,440
                                                          ------------    ------------    ------------

   Loss before income taxes                                 (4,591,107)     (5,305,407)    (11,799,134)

   Provision for income taxes                                     --              --              --
                                                          ------------    ------------    ------------
Net loss                                                  $ (4,591,107)   $ (5,305,407)   $(11,799,134)
                                                          ============    ============    ============

Net loss per share - basic and diluted                    $      (0.07)   $      (0.16)   $      (0.30)
                                                          ============    ============    ============
Weighted average shares outstanding -
   basic and diluted                                        67,691,598      33,510,168      38,934,503
                                                          ============    ============    ============
</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, 2005


<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 year  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)

</TABLE>

              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, 2005

<TABLE>
<CAPTION>
                                                          Common Stock       Additional
                                                  ------------------------    Paid-In      Deferred    Accumulated
                                                    Shares         Amount      Capital   Compensation    Deficit       Total
                                                  -----------  -----------  -----------  ------------  -----------  -----------
<S>                                               <C>          <C>           <C>         <C>            <C>         <C>


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)          --           --

Shares 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

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 diligence 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)          --           --

Beneficial 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

</TABLE>

                                      F-7
<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, 2005

<TABLE>
<CAPTION>
                                                          Common Stock       Additional
                                                  ------------------------    Paid-In      Deferred    Accumulated
                                                    Shares         Amount      Capital   Compensation    Deficit       Total
                                                  -----------  -----------  -----------  ------------  -----------  -----------
<S>                                               <C>          <C>           <C>         <C>            <C>         <C>

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 in October 2004 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 October 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, 2004            --           --      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 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 year 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-8
<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, 2005
<TABLE>
<CAPTION>


                                                          Common Stock       Additional
                                                  ------------------------    Paid-In      Deferred    Accumulated
                                                    Shares         Amount      Capital   Compensation    Deficit       Total
                                                  -----------  -----------  -----------  ------------  -----------  -----------
<S>                                               <C>          <C>           <C>         <C>            <C>         <C>
Sale of shares of common stock for cash at
   $0.20 per share in Mar 2005 for warrant
   exercise, net of costs                           6,600,778        6,600    1,184,256            --           --    1,190,856

Value of warrants issued to members
   of advisory committees in March 2005                    --           --      137,049            --           --      137,049

Deferred compensation in Feb 2005 to a
   consultant for 50,000 shares of stock at
   $0.65 per share.                                        --           --           --       (32,500)          --      (32,500)

Warrants exercised at $0.05 per share
   in June 2003                                        80,000           80        3,920            --           --        4,000

Value of warrants issued to members of
   advisory committee in June 2005                         --           --       70,781            --           --       70,781

Value of warrants issued to investors and
   service providers in June 2005                          --           --       32,991            --           --       32,991

Issuance of 232,153 shares of common
   stock in July 2005 for conversion of
   notes payable                                      232,153          232       64,771            --           --       65,003

Issuance of 100,000 shares of common stock
   in August 2005 to a consultant for
   services provided                                  100,000          100        9,900            --           --       10,000

Value of warrants issued to advisory
   committee in September 2005 for services                --           --       20,491            --           --       20,491

Amortization of deferred comp for the
   twelve months ended December, 2005                      --           --           --       199,726           --      199,726

Value of warrants issued in October
   and December 2005 to investors and
   service providers                                       --           --       18,399            --           --       18,399

Loss for the year ended
   December 31, 2005                                       --           --           --            --   (4,591,107)  (4,591,107)

                                                 ------------  -----------  -----------  ------------  -----------  -----------
                                                   69,436,319       69,435    9,465,501        (2,760) (11,799,134)  (2,266,958)

</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.
                                      F-9
<PAGE>



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

                                                                                                    For the Period
                                                            For the Year Ended  For the Year Ended  October 30, 2002 to
                                                            December 31, 2005   December 31, 2004   December 31, 2005
                                                            -----------------   -----------------   ------------------
<S>                                                         <C>                 <C>                 <C>
Cash flows from operating activities:
   Net loss                                                    $   (4,591,107)     $   (5,305,407)     $   (11,799,134)
   Adjustments to reconcile net loss to net
      cash used in operating activities:
   Non-cash compensation                                              520,853           3,284,577            3,920,853
   Cost of penalty for late registration of shares -
      stock portion                                                 1,991,923                  --            1,991,923
   Cost of penalty for late registration of shares -
      warrant portion                                                 638,838                  --              638,838
  (Gain) loss from marking to market - stock portion
      of penalty for late registration of shares                     (314,385)                 --             (314,385)
  (Gain) loss from marking to market - warrant portion
      of penalty for late registration of shares                     (254,693)                 --             (254,693)
   Impairment of intangible asset                                       6,393                  --                6,393
   Interest expense                                                     4,007              83,776              156,407
   Amortization of discount on notes payable                               --             704,633            1,006,935
   Depreciation and amortization                                        3,201              13,255               29,218
   Changes in operating assets and liabilities:
     Prepaid services and other assets                                  9,946              29,130                3,234
     Accounts payable and accrued expenses                            100,911             148,854              655,953
                                                            -----------------   -----------------   ------------------

   Net cash used in operating activities                           (1,884,113)         (1,041,182)          (3,958,458)

Cash flows from investing activities:
   Acquisition of property and equipment                                   --              (4,783)              (8,087)
                                                            -----------------   -----------------   ------------------

   Net cash used in investing activities                                   --              (4,783)              (8,087)

Cash flows from financing activities:
   Proceeds from notes payable                                             --              32,500            1,233,500
   Principal payments on notes payable and demand loans               (14,997)                 --             (264,997)
   Shares of stock sold for cash                                    1,190,856           1,973,045            3,259,902
   Proceeds from exercise of warrant                                    4,000                  --                4,000
   Officer repayment of amounts paid on his behalf                         --                  --               19,880
   Cash paid on behalf of officer                                          --                  --              (19,880)
                                                            -----------------   -----------------   ------------------

   Net cash provided by financing activities                        1,179,859           2,005,545            4,232,405

Net increase (decrease) in cash and cash equivalents                 (704,254)            959,580              265,860

Cash and cash equivalents at beginning of period                      970,114              10,534                   --
                                                            -----------------   -----------------   ------------------
Cash and cash equivalents at end of period                     $      265,860      $      970,114      $       265,860
                                                            =================   =================   ==================


</TABLE>

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

                                      F-10
<PAGE>



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

<TABLE>
<CAPTION>
                                                                                                    For the Period
                                                            For the Year Ended  For the Year Ended  October 30, 2002 to
                                                            December 31, 2005   December 31, 2004   December 31, 2005
                                                            -----------------   -----------------   ------------------
<S>                                                         <C>                 <C>                <C>
Supplemental disclosures of cash flow information:

Cash paid during the period for:
Interest                                                       $        1,706      $           54     $        43,553

Taxes                                                          $            -      $            -     $             -

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

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

Common stock issued in exchange  for services                   $      10,000      $    2,878,006      $     2,925,286
                                                            =================   =================   ==================

Common stock issued in exchange for previously incurred
debt and accrued interest                                       $      65,003      $      695,591      $     1,060,594
                                                            =================   =================   ==================

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

Amortization of beneficial conversion feature                   $           -      $      162,709      $       223,269
                                                            =================   =================   ==================
Stock options and warrants issued in exchange for services
rendered                                                        $     279,949      $      406,571      $       772,381
                                                            =================   =================   ==================

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

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


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

Amortization of deferred compensation                           $     199,726      $            -      $       199,726
                                                            =================   =================   ==================

Fair value of common stock and warrants in connection
   with the late filing of registration statement               $   2,630,761      $            -      $     2,630,761
                                                            =================   =================   ==================
Gain from marking to market - stock portion of
   penalty for late registration of shares                      $     314,385      $            -      $       314,385
                                                            =================   =================   ==================
Gain from marking to market - warrant portion of
   penalty for late registration of shares                      $     254,693      $            -      $       254,693
                                                            =================   =================   ==================

Impairment of intangible asset                                  $       6,393      $            -      $         6,393
                                                            =================   =================   ==================

</TABLE>

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

                                      F-11
<PAGE>


                 IR BIOSCIENCES HOLDINGS, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
                    AND FOR THE PERIOD FROM OCTOBER 30, 2002
                        (INCEPTION) TO DECEMBER 31, 2005

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.  (the  "Company,"  "we," or "us")  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  biopharmaceutical  company.  Through our wholly  owned
subsidiary,  ImmuneRegen  BioSciences,  Inc., we are engaged in the research and
development  of  potential  therapeutics  for  a  number  of  applications.  All
therapeutics in development are based on Sar9, Met (O2)11-Substance P, an analog
of the naturally occurring human neuropeptide Substance P. This neuropeptide can
be found throughout the body,  including in the airways of humans and many other
species.  We use the generic name Homspera to refer to the synthetic  Sar9,  Met
(O2)11-Substance  P peptide.  All of our  research and  development  efforts are
early, pre-clinical stage and Homspera has only undergone exploratory studies to
evaluate its biological activity in small animals.

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.

Going Concern
-------------

The accompanying consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of  liabilities in the normal course of business.  As shown in the  accompanying
financial  statements  during the years ended  December  31, 2005 and 2004,  the
Company  incurred  losses  from  operations  of $  4,591,107  and  $  5,305,407,
respectively.  In addition, its current liabilities exceed its current assets by
$2,273,444 as of December 31, 2005. These factors among others may indicate that
the  Company  will be unable to continue  as a going  concern  for a  reasonable
period of time.

In order  to  address  our  capital  requirements,  we  intend  to seek to raise
additional cash for working capital purposes through the public or private sales
of debt or equity  securities,  the  procurement  of  advances on  contracts  or
licenses,  funding from joint-venture or strategic  partners,  debt financing or
short-term  loans,  or a  combination  of the  foregoing.   We may also  seek to
satisfy  indebtedness  without any cash outlay  through the private  issuance of
debt or equity  securities.    There can be no  assurance  the  Company  will be
successful in its effort to secure additional equity financing.

If  operations  and cash  flows  continue  to  improve  through  these  efforts,
management  believes  that the Company can  continue  to  operate.  However,  no
assurance  can be given that  management's  actions  will  result in  profitable
operations or the resolution of its liquidity problems.

The  accompanying   consolidated   financial   statements  do  not  include  any
adjustments  that might  result  should the  Company be unable to  continue as a
going concern.

                                      F-12
<PAGE>

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.

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 2005,  2004 and 2003,  common stock
equivalents  were 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 anet
loss of $11,799,134  from its inception  through  December 31, 2005. The Company
incurred a net loss of $ 4,591,107 and $ 5,305,407  from  operations  during the
years ended  December 31, 2005 and 2004,  respectively.  The Company's has a net
working capital deficit of $2,273,444 with cash and cash equivalents of $265,860
at December 31, 2005.

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 2005,  2004, and the period from
October  30,  2002 (date of  inception)  to  December  31,  2005 were  $113,731,
$150,091 and $306,794, respectively.

                                      F-13
<PAGE>

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, 2005.

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  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, 2005 and 200
and for subsequent periods.

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

                                    Twelve months ended
                                       December 31,
                                    2005           2004
                                -----------    -----------
Net loss, as reported           $(4,591,107)   $(5,305,407)

Compensation recognized under
under APB 25                             --             --
Compensation recognized under
SFAS 123                            (83,150)            --
                                -----------    -----------

Pro forma net loss              $(4,674,257)   $(5,305,407)
                                ===========    ===========


Pro forma loss per share        $     (0.07)   $     (0.16)
                                ===========    ===========


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.

                                      F-14
<PAGE>

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, 2005 or 2004.

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 May 2005, the FASB issued FASB  Statement No. 154,  ("FAS 154"),  "Accounting
Changes and Error Corrections." FAS 154 establishes retrospective application as
the  required  method for  reporting  a change in  accounting  principle  in the
absence  of  explicit  transition  requirements  specific  to the newly  adopted
accounting  principle.  FAS 154 also provides  guidance for determining  whether
retrospective  application of a change in accounting  principle is impracticable
and for reporting a change when retrospective application is impracticable.  FAS
154 becomes  effective for accounting  changes and corrections of errors made in
fiscal years beginning after December 15, 2005. We do not expect the adoption of
FAS 154 to have a  material  impact on our  financial  position,  cash  flows or
results of operations.

In December 2004, the FASB issued FASB  Statement No.  123(R),  ("FAS  123(R)"),
"Share-Based  Payment,"  which is a  revision  of FASB  Statement  No. 123 ("FAS
123"),  "Accounting for  Stock-Based  Compensation."  FAS 123(R)  supersedes APB
Opinion No. 25, (APB 25), "Accounting for Stock Issued to Employees," and amends
FASB  Statement  No. 95,  "Statement  of Cash  Flows." FAS 123(R)  requires  all
share-based  payments to employees,  including grants of employee stock options,
to be recognized in the financial  statements  based on their fair values at the
date of grant and to record that cost as  compensation  expense  over the period
during  which the  employee is required to perform  service in exchange  for the
award (generally over the vesting period of the award).  Excess tax benefits, as
defined by FAS 123(R),  will be recognized  as an addition to common  stock.  In
April 2005, the SEC adopted a new rule that amends the compliance  dates for FAS
123(R). In accordance with the new rule, we are required to implement FAS 123(R)
at  the  beginning  of  our  fiscal  year  that  begins  January  1,  2006.  The
Commission's new rule does not change the accounting  required by FAS 123(R); it
changes only the dates of compliance.

In  November  2005,  the FASB  issued  FASB Staff  Position  No.  FAS  123(R)-3,
"Transition  Election  Related to  Accounting  for Tax  Effects  of  Share-Based
Payment Awards." The alternative  transition method includes  simplified methods
to establish the beginning balance of the additional paid-in capital pool ("APIC
pool") related to the tax effects of employee share-based  compensation,  and to
determine the subsequent impact on the APIC pool and consolidated  statements of
cash flows of the tax effects of employee  share-based  compensation awards that
are  outstanding  upon  adoption of SFAS  123(R).  An entity may make a one-time
election to adopt the transition  method described in this guidance and may take

                                      F-15
<PAGE>

up to one year  from the later of its  initial  adoption  of SFAS  123(R) or the
effective  date of this  guidance,  which was November  11, 2005.  We are in the
process  of  determining  whether  to adopt the  alternative  transition  method
provided  in FAS  123(R)-3  for  calculating  the  tax  effects  of  share-based
compensation pursuant to SFAS 123(R).

Effective  January  1,  2006,  we will  adopt  FAS  123(R)  using  the  modified
prospective  transition method, which provides for certain changes to the method
for valuing  share-based  compensation.  The valuation  provisions of FAS 123(R)
apply to new awards and to awards that are outstanding at the effective date and
subsequently  modified or cancelled.  Estimated  compensation expense for awards
outstanding  at January 1, 2006 will be recognized  over the  remaining  service
period using the compensation cost calculated for pro forma disclosure  purposes
under FAS 123. In accordance with the modified  prospective  transition  method,
our  statements of  operations  for periods prior to January 1, 2006 will not be
restated to reflect the impact of FAS 123(R).

Our  calculation of share-based  compensation  expense in future periods will be
calculated using the  Black-Scholes  option valuation model and will include the
portion of share-based payment awards that is ultimately expected to vest during
the period and therefore will be adjusted to reflect estimated forfeitures. SFAS
123(R) requires forfeitures to be estimated at the time of grant and revised, if
necessary,  in  subsequent  periods  if actual  forfeitures  differ  from  those
estimates.  In our pro forma information required under SFAS 123 for the periods
prior to 2006, we accounted for  forfeitures as they occurred.  For share awards
granted   after  January  1,  2006,   expenses  will  be  amortized   under  the
straight-line  attribution  method.  For  share  awards  granted  prior to 2006,
expenses are amortized under the  straight-line  single option method prescribed
by SFAS  123.  We expect  that our  adoption  of FAS  123(R) in 2006 will have a
material impact on our results of operations and net loss per share.

NOTE B - PROPERTY, PLANT AND EQUIPMENT

The  Company's  property  and  equipment  at December  31, 2005  consists of the
following:

  Office Equipment                                $6,665
  Office Fixtures and Furniture                    1,423
                                                 -------
                                                   8,088
  Accumulated Depreciation                        (3,862)
                                                 -------
                                                  $4,226
                                                 =======

Depreciation expense included as a charge to income amounted to $2,274,  $1,078,
and $3,862 for the years ended  December 31, 2005 and 2004 and from inception to
December 31, 2005, 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:

                                                                  2005
                                                                --------
                 Technology License                             $  9,250
                 Website                                          22,500
                 Less:  accumulated amortization                 (25,357)
                        Impairment of intangible asset           ( 6,393)
                                                                --------
                 Intangible assets, net                         $     -
                                                                ========

Amortization  expense included as a charge to income amounted to $927,  $12,177,
and $25,357 for the years ended  December 31, 2005 and 2004, and the period from
inception to December  31, 2005,  respectively.  In December  2005,  the Company
determined  it was  necessary  to record an  impairment  charge  related  to our
intangible  asset totaling  $6,393 , which was charged to operations  during the
year ended December 31, 2005.

                                      F-16
<PAGE>

NOTE D - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES



Accounts payable and accrued liabilities at December 31, 2005 are as follows:

        Common stock portion of penalty for late
          registration of shares                            $1,677,538
        Warrant portion of penalty for late
          registration of shares - with
          registration rights                                  384,145
        Accounts payable & accrued liabilities                 475,030
        Insurance contract payable                              18,000
        Accrued interest                                         9,098
                                                            ----------
        Total                                               $2,563,811
                                                            ==========



NOTE E - PENALTY FOR LATE REGISTRATION OF SHARES

During the fiscal year  December 31, 2005,  the Company  accrued the issuance of
5,242,307  shares of  common  stock  and  warrants  to  purchase  an  additional
2,064,187  shares of common stock pursuant to a penalty  calculation with regard
to the late registration of shares sold in a private placement in October 2004.

In October 2004, we completed a private  placement  sale of shares of our common
stock and warrants to purchase  additional  shares of common stock. We issued in
the private  placement an aggregate of 19,600,000 shares of our common stock and
warrants to purchase 9,800,000 shares of our common stock. We agreed to register
these shares along with the shares  underlying these warrants within ninety days
from the closing date of the transaction, or we would incur a penalty equivalent
to an  additional  2% of the shares and warrants to be  registered  for every 30
days that we fail to complete  this  registration.  This  penalty  amounts to an
aggregate of 461,200 shares and 181,600  warrants per 30 day period until such a
time as this registration statement is made effective.  As of December 31, 2005,
we are  required to issue an  additional  5,242,307  shares of common  stock and
warrants to purchase an additional 2,064,187 shares of common stock. At the time
these  liabilities  were incurred,  the shares were valued at $1,991,923 and the
warrants were valued at $638,838.  The shares were valued at the market price of
the  Company's  common  stock at the time the  liabilities  were  incurred.  The
warrants were valued utilizing the Black-Scholes  valuation model. The aggregate
amount of  $2,630,761  was  charged to  operations  as cost of Penalty  for late
registration of shares during the year ended December 31, 2005.


The shares and warrants were  re-valued at December  31,2005,  and the result of
this  re-valuation  was to decrease  the value of the shares by $314,385  and to
decrease the value of the warrants by $254,693. These decreases were credited to
other (income)  expense during the year ended December 31, 2005. At December 31,
2005,  the fair value of the common  stock  issuable  under the penalty for late
registration  of  shares  is  $1,677,538,  and the fair  value  of the  warrants
issuable under the penalty for late  registration  of shares is $384,145.  These
amounts appear as current  liabilities on the Company's  condensed  consolidated
balance sheet at December 31, 2005.

As the liability  for these  penalty  shares and warrants must be settled by the
delivery of registered  shares and the delivery of the registered  shares is not
controlled by the Company,  pursuant to EITF 00-19,  "Accounting  for Derivative
Financial  Instruments  Indexed to, and Potentially  Settled in, a Company's Own
Stock",  the net value of the shares and  warrants at the date of  issuance  was
recorded  as a  liability  on the  balance  sheet and the  change in fair  value
from the date of  issuance  to  December  31,  2005 has been  included  in other
income  (expense).  Upon the registration  statement being declared  effective,
the fair value of the warrant on that date will be reclassified to equity.

We anticipate  completing  the  registration  of these shares during the quarter
ended  June 30,  2006,  but expect  that an  obligation  to issue  approximately
2,136,893 additional shares and 841,413 additional warrants at an aggregate cost
of approximately  $840,000 will be incurred during the period January 1, 2006 to
June 30, 2006.


NOTE F - RELATED-PARTY TRANSACTIONS

Employment Agreements
---------------------

PRESIDENT AND CHIEF EXECUTIVE OFFICER:

On August 10, 2005, the Company entered into a new employment agreement with its
President  and Chief  Executive  Officer,  Michael K.  Wilhelm.  The  employment
agreement calls for a salary at the rate of $275,000 per annum.  The salary will
be subject to adjustment  of at least 10% per year at the end of each year.  The
registrant also agreed to defend and indemnify,  to the fullest extent permitted
by the  registrant's  certificate of  incorporation  and bylaws and the Delaware
General Corporation Law, Mr. Wilhelm and hold him harmless against any liability
that he incurs  within  the scope of his  employment  under the  agreement.  The
agreement also provides for the following various bonus incentives:

     i) A target incentive bonus in cash and/or stock if the Company consummates
a  transaction  with any  unaffiliated  third  party  such as an  equity or debt
financing,   acquisition,  merger  ,  strategic  partnership  or  other  similar
transaction.

     ii) A one time  grant of an  option  to  purchase  2,000,000  shares of the
Company's  common stock at an exercise  price equal to the fair market value per
share on the date option is granted.

In connection  with Mr.  Wilhelm's new  employment  agreement,  the Company also
entered into a change of control agreement and a severance agreement with him on
August 10, 2005.

Under the  change of control  agreement,  Mr.  Wilhelm  shall be  entitled  to a
continuation  of  his  base  salary  for a  period  of 18  months  following  an
involuntary  termination,  which means,  at any time within that period which is
one-year from the change of control date (including such date),  the termination
of the employment of Mr. Wilhelm (i) by the Company without cause or (ii) due to

                                      F-17
<PAGE>

constructive  termination,  as such  terms are  defined in the change of control
agreement.  Further, in the event of an involuntary  termination,  the agreement
provides that the  registrant  shall pay Mr.  Wilhelm a lump sum amount in cash,
equal  to the  sum of (i) any  unpaid  incentive  compensation  which  has  been
allocated  or  awarded  to Mr.  Wilhelm  for a  completed  fiscal  year or other
measuring period preceding the date of involuntary  termination under any annual
or  long-term   incentive  plan  and  which,  as  of  the  date  of  involuntary
termination,  is contingent only upon the continued employment of Mr. Wilhelm to
a  subsequent  date,  and (ii) a pro  rata  portion  to the date of  involuntary
termination  of the aggregate  value of all  contingent  incentive  compensation
awards to Mr.  Wilhelm  for all then  uncompleted  periods  under any such plan.
Further,  100% of the unvested portion of each outstanding  stock option granted
to Mr. Wilhelm shall be accelerated so that they become immediately  exercisable
upon the date of involuntary termination.

Under the severance  agreement,  Mr. Wilhelm shall be entitled to a continuation
of  his  base  salary  for  a  period  of 18  months  following  an  involuntary
termination, which means the termination of the employment of Mr. Wilhelm (i) by
the Company without cause or (ii) due to constructive termination, as such terms
are defined in the severance agreement.  Further, in the event of an involuntary
termination, the agreement provides that the registrant shall pay Mr. Wilhelm an
amount equal to the amount of executive incentive pay (bonus) that he would have
received for the year in which the involuntary  termination  occurred had he met
one hundred  percent (100%) of the target for such  incentive  pay. Also,  under
this agreement,  100% of the unvested portion of each  outstanding  stock option
granted to Mr.  Wilhelm  shall be  accelerated  so that they become  immediately
exercisable upon the date of involuntary termination.


CHIEF FINANCIAL OFFICER:

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  $1,190,857  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 the Company.
Mr. Fermanis also receives 100,000 shares of the Company's  common stock,  which
are earned at the rate of 1/12 or 8,333 per month  beginning  January 2005.  The
Company  charges to operations  the market value of these shares as of the first
day of each month.  For the twelve months ended  December 31, 2005,  the Company
charged  $41,416  to  operations  for the  issuance  of  100,000  shares  to Mr.
Fermanis. This amount is carried in accrued liabilities at December 31, 2005.

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

In December 2002, the Company entered into a royalty-free license agreement with
its two  founders  and  largest  shareholders.  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 Company will maintain a broad form general  liability and product  liability
insurance.

In February 2005, Drs. Witten and Harris executed assignment documents in which,
for good and valuable  consideration,  patent applications and patents developed
by them were assigned to ImmuneRegen BioSciences,  Inc. The assignment documents
included all of the patents and patent  applications  which were included in and
covered by the licensing agreement, as amended. Drs. Witten and Harris have also
assigned all proprietary  technology developed at ImmuneRegen  subsequent to the
execution of the February 2005 assignment documents.

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 I).
                                      F-18
<PAGE>

Notes Payable
-------------

During the twelve months ended  December 31, 2005, the Company  converted  notes
payable and accrued interest to Company  shareholders in the aggregate amount of
$65,003 into 232,153  shares of the  Company's  common stock at a price of $0.28
per share (see Note G).

NOTE G - NOTES PAYABLE

During the year ended December 31, 2005,  the Company  settled in full three (3)
notes payable aggregating  $80,000.  Payment was made by converting one (1) note
in the amount of $65,003 into 232,153 shares of the Company's  common stock, and
by paying cash in the amount of $14,997 in satisfaction of the remaining two (2)
notes. The Company has no notes payable outstanding at December 31, 2005.

NOTE H - 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, 2005,  the
Company has 69,436,319 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
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 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

                                      F-19
<PAGE>

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.

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. As of the date of the
financial statements,  the registration  statement has not been deemed effective
and as a result,  the Company has incurred penalties in the amount of $2,061,683
representing  the obligation to issue an additional  5,242,307  shares of common
stock and warrants to purchase an additional 2,064,187 shares of common stock at
a price of $0.50 per share.

The accrued  penalties in  connection  with the issuance of the shares of common
stock is included in accounts payable and accrued expenses at December 31, 2005.

In conjunction with raising capital through the private  placement of our common
stock,  the  Company  issued a  warrant  that has  registration  rights  for the
underlying  shares.   As  the  contract  must  be  settled  by the  delivery  of
registered shares and the delivery of the registered shares is not controlled by
the  Company,  pursuant  to EITF 00-19,  "Accounting  for  Derivative  Financial
Instruments  Indexed to, and Potentially Settled in, a Company's Own Stock", the
net value of the 9,800,000 warrants and an additional 2,064,187 penalty warrants
at their respective  dates of issuance has been recorded as a warrant  liability
on the balance  sheet  ($638,838)  and the change in fair value from the date of
issuance to December 31, 2005 has been included in other income (expense).   The
assumptions  used in the Black Scholes model are as follows:  (1) dividend yield
of 0%; (2) expected  volatility of 79%, (3) risk-free interest rate of 4.5%, and
(4) expected life of 5 years.  Upon the  registration  statement  being declared
effective,  the fair value of the warrant on that date will be  reclassified  to
equity.

For the year ended  December  31,  2005 the change in fair value of the  warrant
issued with registration rights decreased by approximately  $254,693 to $384,145
at December 31, 2005 and is recognized in other income (expense).

October  2004,  the Company  converted  certain  notes payable with an aggregate
principal  amount of $558,500  plus  accrued  interest of $56,757 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  6,694,149  along  with  warrants  to  purchase  an  additional
3,347,076 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.

On January 24, 2005, the Company made a tender offer to certain of the Company's
shareholders  whereby the exercise price of certain  warrants  issued in October
2004 (the  "Warrants")  would be reduced from $0.50 to $0.20 per share. In March
2005,  6,600,778  shares of common  stock were sold  pursuant  to this offer for
aggregate proceeds of $1,320,156 less costs of $129,300.

In June 2005,  the Company  issued 80,000 shares of common stock pursuant to the
Exercise of a warrant at a price of $0.05 per share.

In July 2005,  the Company  issued  232,153 shares of common stock at a price of
$0.28 per share pursuant to the conversion of a note payable (see Note F.)

In August 2005, the Company issued 100,000 shares of common stock pursuant to an
agreement with a service provider. The fair value of these shares of $10,000 was
amortized over the life of the contract, from July 2004 to July 2005.


NOTE I - 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.

                                      F-20
<PAGE>

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.


          Options Outstanding                        Options Exercisable
   -----------------------------------    --------------------------------------
                         Weighted                                   Weighted
                         Average         Weighted                   Average
                         Remaining       Average                    Remaining
Exercise   Number        Contractual     Exercise     Number        Contractual
Prices     Outstanding   Life (years)    Price        Exercisable   Life (years)
--------   -----------   ------------    ---------    -----------   ------------

$25.00        63,212         4.24         $25.00       63,212         4.24
 0.31          1,000         4.95           0.31        1,000         4.95
 0.33        103,030         4.61           0.33      103,030         4.61
 0.44        150,000         4.34           0.44      150,000         4.34
             -------                                  -------
             317,242                                  317,242
             =======                                  =======


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

                                                         Weighted Average
                                     Number of Shares     Price Per Share
                                     ----------------    ----------------
Outstanding at December 31, 2003          63,212              25.00
   Granted                                    --                 --
   Exercised                                  --                 --
   Canceled or expired                        --                 --
                                         -------             ------
Outstanding at December 31, 2004          63,212             $25.00
   Granted                               254,030               0.39
   Exercised                                  --                 --
   Canceled or expired                        --                 --
                                         -------             ------
Outstanding at December 31, 2005         317,242             $ 5.30
                                         =======             ======

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.

         Warrants Outstanding                        Warrants Exercisable
   -----------------------------------    --------------------------------------
                          Weighted                                  Weighted
                          Average        Weighted                   Average
                          Remaining      Average                    Remaining
Exercise    Number        Contractual    Exercise     Number        Contractual
Prices      Outstanding   Life (years)   Price        Exercisable   Life (years)
--------    -----------   ------------   ---------    -----------   ------------

$ .05-.10       519,780       3.38        $.05-.10       519,780          3.38
 .125-.21       911,819       3.46        .125-.21       911,819          3.46
  .25-.56     9,271,405       3.57         .25-.56     9,271,405          3.57
     1.00       867,311       2.08           1.00        867,311          2.08
     2.00        46,550       3.21           2.00         46,550          3.21
            -----------   ------------                -----------    -----------
             11,616,865       3.44                    11,616,865          3.44
            ===========   ============                ===========    ===========


                                      F-21
<PAGE>

Transactions involving warrants are summarized as follows:

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

   Outstanding at January 1, 2004                832,510           $    .82
      Granted                                 16,831,199                .47
      Exercised                               (6,600,778)               .50
      Canceled or expired                             --                 --
                                              ----------           --------
   Outstanding at December 31, 2004           11,062,931                .48
      Granted                                    757,464                .44
      Exercised                                  (80,000)               .05
      Canceled or expired                       (123,530)              2.00
                                              ----------           --------
   Outstanding at December 31, 2005           11,616,865           $    .46
                                              ==========           ========

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:

                                                       2005           2004
                                                       ----           ----
 Significant assumptions (weighted-average):
     Risk-free interest rate at grant date             3.75%          3.75%
     Expected stock price volatility                93% to 179%   163% to 262%
     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  $279,711  and $406,571  during the years
ended December 31, 2005 and 2004, respectively.

The Company  also  capitalized  financing  costs of $0 and $397,394 for warrants
granted in connection  with  placement of  convertible  debentures for the years
ended December 31, 2005 and 2004, respectively.

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

                                      F-22
<PAGE>

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.

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.

During the three  months ended March 31, 2005,  the Company  issued  warrants to
purchase  268,033  shares of common stock at prices ranging from $0.125 to $1.00
to consultants for services performed. The Company valued these warrants using
the  Black-Scholes  valuation  model,  and  charged  the amount of  $137,049  to
operations during the twelve months ended December 31, 2005.

                                      F-23
<PAGE>

During the three  months  ended June 30, 2005,  the Company  issued  warrants to
purchase 366,814 shares of common stock at prices ranging from $0.038 to $1.00
per share to consultants and advisory board members.  The Company also cancelled
warrants  to  purchase  123,530  shares of common  stock at a price of $2.00 per
share.   The  Company  valued  these  issuance  and   cancellations   using  the
Black-Scholes  valuation model, and charged the amount of $103,772 to operations
during the twelve months ended December 31, 2005.

Also during the three months ended June 30,  2005,  warrants to purchase  80,000
shares of common stock at a price of $0.05 per share were exercised.

During the three months ended September 30, 2005, the Company issued warrants to
purchase 77,250 shares of common stock at prices ranging from $0.125 to $1.00
per share to consultants  and advisory  board members.  The Company valued these
warrants  using the  Black-Scholes  valuation  model,  and charged the amount of
$20,491 to operations during the twelve months ended December 31, 2005.

In October and December  2005, the Company  issued  warrants to purchase  62,467
shares of common stock at prices ranging from $0.125 to $1.00 to consultants and
advisory board members for services provided.  The Company valued these warrants
using the  Black-Scholes  valuation  model, and charged the amount of $18,399 to
operations during the twelve months ended December 31, 2005.


NOTE J - COMMITMENTS AND CONTINGENCIES

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

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, 2007. Our rent expense is $2,320 per
month in year one and will  increase to $2,380 in year two. 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.

Rent expense amounted to $27,785 for the years ended December 31, 2005,  $41,051
for the year ended  December 31, 2004,  and $102,939 for the period from October
30, 2002 (inception) through December 31, 2005.

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

The  Company  has  employment  agreements  with all of its  President  and Chief
Executive  Officer  (See Note F). 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 also has a
severance  agreement  and a  change  of  control  agreement  in  place  with its
President and Chief Executive Officer.

The Company also has an employment  agreement with its Chief  Financial  Officer
which provide salary and benefit provisions.

The  Company has  consulting  agreements  with  outside  contractors  to provide
marketing and financial and  scientific  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 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.

The judgment was subsequently settled in full for a cash payment of $35,107 paid
on August 2, 2005 releasing us from all obligations under the judgment.

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.


                                      F-24
<PAGE>

NOTE K - 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  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  $4,970,000 which expire through 2026, subject to limitations
of Section 382 of the Internal Revenue Code, as amended.  The deferred tax asset
related  to the  carryforward  is  approximately  $1,740,000.  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, 2005 are as follows:

Non Current:
       Net operating loss carryforward    $1,740,000
       Valuation allowance                (1,740,000)
                                         -----------
       Net deferred tax asset            $        --
                                         ===========

NOTE L - LOSSES PER COMMON SHARE

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


                                                           For the Period
                                                           From October 30,
                                                           2002 (Date of
                                                           Inception) Through
                                  2005           2004      December 31, 2005
                              ------------  -------------  ------------------
Net loss available to
   common shareholders       $ (4,591,107)    (5,305,407)  $(11,799,134)
                              ============   ============   =============
Basic and fully diluted
   loss per share            $      (0.07)  $      (0.16)  $      (0.30)
                              ============   ============   ============
Weighted average common
  shares outstanding           67,691,598      33,510,168    38,934,503
                              ============   ============   ============


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.

At  December  31,  2005  and  2004,   there  were   11,680,077  and  11,380,173,
respectively,  shares of common  stock  issuable  subject to stock  options  and
warrants.  These shares were excluded from the  computation  of diluted net loss
per share as their effect was antidilutive.  If we had reported net income,  the
calculation  of these per share amounts would have included the dilutive  effect
of these common stock equivalents using the treasury stock method.

NOTE M - SUBSEQUENT EVENTS

On March 10, 2006 we issued to our Chief  Financial  Officer,  John N. Fermanis,
100,000 registered common stock per the terms of his employment agreement.

From the period of January 1, 2005 to March 20, 2005, we accrued the issuance of
1,214,493 shares of common stock and warrants to purchase an additional  478,213
shares of common stock pursuant to a penalty calculation with regard to the late
registration of shares sold in a private  placement in October 2004. As of March
20, 2005,  we are  required to issue an  additional  6,456,800  shares of common
stock and  additional  warrants to  purchase  2,542,400  shares of common  stock
pursuant to the late registration penalty.

                                      F-25
<PAGE>




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

None.

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 that
evaluation,  our Chief Executive  Officer and Chief Financial  Officer concluded
that our  disclosure  controls  and  procedures  are  effective  in enabling the
Company to record,  process,  summarize  and report  information  required to be
included in the Company's periodic SEC filings within the required time period.

         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, 2005 that has  materially  affected,  or is  reasonably  likely to
materially affect, our internal control over financial reporting.

ITEM 8B.  OTHER INFORMATION

None.

                                       48
<PAGE>

                                    PART III


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

      Our directors and executive officers are:

Name                     Age     Position
--------------------------------------------------------------------------------
Michael K. Wilhelm        38     President, Chief Executive Officer and Director
John N. Fermanis          52     Chief Financial Officer
Mark L. Witten, Ph.D.     52     Director
Theodore E. Staahl, M.D.  61     Director

         MICHAEL K. WILHELM,  PRESIDENT,  CHIEF EXECUTIVE  OFFICER AND DIRECTOR.
Mr. Wilhelm has served as our President and Chief  Executive  Officer and on our
Board of Directors since July 2003 and as President and Chief Executive  Officer
of  ImmuneRegen  BioSciences,  Inc.  since  December  2002  and on its  Board of
Directors  since November  2002.  Mr. Wilhelm has been actively  involved in the
financial industry since 1990. After leaving the brokerage industry, Mr. Wilhelm
founded  Foresight Capital Partners in July 1996, a company designed to identify
early stage  companies  with above average  growth  potential and assist them in
reaching the next stage of  development.  In working with these  companies,  Mr.
Wilhelm  took  an  active  role,  provided  advisory  services  and  facilitated
financing  for  continued  growth and  development.  Mr.  Wilhelm  was  Managing
Director of Foresight Capital Partners until December 2002. Mr. Wilhelm works on
average 70 hours per week.

         JOHN N. FERMANIS,  CHIEF FINANCIAL OFFICER.  Mr. Fermanis was appointed
as our Chief Financial Officer,  effective as of December 22, 2004. Mr. Fermanis
is  a  co-founder  of  AMPS  Wireless  Data,  Inc.,  a  privately  held  Arizona
corporation  founded in 1998,  where he served as Chief  Financial  Officer from
May, 2001 to October, 2004. Mr. Fermanis had overall financial responsibility at
AMPS and was  instrumental in raising over $5 Million in venture  capital.  From
1997 to 2001, he held the position of Treasury Manager for Peter Piper,  Inc., a
national  restaurant chain  headquartered in Scottsdale,  Arizona,  where he was
responsible  for  managing  a $25  Million  revolving  line of  credit  and cash
concentration  and  disbursement  for a company  with over $100  Million  annual
sales.  Mr. Fermanis has over 18 years of financial  management  experience with
both the  American  Express  Corporation  and  Citigroup  in New York City.  Mr.
Fermanis  holds a Bachelor of Arts degree from the  S.U.N.Y.  at Stony Brook and
attended Pace  University's  Graduate School of Management in New York City. Mr.
Fermanis works on average 60 hours per week.

         THEODORE E. STAAHL, M.D., DIRECTOR.  Dr. Staahl has served on our Board
of Directors  since April 2003. Dr. Staahl is employed at the Cosmetic,  Plastic
and  Reconstructive  Surgery  Center,  a company  which he founded in 1978.  Dr.
Staahl's  professional  training was received at the  University of Illinois and
the  University  of Wisconsin  and is board  certified by the American  Board of
Facial, Plastic and Reconstruction  Surgeons, the Board of Cosmetic Surgeons and
the American Board of Head and Neck Surgeons. Dr. Staahl has presented papers at
national and  international  meetings on hair transplant,  rhinoplasty and cleft
lip deformities. Dr. Staahl devotes on average 3 hours per week to our business.

         MARK L. WITTEN, PH.D.,  DIRECTOR. Dr. Witten has served on our Board of
Directors  since  July  2003  and has  served  on the  Board  of  Directors  for
ImmuneRegen  BioSciences,  Inc.  since  November  2002.  Dr.  Witten served as a
research scientist for ImmuneRegen BioSciences,  Inc. from July 2003 to February
2006. Dr. Witten has served as a Research Professor at the University of Arizona
since July 2000.  Since July 1998 Dr.  Witten has served as the  Director of the
Joan B. and Donald R.  Diamond  Lung  Injury  Laboratory  in the  Department  of
Pediatrics at the University of Arizona College of Medicine. Dr. Witten obtained
his Ph.D. from Indiana  University in 1983 with a double major in physiology and
exercise  physiology.  He conducted a  post-doctoral  fellowship in  Respiratory
Sciences at the University of Arizona  College of Medicine from 1983 to 1988. He
then spent two years as an Assistant Biologist at Massachusetts General Hospital
and  Instructor  in  Medicine  at Harvard  Medical  School.  He  returned to The
University of Arizona  College of Medicine in 1990. Dr. Witten has authored over
200 published  manuscripts,  book chapters and abstracts.  Dr. Witten devotes on
average 3 hours per week to our business.

There are no family relationships among the directors and executive officers.

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

         Section  16(a) of the  Securities  Exchange  Act of 1934  requires  the
Company's  directors  and  executive  officers and persons who own more than ten
percent of a registered  class of the Company's  equity  securities to file with
the SEC initial  reports of  ownership  and reports of changes in  ownership  of
Common Stock and other equity  securities of the Company.  Officers,  directors,
and greater than ten percent  stockholders  are required by SEC  regulations  to
furnish the Company  with  copies of all Section  16(a) forms they file.  To the

                                       49
<PAGE>

Company's  knowledge,  based  solely  on review  of the  copies of such  reports
furnished  to us during the fiscal year ended  December  31,  2005,  all Section
16(a) filing requirements  applicable to the Company's  officers,  directors and
greater than ten percent stockholders were satisfied by such persons.

COMMITTEES OF THE BOARD OF DIRECTORS

         Our Board of Directors does not maintain a separate  audit,  nominating
or compensation  committee.  Functions  customarily performed by such committees
are  performed  by our board of  directors  as a whole.  We are not  required to
maintain such  committees  under the  applicable  rules of the  Over-the-Counter
Bulletin Board. None of our independent directors qualify as an "audit committee
financial expert" as that term is defined in Item 401(e) of Regulation S-B.

ITEM 10. EXECUTIVE COMPENSATION

         The following table sets forth information  concerning the compensation
earned by our Chief Executive  Officer and each of the other executive  officers
who served during the year ended  December 31, 2005, and whose annual salary and
bonus during the fiscal years ended  December 31, 2003,  2004 and 2005  exceeded
$100,000 (the "Named Executive Officers").

<TABLE>
<CAPTION>
                                                                                 ANNUAL COMPENSATION
                                                                          -------------------------------

                  NAME AND PRINCIPAL POSITION                  YEAR        SALARY ($)          BONUS ($)
-----------------------------------------------------------------------------------------------------------
<S>                                                            <C>         <C>                 <C>

     Michael K. Wilhelm(1)                                        2005         275,000            28,870(2)
        Chief Executive Officer and President                     2004         175,000           247,301(3)
                                                                  2003         125,000                 0

     John N. Fermanis                                             2005         161,416(5)          4,590(6)
        Chief Financial Officer (4)                               2004               0                 0
                                                                  2003               0                 0
</TABLE>
----------

(1)   Michael K. Wilhelm has served as Chief Executive  Officer and President of
      IR BioSciences Holdings,  Inc. since July 2003 when the Reorganization was
      completed.  Prior to the  completion of the  Reorganization,  Mr.  Wilhelm
      served  as  Chief   Executive   Officer  and   President  of   ImmuneRegen
      BioSciences,  Inc.  since December 2002.  Mr.  Wilhelm's  compensation  is
      reported in the table with respect to his positions at both IR BioSciences
      Holdings,  Inc.  and  ImmuneRegen  BioSciences,  Inc.  for the years ended
      December 31, 2003, 2004 and 2005.

(2)   Reflects  the value of 80,811  warrants  granted to Michael K.  Wilhelm as
      performance bonuses per his employment agreement. In May 2005, the Company
      issued a warrant to Mr. Wilhelm to purchase 80,811 shares  (post-split) of
      common  stock at a price of $0.30  per  share  (post-split).  The  Company
      valued  these  warrants  using the  Black-Scholes  model,  and charged the
      amount of $28,870 to operations  during the twelve  months ended  December
      31, 2005.

(3)   Reflects  the value of 948,980  warrants  granted to Michael K. Wilhelm as
      performance  bonuses.  In May 2004,  the  Company  issued a warrant to Mr.
      Wilhelm 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 to operations  during the twelve months
      ended  December 31, 2004. In October 2004, the Company issued a warrant to
      Mr. Wilhelm 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.

(4)   John N. Fermanis served as Chief Financial Officer from December 2004.

(5)   Reflects  the value of 100,000  shares of common  stock  issued to John N.
      Fermanis in the three months ended March 31, 2005 as part of  compensation
      per his  employment  agreement.  For the twelve months ended  December 31,
      2005, the Company  charged $35,000 to operations for the issuance of these
      100,000 shares to Mr. Fermanis.

      Also  reflects the value of an additional  100,000  shares of common stock
      issued to John N.  Fermanis  as part of  compensation  per his  employment
      agreement.  The shares  were earned at the rate of 1/12 or 8,333 per month
      beginning January 2005. The Company charged to operations the market value
      of these shares as of the first day of each month.  For the twelve  months
      ended December 31, 2005, the Company charged $41,416 to operations for the
      issuance of 100,000 shares to Mr. Fermanis.

                                       50
<PAGE>

(6)   Reflects  the value of 12,500  warrants  granted  to John N.  Fermanis  as
      performance bonuses per his employment agreement. In May 2005, the Company
      issued a warrant to Mr. Fermanis to purchase 12,500 shares of common stock
      at a price of $0.31 per share. The Company valued these warrants using the
      Black-Scholes model, and charged the amount of $4,590 to operations during
      the twelve months ended December 31, 2005.

COMPENSATION OF DIRECTORS

         STANDARD ARRANGEMENTS. Directors currently receive no cash compensation
from IR BioSciences Holdings, Inc. for their services as members of the Board or
for  attendance at committee  meetings.  Members of the Board are reimbursed for
some expenses in connection with attendance at Board and committee meetings.

         OTHER  ARRANGEMENTS.  We may  from  time  to  time  issue  warrants  to
executives and directors for fulfilling certain performance goals.

         On December 16, 2002 we entered into consulting agreements Mark Witten,
our chief  research  scientist and director.  The  consulting  agreement is on a
month-to-month  basis.  Under the terms of this agreement,  Dr. Witten agrees to
place at the disposal of us his judgment and expertise in the area of acute lung
injury.  In  consideration  for  these  services,  we agree to pay Dr.  Witten a
non-refundable  fee of $5,000 per month. This contract was terminated  effective
February 1, 2006.

EMPLOYMENT AGREEMENTS

         On August 10, 2005, we entered into a new employment agreement with our
President  and Chief  Executive  Officer,  Michael K.  Wilhelm.  The  employment
agreement calls for a salary at the rate of $275,000 per annum.  The salary will
be subject to  adjustment  of at least 10% per year at the end of each year.  We
also agreed to defend and  indemnify,  to the fullest  extent  permitted  by our
certificate of  incorporation  and bylaws and the Delaware  General  Corporation
Law, Mr.  Wilhelm and hold him  harmless  against any  liability  that he incurs
within the scope of his  employment  under the  agreement.  The  agreement  also
provides for the following various bonus incentives:

         (i)      A target incentive bonus in cash and/or stock if we consummate
                  a  transaction  with any  unaffiliated  third party such as an
                  equity  or debt  financing,  acquisition,  merger ,  strategic
                  partnership or other similar transaction.

         (ii)     A one time grant of an  incentive  option to purchase  103,030
                  shares of the  Company's  Common Stock,  at an exercise  price
                  equal to the fair market value per share on the date option is
                  granted and a nonstatutory option to purchase 1,896,970 shares
                  at such time that the Company's  2003 Stock Plan is amended to
                  authorize additional shares.

         In connection  with Mr.  Wilhelm's new  employment  agreement,  we also
entered into a change of control agreement and a severance agreement with him on
August 10, 2005.  Under the change of control  agreement,  Mr.  Wilhelm shall be
entitled  to a  continuation  of his  base  salary  for a  period  of 18  months
following  an  involuntary  termination,  which  means,  at any time within that
period which is one-year from the change of control date  (including such date),
the termination of the employment of Mr. Wilhelm (i) by us without cause or (ii)
due to  constructive  termination,  as such  terms are  defined in the change of
control  agreement.  Further,  in the event of an involuntary  termination,  the
agreement  provides  that we shall pay Mr.  Wilhelm  a lump sum  amount in cash,
equal  to the  sum of (i) any  unpaid  incentive  compensation  which  has  been
allocated  or  awarded  to Mr.  Wilhelm  for a  completed  fiscal  year or other
measuring period preceding the date of involuntary  termination under any annual
or  long-term   incentive  plan  and  which,  as  of  the  date  of  involuntary
termination,  is contingent only upon the continued employment of Mr. Wilhelm to
a  subsequent  date,  and (ii) a pro  rata  portion  to the date of  involuntary
termination  of the aggregate  value of all  contingent  incentive  compensation
awards to Mr.  Wilhelm  for all then  uncompleted  periods  under any such plan.
Further,  100% of the unvested portion of each outstanding  stock option granted
to Mr. Wilhelm shall be accelerated so that they become immediately  exercisable
upon the date of involuntary termination.

         Under the  severance  agreement,  Mr.  Wilhelm  shall be  entitled to a
continuation  of  his  base  salary  for a  period  of 18  months  following  an
involuntary  termination,  which means the  termination of the employment of Mr.
Wilhelm (i) by us without cause or (ii) due to constructive termination, as such
terms  are  defined  in the  severance  agreement.  Further,  in the event of an
involuntary termination, the agreement provides that we shall pay Mr. Wilhelm an
amount equal to the amount of executive incentive pay (bonus) that he would have
received for the year in which the involuntary  termination  occurred had he met
one hundred  percent (100%) of the target for such  incentive  pay. Also,  under
this agreement,  100% of the unvested portion of each  outstanding  stock option
granted to Mr.  Wilhelm  shall be  accelerated  so that they become  immediately
exercisable upon the date of involuntary termination.

                                       51
<PAGE>

         On February 15, 2005, we entered into an employment agreement with John
N. Fermanis,  our Chief Financial Officer.  The employment  agreement expires on
December  31,  2007,  unless  terminated  earlier  pursuant  to the terms of the
agreement. Under the terms of the employment agreement, Mr. Fermanis is entitled
to a base salary of $60,000 until the company completed a funding of $500,000 or
more  which  occurred  on  March 4,  2005,  at which  time the base  salary  was
increased to $85,000 until December 31, 2005. Thereafter, the second year salary
will be  $98,000  per annum  and the third  year  will be  $112,000  per  annum.
Severance provisions include two months salary for termination for cause and six
months salary for constructive termination. This agreement also provides for the
following various bonus incentives:

         (i)      A quarterly  discretionary bonus based upon our performance in
                  the previous quarter.  This discretionary bonus will be in the
                  form of stock options.

         (ii)     A quarterly  five-year warrant to purchase up to 12,500 shares
                  of our  common  stock at 75% of the fair  market  value of the
                  stock on the date the warrant is granted.


STOCK OPTIONS

         We issued 253,030 stock options to our Chief Executive Officer, Michael
Wilhelm, during the fiscal year ended December 31, 2005.

OPTIONS GRANTED IN THE YEAR ENDED DECEMBER 31, 2005

         The following table sets forth information concerning individual grants
of stock options in 2005 to the Named Executive Officers:


<TABLE>
<CAPTION>

                                            Individual Grants
                         --------------------------------------------------------  Potential Realizable
                                                                                     Value at Assumed
                          Number of                                                Annual Rates of Stock
                          Securities    Percent of                                  Price Appreciation
                          Underlying   Total Options   Exercise or                  for Option Term(1)
                           Options      Granted to     Base Price    Expiration
Name                       Granted       Employees      Per Share       Date         5%           10%
--------------------------------------------------------------------------------------------- -------------
<S>                       <C>           <C>            <C>            <C>        <C>          <C>
Michael K. Wilhelm          103,030           40.6%    $     0.33       8/10/10   $  9,394    $    20,757
                            150,000           59.0           0.44       5/20/10     18,235         40,294
</TABLE>

(1) In order to comply with the rules of the SEC, we are  including the gains or
    "option  spreads" that would exist for the respective  options we granted to
    the Named  Executive  Officers.  We  calculated  these  gains by assuming an
    annual compound stock price  appreciation of 5% and 10% from the date of the
    option grant until the  termination  date of the option,  which is the fifth
    anniversary of the grant date.  These gains do not represent our estimate or
    projection of the future price of the ordinary shares.

OPTIONS EXERCISES AND OPTIONS VALUES FOR YEAR ENDED DECEMBER 31, 2005

The following table sets forth  information  concerning option exercises in 2005
and option values as of December 31, 2005 to the Named Executive Officers:

<TABLE>
<CAPTION>

                                              Number of Securities              Value of Unexercised
                                            Underlying Unexercised             In-the-Money Options
                    Shares                 Options at Fiscal Year-End          at Fiscal Year-End (1)
                   Acquired             --------------------------------------------------------------------
                      on       Value
Name               Exercise  Realized   Exercisable        Un-exercisable   Exercisable   Un-exercisable
----------------------------------------------------------------------------------------------------------
<S>                <C>        <C>         <C>              <C>             <C>          <C>
Michael K.            --       $ --       253,030                --          $  --        $     --
   Wilhelm

</TABLE>
(1) The  value of  unexercised  "in-the-money"  options  is based on a price per
    share of $0.32, which was the price of a share as quoted on the OTC Bulletin
    Board at the close of business  on December  31,  2005,  minus the  exercise
    price, multiplied by the number of shares underlying the option.

                                       52
<PAGE>

2003 STOCK OPTION, DEFERRED STOCK AND RESTRICTED STOCK PLAN

         We 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
3,600,000 shares.  The options will have a term not to exceed ten years from the
date of the grant.

         At December  31,  2005,  an  aggregate  of 254,030  stock  options were
outstanding  under the Plan at prices ranging from $0.31 to $0.44 per share.  At
such date, there were 201,996 stock options  available for grant.  Further,  the
Board  approved a one time grant of an incentive  option to our Chief  Executive
Officer to purchase  1,896,970  shares at the fair market value per share on the
date the option is granted.  The options  shall be granted at such time that the
Company's 2003 Stock Plan is amended to authorize additional shares.

         During the fiscal year ended December 31, 2005,  150,000  discretionary
incentive stock options were granted to our Chief Executive Officer,  Michael K.
Wilhelm,  per his  employment  agreement.  The options have an exercise price of
$0.44 and a term of five  years.  Additionally,  the Board  approved  a one time
grant of an incentive option to our Chief Executive  Officer to purchase 103,030
shares of the  Company's  Common  Stock.  The options have an exercise  price of
$0.33 and a term of five years.  Further,  our Board of Directors approved a one
time grant of a  nonstatutory  option to purchase  1,896,970  shares at the fair
market  value per share on the date the option to our Chief  Executive  Officer,
Michael K. Wilhelm.  These warrants will be granted such time that the Company's
2003 Stock Plan is amended to authorize additional shares.

         Through  December  31, 2003,  we had granted,  prior to the merger with
ImmuneRegen  BioSciences,  Inc., options to purchase 63,212 shares of our common
stock at a  weighted  average  exercise  price of $25.00  per  share to  certain
employees and  consultants  that are  exercisable  over various  periods through
March 2010.  These stock options were granted  outside of our 2003 Stock Option,
Deferred Stock and Restricted Stock Plan.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following  table sets forth  information  regarding the  beneficial
ownership of our common stock as of March 10, 2006 by: (i) all those known by IR
BioSciences Holdings,  Inc. to be beneficial owners of more than five percent of
its common stock,  (ii) each director and  executive  officer of IR  BioSciences
Holdings, Inc., and (iii) all executive officers and directors of IR BioSciences
Holdings,  Inc. as a group.  Unless indicated below, the address for each listed
stockholder is c/o IR BioSciences Holdings,  Inc., 4021 North 75th Street, Suite
201, Scottsdale, Arizona 85251.

Name                               Beneficial Ownership (1)   % of Shares (2)
--------------------------------------------------------------------------------
Michael K. Wilhelm                         8,132,814(3)            11.4
John N. Fermanis                             117,500(4)               *
Mark L. Witten                             9,501,138(5)            13.5
Theodore Staahl                            3,489,464(6)             5.0
David T. Harris                            5,066,138                7.3
All executive officers and
  directors as a group (4 persons)        21,240,916(7)            29.3
                                          ==========               ====

* Less than one percent.

1.     Beneficial  ownership is determined  in accordance  with the rules of the
       Securities and Exchange  Commission.  In general, a person who has voting
       power or  investment  power  with  respect  to  securities  is treated as
       beneficial  owner of those  securities.  Common shares subject to options
       and warrants currently exercisable or exercisable within 60 days of March
       10, 2006 count as outstanding  for computing the percentage  beneficially
       owned by the person holding these options or warrants.

2.     Percentages are based on 69,536,319 shares of common stock outstanding as
       of March 20, 2006.

3.     Includes 1,788,718 shares of common stock underlying warrants and 253,030
       shares of common stock underlying options that are currently  exercisable
       or  exercisable  within 60 days of March  10,  2006.  Includes  4,066,138
       shares of common stock  purchase  warrants  issued to  Foresight  Capital
       Partners,  a company  controlled  by Michael  Wilhelm that are  currently
       exercisable or exercisable within 60 days of March 10, 2006.

4.     Includes  17,500  shares of common  stock  underlying  warrants  that are
       currently  exercisable or  exercisable  within 60 days of March 10, 2006.
       Includes  100,000  shares of Common Stock that have been  approved by the
       Board of Directors for issuance; however, have not yet been issued.

                                       53
<PAGE>

5.     Includes  712,000  shares of common stock  underlying  warrants  that are
       currently exercisable or exercisable within 60 days of March 10, 2006.

6.     Includes  238,000  shares of common stock  underlying  warrants  that are
       currently  exercisable or  exercisable  within 60 days of March 10, 2006.
       Includes  93,300  shares of Common  Stock that have been  approved by the
       Board of Directors for issuance; however, have not yet been issued.

7.     Includes 2,721,218 shares of common stock underlying warrants and 253,030
       shares of common stock underlying options that are currently  exercisable
       or  exercisable  within 60 days of March  10,  2006.  Includes  4,101,138
       shares of common stock underlying third party warrants that are currently
       exercisable or exercisable within 60 days of March 10, 2006.


SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

         The  following  table  provides  information  as of  December  31, 2005
regarding  compensation plans (including individual  compensation  arrangements)
under which equity  securities of our company are authorized  for issuance.  All
share information  included in this table has been adjusted to reflect a 2-for-1
forward stock split of our common stock that was effected in April 2004.

<TABLE>
<CAPTION>
                                                                                  Number of securities
                                                                               remaining available for
                           Number of Securities to be     Weighted- average    future issuance under equity
                            issued upon exercise of      exercise price of         compensation plans
                             outstanding options,      outstanding options,       (excluding securities
      Plan Category           warrants and rights       warrants and rights      reflected in column (a)
                                      (a)                       (b)                        (c)
-----------------------------------------------------------------------------------------------------------
<S>                         <C>                         <C>                    <C>

Equity compensation
plans approved by
security holders........             254,030(1)                     $0.39                  201,966(3)

Equity compensation
plans not approved by
security holders........          11,680,077(2)                     $0.59                       --

Total...................          11,934,107                                               201,966
                                  ==========                                               =======
</TABLE>

(1) Represents  254,030  stock  options  at a  weighted  average  price of $0.39
    outstanding under our 2003 Stock Option, Deferred Stock and Restricted Stock
    Plan.

(2) Represents 11,616,865 stock purchase warrants at a weighted average price of
    $0.46 and 63,212, options at a weighted average exercise price of $25.00.

(3) Represents  201,996 shares are available for future  issuance under our 2003
    Stock Option, Deferred Stock and Restricted Stock as of the date hereof.

    Further,  the Board approved a one time grant of an incentive  option to our
     Chief Executive Officer,  Michael K. Wilhelm,  to purchase 1,896,970 shares
     at the fair market  value per share on the date the option is granted.  The
     options shall be granted at such time that the Company's 2003 Stock Plan is
     amended to authorize additional shares.

WARRANTS

         The  following  table  summarizes  the changes in warrants  outstanding
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.

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

   Outstanding at January 1, 2004                832,510           $    .82
      Granted                                 16,831,199                .47
      Exercised                               (6,600,778)               .50
      Canceled or expired                             --                 --
                                              ----------           --------
   Outstanding at December 31, 2004           11,062,931                .48
      Granted                                    757,464                .44
      Exercised                                  (80,000)               .05
      Canceled or expired                       (123,530)              2.00
                                              ----------           --------
   Outstanding at December 31, 2005           11,616,865           $    .46
                                              ==========           ========

         A description of our warrant arrangements and issuances are included in
our financial  statements  for the year ended  December 31, 2005 under "Note I -
Stock Options and Warrants,"

                                       54
<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

IMMUNEREGEN BIOSCIENCES, INC.

         ImmuneRegen  BioSciences,  Inc.  is a  wholly-owned  subsidiary  of  IR
BioSciences  Holdings,  Inc.  IR  BioSciences  Holdings,  Inc.  and  ImmuneRegen
BioSciences,  Inc.  have  interlocking  executive  positions  and  share  common
ownership.

IMMUNEREGEN BIOSCIENCES ASIA PTE. LTD.

         ImmuneRegen   BioSciences  Asia  PTE.  LTD.   ("ImmuneRegen  Asia"),  a
Singaporean  company,  is  an  affiliate  of  IR  BioSciences   Holdings,   Inc.
Approximately  94% of the company is owned equally  between our Chief  Executive
Officer and Chairman,  Michael K. Wilhelm,  and our  Director,  Mark Witten.  IR
BioSciences Holdings,  Inc. holds less than 1% ownership in the company. For the
three month period ended  December  31, 2005,  we incurred no expenses.  For the
period of  inception  (October  30,  2002) to  December  31,  2005,  we incurred
expenses  totaling  approximately   $133,781,   $114,660  on  a  Singapore-based
consultant  and  $19,121  on  travel  regarding  corporate  development  and the
attendance of symposiums and conferences.

         In November 2003, based on observations  made during early  preclinical
animal model studies we approached Ever  Progressing  System PTE LTD ("EPS"),  a
Singapore based contract research  organization (CRO), in an attempt to increase
our market  presence,  attract  potential  funding  sources for our research and
development efforts and to identify and receive governmental grants. EPS advised
us that a presence in  Singapore  would be desirable if we wanted to pursue such
efforts in Singapore and elsewhere in Asia.

         Acting on their advice, we incorporated,  under the Singapore Companies
Act, ImmuneRegen Asia on June 5, 2004 and retained a Singapore-based  consultant
to assist us in (i) the  development  and set-up of our  Singapore  corporation;
(ii)  increasing  our  visibility  in Asia through  attendance  of  conferences,
meetings,   symposiums,   etc.;  (iii)  reaching  out  to  contacts  in  various
governmental organizations; and, (iv) contact bankers, institutional and private
sources of funds for  start-up  costs,  research  and  development  and  working
capital related to ImmuneRegen Asia.

         Between  November 2003 and January 2005, we held  discussions  with the
Economic  Development  Board of Singapore  ("EDB") to assist in  establishing  a
research and development  and clinical trials presence in Singapore.  In October
2004,  our   Singapore-based   consultant  and  representatives  of  ImmuneRegen
BioSciences,  Inc. met with several members of Thailand's  Department of Disease
Control,  Ministry  of Public  Health in  Bangkok.  Also in  October  2004,  our
Singapore-based  consultant  met with  various  departments  of the  Philippines
Department of Health in Manila.

         By April  2005,  our  efforts to further  discussions  with the EDB and
other   governmental   agencies  and  to  secure  adequate  funding  had  proven
unsuccessful.  At that  time our  Board of  Directors  opted  to  terminate  the
Singapore-based  consultant,  dissolve  ImmuneRegen Asia and focus solely on our
United States  operations.  We have since abandoned all discussions with EPS the
EDB and  other  governments  in Asia  regarding  our  research  and  development
activities.

         Dissolution  of  ImmuneRegen  Asia  of  which  we  own  less  than a 1%
interest,  has been initiated pursuant to the requirements of Section 344 of the
Singapore  Companies Act.  ImmuneRegen Asia has not conducted any business since
its  creation  in May 2004,  and is expected  to satisfy  the  requirements  for
dissolution with completion of the process  anticipated in the near future. Upon
adequate  and  sufficient  showing  to the  Singapore  Registrar  of  Companies,
ImmuneRegen  Asia will be struck off the register of  companies  and the company
will be dissolved. Shareholder and Board approval have occurred and the required
documents are being filed with the registrar of companies in Singapore.



OFFICE LEASE

         During the period from  December 1, 2002 through  August 31, 2004,  the
Company leased office space from an entity controlled by the our 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.

INONE CONTRACT

         We have  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 Michael  Wilhelm,  the  Company's  CEO.  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

                                       55
<PAGE>

for 72,000 shares (post split) of our common stock and $15,000.  This  Agreement
also  provides  that  InOne  will  bill us 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 our website
for one year in exchange for 140,000 shares (post split) of our common stock and
$4,200;  (iii) an Agreement  dated December 30, 2003 whereby InOne will name and
design a logo for respiratory infectious diseases,  such as SARS (Viprovex),  in
exchange for $5,000 and a warrant to purchase 20,000 shares  (post-split) of our
common  stock at a price of $0.125;  (iv) an Agreement  dated  December 31, 2003
whereby  InOne will name and design a logo for Acute  Radiation  Syndrome  (ARS)
medical  countermeasure  for  radiation  (Radilex)  in exchange for $5,000 and a
warrant to purchase 20,000 shares (post-split) of our common stock at a price of
$0.125.

         At  December  31,  2005,  InOne no longer  employs or has any  business
relationship with the spouse of Mr. Wilhelm.

         The amounts due InOne at December  31, 2005 and 2004 are $0 and $2,700,
respectively.

RELATED PARTY LOANS

         There were no loans to related  parties  entered into during the fiscal
year  ended  December  31,  2005.  Additionally,  there were no loans to related
parties outstanding at December 31, 2005.

LICENSE AGREEMENT

         In December 2002, we entered into a royalty-free license agreement with
David Harris and Mark Witten, who are our two founders and largest shareholders.
Under the terms of the license agreement,  Messrs.  Harris and Witten granted to
us  an  exclusive  license  to  use  and  sublicense  certain  patents,  medical
applications,  and other  technologies  developed by them. Our obligations under
this 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 us the right to market a product, we will
maintain a broad form general liability and product liability insurance.

         In February 2005, Drs. Witten and Harris executed assignment  documents
in which, for good and valuable  consideration,  patent applications and patents
developed by them were assigned to ImmuneRegen BioSciences,  Inc. The assignment
documents  included  all of the  patents  and  patent  applications  which  were
included in and covered by the licensing agreement,  as amended. Drs. Witten and
Harris have also assigned all  proprietary  technology  developed at ImmuneRegen
subsequent to the execution of the February 2005 assignment documents.

         Neither the  termination of Dr. Harris'  consulting  agreement in March
2005 nor the termination of Dr. Witten's  consulting  agreement in February 2006
have any impact on the license agreement.

CONSULTING AGREEMENTS

         On December 16, 2002 we entered into  consulting  agreements with David
Harris and Mark Witten, who were our two founders and research  scientists.  The
consulting  agreements are on a month-to-month  basis.  Under the terms of these
agreements,  Messrs.  Harris and Witten  agreed to place at the  disposal  of us
their judgment and expertise in the area of acute lung injury.  In consideration
for these services, we agreed to pay each of them a non-refundable fee of $5,000
per month.  In March  2005,  Dr.  Harris  resigned as  consultant  to us and our
subsidiaries.  In January 2006,  the company  received  correspondence  from Dr.
Witten stating that he would  terminate his consulting  contract if his specific
requirements  were not met. We subsequently  accepted his termination  effective
February 1, 2006.

         Pursuant to  consulting  agreements  entered into with David Harris and
Mark Witten, who are our two founders and chief research scientists,  during the
period from October 30, 2002 (inception) to December 31, 2002, we accrued $5,000
in consulting fees. During the period from January 1, 2003 to December 31, 2003,
we accrued an additional  $120,000 in consulting  fees. We had accrued  payables
collectively due to Drs. Harris and Witten of $125,000 and $5,000 as of December
31, 2003 and 2002,  respectively.  In  connection  with our  recently  completed
private  offering in October  2004,  $90,500 of such  amount owed to Dr.  Witten
converted  into  724,000  shares of our common  stock and  warrants  to purchase
362,000  shares of common  stock.  In October  2004,  because Dr. Harris had not
taken an active role in the  management of the Company,  he agreed that he would
forgive the amount accrued to him under the Consulting agreement of $107,500. We
accounted for the transaction as a forgiveness of indebtedness under FAS No. 140
during the period ended December 31, 2004.

                                       56
<PAGE>

DUE TO RELATED PARTIES

         Pursuant to  consulting  agreements  entered into with David Harris and
Mark Witten, who are our two founders and chief research scientists,  during the
period from October 30, 2002 (inception) to December 31, 2002, we accrued $5,000
in consulting fees. During the period from January 1, 2003 to December 31, 2003,
we accrued an additional  $120,000 in consulting  fees. We had accrued  payables
collectively due to Drs. Harris and Witten of $125,000 and $5,000 as of December
31, 2003 and 2002,  respectively.  In  connection  with our  recently  completed
private  offering in October  2004,  $90,500 of such  amount owed to Dr.  Witten
converted  into  724,000  shares of our common  stock and  warrants  to purchase
362,000  shares of common  stock.  In October  2004,  because Dr. Harris had not
taken an active role in the  management of the Company,  he agreed that he would
forgive the amount accrued to him under the Consulting agreement of $107,500. We
accounted for the transaction as a forgiveness of indebtedness under FAS No. 140
during the period ended December 31, 2004.

         As of August 15, 2004, we had accrued payables due to our President and
CEO, Michael  Wilhelm,  of $109,374.  In connection with our recently  completed
private  offering in October  2004,  $89,500 of such amount was  converted  into
716,000 shares of common stock and warrants to purchase 358,000 shares of common
stock.

OUTSTANDING LOANS

         In January  2003,  we were loaned  $15,000 by an  accredited  investor.
Pursuant  to the terms of this  transaction,  we  provided  this  lender  with a
warrant  to  purchase  26,939  shares of our common  stock at a price  $0.17 per
share.  The interest  rate was 8% per annum.  The  principal was repaid in March
2005.  Interest  owed of $2,410.96  was  converted  into 19,288 shares of common
stock per the term of the note.

         Between  August  2001  and  April  2003 we  were  loaned  money  by our
President and Chief Executive  Officer.  We repaid the remaining balance in full
for $4,998  ($3,900  principal  and $1,097  accrued  interest) on April 11, 2005
releasing us from further obligations under the note.

         In September 2001 , we were loaned  $50,000 by an accredited  investor.
On June 7, 2005, the remaining  note in the principal  amount of $50,000 and all
accrued  interest of $15,003 were  converted  into 232,153  shares of our common
stock in accordance with the original terms of the note.



                                       57
<PAGE>


ITEM 13.  EXHIBITS

                                    EXHIBITS

EXHIBIT NUMBER    DESCRIPTION OF EXHIBIT
--------------    --------------------------------------------------------------

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).

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 Common 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).

                                       58
<PAGE>


EXHIBIT NUMBER    DESCRIPTION OF EXHIBIT
--------------    --------------------------------------------------------------

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).

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).

                                       59
<PAGE>

EXHIBIT NUMBER    DESCRIPTION OF EXHIBIT
--------------    --------------------------------------------------------------

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).

10.4(c)           Assignment   Agreement   dated   February   23,  2005  between
                  ImmuneRegen BioSciences,  Inc., a subsidiary of the Registrant
                  and Mark Witten  (incorporated by reference to exhibit 10.4(c)
                  of the Registrant's  registration statement on Form SB-2 (File
                  No.   333-120784)  filed  with  the  Securities  and  Exchange
                  Commission on July 20, 2005).

10.4(d)           Assignment Agreement dated February 23, 2005 among ImmuneRegen
                  BioSciences,  Inc.,  a  subsidiary  of the  Registrant,  David
                  Harris and Mark Witten  (incorporated  by reference to exhibit
                  10.4(d) of the  Registrant's  registration  statement  on Form
                  SB-2  (File No.  333-120784)  filed  with the  Securities  and
                  Exchange Commission on July 20, 2005).

10.4(e)           Assignment   Agreement   dated   November   7,  2005   between
                  ImmuneRegen BioSciences,  Inc., a subsidiary of the Registrant
                  and Mark Witten  (incorporated by reference to exhibit 10.4(e)
                  of the Registrant's  registration statement on Form SB-2 (File
                  No.   333-120784)  filed  with  the  Securities  and  Exchange
                  Commission on November 16, 2005).

10.4(f)           Assignment   Agreement   dated   November   7,  2005   between
                  ImmuneRegen BioSciences,  Inc., a subsidiary of the Registrant
                  and Mark Witten  (incorporated by reference to exhibit 10.4(f)
                  of the Registrant's  registration statement on Form SB-2 (File
                  No.   333-120784)  filed  with  the  Securities  and  Exchange
                  Commission on February 22, 2006).

10.4(g)           Assignment   Agreement   dated   November   7,  2005   between
                  ImmuneRegen BioSciences,  Inc., a subsidiary of the Registrant
                  and Mark Witten  (incorporated by reference to exhibit 10.4(g)
                  of the Registrant's  registration statement on Form SB-2 (File
                  No.   333-120784)  filed  with  the  Securities  and  Exchange
                  Commission on November 16, 2005).

10.4(h)           Assignment   Agreement   dated   November   7,  2005   between
                  ImmuneRegen BioSciences,  Inc., a subsidiary of the Registrant
                  and Mark Witten  (incorporated by reference to exhibit 10.4(h)
                  of the Registrant's  registration statement on Form SB-2 (File
                  No.   333-120784)  filed  with  the  Securities  and  Exchange
                  Commission on November 16, 2005).

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).

                                       60
<PAGE>


EXHIBIT NUMBER    DESCRIPTION OF EXHIBIT
--------------    --------------------------------------------------------------

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).

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).

10.10             Employment  Agreement  dated  February  15,  2005  between the
                  Registrant and John N. Fermanis  (incorporated by reference to
                  exhibit  10.10  of the  Registrant's  Amendment  No. 1 on Form
                  10-K/A to its annual  report for the year ended  December  31,
                  2004).


10.11             Employment  Agreement dated August 10, 2005 by and between the
                  Registrant and Michael K. Wilhelm  (incorporated  by reference
                  to exhibit 10.1 of the  Registrant's  quarterly report on Form
                  10-QSB for the three months ended September 30, 2005).

10.12             Change of  Control  Agreement  dated  August  10,  2005 by and
                  between the Registrant and Michael K. Wilhelm (incorporated by
                  reference to exhibit 10.2 of the Registrant's quarterly report
                  on Form 10-QSB for the three months ended September 30, 2005).

10.13             Severance  Agreement dated November 7, 2005 by and between the
                  Registrant and Michael K. Wilhelm  (incorporated  by reference
                  to exhibit 10.3 of the  Registrant's  quarterly report on Form
                  10-QSB for the three months ended September 30, 2005).

10.14             Authorization  for  Regulatory  Contact dated November 7, 2005
                  between  Immuneregen  BioSciences,  Inc., a subsidiary  of the
                  Registrant,  and Synergos,  Inc. (incorporated by reference to
                  exhibit 10.14 of the  Registrant's  registration  statement on
                  Form SB-2 (File No.  333-120784) filed with the Securities and
                  Exchange Commission on February 22, 2006).

10.15             Proforma   invoice/quotation   dated  November  7,  2005  from
                  Sigma-Aldrich,   Inc.  to  ImmuneRegen  BioSciences,  Inc.,  a
                  subsidiary  of the  Registrant  (incorporated  by reference to
                  exhibit 10.15 of the  Registrant's  registration  statement on
                  Form SB-2 (File No.  333-120784) filed with the Securities and
                  Exchange Commission on November 16, 2005).

                                       61
<PAGE>


EXHIBIT NUMBER    DESCRIPTION OF EXHIBIT
--------------    --------------------------------------------------------------

10.16             Letter of acceptance  dated October 2, 2003,  from  Huntingdon
                  Life Sciences to ImmuneRegen  BioSciences,  Inc., a subsidiary
                  of the Registrant  (incorporated by reference to exhibit 10.16
                  of the Registrant's  registration statement on Form SB-2 (File
                  No.   333-120784)  filed  with  the  Securities  and  Exchange
                  Commission on February 22, 2006).

10.17             Price  Quotation  dated June 27, 2003 received by  ImmuneRegen
                  BioSciences,  Inc., a subsidiary of the Registrant from AppTec
                  Laboratory  Services  (incorporated  by  reference  to exhibit
                  10.17 of the Registrant's  registration statement on Form SB-2
                  (File No.  333-120784)  filed with the Securities and Exchange
                  Commission on February 22, 2006).

10.18             Consulting  Agreement dated March 15, 2005 between ImmuneRegen
                  BioSciences,  Inc., a subsidiary of the Registrant and Dr. Hal
                  Siegel, Ph.D. (Siegel Consultancy)  (incorporated by reference
                  to exhibit 10.18 of the Registrant's registration statement on
                  Form SB-2 (File No.  333-120784) filed with the Securities and
                  Exchange Commission on February 22, 2006).

10.19             Consulting   Agreement   dated   November   3,  2005   between
                  ImmuneRegen BioSciences,  Inc., a subsidiary of the Registrant
                  and Dr. Jack  Caravelli,  Ph.D  (incorporated  by reference to
                  exhibit 10.19 of the  Registrant's  registration  statement on
                  Form SB-2 (File No.  333-120784) filed with the Securities and
                  Exchange Commission on February 22, 2006).

10.20             Consulting  Agreement dated July 29, 2005 between  ImmuneRegen
                  BioSciences,  Inc., a  subsidiary  of the  Registrant  and Dr.
                  Kelly McQueen,  MD, MPH  (incorporated by reference to exhibit
                  10.20 of the Registrant's  registration statement on Form SB-2
                  (File No.  333-120784)  filed with the Securities and Exchange
                  Commission on February 22, 2006).

21.1              Subsidiaries  of  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.

                                       62
<PAGE>

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

         The following table sets forth fees billed to us by our auditors during
the fiscal years ended December 31, 2005 and December 31, 2004 for: (i) services
rendered for the audit of our annual financial  statements and the review of our
quarterly financial statements, (ii) services by our auditor that are reasonably
related to the  performance  of the audit or review of our financial  statements
and that are not reported as Audit Fees,  (iii) services  rendered in connection
with tax  compliance,  tax advice and tax planning,  and (iv) all other fees for
services rendered.

                           December 31, 2005    December 31, 2004
                           --------------------------------------
(i)   Audit Fees                 $67,000              $75,341
(ii)  Audit Related Fees              --                   --
(iii) Tax Fees                    10,000                   --
(iv)  All Other Fees                  --                   --
                           ------------------         -------
      Total fees                 $77,000              $75,341
                           ==================         =======

AUDIT FEES.  Consists of fees billed for professional  services rendered for the
audit of the  Company's  consolidated  financial  statements  and  review of the
interim  consolidated  financial  statements  included in quarterly  reports and
services that are normally  provided by the Company's  certifying  accountant in
connection with statutory and regulatory filings or engagements.

POLICY  ON AUDIT  COMMITTEE  PRE-APPROVAL  OF AUDIT  AND  PERMISSIBLE  NON-AUDIT
SERVICES OF INDEPENDENT AUDITORS

         We currently do not have a designated Audit Committee, and accordingly,
the our Board of Directors'  policy is to pre-approve  all audit and permissible
non-audit  services  provided by the  independent  auditors.  These services may
include audit services, audit-related services, tax services and other services.
Pre-approval  is generally  provided for up to one year and any  pre-approval is
detailed as to the  particular  service or category of services and is generally
subject to a specific  budget.  The  independent  auditors  and  management  are
required to periodically  report to our Board of Directors  regarding the extent
of  services  provided  by the  independent  auditors  in  accordance  with this
pre-approval,  and the fees for the  services  performed  to date.  The Board of
Directors may also pre-approve particular services on a case-by-case basis.


                                       63
<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 March 29, 2006

                          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  March 29, 2006
-----------------------   Director (Principal Executive Officer)
Michael K. Wilhelm

/s/ John N. Fermanis      Chief Financial Officer (Principal      March 29, 2006
-----------------------   Financial and Accounting Officer)
John N. Fermanis

/s/ Theodore E. Staahl    Director                                March 29, 2006
-----------------------
Theodore E. Staahl, M.D.