UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





______________________





FORM
10-Q


______________________






x Quarterly Report
Pursuant to Section 13 or 15(d) of the Securities Exchange


Act
of 1934





For
the quarterly period ended March 31,
2009





or





oTransition 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 Incorporation or Organization)
                
                (I.R.S.
      Employer Identification No.)8777 E. Via De Ventura, Suite 280,
      Scottsdale, AZ
                
                85258(Address
      of Principal Executive Offices)
                
                (Zip
      Code)




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





_____________________________________N/A_____________________________________


(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 o





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such
files).    Yes o No o




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.  (Check one):




Large
      accelerated filer  ̈
            
            Accelerated
      filer  ̈Non-accelerated
      filer  ̈    (Do
      not check is a smaller reporting company)
            
            Smaller reporting company
      x





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





The number of shares outstanding of
Registrant's common stock as of May 8, 2009 was 13,097,525.




Table of Contents





IRBIOSCIENCES HOLDINGS, INC. AND SUBSIDIARY





Table Of
Contents




PagePART I. FINANCIAL
      INFORMATIONITEM
      1.
              FINANCIAL
      STATEMENTSCondensed
      Consolidated Balance Sheets as of March 31, 2009 (unaudited) and December
      31, 2008
              F-1Condensed
      Consolidated Statements of Losses for the three months ended March 31,
      2009 and 2008, and for the period of inception (October 30, 2002) to March
      31, 2009 (unaudited)
              F-2Condensed
      Consolidated Statement of Stockholders' Equity (Deficit) from date of
      inception (October 30, 2002) toMarch 31, 2009(unaudited)
              F-3Condensed
      Consolidated Statements of Cash Flows for the three months endedMarch 31,
      2009and 2008, and
      for the period of inception (October 30, 2002) toMarch 31, 2009(unaudited)
              F-15Notes to
      Condensed Consolidated Financial Statements
              F-17ITEM
      2.
              MANAGEMENT'S
      DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
              3ITEM
      3.
              QUANTITATIVE AND
      QUALITATIVE DISCLOSURE ABOUT MARKET RISK
              7ITEM
      4.
              CONTROLS AND
      PROCEDURES
              7PART II OTHER
      INFORMATIONITEM
      1.
              LEGAL
      PROCEEDINGS
              9ITEM
      1A.
              RISK
      FACTORS
              9ITEM
      2.
              UNREGISTERED SALES
      OF EQUITY SECURITIES AND USE OF PROCEEDS
              9ITEM
      3.
              DEFAULTS UPON
      SENIOR SECURITIES
              9ITEM
      4.
              SUBMISSION OF
      MATTERS TO A VOTE OF SECURITIES HOLDERS
              9ITEM
      5.
              OTHER
      INFORMATION
              9ITEM
      6.
              EXHIBITS
              9Signatures
              10








Table of Contents




ITEM1. FINANCIAL INFORMATION





IR
BioSciences Holdings, Inc. and Subsidiary


(A
Development Stage Company)


Condensed
Consolidated Balance Sheets as of March 31, 2009 (unaudited)


And
December 31, 2008




March
      31,
                                  
                                  
                                  December
      31,2009
                                  
                                  
                                  2008Assets
                                  
                                  (unaudited)Current
      assetsCash
      and cash equivalents
                                  
                                  $
                                  2,217,726
                                  
                                  
                                  $
                                  3,158,226Prepaid
      services and other current assets (note 1)
                                  
                                  
                                  188,964
                                  
                                  
                                  
                                  222,018Total
      current assets
                                  
                                  
                                  2,406,690
                                  
                                  
                                  
                                  3,380,244Deposits
      and other assets (note 1)
                                  
                                  
                                  7,378
                                  
                                  
                                  
                                  7,378Furniture
      and equipment, net of accumulated depreciation of$80,962
      and $75,480, respectively (note 2)
                                  
                                  
                                  37,365
                                  
                                  
                                  
                                  41,347Total
      assets
                                  
                                  $
                                  2,451,433
                                  
                                  
                                  $
                                  3,428,969Liabilities
      and Stockholders' DeficitCurrent
      liabilitiesAccounts
      payable and accrued liabilities (note 4)
                                  
                                  $
                                  750,650
                                  
                                  
                                  $
                                  862,926Current
      portion of notes payable (note 5)
                                  
                                  
                                  1,500,000
                                  
                                  
                                  
                                  1,500,000Redemption
      option liability
                                  
                                  
                                  75,000
                                  
                                  
                                  
                                  -Total
      current liabilities
                                  
                                  
                                  2,325,650
                                  
                                  
                                  
                                  2,362,926Derivative
      liability (note 6)
                                  
                                  
                                  1,486,900
                                  
                                  
                                  
                                  -Notes
      payable, net of discount of $3,364,053 (note 5)
                                  
                                  
                                  3,604,836
                                  
                                  
                                  
                                  5,293,952Total
      liabilities
                                  
                                  
                                  7,417,386
                                  
                                  
                                  
                                  7,656,878Commitments
      and contingencies
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Stockholders'
      deficitPreferred
      stock, $0.001 par value:10,000,000
      shares authorized, no shares issued and outstanding
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Common
      stock, $0.001 par value: 100,000,000 shares authorized;13,097,525
      shares and 12,264,191 shares issued and outstandingat
      March 31, 2009 and December 31, 2008, respectively
                                  
                                  
                                  13,098
                                  
                                  
                                  
                                  12,265Additional
      paid-in capital
                                  
                                  
                                  18,459,152
                                  
                                  
                                  
                                  20,066,317Common
      stock subscribed (note 7)
                                  
                                  
                                  -
                                  
                                  
                                  
                                  250,000Deficit
      Accumulated during the Development Stage
                                  
                                  
                                  (23,438,203
                                  )
                                  
                                  
                                  (24,556,491
                                  )Total
      stockholder's deficit
                                  
                                  
                                  (4,965,953
                                  )
                                  
                                  
                                  (4,227,909
                                  )Total
      liabilities and stockholder’s deficit
                                  
                                  $
                                  2,451,433
                                  
                                  
                                  $
                                  3,428,969







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







F-1
 Table of Contents






IRBioSciences Holdings, Inc. and Subsidiary


(A
Development Stage Company)


Condensed
Consolidated Statements of Losses


for
the three months ended March 31, 2009 and 2008,


and
for the period of inception (October 30, 2002) to March 31, 2009


(Unaudited)




For
      the Three
                                  Months
      Ended
                                  March
      31, 2009
                                
                                
                                For
      the Three
                                  Months
      Ended
                                  March
      31, 2008
                                
                                
                                Cumulative
      from Inception
                                  (October
      30, 2002)
                                  March
      31, 2009Revenue
                                
                                $
                                -
                                
                                
                                $
                                -
                                
                                
                                $
                                -Operating
      expenses:Selling,
      general and administrative expenses
                                
                                
                                844,910
                                
                                
                                
                                1,176,907
                                
                                
                                
                                21,954,864Merger
      fees and costs
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                350,000Impairment
      of intangible asset
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                6,393Total
      operating expenses
                                
                                
                                844,910
                                
                                
                                
                                1,176,907
                                
                                
                                
                                22,311,257Operating
      loss
                                
                                
                                (844,910
                                )
                                
                                
                                (1,176,907
                                )
                                
                                
                                (22,311,257
                                )Other
      expense:Cost
      of penalty for late registration of shares
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                2,192,160(Gain)
      loss from marking to market - warrant portionof
      penalty for late registration of shares
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (378,198
                                )(Gain)
      loss from marketing to market - stock portionof
      penalty for late registration of shares
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (760,058
                                )(Gain) loss from change in fair value of derivative
    liability
                                
                                
                                732,295
                                
                                
                                
                                -
                                
                                
                                
                                (2,840,670
                                )Financing
      cost
                                
                                
                                31,250
                                
                                
                                
                                -
                                
                                
                                
                                300,625Interest
      (income) expense, net
                                
                                
                                532,592
                                
                                
                                
                                46,327
                                
                                
                                
                                2,602,543Total other (income) expense
                                
                                
                                1,296,137
                                
                                
                                
                                46,327
                                
                                
                                
                                1,116,402Loss
      before income taxes
                                
                                
                                (2,141,047
                                )
                                
                                
                                (1,223,234
                                )
                                
                                
                                (23,427,659
                                )Provision
      for income taxes
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (10,544
                                )Net
      loss
                                
                                $
                                (2,141,047
                                )
                                
                                $
                                (1,223,234
                                )
                                
                                $
                                (23,438,203
                                )Net
      loss per share - basic and diluted
                                
                                $
                                (0.16
                                )
                                
                                $
                                (0.11
                                )
                                
                                $
                                (3.26
                                )Weighted
      average shares outstanding -basic
      and diluted
                                
                                
                                13,041,969
                                
                                
                                
                                11,488,517
                                
                                
                                
                                7,189,421






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






F-2
 Table of Contents






IRBioSciences Holding, Inc. and Subsidiary


(A
Development Stage Company)


Condensed
Consolidated Statement of Stockholders' Equity (Deficit)


From
Date of Inception (October 30, 2002) to March 31, 2009


(Unaudited)





Additional
                  
                  
                  
                  
                  
                  CommonCommon
      Stock
                  
                  
                  Paid-In
                  
                  
                  Deferred
                  
                  
                  Stock
                  
                  
                  AccumulatedShares
                  
                  
                  Amount
                  
                  
                  Capital
                  
                  
                  Compensation
                  
                  
                  Subscribed
                  
                  
                  Deficit
                  
                  
                  TotalBalance
      at October 30, 2002 (date of inception)
                  
                  
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -Shares
      of common stock issued at $0.006 per share to founders for license of
      proprietary right in December 2002
                  
                  
                  1,661,228
                  
                  
                  
                  1,661
                  
                  
                  
                  7,589
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  9,250Shares
      of common stock issued at $0.006 per share to founders for services
      rendered in December 2002
                  
                  
                  140,531
                  
                  
                  
                  141
                  
                  
                  
                  641
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  782Shares
      of common stock issued at $1.671 per share to consultants for services
      rendered in December 2002
                  
                  
                  5,388
                  
                  
                  
                  5
                  
                  
                  
                  8,995
                  
                  
                  
                  (9,000
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Sale
      of common stock for cash  at $1.671 per share in December
      2002
                  
                  
                  18,558
                  
                  
                  
                  19
                  
                  
                  
                  30,982
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  31,001Net
      loss for the period from inception (October 30, 2002) to December 31,
      2002
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  
                  
                  
                  
                  (45,918
                  )
                  
                  
                  (45,918
                  )Balance
      at December 31, 2002 (reflective of stock splits)
                  
                  
                  1,825,704
                  
                  
                  $
                  1,826
                  
                  
                  $
                  48,207
                  
                  
                  $
                  (9,000
                  )
                  
                  $
                  -
                  
                  
                  $
                  (45,918
                  )
                  
                  $
                  (4,885
                  )




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






F-3
 Table of Contents






IR
BioSciences Holding, Inc. and Subsidiary


(A
Development Stage Company)


Condensed
Consolidated Statement of Stockholders' Equity (Deficit)


From
Date of Inception (October 30, 2002) to March 31, 2009


(Unaudited)


(Continued)


Additional
                                            
                                            
                                            
                                            
                                            
                                            CommonCommon
      Stock
                                            
                                            
                                            Paid-In
                                            
                                            
                                            Deferred
                                            
                                            
                                            Stock
                                            
                                            
                                            AccumulatedShares
                                            
                                            
                                            Amount
                                            
                                            
                                            Capital
                                            
                                            
                                            Compensation
                                            
                                            
                                            Subscribed
                                            
                                            
                                            Deficit
                                            
                                            
                                            Total


Shares
      granted to consultants at $1.392 per share for services rendered in
      January 2003
                
                
                9,878
                
                
                
                10
                
                
                
                13,740
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                13,750Sale
      of shares of common stock for cash at $1.517 per share in January
      2003
                
                
                32,955
                
                
                
                33
                
                
                
                49,967
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                50,000Shares
      granted to consultants at $1.392 per share for services rendered in March
      2003
                
                
                15,445
                
                
                
                15
                
                
                
                21,485
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                21,500Conversion
      of notes payable to common stock at $1.392 per share in April
      2003
                
                
                143,674
                
                
                
                144
                
                
                
                199,856
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                200,000Shares
      granted to consultants at $1.413 per share for services rendered in April
      2003
                
                
                1,437
                
                
                
                1
                
                
                
                2,029
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                2,030Sale
      of shares of common stock for cash at $2.784 per share in May
      2003
                
                
                1,796
                
                
                
                2
                
                
                
                4,998
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                5,000Sales
      of shares of common stock for cash at $2.784 per share in June
      2003
                
                
                3,592
                
                
                
                4
                
                
                
                9,996
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                10,000Conversion
      of notes payable to common stock at $1.392 per share in June
      2003
                
                
                71,837
                
                
                
                72
                
                
                
                99,928
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                100,000Beneficial
      conversion feature associated with notes issued in June
    2003
                
                
                -
                
                
                
                -
                
                
                
                60,560
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                60,560Amortization
      of deferred compensation
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                9,000
                
                
                
                -
                
                
                
                -
                
                
                
                9,000Costs
      of GPN Merger in July 2003
                
                
                236,813
                
                
                
                237
                
                
                
                (121,036
                )
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (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
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                207,457Value
      of warrants contributed by founders in conjunction with fourth quarter
      notes payable issued October through December 2003
                
                
                -
                
                
                
                -
                
                
                
                183,543
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                183,543Value
      of warrants issued for services in October through December
      2003
                
                
                -
                
                
                
                -
                
                
                
                85,861
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                85,861Net
      loss for the twelve month period ended December 31, 2003
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (1,856,702
                )
                
                
                (1,856,702
                )-Balance
      at December 31, 2003
                
                
                2,343,130
                
                
                $
                2,343
                
                
                $
                1,056,529
                
                
                $
                -
                
                
                $
                -
                
                
                $
                (1,902,620
                )
                
                $
                (843,748
                )




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






F-4
 Table of Contents






IR
BioSciences Holding, Inc. and Subsidiary


(A
Development Stage Company)


Condensed
Consolidated Statement of Stockholders' Equity (Deficit)


From
Date of Inception (October 30, 2002) to March 31, 2009


(Unaudited)


(Continued)




Additional
                                              
                                              
                                              
                                              
                                              
                                              CommonCommon
      Stock
                                              
                                              
                                              Paid-In
                                              
                                              
                                              Deferred
                                              
                                              
                                              Stock
                                              
                                              
                                              AccumulatedShares
                                              
                                              
                                              Amount
                                              
                                              
                                              Capital
                                              
                                              
                                              Compensation
                                              
                                              
                                              Subscribed
                                              
                                              
                                              Deficit
                                              
                                              
                                              Total


Shares
      granted at $10.00 per share pursuant to the Senior Note Agreement in
      January 2004
                
                
                60,000
                
                
                
                60
                
                
                
                599,940
                
                
                
                (600,000
                )
                
                
                -
                
                
                
                -
                
                
                
                -Shares
      issued at $10.00 per share to a consultant for services rendered in
      January 2004
                
                
                80,000
                
                
                
                80
                
                
                
                799,920
                
                
                
                (800,000
                )
                
                
                -
                
                
                
                -
                
                
                
                -Shares
      issued to a consultant at $6.20 per share for services rendered in
      February 2004
                
                
                4,000
                
                
                
                4
                
                
                
                24,796
                
                
                
                (24,800
                )
                
                
                -
                
                
                
                -
                
                
                
                -Shares
      issued to a consultant at $4.00 per share for services rendered in March
      2004
                
                
                105,160
                
                
                
                105
                
                
                
                420,535
                
                
                
                (420,640
                )
                
                
                -
                
                
                
                -
                
                
                
                -Shares
      issued to a consultant at $5.00 per share for services rendered in March
      2004
                
                
                50,000
                
                
                
                50
                
                
                
                249,950
                
                
                
                (250,000
                )
                
                
                -
                
                
                
                -
                
                
                
                -Shares
      sold for cash at $1.50 per share in March, 2004
                
                
                800
                
                
                
                1
                
                
                
                1,199
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                1,200Shares
      issued at $5.00 per share to consultants for services rendered in March
      2004
                
                
                2,000
                
                
                
                2
                
                
                
                9,998
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                10,000Shares
      issued to a consultant at  $4.00 per share for services rendered
      in March 2004
                
                
                200
                
                
                
                0
                
                
                
                800
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                800Shares
      issued to consultants at $3.20 per share for services rendered in March
      2004
                
                
                9,160
                
                
                
                9
                
                
                
                29,303
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                29,312Shares
      to be issued to consultant at $4.10 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
                
                
                60,000
                
                
                
                60
                
                
                
                149,940
                
                
                
                (150,000
                )
                
                
                -
                
                
                
                -
                
                
                
                -Shares
      issued to officer at $3.20 per share for services rendered in
      April  2004
                
                
                20,000
                
                
                
                20
                
                
                
                63,980
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                64,000Conversion
      of Note Payable to common stock at $1.00 per share in May
    2004
                
                
                35,000
                
                
                
                35
                
                
                
                34,965
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                35,000




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






F-5
 Table of Contents




IR
BioSciences Holding, Inc. and Subsidiary


(A
Development Stage Company)


Condensed
Consolidated Statement of Stockholders' Equity (Deficit)


From
Date of Inception (October 30, 2002) to March 31, 2009


(Unaudited)


(Continued)


Additional
                                              
                                              
                                              
                                              
                                              
                                              CommonCommon
      Stock
                                              
                                              
                                              Paid-In
                                              
                                              
                                              Deferred
                                              
                                              
                                              Stock
                                              
                                              
                                              AccumulatedShares
                                              
                                              
                                              Amount
                                              
                                              
                                              Capital
                                              
                                              
                                              Compensation
                                              
                                              
                                              Subscribed
                                              
                                              
                                              Deficit
                                              
                                              
                                              Total


Beneficial
      Conversion Feature associated with note payable in May
2004
                
                
                -
                
                
                
                -
                
                
                
                35,000
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                35,000Issuance
      of warrants to officers and founder for services rendered in May
      2004
                
                
                -
                
                
                
                -
                
                
                
                269,208
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                269,208Shares
      to a consultant at $2.00 per share as a due diligence fee in May
      2004
                
                
                12,500
                
                
                
                13
                
                
                
                24,988
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                25,000Shares
      issued to a consultant at $10.00 per share for services to be rendered
      over twelve months beginning May 2004
                
                
                50,000
                
                
                
                50
                
                
                
                499,950
                
                
                
                (500,000
                )
                
                
                -
                
                
                
                -
                
                
                
                -Beneficial
      Conversion Feature associated with notes payable issued in June
      2004
                
                
                -
                
                
                
                -
                
                
                
                3,000
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                3,000Issuance
      of warrants to note holders in April, May, and June 2004
                
                
                -
                
                
                
                -
                
                
                
                17,915
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                17,915Issuance
      of warrants to employees and consultants for services rendered in April
      through June 2004
                
                
                -
                
                
                
                -
                
                
                
                8,318
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                8,318Shares
      issued in July  to a consultant at $1.00 for services to be
      rendered through July 2005
                
                
                25,000
                
                
                
                25
                
                
                
                24,975
                
                
                
                (25,000
                )
                
                
                -
                
                
                
                -
                
                
                
                -Shares
      issued to a consultant in July and September at $4.10 per share for
      services to be rendered through April 2005
                
                
                20,000
                
                
                
                20
                
                
                
                81,980
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                82,000Shares
      issued to a consultant in September  at $1.20 to $2.20 for
      services rendered through September 2004
                
                
                12,728
                
                
                
                13
                
                
                
                16,896
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                16,909Shares
      issued in July to September 2004 as interest on note
    payable
                
                
                30,000
                
                
                
                30
                
                
                
                35,970
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                36,000Issuance
      of warrants with notes payable in July and August 2004
                
                
                -
                
                
                
                -
                
                
                
                72,252
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                72,252




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






F-6
 Table of Contents






IR
BioSciences Holding, Inc. and Subsidiary


(A
Development Stage Company)


Condensed
Consolidated Statement of Stockholders' Equity (Deficit)


From
Date of Inception (October 30, 2002) to March 31, 2009


(Unaudited)


(Continued)




Additional
                                              
                                              
                                              
                                              
                                              
                                              CommonCommon
      Stock
                                              
                                              
                                              Paid-In
                                              
                                              
                                              Deferred
                                              
                                              
                                              Stock
                                              
                                              
                                              AccumulatedShares
                                              
                                              
                                              Amount
                                              
                                              
                                              Capital
                                              
                                              
                                              Compensation
                                              
                                              
                                              Subscribed
                                              
                                              
                                              Deficit
                                              
                                              
                                              Total


Accrued
      deferred compensation in August 2004 to a consultant for 10,000 shares at
      $1.00 per share, committed but unissued
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (10,000
                )
                
                
                -
                
                
                
                -
                
                
                
                (10,000
                )Shares
      issued in August 2004 at $1.40 to a consultant for services to be
      performed through October 2004
                
                
                10,000
                
                
                
                10
                
                
                
                13,990
                
                
                
                (14,000
                )
                
                
                -
                
                
                
                -
                
                
                
                -Shares
      issued in August 2004 at $1.25 per share for conversion of $30,000 demand
      loan
                
                
                24,000
                
                
                
                24
                
                
                
                29,976
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                30,000Shares
      issued in August 2004 at $1.60 per share to a consultant for services
      provided.
                
                
                12,500
                
                
                
                13
                
                
                
                19,988
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                20,000Shares
      issued to employees in September, 2004 at $1.60 to $2.50 per
      share
                
                
                4,880
                
                
                
                5
                
                
                
                8,379
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                8,384Commitment
      to issue 10,000 shares of stock to a consultant in September, 2004 at
      $2.30 per share for services to be provided through September
      2005
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (23,000
                )
                
                
                -
                
                
                
                -
                
                
                
                (23,000
                )Sale
      of stock for cash in October at $1.25 per share, net of costs of
      $298,155
                
                
                1,816,000
                
                
                
                1,816
                
                
                
                1,362,107
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                1,363,923Value
      of warrants issued with sale of common stock in October, net of
      costs
                
                
                -
                
                
                
                -
                
                
                
                607,922
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                607,922Issuance
      of warrant to officer in October, 2004
                
                
                -
                
                
                
                -
                
                
                
                112,697
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                112,697Issuance
      of stock to investment bankers in October 2004 for commissions
      earned
                
                
                490,000
                
                
                
                490
                
                
                
                (490
                )
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Conversion
      of accounts payable to stock in October, 2004 at $1.25 per
      share
                
                
                125,775
                
                
                
                126
                
                
                
                108,514
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                108,640Value
      of warrants issued with accounts payable conversions in October,
      2004
                
                
                -
                
                
                
                -
                
                
                
                48,579
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                48,579Conversion
      of demand loan to stock in October, 2004 at $1.10 per
share
                
                
                9,330
                
                
                
                9
                
                
                
                10,254
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                10,263Forgiveness
      of notes payable in October, 2004
                
                
                -
                
                
                
                -
                
                
                
                36,785
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                36,785




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






F-7
 Table of Contents




IR
BioSciences Holding, Inc. and Subsidiary


(A
Development Stage Company)


Condensed
Consolidated Statement of Stockholders' Equity (Deficit)


From
Date of Inception (October 30, 2002) to March 31, 2009


(Unaudited)


(Continued)


Additional
                                              
                                              
                                              
                                              
                                              
                                              CommonCommon
      Stock
                                              
                                              
                                              Paid-In
                                              
                                              
                                              Deferred
                                              
                                              
                                              Stock
                                              
                                              
                                              AccumulatedShares
                                              
                                              
                                              Amount
                                              
                                              
                                              Capital
                                              
                                              
                                              Compensation
                                              
                                              
                                              Subscribed
                                              
                                              
                                              Deficit
                                              
                                              
                                              Total


Issuance
      of stock to officer and director at $1.25 per share in October,
      2004 for conversion of liability
                
                
                144,000
                
                
                
                144
                
                
                
                123,789
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                123,933Value
      of warrants issued with officer and director conversion of liabilities in
      October, 2004
                
                
                -
                
                
                
                -
                
                
                
                56,067
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                56,067Conversion
      of debt and accrued interest to common stock at $0.75 to $1.25 per share
      in October, 2004
                
                
                670,315
                
                
                
                670
                
                
                
                423,547
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                424,217Value
      of warrants issued with conversion of debt in October,
2004
                
                
                -
                
                
                
                -
                
                
                
                191,111
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                191,111Conversion
      of Note Payable of $5,000 plus accrued interest of $71 in October,
      2004
                
                
                6,761
                
                
                
                7
                
                
                
                4,993
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                5,000Issuance
      of warrants to note holders in October, 2004
                
                
                -
                
                
                
                -
                
                
                
                112,562
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                112,562Value
      of shares issued to CFO as compensation in December, 2004
                
                
                10,000
                
                
                
                10
                
                
                
                34,990
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                35,000Value
      of warrants issued to members of advisory committees in November and
      December, 2004
                
                
                -
                
                
                
                -
                
                
                
                16,348
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                16,348Beneficial
      conversion feature associated with notes  payable in December,
      2004
                
                
                -
                
                
                
                -
                
                
                
                124,709
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                124,709Shares
      issued in error to be cancelled in December, 2004
                
                
                (900
                )
                
                
                (1
                )
                
                
                1
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                0Amortization
      of deferred compensation through December 31, 2004
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                2,729,454
                
                
                
                -
                
                
                
                -
                
                
                
                2,729,454Loss
      for the twelve months ended December 31, 2004
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (5,305,407
                )
                
                
                (5,305,407
                )Balance
      at December 31, 2004
                
                
                6,242,339
                
                
                $
                6,242
                
                
                $
                7,979,124
                
                
                $
                (169,986
                )
                
                $
                -
                
                
                $
                (7,208,027
                )
                
                $
                607,353




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






F-8
 Table of Contents






IR
BioSciences Holding, Inc. and Subsidiary


(A
Development Stage Company)


Condensed
Consolidated Statement of Stockholders' Equity (Deficit)


From
Date of Inception (October 30, 2002) to March 31, 2009


(Unaudited)


(Continued)




Additional
                                              
                                              
                                              
                                              
                                              
                                              CommonCommon
      Stock
                                              
                                              
                                              Paid-In
                                              
                                              
                                              Deferred
                                              
                                              
                                              Stock
                                              
                                              
                                              AccumulatedShares
                                              
                                              
                                              Amount
                                              
                                              
                                              Capital
                                              
                                              
                                              Compensation
                                              
                                              
                                              Subscribed
                                              
                                              
                                              Deficit
                                              
                                              
                                              Total


Sale
      of shares of common stock for cash at $2.00 per share in March 2005 for
      warrant exercise, net of costs
                
                
                660,078
                
                
                
                660
                
                
                
                1,190,196
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                1,190,856Value
      of warrants issued to members of advisory committees in March
      2005
                
                
                -
                
                
                
                -
                
                
                
                137,049
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                137,049Deferred
      compensation in February 2005 to a consultant for 5,000 shares of common
      stock at $6.50 per share.
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (32,500
                )
                
                
                -
                
                
                
                -
                
                
                
                (32,500
                )Warrants
      exercised at $0.50 per share in June 2003
                
                
                8,000
                
                
                
                8
                
                
                
                3,992
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                4,000Value
      of warrants issued to members of advisory committee in June
      2005
                
                
                -
                
                
                
                -
                
                
                
                70,781
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                70,781Value
      of warrants issued to investors and service providers in June
      2005
                
                
                -
                
                
                
                -
                
                
                
                32,991
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                32,991Issuance
      of 23,215 shares of common stock in July 2005 for conversion of notes
      payable
                
                
                23,215
                
                
                
                23
                
                
                
                64,980
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                65,003Issuance
      of 10,000 shares of common stock in August 2005  to a consultant
      for services provided
                
                
                10,000
                
                
                
                10
                
                
                
                9,990
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                10,000Value
      of warrants issued to advisory committee in September 2005 for
      services
                
                
                -
                
                
                
                -
                
                
                
                20,491
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                20,491Amortization
      of deferred comp for the twelve months ended December,
2005
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                199,726
                
                
                
                -
                
                
                
                -
                
                
                
                199,726Value
      of warrants issued in October and December 2005 to investors and service
      providers
                
                
                -
                
                
                
                -
                
                
                
                18,399
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                18,399Loss
      for the year ended December 31,2005
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (4,591,107
                )
                
                
                (4,591,107
                )6,943,632
                
                
                $
                6,943
                
                
                $
                9,527,993
                
                
                $
                (2,760
                )
                
                $
                -
                
                
                $
                (11,799,134
                )
                
                $
                (2,266,958
                )




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






F-9
 Table of Contents




IR
BioSciences Holding, Inc. and Subsidiary


(A
Development Stage Company)


Condensed
Consolidated Statement of Stockholders' Equity (Deficit)


From
Date of Inception (October 30, 2002) to March 31, 2009


(Unaudited)


(Continued)




Additional
                                              
                                              
                                              
                                              
                                              
                                              CommonCommon
      Stock
                                              
                                              
                                              Paid-In
                                              
                                              
                                              Deferred
                                              
                                              
                                              Stock
                                              
                                              
                                              AccumulatedShares
                                              
                                              
                                              Amount
                                              
                                              
                                              Capital
                                              
                                              
                                              Compensation
                                              
                                              
                                              Subscribed
                                              
                                              
                                              Deficit
                                              
                                              
                                              Total


Issuance
      of 10,000 shares to officer, previously accrued in March,
    2006
                
                
                10,000
                
                
                
                10
                
                
                
                41,406
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                41,416Value
      of warrants issued to members of advisory committee in March,
      2006
                
                
                -
                
                
                
                -
                
                
                
                8,399
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                8,399Amortization
      of deferred compensation for the three months ended March 31,
      2006
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                2,760
                
                
                
                -
                
                
                
                -
                
                
                
                2,760Issuance
      of common stock in May 2006 to a consultant for services
      provided
                
                
                3,446
                
                
                
                3
                
                
                
                16,194
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                16,197Conversion
      of accrued interest to common stock at $1.25 per share in May,
      2006
                
                
                1,929
                
                
                
                2
                
                
                
                2,409
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                2,411Conversion
      of accrued interest to common stock at $1.25 per share in May,
      2006
                
                
                1,632
                
                
                
                2
                
                
                
                2,039
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                2,041Conversion
      of accrued interest to common stock at $1.00 per share in May,
      2006
                
                
                1,345
                
                
                
                1
                
                
                
                1,354
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                1,355Common
      stock issued pursuant to the exercise of warrants at $0.90 per share in
      June 2006
                
                
                500
                
                
                
                1
                
                
                
                450
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                450Value
      of warrants issued to members of advisory committee in June
      2006
                
                
                -
                
                
                
                -
                
                
                
                8,820
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                8,820Value
      of warrants issued to members of advisory committee in September
      2006
                
                
                -
                
                
                
                -
                
                
                
                3,495
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                3,495Value
      of warrants issued to officers in September, 2010
                
                
                -
                
                
                
                -
                
                
                
                50,874
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                50,874Issuance
      of penalty Common Stock, previously accrued in August,
2006
                
                
                415,080
                
                
                
                415
                
                
                
                871,250
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                871,665Issuance
      of penalty warrants, previously accrued in August, 2006
                
                
                -
                
                
                
                -
                
                
                
                182,239
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                182,239Value
      of options issued to officer in September, 2006
                
                
                -
                
                
                
                -
                
                
                
                78,802
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                78,802Value
      of warrants issued to members of advisory committee in December
      2006
                
                
                -
                
                
                
                -
                
                
                
                1,974
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                1,974Issuance
      of Common Stock for cash in December, 2006
                
                
                3,426,625
                
                
                
                3,427
                
                
                
                4,610,122
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                4,613,549Common
      stock to be issued as commission for equity fund raising in December,
      2006
                
                
                -
                
                
                
                -
                
                
                
                (5,483
                )
                
                
                -
                
                
                
                5,483
                
                
                
                -
                
                
                
                -Value
      of options issued to officer in October, 2006
                
                
                -
                
                
                
                -
                
                
                
                185,472
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                185,472Value
      of shares issued to officer in March, 2006
                
                
                -
                
                
                
                -
                
                
                
                32,120
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                32,120Loss
      for the year ended December 31, 2006
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (1,486,046
                )
                
                
                (1,486,046
                )10,804,190
                
                
                $
                10,804
                
                
                $
                15,619,928
                
                
                $
                -
                
                
                $
                5,483
                
                
                $
                (13,285,180
                )
                
                $
                2,351,035




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






F-10
 Table of Contents






IR
BioSciences Holding, Inc. and Subsidiary


(A
Development Stage Company)


Condensed
Consolidated Statement of Stockholders' Equity (Deficit)


From
Date of Inception (October 30, 2002) to March 31, 2009


(Unaudited)


(Continued)




Additional
                                              
                                              
                                              
                                              
                                              
                                              CommonCommon
      Stock
                                              
                                              
                                              Paid-In
                                              
                                              
                                              Deferred
                                              
                                              
                                              Stock
                                              
                                              
                                              AccumulatedShares
                                              
                                              
                                              Amount
                                              
                                              
                                              Capital
                                              
                                              
                                              Compensation
                                              
                                              
                                              Subscribed
                                              
                                              
                                              Deficit
                                              
                                              
                                              Total


Common
      stock issued as commission for equity fund raising in January,
      2007
                
                
                548,260
                
                
                
                548
                
                
                
                4,935
                
                
                
                -
                
                
                
                (5,483
                )
                
                
                -
                
                
                
                -Common
      stock issued to consultant in January 2007 at $1.50 per
    share
                
                
                29,804
                
                
                
                30
                
                
                
                44,676
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                44,706Common
      stock issued to consultants in January 2007 at $1.55 per
    share
                
                
                40,000
                
                
                
                40
                
                
                
                61,960
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                62,000Common
      stock issued to consultants in January 2007 at $1.50 per
    share
                
                
                10,000
                
                
                
                10
                
                
                
                14,990
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                15,000Value
      of options issued to officer in January, February and March
      2007
                
                
                -
                
                
                
                -
                
                
                
                471,457
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                471,457Value
      of options issued to employee  in January 2007
                
                
                -
                
                
                
                -
                
                
                
                5,426
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                5,426Value
      of warrants issued to consultant in April 2007
                
                
                -
                
                
                
                -
                
                
                
                166,998
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                166,998Value
      of options issued to employees in July 2007
                
                
                -
                
                
                
                -
                
                
                
                996,133
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                996,133Value
      of options issued to directors in July 2007
                
                
                -
                
                
                
                -
                
                
                
                537,833
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                537,833Value
      of options issued to consultants in July 2007
                
                
                -
                
                
                
                -
                
                
                
                80,996
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                80,996Common
      stock to be issued for consulting services in 2008 at $1.10 per share in
      November, 2007
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                33,000
                
                
                
                -
                
                
                
                33,000Common
      stock to be issued for finders fee in 2008 at $1.20 per share in November,
      2007
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                120,000
                
                
                
                -
                
                
                
                120,000Loss
      for the year ended December 31, 2007
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (5,463,958
                )
                
                
                (5,463,958
                )11,432,254
                
                
                $
                11,432
                
                
                $
                18,005,332
                
                
                $
                -
                
                
                $
                153,000
                
                
                $
                (18,749,138
                )
                
                $
                (579,374
                )




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






F-11
 Table of Contents




IR
BioSciences Holding, Inc. and Subsidiary


(A
Development Stage Company)


Condensed
Consolidated Statement of Stockholders' Equity (Deficit)


From
Date of Inception (October 30, 2002) to March 31, 2009


(Unaudited)


(Continued)






Additional
                                              
                                              
                                              
                                              
                                              
                                              CommonCommon
      Stock
                                              
                                              
                                              Paid-In
                                              
                                              
                                              Deferred
                                              
                                              
                                              Stock
                                              
                                              
                                              AccumulatedShares
                                              
                                              
                                              Amount
                                              
                                              
                                              Capital
                                              
                                              
                                              Compensation
                                              
                                              
                                              Subscribed
                                              
                                              
                                              Deficit
                                              
                                              
                                              Total


Common
      stock issued for consulting services previously accrued in November
      2007
                
                
                30,000
                
                
                
                30
                
                
                
                32,970
                
                
                
                -
                
                
                
                (33,000
                )
                
                
                -
                
                
                
                -Common
      stock issued for finders fee previously accrued in November
      2007
                
                
                100,000
                
                
                
                100
                
                
                
                119,900
                
                
                
                -
                
                
                
                (120,000
                )
                
                
                -
                
                
                
                -Value
      of warrants issued pursuant to convertible debt agreement in January
      2008
                
                
                -
                
                
                
                -
                
                
                
                226,754
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                226,754Adjustment
      to value of warrants issued in January 2008 due to decrease in exercise
      price
                
                
                -
                
                
                
                -
                
                
                
                60,092
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                60,092Value
      of options issued to advisory board in March 2008
                
                
                -
                
                
                
                -
                
                
                
                3,729
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                3.729Value
      of options issued to employee  in January 2007
                
                
                -
                
                
                
                -
                
                
                
                5,428
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                5,428Value
      of options issued to consultants in July 2007
                
                
                -
                
                
                
                -
                
                
                
                6,994
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                6,994Common
      stock issued for March 2008 interest payment at $0.488 per
      share
                
                
                39,500
                
                
                
                39
                
                
                
                19,237
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                19,276Value
      of options issued to employees in March 2008
                
                
                -
                
                
                
                -
                
                
                
                1,708
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                1,708Value
      of options issued to a Director in March 2008
                
                
                -
                
                
                
                -
                
                
                
                19,625
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                19,625





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






F-12
 Table of Contents





IR
BioSciences Holding, Inc. and Subsidiary


(A
Development Stage Company)


Condensed
Consolidated Statement of Stockholders' Equity (Deficit)


From
Date of Inception (October 30, 2002) to March 31, 2009


(Unaudited)


(Continued)




Additional
                                              
                                              
                                              
                                              
                                              
                                              CommonCommon
      Stock
                                              
                                              
                                              Paid-In
                                              
                                              
                                              Deferred
                                              
                                              
                                              Stock
                                              
                                              
                                              AccumulatedShares
                                              
                                              
                                              Amount
                                              
                                              
                                              Capital
                                              
                                              
                                              Compensation
                                              
                                              
                                              Subscribed
                                              
                                              
                                              Deficit
                                              
                                              
                                              Total


Common
      stock issued for June 2008 interest payment at $0.699 per share in July
      2008
                    
                    
                    28,220
                    
                    
                    
                    28
                    
                    
                    
                    19,698
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    19,726Common
      stock issued for June 2008 interest payment at $0.699 per share in July
      2008
                    
                    
                    2,822
                    
                    
                    
                    3
                    
                    
                    
                    1,969
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    1,972Common
      stock issued for interest payment at $0.33032 per share in August
      2008
                    
                    
                    95,825
                    
                    
                    
                    96
                    
                    
                    
                    31,557
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    31,653Common
      stock issued for interest payment at $0.33032 per share in August
      2008
                    
                    
                    2,228
                    
                    
                    
                    2
                    
                    
                    
                    734
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    736Common
      stock issued for interest payment at $0.33032 per share in August
      2008
                    
                    
                    124,794
                    
                    
                    
                    125
                    
                    
                    
                    41,097
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    41,222Common
      stock issued for pre-payment of interest payment at $0.33032 per share in
      August 2008
                    
                    
                    162,721
                    
                    
                    
                    163
                    
                    
                    
                    53,587
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    53,750Common
      stock issued for pre-payment of interest payment at $0.33032 per share in
      August 2008
                    
                    
                    3,785
                    
                    
                    
                    4
                    
                    
                    
                    1,246
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    1,250Common
      stock issued for pre-payment of interest payment at $0.33032 per share in
      August 2008
                    
                    
                    211,916
                    
                    
                    
                    212
                    
                    
                    
                    69,788
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    70,000Common
      stock issued pursuant to the exercise of warrants at $0.375 per share in
      June and July 2008
                    
                    
                    30,000
                    
                    
                    
                    30
                    
                    
                    
                    11,220
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    11,250Common
      stock issued for rounding due to reverse stock split in August
      2008
                    
                    
                    126
                    
                    
                    
                    1
                    
                    
                    
                    (1
                    )
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Common
      stock subscribed pursuant to agreement for capital raise in August
      2008
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    250,000
                    
                    
                    
                    -
                    
                    
                    
                    250,000Value
      of warrants issued pursuant to convertible debt agreement in August
      2008
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    286,846
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    286,846Value
      of warrants issued pursuant to convertible debt agreement in August
      2008
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    427,628
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    427,628Value
      of warrants issued pursuant to convertible debt agreement in August
      2008
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    9,946
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    9,946Value
      of warrants issued pursuant to convertible debt agreement in August
      2008
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    556,949
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    556,949Value
      of options issued to directors in November 2008
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    52,284
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    52,284Loss
      for the year ended December 31, 2008
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (5,807,353
                    )
                    
                    
                    (5,807,353
                    )12,264,191
                    
                    
                    $
                    12,265
                    
                    
                    $
                    20,066,317
                    
                    
                    $
                    -
                    
                    
                    $
                    250,000
                    
                    
                    $
                    (24,556,491
                    )
                    
                    $
                    (4,227,909
                    )








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






F-13
 Table of Contents




IR
BioSciences Holding, Inc. and Subsidiary


(A
Development Stage Company)


Condensed
Consolidated Statement of Stockholders' Equity (Deficit)


From
Date of Inception (October 30, 2002) to March 31, 2009


(Unaudited)


(Continued)


Additional
                                              
                                              
                                              
                                              
                                              
                                              CommonCommon
      Stock
                                              
                                              
                                              Paid-In
                                              
                                              
                                              Deferred
                                              
                                              
                                              Stock
                                              
                                              
                                              AccumulatedShares
                                              
                                              
                                              Amount
                                              
                                              
                                              Capital
                                              
                                              
                                              Compensation
                                              
                                              
                                              Subscribed
                                              
                                              
                                              Deficit
                                              
                                              
                                              Total


Cumulative
      effect of change in accounting principle - January 1, 2009
      reclassification of embedded feature of equity-linked financial instrument
      to derivative liability
                
                
                -
                
                
                
                -
                
                
                
                (1,856,576
                )
                
                
                -
                
                
                
                -
                
                
                
                3,259,335
                
                
                
                1,402,759Common
      stock issued pursuant to agreement for capital raise previously accrued in
      August 2008 at $0.30 per share
                
                
                833,334
                
                
                
                833
                
                
                
                249,167
                
                
                
                -
                
                
                
                (250,000
                )
                
                
                -
                
                
                
                -Value
      of options issued to employees in March 2008
                
                
                -
                
                
                
                -
                
                
                
                244
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                244Loss
      for the three months ended March 31, 2009
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (2,141,047
                )
                
                
                (2,141,047
                )Balance
      at March 31, 2009
                
                
                13,097,525
                
                
                $
                13,098
                
                
                $
                18,459,152
                
                
                $
                -
                
                
                $
                -
                
                
                $
                (23,438,203
                )
                
                $
                (4,965,953
                )





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










F-14
 Table of Contents




IRBioSciences Holdings, Inc. and Subsidiary


(A
Development Stage Company)


Condensed
Consolidated Statements of Cash Flows


For
the Three Months Ended March 31, 2009 and 2008,


And
For the Period of Inception (October 30, 2002) to March 31, 2009


(Unaudited)




For
      the Three
                              Months
      Ended
                              March
      31,
                              2009
                            
                            
                            For
      the Three
                              Months
      Ended
                              March
      31, 2008
                            
                            
                            Cumulative
                              from
      Inception
                              (October
      30, 2002) to
                              March
      31, 2009Cash
      flows from operating activities:Net
      loss
                            
                            $
                            (2,141,047
                            )
                            
                            $
                            (1,223,234
                            )
                            
                            $
                            (23,438,203
                            )Adjustments
      to reconcile net loss to net cash used in operatingactivities:Non-cash
      compensation
                            
                            
                            244
                            
                            
                            
                            55,432
                            
                            
                            
                            7,148,371Cost
      of penalty for late registration of shares - stock portion
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            1,631,726Cost
      of penalty for late registration of shares - warrant
    portion
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            560,434(Gain)
      loss from marking to market - stock portion of penaltyfor
      late registration of shares
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (760,058
                            )(Gain)
      loss from marking to market - warrant portion of penaltyfor
      late registration of shares
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (378,198
                            )Change
      in fair value of derivative liability
                            
                            
                            732,295
                            
                            
                            
                            -
                            
                            
                            
                            (2,840,670
                            )Legal
      fees for note payable
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            20,125Placement
      fees for note payable
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            65,000Impairment
      of intangible asset
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            6,393Interest
      expense
                            
                            
                            200,000
                            
                            
                            
                            -
                            
                            
                            
                            774,880Amortization
      of discount on notes payable
                            
                            
                            268,248
                            
                            
                            
                            18,896
                            
                            
                            
                            1,807,093Redemption
      Option Liability
                            
                            
                            75,000
                            
                            
                            
                            -
                            
                            
                            
                            75,000Depreciation
      and amortization
                            
                            
                            5,482
                            
                            
                            
                            3,993
                            
                            
                            
                            74,569Changes
      in operating assets and liabilities:Increase
      in deposits
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (4,868
                            )Decrease
      in prepaid services and other assets
                            
                            
                            33,054
                            
                            
                            
                            35,831
                            
                            
                            
                            103,526Increase
      / (Decrease) in accounts payable and accrued expenses
                            
                            
                            (112,276
                            )
                            
                            
                            (239,972
                            )
                            
                            
                            996,404Net
      cash used in operating activities
                            
                            
                            (939,000
                            )
                            
                            
                            (1,349,054
                            )
                            
                            
                            (14,158,476
                            )Cash
      flows from investing activities:Acquisition
      of property and equipment
                            
                            
                            (1,500
                            )
                            
                            
                            (1,597
                            )
                            
                            
                            (86,577
                            )Net
      cash used in investing activities
                            
                            
                            (1,500
                            )
                            
                            
                            (1,597
                            )
                            
                            
                            (86,577
                            )Cash
      flows from financing activities:Proceeds
      from notes payable
                            
                            
                            -
                            
                            
                            
                            1,825,000
                            
                            
                            
                            9,668,375Principal
      payments on notes payable and demand loans
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (1,094,747
                            )Shares
      of stock sold for cash
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            7,873,451Proceeds
      from exercise of warrant
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            15,700Officer
      repayment of amounts paid on his behalf
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            19,880Cash
      paid on behalf of officer
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (19,880
                            )Net
      cash provided by financing activities
                            
                            
                            -
                            
                            
                            
                            1,825,000
                            
                            
                            
                            16,462,779Net
      increase (decrease) in cash and cash equivalents
                            
                            
                            (940,500
                            )
                            
                            
                            474,349
                            
                            
                            
                            2,217,726Cash
      and cash equivalents at beginning of period
                            
                            
                            3,158,226
                            
                            
                            
                            221,120
                            
                            
                            
                            -Cash
      and cash equivalents at end of period
                            
                            $
                            2,217,726
                            
                            
                            $
                            695,469
                            
                            
                            $
                            2,217,726





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




F-15
 Table of Contents






IR
BioSciences Holdings, Inc. and Subsidiary


(A
Development Stage Company)


Condensed
Consolidated Statements of Cash Flows


For
the Three Months Ended March 31, 2009 and 2008,


And
For the Period of Inception (October 30, 2002) to March 31, 2009


(Unaudited)


(continued)






For
      the ThreeMonths
      EndedMarch
      31,2009
                                      
                                      
                                      For
      the ThreeMonths
      EndedMarch
      31, 2008
                                      
                                      
                                      Cumulativefrom
      Inception(October
      30, 2002) toMarch
      31, 2009Supplemental
      disclosures of cash flow information:Cash
      paid during the period for:Interest
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      19,299
                                      
                                      
                                      $
                                      127,051Taxes
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      8,115Acquisition
      and capital restructure:Assets
      acquired
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Liabilities
      assumed
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (120,799
                                      )Common
      stock retained
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (2,369
                                      )Adjustment
      to additional paid-in capital
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      123,168Organization
      costs
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      350,000Total
      consideration paid
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      350,000Common
      stock issued in exchange for proprietary rights
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      9,250Common
      stock issued in exchange for services
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      33,000
                                      
                                      
                                      $
                                      3,177,483Common
      stock issued in exchange for previously incurred debt and accrued
      interest
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      1,066,401Common
      stock issued in exchange as interest
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      150,585Amortization
      of beneficial conversion feature
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      223,269Stock
      options and warrants issued in exchange for services
    rendered
                                      
                                      $
                                      244
                                      
                                      
                                      $
                                      43,453
                                      
                                      
                                      $
                                      3,718,504Debt
      and accrued interest forgiveness from note holders
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      36,785Common
      stock issued in satisfaction of amounts due to an Officer and a
      Director
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      180,000Common
      stock issued in satisfaction of accounts payable
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      157,219Deferred
      compensation to a consultant accrued in March 2005
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      2,630,761Amortization
      of deferred compensation
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      202,486Fair
      value of common stock and warrants in connectionwith
      the late filing of registration statement
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      3,684,664Gain
      from marking to market - stock portion of penaltyfor late
      registration of shares
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      (1,124,255
                                      )Gain
      from marking to market - warrant portion of penaltyfor late
      registration of shares
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      (456,603
                                      )Impairment
      of intangible asset
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      6,393Issuance
      of stock to officer, previously accrued
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      41,416Value
      of options issued to members of advisory board
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      3,729
                                      
                                      
                                      $
                                      3,729Value
      of warrants issued to members of advisory board
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      22,688Services
      for note payable
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      9,750Issuance
      of shares for accounts payable
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      44,706Stock
      issued as commission for equity fundraising
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      1,000
                                      
                                      
                                      $
                                      5,483Value
      of warrants issued for financing
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      226,754
                                      
                                      
                                      $
                                      1,568,215Revaluation
      of derivative liability
                                      
                                      $
                                      732,295
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      (2,840,670
                                      )







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






F-16
 Table of Contents




IRBIOSCIENCES HOLDINGS, INC.


(A
DEVELOPMENT STAGE COMPANY)


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


MARCH
31, 2009


(Unaudited)




Note
1 - Summary Of Accounting Policies





General





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





In the
opinion of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. The results
from operations for the three months ended March 31, 2009 are not necessarily
indicative of the results that may be expected for the year ended December 31,
2009. The unaudited condensed consolidated financial statements should be read
in conjunction with the December 31, 2008 financial statements and footnotes
thereto included in the Company's annual report on SEC Form 10-K filed with the
Securities and Exchange Commission on March 31, 2009 and as amended on April 30,
2009.





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 development-stage biopharmaceutical company. Through our wholly-owned
subsidiary, ImmuneRegen BioSciences, Inc., the Company is engaged in the
research and development of potential drugs. The Company’s goal is to develop
therapeutics to be used for the protection of the body from exposure to harmful
agents such as toxic chemicals and radiation, as well as, biological agents,
including influenza and anthrax. The Company’s research and development efforts
are at a very early stage and Radilex and Viprovex, the Company’s potential drug
candidates, 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
inter-company transactions have been eliminated in consolidation.





In July
2003, the Company effected a 1-for-20 reverse stock split of its common stock.
In April 2004, the Company effected a 2-for-1 forward split of its common
stock.  On July 10, 2008, the Company effected a 1-for-10 reverse
stock split of its common stock and simultaneously reduced its total authorized
shares of common stock to 100,000,000.  Par value remained unchanged
as a result of the July 2008 stock split and reduction of authorized shares.
Accordingly, the effect of the reverse-split has been presented in the
accompanying financial statement and footnote disclosures.





Reclassification





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





Stock based
compensation




The
Company accounts for stock-based compensation under the provisions of SFAS
123R,Share-Based
Payment (“SFAS 123R”). This statement requires the Company to measure the
cost of employee services received in exchange for an award of equity
instruments based on the grant-date fair value of the award. That cost is
recognized over the period in which the employee is required to provide service
in exchange for the award, which is usually the vesting period.


F-17
 Table of Contents




A summary
of option activity under the Company’s stock option plan as of March 31, 2009,
and changes during the period ended are presented below:





Options
                    
                    
                    Weighted
      Average
                      Exercise
      PriceOutstanding
      at December 31, 2008
                    
                    
                    1,791,168
                    
                    
                    $
                    2.65Issued
                    
                    
                    -
                    
                    
                    
                    -Exercised
                    
                    
                    -
                    
                    
                    
                    -Forfeited
      or expired
                    
                    
                    -
                    
                    
                    
                    -Outstanding
      at March 31, 2009
                    
                    
                    1,791,168
                    
                    
                    $
                    2.65Non-vested
      at March31,
      2009
                    
                    
                    -
                    
                    
                    $
                    -Exercisable
      at March 31, 2009
                    
                    
                    1,791,168
                    
                    
                    $
                    2.65





Aggregate
intrinsic value of options outstanding and exercisable at March 31, 2009 was $0.
Aggregate intrinsic value represents the difference between the Company's
closing stock price on the last trading day of the fiscal period, which was
$0.14 as of March 31, 2009, and the exercise price multiplied by the number of
options outstanding.  As of March 31, 2009, total unrecognized
stock-based compensation expense related to stock options was $0. The total fair
value of options vested during the three months ended March 31, 2009 was
$244.





Interim financial
statements





The
accompanying balance sheet as of March 31, 2009, the statements of operations
for the three months ended March 31, 2009 and 2008, and for the period of
inception (October 30, 2002) to March 31, 2009, and the statements of cash flows
for three months ended March 31, 2009 and 2008, and from the period of inception
(October 30, 2002) to March 31, 2009 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 at March 31, 2009 and December 31, 2008
consist of the following:





March
      31, 2009
                    
                    
                    December
      31, 2008Prepaid
      monitoring fees
                    
                    $
                    109,375
                    
                    
                    $
                    140,625Prepaid
      insurance
                    
                    
                    31,179
                    
                    
                    
                    44,929Prepaid
      services
                    
                    
                    40,500
                    
                    
                    
                    22,834Prepaid
      car lease
                    
                    
                    7,910
                    
                    
                    
                    11,865Salary
      advance
                    
                    
                    -
                    
                    
                    
                    1,765Total prepaid services and other current assets
                    
                    $
                    188,964
                    
                    
                    $
                    222,018






F-18
 Table of Contents




Deposits and other
assets





The
balance consists of a deposit on leased office space in the amount of $7,378 and
$7,378 as of March 31, 2009 and December 31, 2008, respectively.





Advertising





The
Company follows the policy of charging the costs of advertising to expenses
incurred. The Company did not incur any advertising costs during the three
months ended March 31, 2009 or during the year ended December 31,
2008.




Determining Whether an
Instrument (or an Embedded Feature) Is Indexed to an entity’s Own
Stock
  The
Company adopted Emerging Issues Task Force issued EITF No. 07-5, “Determining
Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock”
(“EITF 07-5”) on January 1, 2009. The effect of this guidance is described in
Note 6




Recent Accounting
Pronouncements




In
December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in
Consolidated Financial Statements-an amendment of ARB No. 51” (SFAS 160). SFAS
160 requires that non-controlling (or minority) interests in subsidiaries be
reported in the equity section of the company’s balance sheet, rather than in a
mezzanine section of the balance sheet between liabilities and equity. SFAS 160
also changes the manner in which the net income of the subsidiary is reported
and disclosed in the controlling company’s income statement. SFAS 160 also
establishes guidelines for accounting or changes in ownership percentages and
for deconsolidation. SFAS 160 is effective for financial statements for fiscal
years beginning on or after December 15, 2008 and interim periods within those
years. The adoption of SFAS 160 did not have a material impact on our financial
position, results of operations or cash flows.
  In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities-an amendment of FASB Statement No. 133” (SFAS 161). SFAS
161 requires enhanced disclosures about an entity’s derivative and hedging
activities and thereby improves the transparency of financial reporting. SFAS
161 is effective for financial statements issued for fiscal years and interim
periods beginning after November 15, 2008, with early application encouraged.
The adoption of SFAS 161 did not have a material impact on our financial
position, results of operations or cash flows.
  Effective
January 1, 2009, the Company adopted the Financial Accounting Standards Board's
Staff Position (FSP) on the Emerging Issues Task Force (EITF) Issue No. 03-6-1,
“Determining Whether Instruments Granted in Share-Based Payment Transactions are
Participating Securities.”  The FSP required that all unvested
share-based payment awards that contain nonforfeitable rights to dividends
should be included in the basic Earnings Per Share (EPS)
calculation.  This standard did not affect the consolidated financial
position or results of operations.
  In April
2009, the FASB issued FSP FAS No. 115-2 and FAS No. 124-2, “Recognition and
Presentation of Other-Than-Temporary Impairments” (“FSP FAS No. 115-2”). FSP FAS
No. 115-2 provides guidance in determining whether impairments in debt
securities are other than temporary, and modifies the presentation and
disclosures surrounding such instruments. This FSP is effective for interim
periods ending after June 15, 2009, but early adoption is permitted for interim
periods ending after March 15, 2009. The Company plans to adopt the provisions
of this Staff Position during the second quarter of 2009, but does not believe
this guidance will have a significant impact on its consolidated financial
statements.
  In April
2009, the FASB issued FSP FAS No. 157-4, “Determining Fair Value When the Volume
and Level of Activity for the Asset or Liability Have Significantly Decreased
and Identifying Transactions That Are Not Orderly” (“FSP FAS No. 157-4”). FSP
FAS No. 157-4 provides additional guidance in determining whether the market for
a financial asset is not active and a transaction is not distressed for fair
value measurement purposes as defined in SFAS No. 157, “Fair Value
Measurements.” FSP FAS No. 157-4 is effective for interim periods ending after
June 15, 2009, but early adoption is permitted for interim periods ending after
March 15, 2009. The Company will apply the provisions of this statement
prospectively beginning with the second quarter 2009, and does not expect its
adoption to have a material effect on its consolidated financial
statements.
  In April
2009, the FASB issued FSP FAS No. 107-1 and APB 28-1, “Interim Disclosures about
Fair Value of Financial Instruments” (“FSP FAS No. 107-1 and APB 28-1”). This
FSP amends FASB Statement No. 107, “Disclosures about Fair Values of Financial
Instruments,” to require disclosures about fair value of financial instruments
in interim financial statements as well as in annual financial statements. APB
28-1 also amends APB Opinion No. 28, “Interim Financial Reporting,” to require
those disclosures in all interim financial statements. This standard is
effective for interim periods ending after June 15, 2009, but early adoption is
permitted for interim periods ending after March 15, 2009. The Company plans to
adopt FSP FAS No. 107-1 and APB 28-1 and provide the additional disclosure
requirements beginning in second quarter 2009.
 
 Other
recent accounting pronouncements issued by the FASB (including its Emerging
Issues Task Force), the AICPA, and the SEC did not, or are not believed by
management to, have a material impact on the Company's present or future
consolidated financial statements.




F-19
 Table of Contents




In March
2008, the FASB issued Statement No. 161, “Disclosures about Derivative
Instruments and Hedging Activities”. The new standard is intended to improve
financial reporting about derivative instruments and hedging activities by
requiring enhanced disclosures to enable investors to better understand their
effects on an entity’s financial position, financial performance, and cash
flows. It is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008. We do not believe that
its adoption will have a significant impact on our consolidated financial
statements.





Note
2 – Furniture and equipment





Furniture and
Equipment





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





Computer
      equipment
                3
      yearsLaboratory
      equipment
                3
      yearsWebsite
                5
      yearsFurniture
                7
      years





Depreciation
and amortization expense for the three months ended March 31, 2009 and 2008 was
$5,482 and $3,993, respectively. The amount depreciated from the date of
inception (October 30, 2002) through March 31, 2009 was
$74,569.  Company’s furniture and equipment consists of the
following:


March
      31, 2009
                    
                    
                    December
      31, 2008Office
      Equipment
                    
                    $
                    49,909
                    
                    
                    $
                    49,909Office
      Fixtures and Furniture
                    
                    
                    30,568
                    
                    
                    
                    30,568Website
                    
                    
                    28,600
                    
                    
                    
                    27,100Licensed
      Proprietary Rights
                    
                    
                    9,250
                    
                    
                    
                    9,250118,327
                    
                    
                    
                    116,827Accumulated
      Depreciation and Amortization
                    
                    
                    (80,962
                    )
                    
                    
                    (75,480
                    )$
                    37,365
                    
                    
                    $
                    41,347





Note
3 - Related Party Transactions





In August
2008, per the term of his employment agreement, the Company agreed to issue
833,334 shares of common stock to Michael K. Wilhelm, the Company’s President
and Chief Executive Officer.  These shares were not issued as of
December 31, 2008 and the value of the shares in the amount of $250,000 was
recorded in common stock subscribed at September 30, 2008.  During the
three months ended March 31, 2009, the Company issued the 833,334 shares of
common stock.





Note
4 - Accounts Payable And Accrued Liabilities





Accounts
payable and accrued liabilities at March 31, 2009 and December 31, 2008 are as
follows:





March
      31, 2009
                    
                    
                    December
      31, 2008Accounts
      payable and accrued liabilities
                    
                    $
                    662,590
                    
                    
                    $
                    776,319Accounts
      payable - Pre-merger
                    
                    
                    34,926
                    
                    
                    
                    34,926Interest
      payable
                    
                    
                    3,215
                    
                    
                    
                    3,215Accrued
      payroll
                    
                    
                    8,090
                    
                    
                    
                    -Credit
      cards
                    
                    
                    38,629
                    
                    
                    
                    45,266State
      income tax payable
                    
                    
                    3,200
                    
                    
                    
                    3,200$
                    750,650
                    
                    
                    $
                    862,926






F-20
 Table of Contents


Note
5 - Notes Payable





Note Issued To YA Global
Investments, L.P. For Accrued Interest





On March
31, 2009, per the terms of the amended Securities Purchase Agreement with YA
Global Investments, L.P., the Company issued two 0% interest convertible
debentures with a five year term of exercise and a minimum conversion price of
$0.30 per share as payment of an aggregate of $75,000 in interest accrued during
the three months ended March 31, 2009.





Note Issued To Funds Managed
by Brencourt Advisors, LLC For Accrued Interest





On March
31, 2009, per the terms of the amended Securities Purchase Agreement with Funds
Managed by Brencourt Advisors, LLC the Company issued four 0% interest
convertible debentures with a five year term of exercise and a minimum
conversion price of $0.30 per share as payment of an aggregate of $125,000 in
interest accrued during the three months ended March 31, 2009.





As of
March 31, 2009 and December 31, 2008 notes payable consist of:




March
      31,
                          2009
                        
                        
                        December
      31,
                          2008YA
      Global Investments, L.P. Debentures
                        
                        $
                        3,000,000
                        
                        
                        $
                        3,000,000Note
      Issued To YA Global Investments, L.P. For Accrued Interest
                        
                        
                        218,889
                        
                        
                        
                        143,889Brencourt
      Advisors, LLC Debentures
                        
                        
                        5,000,000
                        
                        
                        
                        5,000,000Note
      Issued To Brencourt Advisors, LLC For Accrued Interest
                        
                        
                        250,000
                        
                        
                        
                        125,000Less:
      Debt discount
                        
                        
                        (3,364,053
                        )
                        
                        
                        (1,474,937
                        )Total
      note payable
                        
                        $
                        5,104,863
                        
                        
                        $
                        6,793,952Less:
      current portion of notes payable
                        
                        
                        1,500,000
                        
                        
                        
                        1,500,000Total
      long term portion of notes payable
                        
                        $
                        3,604,836
                        
                        
                        $
                        5,293,952




Aggregate
maturities of debt as of March 31, 2009 are as follows:





For
      the twelve months ended December 31,
                            
                            Amount2009
                            
                            $
                            1,500,0002010
                            
                            
                            1,500,000201120122013
      and beyond
                            
                            
                            5,468,889$
                            8,468,889




Note
6 – Derivative Liability
  In June
2008, the Financial Accounting Standards Board (“FASB”) ratified Emerging Issues
Task Force (“EITF”) Issue No. 07-5, “Determining Whether an Instrument (or
Embedded Feature) Is Indexed to Entity’s Own Stock (“EITF
07-5”).  EITF 07-5 mandates a two-step process for evaluating whether
an equity-linked financial instrument or embedded feature is indexed to the
entity’s own stock.  The Company has entered into certain debenture
and warrant agreements which contain a strike price adjustment feature, which
upon adoption of EITF 07-5, resulted in the instruments no longer being
considered indexed to the Company’s own stock.  Accordingly, adoption
of EITF 07-5 changed the current classification (from equity to liability) and
the related accounting for these warrants outstanding as of January 1,
2009.   During the first quarter of 2009, the liability was adjusted
for warrants exercised and the change in fair value of the
warrants.  In accordance with EITF 07-5, a derivative liability of
$1,486,900 related to the debenture conversion feature and warrants is included
in our unaudited condensed consolidated balance sheet as of March 31,
2009.  During the three months ended March 31, 2009, we recorded a
loss of $732,295 related to the change in fair value of the debenture conversion
feature and warrants.
 As a
result of the adoption of EITF 07-5, the Company is required to disclose the
fair value measurements required by SFAS No. 157, “Fair Value Measurements.” The
other liabilities recorded at fair value in the balance sheet as of
March 31, 2009 are categorized based upon the level of judgment associated
with the inputs used to measure their fair value. Hierarchical levels, defined
by SFAS No. 157 are directly related to the amount of subjectivity associated
with the inputs to fair valuation of these liabilities are as
follows:
  Level 1
      —
                Inputs
      are unadjusted, quoted prices in active markets for identical assets or
      liabilities at the measurement date;Level 2
      —
                Inputs
      other than Level 1 inputs that are either directly or indirectly
      observable; andLevel
      3 —
                Unobservable
      inputs, for which little or no market data exist, therefore requiring an
      entity to develop its own
assumptions.
   F-21
  The
following table summarizes the financial liabilities measured at fair value on a
recurring basis as of March 31, 2009, segregated by the level of the valuation
inputs within the fair value hierarchy utilized to measure fair
value:
  
 Quoted
      prices inactive
      markets for
                      
                      
                      Significant
      other
                      
                      
                      Significantidentical
      assets
                      
                      
                      observable
      inputs
                      
                      
                      unobservable
      inputsTotal
                      
                      
                      (Level
      1)
                      
                      
                      (Level
      2)
                      
                      
                      (Level
      3)Notes
      payable
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      $
                      5,104,863Derivative
      liability
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      $
                      1,486,900
 In
accordance with EITF 07-5, we calculated the fair value of the debenture
conversion features and warrants using the Black–Scholes–Merton valuation
model.
  The
assumptions used in the Black-Scholes-Merton valuation model were as
follows:
 
 January
      1,
                          
                          
                          March
      31,2009
                          
                          
                          2009Expected
      volatility
                          
                          
                          189.77
                          %
                          
                          
                          315.34
                          %Expected
      life (years)
                          
                          
                          4.40-5.51
                          
                          
                          
                          4.15-5.26Risk
      free interest rate
                          
                          
                          1.13
                          %
                          
                          
                          1.31
                          %Forfeiture
      rate
                          
                          
                          -
                          
                          
                          
                          -Dividend
      rate
                          
                          
                          -
                          
                          
                          
                          -


Note 7
- Equity





Common
stock





In July
2003, the Company effected a 1-for-20 reverse stock split of its common stock.
In April 2004, the Company effected a 2-for-1 forward split of its common
stock.  On July 10, 2008, the Company effected a 1-for-10 reverse
stock split of its common stock and simultaneously reduced its authorized shares
of common stock to 100,000,000; par value remained
unchanged.  Accordingly, the effect of the reverse-split has been
presented in the accompanying financial statement and footnote
disclosures.





In August
2008, per the term of his employment agreement, the Company agreed to issue
833,334 shares of common stock to Michael K. Wilhelm, the Company’s President
and Chief Executive Officer.  The value of the shares in the amount of
$250,000 has been recorded as common stock subscribed at December 31,
2008.  During the three months ended March 31, 2009, the Company
issued the 833,334 shares of common stock.





F-22
 Table of Contents




Options





The
Company issued no options during the three months ended March 31,
2009.





The
following table summarizes the changes in options outstanding and the related
prices for the shares of the company's common stock issued to employees of the
company under a non-qualified employee stock option plan March 31,
2009.  The effect of the 1-for-10 reverse-split has been presented in
the accompanying tables and related disclosures.




Options
      Outstanding
                    
                    
                    Options
      ExercisableExercise
      Prices
                    
                    
                    Number
      Outstanding
                    
                    
                    Weighted
      Average Remaining Contractual Life (years)
                    
                    
                    Weighted
      Average Exercise Price
                    
                    
                    Number
      Exercisable
                    
                    
                    Weighted
      Average Remaining Contractual Life (years)$
                    0.10-2.20
                    
                    
                    
                    1,558,000
                    
                    
                    
                    6.81
                    
                    
                    $
                    0.10-2.20
                    
                    
                    
                    1,558,000
                    
                    
                    
                    6.812.30-2.50
                    
                    
                    
                    201,444
                    
                    
                    
                    2.27
                    
                    
                    
                    2.30-2.50
                    
                    
                    
                    201,444
                    
                    
                    
                    2.273.10
                    
                    
                    
                    100
                    
                    
                    
                    1.70
                    
                    
                    
                    3.10
                    
                    
                    
                    100
                    
                    
                    
                    1.703.30
                    
                    
                    
                    10,303
                    
                    
                    
                    1.39
                    
                    
                    
                    3.30
                    
                    
                    
                    10,303
                    
                    
                    
                    1.394.40
                    
                    
                    
                    15,000
                    
                    
                    
                    1.25
                    
                    
                    
                    4.40
                    
                    
                    
                    15,000
                    
                    
                    
                    1.25250.00
                    
                    
                    
                    6,321
                    
                    
                    
                    1.00
                    
                    
                    
                    250.00
                    
                    
                    
                    6,321
                    
                    
                    
                    1.001,791,168
                    
                    
                    
                    6.20
                    
                    
                    
                    
                    
                    
                    
                    1,791,168
                    
                    
                    
                    6.20




Options
not vested are not exercisable. Transactions involving stock options issued to
employees are summarized as follows:





Number
      of Shares
                        
                        
                        Weighted
      Average
                          Price
      Per ShareOutstanding
      at December 31, 2008
                        
                        
                        1,791,168
                        
                        
                        $
                        2.65Granted
                        
                        
                        -
                        
                        
                        
                        -Exercised
                        
                        
                        -
                        
                        
                        
                        -Expired
                        
                        
                        -
                        
                        
                        
                        -Outstanding
      at March 31, 2009
                        
                        
                        1,791,168
                        
                        
                        $
                        2.65Non-vested
      at March 31, 2009
                        
                        
                        -
                        
                        
                        $
                        -Exercisable
      March 31, 2009
                        
                        
                        1,791,168
                        
                        
                        $
                        2.65





Aggregate
intrinsic value of options outstanding and exercisable at March 31, 2009 was $0.
Aggregate intrinsic value represents the difference between the Company's
closing stock price on the last trading day of the fiscal period, which was
$0.14 as of March 31, 2009, and the exercise price multiplied by the number of
options outstanding.  As of March 31, 2009, total unrecognized
stock-based compensation expense related to stock options was $0. During the
three months ended March 31, 2009 the Company charged $244 to operations related
to recognized stock-based compensation expense for employees and directors stock
options.





The fair
value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model. We use historical data to estimate expected
volatility, the period of time that option grants are expected to be
outstanding, as well as employee termination experience. The risk-free rate is
based on the U.S. Treasury yield curve in effect at the time of grant for the
estimated life of the option. The following assumptions were used to estimate
the fair value of options granted during the three-month periods ended
March 31, 2009 and 2008 using the Black-Scholes option-pricing
model:





2009
                  
                  2008Risk-free
      interest rate at grant date
                  1.31%
                  
                  2.50
      to 4.25%Expected
      stock price volatility
                  315.3%
                  
                  92.8%Expected
      dividend payout
                  -
                  
                  -Expected
      option life-years
                  3
      to 5
                  
                  3
      to 5






F-23
 Table of Contents




Warrants





The
Company issued no warrants during the three months ended March 31,
2009.





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





Warrants
      Outstanding
                              
                              
                              Warrants
      ExercisableWeighted
                              
                              
                              
                              
                              
                              
                              
                              
                              WeightedAverage
                              
                              
                              Weighted
                              
                              
                              
                              
                              
                              AverageRemaining
                              
                              
                              Average
                              
                              
                              
                              
                              
                              RemainingExercise
                              
                              
                              Number
                              
                              
                              Contractual
                              
                              
                              Exercise
                              
                              
                              Number
                              
                              
                              ContractualPrices
                              
                              
                              Outstanding
                              
                              
                              Life
      (years)
                              
                              
                              Price
                              
                              
                              Exercisable
                              
                              
                              Life
      (years)$
                              0.50-1.00
                              
                              
                              
                              19,080
                              
                              
                              
                              0.33
                              
                              
                              $
                              0.50-1.00
                              
                              
                              
                              19,080
                              
                              
                              0.331.25-2.20
                              
                              
                              
                              4,106,675
                              
                              
                              
                              4.40
                              
                              
                              
                              1.25-2.20
                              
                              
                              
                              4,106,675
                              
                              
                              4.402.30-5.60
                              
                              
                              
                              2,783,017
                              
                              
                              
                              1.93
                              
                              
                              
                              2.30-5.60
                              
                              
                              
                              2,783,017
                              
                              
                              1.9310.00
                              
                              
                              
                              9,000
                              
                              
                              
                              0.48
                              
                              
                              
                              10.00
                              
                              
                              
                              9,000
                              
                              
                              0.4820.00
                              
                              
                              
                              655
                              
                              
                              
                              0.32
                              
                              
                              
                              20.00
                              
                              
                              
                              655
                              
                              
                              0.326,918,427
                              
                              
                              
                              3.39
                              
                              
                              
                              
                              
                              
                              
                              6,918,427
                              
                              
                              3.39





Transactions
involving warrants are summarized as follows:




Number
      of Shares
                      
                      
                      Weighted
      Average
                        Price
      Per ShareOutstanding
      at December 31, 2008
                      
                      
                      7,020,975
                      
                      
                      $
                      2.66Granted
                      
                      
                      -
                      
                      
                      
                      -Exercised
                      
                      
                      -
                      
                      
                      
                      -Cancelled
      or expired
                      
                      
                      (102,548
                      )
                      
                      
                      2.26Outstanding
      at March 31, 2009
                      
                      
                      6,918,427
                      
                      
                      $
                      2.67







F-24
 Table of Contents




ITEM2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION





Special Note Regarding
Forward-looking Statements





Some of
the statements under "Risk Factors" and elsewhere in this Quarterly Report on
Form 10-Q constitute forward-looking statements. All statements other than
historical facts contained in this report, including statements regarding our
future financial position and revenues, capital expenditures, cash flows,
business strategy and plans and objectives of management for future operations,
are 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-Q and in the "Risk Factors" section of our annual report on
SEC Form 10-K filed with the Securities and Exchange Commission on March 31,
2009 and as amended on April 30, 2009.





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 biotechnology company. Through
our wholly-owned subsidiary ImmuneRegen BioSciences, Inc., we are engaged in the
research and development of potential drug candidates, Homspera® and its
derivatives, Radilex® and Viprovex®. Although containing the identical
active ingredient Homspera, we defined Radilex and Viprovex as derivatives of
Homspera due to the potential difference in formulations and indications for
use. Our goals include developing these potential drug candidates to be used as
possible countermeasures for homeland security threats, including radiological,
chemical and biological agents, and to meet the commercial need for similar
beneficial effects in conditions such as radiation therapy, influenza, anthrax
and potentially other microbial ailments. We have discovered activities of
Homspera that may potentially open additional commercialization opportunities in
areas such as human adult stem cell stimulation, vaccine adjuvants, which
stimulate the immune system above that of a stand-alone vaccine, and wound
healing.





Our
patents, patent applications and continued research are partially derived from
discoveries made during research studies related to the function of Substance P,
which is found in the body and has a large number of actions. These studies were
funded by the Air Force Office of Scientific Research (AFOSR) in the early 1990s
and were conducted by research scientists, including our co-founders Drs. Mark
Witten and David Harris. In the course of research on Substance P, scientists
created a number of synthetic analogues, structural derivatives with slight
chemical differences, for study. One of these, which we have named Homspera, is
the basis for our drug development efforts and our intellectual property. All of
our research and development efforts are at the pre-clinical stage and Homspera
has only undergone exploratory studies to evaluate its biological activity in
small animals. There can be no assurance that our interpretation of study
results will prove to be accurate after further testing, and our beliefs
regarding the potential uses of our drug candidates may never
materialize.





Our
current focus is to develop Homspera for regenerating or strengthening the human
immune system, in part, through stimulating human adult stem
cells.  It is the belief of our management that the stem cell activity
exhibited by Homspera underlies some of the effects previously reported in
potential applications like treatment for radiation exposure and infectious
diseases using Homspera derivatives Radilex and Viprovex, respectively, which
are described below.  Recent studies have evaluated the effects of
Homspera on human adult stem cell activity.  Additionally, ongoing
studies are being performed to evaluate the efficacy of Homspera as a potential
product to increase the healing rate of wounds. One aspect of this evaluation is
to consider the impact of Homspera on the mechanisms and pathology of fibrosis,
which is associated with scar formation, pulmonary injury and can occur
following exposure to ionizing radiation (gamma rays or x-rays).





We are
researching Radilex for use as a potential treatment for acute exposure to
radiation. We believe that a commercial market may exist for the use of Radilex
as it relates to the amelioration of certain side effects of cancer treatments,
whether chemotherapy or radiotherapy. Further, we believe that Radilex, if
developed, may be an acceptable candidate to be marketed to governmental
agencies for procurement into the Strategic National Stockpile for potential use
following radiological or nuclear threats.





We are
researching Viprovex for potential use in treatments of exposure to biological
agents, such as infectious diseases, which include influenza and anthrax. We
believe that potential commercial opportunities may exist for the treatment of
seasonal influenza and other viral or bacterial infections, either as a
stand-alone drug or as an adjuvant to other existing drugs. We believe that
Viprovex, if adequately developed, may be used in potential applications for
sale to governments for the treatment of exposure to anthrax and pandemic
influenza. In addition, ongoing studies are being performed to evaluate the
efficacy of Viprovex as a vaccine adjuvant to enhance immune response to a given
dose of vaccine for either prophylactic protection, such as influenza, or
therapy, such as cancer.  Based on early studies on Homspera and
existing literature on Substance P, we are also researching the efficacy of
Viprovex as a potential treatment for exposure to chemical agents, such as
formalin.





To date
we have submitted preliminary study data to the U.S. Food and Drug
Administration (FDA) and have been issued two Pre-Investigational New Drug
(PIND) numbers, one for the potential use of Radilex in the treatment of acute
radiation syndrome (PIND 63,255) and the other for the potential use of Viprovex
in the treatment of avian influenza (PIND 73,709). We have evaluated and/or
contracted with a number of FDA regulatory consultants to assist us in our
preparation and submission of an Investigational New Drug application (IND), a
necessary prerequisite to human clinical studies, which can only follow after
the FDA’s allowance of our IND.





3
 Table of Contents




We have
filed patent applications directed to various methods of using and compositions
comprising Substance P analogues.  We presently own approximately
eight issued patents, including two issued U.S. patents and six issued foreign
patents, one of which has been registered in nine countries in the European
Union. We also have approximately 64 pending patent applications, including
approximately 17 pending U.S. utility patent applications, 1 pending U.S.
provisional application, 6 pending international patent applications, and
approximately 40 pending foreign patent applications. All inventions
embodied in these applications and issued patents have been assigned to the
company by the inventors.





Our
potential drug candidates, Homspera, Radilex and Viprovex, are at pre-clinical
stages of development and may not be shown to be safe or effective in humans and
may never receive regulatory approval. Neither Homspera, Radilex nor Viprovex
have been tested in humans. There is no guarantee that regulatory authorities
will ever permit human testing of Homspera, Radilex, Viprovex or any other
potential products derived from Homspera. Even if such testing is permitted,
neither Homspera, Radilex, Viprovex or any other potential drug candidates, if
any, derived from Homspera may be successfully developed or shown to be safe or
effective in humans.





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





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




Results
of Operations for the Three Month Periods Ended March 31, 2009 and March 31,
2008





Revenue





We have
not generated any revenues from operations from our inception. We believe we
will begin earning revenues from operations during calendar year 2010 as we
transition from a development stage company.





Cost and
Expenses





From our
inception through March 31, 2009, we have incurred losses of $23,438,203. These
expenses were associated principally with equity-based compensation to employees
and consultants, product development costs and professional services and
interest expense.
 
 For the
three months ending March 31, 2009, Sales, General and Administrative expenses
(“SG&A”) were $844,910, a decrease of $331,997 or approximately 28% compared
to SG&A expenses of $1,176,907 during the three months ended March 31, 2008.
The year over year decrease was primarily due to a decrease in non-cash
compensation, lower payroll expenses, lower legal and accounting costs, and
lower research and development costs.  For the three months ended
March 31, 2009, this amount consisted primarily of payroll and related expenses
of $285,404, research and development costs of $184,401, legal and accounting
costs of $158,079, consulting and professional fees of $50,654 and insurance
costs of $39,288.  We expect SG&A to remain flat during the coming
twelve months.





Financing
Cost





Financing
costs were $31,250 for the three months ended March 31, 2009, a 100% increase
compared to financing costs of $0 during the three months ended March 31,
2008.  The Company deposited cash in the amount of $250,000 held in
escrow pursuant to the Securities Purchase Agreements with YA Global
Investments, L.P. that were entered into in January 2008 and June 2008, of which
$175,000 was placed into escrow on January 3, 2008 and an additional $75,000 was
placed into escrow on June 12, 2008. These funds are amortized on a
straight-line basis over a 24 month period.  Prior to December 31,
2008, these costs were captured in SG&A expenses.





The
Company expects no significant increase to financing costs during the coming
twelve months.





Interest Expense
(net)





For the
three months ending March 31, 2009, interest expense (net) was $532,592; an
increase of $486,265 or approximately 1050% compared to interest expense of
$46,327 for the three months ended March 31, 2008. Interest expense increased
during the three months ended March 31, 2009 due to interest costs relating to
the securities purchase agreement with YA Global Investments, L.P. dated June
12, 2008, and interest costs relating to the securities purchase agreement with
Brencourt Advisors, LLC dated August 8, 2008.


We expect
interest expense to remain flat during the coming twelve
months.


4
 Table of Contents




Net Loss





Our net
loss for the three months ended March 31, 2009 was $2,141,047 or $0.16 per
share, an increase of $917,813 or approximately 75% compared to a net loss of
$1,223,234 for the three months ended March 31, 2008.  In addition to
the year over year variances described above, the increase in Net Loss was
primarily due to a loss in the three month period ending March 31, 2009 of
$732,295which was due to the change in value of the equity-linked financial
instruments as  mandated by Financial Accounting Standards Board
(“FASB”) ratified Emerging Issues Task Force (“EITF”) Issue No. 07-5,
“Determining Whether an Instrument (or Embedded Feature) Is Indexed to Entity’s
Own Stock (“EITF 07-5”).  (See Note 6 of the Notes to condensed
consolidated financial statements,  March 31, 2009 – Derivative
Liabilities).


Going
Concern





Our
independent certified public accountants have stated in their report included in
our annual report on SEC Form 10-K filed with the Securities and Exchange
Commission on March 31, 2009 and as amended on April 30, 2009 that we have
incurred a net loss and negative cash flows from operations of $5,807,353 and
$4,769,496, respectively, for the year ended December 31, 2008. This loss, in
addition to a lack of operational history, raises substantial doubt about our
ability to continue as a going concern. We currently have sufficient working
capital to fund operations through December 2009.  In the absence of
significant revenue and profits, and since we do not expect to generate
significant revenues in the foreseeable future, we, in order to fund future
operations, will be completely dependent on additional debt and equity financing
arrangements. There is no assurance that any financing will be sufficient to
fund our capital expenditures, working capital and other cash requirements
beyond December 2009. No assurance can be given that any such additional funding
will be available or that, if available, can be obtained on terms favorable to
us. If we are unable to raise needed funds on acceptable terms, we will not be
able to develop or enhance our products, take advantage of future opportunities
or respond to competitive pressures or unanticipated requirements. A material
shortage of capital will require us to take drastic steps such as reducing our
level of operations, disposing of selected assets or seeking an acquisition
partner. If cash is insufficient, we will not be able to continue
operations.





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 continue our research and development
efforts on our early, pre-clinical stage products and build out our corporate
infrastructure.




Plan
of Operations





We expect
to continue to incur operating losses for the foreseeable future, primarily due
to our continued research and development activities attributable to Radilex,
Viprovex and any other proposed product, if any, derived from Homspera and
general and administrative activities.





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





Product Research and
Development





We
incurred expenses of $184,403 for the three months ended March 31, 2009 in
research and development activities related to the development of Homspera,
Radilex and Viprovex versus expenses of $222,171 for the three months ended
March 31, 2008. From our inception in October 2002, we have spent $3,044,299 on
research and development activities. These costs only include the manufacture
and delivery of our drug by third party manufacturers and payments to contract
research organizations and consultants for consulting related to our studies and
costs of performing such studies. Significant costs relating to research and
development, such as compensation for Dr. Siegel, have been classified in
officers’ salaries for consistency of financial reporting.





We
anticipate that during the next 12 months we will decrease our research and
development spending to a total of approximately $500,000 in an effort to
further develop Radilex and Viprovex. This research and development cost
estimate includes additional animal pharmacology studies, formulation and animal
safety/toxicity studies. If we receive additional funds, through investment
funding, licensing agreements or grants, we expect we will increase our research
and development spending above this level.





We
believe that initial revenues, if any, will likely be generated through
partnerships, alliances and/or licensing agreements with pharmaceutical or
biotechnology companies. Our focus during the next 12 months will be to identify
those companies which we believe may have an interest in our proposed products
and attempt to negotiate arrangements for potential partnerships, alliances
and/or licensing arrangements. Alliances between pharmaceutical and
biotechnology companies can take a variety of organizational forms and involve
many different payment structures such as upfront payments, milestone payments,
equity injections and royalty payments. To date, we have not entered into
discussions with and have no agreements or arrangements with any such companies.
Even if we are successful in entering into such a partnership or alliance or
licensing our technology, we anticipate that the earliest we may begin to
generate revenues from operations would be calendar year 2010. There is no
assurance that we will ever be successful in reaching such agreements or ever
generate revenues from operations.




We will
need to generate significant revenues from product sales and or related
royalties and license agreements to achieve and maintain profitability. Through
March 31, 2009, we had no revenues from any product sales, royalties or
licensing fees, and have not achieved profitability on a quarterly or annual
basis. Our ability to achieve profitability depends upon, among other things,
our ability to develop products, obtain regulatory approval for products under
development and enter into agreements for product development, manufacturing and
commercialization. Moreover, we may never achieve significant revenues or
profitable operations from the sale of any of our potential products or
technologies.





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 our potential products, if any.  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.





5
 Table of Contents




If we are
successful in achieving desirable results for these applications, we intend to
design the protocols and begin further studies for this and other applications,
when capital is available. As we have only collected preliminary data and
additional studies are required, we cannot predict when, if ever, a viable
treatment for these indications can be commercialized. If we do not observe
significant results or we lack the capital to further the development, we may
abandon such research and development efforts; thereby limiting our future
potential revenues.





If we are
successful in completing our studies and the results are as we anticipate, we
intend to prepare and submit the necessary documentation to the FDA and other
regulatory agencies for approval. If approval for Homspera, Radilex and/or
Viprovex is granted, we expect to begin efforts to commercialize our product, if
any, immediately thereafter, however, since we are currently in the pre-clinical
stage of development, it will take an indeterminate amount of time in
development before we have a marketable drug, if ever.





Off-Balance
Sheet Arrangements





There
were no off-balance sheet arrangements as of March 31, 2009.





Liquidity
and Capital Resources





At March
31, 2009, we had current assets of $2,406,690 consisting of cash and cash
equivalents of $2,217,726, and prepaid assets and other current assets of
$188,964. Also, at March 31, 2009, we had current liabilities of $2,325,650
consisting of accounts payable and accrued liabilities of $750,650, notes
payable of $1,500,000 and redemption option liability of $75,000. This resulted
in working capital of $81,040. During the three months ended March 31, 2009, we
used cash in operating activities of $939,000. From the date of inception
(October 30, 2002) to March 31, 2009, we had a net loss of $23,438,203 and used
cash of $14,158,476 in operating activities. We met our cash requirements from
our inception (October 30, 2002) through March 31, 2009 via the private
placement of $7,889,151 of our common stock and $8,573,628 from the issuance of
notes payable, net of repayments.


We
currently have no revenue. There is no guarantee that our business model will be
successful, or that we will be able to generate sufficient revenue to fund
future operations. As a result, we expect our operations to continue to use net
cash, and that we will be required to seek additional debt or equity financings
during the coming quarters. Since inception, we have financed our operations
through debt and equity financing. While we have raised capital to meet our
working capital and financing needs in the past, additional financing is
required in order to meet our current and projected cash flow deficits from
operations and development of our product line.




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 2002 to March 31, 2009, we were
able to obtain financing of $17,557,526 from the private placements of our
securities (which resulted in net proceeds to us of $16,462,779). In January
2008 we sold $2 million in secured convertible debentures which resulted in net
proceeds to us of $1,815,000.  In June 2008 we sold an additional $1
million of the secured convertible debentures as per the terms of the securities
purchase agreement with YA Global Investments L.P. In August 2008 we sold $5
million in secured convertible debentures to a group of funds managed by
Brencourt Advisors LLP.  Based on our current plan of operations all
of our current funding is expected to be depleted by the end of December 2009.
If we are not successful in generating sufficient liquidity from operations or
in raising sufficient capital resources, it would have a material adverse effect
on our business, results of operations, liquidity and financial
condition.





Our
registered independent certified public accountants have stated in their report
included in our annual report on SEC Form 10-K filed with the Securities and
Exchange Commission on March 31, 2009 that the Company's recurring losses and
negative cash flow raise substantial doubt about the Company's ability to
continue as a going concern.


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





During
fiscal year 2009, we will pay our Chief Executive Officer, Chief Financial
Officer and Chief Scientific Officer an aggregate of $746,000 pursuant to their
employment agreements.





We
currently have $8,468,889 in notes payable, of which $1,500,000 is current and
payable on December 31, 2009.    An additional $1,500,000
matures on December 31, 2010 and the remaining balance of $5,468,889 will mature
in 2013 and beyond.





Until
such time, if at all, as we receive adequate funding, we intend to continue to
defer payment of all of our obligations which are capable of being deferred,
which actions have resulted in some vendors demanding cash payment for their
goods and services in advance, and other vendors refusing to continue to do
business with us. We do not expect to generate a positive cash flow from our
operations for at least several years, if at all, due to anticipated
expenditures for research and development activities, administrative and
marketing activities, and working capital requirements and expect to continue to
attempt to raise further capital through one or more further private placements.
Based on our operating expenses and anticipated research and development
activities we believe we have sufficient capital to meet our operating needs
through December 2009. Thereafter, we believe that we will require an additional
$3,500,000 to meet our expenses over the next 12 months.




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Acquisition or Disposition
of Plant and Equipment





We did
not dispose or acquire any significant property, plant or equipment during the
quarter ended March 31, 2009. We do not anticipate the sale of any significant
property, plant or equipment during the next twelve months.





Number of
Employees





In the
three months ending March 31, 2009 we made significant staff reductions,
eliminating two employees from the science department, one from the finance
department and two administrative personnel.





As of
March 31, 2009 we currently have five full-time total employees: Michael K.
Wilhelm, our Chief Executive Officer; John N. Fermanis, our Chief Financial
Officer; Hal N. Siegel, Ph.D., Vice-President and Chief Scientific Officer; one
scientific program manager; and, one administrative personnel. From our
inception through the period ended March 31, 2009, we have relied on the
services of outside consultants for services.





None of
our employees are covered by collective bargaining agreements, and we believe
our relations with our employees are favorable.





We do not
anticipate our employment base will significantly change during the next twelve
months.




Critical
Accounting Policies and Estimates





The
preparation of our consolidated financial statements in conformity with
accounting principles generally accepted in the United States requires us to
make estimates and judgments that affect our reported assets, liabilities,
revenues, and expenses, and the disclosure of contingent assets and
liabilities.





We
describe our significant accounting policies in the Notes to Consolidated
Financial Statements included in our Annual Report on SEC Form 10-K filed with
the Securities and Exchange Commission. We discuss our critical accounting
policies and estimates in Management’s Discussion and Analysis of Financial
Condition and or Plan of Operation in SEC Form 10-K.  Other than as
indicated in this quarterly report, there have been no material revisions to the
critical accounting policies as filed in our Annual Report on Form 10-K as
of and for the year ended December 31, 2008 with the SEC on March 31, 2009
and as amended on April 30, 2009.




Determining Whether an
Instrument (or an Embedded Feature) Is Indexed to an entity’s Own
Stock
  The
Company adopted Emerging Issues Task Force issued EITF No. 07-5, “Determining
Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock”
(“EITF 07-5”) on January 1, 2009. The effect of this guidance is described in
Note 6




7
  ITEM3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK





Not
applicable to smaller reporting companies.




ITEM4. CONTROLS AND PROCEDURES





Evaluation of Disclosure
Controls and Procedures




Disclosure
controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed by us in the reports that we
file or submit under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) is recorded, processed, summarized and reported, within the time
periods specified in the Securities and Exchange Commission's rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed by us in
the reports that we file under the Exchange Act is accumulated and communicated
to our management, including our principal executive and financial officers, as
appropriate to allow timely decisions regarding required
disclosure.





As of the
end of the period covered by this Quarterly Report on form 10-Q, our management,
under the supervision and with the participation of the Company's Chief
Executive Officer and Chief Financial (and principal accounting) Officer,
carried out an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures (as defined in Rule 13a-15(e) of the
Exchange Act).  Based upon that evaluation and due to the
material weakness existing in our internal controls as of December 31, 2008
(described below) which has not been fully remediated as of March 31, 2009, we
have concluded that as of March 31, 2009, our disclosure controls and procedures
were ineffective.




Changes in internal
controls.





A
material weakness is a deficiency, or combination of deficiencies, in internal
control over financial reporting such that there is a reasonable possibility
that a material misstatement of the Company’s annual or interim financial
statements will not be prevented or detected on a timely basis.  Material
weaknesses would permit information required to be disclosed by the Company in
the reports that it files or submits to not be recorded, processed, summarized
and reported, within the time periods specified in the Securities Exchange
Commission’s rules and forms.  In our Annual Report on Form 10-K for the
year ended December 31, 2008, we identified a material weakness consisting of
limited resources and a limited number of employees, namely, an understaffed
financial and accounting function, and the need for additional personnel to
prepare and analyze financial information in a timely manner and to allow review
and on-going monitoring and enhancement of our controls.





During
the three months ending March 31, 2009 we continued to evaluate our internal
control documentation.  Although we made progress towards remediation
of the deficiencies giving rise to the material weakness, we are unable to
conclude that the material weakness described above was remediated as of March
31, 2009.





There
were no changes in our internal controls over financial reporting during the
quarter ended March 31, 2009 that have materially affected, or are reasonably
likely to materially affect, our internal control over financial
reporting.





Limitations on Effectiveness
of Controls and Procedures





Our
management, including our Chief Executive Officer and Chief Financial Officer,
does not expect that our disclosure controls and procedures or our internal
controls will prevent all errors and all fraud. A control system, no matter how
well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met. Further, the design
of a control system must reflect the fact that there are resource constraints
and the benefits of controls must be considered relative to their costs. Because
of the inherent limitations in all control systems, no evaluation of controls
can provide absolute assurance that all control issues and instances of fraud,
if any, within the Company have been detected. These inherent limitations
include, but are not limited to, the realities that judgments in decision-making
can be faulty and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people, or by management override of the
control. The design of any system of controls also is based in part upon certain
assumptions about the likelihood of future events and there can be no assurance
that any design will succeed in achieving its stated goals under all potential
future conditions. Over time, controls may become inadequate because of changes
in conditions, or the degree of compliance with the policies or procedures may
deteriorate. Because of the inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and not be
detected.







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PART II - OTHER INFORMATION




ITEM1. LEGAL PROCEEDINGS





We are
not currently a party to any material legal proceedings.




ITEM
1A. RISK FACTORS





Not
required for smaller reporting companies.





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





Convertible Debentures Sold
For Accrued Interest





Note
Issued To YA Global Investments, L.P. For Accrued Interest





On March
31, 2009, per the terms of the amended Securities Purchase Agreement with YA
Global Investments L.P., the Company issued two 0% interest convertible
debentures with a five year term of exercise and a minimum conversion price of
$0.30 per share as payment of an aggregate of $75,000 in interest accrued during
the three months ended March 31, 2009.  The securities were issued in
reliance upon exemptions from registration pursuant to Section 4(2) under the
Securities Act of 1933, as amended, and Rule 506 promulgated
thereunder.





Note
Issued To Funds Managed by Brencourt Advisors, LLC For Accrued
Interest





On March
31, 2009, per the terms of the amended Securities Purchase Agreement with Funds
Managed by Brencourt Advisors, LLC the Company issued four 0% interest
convertible debentures with a five year term of exercise and a minimum
conversion price of $0.30 per share as payment of an aggregate of $125,000 in
interest accrued during the three months ended March 31, 2009.  The
securities were issued in reliance upon exemptions from registration pursuant to
Section 4(2) under the Securities Act of 1933, as amended, and Rule 506
promulgated thereunder.




Issuance of Restricted
Common Shares to CEO





In August
2008, per the term of his employment agreement, the Company agreed to issue
833,334 shares of common stock to Michael K. Wilhelm, the Company’s President
and Chief Executive Officer. These shares were issued in January 2009. The
securities were issued in reliance upon exemptions from registration pursuant to
Section 4(2) under the Securities Act of 1933, as amended, and Rule 506
promulgated thereunder.





ITEM
3. DEFAULTS UPON SENIOR SECURITIES





None.





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





None.





ITEM
5. OTHER INFORMATION





None.




ITEM
6. EXHIBITS




31.1
            Certification of Chief Executive Officer pursuant to
      Item 601(b)(31) of Regulation S-B, as adopted pursuant to Section 302 of
      the Sarbanes-Oxley Act of 2002.31.2
            Certification of Chief Financial Officer pursuant to
      Item 601(b)(31) of Regulation S-B, as adopted pursuant to Section 302 of
      the Sarbanes-Oxley Act of 2002.32.1
            Certifications of Chief Executive Officer pursuant to 18
      U.S.C. Section 1350 as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.*32.2
            Certifications of Chief Financial Officer pursuant to 18
      U.S.C. Section 1350 as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of
2002.*





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






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Signatures





Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized, on May 15, 2009.





IR
      BioSciences Holdings, Inc.By:
                /s/ Michael K.
      WilhelmMichael
      K. WilhelmPresident,
      Chief Executive Officer/s/ John N.
      FermanisJohn
      N. FermanisChief
      Financial Officer










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