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** **

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

 

**Form 10-Q**

 

**(Mark One)**

 

**x**** QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF 1934**

 

**For the quarterly period ended June 30, 2008**

 

 

**OR**

 

**o**** ****TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934**

 

**For the transition period from              to              **

 

**COMMISSION****FILENUMBER 333-142076**

 

**IRIS BIOTECHNOLOGIES INC.**

(Exact Name of smallbusiness issuer as specified in its charter)

 

| **California**                   | ** ** | **77-0506396**      |
|----------------------------------|------------|---------------------|
| (State or other  jurisdiction of |       | (I.R.S. Employer    |
| incorporation or  organization)  |       | Identification No.) |

 

**5201 GreatAmerica Parkway, Suite 320, Santa Clara, California 95054**

(Address of principalexecutive offices) (Zip Code)

 

Issuer’s telephone Number:**(408) 867-2885**

 

Check whether the issuer (1) filed all reportsrequired to be filed by Section 13 or 15(d) of the Exchange Actduring the past 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes x  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 definitions of “large accelerated filer,” “accelerated filer,” and “smallerreporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

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

 

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

 

As of August 11, 2008 the issuer had 10,896,986outstanding shares of Common Stock.

 

 

 

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TABLE OF CONTENTS

 
| ** ** |                                                                                       | **Page** |
|------------|--------------------------------------------------------------------------------------------|----------|
|       | PART I                                                                                |     |
| Item 1.    | Financial Statements                                                                       | 3        |
| Item 2.    | Management’s  Discussion and Analysis of Financial Condition and Results of Operation | 26       |
| Item 3.    | Quantitative  and Qualitative Disclosures About Market Risk                                | 29       |
| Item 4T    | Controls and  Procedures                                                                   | 30       |
|       |                                                                                       |     |
|       | PART II                                                                               |     |
| Item 1.    | Legal Proceedings                                                                          | 30       |
| Item 1A.   | Risk Factors                                                                               | 30       |
| Item 2.    | Unregistered  Sales of Equity Securities and Use of Proceeds                               | 30       |
| Item 3.    | Defaults  Upon Senior Securities                                                           | 30       |
| Item 4.    | Submission  of Matters to a Vote of Security Holders                                       | 30       |
| Item 5.    | Other Information                                                                          | 30       |
| Item 6.    | Exhibits                                                                                   | 31       |
|       |                                                                                       |     |
| SIGNATURES | 32                                                                                         |

 

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**PART I**

 

**ITEM 1. FINANCIAL STATEMENTS.**

 

**INDEX TO FINANCIAL STATEMENTS**

** **
| ** **                                                                                                                                                                                | **Page** |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|
| Unaudited Condensed Balance Sheets as of June 30,  2008 and December 31, 2007                                                                                                   | 4        |
|                                                                                                                                                                                      |     |
| Unaudited Condensed Statements of Losses  for the three and six months ended June 30, 2008 and 2007 and the period  February 16, 1999 (date of inception) to June 30, 2008 | 5        |
|                                                                                                                                                                                      |     |
| Unaudited  Condensed Statement of Stockholders’ Equity for the period February 16,  1999 (date of inception) to June 30, 2008                                              | 6        |
|                                                                                                                                                                                      |     |
| Unaudited Condensed Statements of Cash  Flows for the six months ended June 30, 2008 and 2007 and the period  February 16, 1999 (date of inception) to June 30, 2008       | 11       |
|                                                                                                                                                                                      |     |
| Notes to the  Unaudited Condensed Financial Statements                                                                                                                                    | 12       |

 

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**IRIS BIOTECHNOLOGIES, INC**

**(a development stage company)**

**CONDENSEDBALANCE SHEETS**

 
| ** **                                                                                                                                                                                                    | ** ** | **June 30,** | ** ** | **December 31,** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------|------------|-----------------------|------------|
| ** **                                                                                                                                                                                                    | ** ** | **2008**          | ** ** | **2007**              | ** ** |
| ** **                                                                                                                                                                                                    | ** ** | **(unaudited)**   | ** ** | ** **            | ** ** |
| ASSETS                                                                                                                                                                                                        |       |              |       |                  |       |
| Current assets:                                                                                                                                                                                               |       |              |       |                  |       |
| Cash                                                                                                                                                                                                          |       | $                 | 116,116    |                  | $          | 179,617 |   |
| Total current assets                                                                                                                                                                                          |       | 116,116           |       | 179,617               |       |
|                                                                                                                                                                                                          |       |              |       |                  |       |
| Property, plant and equipment, net of  accumulated depreciation of $157,712 and $151,186 as of June 30, 2008  and December 31, 2007, respectively (Note B)                                          |       | 53,616            |       | 55,442                |       |
|                                                                                                                                                                                                          |       |              |       |                  |       |
| Total assets                                                                                                                                                                                                  |       | $                 | 169,732    |                  | $          | 235,059 |   |
|                                                                                                                                                                                                          |       |              |       |                  |       |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                                                     |       |              |       |                  |       |
| Current liabilities:                                                                                                                                                                                          |       |              |       |                  |       |
| Accounts payable and accrued liabilities  (Note C)                                                                                                                                                            |       | $                 | 63,093     |                  | $          | 38,029 |   |
| Total current liabilities                                                                                                                                                                                     |       | 63,093            |       | 38,029                |       |
|                                                                                                                                                                                                          |       |              |       |                  |       |
| STOCKHOLDERS’ EQUITY                                                                                                                                                                                     |       |              |       |                  |       |
| Preferred stock, no par or stated value;  5,000,000 shares authorized; no shares issued and outstanding as of  June 30, 2008 and December 31, 2007 (Note E)                                         |       | —            |       | —                |       |
| Common stock, no par or stated value; 20,000,000  shares authorized; 10,853,431 and 10,655,377 shares issued and outstanding as  of June 30, 2008 and December 31, 2007, respectively (Note E) |       | 4,653,692         |       | 4,208,066             |       |
| Additional paid in capital                                                                                                                                                                                    |       | 1,230,202         |       | 1,222,347             |       |
| Deferred compensation                                                                                                                                                                                         |       | (140,321          | )          | (161,063              | )          |
| Deficit accumulated during development  stage                                                                                                                                                                 |       | (5,636,934        | )          | (5,072,320            | )          |
| Total stockholders’ equity                                                                                                                                                                               |       | 106,639           |       | 197,030               |       |
|                                                                                                                                                                                                          |       |              |       |                  |       |
| Total liabilities and stockholders’ equity                                                                                                                                                               |       | $                 | 169,732    |                  | $          | 235,059 |   |

 

The accompanying notes are an integral partof these unaudited condensed financial statements

 

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**IRIS BIOTECHNOLOGIES, INC**

**(a development stage company)**

**STATEMENTSOF LOSSES**

**(unaudited)**

 
| ** **                                                                    | ** ** | ** **                                          | ** ** | ** **                                        | ** ** | **For the period from**                                                         | ** ** |
|-------------------------------------------------------------------------------|------------|-----------------------------------------------------|------------|---------------------------------------------------|------------|------------------------------------------------------------------------------------------------|------------|
| ** **                                                                    | ** ** | **Three months ended June 30,** | ** ** | **Six months ended June 30,** | ** ** | **February 16, 1999 (date of  inception) through June 30,** | ** ** |
| ** **                                                                    | ** ** | **2008**                                            | ** ** | **2007**                                          | ** ** | **2008**                                                                                       | ** ** | **2007** | ** ** | **2008** | ** ** |
| Operating expenses:                                                           |       |                                                |       |                                              |       |                                                                                           |       |   |   |   |   |
| Selling, general and administrative                                           |       | $                                                   | 221,462    |                                              | $          | 96,897                                                                                         |       | $ | 454,809 |   | $ | 151,337 |   | $ | 2,373,583 |   |
| Research and development (Note A)                                             |       | 71,816                                              |       | 48,440                                            |       | 104,726                                                                                        |       | 94,542 |   | 1,270,610 |   |
| Impairment of intellectual property                                           |       | —                                              |       | —                                            |       | —                                                                                         |       | — |   | 1,838,250 |   |
| Depreciation                                                                  |       | 3,331                                               |       | 1,297                                             |       | 6,526                                                                                          |       | 2,787 |   | 157,712 |   |
| Total operating expenses                                                      |       | 296,609                                             |       | 146,634                                           |       | 566,061                                                                                        |       | 248,666 |   | 5,640,155 |   |
|                                                                          |       |                                                |       |                                              |       |                                                                                           |       |   |   |   |   |
| Net loss from operations                                                      |       | (296,609                                            | )          | (146,634                                          | )          | (566,061                                                                                       | )          | (248,666 | ) | (5,640,155 | ) |
|                                                                          |       |                                                |       |                                              |       |                                                                                           |       |   |   |   |   |
| Other income (expense)                                                        |       |                                                |       |                                              |       |                                                                                           |       |   |   |   |   |
| Interest income (expense)                                                     |       | 874                                                 |       | 3,546                                             |       | 2,247                                                                                          |       | 3,546 |   | 11,257 |   |
|                                                                          |       |                                                |       |                                              |       |                                                                                           |       |   |   |   |   |
| Net loss before provision for income taxes                                    |       | (295,735                                            | )          | (143,088                                          | )          | (563,814                                                                                       | )          | (245,120 | ) | (5,628,898 | ) |
|                                                                          |       |                                                |       |                                              |       |                                                                                           |       |   |   |   |   |
| Income taxes                                                                  |       | —                                              |       | —                                            |       | 800                                                                                            |       | 825 |   | 8,036 |   |
|                                                                          |       |                                                |       |                                              |       |                                                                                           |       |   |   |   |   |
| Net Loss                                                                      |       | $                                                   | (295,735   | )                                                 | $          | (143,088                                                                                       | )          | $ | (564,614 | ) | $ | (245,945 | ) | $ | (5,636,934 | ) |
|                                                                          |       |                                                |       |                                              |       |                                                                                           |       |   |   |   |   |
| Loss per common share-basic and fully  diluted                                |       | $                                                   | (0.03      | )                                                 | $          | (0.01                                                                                          | )          | $ | (0.05 | ) | $ | (0.02 | ) | $ | (0.60 | ) |
|                                                                          |       |                                                |       |                                              |       |                                                                                           |       |   |   |   |   |
| Weighted average number of common shares  outstanding-basic and fully diluted |       | 10,812,435                                          |       | 10,631,644                                        |       | 10,751,761                                                                                     |       | 10,530,821 |   | 9,364,755 |   |

 

The accompanying notes are an integral partof these unaudited condensed financial statements

 

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**IRIS BIOTECHNOLOGIES, INC**

**(a development stage company)**

**STATEMENT OF(DEFICIENCY IN) STOCKHOLDERS’ EQUITY**

**FROM FEBRUARY 16, 1999 (DATE OF INCEPTION) THROUGH JUNE30, 2008**

**(Unaudited)**

 
| ** **                                                                                          | ** ** | ** **                | ** ** | ** **             | ** ** | ** **     | ** ** | ** **   | ** ** | ** **                    | ** ** | ** **       | ** ** | **Deficit accumulated** | ** ** | ** ** | ** ** |
|-----------------------------------------------------------------------------------------------------|------------|---------------------------|------------|------------------------|------------|----------------|------------|--------------|------------|-------------------------------|------------|------------------|------------|------------------------------|------------|------------|------------|
| ** **                                                                                          | ** ** | **Preferred shares** | ** ** | **Common shares** | ** ** | **Additional** | ** ** | **Deferred** | ** ** | **during**                    | ** ** | ** **       | ** ** |
| ** **                                                                                          | ** ** | **Stock**                 | ** ** | **Amount**             | ** ** | **Stock**      | ** ** | **Amount**   | ** ** | **Paid in Capital** | ** ** | **Compensation** | ** ** | **Development stage**   | ** ** | **Total**  | ** ** |
| Common stock issued in February 1999 in  exchange for intellectual property at $0.25 per share |       | —                    |       | $                      | —     |           | 7,200,000  |         | $          | 1,800,000                     |       | $                | —     |                         | $          | —     |       | $ | — |   | $ | 1,800,000 |   |
| Common stock issued in March 1999 in  exchange for services rendered at $0.25 per share        |       | —                    |       | —                 |       | 120,000        |       | 30,000       |       | —                        |       | —           |       | —                       |       | 30,000     |       |
| Sale of common stock in March 1999 at  $0.25 per share                                         |       | —                    |       | —                 |       | 220,000        |       | 55,000       |       | —                        |       | —           |       | —                       |       | 55,000     |       |
| Fair value of options issued in  March 1999 in exchange for services rendered                  |       | —                    |       | —                 |       | —         |       | —       |       | 9,240                         |       | —           |       | —                       |       | 9,240      |       |
| Common stock issued in April 1999 in  exchange for services rendered at $0.25 per share        |       | —                    |       | —                 |       | 33,000         |       | 8,250        |       | —                        |       | —           |       | —                       |       | 8,250      |       |
| Sale of common stock in April 1999 at  $0.25 per share                                         |       | —                    |       | —                 |       | 107,000        |       | 26,750       |       | —                        |       | —           |       | —                       |       | 26,750     |       |
| Exercise of options in April  1999 at  $0.25 per share                                         |       | —                    |       | —                 |       | 50,000         |       | 12,500       |       | —                        |       | —           |       | —                       |       | 12,500     |       |
| Sale of common stock in August 1999 at  $0.25 per share                                        |       | —                    |       | —                 |       | 50,000         |       | 25,000       |       | —                        |       | —           |       | —                       |       | 25,000     |       |
| Fair value of options issued in  September 1999 in exchange for services rendered              |       | —                    |       | —                 |       | —         |       | —       |       | 16,612                        |       | —           |       | —                       |       | 16,612     |       |
| Sale of common stock in November 1999  at $0.25 per share                                      |       | —                    |       | —                 |       | 50,000         |       | 12,500       |       | —                        |       | —           |       | —                       |       | 12,500     |       |
| Exercise of options in November 1999  at $0.50 per share                                       |       | —                    |       | —                 |       | 50,000         |       | 25,000       |       | —                        |       | —           |       | —                       |       | 25,000     |       |
| Net loss                                                                                            |       | —                    |       | —                 |       | —         |       | —       |       | —                        |       | —           |       | (2,087,103                   | )          | (2,087,103 | )          |
| Balance at December 31, 1999                                                                   |       | —                    |       | $                      | —     |           | 7,880,000  |         | $          | 1,995,000                     |       | $                | 25,852     |                         | $          | —     |       | $ | (2,087,103 | ) | $ | (66,251 | ) |

 

The accompanying notes are an integral part of these unauditedcondensed financial statements

 

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| ** **                                                                                     | ** ** | ** **                | ** ** | ** **             | ** ** | ** **     | ** ** | ** **   | ** ** | ** **                    | ** ** | ** **       | ** ** | **Deficit accumulated** | ** ** | ** ** | ** ** |
|------------------------------------------------------------------------------------------------|------------|---------------------------|------------|------------------------|------------|----------------|------------|--------------|------------|-------------------------------|------------|------------------|------------|------------------------------|------------|------------|------------|
| ** **                                                                                     | ** ** | **Preferred shares** | ** ** | **Common shares** | ** ** | **Additional** | ** ** | **Deferred** | ** ** | **during**                    | ** ** | ** **       | ** ** |
| ** **                                                                                     | ** ** | **Stock**                 | ** ** | **Amount**             | ** ** | **Stock**      | ** ** | **Amount**   | ** ** | **Paid in Capital** | ** ** | **Compensation** | ** ** | **Development stage**   | ** ** | **Total**  | ** ** |
| Balance forward                                                                                |       | —                    |       | $                      | —     |           | 7,880,000  |         | $          | 1,995,000                     |       | $                | 25,852     |                         | $          | —     |       | $ | (2,087,103 | ) | $ | (66,251 | ) |
| Sale of common stock in June 2000 at  $0.50 per share                                     |       | —                    |       | —                 |       | 100,000        |       | 50,000       |       | —                        |       | —           |       | —                       |       | 50,000     |       |
| Sale of common stock in July 2000 at  $0.50 per share                                     |       | —                    |       | —                 |       | 250,000        |       | 125,000      |       | —                        |       | —           |       | —                       |       | 125,000    |       |
| Sale of common stock in August 2000 at  $0.50 per share                                   |       | —                    |       | —                 |       | 164,000        |       | 82,000       |       | —                        |       | —           |       | —                       |       | 82,000     |       |
| Common stock issued in August 2000 at  $0.50 per share in exchange for services rendered  |       | —                    |       | —                 |       | 20,000         |       | 10,000       |       | —                        |       | —           |       | —                       |       | 10,000     |       |
| Sale of common stock in September 2000  at $0.50 per share                                |       | —                    |       | —                 |       | 250,000        |       | 125,000      |       | —                        |       | —           |       | —                       |       | 125,000    |       |
| Sale of common stock in November 2000  at $0.50 per share                                 |       | —                    |       | —                 |       | 100,000        |       | 50,000       |       | —                        |       | —           |       | —                       |       | 50,000     |       |
| Net loss                                                                                       |       | —                    |       | —                 |       | —         |       | —       |       | —                        |       | —           |       | (378,039                     | )          | (378,039   | )          |
| Balance at December 31, 2000                                                              |       | —                    |       | —                 |       | 8,764,000      |       | 2,437,000    |       | 25,852                        |       | —           |       | (2,465,142                   | )          | (2,290     | )          |
| Fair value of options issued in  January 2000 in exchange for services rendered           |       | —                    |       | —                 |       | —         |       | —       |       | 57,852                        |       | —           |       | —                       |       | 57,852     |       |
| Sale of common stock in January 2001  at $0.50 per share                                  |       | —                    |       | —                 |       | 244,000        |       | 122,000      |       | —                        |       | —           |       |                         |       | 122,000    |       |
| Net loss                                                                                       |       | —                    |       | —                 |       | —         |       | —       |       | —                        |       | —           |       | (266,224                     | )          | (266,224   | )          |
| Balance at December 31, 2001                                                              |       | —                    |       | —                 |       | 9,008,000      |       | 2,559,000    |       | 83,704                        |       | —           |       | (2,731,366                   | )          | (88,662    | )          |
| Common stock issued in January 2002 at  $0.50 per share in exchange for services rendered |       | —                    |       | —                 |       | 20,000         |       | 10,000       |       | —                        |       | —           |       | —                       |       | 10,000     |       |
| Sale of common stock in March 2002 at  $0.50 per share                                    |       | —                    |       | —                 |       | 50,000         |       | 25,000       |       | —                        |       | —           |       | —                       |       | 25,000     |       |
| Sale of common stock in April 2002 at  $0.50 per share                                    |       | —                    |       | —                 |       | 200,000        |       | 100,000      |       | —                        |       | —           |       | —                       |       | 100,000    |       |
| Fair value of options issued in  May 2002 in exchange for services rendered               |       | —                    |       | —                 |       | —         |       | —       |       | 17,892                        |       | —           |       | —                       |       | 17,892     |       |
| Sale of common stock in May 2002 at  $0.50 per share                                      |       | —                    |       | —                 |       | 60,000         |       | 30,000       |       | —                        |       | —           |       | —                       |       | 30,000     |       |
| Sale of common stock in July 2002 at  $0.50 per share                                     |       | —                    |       | —                 |       | 80,000         |       | 40,000       |       | —                        |       | —           |       | —                       |       | 40,000     |       |
| Sale of common stock in August 2002 at  $0.50 per share                                   |       | —                    |       | —                 |       | 55,400         |       | 27,700       |       | —                        |       | —           |       | —                       |       | 27,700     |       |
| Sale of common stock in September 2002  at $0.50 per share                                |       | —                    |       | —                 |       | 50,000         |       | 25,000       |       | —                        |       | —           |       | —                       |       | 25,000     |       |
| Sale of common stock in October 2002  at $0.50 per share                                  |       | —                    |       | —                 |       | 50,000         |       | 25,000       |       | —                        |       | —           |       | —                       |       | 25,000     |       |
| Sale of common stock in November 2002  at $0.50 per share                                 |       | —                    |       | —                 |       | 144,000        |       | 72,000       |       | —                        |       | —           |       | —                       |       | 72,000     |       |
| Net loss                                                                                       |       | —                    |       | —                 |       | —         |       | —       |       | —                        |       | —           |       | (184,721                     | )          | (184,721   | )          |
| Balance at December 31, 2002                                                              |       | —                    |       | $                      | —     |           | 9,717,400  |         | $          | 2,913,700                     |       | $                | 101,596    |                         | $          | —     |       | $ | (2,916,087 | ) | $ | 99,209 |   |

 

The accompanying notes are an integral part of these unauditedcondensed financial statements

 

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| ** **                                                                                   | ** ** | ** **                | ** ** | ** **             | ** ** | ** **     | ** ** | ** **   | ** ** | ** **                    | ** ** | ** **       | ** ** | **Deficit accumulated** | ** ** | ** ** | ** ** |
|----------------------------------------------------------------------------------------------|------------|---------------------------|------------|------------------------|------------|----------------|------------|--------------|------------|-------------------------------|------------|------------------|------------|------------------------------|------------|------------|------------|
| ** **                                                                                   | ** ** | **Preferred shares** | ** ** | **Common shares** | ** ** | **Additional** | ** ** | **Deferred** | ** ** | **during**                    | ** ** | ** **       | ** ** |
| ** **                                                                                   | ** ** | **Stock**                 | ** ** | **Amount**             | ** ** | **Stock**      | ** ** | **Amount**   | ** ** | **Paid in Capital** | ** ** | **Compensation** | ** ** | **Development stage**   | ** ** | **Total**  | ** ** |
| Balance forward                                                                              |       | —                    |       | $                      | —     |           | 9,717,400  |         | $          | 2,913,700                     |       | $                | 101,596    |                         | $          | —     |       | $ | (2,916,087 | ) | $ | 99,209 |   |
| Sale of common stock in January 2003  at $0.50 per share                                |       | —                    |       | —                 |       | 35,378         |       | 17,689       |       | —                        |       | —           |       | —                       |       | 17,689     |       |
| Common stock issued in February 2003 at  $0.50 in exchange for services rendered        |       | —                    |       | —                 |       | 20,000         |       | 10,000       |       | —                        |       | —           |       | —                       |       | 10,000     |       |
| Sale of common stock in March 2003 at  $0.50 per share                                  |       | —                    |       | —                 |       | 100,000        |       | 50,000       |       | —                        |       | —           |       | —                       |       | 50,000     |       |
| Common stock issued in March 2003 at  $0.50 per share in exchange for services rendered |       | —                    |       | —                 |       | 6,000          |       | 3,000        |       | —                        |       | —           |       | —                       |       | 3,000      |       |
| Sale of common stock in July 2003 at  $1.00 per share                                   |       | —                    |       | —                 |       | 63,080         |       | 63,080       |       | —                        |       | —           |       | —                       |       | 63,080     |       |
| Sale of common stock in September 2003  at $1.00 per share                              |       | —                    |       | —                 |       | 25,000         |       | 25,000       |       | —                        |       | —           |       | —                       |       | 25,000     |       |
| Sale of common stock in December 2003  at $1.00 per share                               |       | —                    |       | —                 |       | 32,597         |       | 32,597       |       | —                        |       | —           |       | —                       |       | 32,597     |       |
| Net loss                                                                                     |       | —                    |       | —                 |       | —         |       | —       |       | —                        |       | —           |       | (216,804                     | )          | (216,804   | )          |
| Balance at December 31, 2003                                                            |       | —                    |       | —                 |       | 9,999,455      |       | 3,115,066    |       | 101,596                       |       | —           |       | (3,132,891                   | )          | 83,771     |       |
| Sale of common stock in August 2004 at  $1.00 per share                                 |       | —                    |       | —                 |       | 2,000          |       | 2,000        |       | —                        |       | —           |       | —                       |       | 2,000      |       |
| Sale of common stock in September 2004  at $1.00 per share                              |       | —                    |       | —                 |       | 20,000         |       | 20,000       |       | —                        |       | —           |       | —                       |       | 20,000     |       |
| Sale of common stock in November 2004  at $1.00 per share                               |       | —                    |       | —                 |       | 30,000         |       | 30,000       |       | —                        |       | —           |       | —                       |       | 30,000     |       |
| Sale of common stock in December 2004  at $1.00 per share                               |       | —                    |       | —                 |       | 73,500         |       | 73,500       |       | —                        |       | —           |       | —                       |       | 73,500     |       |
| Net loss                                                                                     |       | —                    |       | —                 |       | —         |       | —       |       | —                        |       | —           |       | (205,640                     | )          | (205,640   | )          |
| Balance at December 31, 2004                                                            |       | —                    |       | —                 |       | 10,124,955     |       | 3,240,566    |       | 101,596                       |       | —           |       | (3,338,531                   | )          | 3,631      |       |
| Sale of common stock in December 2005  at $1.00 per share                               |       | —                    |       | —                 |       | 28,900         |       | 28,900       |       | —                        |       | —           |       | —                       |       | 28,900     |       |
| Net loss                                                                                     |       | —                    |       | —                 |       | —         |       | —       |       | —                        |       | —           |       | (197,277                     | )          | (197,277   | )          |
| Balance at December 31, 2005                                                            |       | —                    |       | $                      | —     |           | 10,153,855 |         | $          | 3,269,466.0                   |       | $                | 101,596.0  |                         | $          | —     |       | $ | (3,535,808.0 | ) | $ | (164,746.0 | ) |

 

The accompanying notes are an integral part of these unauditedcondensed  financial statements

 

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| ** **                                                                                   | ** ** | ** **                | ** ** | ** **             | ** ** | ** **     | ** ** | ** **   | ** ** | ** **                    | ** ** | ** **       | ** ** | **Deficit accumulated** | ** ** | ** ** | ** ** |
|----------------------------------------------------------------------------------------------|------------|---------------------------|------------|------------------------|------------|----------------|------------|--------------|------------|-------------------------------|------------|------------------|------------|------------------------------|------------|------------|------------|
| ** **                                                                                   | ** ** | **Preferred shares** | ** ** | **Common shares** | ** ** | **Additional** | ** ** | **Deferred** | ** ** | **during**                    | ** ** | ** **       | ** ** |
| ** **                                                                                   | ** ** | **Stock**                 | ** ** | **Amount**             | ** ** | **Stock**      | ** ** | **Amount**   | ** ** | **Paid in Capital** | ** ** | **Compensation** | ** ** | **Development stage**   | ** ** | **Total**  | ** ** |
| Balance forward                                                                              |       | —                    |       | $                      | —     |           | 10,153,855 |         | $          | 3,269,466                     |       | $                | 101,596    |                         | $          | —     |       | $ | (3,535,808 | ) | $ | (164,746 | ) |
| Sale of common stock in January 2006  at $1.00 per share                                |       | —                    |       | —                 |       | 50,000         |       | 50,000       |       | —                        |       | —           |       | —                       |       | 50,000     |       |
| Common stock issued in March 2006 at  $1.00 per share in exchange for services rendered |       | —                    |       | —                 |       | 20,000         |       | 20,000       |       | —                        |       | —           |       | —                       |       | 20,000     |       |
| Fair value of options issued in  March 2006 in exchange for services rendered           |       | —                    |       | —                 |       | —         |       | —       |       | 896,532                       |       | —           |       | —                       |       | 896,532    |       |
| Sale of common stock in May 2006 at  $2.00 per share                                    |       | —                    |       | —                 |       | 50,000         |       | 100,000      |       | —                        |       | —           |       | —                       |       | 100,000    |       |
| Fair value of warrants issued in  May 2006 in exchange for services rendered            |       | —                    |       | —                 |       | —         |       | —       |       | 32,016                        |       | —           |       | —                       |       | 32,016     |       |
| Sale of common stock in September 2006  at $2.00 per share                              |       | —                    |       | —                 |       | 10,000         |       | 20,000       |       | —                        |       | —           |       | —                       |       | 20,000     |       |
| Sale of common stock in October 2006  at $2.00 per share                                |       | —                    |       | —                 |       | 24,000         |       | 48,000       |       | —                        |       | —           |       | —                       |       | 48,000     |       |
| Sale of common stock in December 2006  at $2.00 per share                               |       | —                    |       | —                 |       | 14,800         |       | 29,600       |       | —                        |       | —           |       | —                       |       | 29,600     |       |
| Net loss                                                                                     |       | —                    |       | —                 |       | —         |       | —       |       | —                        |       | —           |       | (1,139,559                   | )          | (1,139,559 | )          |
| Balance at December 31, 2006                                                            |       | —                    |       | —                 |       | 10,322,655     |       | 3,537,066    |       | 1,030,144                     |       | —           |       | (4,675,367                   | )          | (108,157   | )          |
| Fair value of warrants issued in  January 2007 in exchange for services rendered        |       | —                    |       | —                 |       | —         |       | —       |       | 25,913                        |       | —           |       | —                       |       | 25,913     |       |
| Sale of common stock in January 2007  at $2.00 per share                                |       | —                    |       | —                 |       | 13,000         |       | 26,000       |       | —                        |       | —           |       | —                       |       | 26,000     |       |
| Sale of common stock in February 2007  at $2.00 per share                               |       | —                    |       | —                 |       | 162,500        |       | 325,000      |       | —                        |       | —           |       | —                       |       | 325,000    |       |
| Sale of common stock in March 2007 at  $2.00 per share                                  |       | —                    |       | —                 |       | 122,500        |       | 245,000      |       | —                        |       | —           |       | —                       |       | 245,000    |       |
| Sale of common stock in April 2007 at  $2.00 per share                                  |       | —                    |       | —                 |       | 12,500         |       | 25,000       |       | —                        |       | —           |       | —                       |       | 25,000     |       |
| Fair of options issued in  November 2007 in exchange for service fees                   |       | —                    |       | —                 |       | —         |       | —       |       | 166,290                       |       | (166,290         | )          | —                       |       | —     |       |
| Sale of common stock in December 2007  at $2.25 per share                               |       | —                    |       | —                 |       | 22,222         |       | 50,000       |       | —                        |       | —           |       | —                       |       | 50,000     |       |
| Amortization of deferred compensation                                                        |       | —                    |       | —                 |       | —         |       | —       |       | —                        |       | 5,227            |       | —                       |       | 5,227      |       |
| Net loss                                                                                     |       | —                    |       | —                 |       | —         |       | —       |       | —                        |       | —           |       | (396,953                     | )          | (396,953   | )          |
| Balance at December 31, 2007                                                            |       | —                    |       | $                      | —     |           | 10,655,377 |         | $          | 4,208,066                     |       | $                | 1,222,347  |                         | $          | (161,063   | )          | $ | (5,072,320 | ) | $ | 197,030 |   |

 

The accompanying notes are an integral part of these unauditedcondensed  financial statements

 

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| ** **                                                                                      | ** ** | ** **                | ** ** | ** **             | ** ** | ** **     | ** ** | ** **   | ** ** | ** **                    | ** ** | ** **       | ** ** | **Deficit accumulated** | ** ** | ** ** | ** ** |
|-------------------------------------------------------------------------------------------------|------------|---------------------------|------------|------------------------|------------|----------------|------------|--------------|------------|-------------------------------|------------|------------------|------------|------------------------------|------------|------------|------------|
| ** **                                                                                      | ** ** | **Preferred shares** | ** ** | **Common shares** | ** ** | **Additional** | ** ** | **Deferred** | ** ** | **during**                    | ** ** | ** **       | ** ** |
| ** **                                                                                      | ** ** | **Stock**                 | ** ** | **Amount**             | ** ** | **Stock**      | ** ** | **Amount**   | ** ** | **Paid in Capital** | ** ** | **Compensation** | ** ** | **Development stage**   | ** ** | **Total**  | ** ** |
| Balance forward                                                                                 |       | —                    |       | $                      | —     |           | 10,655,377 |         | $          | 4,208,066                     |       | $                | 1,222,347  |                         | $          | (161,063   | )          | $ | (5,072,320 | ) | $ | 197,030 |   |
| Sale of common stock in January 2008  at $2.25 per share                                   |       | —                    |       | —                 |       | 22,222         |       | 50,000       |       | —                        |       | —           |       | —                       |       | 50,000     |       |
| Common stock issued in January 2008 at  $2.25 per share in exchange for services rendered  |       | —                    |       | —                 |       | 4,000          |       | 9,000        |       | —                        |       | —           |       | —                       |       | 9,000      |       |
| Sale of common stock in February 2008  at $2.25 per share                                  |       | —                    |       | —                 |       | 11,111         |       | 25,000       |       | —                        |       | —           |       | —                       |       | 25,000     |       |
| Common stock issued in February 2008  at $2.25 per share in exchange for services rendered |       | —                    |       | —                 |       | 4,000          |       | 9,000        |       | —                        |       | —           |       | —                       |       | 9,000      |       |
| Sale of common stock in March 2008 at  $2.25 per share                                     |       | —                    |       | —                 |       | 68,055         |       | 153,125      |       |                          |       |             |       |                         |       |       |       |
| Common stock issued in March 2008 at  $2.25 per share in exchange for services rendered    |       | —                    |       | —                 |       | 6,222          |       | 14,000       |       | —                        |       | —           |       | —                       |       | 14,000     |       |
| Sale of common stock in April 2008 at  $2.25 per share                                     |       | —                    |       | —                 |       | 30,000         |       | 67,501       |       | —                        |       | —           |       | —                       |       | 67,501     |       |
| Common stock issued in April 2008 at  $2.25 per share in exchange for services rendered    |       | —                    |       | —                 |       | 4,000          |       | 9,000        |       | —                        |       | —           |       | —                       |       | 9,000      |       |
| Sale of common stock in May 2008 at  $2.25 per share                                       |       | —                    |       | —                 |       | 22,222         |       | 50,000       |       | —                        |       | —           |       | —                       |       | 50,000     |       |
| Common stock issued in May 2008 at  $2.25 per share in exchange for services rendered      |       | —                    |       | —                 |       | 4,000          |       | 9,000        |       | —                        |       | —           |       | —                       |       | 9,000      |       |
| Fair value of vested options issued in  exchange for services rendered                          |       | —                    |       | —                 |       | —         |       | —       |       | 7,855                         |       | —           |       | —                       |       | 7,855      |       |
| Sale of common stock in June 2008 at  $2.25 per share                                      |       | —                    |       | —                 |       | 22,222         |       | 50,000       |       | —                        |       | —           |       | —                       |       | 50,000     |       |
| Amortization of deferred compensation                                                           |       | —                    |       | —                 |       | —         |       | —       |       | —                        |       | 20,742           |       | —                       |       | 20,742     |       |
| Net Loss                                                                                        |       | —                    |       | —                 |       | —         |       | —       |       | —                        |       | —           |       | (564,614                     | )          | (564,614   | )          |
|                                                                                            |       | —                    |       | $                      | —     |           | 10,853,431 |         | $          | 4,653,692                     |       | $                | 1,230,202  |                         | $          | (140,321   | )          | $ | (5,636,934 | ) | $ | 106,639 |   |

 

The accompanying notes are an integral part of these unaudited condensedfinancial statements

 

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**IRIS BIOTECHNOLOGIES, INC**

**(a development stage company)**

**STATEMENTSOF CASH FLOWS**

**(Unaudited)**

 
| ** **                                                                 | ** ** | ** **                                                          | ** ** | ** **                                                                                     | ** ** | **For the period from** | ** ** |
|----------------------------------------------------------------------------|------------|---------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------|------------|----------------------------------------|------------|
| ** **                                                                 | ** ** | **For the six months ended June 30,** | ** ** | **February 16, 1999 (date of  inception) through June 30,** | ** ** |
| ** **                                                                 | ** ** | **2008**                                                            | ** ** | **2007**                                                                                       | ** ** | **2008**                               | ** ** |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                      |       |                                                                |       |                                                                                           |       |                                   |       |
| Net loss                                                                   |       | $                                                                   | (564,614   | )                                                                                              | $          | (245,945                               | )          | $ | (5,636,934 | ) |
| Adjustments to reconcile net loss to cash  (used in) operating activities: |       |                                                                |       |                                                                                           |       |                                   |       |
| Depreciation                                                               |       | 6,526                                                               |       | 2,787                                                                                          |       | 157,712                                |       |
| Amortization of deferred compensation                                      |       | 20,742                                                              |       | —                                                                                         |       | 25,969                                 |       |
| Common stock issued in exchange for  services rendered                     |       | 50,000                                                              |       | —                                                                                         |       | 141,250                                |       |
| Common stock issued in exchange for  intellectual property                 |       | —                                                              |       | —                                                                                         |       | 1,800,000                              |       |
| Options and warrants issued in exchange for  services rendered             |       | 7,855                                                               |       | 25,913                                                                                         |       | 1,063,912                              |       |
| (Increase) decrease in:                                                    |       |                                                                |       |                                                                                           |       |                                   |       |
| Prepaid expenses                                                           |       | —                                                              |       | 13,393                                                                                         |       | —                                 |       |
| Increase (decrease) in:                                                    |       |                                                                |       |                                                                                           |       |                                   |       |
| Accounts payable and accrued liabilities                                   |       | 36,303                                                              |       | (15,998                                                                                        | )          | 63,092                                 |       |
| Net cash (used in) operating activities:                                   |       | (443,188                                                            | )          | (219,850                                                                                       | )          | (2,384,999                             | )          |
|                                                                       |       |                                                                |       |                                                                                           |       |                                   |       |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                      |       |                                                                |       |                                                                                           |       |                                   |       |
| Acquisition of property, plant and  equipment                              |       | (15,939                                                             | )          | (9,160                                                                                         | )          | (211,328                               | )          |
| Net cash (used in) investing activities:                                   |       | (15,939                                                             | )          | (9,160                                                                                         | )          | (211,328                               | )          |
|                                                                       |       |                                                                |       |                                                                                           |       |                                   |       |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                      |       |                                                                |       |                                                                                           |       |                                   |       |
| Sale of common stock                                                       |       | 395,626                                                             |       | 621,000                                                                                        |       | 2,674,943                              |       |
| Exercise of common stock options                                           |       | —                                                              |       | —                                                                                         |       | 37,500                                 |       |
| Net (payments) proceeds, related party                                     |       | —                                                              |       | (92,000                                                                                        | )          | —                                 |       |
| Net cash provided by financing activities                                  |       | 395,626                                                             |       | 529,000                                                                                        |       | 2,712,443                              |       |
|                                                                       |       |                                                                |       |                                                                                           |       |                                   |       |
| (Decrease) increase in cash and cash  equivalents                          |       | (63,501                                                             | )          | 299,990                                                                                        |       | 116,116                                |       |
| Cash and cash equivalents beginning of  period                             |       | 179,617                                                             |       | 13,667                                                                                         |       | —                                 |       |
| Cash and cash equivalents end of period                                    |       | $                                                                   | 116,116    |                                                                                           | $          | 313,657                                |       | $ | 116,116 |   |
|                                                                       |       |                                                                |       |                                                                                           |       |                                   |       |
| Supplemental disclosures of cash flow  information:                        |       |                                                                |       |                                                                                           |       |                                   |       |
| Cash paid during the period for interest                                   |       | $                                                                   | —     |                                                                                           | $          | —                                 |       | $ | — |   |
| Cash paid during the period for taxes                                      |       | $                                                                   | 800        |                                                                                           | $          | 837                                    |       | $ | 1,102 |   |
| Common stock issued in exchange for  services                              |       | $                                                                   | 50,000     |                                                                                           | $          | —                                 |       | $ | 141,250 |   |
| Common stock issued in exchange for  intellectual property                 |       | $                                                                   | —     |                                                                                           | $          | —                                 |       | $ | 1,800,000 |   |
| Options and warrants issued in exchange for  services rendered             |       | $                                                                   | 7,855      |                                                                                           | $          | 25,913                                 |       | $ | 1,063,912 |   |

 

The accompanying notes are an integral partof these unaudited condensed financial statements

 

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**IRISBIOTECHNOLOGIES INC.**

**(Adevelopment stage company)**

**NOTES TOTHE CONDENSED FINANCIAL STATEMENTS**

**JUNE 30,2008**

**(Unaudited)**

 

**NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

 

Asummary of the significant accounting policies applied in the preparation ofthe accompanying unaudited condensed financial statements follows.

 

General

 

Theaccompanying unaudited condensed financial statements have been prepared in accordancewith accounting principles generally accepted in the United States of Americafor interim financial information and with the instructions to Form 10-Q.Accordingly, they do not include all of the information and footnotes requiredby generally accepted accounting principles for complete financial statements.

 

Inthe opinion of management, all adjustments (consisting of normal recurringaccruals) considered necessary for a fair presentation have been included.Accordingly, the results from operations for the three and six month periodsended June 30, 2008, are not necessarily indicative of the results thatmay be expected for the year ended December 31, 2008. The unauditedcondensed financial statements should be read in conjunction with the December 31,2007 financial statements and footnotes thereto included in the Company’s Form 10-KSBfiled on March 31, 2008.

 

Businessand Basis of Presentation

 

IrisBioTechnologies Inc. (the “Company”) was incorporated on February 16, 1999under the laws of the State of California. The Company is in the developmentstage as defined under Statement on Financial Accounting Standards No.7,Development Stage Enterprises (“SFAS No.7”) and its efforts are principallydevoted to developing solutions for the detection and monitoring of monogenicand complex genomic diseases. The Company has not generated any revenue to dateand consequently its operations are subject to all risks inherent in theestablishment of a new business enterprise. For the period from inception throughJune 30, 2008, the Company has accumulated losses of $5,636,934.

 

Cashand Cash Equivalents

 

Forpurposes of the Statements of Cash Flows, the Company considers all highlyliquid debt instruments purchased with a maturity date of three months or lessto be cash equivalents.

 

Propertyand Equipment

 

Propertyand equipment are stated at cost. When retired or otherwise disposed, therelated carrying value and accumulated depreciation are removed from therespective accounts and the net difference less any amount realized fromdisposition, is reflected in earnings. For financial statement purposes,property and equipment are recorded at cost and depreciated using thestraight-line method over their estimated useful lives of 3 to 5 years.

 

Long-LivedAssets

 

TheCompany has adopted Statement of Financial Accounting Standards No. 144 (“SFAS144”). The Statement requires that long-lived assets and certain identifiableintangibles held and used by the Company be reviewed for impairment wheneverevents or changes in circumstances indicate that the carrying amount of anasset may not be recoverable. Events relating to recoverability may includesignificant unfavorable changes in business conditions, recurring losses, or aforecasted inability to achieve break-even operating results over an extendedperiod. The Company evaluates the recoverability of long-lived assets basedupon forecasted undiscounted cash flows. Should impairment in value beindicated, the carrying value of intangible assets will be adjusted, based onestimates of future discounted cash flows resulting from the use and ultimatedisposition of the asset. SFAS No. 144 also requires assets to be disposedof be reported at the lower of the carrying amount or the fair value less coststo sell.

 

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**IRISBIOTECHNOLOGIES INC.**

**(Adevelopment stage company)**

**NOTES TOTHE CONDENSED FINANCIAL STATEMENTS**

**JUNE 30,2008**

**(Unaudited)**

 

**NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued)**

 

IncomeTaxes

 

TheCompany follows Statement of Financial Accounting Standard No.109, Accountingfor Income Taxes (SFAS No.109) for recording the provision for income taxes.Deferred tax assets and liabilities are computed based upon the differencebetween the financial statement and income tax basis of assets and liabilitiesusing the enacted marginal tax rate applicable when the related asset orliability is expected to be realized or settled. Deferred income tax expensesor benefits are based on the changes in the asset or liability during eachperiod. If available evidence suggests that it is more likely than not thatsome portion or all of the deferred tax assets will not be realized, avaluation allowance is required to reduce the deferred tax assets to the amountthat is more likely than not to be realized. Future changes in such valuationallowance are included in the provision for deferred income taxes in the periodof change. Deferred income taxes may arise from temporary differences resultingfrom income and expense items reported for financial accounting and taxpurposes in different periods. Deferred taxes are classified as current ornon-current, depending on the classification of assets and liabilities to whichthey relate. Deferred taxes arising from temporary differences that are notrelated to an asset or liability are classified as current or non-currentdepending on the periods in which the temporary differences are expected toreverse.

 

NetIncome (loss) Per Common Share

 

TheCompany computes earnings per share under Financial Accounting Standard No. 128,“Earnings per Share” (“SFAS 128”). Net loss per common share is computed bydividing net loss by the weighted average number of shares of common stock anddilutive common stock equivalents outstanding during the year. Dilutivecommon stock equivalents consist of shares issuable and the exercise of theCompany’s stock options and warrants (calculated using the treasury stockmethod). For the three and six month periods ended June 30, 2008 and 2007common stock equivalents derived from shares issuable in the exercise ofoptions and warrants  are not considered in the calculation of theweighted average number of common shares outstanding because they would beanti-dilutive, thereby decreasing the net loss per share

 

Useof Estimates

 

Thepreparation of financial statements in conformity with generally acceptedaccounting principles requires management to make estimates and assumptionsthat affect certain reported amounts and disclosures. Accordingly, actualresults could differ from those estimates.

 

Reclassifications

 

Certainreclassifications have been made in prior year’s financial statements toconform to classifications used in the current year.

 

Researchand Development

 

TheCompany accounts for research and development costs in accordance with theFinancial Accounting Standards Board’s Statement of Financial AccountingStandards No. 2 (“SFAS 2”), “Accounting for Research and Development Costs”.Under SFAS 2, all research and development costs must be charged to expense asincurred. Accordingly, internal research and development costs are expensed asincurred. Third-party research and developments costs are expensed when thecontracted work has been performed or as milestone results have been achieved.Company-sponsored research and development costs related to both present andfuture products are expensed in the period incurred. The Company incurredresearch and development expenditures of $71,816 and $48,440 for the threemonths period ended June 30, 2008 and 2007, respectively; $104,726 and$94,542 for the six months period ended June 30, 2008 and 2007,respectively, and $1,270,610 from the period from February 16, 1999 (dateof inception) to June 30, 2008.

 

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**IRISBIOTECHNOLOGIES INC.**

**(Adevelopment stage company)**

**NOTES TOTHE CONDENSED FINANCIAL STATEMENTS**

**JUNE 30,2008**

**(Unaudited)**

 

**NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued)**

 

Liquidity

 

Todate the Company has generated no revenues, has incurred expenses, and hassustained losses. As shown in the accompanying unaudited financial statements,the Company incurred a net loss of $564,614 during the six months period ended June 30,2008 and $245,945 during the six month period ended June 30, 2007. For theperiod from inception through June 30, 2008, the Company has accumulatedlosses of $5,636,934. Consequently, its operations are subject to all risksinherent in the establishment of a new business enterprise.

 

Concentrationsof Credit Risk

 

Financialinstruments and related items, which potentially subject the Company toconcentrations of credit risk, consist primarily of cash, cash equivalents andrelated party receivables. The Company places its cash and temporary cashinvestments with credit quality institutions. At times, such investments may bein excess of the FDIC insurance limit. The Company periodically reviews itstrade receivables in determining its allowance for doubtful accounts. TheCompany does not have accounts receivable and allowance for doubtful accountsat June 30, 2008.

 

FairValue of Financial Instruments

 

Statementof Financial Accounting Standards No. 107, “Disclosures About Fair Valueof Financial Instruments,” requires disclosure of the fair value of certainfinancial instruments. The carrying value of cash and cash equivalents,accounts receivable, accounts payable and short-term borrowings, as reflectedin the balance sheets, approximate fair value because of the short-termmaturity of these instruments.

 

StockBased Compensation

 

EffectiveJanuary 1, 2006, the beginning of the Company’s first fiscal quarter of2006, the Company adopted the fair value recognition provisions of SFAS 123R,using the modified-prospective transition method. Under this transition method,stock-based compensation expense was recognized in the financial statements forgranted, modified, or settled stock options. Compensation expense recognizedincluded the estimated expense for stock options granted on and subsequent to January 1,2006, based on the grant date fair value estimated in accordance with theprovisions of SFAS 123R, and the estimated expense for the portion vesting inthe period for options granted prior to, but not vested as of January 1,2006, based on the grant date fair value estimated in accordance with theoriginal provisions of SFAS 123. Results for prior periods have not beenrestated, as provided for under the modified-prospective method.

 

SFAS123(R) requires forfeitures to be estimated at the time of grant andrevised, if necessary, in subsequent periods if actual forfeitures differ fromthose estimates. In the Company’s pro forma information required under SFAS 123for the periods prior to fiscal 2006, the Company accounted for forfeitures asthey occurred.

 

Uponadoption of SFAS 123(R), the Company is using the Black-Scholes option-pricingmodel as its method of valuation for share-based awards granted beginning infiscal 2006, which was also previously used for the Company’s pro formainformation required under SFAS 123. The Company’s determination of fair valueof share-based payment awards on the date of grant using an option-pricingmodel is affected by the Company’s stock price as well as assumptions regardinga number of highly complex and subjective variables. These variables include,but are not limited to the Company’s expected stock price volatility over theterm of the awards, and certain other market variables such as the risk freeinterest rate.

 

Forthe six month period ended June 30, 2008, the Company granted 167,696employee options to purchase the Company’s common stock at $2.25 per share overten years, vesting in four years. The fair value of the vested portion wascharged to current period operations.

 

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**IRISBIOTECHNOLOGIES INC.**

**(Adevelopment stage company)**

**NOTES TOTHE CONDENSED FINANCIAL STATEMENTS**

**JUNE 30,2008**

**(Unaudited)**

 

**NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued)**

 

RevenueRecognition

 

TheCompany recognizes revenue in accordance with Staff Accounting Bulletin No. 104,REVENUE RECOGNITION (“SAB104”), which superseded Staff Accounting Bulletin No. 101,REVENUE RECOGNITION IN FINANCIAL STATEMENTS (“SAB101”). SAB 101 requires thatfour basic criteria must be met before revenue can be recognized: (1) persuasiveevidence of an arrangement exists; (2) delivery has occurred; (3) theselling price is fixed and determinable; and (4) collectibility isreasonably assured. Determination of criteria (3) and (4) are basedon management’s judgments regarding the fixed nature of the selling prices ofthe products delivered and the collectibility of those amounts. Provisions fordiscounts and rebates to customers, estimated returns and allowances, and otheradjustments are provided for in the same period the related sales are recorded.The Company defers any revenue for which the product has not been delivered oris subject to refund until such time that the Company and the customer jointlydetermine that the product has been delivered or no refund will be required.

 

SAB104 incorporates Emerging Issues Task Force 00-21 (“EITF 00-21”),MULTIPLE-DELIVERABLE REVENUE ARRANGEMENTS. EITF 00-21 addresses accounting forarrangements that may involve the delivery or performance of multiple products,services and/or rights to use assets. The effect of implementing EITF 00-21 onthe Company’s financial position and results of operations was not significant.

 

Fromthe date of inception through June 30, 2008, the Company has not generatedany revenue.

 

Recentaccounting pronouncements

 

InFebruary 2007, the FASB issued SFAS No. 159, “*The Fair Value Option for Financial Assets andFinancial Liabilities — Including an Amendment of FASB Statement No. 115*  “ (“SFAS No. 159”).  SFAS No. 159permits entities to choose to measure many financial instruments and certainother items at fair value.  Most of the provisions of SFAS No. 159apply only to entities that elect the fair value option. However, the amendmentto SFAS No. 115 “*Accounting for CertainInvestments in Debt and Equity Securities* “ applies to all entitieswith available-for-sale and trading securities.  SFAS No. 159 iseffective as of the beginning of an entity’s first fiscal year that beginsafter November 15, 2007.  Early adoption is permitted as of thebeginning of a fiscal year that begins on or before November 15, 2007,provided the entity also elects to apply the provision of SFAS No. 157, “*Fair Value Measurements*”.  Theadoption of SFAS No. 159 is not expected to have a material impact on ourfinancial position, results of operations or cash flows.

 

InDecember 2007, the FASB issued SFAS No. 141(R), **“BusinessCombinations”** (“SFAS No. 141(R)”), which establishesprinciples and requirements for how an acquirer recognizes and measures in itsfinancial statements the identifiable assets acquired, the liabilities assumed,and any noncontrolling interest in an acquiree, including the recognition andmeasurement of goodwill acquired in a business combination. SFAS No. 141Ris effective as of the beginning of the first fiscal year beginning on or afterDecember 15, 2008. Earlier adoption is prohibited and the Company iscurrently evaluating the effect, if any that the adoption will have on itsfinancial position results of operations or cash flows.

 

InDecember 2007, the FASB issued SFAS No. 160, **“Noncontrolling Interest in ConsolidatedFinancial Statements, an amendment of ARB No. 51”** (“SFAS No. 160”),which will change the accounting and reporting for minority interests, whichwill be recharacterized as noncontrolling interests and classified as acomponent of equity within the consolidated balance sheets. SFAS No. 160is effective as of the beginning of the first fiscal year beginning on or afterDecember 15, 2008. Earlier adoption is prohibited and the Company iscurrently evaluating the effect, if any that the adoption will have on itsfinancial position results of operations or cash flows.

 

15

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Table of Contents

 

**IRISBIOTECHNOLOGIES INC.**

**(Adevelopment stage company)**

**NOTES TOTHE CONDENSED FINANCIAL STATEMENTS**

**JUNE 30,2008**

**(Unaudited)**

 

**NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued)**

 

Recentaccounting pronouncements (continued)

 

InJune 2007, the Accounting Standards Executive Committee issued Statementof Position 07-1, “Clarification of the Scope of the Audit and Accounting GuideInvestment Companies and Accounting by Parent Companies and Equity Method Investorsfor Investments in Investment Companies” (“SOP 07-1”). SOP 07-1 providesguidance for determining whether an entity is within the scope of the AICPAAudit and Accounting Guide Investment Companies (the “Audit Guide”). SOP 07-1was originally determined to be effective for fiscal years beginning on orafter December 15, 2007, however, on February 6, 2008, FASB issued afinal Staff Position indefinitely deferring the effective date and prohibitingearly adoption of SOP 07-1 while addressing implementation issues.

 

InJune 2007, the FASB ratified the consensus in EITF Issue No. 07-3, “Accountingfor Nonrefundable Advance Payments for Goods or Services to be Used in FutureResearch and Development Activities” (EITF 07-3), which requires thatnonrefundable advance payments for goods or services that will be used orrendered for future research and development (R&D) activities be deferredand amortized over the period that the goods are delivered or the relatedservices are performed, subject to an assessment of recoverability.EITF 07-3 will be effective for fiscal years beginning after December 15,2007. The Company does not expect that the adoption of EITF 07-3 will havea material impact on our financial position, results of operations or cashflows.

 

InDecember 2007, the FASB ratified the consensus in EITF Issue No. 07-1,“Accounting for Collaborative Arrangements” (EITF 07-1). EITF 07-1defines collaborative arrangements and requires collaborators to present theresult of activities for which they act as the principal on a gross basis andreport any payments received from (made to) the other collaborators based onother applicable authoritative accounting literature, and in the absence ofother applicable authoritative literature, on a reasonable, rational andconsistent accounting policy is to be elected. EITF 07-1 also provides fordisclosures regarding the nature and purpose of the arrangement, the entity’srights and obligations, the accounting policy for the arrangement and theincome statement classification and amounts arising from the agreement.EITF 07-1 will be effective for fiscal years beginning after December 15,2008, which will be the Company’s fiscal year 2009, and will be applied as achange in accounting principle retrospectively for all collaborativearrangements existing as of the effective date. The Company has not yetevaluated the potential impact of adopting EITF 07-1 on our financialposition, results of operations or cash flows.

 

InMarch 2008, the FASB” issued SFAS No. 161, “*Disclosures about Derivative Instruments and HedgingActivities — an amendment to FASB Statement No. 133”* (“SFAS No. 161”)*.*   SFAS No. 161 isintended to improve financial standards for derivative instruments and hedgingactivities by requiring enhanced disclosures to enable investors to betterunderstand their effects on an entity’s financial position, financialperformance, and cash flows.  Entities are required to provideenhanced disclosures about: (a) how and why an entity uses derivativeinstruments; (b) how derivative instruments and related hedged items areaccounted for under SFAS No. 133 and its related interpretations; and (c) howderivative instruments and related hedged items affect an entity’s financialposition, financial performance, and cash flows.  It is effective forfinancial statements issued for fiscal years beginning after November 15,2008, with early adoption encouraged.  The Company is  currently evaluating the impact of SFAS No. 161,if any, will have on our financial position, results of operations or cashflows.

 

InApril 2008, the FASB issued FSP No. FAS 142-3,*“Determination of the Useful Life of IntangibleAssets”.*  This FSP amends thefactors that should be considered in developing renewal or extensionassumptions used to determine the useful life of a recognized intangible assetunder SFAS No. 142,*“Goodwill and OtherIntangible Assets”.*   We are required to adopt FSP 142-3on September 1, 2009, earlier adoption is prohibited.  Theguidance in FSP 142-3 for determining the useful life of a recognizedintangible asset shall be applied prospectively to intangible assets acquiredafter adoption, and the disclosure requirements shall be applied prospectivelyto all intangible assets recognized as of, and subsequent to, adoption.  TheCompany is  currently evaluating theimpact of FSP 142-3 on our financial position, results of operations or cashflows.

 

16

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Table of Contents

 

**IRISBIOTECHNOLOGIES INC.**

**(Adevelopment stage company)**

**NOTES TOTHE CONDENSED FINANCIAL STATEMENTS**

**JUNE 30,2008**

**(Unaudited)**

 

**NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued)**

 

Recentaccounting pronouncements (continued)

 

InMay 2008, the FASB issued SFAS No. 162, “*The Hierarchy of Generally Accepted Accounting Principles*” (“SFAS No. 162”).  SFAS No. 162identifies the sources of accounting principles and the framework for selectingthe principles used in the preparation of financial statements ofnongovernmental entities that are presented in conformity with generallyaccepted accounting principles (the GAAP hierarchy).  SFAS No. 162will become effective 60 days following the SEC’s approval of the PublicCompany Accounting Oversight Board amendments to AU Section 411, “TheMeaning of Present Fairly in Conformity With Generally Accepted AccountingPrinciples.” The Company does  notexpect the adoption of SFAS No. 162 will have a material effect onour financial position, results of operations or cash flows.

 

InMay 2008, the FASB issued FSP Accounting Principles Board (“APB”) 14-1 “*Accounting for Convertible Debt Instruments That May BeSettled in Cash upon Conversion (Including Partial Cash Settlement)* “(“FSP APB 14-1”).  FSP APB 14-1 requires the issuer ofcertain convertible debt instruments that may be settled in cash (or otherassets) on conversion to separately account for the liability (debt) and equity(conversion option) components of the instrument in a manner that reflects theissuer’s non-convertible debt borrowing rate.  FSP APB 14-1 iseffective for fiscal years beginning after December 15, 2008 on aretroactive basis.  The Company is currently evaluating the potentialimpact, if any, of the adoption of FSP APB 14-1 on our financial position,results of operations or cash flows.

 

Otherrecent accounting pronouncements issued by the FASB (including its EmergingIssues Task Force), the AICPA, and the SEC did not, or are not believed bymanagement to, have a material impact on the Company’s present or futurefinancial statements.

 

**NOTE B - PROPERTY, PLANT, AND EQUIPMENT**

 

Property,plant and equipment at June 30, 2008 and December 31, 2007 are asfollows:

 
| ** **                     | ** ** | **June 30,  2008** | ** ** | **December  31,  2007** | ** ** |
|--------------------------------|------------|-------------------------|------------|-----------------------------------|------------|
| Computer equipment             |       | $                       | 58,110     |                              | $          | 54,052 |   |
| Office equipment               |       | 1,729                   |       | 1,729                             |       |
| Furniture and fixtures         |       | 3,586                   |       | 2,944                             |       |
| Manufacturing equipment        |       | 147,903                 |       | 147,903                           |       |
|                           |       | 211,328                 |       | 206,628                           |       |
| Less: accumulated depreciation |       | (157,712                | )          | (151,186                          | )          |
|                           |       | $                       | 53,616     |                              | $          | 55,442 |   |

 

Duringthe three month period ended June 30, 2008 and 2007, depreciation expensecharged to operations was $3,331 and $1,297, respectively. During the six monthperiod ended June 30, 2008 and 2007, depreciation expense charged tooperations was $6,526 and $2,787, respectively

 

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**IRISBIOTECHNOLOGIES INC.**

**(Adevelopment stage company)**

**NOTES TOTHE CONDENSED FINANCIAL STATEMENTS**

**JUNE 30,2008**

**(Unaudited)**

 

**NOTE C – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES**

 

Accountspayable and accrued liabilities at June 30, 2008 and December 31,2007:

 
| ** **                            | ** ** | **June 30,  2008** | ** ** | **December 31,  2007** | ** ** |
|---------------------------------------|------------|-------------------------|------------|-----------------------------|------------|
| Accounts payable and accrued expenses |       | $                       | 63,093     |                        | $          | 38,029 |   |
|                                       |            |                         |            |                             |            |  |  |

 

**NOTE D – RELATED PARTY TRANSACTIONS**

 

TheCompany’s President has advanced funds to the Company for working capitalpurposes since the Company’s inception in February 1999.  No formalrepayment terms or arrangements exist. The net amount of outstanding at June 30,2008 was $-0-.

 

**NOTE E – STOCKHOLDER EQUITY**

 

Preferredstock

 

TheCompany is authorized to issue 5,000,000 shares of no par or stated valuepreferred stock. From date of inception through June 30, 2008, the Companyhas not issued any preferred shares.

 

Commonstock

 

TheCompany is authorized to issue 20,000,000 shares of no par or stated valuecommon stock. As of June 30, 2008, the Company has 10,853,431 shares ofcommon stock issued and outstanding.

 

OnApril 9, 2003, the Company effected a two-for-one (2 for 1) stock split ofits  outstanding shares of common stock,no par  value. All references in thefinancial statements and the notes to financial statements, number of shares,and share amounts have been retroactively restated to reflect the split.

 

InFebruary 1999, the Company issued 7,200,000 shares of common stock inexchange for intellectual property valued at $1,800,000.

 

Duringthe year ended December 31, 1999, the Company issued an aggregate of153,000 shares of common stock to consultants for services in the amount of$38,250. All valuations of common stock issued for services were based upon thevalue of the services rendered, which did not differ materially from the fairvalue of the Company’s common stock during the period the services were rendered.

 

Duringthe year ended December 31, 1999, the Company issued an aggregate of50,000 shares of common stock in conjunction with the exercise of common stockoptions at $0.50 per share and 50,000 shares of common stock at $0.25 pershare.

 

18

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**IRISBIOTECHNOLOGIES INC.**

**(Adevelopment stage company)**

**NOTES TOTHE CONDENSED FINANCIAL STATEMENTS**

**JUNE 30,2008**

**(Unaudited)**

 

**NOTE E – STOCKHOLDER EQUITY (continued)**

 

Commonstock (continued)

 

Duringthe year ended December 31, 2000, the Company issued an aggregate of20,000 shares of common stock to consultants for services in the amount of$10,000. All valuations of common stock issued for services were based upon thevalue of the services rendered, which did not differ materially from the fairvalue of the Company’s common stock during the period the services wererendered.

 

Duringthe year ended December 31, 2002, the Company issued an aggregate of20,000 shares of common stock to consultants for services in the amount of$10,000. All valuations of common stock issued for services were based upon thevalue of the services rendered, which did not differ materially from the fairvalue of the Company’s common stock during the period the services wererendered

 

Duringthe year ended December 31, 2003, the Company issued an aggregate of26,000 shares of common stock to consultants for services in the amount of$13,000. All valuations of common stock issued for services were based upon thevalue of the services rendered, which did not differ materially from the fairvalue of the Company’s common stock during the period the services wererendered.

 

Duringthe year ended December 31, 2006, the Company issued an aggregate of20,000 shares of common stock to consultants for services in the amount of$20,000. All valuations of common stock issued for services were based upon thevalue of the services rendered, which did not differ materially from the fairvalue of the Company’s common stock during the period the services wererendered.

 

Duringthe six month period ended June 30, 2008, the Company issued an aggregateof 22,222 shares of common stock to consultants for services in the amount of$50,000. All valuations of common stock issued for services were based upon thevalue of the services rendered, which did not differ materially from the fairvalue of the Company’s common stock during the period the services wererendered.

 

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 **IRISBIOTECHNOLOGIES INC.**

**(Adevelopment stage company)**

**NOTES TOTHE CONDENSED FINANCIAL STATEMENTS**

**JUNE 30,2008**

**(Unaudited)**

 

**NOTE F – WARRANTS AND OPTIONS**

 

Warrants

 

Thefollowing table summarizes the changes in warrants outstanding and relatedprices for the shares of the Company’s common stock issued to shareholders at June 30,2008:

 
| ** **              | ** ** | ** **      | ** ** | **Warrants Outstanding**  | ** ** | ** **              | ** ** | ** **      | ** ** | **Warrants Exercisable** | ** ** |
|-------------------------|------------|-----------------|------------|--------------------------------|------------|-------------------------|------------|-----------------|------------|-------------------------------|------------|
| ** **              | ** ** | ** **      | ** ** | **Weighted Average**      | ** ** | **Weighted**            | ** ** | ** **      | ** ** | **Weighted**                  | ** ** |
| ** **              | ** ** | **Number**      | ** ** | **Remaining Contractual** | ** ** | **Average**             | ** ** | **Number**      | ** ** | **Average**                   | ** ** |
| **Exercise Price** | ** ** | **Outstanding** | ** ** | **Life (years)**          | ** ** | **Exercise price** | ** ** | **Exercisable** | ** ** | **Exercise Price**       | ** ** |
| $                       | 2.00       |            | 31,400     |                           | 3.21       |                    | $          | 2.00            |       | 31,400                        |       | $ | 2.00 |   |
| 2.25                    |       | 100,000         |       | 4.37                           |       | 2.25                    |       | 14,583          |       | 2.25                          |       |
|                         |            |                 |            |                                |            |                         |            |                 |            |                               |            |  |  |  |

 

Transactionsinvolving the Company’s warrant issuance are summarized as follows:

 
| ** **                            | ** ** | **Number of Shares** | ** ** | **Weighted  Average  Price Per Share** | ** ** |
|---------------------------------------|------------|---------------------------|------------|--------------------------------------------------|------------|
| Outstanding at December 31, 2006 |       | 17,500                    |       | $                                                | 2.00       |   |
| Granted                               |       | 113,900                   |       | 2.22                                             |       |
| Exercised                             |       | —                    |       | —                                           |       |
| Canceled or expired                   |       | —                    |       | —                                           |       |
| Outstanding at December 31, 2007 |       | 131,400                   |       | $                                                | 2.19       |   |
| Granted                               |       | —                    |       | —                                           |       |
| Exercised                             |       | —                    |       | —                                           |       |
| Canceled or expired                   |       | —                    |       | —                                           |       |
| Outstanding at June 30, 2008     |       | 131,400                   |       | $                                                | 2.19       |   |

 

Warrantsgranted during the year ended December 31, 2007 totaling 13,900 wereissued for services rendered. The warrants are exercisable until five yearsafter the date of issuance at a purchase price of $2.00 per share.  Thefair value (determined as described below) of $25,913 was charged to currentperiod earnings.

 

Theweighted-average fair value of these stock options granted and theweighted-average significant assumptions used to determine those fair values,using a Black-Scholes option pricing model are as follows:

 
| **For the year ended December 31, 2007:** | ** ** | ** ** | ** ** |
|-------------------------------------------------------------------------|------------|------------|------------|
|                                                                    |       |       |       |
| Significant assumptions (weighted-average):                             |       |       |       |
| Risk-free interest rate at grant date                                   |       | 4.81       | %          |
| Expected stock price volatility                                         |       | 158.46     | %          |
| Expected dividend payout                                                |       | —     |       |
| Expected option life-years (a)                                          |       | 5          |       |

 

----

(a)Theexpected warrant life is based on contractual expiration dates.

 

Duringthe year ended December 31, 2007, the Company granted 100,000 stockoptions with an exercise price of $2.25 vesting over four years and expiringfive years from issuance.  The fair value (as described below) of $166,290was recorded as deferred compensation and is amortized ratably over the fouryears to earnings. For the year ended December 31, 2007, the Companyrecorded amortization of $5,227 and $20,742 for the six months ended June 30,2008.

 

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Table of Contents

 

**IRISBIOTECHNOLOGIES INC.**

**(Adevelopment stage company)**

**NOTES TOTHE CONDENSED FINANCIAL STATEMENTS**

**JUNE 30,2008**

**(Unaudited)**

 

**NOTE F – WARRANTS AND OPTIONS (continued)**

 

Theweighted-average fair value of these stock options granted and theweighted-average significant assumptions used to determine those fair values,using a Black-Scholes option pricing model are as follows:

 

Warrants (continued)

 
| **For the year ended December 31, 2007:** | ** ** | ** ** | ** ** |
|-------------------------------------------------------------------------|------------|------------|------------|
|                                                                    |       |       |       |
| Significant assumptions (weighted-average):                             |       |       |       |
| Risk-free interest rate at grant date                                   |       | 3.71       | %          |
| Expected stock price volatility                                         |       | 95.17      | %          |
| Expected dividend payout                                                |       | —     |       |
| Expected option life-years (a)                                          |       | 5          |       |

 

----

(a)Theexpected option life is based on contractual expiration dates

 

TheCompany did not grant warrants during the six month period ended June 30,2008.

 

Options

 

EmployeeOptions

 

Thefollowing table summarizes the changes in options outstanding and the relatedprices for the shares of the Company’s common stock issued to employees under anon qualified stock option plan at June 30, 2008:

 
| ** **   | ** ** | **Options Outstanding** | ** ** | **Options Exercisable** | ** ** |
|--------------|------------|------------------------------|------------|------------------------------|------------|
| ** **   | ** ** | ** **                   | ** ** | **Weighted Average**    | ** ** | **Weighted** | ** ** | ** ** | ** ** | **Weighted** | ** ** |
| ** **   | ** ** | ** **                   | ** ** | **Remaining**                | ** ** | **Average** | ** ** | ** ** | ** ** | **Average** | ** ** |
| **Exercise** | ** ** | **Number**                   | ** ** | **Contractual Life**    | ** ** | **Exercise** | ** ** | **Number** | ** ** | **Exercise** | ** ** |
| **Prices**   | ** ** | **Outstanding**              | ** ** | **(Years)**                  | ** ** | **Price** | ** ** | **Exercisable** | ** ** | **Price** | ** ** |
| $            | 0.25       |                         | 400,000    |                         | 0.66       |   | $ | 0.25 |   | 400,000 |   | $ | 0.25 |   |
| 0.50         |       | 356,000                      |       | 2.34                         |       | 0.50 |   | 356,000 |   | 0.50 |   |
| 1.00         |       | 992,000                      |       | 6.80                         |       | 1.00 |   | 694,500 |   | 1.00 |   |
| 2.25         |       | 167,696                      |       | 9.91                         |       | 2.25 |   | 3,494 |   | 2.25 |   |
|         |       |                         |       |                         |       |   |   |   |   |   |   |
|         |       | 1,915,696                    |       |                         |       | 0.84 |   | 1,453,994 |   | 0.68 |   |
|              |            |                              |            |                              |            |  |  |  |  |  |  |  |  |  |

 

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Table of Contents

 

**IRISBIOTECHNOLOGIES INC.**

**(Adevelopment stage company)**

**NOTES TOTHE CONDENSED FINANCIAL STATEMENTS**

**JUNE 30,2008**

**(Unaudited)**

 

**NOTE F – WARRANTS AND OPTIONS (continued)**

 

EmployeeOptions (continued)

 

Transactionsinvolving employee  stock options issuedare summarized as follows:

 
| ** **                             | ** ** | ** **                     | ** ** | **Weighted Average**     | ** ** |
|----------------------------------------|------------|--------------------------------|------------|-------------------------------|------------|
| ** **                             | ** ** | **Number of Shares** | ** ** | **Price Per Share** | ** ** |
| Outstanding at December 31, 2006: |       | 1,748,000                      |       | $                             | 0.73       |   |
| Granted                                |       | —                         |       | —                        |       |
| Exercised                              |       | —                         |       | —                        |       |
| Canceled or expired                    |       | —                         |       | —                        |       |
| Outstanding at December 31, 2007  |       | 1,748,000                      |       | $                             | 0.73       |   |
| Granted                                |       | 167,696                        |       | 2.25                          |       |
| Exercised                              |       | —                         |       | —                        |       |
| Canceled or expired                    |       | —                         |       | —                        |       |
| Outstanding at June 30, 2008:     |       | 1,915,696                      |       | $                             | 0.84       |   |

 

Duringthe year ended December 31, 2006, the Company granted 800,000 employeestock options with an exercise price of $1.00 expiring ten years fromissuance.  The fair value (determined as described below) of $788,160 wascharged to current period earnings.

 

Theweighted-average fair value of these stock options granted and theweighted-average significant assumptions used to determine those fair values,using a Black-Scholes option pricing model are as follows:

 

Forthe year ended December 31, 2006:

 
| **Significant assumptions (weighted-average):** | ** ** | ** **   | ** ** |
|-----------------------------------------------------------|------------|--------------|------------|
| Risk-free interest rate at grant date                     |       | 4.65 to 4.70 | %          |
| Expected stock price volatility                           |       | 148.41       | %          |
| Expected dividend payout                                  |       | —       |       |
| Expected option life-years (a)                            |       | 10           |       |

 

----

(a)Theexpected option life is based on contractual expiration dates.

 

Duringthe six month period ended June 30, 2008, the Company granted 167,696employee stock options with an exercise price of $2.25 vesting over four yearsand expiring ten years from issuance.  The fair value of the vestedportion (determined as described below) of $7,855 was charged to current periodearnings.

 

Theweighted-average fair value of these stock options granted and theweighted-average significant assumptions used to determine those fair values,using a Black-Scholes option pricing model are as follows:

 

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Table of Contents

 

**IRISBIOTECHNOLOGIES INC.**

**(Adevelopment stage company)**

**NOTES TOTHE CONDENSED FINANCIAL STATEMENTS**

**JUNE 30,2008**

**(Unaudited)**

 

**NOTE F – WARRANTS AND OPTIONS (continued)**

 

EmployeeOptions (continued)

 

Forthe six month period ended June 30, 2008:

 
| **Significant assumptions (weighted-average):** | ** ** | ** ** | ** ** |
|-----------------------------------------------------------|------------|------------|------------|
| Risk-free interest rate at grant date                     |       | 3.25       | %          |
| Expected stock price volatility                           |       | 236.71     | %          |
| Expected dividend payout                                  |       | —     |       |
| Expected option life-years (a)                            |       | 10         |       |

 

----

(a)Theexpected option life is based on contractual expiration dates

 

Nonemployee options

 

Thefollowing table summarizes the changes in options outstanding and the relatedprices for the shares of the Company’s common stock issued to non employeesunder a non qualified stock option plan at June 30, 2008:

 
| ** **                                 | ** ** | **Options Outstanding** | ** ** | **Options Exercisable** | ** ** |
|--------------------------------------------|------------|------------------------------|------------|------------------------------|------------|
| ** **                                 | ** ** | ** **                   | ** ** | **Weighted Average**    | ** ** | **Weighted** | ** ** | ** ** | ** ** | **Weighted** | ** ** |
| ** **                                 | ** ** | ** **                   | ** ** | **Remaining**                | ** ** | **Average** | ** ** | ** ** | ** ** | **Average** | ** ** |
| **Exercise**                               | ** ** | **Number**                   | ** ** | **Contractual Life**    | ** ** | **Exercise** | ** ** | **Number** | ** ** | **Exercise** | ** ** |
| **Prices**                                 | ** ** | **Outstanding**              | ** ** | **(Years)**                  | ** ** | **Price** | ** ** | **Exercisable** | ** ** | **Price** | ** ** |
| $                                          |  0.25 |                         | 60,000     |                         | 0.89       |   | $ | 0.25 |   | 60,000 |   | $ | 0.25 |   |
| 0.50                                       |       | 240,000                      |       | 2.21                         |       | 0.50 |   | 240,000 |   | 0.50 |   |
| 1.00                                       |       | 110,000                      |       | 7.71                         |       | 1.00 |   | 83,750 |   | 1.00 |   |
|         |       |                         |       |                         |       |   |   |   |   |   |   |
|                                       |       | 410,000                      |       |                         |       | 0.60 |   | 383,750 |   | 0.57 |   |
|                                            |            |                              |            |                              |            |  |  |  |  |  |  |  |  |  |

 

Transactionsinvolving non employee stock options issued are summarized as follows:

 
| ** **                             | ** ** | ** **                     | ** ** | **Weighted Average**     | ** ** |
|----------------------------------------|------------|--------------------------------|------------|-------------------------------|------------|
| ** **                             | ** ** | **Number of Shares** | ** ** | **Price Per Share** | ** ** |
| Outstanding at December 31, 2006: |       | 410,000                        |       | $                             | 0.60       |   |
| Granted                                |       | —                         |       | —                        |       |
| Exercised                              |       | —                         |       | —                        |       |
| Canceled or expired                    |       | —                         |       | —                        |       |
| Outstanding at December 31, 2007  |       | 410,000                        |       | $                             | 0.60       |   |
| Granted                                |       | —                         |       | —                        |       |
| Exercised                              |       | —                         |       | —                        |       |
| Canceled or expired                    |       | —                         |       | —                        |       |
| Outstanding at June 30, 2008:     |       | 410,000                        |       | $                             | 0.60       |   |

 

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Table of Contents

 

**IRISBIOTECHNOLOGIES INC.**

**(Adevelopment stage company)**

**NOTES TOTHE CONDENSED FINANCIAL STATEMENTS**

**JUNE 30,2008**

**(Unaudited)**

 

**NOTE F – WARRANTS AND OPTIONS (continued)**

 

NonEmployee options (continued)

 

Duringthe year ended December 31, 2006, the Company granted 110,000 non employeestock options with an exercise price of $1.00 expiring ten years fromissuance.  The fair value (determined as described below) of $108,372 wascharged to current period earnings.

 

Theweighted-average fair value of these stock options granted and theweighted-average significant assumptions used to determine those fair values,using a Black-Scholes option pricing model are as follows:

 

Forthe year ended December 31, 2006:

 
| **Significant assumptions (weighted-average):** | ** ** | ** **   | ** ** |
|-----------------------------------------------------------|------------|--------------|------------|
| Risk-free interest rate at grant date                     |       | 4.65 to 4.70 | %          |
| Expected stock price volatility                           |       | 148.41       | %          |
| Expected dividend payout                                  |       | —       |       |
| Expected option life-years (a)                            |       | 10           |       |

 

----

(a)Theexpected option life is based on contractual expiration dates.

 

 ****NOTE G -LOSSES PER SHARE****

 

Thefollowing table presents the computation of basic and diluted losses per share:

 
| ** **                                        | ** ** | **Three months  ended  June 30,** | ** ** | **Three months  ended  June 30,** | ** ** |
|---------------------------------------------------|------------|---------------------------------------------|------------|---------------------------------------------|------------|
| ** **                                        | ** ** | **2008**                                    | ** ** | **2007**                                    | ** ** |
| Net income loss available to Common  stockholders |       | $                                           | (295,735   | )                                           | $          | (143,088 | ) |
| Basic and diluted earning (loss) per share        |       | $                                           | (0.03      | )                                           | $          | (0.01 | ) |
| Weighted average common shares outstanding        |       | 10,812,435                                  |       | 10,631,644                                  |       |

 
| ** **                                        | ** ** | **Six months  ended  June 30,  2008** | ** ** | **Six months  ended  June 30,  2007** | ** ** |
|---------------------------------------------------|------------|-------------------------------------------------|------------|-------------------------------------------------|------------|
| Net income loss available to Common  stockholders |       | $                                               | (564,614   | )                                               | $          | (245,945 | ) |
| Basic and diluted earning (loss) per share        |       | $                                               | (0.05      | )                                               | $          | (0.02 | ) |
| Weighted average common shares outstanding        |       | 10,751,761                                      |       | 10,530,821                                      |       |
|                                                   |            |                                                 |            |                                                 |            |  |  |  |

 

InApril 2003, a two (2) for one (1) stock split of the Company’scommon stock was affected. Accordingly, all historical weighted average shareand per share amounts have been restated to reflect the stock split.

 

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**IRISBIOTECHNOLOGIES INC.**

**(Adevelopment stage company)**

**NOTES TOTHE CONDENSED FINANCIAL STATEMENTS**

**JUNE 30,2008**

**(Unaudited)**

 

****NOTE H - INCOME TAXES****

 

FinancialAccounting Standard No. 109 requires the recognition of deferred taxliabilities and assets for the expected future tax consequences of events thathave been included in the financial statement or tax returns. Under thismethod, deferred tax liabilities and assets are determined based on thedifference between financial statements and tax bases of assets and liabilitiesusing enacted tax rates in effect for the year in which the differences areexpected to reverse. Temporary differences between taxable income reported forfinancial reporting purposes and income tax purposes are insignificant.

 

Forincome tax reporting purposes, the Company’s aggregate unused net operatinglosses approximate $5,300,000 which expires through 2025, subject to limitationsof Section 382 of the Internal Revenue Code, as amended. The deferred taxasset related to the carry forward is approximately $1,850,000. The Company hasprovided a valuation reserve against the full amount of the net operating lossbenefit, because in the opinion of management based upon the earning history ofthe Company; it is more likely than not that the benefits will not be realized.Due to significant changes in the Company’s ownership, the Company’s future useof its existing net operating losses may be limited.

 

Componentsof deferred tax assets as of June 30, 2008 are as follows:

 
| Non current:                    |   |       |     |
|---------------------------------|--------|------------|----------|
| Net operating loss carryforward |   | $          | 1972,000 |   |
| Valuation allowance             |   | (1,972,000 | )        |
| Net deferred tax asset          |   | $          | —   |   |

 

**NOTE I – SUBSEQUENT EVENTS**

 

InJuly 2008, the Company sold an aggregate of 35,555 shares of common stockat $2.25 per share

 

InJuly 2008, the Company issued 4,000 shares of common stock at $2.25 pershare for services rendered.

 

InAugust 2008, the Company issued 4,000 shares of common stock at $2.25 per sharefor services rendered.

 

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**ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS.**

 

**Forward-Looking Statements**

 

The information in thisreport contains forward-looking statements. All statements other thanstatements of historical fact made in this report are forward looking. Inparticular, the statements herein regarding industry prospects and futureresults of operations or financial position are forward-looking statements.These forward-looking statements can be identified by the use of words such as “believes,”“estimates,” “could,” “possibly,” “probably,” anticipates,” “projects,” “expects,”“may,” “will,” or “should” or other variations or similar words. No assurancescan be given that the future results anticipated by the forward-lookingstatements will be achieved. Forward-looking statements reflect management’scurrent expectations and are inherently uncertain. Our actual results maydiffer significantly from management’s expectations.

 

The following discussion andanalysis should be read in conjunction with our financial statements, includedherewith. This discussion should not be construed to imply that the resultsdiscussed herein will necessarily continue into the future, or that anyconclusion reached herein will necessarily be indicative of actual operatingresults in the future. Such discussion represents only the best presentassessment of our management.

 

**Overview**

 

Since inception on February 16,1999 through June 30, 2008, we have sustained cumulative net losses of$5,636,934. Our losses have resulted primarily from research and developmentexpenses, patent costs and legal and accounting expenses. We have four issuedpatents, and we are currently beta-testing one of our BioWindows medicalinformatics system. From inception through June 30, 2008, we have notgenerated any revenue from operations. We expect to incur additional losses toperform further research and development activities. We have no debt and havesufficient cash to operate for one year at the current burn rate. In order toaccelerate our product introduction and to grow dynamically, we will need toraise additional funds. We do not currently have any commercial products. With additionalfunding, we expect to launch our first nano-biochip product in about a yearafter we become public. There are some risks with respect to clinical testing,regulatory approval and review cycles and uncertainty of the costs. Netpositive cash inflows from any products developed may take several years toachieve.

 

Management plans to continuefinancing operations with a combination of equity issuances and debtarrangements. If adequate funds are not available, we may be required to delay,reduce the scope of, or eliminate our research or development programs, orcease operations.

 

**History**

 

We were incorporated in theState of California on February 16, 1999 and planned to sell theranostic(choosing therapy based upon personalized diagnostic results) products andservices in the medical field. In an effort to develop that business, we set upoperations in three locations in California - Headquarters in Santa Clara,Laboratory in San Leandro, and Informatics Office in Eureka.

 

Beginning on March 11,1999, Simon Chin, MBA, our founder, President and CEO, Secretary and principalshareholder, entered into Common Stock Purchase Agreements with variouscompanies, investment groups and private individuals. On March 1, 2003,Daniel Farnum, M.D., an owner of Humboldt Orthopedics and a key shareholder,and Grace Osborne, MBA, President of GCO Recruiting, joined Mr. Chinon our board of directors. On April 9, 2003, the board approved a 2for 1 stock split, changed the authorized shares of common stock from 10 millionto 20 million, and the authorized preferred stock remained at 5 million shares.

 

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**Plan of Operation**

 

We are a life sciencecompany focused on the development and commercialization of a nano-biochip geneexpression kit and an artificial intelligence system to assist in establishingthe foundation for personalized medicine, which will initially be utilized in thetreatment of breast cancer. We are designing our products to be approved by theFDA, which can then be used in any certified laboratory. Starting at the pointof a breast biopsy diagnosis of cancer, the nano-biochip and informaticsprogram are designed to enable a treating physician to quickly prescribe apersonalized treatment regimen that will have the greatest probability ofsuccess for each patient’s particular type of cancer. Our product platform isexpected to lead to more effective diagnosis and treatment not only forpatients with breastcancer, but also for those with neurological disorders, heart disease, diabetesand other gene-related metabolic problems .

 

**Product Research and Development**

 

We anticipate spending, inorder to accelerate our growth, which is contingent upon raising additionalfunds, approximately $1,500,000 for product research and development activitiesrelated to our anticipated product launch during the next twelve months.

 

**Acquisition of Plant and Equipmentand Other Assets**

 

We do not anticipate thesale of any material property, plant or equipment during the next 12 months. Wedo not anticipate the acquisition of any material property, plant or equipmentduring the next 12 months, unless we raise additional funds to accelerate ourgrowth to fulfill the unmet needs of a large, growing market.

 

**Number of Employees**

 

From our inception, we haveprincipally relied on the services of outside consultants and part-timeemployees for services. As of August 8, 2008, we have five full timeemployees and 10 part-time employees. In order for us to attract and retainquality personnel, we anticipate we will have to offer competitive salaries tofuture employees. We anticipate that it may become desirable to add additionalfull and or part time employees to discharge certain critical functions duringthe next 12 months. This projected increase in personnel is dependent upon ourability to generate revenues and obtain sources of financing. There is noguarantee that we will be successful in raising the funds required orgenerating revenues sufficient to fund the projected increase in the number ofemployees. As we continue to expand, we will incur additional cost forpersonnel.

 

**Results of Operations**

 

As a development stagecompany, we have yet to earn revenues from operations. We may experiencefluctuations in operating results in future periods due to a variety offactors, including our ability to obtain additional financing in a timelymanner and on terms favorable to us, our ability to successfully develop ourbusiness model, the amount and timing of operating costs and capitalexpenditures relating to the expansion of our business, operations andinfrastructure and the implementation of marketing programs, key agreements,and strategic alliances, and general economic conditions specific to ourindustry.

 

As a result of limitedcapital resources and no revenues from operations since inception, wehave relied on the issuance of equity securities to employees andnon-employees in exchange for services. Our management enters into equitycompensation agreements with non-employees if it is in our best interestunder terms and conditions consistent with the requirements of FinancialAccounting Standards No. 123 R, “Share-Based Compensation.” In order toconserve our limited operating capital resources, we anticipate continuingto compensate non-employees with equity for services during the nexttwelve months. This policy may have a material effect on our results ofoperations during the next twelve months.

 

**Three Months Ended June 30,2008 Compared to Three Months Ended June 30, 2007**

 

**Revenues**

 

We have generated nooperating revenues from operations from our inception. We believe we will beginearning revenues from operations in 2008 from actual operation as wetransition from a development stage company to that of an active growthstage company.

 

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**Costs and Expenses**

 

From our inception through June 30,2008, we have incurred cumulative losses of $5,636,934. In addition, asignificant part of the overall remaining costs are associated principally withequity-based compensation to employees and consultants, research anddevelopment costs and professional services rendered.

 

Selling, general and administrative (“SG&A”) expenses increased by$124,565  from $96,897 for the threemonths ended June 30, 2007 to $221,462 for the three months ended June 30,2008. SG&A expenses consisted of accounting, legal, consulting, publicrelations, startup and organizational expenses. SG&A expenses also includednon-cash charges from the issuance of stock, warrants and stock options in theamounts of $-0- for the three months ended June 30, 2007 and $36,220for the three months ended June 30, 2008, a period to period increase of$36,220. The remaining SG&A expenses which required cash amounted toapproximately $185,242 and $96,897 for the three months ended June 30,2008 and 2007, respectively. We used stock in lieu of cash to conserve our cashresources.

 

Research and development costs increased from $48,440 for the threemonths ended June 30, 2007 to $71,816 for the three months ended June 30,2008.

 

As a result of the above-mentioned expenses, net losses increased from$143,088 for the three months ended June 30, 2007 to $295,735 for thethree months ended June 30, 2008.

 

**Six Months Ended June 30, 2008Compared to Six Months Ended June 30, 2007**

 

**Revenues**

 

We have generated nooperating revenues from operations from our inception. We believe we will beginearning revenues from operations in 2008 from actual operation as wetransition from a development stage company to that of an active growthstage company.

 

**Costs and Expenses**

 

From our inception through June 30,2008, we have incurred cumulative losses of $5,636,934. In addition, asignificant part of the overall remaining costs are associated principally withequity-based compensation to employees and consultants, research and developmentcosts and professional services rendered.

 

Selling, general and administrative (“SG&A”) expenses increased by$303,472 from $151,337 for the six months ended June 30, 2007 to $454,809for the six months ended June 30, 2008. SG&A expenses consisted of accounting,legal, consulting, public relations, startup and organizational expenses.SG&A expenses also included non-cash charges from the issuance of stock,warrants and stock options in the amounts of $25,913 for the six months ended June 30, 2007and $78,597 for the six months ended June 30, 2008, a period to periodincrease of $52,684. The remaining SG&A expenses which required cashamounted to approximately $376,212 and $125,424 for the six months ended June 30,2008 and 2007, respectively. We used stock in lieu of cash to conserve our cashresources.

 

Research and development costs increased from $94,542 for the sixmonths ended June 30, 2007 to $104,726 for the six months ended June 30,2008.

 

As a result of the above-mentioned expenses, net losses increased from$245,945 for the six months ended June 30, 2007 to $564,614 for the sixmonths ended June 30, 2008.

 

**Liquidity and Capital Resources**

 

As of June 30, 2008, wehad working capital of $53,023 as compared to $141,588 as of December 31,2007. Our cash position was $116,116 as of June 30, 2008 compared to$179,617 as of December 31, 2007. From inception to June 30, 2008 wehave incurred an operating cash flow deficit of $2,384,999, which has beenprincipally financed through the private placement of our common stock. As of June 30,2008, we have no long term debt.

 

We expect to continue toincur additional losses and negative cash flows from operating activities forthe next two years.

 

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Our available workingcapital and capital requirements will depend upon numerous factors, includingprogress of our research and development programs, our progress in and the costof pre-clinical and clinical testing, the timing and cost of obtainingregulatory approvals, the cost of filing and prosecuting patent claims andother intellectual property rights, completing technological and marketdevelopments, current and future licensing relationships, the status of ourcompetitors, and our ability to establish collaborative arrangements with otherorganizations .

 

Our continued operationswill depend on whether we are able to raise additional funds through variouspotential sources, such as equity and debt financing, collaborative andlicensing agreements, strategic alliances, and our ability to realize the fullpotential of our technology in development. Such additional funds may notbecome available on acceptable terms, if at all, and there can be no assurancethat any additional funding that we do obtain will be sufficient to meet ourneeds in the long term. Through August 11, 2008, virtually all of ourfinancing has been through private placements of common stock and warrants. Weintend to continue to fund operations from cash on-hand and through the similarsources of capital previously described for the foreseeable future. We can giveno assurances that any additional capital that we are able to obtain will besufficient to meet our needs. We believe that we will continue to incur netlosses and negative cash flows from operating activities for the next twoyears. Based on the resources available to us on August 11, 2008, we cansustain our present burn rate for one year. We will need additional equityor debt financing to accelerate the growth of our operations through theremainder of 2008 and we may need additional financing thereafter.

 

**Off-Balance Sheet Arrangements**

 

We do not have anyoff-balance sheet arrangements.

 

**Inflation**

 

It is our opinion thatinflation has not had a material effect on our operations.

 

**Critical Accounting Policies**

 

Our financial statements areprepared in accordance with accounting principles generally accepted in theUnited States of America, which requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent assets and liabilities at the date of the financialstatements and the reported amounts of revenues and expenses during thereporting period. Actual results could differ from those estimates.

 

The following accountingpolicies are critical in fully understanding and evaluating our reportedfinancial results:

 

**Accounting for Stock-BasedCompensation**

 

We account for our stockoptions and warrants using the fair value method promulgated by Statement ofFinancial Accounting Standards No. 123R “Share-Based Compensation” whichaddresses the accounting for transactions in which an entity exchanges itsequity instruments for goods or services. Therefore, our results includenon-cash compensation expense as a result of the issuance of stock options andwarrants and we expect to record additional non-cash compensation expense inthe future.

 

**ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.**

 

N/A

 

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**ITEM 4T.CONTROLS AND PROCEDURES.**

 

*Evaluation of Disclosure Controls and Procedures*. Under the supervision and with theparticipation of our management, including our President, Chief FinancialOfficer and Secretary, we evaluated the effectiveness of the design andoperation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”))as of the end of the period covered by this report. Based upon that evaluation,our President, Chief Financial Officer and Secretary concluded that ourdisclosure controls and procedures as of the end of the period covered by thisreport were effective such that the information required to be disclosed by usin reports filed under the Securities Exchange Act of 1934 is (i) recorded,processed, summarized and reported within the time periods specified in the SEC’srules and forms and (ii) accumulated and communicated to ourmanagement to allow timely decisions regarding disclosure. A controls systemcannot provide absolute assurance, however, that the objectives of the controlssystem are met, and no evaluation of controls can provide absolute assurancethat all control issues and instances of fraud,  if any, within a companyhave been detected.

 

*Changes in Internal Control Over Financial Reporting.* During the most recent quarter ended June 30,2008, there has been no change in our internal control over financial reporting(as defined in Rule 13a-15(f) and 15d-15(f) under the ExchangeAct) ) that has materially affected, or is reasonably likely to materiallyaffect, our internal control over financial reporting.

 

**PART II**

 

**ITEM 1.LEGAL PROCEEDINGS.**

 

We are not a party to anypending legal proceeding, nor is our property the subject of a pending legalproceeding, that is not in the ordinary course of business or otherwisematerial to the financial condition of our business. None of our directors,officers or affiliates is involved in a proceeding adverse to our business orhas a material interest adverse to our business.

 

**ITEM 1A.RISK FACTORS.**

 

N/A

 

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

 

During the three monthsended June 30, 2008, we issued and sold 74,444 shares of common stock forproceeds of $167,499.  In addition, weissued 8,000 shares of common stock to consultants for services rendered in theamount of $18,000. In connection with the issuance of such shares, we relied onthe exemption from registration provided by Section 4(2) of theSecurities Act of 1933, as amended.

 

**ITEM 3.DEFAULTS UPON SENIOR SECURITIES.**

 

None

 

**ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.**

 

None

 

**ITEM 5.OTHER INFORMATION.**

 

None

 

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**ITEM 6.EXHIBITS.**

 
| **Exhibit  Number** | ** ** | **Description of Exhibit**                                                                                                                                                                |
|---------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                |       |                                                                                                                                                                                      |
| 31.1                |       | Certifications  required by Rule 13a-14, as adopted pursuant to Section 302 of the  Sarbanes-Oxley Act of 2002.                                                                 |
| 32.1                |       | Certification  of Chief Executive Officer and Principal Accounting Officer pursuant to 18  U.S.C.§ 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley  Act of 2002. |

 

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**SIGNATURES**

 

Pursuant to the requirementsof the Securities Exchange Act of 1934, the registrant has duly caused thisreport to be signed on its behalf by the undersigned, thereunto dulyauthorized.

 
|                       | IRIS BIOTECHNOLOGIES INC.                                                                                                                                                |
|----------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                       |
|                       | /s/ Simon Chin                                                                                                                                                           |
|  August 11, 2008 | Simon Chin                                                                                                                                                               |
|                       | President, Chief Executive Officer, Chief  Financial  Officer and Director (Principal Executive Officer,  Principal Accounting Officer and  Principal Financial Officer) |
|                            |                                                                                                                                                                          |  |

 

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