**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**








**FORM
      10-KSB/AAmendment
      No. 2**








x
              **Annual Report Pursuant to
                Section 13
                or 15(d) of theSecurities
                Exchange Act of 1934****For the fiscal year ended
                December
                31, 2005****OR**o
              **Transition Report Pursuant
                to Section
                13 or 15(d) of the SecuritiesExchange
                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 ofIncorporation
                or Organization)
            
            (I.R.S.
                Employer 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. o.
 
 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
o
 
 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. o
 
 Indicate
          by check mark whether the registrant is a shell company (as defined in
          Rule
          12b-2 of the Exchange Act). Yes oNo 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 year end, 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 o No x











Table
          of Contents
   **Explanatory
            Note**
 In
            response to certain comments raised by the staff of the Securities and
            Exchange
            Commission, the Registrant is filing this Amendment No. 2 on Form 10-KSB/A
            (this
“Amendment”) to its Annual Report on Form 10-KSB for the year ended December 31,
            2005 originally filed with the Securities and Exchange Commission (the
            “Commission”) on March 28, 2006, and as amended by Amendment No. 1 to the Annual
            Report on Form 10-KSB/A filed with the Commission on March 30, 2006 (the
            “Original Form 10-KSB”).  This Amendment contains revisions
            to:
 
 ·
                  Add
                      additional detail for clarification of descriptions of the
                      Registrant’s
                      potential products and development thereof to Business and
                      Management’s
                      Discussion And Analysis Of Financial Conditions And Results
                      Of
                      Operations;
 
 ·
                  Update
                      Risk Factors; and,
 
 ·
                  Update
                      closing sales price, number of shares outstanding and beneficial
                      ownership.
 
 For
            the
            convenience of the reader, this Amendment sets forth the text of the
            Original
            Form 10-KSB in its entirety.  As a result of this Amendment, the
            certifications pursuant to Section 302 and Section 906 of the Sarbanes-Oxley
            Act
            of 2002, filed as exhibits to our 10-KSB have been revised, re-executed
            and
            re-filed as of the date of this Amendment.  All information in this
            amendment is as of the date of the Original Filing and does not reflect
            any
            subsequent information or events occurring after the date of the Original
            Filing, except to reflect the corrections noted above. Accordingly, this
            amendment should be read in conjunction with the Company’s filings made with the
            SEC subsequent to the filing of the Original
            Filing.


Table
          of Contents




**TableOf
          Contents**
 
 **Page****Part
                  I**Item
                  1.     Description of
                  Business
              2Item
                  2.     Description of
                  Property
              25Item
                  3.     Legal
                  Proceedings
              25Item
                  4.     Submission of Matters to a
                  Vote of Security Holders
              25**Part
                  II**Item
                  5.     Market for Registrant's
                  Common Stock and Related Stockholder Matters
              25Item
                  6.     Management's Discussion and
                  Analysis or Plan of Operation
              26Item
                  7.     Financial
                  Statements
              F-1
                  to F-23Item
                  8.     Changes in and Disagreements
                  with Accountants on Accounting and Financial
                  Disclosure
              34Item
                  8A.  Controls and Procedures
              34Item
                  8B.   Other Information
              34**Part
                  III**Item
                  9.     Directors, Executive
                  Officers, Promoters and Control Persons; Compliance with Section
                  16(a) of
                  the Exchange Act
              35Item
                  10.   Executive
                  Compensation
              35Item
                  11.   Security Ownership of Certain
                  Beneficial Owners and Management and Related Stockholder
                  Matters
              38Item
                  12.   Certain Relationships and Related
                  Transactions, And Director Independence
              39Item
                  13.   Exhibits
              42Item
                  14.   Principal Accountant Fees and
                  Services
              45Signatures
              46
 
 
 Table
            of Contents




**FORWARD-LOOKING
        STATEMENTS**
 
 **THIS
        ANNUAL REPORT ON FORM 10-KSB CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE
        RISKS AND UNCERTAINTIES. IN PARTICULAR, STATEMENTS ABOUT OUR EXPECTATIONS,
        BELIEFS, PLANS, OBJECTIVES, ASSUMPTIONS OR FUTURE EVENTS OR PERFORMANCE ARE
        CONTAINED OR INCORPORATED BY REFERENCE IN THIS REPORT. WE HAVE BASED THESE
        FORWARD-LOOKING STATEMENTS ON OUR CURRENT EXPECTATIONS ABOUT FUTURE EVENTS.
        WHILE WE BELIEVE THESE EXPECTATIONS ARE REASONABLE, SUCH FORWARD-LOOKING
        STATEMENTS ARE INHERENTLY SUBJECT TO RISKS AND UNCERTAINTIES, MANY OF WHICH
        ARE
        BEYOND OUR CONTROL. THE ACTUAL FUTURE RESULTS FOR IR BIOSCIENCES HOLDINGS,
        INC.
        MAY DIFFER MATERIALLY FROM THOSE DISCUSSED HERE FOR VARIOUS REASONS, INCLUDING
        THOSE DISCUSSED IN THIS REPORT UNDER THE HEADING "RISK FACTORS," PART II,
        ITEM 6
        ENTITLED "MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION" AND
        ELSEWHERE THROUGHOUT THIS ANNUAL REPORT. GIVEN THESE RISKS AND UNCERTAINTIES,
        YOU ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON SUCH FORWARD-LOOKING
        STATEMENTS. THE FORWARD-LOOKING STATEMENTS INCLUDED IN THIS REPORT ARE MADE
        ONLY
        AS OF THE DATE HEREOF. WE DO NOT UNDERTAKE AND SPECIFICALLY DECLINE ANY
        OBLIGATION TO UPDATE ANY SUCH STATEMENTS OR TO PUBLICLY ANNOUNCE THE RESULTS
        OF
        ANY REVISIONS TO ANY OF SUCH STATEMENTS TO REFLECT FUTURE EVENTS OR
        DEVELOPMENTS. WHEN USED IN THE REPORT, UNLESS OTHERWISE INDICATED, "WE,"
        "OUR,"
        "US," THE "COMPANY" OR "IMMUNEREGEN" REFERS TO IR BIOSCIENCES HOLDINGS, INC.
        AND
        ITS SUBSIDIARY, IMMUNEREGEN BIOSCIENCES, INC.**
    1
 Table
            of Contents






**PART
        I**
 Item
          1. Description of Business
 **Overview**
 
 IR
            BioSciences Holdings, Inc. is a development stage biotechnology company.
            Through
            our wholly-owned subsidiary ImmuneRegen BioSciences, Inc., we are engaged
            in the
            research and development of potential drug candidates, HomsperaTM and its
            derivatives, RadilexTM and ViprovexTM. Our goal is to develop these potential drug
            candidates to be used as possible countermeasures for homeland security
            threats,
            including radiological, chemical and biological agents, such as influenza
            and
            anthrax. We hope there may exist not only a market for products related
            to
            biodefense through governmental purchasing, but there also may exist
            a potential
            commercial market for treatments of cancer treatment side-effects and
            seasonal
            influenza.
 
 Our
            patents, patent applications and continued research are derived from
            discoveries
            made during research studies related to the function of Substance P performed
            before the formation of the Company. These studies were funded by the
            Air Force
            Office of Scientific Research (AFOSR) in the early 1990s and were conducted
            by
            research scientists, including our co-founders Drs. Mark Witten and David
            Harris. In the course of research on Substance P, these scientists created
            a
            number of synthetic analogues, structural derivatives with slight chemical
            differences, for study. One of these, which we have named Homspera, is
            the basis
            for our drug development efforts and our intellectual property. 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. There can be no assurance that our interpretation of the results
            of our
            studies will prove to be accurate after further testing and our beliefs
            regarding the potential uses of our drug candidates may never
            materialize.
 
 Our
            current focus is on the development of two potential formulations derived
            from Homspera, Radilex and Viprovex.
 
 We
            are
            researching Radilex for use as a potential treatment for acute exposure
            to
            radiation. To date we have sponsored seven studies and co-sponsored three
            studies all of which were conducted utilizing rodents. The results of
            these
            studies suggest Radilex may play a role in increased survival among tested
            rodents following exposure to lethal doses of gamma radiation. We believe
            that
            Radilex, if developed, may be an acceptable candidate to be marketed
            to
            governmental agencies for procurement. Further, we believe that a commercial
            market may exist for the use of Radilex as it relates to the treatment
            of
            radiation-induced side effects of cancer treatments, either as a stand
            alone
            treatment or as a co-therapeutic agent to be used with other
            therapies.
 
 Viprovex
            is being researched by us for use in potential treatments of exposure
            to
            biological agents, such as infectious disease, which include influenza
            and
            anthrax. Based on early studies on Homspera and existing literature on
            Substance
            P, we are researching the efficacy of Viprovex as a potential treatment
            for
            exposure to chemical agents, such as formalin. To date we have sponsored
            three
            studies related to the treatment of influenza, three on the exposure
            to anthrax
            spores and one on exposure to formalin. We believe the results of these
            studies
            indicated potential efficacy in the use of Viprovex as both a stand alone
            treatment and an adjuvant, to be used in conjunction with other drugs.
            If
            Viprovex can be developed, we believe that potential applications may
            exist for
            sale to governments for the treatment of exposure to anthrax and pandemic
            influenza. In addition, we believe that potential commercial opportunities
            may
            exist for the treatment of seasonal influenza and other viral or bacterial
            infections, either as a stand-along drug or as an adjuvant to other existing
            drugs.
 
 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.
 
 We
            have
            filed patent applications and provisional patent applications, for the
            use of
            Homspera and derivatives thereof. 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
            potential drug candidates, Radilex and Viprovex, are at early, pre-clinical
            stages of development and may not be shown to be safe or effective and
            may never
            receive regulatory approval. Neither Radilex nor Viprovex have yet been
            tested
            in large animals or 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 such 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 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.
  2
 Table
            of Contents
  **Substance
              P And Homspera**
 
 Our
            patents, patent applications and continued research are derived from
            discoveries
            made during research studies related to the function of Substance P,
            which is
            found in the body and has a large number of actions. These studies, performed
            prior to our formation, were funded by the Air Force Office of Scientific
            Research (AFOSR) in the early 1990s and were conducted by research scientists,
            including our co-founders Drs. Mark Witten and David Harris. In the course
            of
            this research, these scientists created for study a number of analogues,
            or
            structural derivatives with slight chemical differences, of Substance
            P. One of
            these analogues of Substance P, which we have termed Homspera, is the
            basis for
            our research and development of potential drug candidates.
 
 Substance
            P
 
 The
            elements carbon, oxygen, nitrogen and hydrogen can be combined to form
            amino
            acids, a basic building block of life. When amino acids are combined
            through a
            biochemical process they form what are called peptides or proteins. Proteins
            play a number of fundamental roles in living organisms, from structural
            to
            messaging between cells. When components of the nervous system use chemicals
            to
            transmit signals betweennerves and brain cells to
            propagate signaling throughout the body, those chemicals are called
            neurotransmitters. When peptides are released by nerves cells or other
            cells and
            modulate this neurotransmission, they are termed neuropeptides.
 
 One
            such
            neuropeptide is Substance P. Substance P is a relatively small peptide
            made of
            just eleven amino acids. Substance P was discovered in 1931 and found
            to have
            local blood-pressure reducing effects. The peptide is difficult to isolate,
            and
            consequently was ignored for tens of years. When science developed to
            the point
            that peptides could be recognized by their amino acid structures, Substance
            P
            was one of the first identified. The amino acid sequence (using the standard
            three-letter acronyms for amino acids) of Substance P is presented
            below:
 
 Arg-Pro-Lys-Pro-Gln-Gln-Phe-Phe-Gly-Leu-Met-NH2.
 
 Neuropeptides,
            such as Substance P, were originally identified as being distributed
            throughout
            the peripheral and central nervous systems of experimental animals, and
            then of
            humans. To date, Substance P has also been shown to be produced in
            non-neuronal cells such as human endothelial cells, Leydig cells,
            enterochromaffin cells, epithelial cells, fibroblasts, keratinocytes,
            intestinal
            and airway smooth muscle cells, inflammatory and immune cells, and in
            cells of
            the female reproductive system.
 
 In
            early
            research Substance P was revealed as playing a key role in the transmission
            of
            pain. Later on, Substance P was identified as being involved in the
            pathophysiology of psychiatric disorders, like anxiety and depression.
            Additionally, Substance P has been shown to be involved in a number of
            physiological processes, such as blood vessel and smooth muscle contractions,
            and in the levels and responses of the cells of the blood and immune
            system.
 
 Substance
            P produces this wide variety of effects by acting through three different
            molecular receptors, located on the surface membrane of sensitive cells.
            These
            receptors are called NK1, NK2 and NK3 receptors, and binding of Substance
            P to
            one receptor subtype or another will cause different chemical signaling
            to occur
            both inside and outside cells. These receptor binding differences are
            believed
            to be responsible for the different physiological results following the
            stimulation of the different receptor subtypes.
 
 Homspera
 
 Within
            a
            few years following the discovery of the amino acid sequence of Substance
            P,
            numerous synthetic analogues were being produced in an attempt to better
            understand how the structure and function of the molecule were related.
            One
            particular analogue was produced by the replacement of the amino acid
            glycine
            (Gly) with Sarcosine (Sar or N-methyl glycine) at the ninth position
            and the
            introduction of oxidized methionine (Met(O2))
            in place of
            methionine (Met) at the eleventh position. The resulting peptide, still
            11 amino
            acids long, but now with a slightly different molecular weight, is thus
            called
            Sar9,
            Met
            (O2)11-Substance
            P. The
            amino acid sequence for Homspera is presented below:
 
 Arg-Pro-Lys-Pro-Gln-Gln-Phe-Phe-Sar-Leu-Met(O2)-NH2.
 3
 Table
            of Contents
  It
            is
            these specific chemical alterations that are presumably responsible for
            the
            different physiological actions of Homspera versus endogenous Substance
            P. In
            fact, Sar9,
            Met
            (O2)11-Substance
            P was
            first synthesized in an attempt to make chemicals that had specific distinctions
            in their activity from that of the parent Substance P molecule.
 
 Homspera,
            or Sar9,
            Met
            (O2)11-Substance
            P
            differs from Substance P in at least two ways. It is reported to be active
            at
            only the NK1 receptor, and to be more resistant to the enzyme that usually
            breaks down Substance P and thereby terminates its action. Thus Sar9,
            Met (O2)11-Substance
            P is
            both more specific than Substance P, and also more persistent in the
            body.
 
 In
            December 2004 we filed an application with the US Patent and Trademark
            Office in
            an effort to trademark the name Homspera to refer to Sar9,
            Met (O2)11-Substance
            P for
            its potential usage in a number of applications. Our application is still
            pending.
 
 **RadilexTM
            and ViprovexTM**
 
 In
            the
            early AFOSR studies, it was observed that the exposure of animals to
            JP-8 jet
            fuel resulted in pathological changes in the lungs and immune systems
            of those
            exposed. Homspera was administered to the test animals after prolonged
            exposure
            to the jet fuel. Based on the results of these studies, we believe that
            the
            administration of Homspera prevented some of the harmful effects of the
            jet fuel
            exposure in the lungs, as well as having a positive effect on the immune
            system.
            However, there is no guarantee that our interpretation of the results
            of these
            studies will prove to be accurate after further testing.
 
 Based
            on
            our interpretation of these results, our current focus is on the development
            of
            two potential drug applications, Radilex and Viprovex. We have created
            the trade
            names Radilex and Viprovex to more easily differentiate the potential
            applications with respect to their development and potential future market
            opportunities.  Although the active ingredient, Homspera, is
            chemically equivalent in both Radilex and Viprovex, their administration
            and
            their formulations differ.
 
 We
            are
            researching Radilex for use as a potential treatment for acute exposure
            to
            radiation. To date we have sponsored seven studies and co-sponsored three
            studies all of which were conducted utilizing rodents. We believe the
            results of
            these and other studies suggest Radilex may play a role in increasing
            an
            individual’s ability to overcome the effects of radiation, and, in the cases of
            exposure to potentially lethal radiation, to play a role in increased
            rates of
            survivability. Based on the sum of these studies, we believe that Radilex,
            once
            and if developed, could be an acceptable candidate to be purchased by
            governmental agencies for national distribution in the event of a significant
            nuclear or radiological threat. Further, we believe that a commercial
            market may
            exist for the use of Radilex as it relates to the treatment of radiation-induced
            side effects of cancer treatments, either as a stand alone treatment
            or as a
            co-therapeutic agent to be used with other treatments.
 
 Viprovex
            is being researched by us for use in potential treatments of exposure
            to
            biological agents, such as anthrax and infectious diseases, including
            influenza.
            Based on early studies on Homspera and existing literature on Substance
            P, we
            are also researching Viprovex as a potential treatment for exposure to
            chemical
            agents, such as formalin. Formalin, a highly toxic chemical, is a solution
            of
            formaldehyde gas dissolved in water and used industrially. To date we
            have
            sponsored three studies related to the treatment of influenza, three
            on the
            exposure to anthrax spores and one on exposure to formalin. We believe
            the
            results of these studies indicated potential efficacy in the use of Viprovex
            as
            both a stand alone treatment and to be used in conjunction with other
            drugs. If
            Viprovex can be developed, we believe that potential applications may
            exist for
            sale to governments for the treatment of exposure to anthrax and pandemic
            influenza. In addition, we believe that potential commercial opportunities
            may
            exist for the treatment of seasonal influenza and other viral or bacterial
            infections, either as a stand-alone drug or in conjunction with other
            existing
            drugs.
 **Applications**
 
 Our
            initial pre-clinical applications that we are researching are in the
            treatment
            of the effects on the body caused by (i) exposure to radiation (Radilex)
            (ii)
            infectious disease and harmful biological materials (Viprovex) and (iii)
            harmful
            chemical agents (Viprovex). In addition to these three potential applications,
            we continue to explore the potential capabilities of Homspera and strive
            to
            better understand the mechanisms of this compound in order to further
            our
            development efforts with regard to not only our current application research,
            but also potential future applications.
 
 To
            date
            we have sponsored seven radiation studies and co-sponsored three radiation
            studies all of which were conducted utilizing rodents. We have sponsored
            three
            studies on the potential treatment of anthrax exposure and one study
            on avian
            influenza all of which were conducted utilizing rodents. We have also
            sponsored
            one chemical study in an attempt to determine initial indications of
            efficacy on
            the treatment of formalin exposure.
 
 All
            our
            product candidates are in the pre-clinical stage of development. They
            have only
            been introduced to FDA via the pre-IND filings, submissions to which
            the FDA
            offers no judgment thereon. To date we have been issued two
            Pre-Investigational New Drug (PIND) numbers by the U.S. Food & Drug
            Administration (FDA) - one for the potential use of Radilex in the treatment
            of
            acute radiation syndrome and one for the potential use of Viprovex in
            the
            treatment of avian influenza. The table below illustrates our current
            product
            candidates and their current stage of development within the FDA approval
            process.




4
 Table
          of Contents




**Product
                  Candidate**
              
              **Pharmacological
                  Identification**
              
              **Animal
                  Safety**
              
              **Pre-Clinical
                  Mechanistic**
              
              **Phase
                  I**
              
              **Phase
                  II**
              
              **Phase
                  III**Acute
                  Radiation SyndromeRadilex
              
              In-progress
              
              Planned
              
              In-progress
              
              —
              
              —
              
              —Infectious
                  diseaseViprovex
              
              In-progress
              
              Planned
              
              In-progress
              
              —
              
              —
              
              —Chemical
                  exposureViprovex
              
              In-progress
              
              Planned
              
              Planned
              
              —
              
              —
              
              —




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."
 
 **Radilex**
 
 All
            of
            our product candidates based on Radilex are in the pre-clinical stage
            of
            development. 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.
 
 To
            date
            we have sponsored seven radiation studies and co-sponsored three radiation
            studies all of which were conducted utilizing rodents to study dose response
            to
            radiation, the impact on survival and to distinguish survival response
            using
            different forms of drug delivery. In each of these studies mice were
            exposed to
            varying levels of radiation and the Radilex was aerosolized in water
            and
            administered to the test subject animals by inhalation.
 
 Radiation
            is emitted electromagnetic energy. Excessive exposure to ionizing radiation
            over
            a short period of time, as is the case in nuclear or radiological attacks,
            leads
            to the development of radiation sickness, or Acute Radiation Syndrome
            (ARS).
            Exposure to lower doses of radiation may, either by design or as a side
            effect
            of cancer treatment, result in the destruction of bone marrow cells responsible
            for maintaining the levels of red blood cells, white blood cells and
            platelets,
            which are vital for the formation of blood clots, in the circulation,
            resulting
            in compromised oxygen carrying capacity, diminished immune system function,
            and
            uncontrollable bleeding.
 
 These
            bone marrow cells are called hematopoietic stem cells, and they can multiply
            and
            mature into precursor cells to the B-cells and T-cells of the immune
            system, or
            into precursors of the red blood cells and of the granulocytes and macrophages,
            which are also of the immune system, and megakaryocytes, which produces
            platelets. Thus all circulating cells of the immune system, red blood
            cells and
            platelets derive from these stem cells.
 
 In
            studies to date we have collected data that we believe suggests that
            Radilex
            shows efficacy in treating ARS by combating neutropenia and thrombocytopenia,
            which is the decrease in blood levels of white blood cells and platelets,
            the
            major medical conditions associated with acute exposure to radiation.
            Loss of
            these cells results in increased sensitivity to infection and to uncontrolled
            bleeding, both of which can be potentially life-threatening. Further,
            as
            treatment for cancer often includes radiation treatment, we believe that
            the
            potential also exists for Radilex to be used for cancer patients as a
            stand
            alone treatment or a co-therapeutic agent to be used with other drugs
            as
            treatment.
 
 Data
            collected in studies performed at the Oak Ridge National Laboratory in
            2006, we
            believe, revealed that Radilex not only prolonged survival of animals
            exposed to
            lethal gamma irradiation, but also appeared to have increased platelet
            concentrations in surviving animals.
 
 There
            is
            also preliminary research data showing that the activity of a specific
            enzyme
            (poly-(ADP-ribosyl) polymerase, or PARP), may be responsible for repairing
            DNA
            that has been damaged by radiation can be modified by Substance P. When
            damage
            is severe, the activation of this enzyme becomes too much for the cell
            to
            support, and the cell triggers its own destruction. The chain of events
            that
            result in this destruction is called apoptosis, a process of deliberate
            life
            termination that a cell undergoes following exposure to high levels of
            stress,
            and agents that can control the rate of apoptosis are of significant
            importance
            in controlling the functioning of organs and organisms. If a cell can
            be kept
            alive long enough to repair cellular damage, it might be of more value
            to the
            organism.
 
 Based
            on
            the above referenced, and other, data, we believe that one possible mechanism
            by
            which Radilex is able to prolong survival in animal models (either in
            addition
            to its effect on stem cells or perhaps as a mechanism by which it impacts
            stem
            cells), is by modulating the activities of the PARP-1 enzyme within cells.
            By
            possibly preventing cells from dying, Radilex may be effective in treating
            the
            impact of cell radiation, thereby decreasing the likelihood of
            death.
 
 Further,
            we believe that our survival data from irradiated mice studies and mechanistic
            studies in cell culture have shown indications of hematopoietic stem
            cell
            replenishment of circulating leukocytes and platelets, which could be
            of value
            in radiation-treated cancer patients.
 
 Acute
            total body irradiation exposure studies have been performed at the University
            of
            Arizona Cancer Center and at Oak Ridge National Laboratories (ORNL).
            These
            studies show that radiation destroys the immune system resulting in pneumonia
            and death, and that Radilex, we believe demonstrates efficacy at reversing
            the
            loss of white blood cells that comprise the immune system, as well as
            platelets
            necessary to control blood clotting, subsequently leading to an increase
            in
            survival rates.
 
 We
            believe these animal studies provide support for our continued effort
            to
            research and develop Radilex to treat the effects of exposure to radiation.
            However, there is no assurance that our interpretation of the results
            of the
            studies will prove to be accurate after further
            testing.
 5
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  **Viprovex**
 
 All
          of
          our product candidates based on Viprovex are in the pre-clinical stage
          of
          development. We are researching the efficacy of Viprovex as a potential
          treatment, either as a stand alone application or as co-therapeutic treatment,
          for exposure to various biological agents, such as infectious disease,
          including
          influenza and anthrax. We are also researching the efficacy of Viprovex
          as a
          potential treatment for exposure to chemical agents, such as formalin.
          Formalin,
          a highly toxic chemical, is a solution of formaldehyde gas dissolved in
          water
          and used industrially.
 
 Unlike
          Radilex, we are currently formulating Viprovex in a buffered saline solution
          as
          its preferred method of administration is intranasal.
 
 Biological
          Exposure Applications
 
 *Infectious
          Disease - Seasonal and Pandemic Influenza*
 
 We
          believe of management that results from our studies may reveal 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.
 
 In
          October 2003 the AFOSR sponsored preliminary studies with the Hong Kong
          influenza virus (A/Hong Kong/8/68) and Viprovex at the University of Arizona,
          Arizona Health Sciences Center, Lung Injury Laboratory. We believe that
          these
          studies suggest that when mice were exposed to the irritant JP-8 jet fuel
          and
          then inoculated with the Hong Kong respiratory virus (HKV), they experience
          elevated levels of inflammatory cells in their lungs. These levels were
          reduced
          in animals also treated with Viprovex. In contrast to control animals exposed
          to
          the virus the JP-8 treated animals also treated with Viprovex, did not
          develop
          the clinical symptoms of viral infection, which included increases in alveolar
          macrophages and neutrophils in broncho-alveolar lavage fluid. These cells
          are
          components of the immune system that are expressed out of the blood and
          into the
          fluid inside the lungs coating the alveoli. The alveoli, found in the
          respiratory zone of the lungs, are primary sites of gas exchange where
          blood and
          air exchange oxygen and carbon dioxide carried by red blood cells. The
          fluid is
          acquired and assayed by washing lavage the lungs with liquid and assessing
          the
          cells and chemicals in this wash fluid. Animals treated with Viprovex also
          exhibited lower levels of leukotriene B4 (LTB4), a chemical released by
          white
          blood cells during an immune response, than animals not treated with Viprovex.
          Elevated LTB4 would attract the inflammatory cells, particularly neutrophils,
          which would follow infection with virus. Electron micrographs showed healthier,
          normal appearing cells in the airways with 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 attack,
          engulf and destroy the virus more effectively. Without virus particles in
          the lungs, there would be no need to mount an immune response. Based on
          the
          results of this study, we believe that Viprovex may be potentially used
          to
          increase the ability of 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.
 
 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 influenza was issued
          on
          December 19, 2005 (PIND No. 73,709).
 
 Subsequently,
          we have sponsored three influenza studies conducted at Virion Systems,
          Inc, one
          of which is still ongoing, utilizing rodents to test the efficacy of Viprovex
          in
          treating the avian influenza A/Wuhan/359/95 (H3N2), a model system for
          studying
          the H5N1 avian influenza.
 
 In
          our
          opinion, the data acquired to date in examining the effect of Viprovex
          on
          influenza infection suggests an anti-viral action occurs in lungs and,
          more
          noticeably, in nose. Further, in conjunction with the suggested anti-viral
          effect, animal weights and temperatures were normalized. Differences in
          cytokines (small peptide signaling molecules released by cells of the immune
          system to mediate inflammation and immune responses) such as certain
          interleukins and interferons were also witnessed. In the opinion of management,
          such Viprovex-induced changes in immune response as evinced by cytokine
          signals
          demonstrate the potential efficacy of Viprovex. Based on our results, we
          believe
          that Viprovex may show efficacy as a stand alone drug in the treatment
          of
          influenza. Further, when used in conjunction with a neuraminidase inhibitor,
          currently the most effective pharmacological agents (zanamivir (Relenza®,
          GlaxoSmithKline) and oseltamivir (Tamiflu®, Roche) are neuraminidase inhibitors)
          to treat influenza (by inhibiting an enzyme necessary for infectivity),
          Viprovex
          might be an effective adjuvant therapeutic on treating or preventing
          influenza.
 
 There
          is
          no assurance that our interpretation of the results of the studies will
          prove to
          be accurate after further testing.
 
  6
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  *Anthrax*
 
 Anthrax
            is an often-fatal human disease resulting from infection of the bacterium
            *Bacillus anthracis*. Anthrax is most often contracted by skin to skin,
            or cutaneous, contact with an infected lesion, resulting from the handling
            of
            infected animal products. Cutaneous anthrax has a mortality rate of roughly
            20%.
            In contrast, the inhalation of *B. anthracis* spores results in a
            significantly more severe and lethal infection, with mortality rates
            of greater
            than 80%. As a result of the high mortality rate and route of infection,
            anthrax
            is considered a prominent agent of bioterrorism.
 
 To
            date
            we have sponsored three anthrax studies all of which were conducted utilizing
            rodents to determine if Viprovex will reduce the mortality rate of an
            active
            infection of pulmonary anthrax. In our opinion, when treated with Viprovex
            prior
            to exposure to anthrax spores, Viprovex elicited protective, prophylactic
            efficacy and when treated a short time period after exposure to anthrax
            spores,
            Viprovex elicited therapeutic efficacy.
 
 In
            2006
            we completed a series of studies with Hyperion Biotechnology Inc. at
            their
            laboratory facilities located at Brooks City-Base in San Antonio, Texas.
            The
            purpose of these studies was to determine if Viprovex could reduce the
            mortality
            rate of an active infection of pulmonary anthrax. The first of these
            studies was
            initiated in October 2005. This research indicated, in our opinion, that
            Viprovex offers protection from anthrax exposure in a mouse model. In
            these
            studies, we witnessed mice treated with Viprovex to have a greater survival
            rate
            11 days post-exposure to anthrax spores. Additionally, based on this
            research,
            we believe Viprovex to elicit a prophylactic protection from anthrax
            in a mouse
            model.
 
 Further
            research, in our opinion, has supported these findings of prophylactic
            efficacy
            of Viprovex against anthrax and also demonstrated Viprovex to show efficacy
            in
            increasing survival rates in mice pretreated with anthrax. Additionally,
            while
            these results are preliminary, we believe that Viprovex, when used as
            an
            adjuvant, could play an important role, in conjunction with other therapies,
            in
            improving treatments of anthrax exposure.
 
 There
            is
            no assurance that our interpretation of the results of the studies will
            prove to
            be accurate after further testing.
 Chemical
          Exposure Applications
 
 Based
          on
          early studies on Homspera and existing literature on Substance P, we are
          researching the efficacy of Viprovex as a potential treatment for exposure
          to
          chemical agents, such as formalin. Formalin is a solution of formaldehyde
          gas
          dissolved in water, used industrially and toxic typically via crosslinking
          of
          proteins to other nearby proteins. To date, we have only conducted limited
          preclinical studies with regard to the development of Viprovex for indications
          related to treatment of exposure to harmful chemicals.
 
 *JP-8
          Jet Fuel and Smoke*
 
 We
          believe our early AFOSR rodent studies demonstrated the administration
          of
          Substance P and Homspera to animals exposed to JP-8 decreased the immune
          system
          effects, while administration of Substance P antagonists compounded the
          deleterious effects. Further experiments performed using Viprovex examined
          effectiveness in preventing lung injury on inhalation of toxic fumes. In
          our
          opinion based on our results, Viprovex has been shown to exhibit
          anti-inflammatory effects in animal models.
 
 There
          is
          no assurance that our interpretation of the results of the studies will
          prove to
          be accurate after further testing.
  *Formalin*
 
 Formaldehyde
            is one of the 25 most abundantly produced chemicals in the world and
            has use in
            many industries. When dissolved in water at 30% to 50% formaldehyde,
            and often
            with methanol as a stabilizer, the resulting formalin solution is toxic
            to
            embryos and adult organisms.
 
 We
            have
            conducted one pilot study to determine if aerosolized Viprovex could
            be
            efficacious in attenuating lung injury after formalin exposure.
 
 In
            rats
            exposed to an aerosol application of formalin data suggests, in our opinion,
            that treatment with Viprovex may minimize lung damage concurrent with
            formalin
            inhalation.
 
 There
            is
            no assurance that our interpretation of the results of the studies will
            prove to
            be accurate after further testing.
 
 **Adjuvant
              Therapeutic**
 Results
            from studies also suggest that Homspera may also have potential value
            as a
            co-therapeutic agent or vaccine adjuvant. Studies performed in animal
            models of
            influenza and acute radiation syndrome have revealed the potential capability
            of
            Homspera to enhance the action of approved anti-viral medications as
            well as to
            provide adjunctive impact on anti-tumor radiation therapy.
 
 Adjuvants
            are unique among active ingredients in drugs in that they are designed
            to not
            stimulate an immune response against themselves, but they are required
            to
            augment the immune response against other, co-administered
            compounds.
 
 The
            potential efficacy of Homspera as a vaccine adjuvant results from the
            unique
            mechanism through which Homspera modulates the immune system. The actions
            of
            Homspera are mediated predominately through interactions with the Neurokinin-1
            receptor (NK1-R).
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  Studies
            in cell culture have revealed elevations in components of what is the
            most basic
            aspect of the immune system, termed the innate immune system, that are
            consistent with activation of specific cell components called Toll-like
            Receptors, a postulated mechanism by which vaccine adjuvants increase
            immune
            responses to vaccine components.. Additionally, the anti-anthrax activity
            reported by Homspera is similarly consistent with activation of components
            of
            innate immunity that have been reported to have anti-anthrax activity,
            such as
            defensins, small peptides found in immune cells that help destroy invading
            bacteria.
 
 We
            believe that, in conjunction with other influenza therapeutics, Homspera
            might
            be an effective adjuvant therapeutic by decreasing the number of viruses
            at
            which the viral neuraminidase-targeted therapeutic must act.
 
 We
            believe that there is also potential for Homspera to be used as a co-therapy
            to
            what is called adjuvant therapy for cancer patients, as secondary treatment
            often involves radiation treatments following chemotherapy, in an attempt
            to
            kill more of the cancer cells. Survival data from gamma-irradiated mice
            studies
            have shown indications of hematopoietic stem cell replenishment of circulating
            leukocytes and platelets, which could be of value in radiation-treated
            cancer
            patients. There is no assurance that our interpretation of the results
            of the
            studies will prove to be accurate after further
            testing.
 **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:
          treatment
          of avian influenza in mammals, reducing the risk or severity of anthrax
          infection, treatment of blood cell depletion, 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**
 Research
            and Development Spending
 
 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 $2,500,000 in an effort
              to
              further develop Radilex and Viprovex. This research and development
              cost
              estimate includes initial costs for a radiation study on large animals,
              which we
              estimate start-up costs and initial studies of up to $1,000,000 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 will be
              lessened.
 *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.
 
 Since
            our
            incorporation in October 2002, we have made submissions for eleven grants
            either
            by submitting Requests For Information (RFI), Requests for Proposal (RFP),
            Broad
            Agency Announcements (BAA), requests for white papers and/or fully executed
            grant applications. To date our applications for grant funding have not
            been
            accepted. We intend to continue to apply for grants; however, there can
            be no
            assurance that we will ever receive any grants.
   8
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  Animal
            Efficacy Rule
 
 Using
            traditional efficacy studies in the development of some of our potential
            applications would require healthy human volunteers to be exposed to
            lethal
            agents and pathogens. This cannot be done. Therefore, we intend to apply
            for
            approval based upon a 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 rule, in situations where it
            would be
            unethical to conduct traditional 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. Under either the animal
            efficacy
            rule or traditional efficacy rules, 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.
  Contract
            Research Organizations (CRO) and Collaborators
 
 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) and collaborative
              relationships.
 CRO's
            are
            independent laboratories or other facilities 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
            addition, 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
            with are described below.
 
 ·
                    University
                        of Arizona College of Medicine, Tucson, Arizona. We have sponsored or
                        co-sponsored seven mouse radiation studies and co-sponsored
                        one inhalation
                        study at the University of Arizona College of Medicine, Tucson,
                        Arizona
                        since January, 2005. 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.
 
 ·
                    Hyperion
                        Biotechnology Inc. Hyperion Biotechnology 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 potential 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.
                        To date we
                        have completed three studies on anthrax. Hyperion has also
                        conducted
                        mechanistic studies in cell culture looking at cellular mechanisms
                        impacted by Homspera. These studies are
                        ongoing.
 
 ·
                    St.
                        Joseph's Hospital and Medical Center (Phoenix, Arizona). St. Joseph's
                        has performed assays on Homspera for us on a sub-contracting
                        basis.
 
 ·
                    Battelle
                        Memorial Institute's Medical Research and Evaluation Facility
                        (MREF)
                        (Columbus, Ohio). Battelle has issued a letter of intent
                        to support us in
                        our testing of Homspera as an Avian Influenza therapeutic
                        in mice.
                        Battelle is actively involved in analytical development studies
                        through
                        activities at PNNL and studies protocols are in development
                        for avian
                        influenza studies that may be initiated at
                        Battelle.
 
 ·
                    Pacific
                        Northwest National Laboratory (Richland, Washington). PNNL
                        has issued a
                        letter of intent to support us in our testing of Homspera
                        as a Universal
                        Protectant therapeutic. In addition to ongoing analytical
                        studies at PNNL
                        and managed by Battelle, additional studies regarding radiation
                        and
                        influenza in both small animals and non-human primates, are
                        under
                        discussion and protocols are being
                        developed.
 
 ·
                    Oak
                        Ridge National Laboratory (Oak Ridge, Tennessee). We have
                        contracted with
                        Oak Ridge 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 testing Radilex for
                        potential uses
                        to treat the effects of acute radiation. To date, we have
                        completed three
                        studies that have confirmed experimental results obtained
                        previously and
                        have expanded insight into radioprotection dosing and
                        mechanisms.
 
 ·
                    PanFlu
                        LLC and Virion Systems, Inc. We have contracted with PanFlu
                        and Virion to
                        conduct influenza studies to test the efficacy of Viprovex
                        in treating the
                        avian influenza A/Wuhan/359/95 (H3N2), a model system for
                        studying the
                        H5N1 avian influenza. To date two completed studies have
                        provided evidence
                        that we believe suggests viral reduction by Viprovex and
                        provided
                        preliminary evidence for potential mechanisms. Planned studies
                        include a
                        co-treatment study with the neuraminidase inhibitor oseltamivir
                        (Tamiflu®,
                        Roche).
 
 ·
                    TGen
                        (Translational Genomics Research Institute) Drug Development
                        Services (TD2
                        LLC) (Phoenix, Arizona). We have contracted with TGen to
                        perform
                        anti-cancer research designed to assess preclinical safety
                        and efficacy
                        (with the ability to expand to Phase 1 and Phase 2a clinical
                        studies at
                        the associated Mayo Clinic Scottsdale, MD Anderson Cancer
                        Center and
                        Arizona Cancer Center Tucson). A broad spectrum of Preclinical
                        Studies are
                        ongoing at TD2, including cancer screening against established
                        cell lines
                        and chemo-therapeutics, analytical assay development, radioprotection
                        studies in small animals and non-GLP safety and pathology
                        studies.
  9
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  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 two outside consultants related to the research
              and
              development, including regulatory affairs, of our potential
              products.
 
 Kelly
              McQueen, MD, MPH, PLLC was engaged in July 2005 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. Dr. 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. Dr. McQueen 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). Dr. McQueen's contract with us provides for cash
              compensation on an hourly basis and reimbursement for travel and expenses.
              The
              original term of the agreement was until October 2005 but has been
              mutually
              agreed to have been extended on the same terms on a month by month
              basis.
 
 Dr.
              Jack
              Caravelli, Ph.D. was contracted in November 2005 to provide advisory
              services in
              support of our 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 provides for
              cash
              compensation at an hourly rate and reimbursement for any related travel
              and
              expenses. The original term of the agreement was until January 2006
              but has been
              mutually agreed to have been extended on the same terms on a month
              by month
              basis.
 *Advisory
            Boards*
 
 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. Anesthesiologist and Public Health Consultant;
          Infectious Disease and Disaster Planning for U.S. Army and US Northern
          Combatant
          Command
 
 Dr.
            Hal
            Siegel Ph.D., Dr. Siegel has two decades of experience providing scientific,
            clinical and regulatory assistance to life science client companies across
            the
            medical product spectrum, helping them meet business needs and FDA requirements
            from pre-clinical studies through the regulatory submission process and
            into the
            post-approval marketplace.
 
 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. Dr. Dann is a graduate of
            Harvard University Dental School and
            Washington University Medical School. He is a Board Certified
            maxillofacial and cranial facial surgeon.
 
 Dr.
          Jeffery Friedman, M.D. 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:
  
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   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: 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
 
 **Manufacturing**
 
 Radilex
            and Viprovex both have distinct methods of administration, formulations
            and
            dosing regimens. We do not have, and do not intend to establish, manufacturing
            facilities to produce Homspera, Radilex or Viprovex or any other potential
            products, if any, that may be derived from Homspera.
 
 We
            have
            used and expect to continue to use third party manufacturers to obtain
            synthetic
            Homspera or Sar9,
            Met (O2)11-Substance
            P, the
            active ingredient in experimental formulations of Radilex and Viprovex.
            We
            believe Sar9,
            Met (O2)11-Substance
            P is
            readily available at low cost from several life science and technology
            companies
            that provide biochemical and organic chemical products used in scientific
            and
            genomic research, biotechnology, pharmaceutical development and the diagnosis
            of
            disease and chemical manufacturing. 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.
 
 Since
            to
            date 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.
   11
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  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.
 
 Registered
          Patents:
  **Title**
                    **Serial
                        No.**Substance
                        P Treatment for Immunostimulation
                    US
                        5,945,508Substance
                        P Treatment for Immunostimulation
                    US
                        5,998,376Substance
                        P Treatment for Immunostimulation
                    Australia
                        737201Substance
                        P Treatment for Immunostimulation
                    European
                        0957930
 
 **Patents
              Pending:**
 **Title**
                    **Serial
                        No.**Acute
                        Respiratory Syndromes
                    US
                        10/553232Acute
                        Respiratory Syndromes
                    Europe
                        (Application number TBA)Acute
                        Respiratory Syndromes
                    Singapore
                        (Application number TBA)Acute
                        Respiratory Syndromes
                    Vietnam
                        1-2005-015Amelioration
                        of Effects of Cigarette Smoke
                    US
                        10/645,839Amelioration
                        of Effects of Cigarette Smoke
                    Singapore
                        2005 01072-3Amelioration
                        of Effects of Cigarette Smoke
                    Vietnam
                        1-2005-00215Amelioration
                        of Effects of Cigarette Smoke
                    Japan
                        2004-532943Amelioration
                        of Effects of Cigarette Smoke
                    European
                        Union 3791722.6Amelioration
                        of Effects of Cigarette Smoke
                    Canada
                        -2496447Anti-Aging
                        Effects of Substance P
                    PCT/US05/13113Inducing
                        and Maintaining Hair Color
                    PCT/US05/13112Method
                        to Promote Wound Healing
                    US
                        60/622,015Prevention
                        of Respiratory Diseases in Fowl
                    US
                        60/641153Prevention
                        of Respiratory Diseases in Fowl
                    Singapore
                        200500467-6Prevention
                        of Respiratory Infection in Fowl
                    Vietnam
                        1-2005-00599Prevention
                        of Respiratory Infection in Fowl
                    Thailand
                        097659Stimulation
                        of Hair Growth
                    US
                        10/539/734Substance
                        P Treatment for Immunostimulation
                    Canada
                        2,261,885Treatment
                        of Asthma
                    US
                        60/667,062Treatment
                        of Asthma
                    Singapore
                        200504104-1Treatment
                        of Skin Diseases
                    US
                        60/642,996Treatment
                        of Skin Diseases
                    Vietnam
                        1-2005-00598Treatment
                        of Skin Diseases
                    Thailand
                        098080Treatment
                        of Skin Diseases
                    Singapore
                        200500466-8






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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.
 
 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.
 
 Trademarks
 
 On
          December 9, 2004 we filed for trademarks with US Patent and Trademark Office
          (USPTO) for Homspera, Radilex and Viprovex.
 
 13
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  **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 (AFOSR) in 1994 by our co-founders Drs. Mark
          Witten and David Harris. In December 2002 we entered into consulting agreements
          on a month-to-month basis with Dr. Mark Witten and Dr. David Harris. Under
          the
          terms of these agreements, Drs. Witten and Harris 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 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 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
        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.
  14
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  The
        process required by the FDA before a new drug or biologic may be marketed
        in the
        United States generally involves the following:
  ·completion
        of pre-clinical laboratory tests or trials and formulation studies;
 
 ·submission
                  to
                  the FDA of an IND for a new drug or biologic, which must become
                  effective
                  before human clinical trials may
                  begin;
 
 ·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,
 
 ·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:
 
 ·         assess
        its efficacy in specific, targeted indications;
 
 ·         assess
        dosage tolerance and optimal dosage; and,
 
 ·         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 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 rule, in situations
          where it would be unethical to conduct traditional 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. . Under either the animal efficacy rule or
          traditional efficacy rules, 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.
 
 If
        the
        FDA does ultimately approve the product, it may require post-marketing testing,
        including potentially expensive Phase IV studies, to monitor its safety and
        effectiveness.
 
 Clinical
        trials must meet requirements for Institutional Review Board, or IRB, oversight,
        informed consent and the FDA's Good 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.
 
 15
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  **Ongoing
          FDA Requirements**
 Before
        approving an NDA or BLA, the FDA will inspect the facilities at which the
        product is manufactured and will not approve the product unless the
        manufacturing facilities are in compliance with the FDA's current Good
        Manufacturing Practices, or cGMP, requirements which govern the manufacture,
        holding and distribution of a product. Manufacturers of biologics also must
        comply with the FDA's general biological product standards. Following approval,
        the FDA periodically inspects drug and biologic manufacturing facilities
        to
        ensure continued compliance with the cGMP requirements. Manufacturers must
        continue to expend time, money and effort in the areas of production, quality
        control, record keeping and reporting to ensure full compliance with those
        requirements. Failure to comply with these requirements subjects the
        manufacturer to possible legal or regulatory action, such as suspension of
        manufacturing, seizure of product, voluntary recall of product, withdrawal
        of
        marketing approval or civil or criminal penalties. Adverse experiences with
        the
        product must be reported to the FDA and could result in the imposition of
        marketing restrictions through labeling changes or market removal. Product
        approvals may be withdrawn if compliance with regulatory requirements is
        not
        maintained or if problems concerning safety or efficacy of the product occur
        following approval.
 
 The
        labeling, advertising, promotion, marketing and distribution of a drug or
        biologic product also must be in compliance with FDA and FTC requirements
        which
        include, among others, standards and regulations for direct-to-consumer
        advertising, industry-sponsored scientific and educational activities, and
        promotional activities involving the internet. The FDA and FTC have very
        broad
        enforcement authority, and failure to abide by these regulations can result
        in
        penalties, including the issuance of a Warning Letter directing the company
        to
        correct deviations from regulatory standards, a requirement that future
        advertising and promotional materials be pre-cleared by the FDA and enforcement
        actions that can include seizures, injunctions and criminal
        prosecution.
 
 Manufacturers
        are also subject to various 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 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.
 
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  **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
          Hollis-Eden Pharmaceuticals, Inc., Amgen Inc. and Cleveland Biolabs, 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.
 
 **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.
 
 17
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  **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:
 
 ·
                  we
                      may not obtain additional financial resources when necessary
                      or on terms
                      favorable to us, if at all; and
 
 ·
                  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 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.
 
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  **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:
 
 ·
                  ensure
                      that any potential drug candidate would function as intended
                      in large
                      animal studies or human clinical
                      applications;
 
 ·
                  obtain
                      the regulatory approvals necessary to commercialize products
                      that we may
                      develop in the future;
 
 ·
                  manufacture,
                      or arrange for third-parties to manufacture, future products
                      in a manner
                      that will enable us to be
                      profitable;
 
 ·
                  establish
                      many of the business functions necessary to operate, including
                      sales,
                      marketing, administrative and financial functions,  and
                      establish appropriate financial
                      controls;
 
 ·
                  make,
                      use, and sell future products without infringing upon third
                      party
                      intellectual property rights; or
 
 ·
                  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.
 
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  **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 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 procurements
              by the U.S. and foreign governments. Although a number of governments
              have
              historically purchased drugs to treat indications such as smallpox,
              anthrax
              exposure, plague, tularemia and certain long-term effects of radiation
              exposure,
              we have not been approached for nor can we guarantee any purchase orders
              our
              potential products, if any, by such government.
  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 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 application will result in funding, 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:
 
 ·
                  delays
                      in obtaining regulatory approvals to commence a
                      study;
 
 ·
                    delays
                        in  identifying  and reaching  agreement on
                        acceptable  terms with prospective clinical trial
                        sites;
 
 ·
                  delays
                      in the enrollment of patients;
 
 ·
                  lack
                      of efficacy during clinical trials;
                      or,
 
 ·
                  unforeseen
                      safety issues.
 
 `                Even
            if marketing approval from the FDA is received, the FDA may impose post-marketing
            requirements, such as:
 
 ·
                  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;
 
 ·
                  testing
                      and surveillance to monitor our future products and their continued
                      compliance with regulatory
                      requirements;
 
 ·
                    submitting
                        products for inspection and, if any inspection reveals that
                        the product is
                        not in compliance, prohibiting the sale of all
                        products;
 
 ·
                  suspending
                      manufacturing; or,
 
 ·
                  withdrawing
                      marketing
                      clearance.






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`                Additionally,
        the FDA's policies may change and additional government regulations may be
        enacted which could prevent or delay regulatory approval of our applications.
        We
        cannot predict the likelihood, nature or extent of adverse government regulation
        that may arise from future legislation or administrative action, either in
        the
        United States or abroad. If we are not able to maintain regulatory compliance,
        we might not be permitted to market our future products and our business
        could
        suffer.
 
 `                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.**
 `                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:
  ·
                we
                    may not have the financial resources to continue research and
                    development
                    of any of our drug candidates; and,
 
 ·
                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:
 
 ·
                delays
                    in enrolling volunteers;
 
 ·
                interruptions
                    in the manufacturing of our drug candidates or other delays in
                    the
                    delivery of materials required for the conduct of our
                    studies;
 
 ·
                lower
                    than anticipated retention rate of volunteers in a
                    trial;
 
 ·
                unfavorable
                    efficacy results;
 
 ·
                serious
                    side effects experienced by study participants relating to the
                    drug
                    candidate;
 
 ·
                new
                    communications from regulatory agencies about how to conduct
                    these
                    studies; or,
 
 ·
                failure
                    to raise additional
                    funds.






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**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.**
 `                
               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. Our dependence on such
              manufacturers may delay or impair our ability to generate revenues,
              or adversely
              affect our profitability.
 
 We
              rely
              on arrangements with contract manufacturing companies in order to meet
              requirements for Radilex, Viprovex and Homspera. By choosing 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 potential profit margins, if any, and our ability to develop
              and
              deliver proposed products on a timely and competitive basis.
  **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.
 **Even
            if we are permitted to market our potential products, 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.
 `
 `                  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.
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**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 issuedforeign 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
            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.
 If
        we
        fail to obtain or maintain these protections, we may not be able to prevent
        third parties from using our proprietary rights. Our currently pending or
        future
        patent applications may not result in issued patents. In the United States,
        patent applications are confidential until patent applications are published
        or
        the patent is issued, and because third parties may have filed patent
        applications for technology covered by our pending patent applications without
        us being aware of those applications, our patent applications may not have
        priority over any patent applications of others. In addition, our issued
        patents
        may not contain claims sufficiently broad to protect us against third parties
        with similar technologies or products or provide us with any competitive
        advantage. If a third party initiates litigation regarding our patents, and
        is
        successful, a court could revoke our patents or limit the scope of coverage
        for
        those patents.
 
 Legal
        standards relating to the validity of patents covering pharmaceutical and
        biotechnology inventions and the scope of claims made under such patents
        are
        still developing. In some of the countries in which we intend to market our
        products, pharmaceuticals are either not patentable or have only recently
        become
        patentable. Past enforcement of intellectual property rights in many of these
        countries has been limited or non-existent. Future enforcement of patents
        and
        proprietary rights in many other countries may be problematic or unpredictable.
        Moreover, the issuance of a patent in one country does not assure the issuance
        of a similar patent in another country. Claim interpretation and infringement
        laws vary by nation, so the extent of any patent protection is uncertain
        and may
        vary in different jurisdictions. The U.S. Patent and Trademark Office, commonly
        referred to as the USPTO, and the courts have not consistently treated the
        breadth of claims allowed in biotechnology patents. If the USPTO or the courts
        begin to allow broader claims, the incidence and cost of patent interference
        proceedings and the risk of infringement litigation will likely increase.
        On the
        other hand, if the USPTO or the courts begin to allow narrower claims, the
        value
        of our proprietary rights may be limited. Any changes in, or unexpected
        interpretations of the patent laws may adversely affect our ability to enforce
        our patent position.
 
 We
        also
        rely upon trade secrets, proprietary know-how and continuing technological
        innovation to remain competitive. We protect this information with reasonable
        security measures, including the use of confidentiality agreements with our
        employees, consultants and corporate collaborators. It is possible that these
        individuals will breach these agreements and that any remedies for a breach
        will
        be insufficient to allow us to recover our costs. Furthermore, our trade
        secrets, know-how and other technology may otherwise become known or be
        independently discovered by our competitors.
  **Our
          rights to the US Patent Nos. 5,945,508 and 5,998,376, Substance P Treatment
          for
          Immunostimulation, are limited by the rights of the University of Arizona
          and
          the United States Air Force and as a result, our ability to use of the
          patent in
          our business is also limited. Due to these limitations, we may not be able
          to
          use the patent in the most profitable or efficient manner and, as a result,
          our
          results of operations may suffer.** **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.
 
 Further,
            because our patents are based on research funded by the government, the
            U.S.
            Government has certain rights in any technology developed. These rights
            include
            a non-exclusive, paid-up, worldwide license under such inventions for
            any
            governmental purpose. In addition, 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.
 
 As
            a
            result, our potential future revenues, if any, may be lessened. Additionally,
            our profit margins, if any, may be lessened as our cost of goods may
            increase if
            we are mandated to manufacture our products substantially in the United
            States.
            Additionally, the U.S. Government may elect to manufacture and use any
            products
            based on our technology without paying us any
            revenue.
 **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.
 
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  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, and
              Hal Siegel,
              Ph.D., our Senior Director, Product Development and Regulatory Affairs.
              We
              currently maintain a key-man insurance policy on Mr. Wilhelm and Dr.
              Siegel for
              $1,000,000 and $250,000 respectively, payable to the company, on their
              lives.
              While we have entered into employment agreements with Mr. Wilhelm and
              Dr.
              Siegel, the loss of any of their services would be detrimental to us
              and could
              have a material adverse effect on our business, financial condition
              and results
              of operations.
  **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. 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
              quotation of our common stock on the OTCBB does not assure that a meaningful,
              consistent and liquid trading market currently exists, and in recentyears 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 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.
                      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. We recently
                      withdrew a
                      registration statement we had filed with the SEC to register
                      an aggregate of
                      64,545,747 shares of our Common Stock for resale by investors.
                      We do not intend
                      to include these shares in the registration statement to be
                      filed by us
                      following this offering, nor do we intend to refile that prior
                      registration
                      statement.
 
 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.
 
 **The
                    liquidity of our securities and our obligations to register securities
                    will be
                    impacted by the SEC’s review of the resale registration statement that we will
                    file.**
  We
                          closed
                          a private placement of securities on December 6, 2006 pursuant
                          to which we
                          agreed to register 51,399,375 shares of our common stock
                          and shares of common
                          stock underlying purchase warrants. We filed a resale registration
                          statement on
                          Form SB-2 to register for resale such shares of common
                          stock on June 21, 2007.
                          We cannot control this future registration process in all
                          respects as some
                          matters are outside our control. Even if we are successful
                          in causing the
                          effectiveness of the resale registration statement, there
                          can be no assurances
                          that the occurrence of subsequent events may not preclude
                          our ability to
                          maintain the effectiveness of the registration statement.
                          Any of the foregoing
                          items could have adverse effects on the liquidity of our
                          shares of common
                          stock.
 
 In
                          addition, the SEC has recently disclosed that it has developed
                          internal
                          guidelines concerning the use of a resale registration
                          statement to register the
                          securities issued to certain investors in private investment
                          in public equity
                          (PIPE) transactions, where the issuer has a market capitalization
                          of less than
                          $75 million and, in general, does not qualify to file a
                          Registration Statement
                          on Form S-3 to register its securities. The SEC has taken
                          the position that
                          these smaller issuers may not be able to rely on Rule 415
                          under the Securities
                          Act, which generally permits the offer and sale of securities
                          on a continued or
                          delayed basis over a period of time, but instead would
                          require that the issuer
                          offer and sell such securities in a direct or "primary"
                          public offering, at a
                          fixed price, if the facts and circumstances are such that
                          the SEC believes the
                          investors seeking to have their shares registered are underwriters
                          and/or
                          affiliates of the issuer. It appears that the SEC in most
                          cases will permit a
                          registration for resale of up to one third of the total
                          number of shares of
                          common stock then currently owned by persons who are not
                          affiliates of such
                          issuer and, in some cases, a larger percentage depending
                          on the facts and
                          circumstances. Staff members also have indicated that an
                          issuer in most cases
                          will have to wait until the later of six months after effectiveness
                          of the first
                          registration or such time as substantially all securities
                          registered in the
                          first registration are sold before filing a subsequent
                          registration on behalf of
                          the same investors. The SEC may require as a condition
                          to the declaration of
                          effectiveness of a resale registration statement that we
                          reduce or “cut back”
the number of shares of Common Stock to be registered in
                          such registration
                          statement. The result of the foregoing is that a stockholder’s liquidity in our
                          Common Stock may be adversely affected in the event the
                          SEC requires a cut back
                          of the securities as a condition to allow the Company to
                          rely on Rule 415 with
                          respect to a resale registration statement, or, if the
                          SEC requires us to file a
                          primary registration statement.
  24
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                      of
                      Contents




**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 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.
  **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
                  
                  
                  $
                  0.332nd
                        Quarter
                  
                  0.52
                  
                  
                  
                  0.263rd
                        Quarter
                  
                  0.48
                  
                  
                  
                  0.284th
                        Quarter
                  $
                  0.52
                  
                  
                  $
                  0.19**2004****High**
                  
                  
                  **Low**1st
                        Quarter
                  $
                  1.00
                  
                  
                  $
                  0.322nd
                        Quarter
                  
                  0.51
                  
                  
                  
                  0.113rd
                        Quarter
                  
                  0.19
                  
                  
                  
                  0.094th
                        Quarter
                  $
                  0.40
                  
                  
                  $
                  0.15






25
 Table
          of Contents




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.




**Dividends
          and Distributions**
 We
        have not paid any cash dividends to date. We intend to retain our future
        earnings, if any, and we do not anticipate paying cash dividends on our common
        stock in the foreseeable future.
 
 **Item
          6. Management's Discussion and Analysis or Plan of
          Operation**
 
 **The following discussion contains forward-looking statements that involve
          risks and uncertainties. See "forward-looking statements"
          above.**
  **This discussion and analysis should be
          read in conjunction with the financial statements and
          notes included elsewhere in this report.**
  This
        annual report on Form 10-KSB/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.**
 
 **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.
 26
 Table
            of Contents
  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.
 
 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 individuals designated by Joseph Stevens & Co., Inc., 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.
 **General**
 
 IR
              BioSciences Holdings, Inc. is a development stage biotechnology company.
              Through
              our wholly-owned subsidiary ImmuneRegen BioSciences, Inc., we are engaged
              in the
              research and development of potential drug candidates, HomsperaTM and its
              derivatives, RadilexTM and ViprovexTM. Our goal is to develop these potential drug
              candidates to be used as possible countermeasures for homeland security
              threats,
              including radiological, chemical and biological agents, such as influenza
              and
              anthrax. We hope there may exist not only a market for products related
              to
              biodefense through governmental purchasing, but there also may exist
              a potential
              commercial market for treatments of cancer treatment side-effects and
              seasonal
              influenza.
 
 Our
              patents, patent applications and continued research are derived from
              discoveries
              made during research studies, performed before our formation, related
              to the
              function of Substance P.. These studies were funded by the Air Force
              Office of
              Scientific Research (AFOSR) in the early 1990s and were conducted by
              research
              scientists, including our co-founders Drs. Mark Witten and David Harris.
              In the
              course of research on Substance P, these scientists created a number
              of
              synthetic analogues, structural derivatives with slight chemical differences,
              for study. One of these, which we have named Homspera, is the basis
              for our drug
              development efforts and our intellectual property. 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. There can be no assurance that our interpretation of the results
              of our
              studies will prove to be accurate after further testing and our beliefs
regarding
              the potential uses of our drug candidates may never
              materialize.
  27
 Table
              of Contents




Our
            current focus is on the development of two potential formulations derived
            from
            Homspera, Radilex and Viprovex.
 
 We
            are
            researching Radilex for use as a potential treatment for acute exposure
            to
            radiation. To we have sponsored seven studies and co-sponsored three
            studies all
            of which were conducted utilizing rodents. The results of these studies
            suggest
            Radilex may play a role in increased survival among tested rodents following
            exposure to lethal doses of gamma radiation. We believe that Radilex,
            if
            developed, may be an acceptable candidate to be marketed to governmental
            agencies for procurement. Further, we believe that a commercial market
            may exist
            for the use of Radilex as it relates to the treatment of radiation-induced
            side
            effects of cancer treatments, either as a stand alone treatment or as
            a
            co-therapeutic agent to be used with other therapies.
 
 Viprovex
            is being researched by us for use in potential treatments of exposure
            to
            biological agents, such as infectious disease, which include influenza
            and
            anthrax. Based on early studies on Homspera and existing literature on
            Substance
            P, we are researching the efficacy of Viprovex as a potential treatment
            for
            exposure to chemical agents, such as formalin. Formalin, a highly toxic
            chemical, is a solution of formaldehyde gas dissolved in water and used
            industrially. To date we have sponsored three studies related to the
            treatment
            of influenza, three on the exposure to anthrax spores and one on exposure
            to
            formalin. We believe the results of these studies indicated potential
            efficacy
            in the use of Viprovex as both a stand alone treatment and an adjuvant,
            to be
            used in conjunction with other drugs. If Viprovex can be developed, we
            believe
            that potential applications may exist for sale to governments for the
            treatment
            of exposure to anthrax and pandemic influenza. In addition, we believe
            that
            potential commercial opportunities may exist for the treatment of seasonal
            influenza and other viral or bacterial infections, either as a stand-along
            drug
            or as an adjuvant to other existing drugs.
 
 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.
 
 We
            have
            filed patent applications and provisional patent applications for the
            use of
            Sar9,
            Met
            (O2)11-Substance
            P, the
            active ingredient in Homspera, Radilex and Viprovex. The intellectual
            property
            owned by us is for various potential uses of Sar9,
            Met (O2)11-Substance
            P. 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
            potential drug candidates, Radilex and Viprovex, are at early, pre-clinical
            stages of development and may not be shown to be safe or effective and
            may never
            receive regulatory approval. Neither Radilex nor Viprovex have yet been
            tested
            in large animals or 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 such 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 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.
 
 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.
 
 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."
 28
 Table
              of Contents
  **Product
            Research and Development**
 Due
              to our liquidity and limited cash available our spending on research
              and
              development activities in the years ended December 31, 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, and we spent $116,035 for the six months ended
              June 30,
              2006. From our inception in October 2002, we have spent $422,829 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 $2,500,000
              in an
              effort to further develop Radilex and Viprovex. This research and development
              cost estimate includes initial costs for a radiation study on large
              animals,
              which we estimate start-up costs and initial studies of up to $1,000,000
              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
              will
              be lessened.
 
 We
              believe we will be able 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." Under either the animal
              efficacy
              rule or Phase II and Phase III efficacy rules, 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.
 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.
  Research
            and Development of Radilex in Radiological Exposure
            Applications
 
 To
                date
                we have sponsored seven radiation studies and co-sponsored three
                radiation
                studies all of which were conducted utilizing rodents to study dose
                response to
                radiation, the impact on survival and to distinguish survival response
                using
                different forms of drug delivery. In each of these studies mice were
                exposed to
                varying levels of radiation and the Radilex was aerosolized in water
                and
                administered to the test subject animals by inhalation.
 
 In
                these
                studies we have collected data that we believe suggests that Radilex
                shows
                efficacy in treating ARS by combating neutropenia and thrombocytopenia,
                which is
                the decrease in populations of blood levels of white blood cells
                and platelets
                and the major medical conditions associated with acute exposure to
                radiation.
                Loss of these cells results in increased sensitivity to infection
                and to
                uncontrolled bleeding, both of which can be potentially life-threatening.
                Further, as treatment for cancer often includes radiation treatment,
                we believe
                that the potential also exists for Radilex to be used for cancer
                patients as a
                stand alone treatment or a co-therapeutic agent to be used with other
                drugs as
                treatment.
 
 Acute
                total body irradiation exposure studies have been performed at the
                University of
                Arizona Cancer Center and at Oak Ridge National Laboratories (ORNL).
                We believe
                that data collected in studies performed at the Oak Ridge National
                Laboratory in
                2006 revealed that Radilex not only prolonged survival of animals
                exposed to
                lethal gamma irradiation, but also appeared to reverse the loss of
                white blood
                cells that comprise the immune system, as well as platelets necessary
                to control
                blood clotting, subsequently leading to an increase in survival
                rates.
 
 Further,
                we believe that our survival data from irradiated mice studies and
                mechanistic
                studies in cell culture have shown indications of hematopoietic stem
                cell
                replenishment of circulating leukocytes and platelets, which could
                be of value
                in radiation-treated cancer patients.
  Continuing
                radiation studies are expected to be performed at both the Translational
                Genomics Research Institute (TGen) and TGen Drug Development Services
                (TD2, its
                drug development arm) , Pacific Northwest National Laboratory, and
                Stem Cells
                Technology Inc. to further explore the impact of radiation on the
                hematopoietic
                system of Radilex-exposed animals. In addition, future studies will
                be designed
                to examine mechanistic indicators at both high levels of radiation
                where Radilex
                has shown protection, as well as at lower levels. If successful,
                these studies
                would demonstrate the ability of Radilex to address both the government
                market,
                as a countermeasure to radiological dispersion devices, such as dirty
                bombs, as
                well as the cancer market, as an adjuvant treatment candidate potentially
                ameliorating the side effects resulting from cancer radiotherapy
  We
                believe these animal studies provide support for our continued effort
                to
                research and develop Radilex to treat the effects of exposure to
                radiation.
                However, there is no assurance that our interpretation of the results
                of the
                studies will prove to be accurate after further
                testing.
 29
 Table
                of Contents
  Research
              and Development of Viprovex in Biological Exposure
              Applications
 
 We
                are
                researching the efficacy of Viprovex as a potential treatment, either
                as a stand
                alone application or as co-therapeutic treatment, for exposure to
                various
                biological agents, such as infectious disease, including influenza
                and anthrax.
                Unlike Radilex, we are currently formulating Viprovex in a buffered
                saline
                solution as its preferred method of administration is intranasal.
 
 We
                believe that results from our animal studies may reveal 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.
 Influenza.
 
 In
                October 2003 the AFOSR sponsored preliminary studies with the Hong
                Kong
                influenza virus (A/Hong Kong/8/68) and Viprovex at the University
                of Arizona,
                Arizona Health Sciences Center, Lung Injury Laboratory. Subsequently,
                we have
                sponsored three influenza studies at Virion Laboratories, one of
                which is still
                ongoing, utilizing rodents to test the efficacy of Viprovex in treating
                the
                avian influenza A/Wuhan/359/95 (H3N2), a model system for studying
                the H5N1
                avian influenza.
 
 We
                believe that the data acquired to date in examining the effect of
                Viprovex on
                influenza infection suggests an anti-viral action occurs in the lungs
                and, more
                noticeably, in the nose. In conjunction with this suggested anti-viral
                effect,
                we believe Viprovex may play a role in the normalization of animal
                weight and
                temperature. Further, we believe we witnessed differences in peptides
                signaling
                molecules released by cells of the immune system to mediate inflammation
                and
                immune responses. We believe that such Viprovex-induced changes in
                immune
                response signals demonstrate the potential efficacy of Viprovex.
                Based on our
                results, we believe that Viprovex may show efficacy as a stand alone
                drug in the
                treatment of influenza. Further, when used in conjunction with other
                pharmacological agents, Viprovex might be an effective adjuvant therapeutic
                on treating or preventing influenza.
 
 There
                is
                no assurance that our interpretation of the results of the studies
                will prove to
                be accurate after further testing.
  Anthrax
  To
                date
                we have sponsored three anthrax studies all of which were conducted
                utilizing
                rodents to determine if Viprovex will reduce the mortality rate of
                an active
                infection of pulmonary anthrax. In our opinion, when treated with
                Viprovex prior
                to exposure to anthrax spores, Viprovex elicited protective, prophylactic
                efficacy and when treated a short time period after exposure to anthrax
                spores,
                Viprovex elicited therapeutic efficacy.
 
 We
                are
                currently sponsoring a series of studies with Hyperion Biotechnology
                Inc. at
                their laboratory facilities located at Brooks City-Base in San Antonio,
                Texas.
                The purpose of these studies is to determine if Viprovex could reduce
                the
                mortality rate of an active infection of pulmonary anthrax. The first
                of these
                studies was initiated in October 2005. This research suggested, we
                believe, that
                Viprovex offers protection from anthrax exposure in a mouse model.
                In these
                studies, we witnessed mice treated with Viprovex to have a greater
                survival rate
                11 days post-exposure to anthrax spores. Additionally, we believe
                that this
                research suggests Viprovex to elicit a dose-dependent prophylactic
                protection
                from anthrax in a mouse model.
 
 Further
                research, we believe supports these findings of prophylactic efficacy
                of
                Viprovex against anthrax and also suggests Viprovex to show efficacy
                in
                increasing survival rates in mice pretreated with anthrax. Additionally,
                preliminary results, we believe suggest that Viprovex, when used
                as an adjuvant,
                could play an important role, in conjunction with other therapies,
                in improving
                treatments of anthrax exposure.
 
 There
                is
                no assurance that our interpretation of the results of the studies
                will prove to
                be accurate after further testing.
 
 Research
                and Development of Viprovex in Chemical Exposure Applications
 
 Based
                on
                early studies on Homspera and existing literature on Substance P,
                we are
                researching the efficacy of Viprovex as a potential treatment for
                exposure to
                chemical agents, such as formalin. Formalin is a solution of formaldehyde
                gas
                dissolved in water, used industrially and toxic typically via crosslinking
                of
                proteins to other nearby proteins. To date, we have only conducted
                limited
                preclinical studies with regard to the development of Viprovex for
                indications
                related to treatment of exposure to harmful chemicals.
 
 We
                believe our early AFOSR rodent studies suggests the administration
                of Substance
                P and Homspera to animals exposed to JP-8 decreased the immune system
                effects,
                while administration of Substance P antagonists compounded the deleterious
                effects. Further experiments performed using Viprovex examined effectiveness
                in
                preventing lung injury on inhalation of toxic fumes. We believe data
                collected
                from these studies suggest Viprovex to exhibit anti-inflammatory
                effects in
                animal models.
 There
              is
              no assurance that our interpretation of the results of the studies
              will prove to
              be accurate after further testing.
 
 Research
              and Development as an Adjuvant Therapeutic
 
 Adjuvants
                are unique among active ingredients in drugs in that they are designed
                to not
                stimulate an immune response against themselves, but they are required
                to
                augment the immune response against other, co-administered
                compounds.
 
 Data
                collected from studies, we believe, suggest that Homspera may have
                potential
                value as a co-therapeutic agent or vaccine adjuvant. Studies performed
                in animal
                models of influenza and acute radiation syndrome have revealed the
                potential
                capability of Homspera to enhance the action of approved anti-viral
                medications
                as well as to provide adjunctive impact on anti-tumor radiation
                therapy.
 
 We
                believe that, in conjunction with other influenza therapeutics, Homspera
                might
                be an effective adjuvant therapeutic by decreasing the number of
                viruses at
                which the viral neuraminidase-targeted therapeutic must act. Additionally,
                while
                these results are preliminary, we believe that data suggests Homspera,
                when used
                as an adjuvant, could play an important role, in conjunction with
                other
                therapies, in improving treatments of anthrax exposure. Further,
                we believe that
                data also suggests a potential for Homspera to be used as a co-therapy
                for
                cancer patients, as secondary treatment often involves radiation
                treatments
                following chemotherapy, in an attempt to kill more of the cancer
                cells.
 30
 Table
                of Contents
  There
                is
                no assurance that our interpretation of the results of the studies
                will prove to
                be accurate after further testing.
  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.
 
 If
                we are
                successful in achieving desirable results for these applications,
                we intend to
                design the protocols and begin further studies for this and other
                applications,
                when capital is available. As we have only collected preliminary
                data and
                additional studies are required, we cannot predict when, if ever,
                a viable
                treatments for these indications 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.
 
 **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.
  
 31
 Table
                  of Contents
  **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
              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.
 
 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 August 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.
 
 32
 Table
                  of Contents
  **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.
 
 **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 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.
  33
 Table
                  of
                  Contents




**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
 Table
          of Contents




I**R
        Biosciences Holdings, Inc.**
 
 **Index
        to Financial Statements**
 
 
 
 **Page
                  No.**Report
                  of Independent Registered Certified Public Accounting Firm
              F-3Consolidated
                  Balance Sheet at December 31, 2005
              F-4Consolidated
                  Statements of Losses for the two years endedDecember
                  31, 2005 and 2004 and the period October 30, 2002(Date
                  of Inception) through December 31, 2005
              F-5Consolidated
                  Statements of Stockholders' Equity (Deficit) for the
                  periodOctober
                  30, 2002 (Date of Inception) through December 31, 2005
              F-6
                  to F-9Consolidated
                  Statements of Cash Flows for the two years endedDecember
                  31, 2005 and 2004 and the period October 30, 2002(Date
                  of Inception) through December 31, 2005
              F-10
                  to F-11Notes
                  to Consolidated Financial Statements
              F-12
                  to F-25
  
 F-2
 Table
            of Contents




**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
 Table
            of Contents




**IR
        BioSciences Holdings, Inc. and Subsidiary**
 **(A
        Development Stage Company)**
 **Consolidated
        Balance Sheet**
 
 **December
                  31, 2005****Assets**Current
                  assetsCash
                  and cash equivalents
              
              $
              265,860Prepaid
                  services and other current assets
              
              
              24,507Total
                  current assets
              
              
              290,367Deposits
                  and other assets
              
              
              2,260Furniture
                  and equipment, net of accumulateddepreciation
                  of $3,862
              
              
              4,226Total
                  assets
              
              $
              296,853**Liabilities
                  and Stockholders' Deficit**Current
                  liabilitiesAccounts
                  payable and accrued liabilities
              
              
              502,128Warrant
                  portion of penalty for late registrationof
                  shares - with registration rights (See note E)
              
              
              384,145Commom
                  stock portion of penalty for lateRegistration
                  of shares (See note E)
              
              
              1,677,538Total
                  current liabilities
              
              
              2,563,811Commitments
                  and Contingencies
              
              
              --Stockholders'
                  deficitPreferred
                  stock, 0.001 par value:10,000,000
                  shares authorized, no sharesissued
                  and outstanding
              
              
              --Common
                  stock, $0.001 par value; 100,000,000shares
                  authorized; 69,436,319 shares issuedand
                  outstanding at December 31, 2005
              
              
              69,435Additional
                  paid-in capital
              
              
              9,465,501Deferred
                  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
 Table
            of Contents




**IR
        BioSciences Holdings, Inc. and Subsidiary**
 **(A
        Development Stage Company)**
 **Consolidated
        Statements of Losses**
 
 
 
 **For
                  the**
                **Year Ended**
                **December
                  31,**
                **2005**
              
              
              **For
                  the**
                **Year
                  Ended**
                **December
                  31,**
                **2004**
              
              
              **For
                  the Period**
                **October
                  30,**
                **2002
                  to**
                **December
                  31,**
                **2005**Operating
                  expenses:Selling,
                  general and administrative expenses
              
              $
              2,534,417
              
              
              $
              4,498,390
              
              
              $
              8,124,301Merger
                  fees and costs
              
              
              --
              
              
              
              --
              
              
              
              350,000Financing
                  cost
              
              
              --
              
              
              
              --
              
              
              
              90,000Impairment
                  of intangible asset
              
              
              6,393
              
              
              
              --
              
              
              
              6,393Total
                  operating expenses
              
              
              2,540,810
              
              
              
              4,498,390
              
              
              
              8,570,694Operating
                  loss
              
              
              (2,540,810
              )
              
              
              (4,498,390
              )
              
              
              (8,570,694
              )Other
                  expense:Cost
                  of penalty for late registration of shares
              
              
              2,630,761
              
              
              
              --
              
              
              
              2,630,761Gain
                  from marking to market - warrant portionof
                  penalty for late registration of shares
              
              
              (254,693
              )
              
              
              --
              
              
              
              (254,693
              )Gain
                  from marking to market - stock portionof
                  penalty for late registration of shares
              
              
              (314,385
              )
              
              
              --
              
              
              
              (314,385
              )Interest
                  (income) expense, net
              
              
              (11,386
              )
              
              
              807,017
              
              
              
              1,166,757Total
                  other (income) expense
              
              
              (2,050,297
              )
              
              
              807,017
              
              
              
              3,228,440Loss
                  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
 
 The
        accompanying notes are an integral part of these consolidated financial
        statements.
   F-5
 Table
            of Contents




**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**






**Common
                  Stock****Shares**
              
              
              **Amount**
              
              
              **Additional**
                **Paid-In**
                **Capital**
              
              
              **Deferred**
                **Compensation**
              
              
              **Accumulated**
                **Deficit**
              
              
              **Total**Balance
                  at October 30, 2002 (date of inception)
              
              
              --
              
              
              $
              --
              
              
              $
              --
              
              
              
              --
              
              
              $
              --
              
              
              $
              --Shares
                  of common stock issued at $0.0006per
                  share to founders for license ofproprietary
                  right in December 2002
              
              
              16,612,276
              
              
              
              16,612
              
              
              
              (7,362
              )
              
              
              --
              
              
              
              --
              
              
              
              9,250Shares
                  of common stock issued at $0.0006 pershare
                  to founders for services rendered inDecember
                  2002
              
              
              1,405,310
              
              
              
              1,405
              
              
              
              (623
              )
              
              
              --
              
              
              
              --
              
              
              
              782Shares
                  of common stock issued at $0.1671 pershare
                  to consultants for services renderedin
                  December 2002
              
              
              53,878
              
              
              
              54
              
              
              
              8,946
              
              
              
              (9,000
              )
              
              
              --
              
              
              
              --Sale
                  of common stock for cash at $0.1671 pershare
                  in December 2002
              
              
              185,578
              
              
              
              186
              
              
              
              30,815
              
              
              
              --
              
              
              
              --
              
              
              
              31,001Net
                  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 pershare
                  for services rendered in January 2003
              
              
              98,776
              
              
              
              99
              
              
              
              13,651
              
              
              
              --
              
              
              
              --
              
              
              
              13,750Sale
                  of shares of common stock for cash at$0.1517
                  per share in January 2003
              
              
              329,552
              
              
              
              330
              
              
              
              49,670
              
              
              
              --
              
              
              
              --
              
              
              
              50,000Shares
                  granted to consultants at $0.1392 pershare
                  for services rendered in March 2003
              
              
              154,450
              
              
              
              154
              
              
              
              21,346
              
              
              
              --
              
              
              
              --
              
              
              
              21,500Conversion
                  of notes payable to common stockat
                  $0.1392 per share in April 2003
              
              
              1,436,736
              
              
              
              1,437
              
              
              
              198,563
              
              
              
              --
              
              
              
              --
              
              
              
              200,000Shares
                  granted to consultants at $0.1413 pershare
                  for services rendered in April 2003
              
              
              14,368
              
              
              
              14
              
              
              
              2,016
              
              
              
              --
              
              
              
              --
              
              
              
              2,030Sale
                  of shares of common stock for cash at$0.2784
                  per share in May 2003
              
              
              17,960
              
              
              
              18
              
              
              
              4,982
              
              
              
              --
              
              
              
              --
              
              
              
              5,000Sales
                  of shares of common stock for cash at$0.2784
                  per share in June 2003
              
              
              35,918
              
              
              
              36
              
              
              
              9,964
              
              
              
              --
              
              
              
              --
              
              
              
              10,000Conversion
                  of notes payable to common stockat
                  $0.1392 per share in June 2003
              
              
              718,368
              
              
              
              718
              
              
              
              99,282
              
              
              
              --
              
              
              
              --
              
              
              
              100,000Beneficial
                  conversion feature associated withnotes
                  issued in June 2003
              
              
              --
              
              
              
              --
              
              
              
              60,560
              
              
              
              --
              
              
              
              --
              
              
              
              60,560Amortization
                  of deferred compensation
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              9,000
              
              
              
              --
              
              
              
              9,000Costs
                  of GPN Merger in July 2003
              
              
              2,368,130
              
              
              
              2,368
              
              
              
              (123,168
              )
              
              
              --
              
              
              
              --
              
              
              
              (120,799
              )Value
                  of warrants issued with extended notespayable
                  in October 2003
              
              
              --
              
              
              
              --
              
              
              
              189,937
              
              
              
              --
              
              
              
              --
              
              
              
              189,937Value
                  of Company warrants issued inconjunction
                  with fourth quarter notespayable
                  issued October throughDecember
                  2003
              
              
              --
              
              
              
              --
              
              
              
              207,457
              
              
              
              --
              
              
              
              --
              
              
              
              207,457Value
                  of warrants contributed by foundersin
                  conjunction with fourth quarter notespayable
                  issued October throughDecember
                  2003
              
              
              --
              
              
              
              --
              
              
              
              183,543
              
              
              
              --
              
              
              
              --
              
              
              
              183,543Value
                  of warrants issued for services inOctober
                  through December 2003
              
              
              --
              
              
              
              --
              
              
              
              85,861
              
              
              
              --
              
              
              
              --
              
              
              
              85,861Net
                  loss for the year endedDecember
                  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
              )




The
        accompanying notes are an integral part of these consolidated financial
        statements.
   F-6
 Table
            of Contents




**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**




**Common
                  Stock****Shares**
              
              
              **Amount**
              
              
              **Additional**
                **Paid-In**
                **Capital**
              
              
              **Deferred**
                **Compensation**
              
              
              **Accumulated**
                **Deficit**
              
              
              **Total**Shares
                  granted at $1.00 per share pursuant tothe
                  Senior Note Agreement in January 2004
              
              
              600,000
              
              
              
              600
              
              
              
              599,400
              
              
              
              (600,000
              )
              
              
              --
              
              
              
              --Shares
                  issued at $1.00 per share to aconsultant
                  for services rendered inJanuary
                  2004
              
              
              800,000
              
              
              
              800
              
              
              
              799,200
              
              
              
              (800,000
              )
              
              
              --
              
              
              
              --Shares
                  issued to a consultant at $0.62per
                  share for services rendered inFebruary
                  2004
              
              
              40,000
              
              
              
              40
              
              
              
              24,760
              
              
              
              (24,800
              )
              
              
              --
              
              
              
              --Shares
                  issued to a consultant at $0.40 pershare
                  for services rendered in March 2004
              
              
              1,051,600
              
              
              
              1,051
              
              
              
              419,589
              
              
              
              (420,640
              )
              
              
              --
              
              
              
              --Shares
                  issued to a consultant at $0.50 pershare
                  for services rendered in March 2004
              
              
              
              
              
              
              500,000
              
              
              
              500
              
              
              
              249,500
              
              
              
              (250,000
              )
              
              
              --Shares
                  sold for cash at $0.15 per sharein
                  March, 2004
              
              
              8,000
              
              
              
              8
              
              
              
              1,192
              
              
              
              --
              
              
              
              --
              
              
              
              1,200Shares
                  issued at $0.50 per share toconsultants
                  for services rendered inMarch
                  2004
              
              
              20,000
              
              
              
              20
              
              
              
              9,980
              
              
              
              --
              
              
              
              --
              
              
              
              10,000Shares
                  issued to a consultant at $0.40 perfor
                  services rendered in March 2004
              
              
              2,000
              
              
              
              2
              
              
              
              798
              
              
              
              --
              
              
              
              --
              
              
              
              800Shares
                  issued to consultants at $0.32 pershare
                  for services rendered in March 2004
              
              
              91,600
              
              
              
              92
              
              
              
              29,220
              
              
              
              --
              
              
              
              --
              
              
              
              29,312Shares
                  to be issued to consultant at $0.41 pershare
                  in April 2004 for services to berendered
                  through March 2005
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              (82,000
              )
              
              
              --
              
              
              
              (82,000
              )Shares
                  granted pursuant to the New Senior NoteAgreement
                  in April 2004
              
              
              600,000
              
              
              
              600
              
              
              
              149,400
              
              
              
              (150,000
              )
              
              
              --
              
              
              
              --Shares
                  issued to officer at $0.32 per share forservices
                  rendered in April 2004
              
              
              200,000
              
              
              
              200
              
              
              
              63,800
              
              
              
              --
              
              
              
              --
              
              
              
              64,000Conversion
                  of note payable to common stock at$0.10
                  per share in May 2004
              
              
              350,000
              
              
              
              350
              
              
              
              34,650
              
              
              
              --
              
              
              
              --
              
              
              
              35,000Beneficial
                  Conversion Feature associated withnote
                  payable in May 2004
              
              
              --
              
              
              
              --
              
              
              
              35,000
              
              
              
              --
              
              
              
              --
              
              
              
              35,000Issuance
                  of warrants to officers and founderfor
                  services rendered in May 2004
              
              
              --
              
              
              
              --
              
              
              
              269,208
              
              
              
              --
              
              
              
              --
              
              
              
              269,208Shares
                  to a consultant at $0.20 per share as adue
                  diligence fee in May 2004
              
              
              125,000
              
              
              
              125
              
              
              
              24,875
              
              
              
              --
              
              
              
              --
              
              
              
              25,000Shares
                  issued to a consultant at $1.00 pershare
                  for services to be rendered overtwelve
                  months beginning May 2004
              
              
              500,000
              
              
              
              500
              
              
              
              499,500
              
              
              
              (500,000
              )
              
              
              --
              
              
              
              --Beneficial
                  Conversion Feature associated withnotes
                  payable issued in June 2004
              
              
              --
              
              
              
              --
              
              
              
              3,000
              
              
              
              --
              
              
              
              --
              
              
              
              3,000Issuance
                  of warrants to note holders in April,May,
                  and June 2004
              
              
              --
              
              
              
              --
              
              
              
              17,915
              
              
              
              --
              
              
              
              --
              
              
              
              17,915Issuance
                  of warrants to employees andconsultants
                  for services rendered inApril
                  through June 2004
              
              
              --
              
              
              
              --
              
              
              
              8,318
              
              
              
              --
              
              
              
              --
              
              
              
              8,318Shares
                  issued in July to a consultant at$0.10
                  for services to be rendered throughJuly
                  2005
              
              
              250,000
              
              
              
              250
              
              
              
              24,750
              
              
              
              (25,000
              )
              
              
              --
              
              
              
              --Shares
                  issued to a consultant in July andSeptember
                  at $0.41 per share for servicesto
                  be rendered through April 2005
              
              
              200,000
              
              
              
              200
              
              
              
              81,800
              
              
              
              --
              
              
              
              --
              
              
              
              82,000Shares
                  issued to a consultant in September at$0.12
                  to $0.22 for services renderedthrough
                  September 2004
              
              
              127,276
              
              
              
              127
              
              
              
              16,782
              
              
              
              --
              
              
              
              --
              
              
              
              16,909




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






F-7
 Table
          of Contents




**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**






**Common
                  Stock****Shares**
              
              
              **Amount**
              
              
              **Additional**
                **Paid-In**
                **Capital**
              
              
              **Deferred**
                **Compensation**
              
              
              **Accumulated**
                **Deficit**
              
              
              **Total**Shares
                  issued in July to September 2004 asinterest
                  on note payable
              
              
              300,000
              
              
              
              300
              
              
              
              35,700
              
              
              
              --
              
              
              
              --
              
              
              
              36,000Issuance
                  of warrants with notes payable inJuly
                  and August 2004
              
              
              --
              
              
              
              --
              
              
              
              72,252
              
              
              
              --
              
              
              
              --
              
              
              
              72,252Accrued
                  deferred compensation in August 2004to
                  a consultant for 100,000 shares at $0.10per
                  share, committed but unissued
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              (10,000
              )
              
              
              --
              
              
              
              (10,000
              )Shares
                  issued in August 2004 at $0.14 to aconsultant
                  for services to be performedthrough
                  October 2004
              
              
              100,000
              
              
              
              100
              
              
              
              13,900
              
              
              
              (14,000
              )
              
              
              --
              
              
              
              --Shares
                  issued in August 2004 at $0.125 pershare
                  for conversion of $30,000 demand loan
              
              
              240,000
              
              
              
              240
              
              
              
              29,760
              
              
              
              --
              
              
              
              --
              
              
              
              30,000Shares
                  issued in August 2004 at $0.16 pershare
                  to a consultant for services provided
              
              
              125,000
              
              
              
              125
              
              
              
              19,875
              
              
              
              --
              
              
              
              --
              
              
              
              20,000Shares
                  issued in October 2004 to employees at$0.16
                  to $0.25 per share
              
              
              48,804
              
              
              
              49
              
              
              
              8,335
              
              
              
              --
              
              
              
              --
              
              
              
              8,384Commitment
                  to issue 100,000 shares of stock toa
                  consultant at $0.23 per share for servicesto
                  be provided through September 2005
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              (23,000
              )
              
              
              --
              
              
              
              (23,000
              )Sale
                  of stock for cash in October at $0.125 pershare,
                  net of costs of $298,155
              
              
              18,160,000
              
              
              
              18,160
              
              
              
              1,345,763
              
              
              
              --
              
              
              
              --
              
              
              
              1,363,923Value
                  of warrants issued with sale of commonstock
                  in October, net of costs
              
              
              --
              
              
              
              --
              
              
              
              607,922
              
              
              
              --
              
              
              
              --
              
              
              
              607,922Issuance
                  of warrant to officer in October, 2004
              
              
              --
              
              
              
              --
              
              
              
              112,697
              
              
              
              --
              
              
              
              --
              
              
              
              112,697Issuance
                  of stock to investment bankers inOctober
                  2004 for commissions earned
              
              
              4,900,000
              
              
              
              4,900
              
              
              
              (4,900
              )
              
              
              --
              
              
              
              --
              
              
              
              --Conversion
                  of accounts payable to stock inOctober
                  at $0.125 per share
              
              
              1,257,746
              
              
              
              1,258
              
              
              
              107,382
              
              
              
              --
              
              
              
              --
              
              
              
              108,640Value
                  of warrants issued with accountspayable
                  conversions
              
              
              --
              
              
              
              --
              
              
              
              48,579
              
              
              
              --
              
              
              
              --
              
              
              
              48,579Conversion
                  of demand loan to stock in Octoberat
                  $0.11 per share
              
              
              93,300
              
              
              
              93
              
              
              
              10,170
              
              
              
              --
              
              
              
              --
              
              
              
              10,263Forgiveness
                  of notes payable in October 2004
              
              
              --
              
              
              
              --
              
              
              
              36,785
              
              
              
              --
              
              
              
              --
              
              
              
              36,785Issuance
                  of stock to officer and director at$0.125
                  per share in October for conversionof
                  liability
              
              
              1,440,000
              
              
              
              1,440
              
              
              
              122,493
              
              
              
              --
              
              
              
              --
              
              
              
              123,933Value
                  of warrants issued with officer anddirector
                  conversion of liabilities
              
              
              --
              
              
              
              --
              
              
              
              56,067
              
              
              
              --
              
              
              
              --
              
              
              
              56,047Conversion
                  of debt and accrued interest tocommon
                  stock at $0.075 to $0.125 per share
              
              
              6,703,151
              
              
              
              6,703
              
              
              
              417,514
              
              
              
              --
              
              
              
              --
              
              
              
              424,217Value
                  of warrants issued with conversionof
                  debt
              
              
              --
              
              
              
              --
              
              
              
              191,111
              
              
              
              --
              
              
              
              --
              
              
              
              191,111Conversion
                  of note payable in October intocommon
                  stock at $0.075 per share
              
              
              67,613
              
              
              
              68
              
              
              
              4,932
              
              
              
              --
              
              
              
              --
              
              
              
              5,000Issuance
                  of warrants to note holders inOctober
                  2004
              
              
              --
              
              
              
              --
              
              
              
              112,562
              
              
              
              --
              
              
              
              --
              
              
              
              112,562Value
                  of shares issued to CFO as compensation
              
              
              100,000
              
              
              
              100
              
              
              
              34,900
              
              
              
              --
              
              
              
              --
              
              
              
              35,000Value
                  of warrants issued to members ofadvisory
                  committees in Novemberand
                  December
              
              
              --
              
              
              
              --
              
              
              
              16,348
              
              
              
              --
              
              
              
              --
              
              
              
              16,348Beneficial
                  conversion feature associated withnotes
                  payable
              
              
              --
              
              
              
              --
              
              
              
              124,709
              
              
              
              --
              
              
              
              --
              
              
              
              124,709Shares
                  issued in error to be cancelled
              
              
              (9,002
              )
              
              
              (9
              )
              
              
              9
              
              
              
              --
              
              
              
              --
              
              
              
              --Amortization
                  of deferred compensation throughDecember
                  31, 2004
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              2,729,454
              
              
              
              --
              
              
              
              2,729,454Loss
                  for the year endedDecember
                  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






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






F-8
 Table
          of Contents




**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**
 ****


**Common
                  Stock****Shares**
              
              
              **Amount**
              
              
              **Additional**
                **Paid-In**
                **Capital**
              
              
              **Deferred**
                **Compensation**
              
              
              **Accumulated**
                **Deficit**
              
              
              **Total**Sale
                  of shares of common stock for cash at$0.20
                  per share in Mar 2005 for warrantexercise,
                  net of costs
              
              
              6,600,778
              
              
              
              6,600
              
              
              
              1,184,256
              
              
              
              --
              
              
              
              --
              
              
              
              1,190,856Value
                  of warrants issued to membersof
                  advisory committees in March 2005
              
              
              --
              
              
              
              --
              
              
              
              137,049
              
              
              
              --
              
              
              
              --
              
              
              
              137,049Deferred
                  compensation in Feb 2005 to aconsultant
                  for 50,000 shares of stock at$0.65
                  per share.
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              (32,500
              )
              
              
              --
              
              
              
              (32,500
              )Warrants
                  exercised at $0.05 per sharein
                  June 2003
              
              
              80,000
              
              
              
              80
              
              
              
              3,920
              
              
              
              --
              
              
              
              --
              
              
              
              4,000Value
                  of warrants issued to members ofadvisory
                  committee in June 2005
              
              
              --
              
              
              
              --
              
              
              
              70,781
              
              
              
              --
              
              
              
              --
              
              
              
              70,781Value
                  of warrants issued to investors andservice
                  providers in June 2005
              
              
              --
              
              
              
              --
              
              
              
              32,991
              
              
              
              --
              
              
              
              --
              
              
              
              32,991Issuance
                  of 232,153 shares of commonstock
                  in July 2005 for conversion ofnotes
                  payable
              
              
              232,153
              
              
              
              232
              
              
              
              64,771
              
              
              
              --
              
              
              
              --
              
              
              
              65,003Issuance
                  of 100,000 shares of common stockin
                  August 2005 to a consultant forservices
                  provided
              
              
              100,000
              
              
              
              100
              
              
              
              9,900
              
              
              
              --
              
              
              
              --
              
              
              
              10,000Value
                  of warrants issued to advisorycommittee
                  in September 2005 for services
              
              
              --
              
              
              
              --
              
              
              
              20,491
              
              
              
              --
              
              
              
              --
              
              
              
              20,491Amortization
                  of deferred comp for thetwelve
                  months ended December, 2005
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              199,726
              
              
              
              --
              
              
              
              199,726Value
                  of warrants issued in Octoberand
                  December 2005 to investors andservice
                  providers
              
              
              --
              
              
              
              --
              
              
              
              18,399
              
              
              
              --
              
              
              
              --
              
              
              
              18,399Loss
                  for the year endedDecember
                  31, 2005
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              (4,591,107
              )
              
              
              (4,591,107
              )69,436,319
              
              
              
              69,435
              
              
              
              9,465,501
              
              
              
              (2,760
              )
              
              
              (11,799,134
              )
              
              
              (2,266,958
              )




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






F-9
 Table
          of Contents






**IR
        BioSciences Holdings, Inc. and Subsidiary**
 **(A
        Development Stage Company)**
 **Consolidated
        Statements of Cash Flows**
  
 
 **For
                  the Year Ended**
                **December
                  31, 2005**
              
              
              **For
                  the Year Ended**
                **December
                  31, 2004**
              
              
              **For
                  the Period**
                **October
                  30, 2002 to**
                **December
                  31, 2005**Cash
                  flows from operating activities:Net
                  loss
              
              $
              (4,591,107
              )
              
              $
              (5,305,407
              )
              
              $
              (11,799,134
              )Adjustments
                  to reconcile net loss to netcash
                  used in operating activities:Non-cash
                  compensation
              
              
              520,853
              
              
              
              3,284,577
              
              
              
              3,920,853Cost
                  of penalty for late registration of shares -stock
                  portion
              
              
              1,991,923
              
              
              
              --
              
              
              
              1,991,923Cost
                  of penalty for late registration of shares -warrant
                  portion
              
              
              638,838
              
              
              
              --
              
              
              
              638,838(Gain)
                  loss from marking to market - stock portionof
                  penalty for late registration of shares
              
              
              (314,385
              )
              
              
              --
              
              
              
              (314,385
              )(Gain)
                  loss from marking to market - warrant portionof
                  penalty for late registration of shares
              
              
              (254,693
              )
              
              
              --
              
              
              
              (254,693
              )Impairment
                  of intangible asset
              
              
              6,393
              
              
              
              --
              
              
              
              6,393Interest
                  expense
              
              
              4,007
              
              
              
              83,776
              
              
              
              156,407Amortization
                  of discount on notes payable
              
              
              --
              
              
              
              704,633
              
              
              
              1,006,935Depreciation
                  and amortization
              
              
              3,201
              
              
              
              13,255
              
              
              
              29,218Changes
                  in operating assets and liabilities:Prepaid
                  services and other assets
              
              
              9,946
              
              
              
              29,130
              
              
              
              3,234Accounts
                  payable and accrued expenses
              
              
              100,911
              
              
              
              148,854
              
              
              
              655,953Net
                  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
              
              
              
              1,233,500Principal
                  payments on notes payable and demand loans
              
              
              (14,997
              )
              
              
              --
              
              
              
              (264,997
              )Shares
                  of stock sold for cash
              
              
              1,190,856
              
              
              
              1,973,045
              
              
              
              3,259,902Proceeds
                  from exercise of warrant
              
              
              4,000
              
              
              
              --
              
              
              
              4,000Officer
                  repayment of amounts paid on his behalf
              
              
              --
              
              
              
              --
              
              
              
              19,880Cash
                  paid on behalf of officer
              
              
              --
              
              
              
              --
              
              
              
              (19,880
              )Net
                  cash provided by financing activities
              
              
              1,179,859
              
              
              
              2,005,545
              
              
              
              4,232,405Net
                  increase (decrease) in cash and cash equivalents
              
              
              (704,254
              )
              
              
              959,580
              
              
              
              265,860Cash
                  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
 The
        accompanying notes are an integral part of
        these consolidated financial statements.
   F-10
 Table
            of Contents




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


**For
                  the Year Ended**
                **December
                  31, 2005**
              
              
              **For
                  the Year Ended**
                **December
                  31, 2004**
              
              
              **For
                  the Period**
                **October
                  30, 2002 to**
                **December
                  31, 2005**Supplemental
                  disclosures of cash flow information:Cash
                  paid during the period for:Interest
              
              $
              $
                  1,706
              
              
              $
              54
              
              
              $
              43,553Taxes
              
              $
              -
              
              
              $
              -
              
              
              $
              -Acquisition
                  and capital restructure:Assets
                  acquired
              
              
              -
              
              
              
              -
              
              
              
              -Liabilities
                  assumed
              
              
              -
              
              
              
              -
              
              
              
              (120,799
              )Common
                  stock retained
              
              
              -
              
              
              
              -
              
              
              
              (2,369
              )Adjustment
                  to additional paid-in capital
              
              
              -
              
              
              
              -
              
              
              
              123,168Organization
                  costs
              
              
              -
              
              
              
              -
              
              
              
              350,000Total
                  consideration paid
              
              $
              -
              
              
              $
              -
              
              
              $
              350,000Common
                  stock issued in exchange for proprietary rights
              
              $
              -
              
              
              $
              -
              
              
              $
              9,250Common
                  stock issued in exchange for services
              
              $
              10,000
              
              
              $
              2,878,006
              
              
              $
              2,925,286Common
                  stock issued in exchange for previously incurreddebt
                  and accrued interest
              
              $
              65,003
              
              
              $
              695,591
              
              
              $
              1,060,594Common
                  stock issued as interest
              
              $
              -
              
              
              $
              36,000
              
              
              $
              36,000Amortization
                  of beneficial conversion feature
              
              $
              -
              
              
              $
              162,709
              
              
              $
              223,269Stock
                  options and warrants issued in exchange for servicesrendered
              
              $
              279,949
              
              
              $
              406,571
              
              
              $
              772,381Debt
                  and accrued interest forgiveness from note holders
              
              $
              -
              
              
              $
              36,785
              
              
              $
              36,785Common
                  stock issued in satisfaction of amounts due to anOfficer
                  and a Director
              
              $
              -
              
              
              $
              180,000
              
              
              $
              180,000Common
                  stock issued in satisfaction of accounts payable
              
              $
              -
              
              
              $
              157,219
              
              
              $
              157,219Amortization
                  of deferred compensation
              
              $
              199,726
              
              
              $
              -
              
              
              $
              199,726Fair
                  value of common stock and warrants in connectionwith
                  the late filing of registration statement
              
              $
              2,630,761
              
              
              $
              -
              
              
              $
              2,630,761Gain
                  from marking to market - stock portion ofpenalty
                  for late registration of shares
              
              $
              314,385
              
              
              $
              -
              
              
              $
              314,385Gain
                  from marking to market - warrant portion ofpenalty
                  for late registration of shares
              
              $
              254,693
              
              
              $
              -
              
              
              $
              254,693Impairment
                  of intangible asset
              
              $
              6,393
              
              
              $
              -
              
              
              $
              6,393
 The
          accompanying notes are an integral part of
          these consolidated financial statements.
   F-11
 Table
            of Contents




**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.
 
 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 CashEquivalents
 
 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.
   F-12
 Table
            of Contents
  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.
 
 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.
   F-13
 Table
            of Contents
  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 underunder
                    APB 25
                
                
                --
                
                
                
                --Compensation
                    recognized underSFAS
                    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.
  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
        andEquipment
 
 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.
 
 F-14
 Table
            of Contents
  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 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
                
                $
                6,665Office
                    Fixtures and Furniture
                
                
                1,4238,088Accumulated
                    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.
 
 F-15
 Table
            of Contents
  The
        costs
        and accumulated amortization of intangible assets at December 31 are summarized
        as follows:
  **2005**Technology
                    License
                
                $
                9,250Website
                
                
                22,500Less:
                    accumulated amortization
                
                
                (25,357
                )Impairment
                    of intangible asset
                
                
                (6,393
                )Intangible
                    assets, net
                
                $
                -




**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 lateregistration
                    of shares
                
                $
                1,677,538Warrant
                    portion of penalty for lateregistration
                    of shares - withregistration
                    rights
                
                
                384,145Accounts
                    payable & accrued liabilities
                
                
                475,030Insurance
                    contract payable
                
                
                18,000Accrued
                    interest
                
                
                9,098Total
                
                $
                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.
 
 F-16
 Table
              of Contents
  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 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).
 
 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.
   F-17
 Table
              of Contents
  **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
            individuals designated by its investment bankers as fees. The Company
            also
            issued 1,257,746 shares of common stock in settlement of $157,219 of
            accounts
            payable. In addition, the Company issued an aggregate 1,440,000 shares
            of common
            stock to an officer and a director in satisfaction $180,000 of
            liabilities.
 
 Private
          Placement of Common Stock
 
 In
            October 2004, the Company completed a private placement of its common
            stock (the
            "Private Placement") whereby the Company sold an aggregate of $2,450,000
            worth
            of units (each a "Unit" and collectively, the "Units") to accredited
            investors
            (as defined by Rule 501 under the Securities Act of 1933, as amended)
            (the
            transaction is referred to herein as the "Private Placement"). The Company
            received proceeds of $1,971,845 after costs of the issuance of $298,155.
            Included in the $2,450,000 sale was conversion of $180,000 of accrued
            salary and
            consulting fees due to an officer and an director of the Company. The
            number of
            shares of common stock issued pursuant to the Private Placement was 19,600,000,
            along with warrants to purchase an additional 9,080,000 shares, plus
            warrants to
            purchase an additional 720,000 shares issued to the officer and director.
            The Company
            also issued an additional 4,900,000 shares of common stock to individuals
            designated by 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.
 
 F-18
 Table
              of Contents
  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.
  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****Exercise**
                    **Prices**
                  
                  
                  **Number**
                    **Outstanding**
                  
                  
                  **Weighted**
                    **Average**
                    **Remaining**
                    **Contractual**
                    **Life
                      (years)**
                  
                  
                  **Weighted**
                    **Average**
                    **Exercise**
                    **Price**
                  
                  
                  **Number**
                    **Exercisable**
                  
                  
                  **Weighted**
                    **Average**
                    **Remaining**
                    **Contractual**
                    **Life
                      (years)**$
                  25.00
                  
                  
                  
                  63,212
                  
                  
                  
                  4.24
                  
                  
                  $
                  25.00
                  
                  
                  
                  63,212
                  
                  
                  
                  4.240.31
                  
                  
                  
                  1,000
                  
                  
                  
                  4.95
                  
                  
                  
                  0.31
                  
                  
                  
                  1,000
                  
                  
                  
                  4.950.33
                  
                  
                  
                  103,030
                  
                  
                  
                  4.61
                  
                  
                  
                  0.33
                  
                  
                  
                  103,030
                  
                  
                  
                  4.610.44
                  
                  
                  
                  150,000
                  
                  
                  
                  4.34
                  
                  
                  
                  0.44
                  
                  
                  
                  150,000
                  
                  
                  
                  4.34317,242
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  317,242






F-19
 Table
          of Contents


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




**Number
                  of Shares**
              
              
              **Weighted
                  Average**
                **Price
                  Per Share**Outstanding
                  at December 31, 2003
              
              
              63,212
              
              
              
              25.00Granted
              
              
              --
              
              
              
              --Exercised
              
              
              --
              
              
              
              --Canceled
                  or expired
              
              
              --
              
              
              
              --Outstanding
                  at December 31, 2004
              
              
              63,212
              
              
              $
              25.00Granted
              
              
              254,030
              
              
              
              0.39Exercised
              
              
              --
              
              
              
              --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****Exercise**
                **Prices**
              
              
              **Number**
                **Outstanding**
              
              
              **Weighted**
                **Average**
                **Remaining**
                **Contractual**
                **Life
                  (years)**
              
              
              **Weighted**
                **Average**
                **Exercise**
                **Price**
              
              
              **Number**
                **Exercisable**
              
              
              **Weighted**
                **Average**
                **Remaining**
                **Contractual**
                **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
              
              
              
              3.571.00
              
              
              
              867,311
              
              
              
              2.08
              
              
              
              1.00
              
              
              
              867,311
              
              
              
              2.082.00
              
              
              
              46,550
              
              
              
              3.21
              
              
              
              2.00
              
              
              
              46,550
              
              
              
              3.2111,616,865
              
              
              
              3.44
              
              
              
              
              
              
              
              11,616,865
              
              
              
              3.44




Transactions
        involving warrants are summarized as follows:
  **Number
                  of Shares**
                **(post-split)**
              
              
              **Weighted
                  Average**
                **Price
                  Per Share**
                **(post-split)**Outstanding
                  at January 1, 2004
              
              
              832,510
              
              
              $
              .82Granted
              
              
              16,831,199
              
              
              
              .47Exercised
              
              
              (6,600,778
              )
              
              
              .50Canceled
                  or expired
              
              
              --
              
              
              
              --Outstanding
                  at December 31, 2004
              
              
              11,062,931
              
              
              
              .48Granted
              
              
              757,464
              
              
              
              .44Exercised
              
              
              (80,000
              )
              
              
              .05Canceled
                  or expired
              
              
              (123,530
              )
              
              
              2.00Outstanding
                  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








F-20
 Table
          of Contents






(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 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 introducing financial partners to the Company through which the
          Company raised a minimum of $2,000,000 in equity and debt financings in
          a series
          of transactions. 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.
 
 F-21
 Table
            of Contents
  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.
  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.
 
 F-22
 Table
            of Contents
  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.
 
 **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
              
              $
              1,740,000Valuation
                  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:




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






F-23
 Table
          of Contents




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.
 
 **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.
 
 34
 Table
            of Contents
 
 **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 DirectorJohn
                    N. Fermanis
                
                52
                
                Chief
                    Financial OfficerMark
                    L. Witten, Ph.D.
                
                52
                
                DirectorTheodore
                    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 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").






35
 Table
          of Contents




**Annual
                  Compensation****Name
                  and principal position**
              **Year**
              
              **Salary
                  ($)**
              
              
              **Bonus
                  ($)**Michael
                  K. Wilhelm(1)
              2005
              
              
              275,000
              
              
              
              28,870
              (2)Chief
                  Executive Officer and President
              2004
              
              
              175,000
              
              
              
              247,301
              (3)2003
              
              
              125,000
              
              
              
              0John
                  N. Fermanis
              2005
              
              
              161,416
              (5)
              
              
              4,590
              (6)Chief
                  Financial Officer (4)
              2004
              
              
              0
              
              
              
              02003
              
              
              0
              
              
              
              0






(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 introducing financial partners to the Company through which the
          Company raised a minimum of $2,000,000 in equity and debt financings in
          a series
          of transactions. 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.
 
 (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.
 
 Pursuant
            to the terms of his employment agreement dated August 5, 2006, Mr. Wilhelm,
            our
            President and Chief Executive Officer, is to receive cash fees and issued
            unregistered shares of the Company’s common stock if the Company consummates a
            Transaction, as defined below, with any unaffiliated third party, the
            number of
            shares to be issued to be the product of the percentage of transaction
            value, as
            defined in the employment agreement, divided by the closing bid price
            of the
            Company’s common stock on the trading date immediately preceding the closing
            of
            the Transaction. The Cash Fee component of the award will be capped at
            a maximum
            amount equal to one times the annual salary of Mr. Wilhelm.
 
 For
            purposes of the tables below, a “Transaction” is (i) an equity or debt financing
            involving the Company or any subsidiary thereof, (ii) a direct or indirect
            acquisition, merger, consolidation, restructuring or any similar related
            transaction of all or substantially all of the assets or stock of the
            Company or
            (iii) a research collaboration, strategic partnership, research grant,
            license
            agreement, funded research study or other similar
            transaction.
  36
 Table
            of Contents
  **Cash
        Transaction: (Transaction includes at least $1 Million in Cash or Cash
        Equivalents)**




**Transaction
                  Value**
              
              **Cash
                  Fee**
              
              **Stock
                  Issuance**$1
                  to $2,500,000
              
              5.00%
                  of Transaction Value
              
              5.00%
                  of Transaction Value$2,500,001
                  to $5,000,000
              
              4.00%
                  of Transaction Value
              
              4.00%
                  of Transaction Value$5,000,001
                  to $7,500,000
              
              3.00%
                  of Transaction Value
              
              3.00%
                  of Transaction Value$7,500,001
                  or Above
              
              2.50%
                  of Transaction Value
              
              2.50%
                  of Transaction Value
 
 
 **Non-Cash
        Transaction: (Transaction Includes Less Than $1 Million in Cash or Cash
        Equivalents)**
 
 **Transaction
                  Value**
              
              **Cash
                  Fee**
              
              **Stock
                  Issuance**$1
                  to $2,500,000
              
              0%
                  of Transaction Value
              
              10.00%
                  of Transaction Value$2,500,001
                  to $5,000,000
              
              0%
                  of Transaction Value
              
              8.00%
                  of Transaction Value$5,000,001
                  to $7,500,000
              
              0%
                  of Transaction Value
              
              6.00%
                  of Transaction Value$7,500,001
                  or Above
              
              0%
                  of Transaction Value
              
              5.00%
                  of Transaction Value




(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 is 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 is 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.
 
 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:
  **Individual
                      Grants****Potential
                      Realizable**
                    **Value
                      at Assumed**
                    **Annual
                      Rates of Stock**
                    **Price
                      Appreciation**
                    **for
                      Option Term(1)****Name**
                  
                  **Number
                      of**
                    **Securities**
                    **Underlying**
                    **Options**
                    **Granted**
                  
                  
                  **Percent
                      of**
                    **Total
                      Options**
                    **Granted
                      to**
                    **Employees**
                  
                  
                  **Exercise
                      or**
                    **Base
                      Price**
                    **Per
                      Share**
                  
                  **Expiration**
                    **Date**
                  
                  ****
                  **5**
                  **%**
                  
                  ****
                  **10**
                  **%**Michael
                      K. Wilhelm
                  
                  
                  103,030
                  
                  
                  
                  40.6
                  %
                  
                  $
                  0.33
                  
                  8/10/10
                  
                  $
                  9,394
                  
                  
                  $
                  20,757150,000
                  
                  
                  
                  59.0
                  
                  
                  
                  0.44
                  
                  5/20/10
                  
                  
                  18,235
                  
                  
                  
                  40,294




(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.
  
 37
 Table
            of Contents






**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
              and related
              stockholder matters**
 
 **Principal
              S** **tockholders**
 The
          following table sets forth information regarding
          the beneficial ownership of our common stock as of September 7, 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
              
              
              11,406,784
              (3)
              
              
              13.7John
                  N. Fermanis
              
              
              180,000
              (4)
              
              
              *Theodore
                  Staahl
              
              
              3,489,464
              (5)
              
              
              4.7Hal
                  N. Siegel, PhD
              
              
              5,000
              (6)
              
              
              *All
                  executive officers anddirectors
                  as a group (4 persons)
              
              
              15,081,248
              
              
              
              18.65%
                  StockholdersMark
                  L. Witten, PhD
              
              
              9,211,138
              (7)
              
              
              12.4




*
        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 September  7, 2006 count as
        outstanding for computing the percentage beneficially  owned by
        the person holding these options or warrants.
 
 2.   
        Percentages are based on 73,775,651 shares of common stock outstanding as 
of September 7, 2006.
 
 3.    
        Includes 2,088,718 shares of common stock underlying warrants and
        5,650,000  shares of common stock underlying options that are
        currently exercisable  or exercisable within 60 days of
        September 7, 2006. Includes 2,066,138  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 September
        7, 2006.
 
 4.    
        Includes 80,000 shares of
        common stock underlying warrants that are 
currently exercisable or exercisable within 60 days of M
        September 7, 2006.
 
 5.    
        Includes 273,000 shares of common
        stock underlying warrants that are 
currently exercisable or exercisable within 60 days of September
        7, 2006.
 
 6.    
        Includes 5,000 shares of common
        stock underlying warrants that are 
currently exercisable or exercisable within 60 days of September
        7, 2006.
 
 7.    
        Dr. Mark Witten was a co-founder of the Company. Dr. Witten terminated his
        consulting agreement with us on February 1,
        2006. Includes 712,000 shares of common
        stock underlying warrants that are currently exercisable or
        exercisable within 60 days of September 7, 2006.
 
 38
 Table
            of Contents
  **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.
  **Plan
                    Category**
                
                **Number
                    of Securities to be i****ssued
                    upon exercise of****outstanding
                    options,**
                  **warrants
                    and rights**
                  **(a)**
                
                
                **Weighted-
                    average**
                  **exercise
                    price of**
                  **outstanding
                    options,**
                  **warrants
                    and rights**
                  **(b)**
                
                
                **Number
                    of securities**
                  **remaining
                    available for****future
                    issuance under equity**
                  **compensation
                    plans**
                  **(excluding
                    securities**
                  **reflected
                    in column (a)**
                  **(c)**Equity
                    compensationplans
                    approved bysecurity
                    holders
                
                
                254,030
                (1)
                
                $
                0.39
                
                
                
                201,966
                (3)Equity
                    compensationplans
                    not approved bysecurity
                    holders
                
                
                11,680,077
                (2)
                
                $
                0.59
                
                
                
                --Total
                
                
                11,934,107
                
                
                
                201,966




(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**
                  **(post-split)**
                
                
                **Weighted
                    Average**
                  **Price
                    Per Share**
                  **(post-split)**Outstanding
                    at January 1, 2004
                
                
                832,510
                
                
                $
                .82Granted
                
                
                16,831,199
                
                
                
                .47Exercised
                
                
                (6,600,778
                )
                
                
                .50Canceled
                    or expired
                
                
                --
                
                
                
                --Outstanding
                    at December 31, 2004
                
                
                11,062,931
                
                
                
                .48Granted
                
                
                757,464
                
                
                
                .44Exercised
                
                
                (80,000
                )
                
                
                .05Canceled
                    or expired
                
                
                (123,530
                )
                
                
                2.00Outstanding
                    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,"
 
 **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.
 
 39
 Table
            of Contents
  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.
 
 ImmuneRegen
          Asia has not conducted any business since its creation in May 2004. On
          March 23,
          2006, per shareholder and Board approval, ImmuneRegen Asia was struck off
          the
          register of companies and dissolved. A notice of such action was published
          in
          the Governmental Gazette on April 7, 2006.
 
 **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 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.
 
 **Employment
        Agreement**
 
 In
          March
          2006, per his employment agreement we issued 100,000 shares of our common
          stock
          to our Chief Financial Officer, John Fermanis. No general solicitation
          or
          advertising was undertaken in connection with the offer and sale of the
          shares.
          The Company's Chief Financial Officer qualifies as an "accredited investor"
          and
          acknowledged and agreed that the shares had not been registered under the
          Securities Act and may not be offered or sold unless subsequently registered
          and/or offered, sold or transferred pursuant to an exemption from the
          registration requirements. The securities were issued in reliance upon
          exemptions from registration pursuant to Section 4(2) under the Securities
          Act
          of 1933, as amended, and Rule 506 promulgated thereunder.
 
 40
 Table
            of Contents
  **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.
 
 **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. No interest was charged to this payable. 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.
 
 41
 Table
            of Contents
  **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).
 
 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).
 
 42
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              of Contents
  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).
 
 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).
 
 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).
 
 43
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  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).
 
 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.
 44
 Table
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**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.
   45
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**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 October 10,
          2007.
   **IR
                  BIOSCIENCES HOLDINGS, INC.**Date:
                  October 10, 2007
              By:
              /s/
                  Michael K.
                  WilhelmMichael
                  K. WilhelmPresident
                  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
                Michael
                  K. Wilhelm
              
              Chief
                  Executive Officer, President and Director
                (Principal
                  Executive Officer)
              
              October
                  10, 2007/s/
                  John N.
                  Fermanis
                John
                  N. Fermanis
              
              Chief
                  Financial Officer
                (Principal
                  Financial and Accounting Officer)
              
              October
                  10, 2007/s/
                  Hal N.
                  Siegel
                Hal
                  N. Siegel, Ph.D.
              
              Director
              
              October
                  10, 2007/s/
                  Theodore E.
                  Staahl
                Theodore
                  E. Staahl, M.D.
              
              Director
              
              October
                  10, 2007/s/
                  Robert J.
                  Hariri
                Robert
                  J. Hariri, M.D., Ph.D.
              
              Director
              
              October
                  10, 2007/s/
                  Lance K.
                  Gordon
                Lance
                  K. Gordon, Ph.D.
              
              Director
              
              October
                  10, 2007
  
 
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