FORM 10-QSB/A
                                (Amendment No. 1)
                       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 June 30, 2005

                                       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
   ---      ---

The number of shares  outstanding of  Registrant's  common stock as of August 1,
2005 was 69,336,319.

<PAGE>

                  IR BIOSCIENCES HOLDINGS, INC. AND SUBSIDIARY

                                TABLE OF CONTENTS

PART I.  FINANCIAL INFORMATION                                            Page
                                                                          Number

    Item 1.  Financial Statements:

             Condensed Consolidated Balance Sheet as of
             June 30, 2005 (unaudited)..................................... F-1

             Condensed  Consolidated  Statement of Operations for
             the three months and six months  ended June 30,  2005
             and 2004, and for the period of inception
             (October 30, 2002) to June 30, 2005........................... F-2

             Condensed Consolidated Statement of Deficiency   in
             Stockholders' Equity from date of inception
             (October 30, 2002) to June 30, 2005........................... F-3

             Condensed Consolidated Statement of Cash Flows for the
             six months ended June 30, 2005 and 2004, and for the
             period of inception (October 30, 2002) to June 30, 2005....... F-8

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

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

PART II  OTHER INFORMATION

    Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds... 19

    Item 6.  Exhibits...................................................... 20

             Signatures.................................................... 21

                                        2

<PAGE>

ITEM 1. FINANCIAL INFORMATION

                  IR BioSciences Holdings, Inc. and Subsidiary
                          (A Development Stage Company)
            Condensed Consolidated Balance Sheet as of June 30, 2005
                                   (Unaudited)

                                                                  June 30,
                                                                    2005
                                                                ------------
Assets

Current assets

   Cash and cash equivalents                                       1,141,986
   Prepaid services and other current assets                           8,713
                                                                ------------

      Total current assets                                         1,150,699
   Licensed proprietary rights, net                                    6,856
   Furniture and equipment, net                                        5,762
                                                                ------------

Total assets                                                    $  1,163,317
                                                                ============

Liabilities and Deficiency in Stockholders' Equity

Current liabilities

   Accounts payable and accrued liabilities                        1,843,088
                                                                ------------

      Total current liabilities                                    1,843,088

Commitments and Contingencies

   Deficiency in Stockholders' Equity Preferred stock,
      0.001 par value: 10,000,000 shares authorized,
      no shares issued and outstanding                                     0
   Common stock, $0.001 par value; 100,000,000 shares
      authorized; 69,104,166 shares issued and outstanding
      at June 30, 2005                                                69,104
   Additional paid-in capital                                      9,351,940
   Deferred compensation                                             (30,862)
   Common stock subscribed                                            65,003
   Deficit Accumulated during the Development Stage              (10,134,956)
                                                                ------------
      Total deficiency in stockholder's equity                      (679,771)
                                                                ------------

Total liabilities and deficiency in stockholder's equity        $  1,163,317
                                                                ============

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

                                       F-1

<PAGE>

                  IR BioSciences Holdings, Inc. and Subsidiary
                          (A Development Stage Company)
                       Condensed Consolidated Statement of
                 Operations For the three months and six months
                          ended June 30, 2005 and 2004,
                         And for the period of inception
                       (October 30, 2002) to June 30, 2005
                                   (Unaudited)

<TABLE>
<CAPTION>
                                         For the         For the
                                          Three           Three                                     Cumulative from
                                          Months         Months        For the Six    For the Six  Inception (October
                                        Ended June     Ended June     Months Ended    Months Ended    30, 2002) to
                                         30, 2005       30, 2004      June 30, 2005  June 30, 2004   June 30, 2005
                                      ------------    ------------    ------------    ------------    ------------
<S>                                   <C>             <C>             <C>            <C>             <C>
Revenues                              $         --    $         --    $         --    $         --    $         --

Operating expenses:

   Selling, general and

administrative expenses                    593,835       1,574,415       1,432,355       2,505,489       7,022,239

   Merger fees and costs                         0               0               0               0         350,000
   Financing cost                        1,493,256               0       1,493,256               0       1,583,256
                                      ------------    ------------    ------------    ------------    ------------
      Total operating expenses           2,087,091       1,574,415       2,925,611       2,505,489       8,955,495

Operating loss                          (2,087,091)     (1,574,415)     (2,925,611)     (2,505,489)     (8,955,495)

Other expense:
   Interest (income) expense                   341         131,737           1,318         435,815       1,179,461
                                      ------------    ------------    ------------    ------------    ------------
      Total other expense                      341         131,737           1,318         435,815       1,179,461

  Loss before income taxes              (2,087,432)     (1,706,152)     (2,926,929)     (2,941,304)    (10,134,956)

   Provision for income taxes                   --              --              --              --              --
                                      ------------    ------------    ------------    ------------    ------------
Net loss                              $ (2,087,432)   $ (1,706,152)   $ (2,926,929)   $ (2,941,304)   $(10,134,956)
                                      ============    ============    ============    ============    ============

Net loss per share -
   basic and diluted                  $      (0.03)   $      (0.06)   $      (0.04)   $      (0.11)   $      (0.31)
                                      ============    ============    ============    ============    ============

Weighted average shares outstanding
   basic and diluted                    69,039,111      27,474,445      65,968,335      26,163,266      33,181,714
                                      ============    ============    ============    ============    ============

</TABLE>

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

                                       F-2

<PAGE>

                   IR Biosciences Holding, Inc. and Subsidiary
                          (A Development Stage Company)
     Condensed Consolidated Statement of Deficiency in Stockholders' Equity
       For the period from inception (October 30, 2002) to June 30, 2005
                                   (unaudited)

<TABLE>
<CAPTION>

                                                                                                        Deficit
                                                                                                        Accumulated
                                             Common Stock        Additional                 Common      During the
                                       -----------------------    Paid-In     Deferred      Stock       Development
                                         Shares       Amount      Capital    Compensation  Subscribed   Stage           Total
                                       ----------  -----------  -----------  ------------  -----------  -----------  -----------
<S>                                  <C>           <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
</TABLE>

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

                                      F-3

<PAGE>

                   IR Biosciences Holding, Inc. and Subsidiary
                          (A Development Stage Company)
     Condensed Consolidated Statement of Deficiency in Stockholders' Equity
       For the period from inception (October 30, 2002) to June 30, 2005
                                   (unaudited)

<TABLE>
<CAPTION>

                                                                                                        Deficit
                                                                                                        Accumulated
                                             Common Stock        Additional                 Common      During the
                                       -----------------------    Paid-In     Deferred      Stock       Development
                                         Shares       Amount      Capital    Compensation  Subscribed   Stage           Total
                                       ----------  -----------  -----------  ------------  -----------  -----------  -----------
<S>                                     <C>           <C>          <C>          <C>        <C>         <C>              <C>
Beneficial conversion feature
associated with notes issued in
June 2003                                      --           --       60,560            --           --           --       60,560

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

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

Value of warrants issued with
extended notes payable in
October 2003                                   --           --      189,937                                              189,937
                                                                                                                              --
Value of Company warrants
issued in conjunction with
fourth quarter notes payable
issued October through December 2003           --           --      207,457            --           --           --      207,457

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

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

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

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

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

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

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
</TABLE>

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

                                      F-4

<PAGE>

                   IR Biosciences Holding, Inc. and Subsidiary
                          (A Development Stage Company)
     Condensed Consolidated Statement of Deficiency in Stockholders' Equity
       For the period from inception (October 30, 2002) to June 30, 2005
                                   (unaudited)

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

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
</TABLE>

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

                                      F-5

<PAGE>

                   IR Biosciences Holding, Inc. and Subsidiary
        (A Development Stage Company) Condensed Consolidated Statement of
                       Deficiency in Stockholders' Equity
       For the period from inception (October 30, 2002) to June 30, 2005
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                                        Deficit
                                                                                                        Accumulated
                                             Common Stock        Additional                 Common      During the
                                       -----------------------    Paid-In     Deferred      Stock       Development
                                         Shares       Amount      Capital    Compensation  Subscribed   Stage          Total
                                       ----------  -----------  -----------  ------------  -----------  -----------  -----------

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

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

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

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

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

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

Sale of stock for cash in
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            --           --           --           --

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

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

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

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

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

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

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

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

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
</TABLE>

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

                                      F-6

<PAGE>

                   IR Biosciences Holding, Inc. and Subsidiary
                          (A Development Stage Company)
                Condensed Consolidated Statement of Deficiency in
               Stockholders' Equity For the period from inception
                      (October 30, 2002) to June 30, 2005
                                   (unaudited)


<TABLE>
<CAPTION>
                                                                                                        Deficit
                                                                                                        Accumulated
                                             Common Stock        Additional                 Common      During The
                                       -----------------------    Paid-In     Deferred      Stock       Development
                                         Shares       Amount      Capital    Compensation  Subscribed   Stage           Total
                                       ----------  -----------  -----------  ------------  -----------  -----------  -----------

<S>                                    <C>         <C>         <C>           <C>          <C>           <C>          <C>

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

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

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

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

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

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

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

Sale of shares of common stock
for cash at $0.20 per share
in March 2005 for warrant
exercise, net of costs                  6,600,778        6,601    1,184,256            --           --           --    1,190,857

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

Accrued deferred compensation in
February, 2005 to a consultant
for 50,000 shares at $0.65 per
share. Committed but unissued                  --           --           --       (32,500)          --           --      (32,500)

Amortization of deferred
compensation for the three months
ended March 31, 2005                           --           --           --       149,061           --           --      149,061

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

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

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

Amortization of deferred
compensation for the three months
ended June 30, 2005                            --           --           --        22,563           --           --       22,563

Conversion of notes payable into
232,153 common stock not yet issued            --           --           --            --       65,003           --       65,003

Loss for the six months ended
June 30, 2005                                  --           --           --            --           --   (2,926,929)  (2,926,929)
                                       ----------  -----------  -----------  ------------  -----------  -----------  -----------
Balance at June 30, 2005               69,104,166       69,104    9,351,940       (30,862)      65,003  (10,134,956)    (679,771)
                                       ==========  ===========  ===========  ============  ===========  ===========  ===========
</TABLE>


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

                                      F-7

<PAGE>

                   IR Biosciences Holding, Inc. and Subsidiary
                          (A Development Stage Company)
                 Condensed Consolidated Statement of Cash Flows
                For the six months ended June 30, 2005 and 2004,
               And for the period of inception (October 30, 2002)
                                to June 30, 2005
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                            Cumulative from
                                                                                               Inception
                                                           For the Six      For the Six      (October 30,
                                                          Months Ended      Months Ended   2002) to June 30,
                                                          June 30, 2005    June 30, 2004          2005
                                                         ----------------  --------------- -------------------
<S>                                                      <C>              <C>              <C>
Cash flows from operating activities:
   Net loss                                               $ (2,926,929)   $ (2,941,304)     $(10,134,956)
  ADJUSTMENTS TO RECONCILE NET LOSS TO NET
  CASH USED IN OPERATING ACTIVITIES:
  Non-cash compensation                                        426,279       1,912,027         3,826,279
  Interest expense                                               4,007          37,545           156,407
  Amortization of discount on notes payable                          0         399,222         1,006,935
  Depreciation and amortization                                  1,202          12,053            27,219
  Changes in operating assets and liabilities:                      --
        Prepaid services and other assets                       (2,000)         31,043            (8,712)
        Accounts payable and accrued expenses                1,489,453         243,931         2,044,495
                                                          ------------    ------------      ------------

   NET CASH USED IN OPERATING ACTIVITIES                    (1,007,988)       (305,483)       (3,082,333)

Cash flows from investing activities:
   Acquisition of property and equipment                             0               0            (8,087)
                                                          ------------    ------------      ------------

   NET CASH USED IN INVESTING ACTIVITIES                             0               0            (8,087)

Cash flows from financing activities:
   Proceeds from notes payable                                      --         442,957         1,233,500
   Principal payments on notes payable and demand loans        (14,997)       (174,000)         (264,997)
   Shares of stock sold for cash                             1,190,857          31,200         3,259,903
   Proceeds from exercised of warrants                           4,000           4,000             4,000
   Officer repayment of amounts paid on his behalf                                                19,800
   Cash paid on behalf of officer                                                                (19,800)
                                                          ------------    ------------      ------------

   NET CASH PROVIDED BY FINANCING ACTIVITIES                 1,179,860         300,157         4,232,406

Net increase in cash and cash equivalents                      171,872          (5,326)        1,141,986

Cash and cash equivalents at beginning of period               970,114          10,534                --
                                                          ------------    ------------      ------------
Cash and cash equivalents at end of period                $  1,141,986    $      5,208      $  1,141,986
                                                          ============    ============      ============

Supplemental disclosure of cash flow information:

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
                                                          ============    ============      ============
</TABLE>

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

                                      F-8

<PAGE>

                   IR Biosciences Holding, Inc. and Subsidiary
                          (A Development Stage Company)
                 Condensed Consolidated Statement of Cash Flows
                   For the six months ended June 30, 2005 and
                 2004, And for the period of inception (October
                           30, 2002) to June 30, 2005
                                   (Unaudited)

<TABLE>
<CAPTION>
<S>                                                       <C>            <C>           <C>
Cash paid during the period for:
Interest                                                  $      1,486   $      4,553        44,286
                                                          ============   ============  ============

Taxes                                                     $         --   $         --  $         --
                                                          ============   ============  ============

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

Common stock issued in exchange for services              $         --   $  2,095,240  $  2,915,286
                                                          ============   ============  ============

Common stock issued in exchange for previously incurred
   debt and accrued interest                              $     65,003   $     35,000  $  1,060,594
                                                          ============   ============  ============

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

Amortization of beneficial conversion feature             $         --   $         --  $    223,269
                                                          ============   ============  ============
Stock options and warrants issued in exchange for
services rendered                                         $    249,821                 $    742,253
                                                          ============   ============  ============

Debt and accrued interest forgiveness from note holders    $         --                $     36,875
                                                          ============   ============  ============

Common stock issued in satisfaction of accounts payable   $         --   $     29,132  $    157,219
                                                          ============   ============  ============
Common stock issued in satisfaction of amounts due
   to an Officer and a Director                           $         --   $         --  $    180,000
                                                          ============   ============  ============

Amortization of deferred compensation                     $    171,624                 $    171,624
                                                          ============                 ============
Fair Value of common stock and warrants payable in
connection with late filing of registration statement     $  1,493,256                 $  1,493,256
                                                          ============                 ============
</TABLE>

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

                                      F-9
<PAGE>

                          IR BIOSCIENCES HOLDINGS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2005
                                   (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 six-month  periods ended June 30, 2005 and 2004
are not necessarily indicative of the results that may be expected for the years
ended  December  31,  2005.  The  unaudited  condensed   consolidated  financial
statements  should be read in  conjunction  with the December 31, 2004 financial
statements and footnotes thereto included in the Company's annual report on Form
10-KSB filed with the Securities and Exchange Commission on April 19, 2005.

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 a class  of drug  candidates
derived from Homspera, Radilex(TM) and Viprovex(TM). Radilex has been formulated
specifically  for the  indication of acute  exposure to radiation.  Viprovex was
formulated  specifically for  applications  relating to the treatment of various
chemical agents,  such as exposure to formalin,  and biological agents,  such as
infectious  disease and other Class A pathogens.  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.

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

In December  2002,  the FASB issued SFAS No. 148,  "Accounting  for  Stock-Based
Compensation-Transition and Disclosure-an amendment of SFAS 123." This statement
amends  SFAS No.  123,"Accounting  for  Stock-Based  Compensation,"  to  provide
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee  compensation.  In addition,  this
statement  amends  the  disclosure  requirements  of  SFAS  No.  123 to  require
prominent  disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of the
method used on reported  results.  The Company has chosen to continue to account
for stock-based  compensation using the intrinsic value method prescribed in APB
Opinion No. 25 and related  interpretations.  Accordingly,  compensation expense
for stock options is measured as the excess, if any, of the fair market value of
the  Company's  stock at the date of the grant  over the  exercise  price of the
related option. The Company has adopted the annual disclosure provisions of SFAS
No. 148 in its  financial  reports for the year ended  December 31, 2002 and for
the subsequent periods.

                                      F-10

<PAGE>

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

The accompanying balance sheet as of June 30, 2005, the statements of operations
for the six months ended June 30, 2005 and 2004, and for the period of inception
(October 30, 2002) to June 30, 2005,  and the  statements  of cash flows for six
months ended June 30, 2005 and 2004,  and from the period of inception  (October
30, 2002) to June 30, 2005 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.

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 (i) salary advance to an
employee of $2,300;  (ii) deposits of $2,260;  and (iii) prepaid consulting fees
of $4,153.

Licensed proprietary rights
---------------------------

The Company has licensed from its founders certain  proprietary rights which the
Company  intends  to  utilize  in the  execution  of its  business  plan.  These
proprietary  rights are being amortized over the term of the license  agreement,
or ten years.  The amount  amortized during the three months ended June 30, 2005
and 2004 was $232 during each period. The amount amortized during the six months
ended June 30, 2005 and 2004 was $464 during each period.  The Company amortized
$2,394 for the period from October 30, 2002 (inception) to June 30, 2005.

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
areas follows:

     Computer equipment             3 years
     Furniture                      7 years

The amounts  depreciated  for the three months ended June 30, 2005 and 2004 were
$568 and $170,  respectively.  The amounts  depreciated for the six months ended
June 30, 2005 and 2004 were $738 and $340, respectively.  The amount depreciated
from the date of inception (October 30, 2002) through June 30, 2005 was $2,326.

NOTE 2 - RELATED PARTY TRANSACTIONS

Proprietary rights agreement
----------------------------

In December 2002, the Company entered into a royalty-free license agreement (the
"License  Agreement")  with  its two  founders  and  largest  shareholders  (the
"Licensors").  Under the terms of the License Agreement,  the Licensors grant to
the Company an exclusive license to use and sublicense certain patents,  medical
applications,  and other technologies developed by the Licensors.  The Company's
obligations  under the  License  Agreement  include  (i)  reasonable  efforts to
protect any licensed patents or other associated

                                      F-11

<PAGE>

property  rights;  (ii) reasonable  efforts to maintain  confidentiality  of any
proprietary  information;  (iii)  upon the  granting  by the U. S. Food and Drug
Administration  to the Company the right to market a product,  the Company  will
maintain a broad form general liability and product liability insurance.

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

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


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


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

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

During the three  months  ended  June 30,  2005,  the  Company  paid  $17,000 in
consulting fees to the Consultant, and charged this amount to operations; during
the three months ended June 30, 2004, the Company  accrued the amount of $15,000
in  consulting  fees payable to the  Company's  Founders.  During the six months
ended June 30,  2005,  the  Company  paid a total of $43,000 to the  Consultant,
charging $17,000 of this amount to operations and the remaining  $26,000 against
the accrued  liability;  also  during the six months  ended June 30,  2005,  the
Company accrued an additional  $19,000 in consulting fees due to the Consultant.
At June 30,  2005,  there is a prepaid  asset of $4,153  relating to these fees.
During the six months  ended  June 30,  2004,  the  Company  accrued  $60,000 in
consulting fees payable to the Consultants.

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

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

Pursuant to our employment  agreement with John  Fermanis,  our Chief  Financial
Officer,  dated February 15, 2005, we paid a salary of $60,000 until the company
completed a financing of $500,000 or more.  This  occurred on March 4, 2005 when
the company  completed a Tender Offer for warrants  totaling  $1,190,857  net of
fees. From March 4, 2005,  until December 31, 2005, we will pay an annual salary
of $85,000.  Thereafter,  we will pay an annual salary of $98,000 for the second
year ending  December  31, 2006 and an annual  salary of $112,000  for the third
year  ending  December  31,  2007.  Mr.  Fermanis'  salary is payable in regular
installments in accordance with the customary payroll practices of our company.

NOTE 3 - DEBT

During the six months ended June 30, 2005,  the Company paid three notes payable
in the  aggregate  amount of $80,000.  Payment was made by cash in the amount of
$14,997,  and by converting a note with a balance of $65,003 into 232,153 shares
of the Company's  common stock at a price of $0.28 per share.  These shares were
issued subsequent to June 30, 2005.

NOTE 4 - EQUITY

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

                                      F-12

<PAGE>

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

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

Warrants
--------

During the three  months ended March 31, 2005,  the Company  issued  warrants to
purchase  268,033  shares of common stock at prices ranging from $0.125 to $1.00
to consultants for services  performed.  The Company valued these warrants using
the Black-Scholes valuation model, and charged the amount of $137,049 six months
ended June 30, 2005.

During the three  months  ended June 30, 2005,  the Company  issued  warrants to
purchase  366,814  shares of common stock at prices ranging from $0.038 to $1.00
per share.  The Company also  cancelled  warrants to purchase  123,530 shares of
common stock at a price of $2.00 per share.  The Company  valued these  issuance
and  cancellations  using the  Black-Scholes  valuation  model,  and charged the
amount of $32,991 to operations during the six months ended June 30, 2005.

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

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

<TABLE>
<CAPTION>
        Warrants Outstanding              Warrants Exercisable
---------------------------------  --------------------------------
                                   Weighted Average       Weighed                       Weighted Average
                                      Remaining           Average                          Remaining
      Exercise          Number     Contractual Life       Exercise        Number         Contractual Life
        Prices       Outstanding       (Years)             Price        Exercisable          (Years)
---------------------------------------------------------------------------------------------------------
<S>                  <C>               <C>              <C>            <C>                  <C>
     $0.01-0.10         519,780         3.89             $0.01-0.10       519,780            3.89
     0.125-0.21         878,669         3.99             0.125-0.21       878,669            3.99
      0.25-0.50       9,254,406         4.08              0.25-0.50     9,254,406            4.08
           1.00         794,844         2.51                   1.00       794,844            2.51
           2.00          49,050         3.74                   2.00        49,050            3.74
                     ----------        -----                           ----------            ----
                     11,496,749         3.95                           11,496,749            3.95
                     ==========        =====                           ==========            ====
</TABLE>

Transactions involving warrants are summarized as follows:

                                                           Weighted Average
                                        Number of Shares    Price Per Share
                                         ---------------    ---------------

   Outstanding at January 1, 2005             17,666,210           $    .49
     Granted                                     268,033                .48
     Exercised                                (6,600,778)               .50
     Canceled or expired                              --                 --
                                              ----------           --------
   Outstanding at March 31, 2005              11,333,465           $    .47

     Granted                                     366,814                .32
     Exercised                                   (80,000)               .05
     Cancelled or expired                       (123,530)              2.00
                                              ----------        -----------
   Outstanding at June 30, 2005               11,496,749              $0.45
                                              ==========        ===========

                                      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
                                                       ----
 Significant assumptions (weighted-average):
     Risk-free interest rate at grant date        3.69% to 3.85%
     Expected stock price volatility               129% to 163%
     Expected dividend payout                           --
     Expected option life-years (a)                   3 to 5

Additional  shares  issuable  in  connection  with late  filing of  registration
statement
-------------------------------------------------------------------------------

In October 2004, the Company completed a private placement sale of shares of its
common stock and warrants to purchase  additional  shares of common  stock.  The
Company agreed to register these shares along with the shares  underlying  these
warrants  within  ninety days from the closing date of the  transaction,  or the
Company  would incur a penalty  equivalent to an additional 2% of the shares and
warrants to be  registered  for every 30 days that the Company fails 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 June 30,  2005,  the Company is required to
issue  additional  2,413,613  shares of common stock and warrants to purchase an
additional  950,373 shares of common stock. These shares have been valued at the
market price of the common stock at the time each 30 day period,  for a total of
$1,109,032  at June 30, 2005;  the warrants have been valued at $384,224 at June
30, 2005 utilizing the  Black-Scholes  valuation  model.  The total value of the
common stock and warrants  issuable pursuant to this late filing penalty at June
30, 2005 is $1,493,256. This amount was charged to finance cost during the three
months ended June 30, 2005 and are included in accrued  liabilities  at June 30,
2005.

The Company  anticipates  completing the registration of these shares during the
quarter  ended  September  30,  2005,  but expects that an  obligation  to issue
approximately  815,000 additional shares and 325,000  additional  warrants at an
aggregate cost of approximately $335,000 will be incurred.

NOTE 5 - SUBSEQUENT EVENTS

In July 2005,  the Company issued 232,153 shares of its common stock pursuant to
the conversion of $65,003 of debt in June 2005. See Note 3.

                                      F-14

<PAGE>

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

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.

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 Homspera(TM),  a proprietary compound
that is derived from  homeostatic  substance P, a naturally  occurring  peptide.
Currently,  the  majority  of  our  efforts  are  focused  on the  research  and
development of potential uses of Radilex(TM),  a compound derived from Homspera,
as a possible therapeutic in response to toxic radiological or nuclear exposure.
Our research and  development  efforts are at a very early stage and Radilex has
only undergone  pre-clinical  testing in mice. We own or have obtained a license
to 2 issued U.S. and 2 issued foreign  patents and 5 pending Patent  Cooperation
Treaty (PCT)  applications,  6 pending U.S.  applications and 15 pending foreign
patent applications.

RESULTS OF OPERATIONS FOR THE THREE MONTH PERIOD ENDED JUNE 30, 2005


Revenue
-------

We are in the development stage and have no revenue.

Sales, general, and administrative expenses
-------------------------------------------

Sales, general, and administrative expenses ("SG&A") were $593,835 for the three
months ended June 30, 2005, a decrease of $980,580 or approximately 62% compared
to SG&A of $1,574,415  during the three months ended June 30, 2004. The decrease
is primarily due to lower costs of non-cash  compensation.  For the three months
ended June 30, 2005, this amount  consisted  primarily of non-cash  compensation
issued to consultants of $136,845,  legal and accounting fees of $167,218, other
consulting fees of $73,621,  payroll and related costs of $96,413,  and contract
labor costs of $19,670.

The Company  expects  SG&A to  increase  during the coming  twelve  months as we
continue to utilize non-cash compensation in order

                                        3

<PAGE>

to  conserve  cash,  build out the  Company's  infrastructure,  and  continue to
develop the Company's line of potential products.

Late filing of registration statement
-------------------------------------

In October 2004, the Company completed a private placement sale of shares of its
common stock and warrants to purchase  additional  shares of common  stock.  The
Company agreed to register these shares along with the shares  underlying  these
warrants  within  ninety days from the closing date of the  transaction,  or the
Company  would incur a penalty  equivalent to an additional 2% of the shares and
warrants to be  registered  for every 30 days that the Company fails 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 June 30,  2005,  the Company is required to
issue  additional  2,413,613  shares of common stock and warrants to purchase an
additional  950,373 shares of common stock. These shares have been valued at the
market price of the common stock at the time each 30 day period,  for a total of
$1,109,032  at June 30, 2005;  the warrants have been valued at $384,224 at June
30, 2005 utilizing the  Black-Scholes  valuation  model.  The total value of the
common stock and warrants  issuable pursuant to this late filing penalty at June
30, 2005 is $1,493,256. This amount was charged to finance cost during the three
months ended June 30, 2005 and are included in accrued  liabilities  at June 30,
2005.


The Company  anticipates  completing the registration of these shares during the
quarter  ended  December  31,  2005,  but expects  that an  obligation  to issue
approximately 2,659,587 additional shares and 1,047,227 additional warrants.


Interest income / expense
-------------------------

Interest  expense  (net) for the three  months  ended June 30, 2005 was $341,  a
decrease of $131,396  compared to  interest  expense  (net) of $131,737  for the
three  months  ended June 30,  2004.  The  decrease is due to a decrease in debt
along with an increase cash balances.

Net loss
--------

For the reasons above, primarily lower SG&A expenses and lower interest expenses
offset by the late registration penalty, the net loss for the three months ended
June 30, 2005 was  $2,087,432,  an increase of $381,280 or 22% compared to a net
loss of $1,706,152 for the three months ended June 30, 2004.

The Company  expects  losses to increase  during the coming twelve  months.  The
Company  does not  expect to begin to  generate  revenue  in the  coming  twelve
months,  and our costs are likely to increase  as we move our line of  potential
products  through  the  testing  and  approval  phases,  and as we build out our
corporate infrastructure.

RESULTS OF OPERATIONS FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2005

Revenue
-------

We are in the development stage and have no revenue.

Selling, general and administrative expenses
--------------------------------------------

Selling,  general and administrative expenses were $1,432,355 for the six months
ended June 30, 2005 which is a decrease of $1,073,134 or 43% compared to SG&A of
$2,505,489 for the six months ended June 30, 2004. The decrease is primarily due
to lower costs of non-cash compensation.  This expense is primarily comprised of
non-cash  compensation  of  $436,778,  legal and  accounting  fees of  $329,024,
payroll and related  costs of  $155,085,  consulting  fees of  $191,360,  public
relation and marketing of $64,884, and contract labor of $42,162.

Late filing of registration statement
-------------------------------------

In October 2004, the Company completed a private placement sale of shares of its
common stock and warrants to purchase  additional  shares of common  stock.  The
Company agreed to register these shares along with the shares  underlying  these
warrants  within  ninety days from the closing date of the  transaction,  or the
Company  would incur a penalty  equivalent to an additional 2% of the shares and
warrants to be  registered  for every 30 days that the Company fails 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 June 30,  2005,  the Company is required to
issue  additional  2,413,613  shares of common stock and warrants to purchase an
additional  950,373 shares of common stock. These shares have been valued at the
market price of the common stock at the time each 30 day period,  for a total of
$1,109,032  at June 30, 2005;  the warrants have been valued at $384,224 at June
30, 2005 utilizing the  Black-Scholes  valuation  model.  The total value of the
common stock and warrants  issuable pursuant to this late filing penalty at June
30,

                                        4

<PAGE>

2005 is  $1,493,256.  This amount was  charged to finance  cost during the three
months ended June 30, 2005 and are included in accrued  liabilities  at June 30,
2005.


The Company  anticipates  completing the registration of these shares during the
quarter  ended  December  31,  2005,  but expects  that an  obligation  to issue
approximately 2,659,587 additional shares and 1,047,227 additional warrants.


Interest expense (net)
----------------------

Interest  expense was $1,318 for the six months  ended June 30, 2005, a decrease
of $434,497  compared to interest  expense of $435,815  for the six months ended
June 30, 2004.  The decrease is due to a decrease in debt along with an increase
cash balances.

Net loss
--------

For the reasons above, primarily lower SG&A expenses and lower interest expenses
offset by the late registration  penalty,  the net loss for the six months ended
June 30, 2005 was $2,926,929, a decrease of $14,375 or 1% compared to a net loss
of $2,941,304 for the six months ended June 30, 2004.

PLAN OF OPERATION

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

Product Research and Development

We received a credit of $65,849 for laboratory studies in May, 2005 resulting in
net  expense of  $(40,430)  for the three  months  ended June 30, 2005 versus an
expense of $61,807 for the three  months  ended June 30,  2004 in  research  and
development  activities  related to the  development  of Radilex as a  universal
protectant against the effects of chemical, biological, radiological and nuclear
threats.  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 $218,103 in research and development activities. These costs
include the manufacture  and delivery of our drug by third party  manufacturers,
payments to Contract Research  Organizations  ("CRO") for consulting  related to
our studies and costs of performing such studies.


If  we  are  successful  in  obtaining  additional  funding  through  grants  or
investment  capital,  we  anticipate  that  during  the next 12  months  we will
increase our research and development  activities by approximately $450,000 to a
total of  approximately  $600,000  in an effort to further  develop  Radilex and
Viprovex,  excluding a radiation  study on primates  which we estimate will cost
$1,500,000.  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.


Our major research and development projects include:


Research and development of Radilex.

We are currently  preparing the protocols for our eighth mouse study in which we
will  further  validate  our prior  studies  by  collecting  additional  data as
requested  by the FDA and NIH.  We expect to begin the eighth  study  within the
next 120 days. We estimate that the study will be completed within 3 months upon
commencement  at  an  estimated  cost  of  $100,000.   Upon  completion  of  the
aforementioned  study we will prepare the  protocols  necessary  for a non-human
primate study to test the efficacy of Radilex as a treatment to acute  radiation
sickness.  We expect  this study to begin  within  the next  twelve  months.  We
believe that preliminary results will be available within 90 days from beginning

of study,  with  analysis  within an  additional 60 to 90 days. We have budgeted
approximately  $100,000  for  expenses  related to this study in our fiscal year
ending December 31, 2005. We expect an additional $1,500,000 will be required to
complete this study in 2006.


                                        5

<PAGE>


If we are successful in completing the study and achieve the desired results, we
intend to submit the  necessary  documentation  to the FDA and other  regulatory
agencies for  approval.  If approval for Radilex is granted,  we expect to begin
efforts to commercialize our product immediately thereafter. We are anticipating
revenues from the sale of Radilex beginning in calendar year 2008 as a treatment
to the effects caused by irradiation.

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

RESEARCH AND DEVELOPMENT OF VIPROVEX IN CHEMICAL AND BIOLOGICAL EXPOSURE
APPLICATIONS.
------------------------------------------------------------------------

We are currently  continuing to conduct preliminary  research and development on
the  efficacy  of  Viprovex  as a potential  treatment  for toxic  chemical  and
biological  exposure.  Our initial testing has been limited to early preclinical
studies on rodent  models.  We estimate  approximately  $120,000 for  additional
studies  related to the use of  Viprovex  in these  areas  over the next  twelve
months.  We  anticipate  additional  studies to begin in the  fourth  quarter of
calendar 2005 and continue on an ongoing basis over the next three years.  If we
are successful in achieving desirable results, we intend to design the protocols
and begin studies for these indications,  when capital is available.  As we have
only collected  preliminary data and additional studies are required,  we cannot
predict when, if ever, a viable  treatment can be  commercialized.  If we do not
observe  significant  results or we lack the capital to further the development,
we may abandon  such  research and  development  efforts;  thereby  limiting our
future potential revenues.

Research and development of Homspera in Wound Healing Applications.

Within the next six months we plan to begin preclinical  studies to determine if
Homspera could become a compound that would be used in wound healing.  We expect
to begin  studies in the fourth  quarter of  calendar  2005.  We do not have any
research and development  expenses  associated with the use of Homspera in wound
healing in 2004 or 2003. We have budgeted approximately $60,000 for the costs of
such studies over the next twelve  months.  We anticipate the completion of such
studies  within  eight  months of  commencement  of the  studies.  If we achieve
desirable  results,  we will design the  protocols  and begin  studies for these
indications,  when capital is available.  As we have only collected  preliminary
data and  additional  studies are required,  we cannot  predict when, if ever, a
viable product can be commercialized.  If we do not observe  significant results
or we lack the capital to further the development,  we may abandon such research
and development efforts; thereby limiting our future potential revenues.

We will need to generate  significant revenues from product sales and or related
royalties and license agreements to achieve and maintain profitability.  Through
June 30, 2005, we had no revenues from any product sales, royalties or licensing
fees, and have not achieved  profitability  on a quarterly or annual basis.  Our
ability to achieve  profitability  depends upon, among other things, our ability
to develop products,  obtain regulatory  approval for products under development
and  enter  into   agreements  for  product   development,   manufacturing   and
commercialization.  Moreover,  we may  never  achieve  significant  revenues  or
profitable operations from the sale of any of our products or technologies.


REVENUES


We have not  generated  any revenues  from  operations  from our  inception.  We
believe we will begin earning revenues from operations during calendar year 2008
as we transition  from a  development  stage company to that of an active growth
and acquisition stage company.


COSTS AND EXPENSES

From  our  inception   through  June  30,  2005,  we  have  incurred  losses  of
$10,134,956.  These  expenses  were  associated  principally  with  equity-based
compensation  to  employees  and  consultants,  product  development  costs  and
professional services.

                                        6

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2005,  we had current  assets of  $1,150,699  consisting  of cash of
$1,141,986  and other  current  assets of  $8,713.  At June,  2005,  we also had
current  liabilities of $1,843,088,  consisting of accounts  payable and accrued
liabilities  of  $349,832  and the cost of the late  filing of the  registration
statement  with the SEC of $1,493,256.  This resulted in net working  deficit at
June 30,  2005 of  $692,389.  During the six months  ended  June 30,  2005,  the
Company  used  cash in  operating  activities  of  $1,007,988.  From the date of
inception (October 30, 2002) to June 30, 2005, the Company has had a net loss of
$10,134,956 and has used cash of $3,082,333 in operating activities.

The Company  currently has no revenue.  There is no guarantee  that our business
model will be successful, or that we will be able to generate sufficient revenue
to fund future operations.  As a result, we expect our operations to continue to
use net cash,  and that we will be  required to seek  additional  debt or equity
financings during the coming quarters. Since inception, the Company has financed
its 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 June 30, 2005 via the private placement
of $3,263,903 of our common stock including  $1,194,857,  net of costs, from the
exercise of common stock  purchase  warrants  and $968,503  from the issuance of
notes payable, net of repayments.

In January 2005, we made a tender offer to temporarily reduce the exercise price
of certain  warrants  issued in October 2004 from $0.50 to $0.20 per share.  The
tender  offer  expired on March 4, 2005.  We  accepted  for  exercise a total of
6,600,778  warrants validly tendered and not withdrawn  pursuant to the terms of
the tender offer, which represents approximately 48% of the aggregate 13,780,449
warrants  that were subject to the offer.  We raised an aggregate of  $1,190,857
from the tender offer, net of costs.

Since our inception, we have been seeking additional third-party funding. During
such time,  we have retained a number of different  investment  banking firms to
assist  us in  locating  available  funding;  however,  we  have  not  yet  been
successful in obtaining any of the  long-term  funding  needed to make us into a
commercially viable entity. During the period from October 2004 to June 2005, we
were able to obtain financing of $3,770,156 from a series of private  placements
of our  securities.  Included in this amount was the  conversion  of $180,000 of
accrued  salary  and  consulting  fees due to an officer  and a director  of the
company.  These private placements of our securities resulted in net proceeds to
us of  $3,162,711.  Based on our current plan of  operations  all of our current
funding is expected to be depleted by the end of January  2006.  Although we are
continuing  with our efforts to obtain  funding to maintain our  operations,  we
cannot assure you that we will be successful or that any funding we receive will
be  received  timely or on  commercially  reasonable  terms.  Due to our working
capital  deficiency,  and if we do not receive  adequate  financing,  we will be
unable  to pay  our  vendors,  lenders  and  other  creditors  if we  cease  our
operations,  since the net realizable  value of our non-current  assets will not
generate adequate cash. We currently have no commitments for financing. There is
no guarantee that we will be successful in raising the funds required.

In the event that we are successful in obtaining  third-party funding, we do not
expect to generate a positive cash flow from our operations for at least several
years, if at all, due to anticipated  expenditures  for research and development
activities,   administrative  and  marketing  activities,  and  working  capital
requirements  and expect to continue to attempt to raise further capital through
one or more further private placements.

While we have  successfully  raised  capital  to meet our  working  capital  and
financing  needs in the past  through  debt and  equity  financings,  additional
financing  will be required in order to implement  our business plan and to meet
our current and projected cash flow deficits from  operations  and  development.
There can be no  assurance  that we will be able to  consummate  future  debt or
equity  financings in a timely manner on a basis  favorable to us, or at all. If
we are unable to raise needed  funds,  we will not be able to develop or enhance
our products,  take advantage of future  opportunities or respond to competitive
pressures or  unanticipated  requirements.  A material  shortage of capital will
require us to take  drastic  steps  such as  reducing  our level of  operations,
disposing of selected assets or seeking an acquisition  partner. We believe that
we have  sufficient  capital  resources  to meet  projected  cash flow  deficits
through the end of December 2005. However, if thereafter,  we are not successful
in generating  sufficient  liquidity  from  operations or in raising  sufficient
capital  resources,  this would have a material  adverse effect on our business,
results of operations,  liquidity and financial condition.  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.

During  the six months  ended  June 30,  2005,  the  Company  paid off two notes
payable, $14,997 in cash and $65,003 by converting into 232,153 shares of common
stocks at $0.28 per share.  These shares of common stocks were issued subsequent
to June 30, 2005.

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

                                        7

<PAGE>

Wilhelm's  salary is payable  in regular  installments  in  accordance  with the
customary payroll practices of our company.

Pursuant to our employment  agreement with John  Fermanis,  our Chief  Financial
Officer,  dated February 15, 2005, we paid a salary of $60,000 until the company
completed a financing of $500,000 or more.  This  occurred on March 4, 2005 when
the company  completed a Tender Offer for warrants  totaling  $1,190,856  net of
fees. From March 4, 2005,  until December 31, 2005, we will pay an annual salary
of $85,000.  Thereafter,  we will pay an annual salary of $98,000 for the second
year ending  December  31, 2006 and an annual  salary of $112,000  for the third
year  ending  December  31,  2007.  Mr.  Fermanis'  salary is payable in regular
installments in accordance with the customary payroll practices of our company.

On December 16, 2002 we entered into a consulting  agreement on a month-to-month
basis with Dr. Mark Witten, our chief research scientist and 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 agree to pay Dr. Witten a  non-refundable  fee of $5,000 per
month.  Under the terms of our consulting  agreement with Dr. Mark Witten, he is
to  receive a  non-refundable  fee equal to $5,000  per  month.  The  consulting
agreement is on a month-to-month basis.

Acquisition or disposition of plant and equipment
-------------------------------------------------

We did not  dispose or acquire  any  significant  property,  plant or  equipment
during the second quarter ended June 30, 2005.

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 June 30, 2005, we have relied on the
services of outside  consultants  for  services  and  currently  have five total
employees,  one contract employee and four full-time employees.  In order for us
to attract and retain  quality  personnel,  we  anticipate we will have to offer
competitive  salaries to future  employees.  We do not anticipate our employment
base will  significantly  change during the next 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

The actual  results of the  combined  company may differ  materially  from those
anticipated in these forward-looking  statements. The Registrant and ImmuneRegen
will operate as a combined company in a market  environment that is difficult to
predict and that involves  significant  risks and  uncertainties,  many of which
will  be  beyond  the  combined   company's   control.   Additional   risks  and
uncertainties  not presently  known,  or that are not  currently  believed to be
important to you, if they  materialize,  also may adversely  affect the combined
company.


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

We have  incurred a  substantial  net loss for the period from our  inception in
October 2002 to June 30, 2005,  and are  currently  experiencing  negative  cash
flow.  We expect to  continue to  experience  negative  cash flow and  operating
losses through at least 2008 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 have incurred  operating  losses since our inception.  Our net loss for
fiscal year 2004 was  $(5,305,407).  As of June 30, 2005, we had an  accumulated
deficit of $ 10,134,956.

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

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


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

As a result of our limited  operating history and because of the emerging nature
of the markets in which we will compete,  our financial data is of limited value
in planning  future  operating  expenses.  To the extent our operating  expenses
precede or are not rapidly followed by increased revenue, our business,  results
of operations and financial condition may be materially adversely affected.  Our
expense  levels  will be based  in part on our  expectations  concerning  future
revenues. A significant portion of our revenue is anticipated

                                        8

<PAGE>


to be derived from Radilex,  Viprovex and Homspera;  however the size and extent
of  such  revenues  are  wholly   dependent  upon  the  choices  and  demand  of
individuals,  which are  difficult to forecast  accurately.  We may be unable to
adjust  our  operations  in a timely  manner to  compensate  for any  unexpected
shortfall in revenues.  Further, business development and marketing expenses may
increase significantly as we expand our operations.


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

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

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

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

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

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

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

     o    respond effectively to competitive pressures.

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

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

As of June  30,  2005,  our  cash and  cash  equivalents  totaled  approximately
$1,141,986.  Based on our current plans, we believe these  financial  resources,
and interest earned thereon,  will be sufficient to meet our operating  expenses
and capital requirements at least through January 31, 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 may
require substantial  additional funds in order to finance our drug discovery and
development  programs,  fund operating expenses,  pursue regulatory  clearances,
develop  manufacturing,  marketing  and sales  capabilities,  and  prosecute and
defend our intellectual  property rights. We may seek additional funding through
public or private financing or through collaborative arrangements with strategic
partners.

     You should be aware that in the future:

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

     o    any available additional financing may not be adequate.

If we cannot raise additional funds when needed, or on acceptable terms, we will
not be able to continue to develop our drug candidates.  We require  substantial
working  capital  to fund our  operations.  Since we do not  expect to  generate
significant revenues in the foreseeable future, in order to fund operations,  we
will  be  completely   dependent  on  additional   debt  and  equity   financing
arrangements.  There is no assurance  that any  financing  will be sufficient to
fund our  capital  expenditures,  working  capital  and other cash  requirements
beyond January 31, 2006.  Our working  capital as of June 30, 2005 was a deficit
of $691,542.  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

                                        9

<PAGE>

opportunities or respond to competitive pressures or unanticipated requirements.
A material  shortage of capital will  require us to take  drastic  steps such as
reducing our level of  operations,  disposing  of selected  assets or seeking an
acquisition  partner.  If cash is insufficient,  we will not be able to continue
operations.


ALL OUR  APPLICATIONS  ARE ALL DERIVED FROM THE USE OF HOMSPERA.  IF HOMSPERA IS
FOUND TO BE UNSAFE OR INEFFECTIVE, WE WOULD HAVE NO POTENTIAL SOURCE OF REVENUES
AND MAY BE REQUIRED TO CEASE OPERATIONS.

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

We will need to conduct significant additional research, preclinical testing and
clinical  testing before we can file  applications  with the FDA for approval of
our product candidates.

         To date we have not yet  made  applications  with the FDA or any  other
governmental  regulatory agency for approval for our product  candidates.  Until
such as time as our  New  Drug  Application  (NDA)  is  filed  and  subsequently
approved, we will not be able to manufacture products.

         Our  research  and  preclinical   testing  is  currently   directed  in
developing products candidates based on our proprietary  compound,  Homspera. We
have  demonstrated in early  preclinical  studies evidence that may suggest that
Homspera may be used to treat the suppression of the body's immune system caused
by exposure to various forms of radiation,  toxic inhalants and viral infectious
diseases.  As a research and  development  company,  we may,  from time to time,
pursue the  development of other  products based on discoveries  made during our
studies. To differentiate from these other potential future applications, we are
developing  specific  candidates under the name Radilex as a potential treatment
for maladies caused by exposure to various forms of radiation,  and Viprovex, as
a potential treatment to various toxic inhalants and viral infectious diseases.

         We are currently conducting formulation, toxicity and stability studies
on Homspera,  Radilex and  Viprovex.  We  anticipate  that these studies will be
completed in 9 to 12 months.

         Also in conjunction with these studies, we plan to begin a rodent study
using  Radilex.  We expect the study to be completed  within 9 to 12 months.  In
parallel  with the rodent  study,  we intend to begin our  preparations  for the
filing of an Investigational New Drug Application (IND). We expect the IND to be
filed with the FDA within the next 12 to 16  months.  At the  conclusion  of the
rodent study, we anticipate  commencing a study in non-human primates. We expect
this study to be  completed  within 16 to 20  months.  Based on  positive  study
results,  we expect to file a New Drug Application (NDA) with the FDA within the
next 36 months.

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

Our failure to develop and commercialize  products successfully will cause us to
cease operations. Our potential therapies utilizing Homspera, or more

specifically Radilex and Viprovex,  will require significant additional research
and   development   efforts  and   regulatory   approvals   prior  to  potential
commercialization  in the future.  We cannot guarantee that we, or our corporate
collaborators, if any, will ever obtain any regulatory approvals of Homspera. We
currently are focusing our core  competencies  on the development of Radilex and
Viprovex  although  there may be no assurance  that we will be  successful in so
doing.


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

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

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


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

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

THE LENGTHY PRODUCT  APPROVAL  PROCESS AND UNCERTAINTY OF GOVERNMENT  REGULATORY
REQUIREMENTS MAY DELAY OR PREVENT US FROM COMMERCIALIZING PROPOSED PRODUCTS, AND
THEREFORE ADVERSELY AFFECT THE TIMING AND LEVEL OF FUTURE REVENUES, IF ANY.


                                       10

<PAGE>


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

      o  delays in obtaining regulatory approvals to commence a study;

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

      o  delays in the enrollment of patients;

      o  lack of efficacy during clinical trials; or,

      o  unforeseen safety issues.

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

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

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

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

      o  suspending manufacturing; or

      o  withdrawing marketing clearance.


                                       11

<PAGE>


         Additionally,  the FDA's policies may change and additional  government
regulations may be enacted,  which could prevent or delay regulatory approval of
our applications.  We cannot predict the likelihood, nature or extent of adverse
government  regulation that may arise from future  legislation or administrative
action,  either in the United  States or abroad.  If we are not able to maintain
regulatory  compliance,  we might not be permitted to market our future products
and our  business  could  suffer.  Even if human  clinical  trials  of  Radilex,
Viprovex and Homspera are initiated and successfully completed,  the FDA may not
approve  Radilex,  Viprovex and Homspera for  commercial  sale. We may encounter
significant  delays  or  excessive  costs in our  efforts  to  secure  necessary
approvals.  Regulatory  requirements  are evolving and uncertain.  Future United
States or foreign legislative or administrative acts could also prevent or delay
regulatory approval of our products.  We may not be able to obtain the necessary
approvals for clinical trials, manufacturing or marketing of any of our products
under development.  Even if commercial  regulatory approvals are obtained,  they
may include  significant  limitations  on the indicated uses for which a product
may be marketed.

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

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


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

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


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


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

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

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

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

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

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

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<PAGE>

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

     o    delays in enrolling volunteers;

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

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

     o    unfavorable efficacy results;

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

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

     o    failure to raise additional funds.

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

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

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


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

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

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


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


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

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


                                       13

<PAGE>


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

THE MEDICAL COMMUNITY MAY NOT ACCEPT AND UTILIZE RADILEX, VIPROVEX AND HOMSPERA,
THE EFFECT OF WHICH  WOULD  PREVENT  US FROM  SUCCESSFULLY  COMMERCIALIZING  THE
PRODUCT AND ADVERSELY AFFECT OUR LEVEL OF FUTURE REVENUE, IF ANY.

Our ability to market and commercialize  Radilex,  Viprovex and Homspera depends
on the acceptance and utilization of Homspera by the medical community.  We will
need to develop  commercialization  initiatives  designed to increase  awareness
about  us  and  Homspera  among  targeted  audiences,  including  public  health
activists  and  community-based  outreach  groups in addition to the  investment
community.  Currently, we have not developed any such initiatives.  Without such
acceptance  of Homspera,  the product  upon which we expect to be  substantially
dependent, we may not be able to successfully commercialize Homspera or generate
revenue.

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

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

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


                                       14

<PAGE>


We own or have obtained a license to 2 issued U.S. and 2 issued foreign  patents
and 5 pending  Patent  Cooperation  Treaty  (PCT)  applications,  6 pending U.S.
applications and 15 pending foreign patent applications. Our success will depend
in part on our ability to obtain  additional  United  States and foreign  patent
protection for our drug candidates and processes, preserve our trade secrets and
operate  without  infringing the proprietary  rights of third parties.  We place
considerable  importance on obtaining  patent  protection  for  significant  new
technologies, products and processes.


Our long-term  success largely depends on our ability to market  technologically
competitive  processes  and  products.  If we fail to obtain or  maintain  these
protections  we may  not be  able  to  prevent  third  parties  from  using  our
proprietary  rights. Our currently pending or future patent applications may not
result  in  issued  patents.  In the  United  States,  patent  applications  are
confidential  until patent  applications  are published or the patent is issued,
and because  third  parties may have filed patent  applications  for  technology
covered by our  pending  patent  applications  without  us being  aware of those
applications,  our patent  applications  may not have  priority  over any patent
applications of others.  In addition,  our issued patents may not contain claims
sufficiently broad to protect us against third parties with similar technologies
or  products  or provide us with any  competitive  advantage.  If a third  party
initiates  litigation  regarding our patents,  and is successful,  a court could
revoke  our  patents or limit the scope of  coverage  for those  patents.  Legal
standards  relating  to the  validity  of patents  covering  pharmaceutical  and
biotechnology  inventions  and the scope of claims  made under such  patents are
still  developing.  In some of the  countries  in which we intend to market  our
products, pharmaceuticals are either not patentable or have only recently become
patentable.  Past  enforcement of intellectual  property rights in many of these
countries has been limited or  non-existent.  Future  enforcement of patents and
proprietary  rights in many other countries may be problematic or unpredictable.
Moreover,  the  issuance of a patent in one country does not assure the issuance
of a similar patent in another country.  Claim  interpretation  and infringement
laws vary by nation, so the extent of any patent protection is uncertain and may
vary in different jurisdictions.

Legal standards relating to the validity of patents covering  pharmaceutical and
biotechnology  inventions  and the scope of claims  made under such  patents are
still  developing.  In some of the  countries  in which we intend to market  our
products, pharmaceuticals are either not patentable or have only recently become
patentable.  Past  enforcement of intellectual  property rights in many of these
countries has been limited or  non-existent.  Future  enforcement of patents and
proprietary  rights in many other countries may be problematic or unpredictable.
Moreover,  the  issuance of a patent in one country does not assure the issuance
of a similar patent in another country.  Claim  interpretation  and infringement
laws vary by nation, so the extent of any patent protection is uncertain and may
vary in different jurisdictions.  The U.S. Patent and Trademark Office, commonly
referred  to as the USPTO,  and the courts  have not  consistently  treated  the
breadth of claims allowed in biotechnology  patents.  If the USPTO or the courts
begin to allow broader  claims,  the  incidence and cost of patent  interference
proceedings and the risk of infringement litigation will likely increase. On the
other hand, if the USPTO or the courts begin to allow narrower claims, the value
of our  proprietary  rights  may be  limited.  Any  changes  in,  or  unexpected
interpretations  of the patent laws may adversely  affect our ability to enforce
our patent position.

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

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

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

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

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

Our products could infringe on the intellectual property rights of others, which
may cause us to engage in costly litigation and, if not

                                       15

<PAGE>

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

If our products violate  third-party  proprietary  rights,  we cannot assure you
that we would be able to  arrange  licensing  agreements  or other  satisfactory
resolutions on commercially reasonable terms, if at all. Any claims made against
us relating to the infringement of third-party  propriety rights could result in
the   expenditure  of  significant   financial  and  managerial   resources  and
injunctions  preventing us from providing  services.  Such claims could severely
harm our  financial  condition and ability to compete.  In addition,  if another
party  claims the same subject  matter or subject  matter  overlapping  with the
subject  matter that we have claimed in a United  States patent  application  or
patent, we may decide or be required to participate in interference  proceedings
in the United  States  Patent and  Trademark  Office in order to  determine  the
priority of invention.  Loss of such an interference proceeding would deprive us
of patent  protection  sought or  previously  obtained and could prevent us from
commercializing our products.  Participation in such proceedings could result in
substantial  costs,  whether or not the  eventual  outcome is  favorable.  These
additional costs could adversely affect our financial results.


FAILURE TO COMPLY WITH  ENVIRONMENTAL  LAWS OR  REGULATIONS  COULD  EXPOSE US TO
SIGNIFICANT  LIABILITY  OR COSTS  WHICH  WOULD  ADVERSELY  IMPART OUR  OPERATING
RESULTS AND DIVERT FUNDS FROM THE  OPERATION OF OUR BUSINESS AND HAVE A MATERIAL
ADVERSE EFFECT ON OUR BUSINESS.


We may be required to incur  significant  costs to comply with current or future
environmental  laws and  regulations.  Although we do not currently  manufacture
commercial quantities of our proposed products, we do produce limited quantities
of these  products for our clinical  trials.  Our research and  development  and
manufacturing  processes  involve the  controlled  storage,  use and disposal of
hazardous materials,  biological hazardous materials and radioactive  compounds.
We are subject to federal,  state and local laws and  regulations  governing the
use,  manufacture,  storage,  handling and disposal of these  materials and some
waste products.  Although we believe that our safety procedures for handling and
disposing of these materials comply with the standards  prescribed by these laws
and regulations, the risk of contamination or injury from these materials cannot

be completely eliminated.  In the event of an incident, IR BioSciences Holdings,
Inc. or ImmuneRegen  BioSciences,Inc.  could be held liable for any damages that
result,  and any  liability  could  exceed  our  resources.  Current  or  future
environmental  laws or  regulations  may have a material  adverse  effect on our
operations, business and assets.

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

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


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


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

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<PAGE>


TRADING IN OUR SECURITIES  COULD BE SUBJECT TO EXTREME PRICE  FLUCTUATIONS  THAT
COULD ADVERSELY  AFFECT THE PRICE OF OUR COMMON STOCK AND THUS ADVERSELY  AFFECT
THE VALUE OF ANY INVESTMENT IN OUR COMMON STOCK.


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

     o    biological or medical discoveries by competitors;

     o    public concern about the safety of our drug candidates;

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

     o    unfavorable results from preclinical or clinical studies;

     o    unfavorable  developments  concerning  patents  or  other  proprietary
          rights; or

     o    unfavorable domestic or foreign regulatory developments;

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

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

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

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

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

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


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


Certain of our  stockholders  have the right to register  securities  for resale
that they hold pursuant to registration rights agreements. We expect to continue
to incur product development and selling,  general and administrative costs, and
in order to satisfy our funding  requirements,  we will need to sell  additional
equity securities, which may be subject to similar registration rights. The sale
or the

                                       17

<PAGE>

proposed sale of  substantial  amounts of our common stock in the public markets
may  adversely  affect the market price of our common  stock.  We expect that an
aggregate of 57,786,607  shares of our common stock will be registered  with the
SEC in the registration statement. The registration and subsequent sales of such
shares of common  stock may have an adverse  effect on the  market  price of our
common stock.


From time to time,  certain  stockholders of our company may be eligible to sell
all or some of their  shares  of  common  stock by means of  ordinary  brokerage
transactions in the open market pursuant to Rule 144,  promulgated under the Act
("Rule 144"), subject to certain limitations.  In general, pursuant to Rule 144,
a stockholder (or stockholders  whose shares are aggregated) who has satisfied a
one-year  holding  periods may,  under  certain  circumstances,  sell within any
three-month  period a number of securities  which does not exceed the greater of
1% of the then  outstanding  shares of our common  stock or the  average  weekly
trading  volume of the class during the four calendar  weeks prior to such sale.
Rule 144 also permits,  under  certain  circumstances,  the sale of  securities,
without any  limitations,  by a non-affiliate of our company who has satisfied a
two-year  holding period.  Any substantial  sale of our common stock pursuant to
Rule 144 or pursuant to any resale  prospectus may have an adverse effect on the
market price of our securities.


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

                                       18

<PAGE>


PART II - OTHER INFORMATION


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


On September 28, 2001, the Company entered into a $50,000 Convertible Promissory
Note bearing 8% interest per month with an  accredited  investor.  in accordance
with the terms of the  Promissory  Note, the  outstanding  principal and accrued
interest was  converted  into 232,153  shares of our common stock  releasing the
Company from any further  obligation under the Note. No general  solicitation or
advertising was undertaken in connection with the offer and sale of the Note and
the shares.  The  investor  represented  to the Company  that the  investor  was
purchasing  the securities for the investor's own account and not with a present
view towards the distribution  thereof. In addition,  each investor acknowledged
and  agreed  that the note and 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.  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 accordance with the terms of the Promissory Note, the
outstanding  principal and accrued interest was converted into 232,153 shares of
our common stock  releasing  the Company from any further  obligation  under the
Note. No general  solicitation  or advertising was undertaken in connection with
the offer and sale of the Note and the shares.  The investor  represented to the
Company that the investor was  purchasing  the securities for the investor's own
account  and not with a  present  view  towards  the  distribution  thereof.  In
addition, each investor acknowledged and agreed that the note and 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. 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.


The Company  accrued the  issuance of 219,161  common  stock  purchase  warrants
during  the three  months  ended June 30,  2005.  The  exercise  prices of these
warrants  range  from  $0.125 to $1.00 per  share.  Pursuant  to the term of his
employment  agreement,  our  Chief  Executive  Officer,  is  to  receive  80,811
warrants.  Pursuant to the term of his employment agreement, our Chief Financial
Officer,  is to receive 12,500  warrants.  The warrants  expire five years after
date of issuance.  For assignment of patents,  we accrued the issuance of 50,000
warrants to our Director and Chief Scientific Officer.  The warrants expire five
years  after  date of  issuance.  Pursuant  to the  terms  of  their  respective
agreement with us, 75,850 of these warrants are to be granted to current members
of the  Bioterrorism  Advisory Board,  Drug  Development  Advisory Board and the
Oncology  and  Dermatology  Advisory  Board for  participation  during the first
quarter  ended June 30,  2005.  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.  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.

On June 13, 2005,  the Company  issued 80,000 shares of common stock for cash of
$4,000  pursuant to the  exercise of a warrant at $0.05 per share.  On April 15,
2004, the Company entered into a $5,000 Convertible  Promissory Note bearing 12%
interest for a term of 60 days to an individual  investor.  The term of the Note
was extended to June 30, 2004. As  additional  incentive to the extension of the
note, the investor was issued 5-year warrants to purchase up to 40,000 shares of
common  stock at $0.05 per  share.  The term of the Note was again  extended  to
October 16,  2004,  the closing  date of the Private  Placement.  As  additional
incentive to the extension of the note, the investor was issued 5-year  warrants
to purchase up to 40,000 shares of common stock at $0.05 per share.  Immediately
upon the closing of the Private  Placement,  and in accordance with the terms of
the Promissory Note, the principal of $5,000 and $299.56 of accrued interest was
repaid to the investor  releasing the Company from any further  obligation under
the warrants. The investor was financially able to bear the economic risk of the
investment and capable of evaluating the merits and risks of the  acquisition of
the  warrants.  The investor  also had  received  and  reviewed all  information
necessary or appropriate for deciding whether to purchase the shares,  including
the Company's periodic SEC reports.  No general  solicitation or advertising was
undertaken in connection  with the offer and sale of the warrants.  The investor
represented to the Company that the investor was purchasing the warrants 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 warrants 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.

During the three months ended June 30, 2005, the Company accrued the issuance of
2,413,613 shares of common stock and warrants to purchase an additional  950,373
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.

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<PAGE>



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.

                                       20

<PAGE>

                                   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 November 16, 2005.


     IR BioSciences Holdings, Inc.

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

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