FORM 10-QSB

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549

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

                  For the quarterly period ended March 31, 2006

                                       or

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

           For the transition period from ___________ to _____________

                        COMMISSION FILE NUMBER: 033-05384

                          IR BIOSCIENCES HOLDINGS, INC.

             (Exact name of Registrant as specified in its charter)

          Delaware                                       13-3301899
-------------------------------                  ----------------------------
(State or other jurisdiction of                       (I.R.S. Employer
 incorporation or organization)                      Identification No.)

            4021 N. 75th Street, Suite 201, Scottsdale, Arizona 85251
                (Address of principal executive offices) Zip Code

       Registrant's telephone number, including area code: (480) 922-3926

              (Former name, former address and former fiscal year,
                         if changed since last report)

Indicate by check mark whether  Registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during
the preceding  twelve 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
        -----   -----


Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).

Yes        No X
   ---       ---


The number of shares outstanding of Registrant's  common stock as of May 1, 2006
was 69,536,319.


<PAGE>


                  IR BIOSCIENCES HOLDINGS, INC. AND SUBSIDIARY

                                TABLE OF CONTENTS



PART I.         FINANCIAL INFORMATION                                Page Number



     Item 1.    Financial Statements:

                Consolidated Balance Sheet as of
                March 31, 2006 (unaudited) ................................F-1

                Consolidated Statement of Losses for the
                three months ended March 31, 2006 and 2005, and for
                the period of inception (October 30, 2002) to
                March 31, 2006 (unaudited).................................F-2

                Consolidated Statement of Stockholders' Equity
                (Deficit)from date of inception (October 30,
                2002) to March 31, 2006 (unaudited).................F-3 to F-6

                Consolidated  Statements of Cash Flows for the three
                months ended March 31, 2006 and 2005, and for the
                period of inception (October 30, 2002) to
                March 31, 2006 (unaudited) .........................F-7 to F-8

                Notes to Consolidated Financial Statements ................F-9


     Item 2.    Management's  Discussion and Analysis of Financial
                Condition or Plan of Operation ..............................3


     Item 3.    Controls and Procedures .....................................9


PART II         OTHER INFORMATION


     Item 1.    Legal Proceedings ..........................................10


     Item 2.    Unregistered Sale of Equity Securities
                and Use of Proceeds ........................................10


     Item 3.    Defaults Upon Senior Securities ............................11


     Item 4.    Submission of Matters to a Vote of Securities Holders ......11


     Item 5.    Other Information...........................................11


     Item 6.    Exhibits....................................................11

                Signatures..................................................11

                                        2
<PAGE>


ITEM 1. FINANCIAL INFORMATION

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

                  IR BioSciences Holdings, Inc. and Subsidiary
                          (A Development Stage Company)
                 Consolidated Balance Sheet as of March 31, 2006
                                   (Unaudited)


                                                                    March 31,
                                                                      2006
                                                                  -------------
Assets
Current assets

   Cash and cash equivalents                                      $       6,154
   Prepaid services and other current assets                             17,007
                                                                  -------------

      Total current assets                                               23,161

   Deposits and other assets                                              2,260
   Furniture and equipment, net of accumulated
      depreciation of $5,803 (See Note 1)                                18,760
                                                                  -------------

Total assets                                                      $      44,181
                                                                  =============

Liabilities and Stockholders' Deficit
Current liabilities

   Accounts payable and accrued liabilities (See Note 3)                707,859
   Cash advance from related party (See Note 5)                          50,000
   Warrant portion of penalty for late registration
      of shares - with registration rights (See note 4)                 476,662
   Common stock portion of penalty for late
      Registration of shares (See note 4)                             2,186,549
                                                                  --------------

      Total current liabilities                                       3,421,070

Commitments and Contingencies                                               --

Stockholders' deficit Preferred stock, 0.001 par value:
      10,000,000 shares authorized, no shares
      issued and outstanding                                                --
   Common stock, $0.001 par value; 100,000,000
      shares authorized;  69,536,319 shares issued
      and outstanding at March 31, 2006 (See Note 6)                     69,535

   Additional paid-in capital (See Note 6)                            9,515,216
   Deficit Accumulated during the Development Stage                 (12,961,640)
                                                                  -------------
      Total stockholder's deficit                                    (3,376,889)
                                                                  -------------

Total liabilities and stockholders' deficit                       $      44,181
                                                                  =============



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


                                       F-1
<PAGE>


                  IR BioSciences Holdings, Inc. and Subsidiary
                          (A Development Stage Company)
                        Consolidated Statements of Losses
               For the three months ended March 31, 2006 and 2005,
                         And for the period of inception
                      (October 30, 2002) to March 31, 2006
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                                           Cumulative
                                                                                         from Inception
                                                          For the Three   For the Three   (October 30,
                                                          Months Ended    Months Ended      2002) to
                                                          March 31,2006   March 31,2005   March 31, 2006
                                                          -------------   -------------   -------------
<S>                                                       <C>             <C>             <C>
Operating expenses:

   Selling, general and administrative expenses           $    561,144    $    838,520    $  8,685,445
   Merger fees and costs                                           --              --          350,000
   Financing cost                                                  --              --           90,000
   Impairment of intangible asset                                  --              --            6,393
                                                          ------------    ------------    ------------

      Total operating expenses                                 561,144         838,520       9,131,838
                                                          ------------    ------------    ------------

Operating loss                                                (561,144)       (838,520)     (9,131,838)

Other expense:
   Cost of penalty for late registration of shares             555,973             --        3,192,688
   (Gain) Loss from marking to market - warrant portion
      of penalty for late registration of shares                (6,868)            --         (267,515)
   (Gain) Loss from marking to market - stock portion
      of penalty for late registration of shares                52,423             --         (261,962)
   Interest (income) expense, net                                 (166)            977       1,166,591
                                                          ------------    ------------    ------------

      Total other (income) expense                             601,362             977       3,829,802
                                                          ------------    ------------    ------------

   Loss before income taxes                                 (1,162,506)       (839,497)    (12,961,640)

   Provision for income taxes                                     --              --              --
                                                          ------------    ------------    ------------
Net loss                                                  $ (1,162,506)   $   (839,497)   $(12,961,640)
                                                          ============    ============    ============

Net loss per share - basic and diluted                    $      (0.02)   $      (0.01)   $      (0.32)
                                                          ============    ============    ============
Weighted average shares outstanding -
   basic and diluted                                        69,475,429      62,863,440      41,136,973
                                                          ============    ============    ============
</TABLE>

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

                                       F-2
<PAGE>



                   IR Biosciences Holding, Inc. and Subsidiary
                          (A Development Stage Company)
            Consolidated Statement of Stockholders' Equity (Deficit)
         From date of inception (October 30, 2002) to March 31, 2006
                                   (Unaudited)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 Net loss for the year  ended
   December 31, 2003                                       --           --           --            --   (1,856,702)  (1,856,702)
                                                  -----------  -----------  -----------  ------------  -----------  -----------
 Balance at December 31, 2003                      23,431,300  $    23,431  $ 1,035,441            --  $(1,902,620) $  (843,748)
</TABLE>


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

                                       F-3
<PAGE>

                   IR Biosciences Holding, Inc. and Subsidiary
                          (A Development Stage Company)
            Consolidated Statement of Stockholders' Equity (Deficit)
         From date of inception (October 30, 2002) to March 31, 2006
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                          Common Stock       Additional
                                                  ------------------------    Paid-In      Deferred    Accumulated
                                                    Shares         Amount      Capital   Compensation    Deficit       Total
                                                  -----------  -----------  -----------  ------------  -----------  -----------
<S>                                               <C>          <C>          <C>          <C>           <C>          <C>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

</TABLE>


<PAGE>

                                       F-4

                   IR Biosciences Holding, Inc. and Subsidiary
                          (A Development Stage Company)
            Consolidated Statement of Stockholders' Equity (Deficit)
         From date of inception (October 30, 2002) to March 31, 2006
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                          Common Stock       Additional
                                                  ------------------------    Paid-In      Deferred    Accumulated
                                                    Shares         Amount      Capital   Compensation    Deficit       Total
                                                  -----------  -----------  -----------  ------------  -----------  -----------
<S>                                               <C>          <C>          <C>          <C>           <C>          <C>
Shares issued in July to September 2004 as
   interest on note payable                           300,000          300       35,700            --           --       36,000

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

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

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

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

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

Shares issued in October 2004 to employees at
   $0.16 to $0.25 per share                            48,804           49        8,335            --           --        8,384

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

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

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

Issuance of warrant to officer in October, 2004            --           --      112,697            --           --      112,697

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                       F-5
<PAGE>



                   IR Biosciences Holding, Inc. and Subsidiary
                          (A Development Stage Company)
            Consolidated Statement of Stockholders' Equity (Deficit)
         From date of inception (October 30, 2002) to March 31, 2006
                                   (Unaudited)

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

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

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

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

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

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

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

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

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

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

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

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

                                                 ------------  -----------  -----------  ------------  -----------  -----------
Balance at December 31, 2005                       69,436,319       69,435    9,465,501        (2,760) (11,799,134)  (2,266,958)
                                                 ------------  -----------  -----------  ------------  -----------  -----------

Issuance of 100,000 shares of common stock
   in March 2006 to an officer,
   previously accrued                                100,000          100       41,316             --           --       41,416

Value of warrants issued to advisory
   committee in March 2006 for services                   --           --        8,399             --           --        8,399

Amortization of deferred comp for the
   three months ended March 31, 2006                      --           --           --          2,760           --        2,760

Loss for the three months ended
   March 31, 2006                                         --           --           --             --   (1,162,506)  (1,162,506)
                                                 ------------  -----------  -----------  ------------  -----------  -----------
Balance at March 31, 2006                          69,536,319      69,535    9,515,216             --  (12,961,640)  (3,376,889)
                                                 ============  ===========  ===========  ============  ===========  ===========

</TABLE>



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

                                       F-6
<PAGE>


                  IR BioSciences Holdings, Inc. and Subsidiary
                          (A Development Stage Company)
                      Consolidated Statements of Cash Flows
                  For the three months ended March 31, 2006 and
            2005, and for the period of inception (October 30, 2002)
                                to March 31, 2006
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                                                           Cumulative
                                                                For the Three       For the Three        from Inception
                                                                Months Ended        Months Ended          (October 30,
                                                                   March 31,          March 31,              2002) to
                                                                     2006                2005            March 31, 2006
                                                               ---------------     ---------------       --------------
<S>                                                            <C>                 <C>                   <C>
Cash flows from operating activities:
   Net loss                                                    $   (1,162,506)     $     (839,497)     $   (12,961,640)
   Adjustments to reconcile net loss to net
      cash used in operating activities:
   Non-cash compensation                                               11,159             299,943            3,932,012
   Cost of penalty for late registration of shares -
      stock portion                                                   456,588                  --            2,448,511
   Cost of penalty for late registration of shares -
      warrant portion                                                 105,339                  --              744,177
  (Gain) loss from marking to market - stock portion
      of penalty for late registration of shares                       52,423                  --             (261,962)
  (Gain) loss from marking to market - warrant portion
      of penalty for late registration of shares                      (12,822)                 --             (267,515)
   Impairment of intangible asset                                          --                  --                6,393
   Interest expense                                                        --                 977              156,407
   Amortization of discount on notes payable                               --                  --            1,006,935
   Depreciation and amortization                                        1,941                 402               31,159
   Changes in operating assets and liabilities:
     Prepaid services and other assets                                  7,500                (372)              10,734
     Accounts payable and accrued expenses                            247,147             (12,424)             903,100
                                                            -----------------   -----------------   ------------------

   Net cash used in operating activities                             (293,231)           (550,971)          (4,251,689)

Cash flows from investing activities:
   Acquisition of property and equipment                              (16,475)                 --              (24,562)
                                                            -----------------   -----------------   ------------------

   Net cash used in investing activities                              (16,475)                 --              (24,562)

Cash flows from financing activities:
   Proceeds from notes payable                                         50,000                  --            1,283,500
   Principal payments on notes payable and demand loans                    --             (10,000)            (264,997)
   Shares of stock sold for cash                                           --           1,190,857            3,259,902
   Proceeds from exercise of warrant                                       --                  --                4,000
   Officer repayment of amounts paid on his behalf                         --                  --               19,880
   Cash paid on behalf of officer                                          --                  --              (19,880)
                                                            -----------------   -----------------   ------------------

   Net cash provided by financing activities                           50,000           1,180,857            4,282,405

Net increase (decrease) in cash and cash equivalents                 (259,706)            629,886                6,154

Cash and cash equivalents at beginning of period                      265,860             970,114                   --
                                                            -----------------   -----------------   ------------------
Cash and cash equivalents at end of period                     $        6,154      $    1,600,000      $         6,154
                                                            =================   =================   ==================

</TABLE>


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

                                       F-7

<PAGE>

                  IR BioSciences Holdings, Inc. and Subsidiary
                          (A Development Stage Company)
                      Consolidated Statements of Cash Flows
                  For the three months ended March 31, 2006 and
            2005, and for the period of inception (October 30, 2002)
                                to March 31, 2006
                                   (Unaudited)


<TABLE>
<CAPTION>

                                                                                                       Cumulative
                                                                For the Three       For the Three     from Inception
                                                                Months Ended        Months Ended       (October 30,
                                                                   March 31,          March 31,         2002) to
                                                                     2006                2005         March 31, 2006
                                                               ---------------     ---------------     -----------
<S>                                                            <C>                 <C>                 <C>
Supplemental disclosures of cash flow information:

Cash paid during the period for:
Interest                                                       $           220     $          --       $    43,773

Taxes                                                          $          --       $          --       $      --

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

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

Common stock issued in exchange for services                   $          --       $          --       $ 2,925,286
                                                               ===============     ===============     ===========

Common stock issued in exchange for previously incurred
debt and accrued interest                                      $          --       $          --       $ 1,060,594
                                                               ===============     ===============     ===========

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

Amortization of beneficial conversion feature                  $          --       $          --       $   223,269
                                                               ===============     ===============     ===========

Stock options and warrants issued in exchange for services
rendered                                                       $          --       $       137,049     $   772,381
                                                               ===============     ===============     ===========

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

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

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

Common stock issued for deferred compensation to a
Consultant accrued in March 2005                               $          --       $        32,500     $ 2,630,761
                                                               ===============     ===============     ===========

Amortization of deferred compensation                          $         2,760     $          --       $   202,486
                                                               ===============     ===============     ===========

Fair value of common stock and warrants in connection
   with the late filing of registration statement              $       555,973     $          --       $ 3,186,734
                                                               ===============     ===============     ===========

Gain from marking to market -- stock portion of
   penalty for late registration of shares                     $        52,423     $          --       $  (261,962)
                                                               ===============     ===============     ===========

Gain from marking to market -- warrant portion of
   penalty for late registration of shares                     $        (6,868)    $          --       $  (261,561)
                                                               ===============     ===============     ===========

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

Issuance of stock to officer, previously accrued               $        41,416     $          --       $    41,416
                                                               ===============     ===============     ===========

Value of warrants issued to members of advisory board          $         8,399     $          --       $     8,399
                                                               ===============     ===============     ===========
</TABLE>


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

                                       F-8
<PAGE>


                          IR BIOSCIENCES HOLDINGS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2006
                                   (Unaudited)


NOTE 1 - SUMMARY OF ACCOUNTING POLICIES

General
-------

The accompanying  unaudited condensed financial statements have been prepared in
accordance with the instructions to Form 10-QSB,  and therefore,  do not include
all the information  necessary for a fair  presentation  of financial  position,
results of operations and cash flows in conformity  with  accounting  principles
generally  accepted  in the  United  States of  America  for a  complete  set of
financial statements.

In the opinion of management,  all adjustments  (consisting of normal  recurring
accruals) considered  necessary for a fair presentation have been included.  The
results from  operations  for the  three-month  periods ended March 31, 2006 and
2005 are not necessarily  indicative of the results that may be expected for the
year ended December 31, 2006.  The unaudited  condensed  consolidated  financial
statements  should be read in  conjunction  with the December 31, 2005 financial
statements and footnotes thereto included in the Company's annual report on Form
10-KSB filed with the Securities  and Exchange  Commission on March 28, 2006 and
Form 10-KSB/A  filed with the  Securities  and Exchange  Commission on March 31,
2006.

Business and basis of presentation
----------------------------------

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  Homspera(TM),  a  proprietary  compound  that is  derived  from
homeostatic substance P, a naturally occurring peptide.  Currently, the majority
of our development  efforts are centered around two drug candidates derived from
Homspera, Radilex(TM) and Viprovex(TM). Radilex has been formulated specifically
for the  potential  treatment  of acute  exposure  to  radiation.  Viprovex  was
formulated  specifically for applications relating to the potential treatment of
maladies  caused by exposure to various  chemical  and  biological  agents.  Our
research  and  development  efforts  are at a very early  stage and  Radilex and
Viprovex have only undergone  pre-clinical  testing in mice.  From its inception
through the date of these  financial  statements,  the Company has recognized no
revenues and has incurred significant operating expenses.

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

Reclassification
----------------

Certain  reclassifications  have been made to conform to prior  periods' data to
the  current  presentation.  These  reclassifications  had no effect on reported
losses.

                                       F-9
<PAGE>

Stock based compensation
------------------------

Effective  January  1,  2006,  the  Company  adopted  SFAS  No.  123  (revised),
"Share-Based Payment" (SFAS 123(R)) utilizing the modified prospective approach.
Prior to the  adoption of SFAS 123(R) we  accounted  for stock  option  grant in
accordance  with APB Opinion No. 25,  "Accounting for Stock Issued to Employees"
(the intrinsic value method), and accordingly,  recognized  compensation expense
for stock option grants.

Under the modified prospective  approach,  SFAS 123(R) applies to new awards and
to awards  that  were  outstanding  on  January  1,  2006 that are  subsequently
modified,  repurchased or cancelled.  Under the modified  prospective  approach,
compensation  cost  recognized  in the first  quarter  of fiscal  2006  includes
compensation  cost for all  share-based  payments  granted prior to, but not yet
vested as of January 1, 2006,  based on the grant-date  fair value  estimated in
accordance with the original  provisions of SFAS 123, and compensation  cost for
all  share-based  payments  granted  subsequent  to January 1, 2006 based on the
grant-date  fair value  estimated  in  accordance  with the  provisions  of SFAS
123(R).  Prior  periods  were not restated to reflect the impact of adopting the
new standard.

As a result of  adopting  SFAS 123(R) on January 1, 2006,  for the three  months
ended March 31,  2006,  there was no effect on our income  before  taxes and net
income as there were no stock options granted during the quarter, and there were
no outstanding but unvested options or grants at December 31, 2005.

Interim financial statements
----------------------------

The  accompanying  balance  sheet  as of  March  31,  2006,  the  statements  of
operations  for the three  months  ended  March 31,  2006 and 2005,  and for the
period of inception  (October 30, 2002) to March 31, 2006, and the statements of
cash flows for three months  ended March 31, 2006 and 2005,  and from the period
of inception (October 30, 2002) to March 31, 2006 are unaudited. These unaudited
interim  financial  statements  include all  adjustments  (consisting  of normal
recurring  accruals),  which, in the opinion of management,  are necessary for a
fair  presentation  of the  results of  operations  for the  periods  presented.
Interim results are not necessarily indicative of the results to be expected for
a full year.

Use of estimates
----------------

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

                                      F-10
<PAGE>

Long-lived assets
-----------------

The Company accounts for its long-lived assets under the provision of Statements
of Financial  Accounting  Standards No. 121,  "Accounting  for the Impairment of
Long-Lived  Assets and for  Long-Lived  Assets To Be Disposed Of." The Company's
long-lived  assets are reviewed  for  impairment  whenever  events or changes in
circumstances  indicate  that the  carrying  amount  of such  assets  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
undiscounted  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.

Prepaid services and other current assets
------------------------------------------

Prepaid  services and other current assets  consist of prepaid  insurance in the
amount of $17,007.

Deposits and other assets
-------------------------

Deposits  and other  assets  consist of a deposit on leased  office space in the
amount of $2,260.

Furniture and equipment
-----------------------

Furniture 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
       Laboratory equipment       3 years
       Furniture                  7 years

The amounts  depreciated for the three months ended March 31, 2006 and 2005 were
$1,941 and $170, respectively. The amount depreciated from the date of inception
(October 30, 2002) through March 31, 2006 was $5,803.

NOTE 2 - RELATED PARTY TRANSACTIONS

Proprietary rights agreements
-----------------------------

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.  The  resignation of Dr. Witten as a consultant to our company in February
2006  does  not have  any  impact  upon  the  terms  of the  proprietary  rights
agreement.

                                      F-11
<PAGE>

Consulting agreements
---------------------

During the three  months  ended March 31,  2006,  the Company paid the amount of
$5,000 to Dr. Witten as consulting fees. At March 31, 2006, the Company owes the
amount of $2,847 to Dr. Harris for accrued consulting fees.

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.

Employment agreements
---------------------

Pursuant to our employment  agreement with John  Fermanis,  our Chief  Financial
Officer, dated February 15, 2005, Mr. Fermanis' salary increased from $85,000 to
$98,000 per annum  effective  January 1, 2006.  Also  pursuant to Mr.  Fermanis'
employment  agreement,  100,000 shares of the Company's common stock were earned
during the twelve months ended December 31, 2005. The Company charged the amount
of $41,416 to operations  during the year ended December 321, 2005. These shares
were issued to Mr. Fermanis in March 2006.

Cash Advance
------------

In March 2006, the Company received a cash advance in the amount of $50,000 from
a Director.  The Company  anticipates  converting this advance to a note payable
during the three months ending June 30, 2006. See note 5.

NOTE 3 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
-------------------------------------------------

Accounts payable and accrued liabilities consisted of the following at March 31,
2006:

Accounts payable and accrued liabilities   $ 644,124
Accounts payable - shell company              34,926
Insurance financing payable                   13,500
Interest payable                               9,262
State income tax payable                       3,200
Consulting fees payable                        2,847
                                            --------
                                           $ 707,859
                                            ========

NOTE 4 - PENALTY FOR LATE REGISTRATION OF SHARES

During the three months ended March 31, 2006,  the Company  accrued the issuance
of  1,383,600  shares of common  stock and  warrants to  purchase an  additional
544,800 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. The
Company charged to operations  $456,588 and $105,339,  respectively,  during the
three  months ended March 31, 2006  representing  the fair value of these shares
and warrants,  respectively.  During the three months ended March 31, 2006,  the
Company also marked to market the value of the 5,423,307  shares and warrants to
purchase an additional  2,064,187  shares which were outstanding at December 31,
2005.  This  resulted  in a charged to  operations  of  $52,423  and a credit to
operations  of $6,868 for these  previously  outstanding  shares  and  warrants,
respectively.  At March  31,  2006,  the  Company  had  obligations  to issue an
aggregate of 6,625,907  shares and warrants to purchase an additional  2,608,987
shares, respectively.

                                      F-12
<PAGE>

NOTE 5 - CASH ADVANCE

In March 2006, the Company received a cash advance from a director in the amount
of $50,000. This advance bears interest at the rate of 12% per annum. During the
three months ended March 31, 2006,  the Company  accrued  interest in the amount
$164 on this advance. The Company anticipates  converting this advance to a note
payable during the quarter ending June 30, 2006.

NOTE 6 - EQUITY

Common stock
------------

In March 2006,  the Company  issued  100,000 shares of common stock to its Chief
Financial Officer.  These shares had been earned,  and were accrued,  during the
year ended December 31, 2005.

Warrants
--------

During the three  months ended March 31, 2006,  the Company  issued  warrants to
purchase 61,500 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 $8,399 to operations
during the three months ended March 31, 2006.

Warrants  outstanding  do not include the warrants to be issued  pursuant to the
penalty for late registration of shares - see Note 4.

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

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

$ .05-.10       519,780       3.14        $.05-.10       519,780          3.14
 .125-.22       936,819       3.21        .125-.22       936,819          3.21
  .25-.56     9,271,405       3.32         .25-.56     9,271,405          3.32
     1.00       903,811       1.88           1.00        903,811          1.88
     2.00        46,550       2.97           2.00         46,550          2.97
            -----------   ------------                -----------    -----------
             11,678,365       3.19                    11,678,365          3.19
            ===========   ============                ===========    ===========

Transactions involving warrants are summarized as follows:

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

   Outstanding at December 31, 2005           11,616,865                .46
      Granted                                     61,500                .67
      Exercised                                       --                 --
      Canceled or expired                             --                 --
                                              ----------           --------
   Outstanding at March 31, 2006              11,678,365                .46
                                              ==========           ========

                                      F-13
<PAGE>

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             4.5%          3.75%
     Expected stock price volatility                    75%        93% to 179%
     Expected dividend payout                           --             --
     Expected option life-years (a)                      3           3 to 5


Options
-------

There were no options granted during the three months ended March 31, 2006.

The following table summarizes the changes in stock options  outstanding and the
related prices for the shares of the Company's  common stock issued to employees
of the Company.




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


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

$25.00        63,212         4.00         $25.00       63,212         4.00
 0.31          1,000         4.70           0.31        1,000         4.70
 0.33        103,030         4.36           0.33      103,030         4.36
 0.44        150,000         4.09           0.44      150,000         4.09
             -------                                  -------
             317,242                                  317,242
             =======                                  =======


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

                                                         Weighted Average
                                     Number of Shares     Price Per Share
                                     ----------------    ----------------
Outstanding at December 31, 2005         317,242             $ 5.30
    Granted                                   --                 --
    Exercised                                 --                 --
    Expired                                   --                 --
                                     ----------------    ----------------
Outstanding at March 31, 2006            317,242             $ 5.30
                                     ================    ================

                                      F-14
<PAGE>


Shares and warrants issuable due to late filing of registration statement
-------------------------------------------------------------------------

During the three months ended March 31, 2006,  the Company  accrued the issuance
of  1,383,600  shares of common  stock and  warrants to  purchase an  additional
544,800 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. The
Company charged to operations  $456,588 and $105,339,  respectively,  during the
three  months ended March 31, 2006  representing  the fair value of these shares
and warrants,  respectively.  During the three months ended March 31, 2006,  the
Company also marked to market the value of the 5,423,307  shares and warrants to
purchase an additional  2,064,187  shares which were outstanding at December 31,
2005.  This  resulted  in a charged to  operations  of  $52,423  and a credit to
operations  of $12,822 for these  previously  outstanding  shares and  warrants,
respectively.  At March  31,  2006,  the  Company  had  obligations  to issue an
aggregate of 6,625,907  shares and warrants to purchase an additional  2,608,987
shares, respectively.

The Company  anticipates to complete the registration of these shares during the
quarter ended June 30, 2006. If the Company is able to complete the registration
within  this  timeframe  it will  incur an  obligation  to  issue  approximately
1,214,493 additional shares and 478,213 additional warrants at an aggregate cost
of  approximately  $500,000  will be incurred.  There is no  guarantee  that the
Company  will  be able to  complete  the  registration  within  the  anticipated
timeframe.

NOTE 7 - SUBSEQUENT EVENTS

Effective  April  13,  2006,  the  Company  entered  into  an  unsecured  Senior
Promissory Note in the amount of $500,000.  Following the payment of commissions
and expenses,  the Company received net proceeds of approximately  $439,875. The
outstanding  principal  amount of the Note, plus interest at the rate of 12% per
annum, is payable in cash on or before the earlier of (i) April 12, 2007 or (ii)
the date upon which the Company sells any of its equity or debt  securities in a
financing transaction,  or a series of financings,  with gross proceeds equal to
$1,000,000;  provided, however, that a subsequent financing transaction will not
include (x)  issuances  of common  stock to  employees,  (y) the exercise of any
options to purchase  shares of common stock that are  outstanding as of the date
hereof, or (z) the grant,  issuance or exercise of options or common stock under
the Company's  stock,  option,  deferred stock and restricted stock plan for the
purpose of satisfying the Company's payables. In an event of default, as defined
in the note, the note shall become  immediately due and payable,  and during the
continuation  of an event of default,  the Company must pay interest on the note
in an amount  equal to 2% per  month  until  the  event of  default  is cured or
waived.

                                      F-15
<PAGE>


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Special Note Regarding Forward-looking Statements

Some of the statements  under "Risk  Factors,"  "Business" and elsewhere in this
Quarterly Report on Form 10-QSB  constitute  forward-looking  statements.  These
statements involve known and unknown risks, uncertainties and other factors that
may cause our actual results, levels of activity, performance or achievements to
be  materially   different  from  any  future   results,   levels  of  activity,
performance,  or  achievements  expressed  or  implied  by such  forward-looking
statements.  Such factors  include,  among other things,  those  described under
"Risk Factors" and elsewhere in this Quarterly  Report on Form 10-QSB and in the
"Risk  Factors"  section  of our  annual  report on Form  10-KSB  filed with the
Securities  and Exchange  Commission on March 28, 2006 and Form  10-KSB/A  filed
with the Securities and Exchange Commission on March 31, 2006.

In some cases, you can identify  forward-looking  statements by terminology such
as  "may,"   "will,"   "should,"   "could,"   "expects,"   "plans,"   "intends,"
"anticipates," "believes," "estimates," "predicts," "potential" or "continue" or
the negative of such terms or other comparable terminology.

Although  we believe  that the  expectations  reflected  in the  forward-looking
statements  are  reasonable,  we  cannot  guarantee  future  results,  levels of
activity,  performance,  or  achievements.  Moreover,  neither  we nor any other
person  assumes  responsibility  for  the  accuracy  and  completeness  of  such
statements. We are under no duty to update any of the forward-looking statements
after the date of this report.

The  following  information  should be read in  conjunction  with the  financial
statements  and the notes  thereto.  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.

Overview
--------

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

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

                                        3
<PAGE>

to various chemical and biological  agents. We are currently  sponsoring ongoing
pre-clinical studies in these areas, specifically two mouse radiation studies on
the efficacy of Radilex in treating acute  radiation  exposure and a mouse study
on the efficacy of Viprovex in treating  exposure to anthrax.  In  addition,  we
have  designed the  protocols  for  additional  radiation  studies in mice using
Radilex and an avian flu study in mice using Viprovex.

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

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

         Our current  potential drug candidates,  Radilex and Viprovex and other
technologies  utilizing Homspera, are at early stages of development and may not
be shown to be safe or  effective  and may never  receive  regulatory  approval.
Neither Radilex nor Viprovex nor our  technologies  utilizing  Homspera have yet
been tested in large animals or humans.  There is no guarantee  that  regulatory
authorities will ever permit large animal or 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  preclinical  studies and clinical trials may not be
indicative  of future  clinical  trial  results.  A  commitment  of  substantial
resources to conduct time-consuming  research,  preclinical studies and clinical
trials will be required if we are to develop any commercial  applications  using
Homspera or any derivates  thereof.  Delays in planned patient enrollment in our
clinical trials may result in increased  costs,  program delays or both. None of
our potential applications may prove to be safe or effective in clinical trials.
Approval of the FDA or other  regulatory  approvals,  including  export  license
permissions,  may  not be  obtained  and  even  if  successfully  developed  and
approved,  our potential  applications  may not achieve market  acceptance.  Any
applications  resulting from our programs may not be  successfully  developed or
commercially available for a number of years, if at all.

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

         Prior to FDA  approval,  Radilex and Viprovex  may become  eligible for
purchase  by  the  U.S.  government.   Project  BioShield  legislation  contains
provisions enabling the U.S. Department of Health and Human Services, or HHS, to
begin  purchasing  new  medical   countermeasures  for  the  Strategic  National
Stockpile  in  advance  of formal  FDA  approval.  This  provision,  known as an
Emergency Use Authorization,  has already been implemented for other development
stage  medical  countermeasures  to  weapons  of mass  destruction.  In that our
studies,  in the opinion of management,  indicate that Radilex may have efficacy
in the  treatment  of the  life-threatening  effects of  radiation  exposure and
Viprovex to exposure to various biological and chemical agents, we believe there
may be interest by government  agencies to stockpile  Radilex and/or Viprovex if
it is successfully  developed.  However,  there is no assurance that any of such
orders will be  forthcoming  and we have  received no  indication  from  Project
BioShield  or any other  agency that it intends to purchase  any  quantities  of
Radilex or Viprovex.

                                        4
<PAGE>

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


RESULTS OF OPERATIONS FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2006 AND MARCH
31, 2005

Revenue
-------

         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.

Sales, General, and Administrative Expenses
-------------------------------------------

         Sales, general, and administrative  expenses ("SG&A") were $561,144 for
the three months  ended March 31, 2006, a decrease of $277,376 or  approximately
33%  compared to SG&A of $838,520  during the three months ended March 31, 2005.
The decrease is primarily due to lower costs of non-cash  compensation.  For the
three months ended March 31, 2006,  this amount  consisted  primarily of officer
compensation  of  $93,250,  research  and  development  of  $111,516,  legal and
accounting  fees of  $195,697,  other  consulting  fees of $53,117,  payroll and
related  costs of $28,685,  public  relations  and  marketing  of  $22,616,  and
non-cash compensation costs of $8,399.

         The Company expects SG&A to increase during the coming twelve months as
we  continue  to build  out the  Company's  infrastructure  and to  develop  the
Company's line of potential products.

Interest (Income)/Expense (net)
-------------------------------

Interest  (Income)  was $(166) for the three  months  ended  March 31,  2006,  a
decrease of $1,143 or  approximately  117% compared to interest  expense of $977
for the three months ended March 31, 2005.  Interest expense was reduced because
the Company  paid all of its  outstanding  debt during the twelve  months  ended
December 31, 2005.

The Company expects  interest  expense to remain at low levels during the coming
twelve months.

Net Loss
--------


         For the reasons  stated above,  our net loss for the three months ended
March 31, 2006 was $1,162,506, or $0.02 per share an increase of $323,009 or 38%
compared to a net loss of $839,497 for the three months ended March 31, 2005.

         Our  independent  certified  public  accountants  have  stated in their
report  included  in SEC  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 three months  ended March 31, 2006,  we accrued the issuance
of  1,383,600  shares of common  stock and  warrants to  purchase an  additional
544,800 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 March 31, 2006, we are required to issue an additional 6,625,907 shares of
common stock and warrants to purchase an additional  2,724,000  shares of common
stock. At the time these  liabilities  were incurred,  the shares were valued at
$2,448,511  and the warrants were valued at $744,177.  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 $557,930 was charged to  operations as cost of penalty
for late  registration  of shares  during the three months ended March 31, 2006.
The shares and warrants were re-valued at March 31, 2006, and the result of this
re-valuation  was to increase the value of the shares by $52,423 and to decrease
the value of the  warrants by $6,868.  These  decreases  were  credited to other
(income)  expense  during the three months  ended March 31,  2006.  At March 31,
2006,  the fair value of the common  stock  issuable  under the penalty for late
registration  of  shares  is  $2,186,549,  and the fair  value  of the  warrants
issuable under the penalty for late  registration  of shares is $476,662.  These
amounts appear as current  liabilities on the Company's  condensed  consolidated
balance sheet at March 31, 2006.

         We anticipate to complete the  registration  of these shares during the
quarter ended June 30, 2006. If we are able to complete the registration  within
this  timeframe,  we will incur an obligation to issue  approximately  1,214,493
additional  shares and  478,213  additional  warrants  at an  aggregate  cost of
approximately  $500,000 will be incurred.  There is no guarantee that we will be
able to complete the registration within the anticipated timeframe.

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.

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

         We incurred an expense of $111,516 for the three months ended March 31,
2006 in  research  and  development  activities  related to the  development  of
Radilex and  Viprovex  versus an expense of $65,849 for the three  months  ended
March 31, 2005. 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 $418,310 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.

         We  anticipate  that  during  the next 12 months we will  increase  our
research and development  spending to a total of approximately  $3,500,000 in an
effort to  further  develop  Radilex  and  Viprovex.  If we are  unable to raise
additional capital, our research and development activities may be lessened. The
drug development,  clinical trial and regulatory  process is lengthy,  expensive
and uncertain and subject to numerous risks.

                                       5
<PAGE>

        Our major research and development projects include:

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

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

         We have  prepared the  protocols  for what we believe will be our final
phase  of  rodent  studies  for a  radiation  sensitivity  study  on  mice to be
conducted  at the Oak Ridge  National  Laboratory  in which we will  attempt  to
further  validate our prior studies.  This study commenced on February 28, 2006.
We estimate  that the study will be  completed  within 3 months at an  estimated
cost of $90,000. Upon completion of the aforementioned study we will prepare the
protocols  necessary  for a  non-human  primate  study to test the  efficacy  of
Radilex as a potential  treatment to acute  radiation  sickness.  We expect this
study to begin  within the next 12 to 18 months.  We  believe  that  preliminary
results will be available within 90 days from beginning of study,  with analysis
within an additional  60 to 90 days.  We expect up to an  additional  $2,500,000
will be required to complete  this study.  We estimate  the  completion  of this
study will be in 18 to 24 months.

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

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

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

         We are sponsoring a series of studies with Hyperion  Biotechnology Inc.
at their laboratory facilities located at Brooks City-Base in San Antonio, Texas
with  the  cooperation  of the U.S.  Air  Force  School  of  Aerospace  Medicine
(USAFSAM).  The first of these studies was initiated in October 2005. Logistical
considerations  related to number of animals requiring  exposure and performance
of a full Viprovex  dose-response  curve within  specified time limits following
anthrax exposure required the experiment be performed in two sections, and it is
incomplete  at this time.  The second half of the full  dose-ranging  experiment
began in February,  2006. We estimate that the study will be completed  within 3
months at an  estimated  cost of  $51,450.  If we are  successful  in  achieving
desirable  results against anthrax,  we intend to design the protocols and begin
further studies for this and other indications, when capital is available. As we
have only collected  preliminary  data and additional  studies are required,  we
cannot predict when, if ever, a viable anthrax treatment can be  commercialized.
If we do not observe  significant  results or we lack the capital to further the
development,  we may abandon such  research  and  development  efforts;  thereby
limiting our future potential revenues.

OFF-BALANCE SHEET ARRANGEMENTS

There were no off-balance  sheet  arrangements  made in the fiscal quarter ended
March 31, 2006.

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 March 31, 2006, we have incurred  losses of
$12,961,640.  These  expenses  were  associated  principally  with  equity-based
compensation to employees and consultants, cost of penalty for late registration
of shares, product development costs and professional services.

LIQUIDITY AND CAPITAL RESOURCES

         At March 31, 2006, we had current assets of $23,161  consisting of cash
of $6,154 and other  current  assets of $17,007.  At March 31, 2006, we also had
current  liabilities of $3,421,070,  consisting of accounts  payable and accrued
liabilities  of $707,859,  notes  payable of $50,000 and accrued cost of penalty
for late  registration  of shares of  $2,663,211.  This  resulted in net working
capital  deficit at March 31, 2006 of $3,397,909.  During the three months ended
March 31, 2006, the Company used cash in operating activities of $293,231.  From
the date of inception  (October 30, 2002) to March 31, 2006, the Company has had
a net  loss  of  $12,961,640  and  has  used  cash of  $4,251,689  in  operating
activities.

         We have  never  generated  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 March 31, 2006 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  $1,018,503 was received from the issuance of notes  payable,  net of
repayments.

                                        6
<PAGE>

         In March 2006 the Company  received a cash advance from a Director,  an
accredited  investor,  in the amount of $50,000.  This advance bears interest at
the rate of 12% per annum.  During the three  months  ended  March 31,  2006 the
Company  accrued  interest  in the amount of $164 on this  advance.  The Company
anticipates  converting this advance to a note payable during the quarter ending
June 30, 2006.


         Effective  April  13,  2006,  we  entered  into  an  unsecured   Senior
Promissory Note in the amount of $500,000.  Following the payment of commissions
and  expenses,  we  received  net  proceeds  of  approximately   $439,875.   The
outstanding  principal  amount of the Note, plus interest at the rate of 12% per
annum, is payable in cash on or before the earlier of (i) April 12, 2007 or (ii)
the date upon which the Company sells any of its equity or debt  securities in a
financing transaction,  or a series of financings,  with gross proceeds equal to
$1,000,000;  provided, however, that a subsequent financing transaction will not
include (x) issuances of common stock to our employees,  (y) the exercise of any
options to purchase  shares of our common stock that are  outstanding  as of the
date  hereof,  or (z) the grant,  issuance  or exercise of options or our common
stock under our stock, option,  deferred stock and restricted stock plan for the
purpose of satisfying the Company's payables. In an event of default, as defined
in the note, the note shall become  immediately due and payable,  and during the
continuation  of an event of  default,  we must pay  interest  on the note in an
amount equal to 2% per month until the event of default is cured or waived.


         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
$1,190,857 from the tender offer, net of costs.

         Pursuant  to  our  employment   agreement  with  Michael  Wilhelm,  our
President  and Chief  Executive  Officer,  dated  December 16, 2002,  we paid an
annual  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 an annual 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 paid 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
December 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
$3,263,902).  Based on our current plan of operations all of our current funding
is expected to be depleted by the end of June 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.

                                        7
<PAGE>

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

         We did not  dispose  or  acquire  any  significant  property,  plant or
equipment  during the first quarter  ended March 31, 2006. We do not  anticipate
the sale of any significant property,  plant or equipment during the next twelve
months.

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

         From our  inception  through the period ended March 31,  2006,  we have
relied on the services of outside  consultants  for services and currently  have
four full-time  employees.  Our full-time employees are Michael K. Wilhelm,  our
Chief Executive Officer;  John Fermanis,  our Chief Financial Officer;  and, the
third and fourth serve in  administrative  roles. 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.

Trends, Risks and Uncertainties
-------------------------------

         We have sought to identify  what we believe to be the most  significant
risks to our business,  but we cannot predict whether, or to what extent, any of
such risks may be realized  nor can we  guarantee  that we have  identified  all
possible risks that might arise. Investors should carefully consider all of such
risk factors  before  making an  investment  decision with respect to our Common
Stock.

                                  RISK FACTORS

Other than with respect to the following  risk factors,  which have been updated
and restated in their entirety below,  there have been no material  changes from
the risk  factors  disclosed  in the  "Risk  Factors"  section  of our the "Risk
Factors"  section of our annual report on Form 10-KSB filed with the  Securities
and  Exchange  Commission  on March 28,  2006 and Form  10-KSB/A  filed with the
Securities and Exchange Commission on March 31, 2006.

                     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 March 31, 2006, we had a working  capital  deficit of $3,397,909.
This amount  consists of cash of $6,154 and current assets of $17,007,  accounts
payable and accrued  current  liabilities of $707,859,  including  notes payable
$50,000 and an accrued current liability of $2,663,211  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 March 31,  2006,  we would  have a working  capital  deficit  of
$734,698.  We have  incurred  a  substantial  net loss for the  period  from our
inception  in October  2002 to March 31, 2006,  and are  currently  experiencing
negative cash flow.  We expect to continue to experience  negative cash flow and
operating losses through at least 2009 and possibly thereafter.  As a result, we
will need to generate significant revenues to achieve profitability.

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

         We are  focused  on  product  development  and have not  generated  any
revenue  to  date.  We do not  believe  we  will  begin  earning  revenues  from
operations  until the calendar  year 2009 as we  transition  from a  development
stage company.  We have incurred  operating losses since our inception.  Our net
loss for the three months ended March 31, 2006 was  $1,162,506.  As of March 31,
2006, we had an accumulated deficit of $12,961,640.

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 on Form  10-KSB/A  that the Company had  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 our 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 June 2006.  However,  changes in our
research and development plans or other events affecting our operating  expenses
may result in the expenditure of such cash before that time. We estimate that we
will  require  approximately  $5  million  over the next 12  months  in order to
finance our research and development  efforts,  fund operating expenses,  pursue
regulatory clearances and prosecute and defend our intellectual property rights.
We may seek such  additional  funding  through  public or private  financing  or
through collaborative arrangements with strategic partners.

         You should be aware that in the future:

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

         o  any available additional financing may not be adequate.

                                        8
<PAGE>

         In addition, we entered into an unsecured Senior Promissory Note in the
amount of $500,000 in April 2006. The outstanding  principal amount of the Note,
plus  interest at the rate of 12% per annum,  is due on or before the earlier of
(i) April 12, 2007 or (ii) the date upon which we sell any of our equity or debt
securities in a financing  transaction,  or a series of  financings,  with gross
proceeds  equal to  $1,000,000,  excluding  certain  issuances.  Our actions are
restricted by the terms of the Note, which may have a material adverse effect on
our  operations  and capital  raising  ability.  Under the terms of the note, we
would not be able to raise more than $1,000,000, if we were otherwise able to do
so, unless we were able to repay the Note upon such financing.  In addition, the
note prevents us from (i) increasing the base salary of any officer more than 5%
per year unless required to do so by an outstanding  employment agreement,  (ii)
pay any dividends, (iii) incur indebtedness which is senior or pari passu to the
Note, (iv) sell account receivables, (v) expend more than $100,000 in any fiscal
year for capital  expenditures,  or (vi) advance money to or invest in any firm,
corporation or other person, except in certain enumerated situations.

         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 June 2006. Our working capital deficit as of March 31, 2006
was $734,698 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.


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

         Under the October  2004  private  placement,  we agreed to register the
shares sold in the  transaction,  along with the shares  underlying the warrants
sold within ninety days from the closing date of the private placement. If these
securities  were not so  registered,  we would incur a penalty  equivalent to an
additional 2% of the shares and warrants to be registered for every 30 days that
we failed to complete the registration.  Through April 28, 2006, we have accrued
6,918,000 shares and 2,724,000 warrants pursuant to this penalty  provision.  No
cap exists to limit the penalty for failure to register  the shares and warrants
in the October 2004 private  placement.  Accordingly,  the amount of  additional
equity  securities  we issue  pursuant to the delayed  registration  penalty may
adversely  affect  the market  price of our  common  stock and the rights of our
stockholders  may be  substantially  reduced.  Moreover,  as of the date of this
report,  our authorized  capital consists of 100,000,000 shares of common stock.
As of April 28, 2006,  we have fully diluted  91,396,465  shares of common stock
outstanding.  Therefore,  because no cap exists to limit the issuance of penalty
shares,  we may not have a sufficient  number of authorized shares available for
the settlement of the registration  penalty. As a result, the investors entitled
to these shares may take legal or other action against us, which may cause us to
pay substantial damages and adversely affect our business.



ITEM 3. CONTROLS AND PROCEDURES

(a) 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 Securities Exchange Act of 1934, as
amended (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.

                                        9
<PAGE>

         As of the end of the  period  covered  by  this  Quarterly  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 Rule 13a-15(e) or Rule 15d-15(e) of the Exchange
Act). Based on that evaluation,  our Chief Executive Officer and Chief Financial
Officer have concluded that, as of March 31, 2006, such disclosure  controls and
procedures  were  effective  in  ensuring  that  required  information  will  be
disclosed  on a timely basis in our  periodic  reports  filed under the Exchange
Act.

(b) 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 March 31, 2006 that has materially  affected,  or is reasonably  likely to
materially affect, our internal control over financial reporting.



PART II - OTHER INFORMATION



ITEM 1. LEGAL PROCEEDINGS

         The Company is not a party to any material  legal  proceedings.  Please
refer to the Company's  report on Form 10-K/A Amendment No. 1 for 2005 regarding
litigation and claims as of December 31, 2005.


ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

         On August 23,  2004,  the  Company  entered  into a $5,000  Convertible
Promissory  Note  bearing  8%  interest  per month to an  individual  accredited
investor.  On October 26, 2004 in  accordance  with the terms of the  Promissory
Note,  principal of $5,000 and accrued interest of $71 was converted into 67,616
shares of our common stock  releasing  the Company  from any further  obligation
under  the Note.  From the date of the  note's  conversion,  these  shares  were
accrued  for by the  Company  and the  certificate  representing  the shares was
issued in March 2006. No general  solicitation  or advertising was undertaken in
connection with the offer and sale of the Note. The investor  represented to the
Company that the investor was purchasing the Note for the investor's own account
and not with a present view towards the distribution  thereof. In addition,  the
investor acknowledged and agreed that the Note and the underlying securities 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. Therefore, the Company believes
that the  securities  were  offered and sold in reliance  upon  exemptions  from
registration  pursuant  to Section  4(2) under the  Securities  Act of 1933,  as
amended, and Rule 506 promulgated thereunder.

         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.

         As of March 31, 2006 we have accrued the issuance of 230,096  shares of
common  stock.  Pursuant  to the terms of their  respective  agreements  with us
34,544 shares of common stock are to be issued to consultants.  Also included is
182,366 shares relating to the conversion of convertible  notes. The shares will
bear a restrictive  legend  regarding  the sale or transfer of such.  The shares
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. Our Chief Financial Officer and the consultants each qualifies as an
accredited investor (as defined by Rule 501 under the Securities Act of 1933, as
amended).  No general  solicitation  or advertising was undertaken in connection
with the offer and sale of these shares.

         During the three months  ended March 31, 2006,  we accrued the issuance
of  1,383,600  shares of common  stock and  warrants to  purchase an  additional
544,800 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.

                                        10
<PAGE>

Subsequent  to March 31,  2006 we have  accrued the  issuance  of an  additional
292,093  shares of common stock and warrants to purchase an  additional  115,013
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

         During  the three  months  ended  March 31,  2006 we have  accrued  the
issuance of 61,500 common stock purchase warrants to members of our Bioterrorism
Advisory  Board,  Drug  Development  Advisory Board and Oncology and Dermatology
Advisory  Board for  participation  during the year.  These warrants were issued
pursuant  to the terms of their  respective  agreements  with us.  The  exercise
prices of these  warrants  range from  $0.125 to $1.00 per share.  The  warrants
expire three years after date of issuance.  The warrants will bear a restrictive
legend regarding the sale or transfer of such or the underlying securities.  The
warrants were issued in reliance upon exemptions from  registration  pursuant to
Section  4(2)  under  the  Securities  Act of  1933,  as  amended,  and Rule 506
promulgated thereunder.  There were less than 35 investors and each investor had
such  knowledge  and  experience  in  financial  and  business  matters that the
investor  was capable of  evaluating  the merits and risks of  investing  in the
warrants.  No general  solicitation  or advertising was undertaken in connection
with the offer and sale of these  shares.  Each  investor was also provided with
access to our Exchange Act reports  including  our annual  report on Form 10-KSB
and our quarterly reports on Form 10-QSB.


ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.


ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

None.


ITEM 5: OTHER INFORMATION

None.


ITEM 6. EXHIBITS

(a) Exhibits

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.*

                  o     * 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.





                                   SIGNATURES

Pursuant  to the  requirements  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 May 5, 2006.

                                            IR BioSciences Holdings, Inc.


                                        By: /S/ Michael K. Wilhelm
                                            -----------------------------------
                                            Michael K. Wilhelm
                                            President, Chief Executive Officer

                                       11