irbio-sb2a061507.htm
As
filed with the Securities and Exchange Commission on June 15,
2007 |
Registration
no. 333-120784
|
United
States
Securities
and Exchange Commission
Washington,
D.C. 20549
Form
SB-2/A
Amendment
No. 1
Registration
Statement under the Securities Act of 1933
IR Biosciences
Holdings, Inc.
(Name
of small business issuer in its charter)
Delaware
|
|
2834
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|
13-3301899
|
(State
or other jurisdiction of incorporation or organization)
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|
(Primary
Standard Industrial Classification Code Number)
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|
(I.R.S.
Employer Identification No.)
|
4021
North 75th Street, Suite 201 Scottsdale,
Arizona 85251
(480)
922-3926
(Address
and telephone number of Principal Executive Offices)
Michael
K. Wilhelm, Chief Executive Officer
4021
North 75th Street, Suite 201 Scottsdale,
Arizona 85251
(480)
922-3926
(Name,
address and telephone number of agent for service)
Copies
to
Thomas
J.
Poletti, Esq.
Anh
Q.
Tran, Esq.
Eliel
Flores, Esq.
Kirkpatrick
& Lockhart Preston Gates Ellis LLP
10100
Santa Monica Blvd., 7th floor Los
Angeles, CA 90067
Telephone
(310) 552-5000 Facsimile (310)
552-5001
APPROXIMATE
DATE OF PROPOSED SALE TO THE PUBLIC: From time to time after the effective
date
of this Registration Statement
If
any of
the securities being registered on this form are to be offered on a delayed
or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box. x
If
this
form is filed to register additional securities for an offering pursuant to
Rule
462(b) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. o
If
this
form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. o
If
this
form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement the same
offering. o
If
delivery of the prospectus is expected to be made pursuant to Rule 434, please
check the following box. o
CALCULATION
OF REGISTRATION FEE
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|
TITLE
OF EACH CLASS OF SECURITIES
TO
BE REGISTERED
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AMOUNT
TO BE REGISTERED (1)
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PROPOSED
MAXIMUM
OFFERING
PRICE PER SHARE
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PROPOSED
MAXIMUM AGGREGATE OFFERING PRICE
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AMOUNT
OF REGISTRATION FEE
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|
Common
stock, $.001 par value (3)
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$ |
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|
$ |
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|
$ |
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|
Common
stock, $.001 par value
(4)
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|
17,133,125
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|
|
0.18
(2)
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|
|
3,083,962.50(2)
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|
|
332
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|
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|
|
|
|
|
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|
$ |
|
* |
*An
SEC
Registration Fee of $1,113 was previously paid.
(Footnotes
to table on next page)
(1)
In accordance with Rule 416(a), the Registrant is
also registering hereunder an indeterminate number
of additional shares of common stock that shall be issuable
pursuant to Rule 416 to prevent dilution resulting from stock splits,
stock dividends or similar transactions.
(2)
Estimated pursuant to Rule 457(c) of the Securities Act of 1933 solely for
the purpose of computing the amount of the registration fee based on
the average of the bid and ask prices reported on the
OTC Bulletin Board on June 11, 2007.
(3)
Represents shares of the Registrant's common stock being
registered for resale that have been issued to
the selling stockholders named in the prospectus or a
prospectus supplement.
(4)
Represents shares of the Registrant's common stock being
registered for resale that have been or may
be acquired upon the exercise of warrants issued to the
selling stockholders named in the prospectus or a prospectus
supplement.
THE
REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS
MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A
FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a),
MAY
DETERMINE.
PROSPECTUS
Subject
to Completion, Dated June 15, 2007
The information
in this prospectus is not complete and may be changed. We may not
sell these securities until
the registration statement filed with the Securities
and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and
we are not soliciting offers to
buy these securities in any state where the offer or sale is not
permitted.
57,480,548
SHARES
IR
BIOSCIENCES HOLDINGS, INC.
COMMON
STOCK
This
prospectus relates to 57,480,548 shares of common stock of IR BioSciences
Holdings, Inc. that may be sold from time to time by the selling stockholders
named in this prospectus. We will not receive any proceeds from the sales by
the
selling stockholders, but we will receive funds from the exercise of warrants
held by selling stockholders, if exercised.
Our
common stock is traded on the OTC Bulletin Board maintained by the National
Association of Securities Dealers, Inc. under the symbol "IRBO." On June
11,
2007, the closing sales price for our common stock on the OTC Bulletin Board
was
$0.18 per share.
THE
SECURITIES OFFERED BY THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 6.
Neither
the Securities and Exchange Commission nor any state securities commission
has
approved or disapproved of these securities or determined if this prospectus
is
truthful or complete. Any representation to the contrary is a criminal
offense.
The
date
of this prospectus is __________, 2007
This
summary highlights some information from this prospectus, and
it may not contain all of the information that is important to you. You
should read the following summary together with the more detailed
information regarding our company and the
common stock being sold in
this offering, including "Risk Factors" and our
consolidated financial statements and related
notes, included elsewhere in this prospectus. All share and per
share information included in this prospectus has
been adjusted for a 1-for-20 reverse split of our common stock
that we effected in July 2003 and a 2-for-1 forward stock
split of our common stock that we effected in April 2004.
OUR
COMPANY
IR
BioSciences Holdings, Inc. is a development stage biotechnology company. Through
our wholly-owned subsidiary ImmuneRegen BioSciences, Inc., we are engaged in
the
research and development of potential drug candidates, Homspera™ and its
derivatives, Radilex™ and Viprovex™. We defined Radilex and Viprovex as
derivatives of Homspera due to the potential difference in formulations and
indications for use of such compounds. Our goal is to develop these potential
drug candidates to be used as possible countermeasures for homeland security
threats, including radiological, chemical and biological agents, such as
influenza and anthrax. We hope there may exist not only a market for products
related to biodefense through governmental purchasing, but there also may exist
a potential commercial market for treatments of cancer treatment side-effects
and seasonal influenza.
Our
patents, patent applications and continued research are derived from discoveries
made during research studies related to the function of Substance P, which
is
found in the body and has a large number of actions. These studies were funded
by the Air Force Office of Scientific Research (AFOSR) in the early 1990s and
were conducted by research scientists, including our co-founders Drs. Mark
Witten and David Harris. In the course of research on Substance P, these
scientists created a number of synthetic analogues, structural derivatives
with
slight chemical differences, for study. One of these, which we have named
Homspera, is the basis for our drug development efforts and our intellectual
property. All of our research and development efforts are early, pre-clinical
stage and Homspera has only undergone exploratory studies to evaluate its
biological activity in small animals. There can be no assurance that our
interpretation of the results of our studies will prove to be accurate after
further testing and our beliefs regarding the potential uses of our drug
candidates may never materialize.
Our
current focus is on the development of two potential formulations derived
from Homspera, Radilex and Viprovex.
We
are
researching Radilex for use as a potential treatment for acute exposure to
radiation. To date we have sponsored seven studies and co-sponsored three
studies all of which were conducted utilizing rodents. The results of these
studies suggest Radilex may play a role in increased survival among tested
rodents following exposure to lethal doses of gamma radiation. We believe that
Radilex, if developed, may be an acceptable candidate to be marketed to
governmental agencies for procurement. Further, we believe that a commercial
market may exist for the use of Radilex as it relates to the treatment of
radiation-induced side effects of cancer treatments, either as a stand alone
treatment or as a co-therapeutic agent to be used with other
therapies.
Viprovex
is being researched by us for use in potential treatments of exposure to
biological agents, such as infectious disease, which include influenza and
anthrax. Based on early studies on Homspera and existing literature on Substance
P, we are researching the efficacy of Viprovex as a potential treatment for
exposure to chemical agents, such as formalin. To date we have sponsored three
studies related to the treatment of influenza, three on the exposure to anthrax
spores and one on exposure to formalin. We believe the results of these studies
indicated potential efficacy in the use of Viprovex as both a stand alone
treatment and an adjuvant, to be used in conjunction with other drugs. If
Viprovex can be developed, we believe that potential applications may exist
for
sale to governments for the treatment of exposure to anthrax and pandemic
influenza. In addition, we believe that potential commercial opportunities
may
exist for the treatment of seasonal influenza and other viral or bacterial
infections, either as a stand-along drug or as an adjuvant to other existing
drugs.
To
date
we have submitted preliminary study data to the U.S. Food and Drug
Administration (FDA) and have been issued two Pre-Investigational New Drug
(PIND) numbers, one for the potential use of Radilex in the treatment of acute
radiation syndrome and the other for the potential use of Viprovex in the
treatment of avian influenza.
We
have
filed patent applications and provisional patent applications, for the use
of
Homspera and derivatives thereof. We own four registered patents, two issued
U.S. and two issued foreign patents. We also have 39 pending patents, comprised
of three pending Patent Cooperation Treaty (PCT) applications, ten pending
U.S.
provisional patent applications and 26 pending foreign provisional patent
applications.
Our
potential drug candidates, Radilex and Viprovex, are at early, pre-clinical
stages of development and may not be shown to be safe or effective and may
never
receive regulatory approval. Neither Radilex nor Viprovex have yet been tested
in large animals or humans. There is no guarantee that regulatory authorities
will ever permit human testing of Radilex, Viprovex or any other potential
products derived from Homspera. Even if such testing is permitted, none of
Radilex, Viprovex or any other potential drug candidates, if any, derived from
Homspera may be successfully developed or shown to be safe or
effective.
The
results of our pre-clinical studies may not be indicative of future clinical
trial results. A commitment of substantial resources to conduct time-consuming
research, pre-clinical studies and clinical trials will be required if we are
to
develop any commercial applications using Homspera or any derivatives thereof.
Delays in planned patient enrollment in our future clinical trials may result
in
increased costs, program delays or both. None of our potential technologies
may
prove to be safe or effective in clinical trials. Approval of the FDA, or other
regulatory approvals, including export license permissions, may not be obtained
and even if successfully developed and approved, our potential applications
may
not achieve market acceptance. Any potential applications resulting from our
programs may not be successfully developed or commercially available for a
number of years, if at all.
To
date,
we have not obtained regulatory approval for or commercialized any applications
using Homspera or any of its derivatives. We have incurred significant losses
since our inception and we expect to incur annual losses for at least the next
three years as we continue with our drug research and development
efforts.
COMPANY
HISTORY
We
were
originally incorporated in the State of Delaware in June 1985 under the name
Vocaltech, Inc. to develop, design, manufacture and market products utilizing
proprietary speech-generated tactile feedback devices. We completed our initial
public offering of our securities in October 1987. In January 1992, we effected
a 1-for-6.3 reverse stock split of our common stock. We changed our name to
InnoTek, Inc. in November 1992. In December 1994, we acquired all of the
outstanding stock of InnoVisions, Inc., a developer and marketer of skin
protective products, discontinued our prior operations in their entirety and
changed our name to DermaRx Corporation. In April 2000, we effected a reverse
merger with a subsidiary of Go Public Network, Inc., which was engaged in
assisting early-stage development and emerging growth companies with financial
and business development services. We changed our name to GoPublicNow.com,
Inc.,
effected a 1-for-5 reverse stock split and discontinued our prior operations
in
their entirety. In November 2000, we changed our name to GPN Network, Inc.
In
July 2001, we discontinued the operations of GPN Network, Inc. in their entirety
and began looking for appropriate merger partners. Our objective became the
acquisition of an operating company with the potential for growth in exchange
for our securities. In July 2003, we effected a reverse merger with ImmuneRegen
BioSciences, Inc., adopted our current business model and thereafter changed
our
name to IR BioSciences Holdings, Inc. In July 2003, we effected a 1-for-20
reverse stock split, and in April 2004, we effected a 2-for-1 stock split.
In
June 2006, our shareholders voted to increase the number of authorized shares
of
Common Stock to 250,000,000. ImmuneRegen BioSciences, Inc. was incorporated
in
October 2002; all information contained herein refers to the operations of
ImmuneRegen BioSciences, Inc., our wholly-owned operational
subsidiary.
Common
stock offered by selling stockholders
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57,480,548
shares(1)
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Common
stock outstanding
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114,322,539
shares(2)
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Use
of Proceeds
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We
will not receive any proceeds from
the sale of the common stock, but we will receive funds
from the exercise of warrants by selling stockholders, if
exercised.
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OTC
Bulletin Board
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IRBO
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(1)
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Represents
40,347,423 shares of our common stock that were issued
to selling stockholders and 17,133,125 shares of our common stock
underlying warrants that were issued to selling
stockholders.
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(2)
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The
number of shares of common stock outstanding as of June 11,
2007 listed above excludes:
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·
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63,212 shares
of our common stock issuable upon exercise of options at
a weighted average exercise price of $25.00
per share that were granted outside of our
2003 Stock Option, Deferred Stock and Restricted Stock
Plan;
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·
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6,014,212
shares of common stock issuable upon the exercise
of options at a weighted average exercise price of
$0.23 granted under our
2003 Stock Option, Deferred Stock and Restricted
Stock Plan; 5,039,717 of which are currently
exercisable;
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·
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35,295,647
shares of our common stock issuable upon exercise of warrants with
exercise prices ranging from $0.01 to $2.00 per share;
31,399,814 of which are currently exercisable;
and,
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·
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695,000
shares issuable upon exercise of warrants at an exercise price of
$0.32
per share to be granted as per the terms of a service agreement if
certain
milestones are reached.
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SUMMARY
FINANCIAL INFORMATION
The
following summary financial information has been derived from the financial
statements that are included elsewhere in this prospectus. You should read
this
information in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the financial statements
and
the related notes thereto included elsewhere in this prospectus.
Summary
of Condensed Consolidated Statement of
Losses
(Unaudited)
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For
the Three Months Ended March 31,
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For
the Period October 30, 2002 to
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2007
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2006
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March
31, 2007
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Selling,
general and administrative expenses
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Impairment
of intangible asset costs
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Cost
of penalty for late registration of shares
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(Gain)
loss from marking to market - warrant portion
of
penalty for late registration of shares
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-
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(6,868
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)
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(378,198
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)
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(Gain)
loss from marking to market - stock portionof
penalty for late registration of shares
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-
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52,423
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(760,058
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)
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Interest
(income) expense, net
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Total
other (income) expense
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Income
(loss) before income taxes
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Provision
for income taxes
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Net
income (loss) per share - basic and diluted
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Weighted
average shares outstanding -
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Summary
of Condensed Consolidated Balance Sheet Data
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As
of March 31,
2007
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As
of December 31, 2006
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(Unaudited)
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Assets
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Cash
and cash equivalents
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Prepaid
services and other current assets
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Deposits
and other assets
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Furniture
and equipment, net of accumulated depreciation
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Liabilities
and Stockholders' Equity
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Accounts
payable and accrued liabilities
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Current
portion of notes payable
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Total
current liabilities
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Commitments
and Contingencies
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Preferred
stock, $0.001 par value:
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10,000,000
shares authorized, no shares issued and outstanding
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Common
stock, $0.001 par value; 250,000,000 shares
authorized;
|
|
|
|
|
|
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114,322,536
shares issued and outstanding at March 31, 2007
and
108,041,897 shares issued and outstanding at December 31,
2006
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|
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Additional
paid-in capital
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Deficit
accumulated during the development stage
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Total
stockholders’ equity
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Total
liabilities and stockholders' equity
|
|
|
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ADDITIONAL
INFORMATION
We
are
incorporated in State of Delaware. Our executive offices are located at
4021 N.
75th Street, Suite 201, Scottsdale, Arizona 85251. Our telephone number
is (480)
922-3926. We maintain a website at www.immuneregen.com. The reference to
our
worldwide web address does not constitute incorporation by reference of
the
information contained on our website.
In
this prospectus, the terms "we," "us,"
the "Company," and "our" refer to
IR BioSciences Holdings, Inc., a Delaware corporation, and its consolidated
subsidiary, as appropriate in the context, and, unless the
context otherwise requires, "common stock" refers to the common stock,
par value $0.001 per share, of IR BioSciences Holdings, Inc.
Any investment
in our common stock involves a high degree of risk.
You should carefully consider the risks described below and all
of the information contained in
this prospectus before deciding whether to purchase our
common stock. The risks described below are all of the material
risks that are facing our company. If any of
the following risks actually occur, our business, financial
condition and results of operations could be harmed. The trading price of
our common stock could decline, and you may lose all
or part of your investment in our common stock.
Risks
Related To Our Financial Results
We
have limited cash resources, an accumulated deficit, have generated no revenues
to date are not currently profitable and expect to incur significant expenses
in
the near future.
We
are
focused on product development and have not generated any revenue to date.
We do
not believe we will begin earning revenues from operations until the calendar
year 2009 as we transition from a development stage company. We have incurred
operating losses since our inception. Our net loss for the three months ended
March 31, 2007 was $861,539 As of March 31, 2007 we had an accumulated deficit
of $14,146,539. Our net loss for the fiscal year ended December 31, 2006 and
December 31, 2005 was $1,486,046 and $4,591,107 respectively. As of December
31,
2006, we had an accumulated deficit of $13,285,180.
As
of
March 31, 2007, we had a working capital of $1,760,646. This amount consists
of
cash of $2,124,695 and other current assets of $106,959 less accounts payable
and accrued liabilities of $421,008 and notes payable of $50,000. As of December
31, 2006, we had working capital of $2,320,533. This amount consists of cash
of
$2,752,103 and prepaid services of $79,399 less accounts payable and accrued
liabilities of $460,969, and notes payable of $50,000. We have incurred a net
loss of $14,146,539 for the period from our inception in October 30, 2002 to
March 31, 2007 and we have incurred a net loss of $13,285,180 for the period
from our inception in October 2002 to December 31, 2006. We have always
experienced negative cash flow. We expect to continue to experience negative
cash flow and operating losses through at least 2010 and possibly thereafter.
As
a result, we will need to generate significant revenues to achieve
profitability. We may never become profitable and as a result the
value and market price of our common stock may substantially
decline.
Our
independent outside auditors have raised substantial doubt about our ability
to
continue as a going concern.
Our
independent certified public accountants have stated in their report included
on
our annual report on SEC Form 10-KSB filed with the Securities and Exchange
Commission on April 17, 2007 and Form 10-KSB/A filed with the Securities and
Exchange Commission on April 30, 2007 that we have incurred a net loss and
negative cash flows from operations of $1,486,046 and $2,035,484, respectively,
for the year ended December 31, 2006. During the three months ended
March 31, 2007, the Company used cash in operating activities of $621,404 and
had a net loss of $861,359. From the date of inception (October 30, 2002) to
March 31, 2007, the Company has had a net loss of $14,146,539 and has used
cash
of $6,615,346 in operating activities.
Our
expectations to continue to incur net losses and negative cash flow from
operations and a lack of operational history, among other matters, that raise
substantial doubt about our ability to continue as a going concern, which
contemplates, among other things, the realization of assets and satisfaction
of
liabilities in the normal course of business. The effect of this going concern
would materially and adversely affect our ability to raise capital, our
relationship with potential suppliers and customers, and have other unforeseen
effects.
We
will be required to raise additional capital to fund our operations. If we
cannot raise needed additional capital in the future, we will be required to
cease operations.
Based
on
our current plans, we believe our existing financial resources, and interest
earned thereon, will be sufficient to meet our operating expenses and capital
requirements through January 2008. However, changes in our research and
development plans or other events affecting our operating expenses may result
in
the expenditure of such cash before that time. We estimate that we will require
an additional $2.5 million over the next 24 months in order to finance our
research and development efforts, fund operating expenses, pursue regulatory
clearances and prosecute and defend our intellectual property rights. We may
seek such additional funding through public or private financing or through
collaborative arrangements with strategic partners.
You
should be aware that in the future:
· we
may not obtain additional financial resources when necessary or on terms
favorable to us, if at all; and
· any
available additional financing may not be adequate.
If
we
cannot raise additional funds when needed, or on acceptable terms, we will
not
be able to continue to develop our drug candidates. We require substantial
working capital to fund our operations. Since we do not expect to generate
any
revenues in the foreseeable future, in order to fund operations, we will be
completely dependent on additional debt and equity financing arrangements.
There
is no assurance that any financing will be sufficient to fund our capital
expenditures, working capital and other cash requirements beyond January 2008.
No assurance can be given that any such additional funding will be available
or
that, if available, can be obtained on terms favorable to us. If we are unable
to raise needed funds on acceptable terms, we will not be able to develop or
enhance our products, take advantage of any future opportunities or respond
to
competitive pressures or unanticipated requirements. A material shortage of
capital will require us to take drastic steps such as reducing our level of
operations, disposing of selected assets or seeking an acquisition partner.
If
cash is insufficient, we will not be able to continue operations.
We
have deferred, and may continue to defer, payment of some of our obligations,
which may adversely affect our ability to obtain goods and services in the
future.
We
estimate that we will require approximately $2.5 million to meet our expenses
for the next 24 months. Until such time, if at all, as we receive adequate
funding, we intend to defer payment of all of our obligations that are capable
of being deferred. Such deferment has resulted in the past, and may result
in
the future, in some vendors demanding cash payment for their goods and services
in advance, and other vendors refusing to continue to do business with us,
which
may adversely affect our ability to obtain goods and services in the future,
or
to do so on favorable terms. There is no guarantee that we will be able to
defer
payment of any of our obligations, at which point we will be forced to find
immediate funding to settle such obligations. If we do not find such funding,
we
may not be able obtain the services and goods needed to continue our
operations.
We
will need to conduct significant additional research, preclinical testing and
clinical testing and expect to incur losses as we research, develop and seek
regulatory approvals for our potential products.
All
of
our research and development efforts are early, pre-clinical stage and Homspera
has only undergone exploratory studies to evaluate its biological activity
in
small animals. We will need to conduct significant additional research,
pre-clinical testing and clinical testing before we can file applications with
the FDA for approval of our product candidates. To date we have not yet made
applications with the FDA or any other governmental regulatory agency for
approval for our drug candidates, nor have we been in a position to seek such
approval. Until such time as we are able to file a New Drug Application (NDA),
and it is subsequently approved, we will not be able to market or manufacture
any products.
If
our
potential products fail in clinical trials or do not gain regulatory approval,
or if our products do not achieve market acceptance, we will not be profitable.
If we fail to become and remain profitable, or if we are unable to fund our
continuing losses, our business may fail. In addition, to compete effectively,
any future products must be easy to use, cost-effective and economical to
manufacture on a commercial scale. We may not achieve any of these
objectives.
Our
operating expenses are unpredictable, which may adversely affect our business,
operations and financial condition.
As
a
result of our limited operating history and because of the emerging nature
of
the markets in which we will compete, our financial data is of limited value
in
planning future operating expenses. To the extent our operating expenses precede
or are not rapidly followed by increased revenue, our business, results of
operations and financial condition may be materially adversely affected. Our
expense levels will be based in part on our expectations concerning future
revenues. We currently anticipate that a significant portion of any revenue
would be derived from Radilex and Viprovex; however, the size and extent of
such
revenues, if any, are wholly dependent upon the choices and demand of
individuals, which are difficult to forecast accurately. We may be unable to
adjust our operations in a timely manner to compensate for any unexpected
shortfall in revenues. Further, business development and marketing expenses
may
increase significantly as we further our product development.
Risks
Related To Our Business
If
our plan is not successful or management is not effective, the value of our
Common stock may decline.
Our
operating subsidiary, ImmuneRegen BioSciences, Inc., was founded in October
2002. As a result, we are a development stage company with a limited operating
history that makes it impossible to reliably predict future growth and operating
results. Our business and prospects must be considered in light of the risks
and
uncertainties frequently encountered by companies in their early stages of
development. In particular, we have not demonstrated that we can:
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ensure
that any potential drug candidate would function as intended in large
animal studies or human clinical
applications;
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obtain
the regulatory approvals necessary to commercialize products that
we may
develop in the future;
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manufacture,
or arrange for third-parties to manufacture, future products in a
manner
that will enable us to be
profitable;
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establish
many of the business functions necessary to operate, including sales,
marketing, administrative and financial functions, and establish
appropriate financial controls;
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make,
use, and sell future products without infringing upon third party
intellectual property rights; or
|
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respond
effectively to competitive
pressures.
|
We
cannot
be sure that we will be successful in meeting these challenges and addressing
these risks and uncertainties. If we are unable to do so, our business will
not
be successful.
If
we do not obtain government regulatory approval for our products, we cannot
sell
our products and we will not generate revenues.
Our
principal development efforts are currently centered on Radilex and Viprovex,
which are potential drug candidates derived from Homspera. All drug candidates
require U.S. Food and Drug Administration ("FDA") and foreign government
approvals before they can be commercialized. These regulations change from
time
to time and new regulations may be adopted. Our research and development efforts
for our drug candidates are at a very early stage; they have not been, and
may
not be, approved for commercial sale by the FDA or any other governmental
regulatory agency. We may incur significant additional operating losses over
the
next several years as we fund development, clinical testing and other expenses
while seeking regulatory approval. To date we have conducted limited
pre-clinical studies of our potential drug candidates using various small animal
models; significant additional trials are required, and we may not be able
to
demonstrate that these drug candidates are safe or effective. If we are unable
to demonstrate the safety and effectiveness of a particular drug candidate
to
the satisfaction of regulatory authorities, the drug candidate will not obtain
required government approval. If we do not receive FDA or foreign approvals
for
our products, we will not be able to sell our potential products and will not
generate revenues. Even if we receive regulatory approval of a potential
product, such approval may impose limitations on the indicated uses for which
we
may market the product, which may limit our ability to generate significant
revenues.
All
our applications are derived from the use of Homspera. If Homspera is found
to
be unsafe or ineffective, our business would be materially
harmed.
Our
current potential drug candidates, Radilex and Viprovex, are derived from
Homspera. In addition, we plan to utilize Homspera in the development of any
future products we market. If these current or future product candidates are
found to be unsafe or ineffective due to the use of Homspera, we may have to
modify or cease production of the products. As all of our applications utilize
or will utilize Homspera, any findings that Homspera is unsafe or ineffective
would severely harm our business operations, since all of our primary revenue
sources would be negatively affected by such findings.
If
we fail to successfully develop and commercialize products, we will have to
cease operations.
Our
failure to develop and commercialize products successfully will cause us to
cease operations. Our current potential drug candidates, Radilex and Viprovex,
will require significant additional research and development efforts and
regulatory approvals prior to potential commercialization in the future. We
cannot guarantee that we will ever obtain any regulatory approvals of Homspera,
Radilex or Viprovex. We currently are focusing our core competencies on the
development of Radilex and Viprovex although there may be no assurance that
we
will be successful in so doing.
Our
current potential drug candidates, Radilex, Viprovex and our technologies
utilizing Homspera are at early stages of development and may not be shown
to be
safe or effective and may never receive regulatory approval. Neither Radilex
nor
Viprovex nor our technologies utilizing Homspera have yet been tested in large
animals or humans. Regulatory authorities may not permit large animal or human
testing of Radilex, Viprovex or any other potential products derived from
Homspera. Even if large animal or human testing is permitted, none of Radilex,
Viprovex or any other potential drug candidate, if any, derived from Homspera
may be successfully developed or shown to be safe or effective.
The
results of our pre-clinical studies may not be indicative of future pre-clinical
or clinical trial results. A commitment of substantial resources to conduct
time-consuming research, pre-clinical studies and clinical trials will be
required if we are to develop any products. Delays in planned patient enrollment
in our clinical trials may result in increased costs, program delays or both.
None of our potential products or technologies may prove to be safe or effective
in clinical trials. Approval of the FDA, or other regulatory approvals,
including export license permissions, may not be obtained and even if
successfully developed and approved, our potential products may not achieve
market acceptance. Any potential products resulting from our programs may not
be
successfully developed or commercially available for a number of years, if
at
all.
Moreover,
unacceptable toxicity or side effects could occur at any time in the course
of
human clinical trials or, if any products are successfully developed and
approved for marketing, during commercial use of any of our proposed products.
The appearance of any unacceptable toxicity or side effects could interrupt,
limit, delay or abort the development of any of our proposed products or, if
previously approved, necessitate their withdrawal from the market.
The
market for treating aspects of acute radiation syndrome and exposure to various
chemical and biological agents is uncertain and if we are unable to successfully
commercialize Radilex or Viprovex, we will not recognize a significant portion
of our future revenues, if any.
If
Radilex, our current potential drug candidate to treat aspects of acute
radiation syndrome (ARS) and Viprovex, our potential drug candidate to treat
exposure to various biological and chemical agents, are approved by the FDA,
we
cannot predict with any certainty the size of the markets for them, if any.
The
potential market for Radilex and Viprovex is largely dependent on the size,
if
any, of procurement orders by the U.S. and foreign governments. While a number
of governments have historically stockpiled drugs to treat indications such
as
smallpox, anthrax exposure, plague, tularemia and certain long-term effects
of
radiation exposure, we are unaware of any significant stockpiling orders for
drugs to treat ARS.
To
date,
although we have filed formal responses to governmental grants, Request for
Information (RFI) and Request for Proposal (RFP) for therapeutics to treat
ARS
and exposure to various chemical and biological agents, none have resulted
in
funding, purchase orders or a commitment to purchase our potential products,
if
any. Additionally, we cannot guarantee that our response to any future RFI,
RFP
or other grant application will result in funding, purchase orders or a
commitment to purchase our potential products, if any.
Any
decision by the U.S. Government to enter into a commitment to purchase Radilex
or Viprovex prior to FDA approval is largely out of our control. Our development
plans and timelines may vary substantially depending on whether we receive
such
a commitment and the size of such commitment, if any. In addition, even if
Radilex or Viprovex is approved by regulatory authorities, we cannot guarantee
that we will receive any purchase orders for Radilex or Viprovex, that any
such
order would be profitable to us or that Radilex or Viprovex will achieve market
acceptance by the general public.
The
lengthy product approval process and uncertainty of government regulatory
requirements may delay or prevent us from commercializing proposed products,
and
therefore adversely affect the timing and level of future revenues, if
any.
The
process of obtaining FDA and other regulatory approvals is time consuming,
expensive and difficult to design and implement. Our current drug candidates,
Radilex and Viprovex, will have to undergo clinical trials and the marketing
and
manufacturing of these drug candidates, if any, will be subject to rigorous
testing procedures. Our research and development efforts are at a very early
stage and Radilex and Viprovex have only undergone pre-clinical testing in
small
animals. We may not be able to obtain the necessary approvals for clinical
trials, manufacturing or marketing of Radilex and Viprovex or any other
potential products, if any, derived from Homspera. Moreover, any significant
delays in clinical trials will impede our ability to commercialize our
applications and generate revenue and could significantly increase our
development costs. The commencement and completion of clinical trials for
Radilex, Viprovex or any other potential products, if any, derived from
Homspera, could be delayed or prevented by a variety of factors,
including:
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delays
in obtaining regulatory approvals to commence a
study;
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delays
in identifying and reaching agreement on acceptable terms with prospective
clinical trial sites;
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delays
in the enrollment of patients;
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lack
of efficacy during clinical trials;
or,
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unforeseen
safety issues.
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Even
if
marketing approval from the FDA is received, the FDA may impose post-marketing
requirements, such as:
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labeling
and advertising requirements, restrictions or limitations, including
the
inclusion of warnings, precautions, contra-indications or use limitations
that could have a material impact on the future profitability of
our
applications;
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testing
and surveillance to monitor our future products and their continued
compliance with regulatory
requirements;
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submitting
products for inspection and, if any inspection reveals that the product
is
not in compliance, prohibiting the sale of all
products;
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suspending
manufacturing; or,
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withdrawing
marketing clearance.
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Additionally,
the FDA's policies may change and additional government regulations may be
enacted which could prevent or delay regulatory approval of our applications.
We
cannot predict the likelihood, nature or extent of adverse government regulation
that may arise from future legislation or administrative action, either in
the
United States or abroad. If we are not able to maintain regulatory compliance,
we might not be permitted to market our potential future products and our
business could suffer.
Even
if
human clinical trials of Radilex, Viprovex or any other potential products,
if
any, derived from Homspera are initiated and successfully completed, the FDA
may
not approve any of them for commercial sale. We may encounter significant delays
or excessive costs in our efforts to secure necessary approvals. Regulatory
requirements are evolving and uncertain. Future United States or foreign
legislative or administrative acts could also prevent or delay regulatory
approval of our products. We may not be able to obtain the necessary approvals
for clinical trials, manufacturing or marketing of any of our potential products
under development. Even if commercial regulatory approvals are obtained, they
may include significant limitations on the indicated uses for which a product
may be marketed.
The
FDA
has not designated expanded access protocols for Radilex or Viprovex as
"treatment" protocols. The FDA may not determine that Radilex or Viprovex meet
all of the FDA's criteria for use of an investigational drug for treatment
use.
Even if Radilex or Viprovex are allowed for treatment use, third party payers
may not provide reimbursement for the costs of treatment with any of them.
The
FDA also may not consider Radilex or Viprovex to be an appropriate candidate
for
acceptance as Emergency Use Authorization for Promising Medical Countermeasures
Under Development, accelerated approval, expedited review or fast track
designation.
If
we fail to obtain approval from foreign regulatory authorities, we will not
be
allowed to market or sell our potential products in other countries, which
would
adversely affect our levels of future revenues, if any.
Marketing
any drug products outside of the United States will subject us to numerous
and
varying foreign regulatory requirements governing the design and conduct of
human clinical trials and marketing approval. Additionally, our ability to
export our potential drug candidates outside the United States on a commercial
basis will be subject to the receipt from the FDA of export permission, which
may not be available on a timely basis, if at all.
Approval
procedures vary among countries and can involve additional testing, and the
time
required to obtain approval may differ from that required to obtain FDA
approval. Foreign regulatory approval processes include all of the risks
associated with obtaining FDA approval set forth above, and approval by the
FDA
does not ensure approval by the health authorities of any other
country.
Clinical
trials may fail to demonstrate the safety and efficacy of our potential drug
candidates, the effect of which could prevent or significantly delay regulatory
approval and therefore adversely affect the timing and level of future revenues,
if any.
Prior
to
receiving approval to commercialize Radilex, Viprovex or any other potential
products, if any, derived from Homspera, we must demonstrate with substantial
evidence from well-controlled clinical trials, and to the satisfaction of the
FDA and other regulatory authorities in the United States and abroad, that
they
are both safe and effective. We will need to demonstrate such potential
products' efficacy and monitor their safety throughout the process. If any
future clinical trials are unsuccessful, our business and reputation would
be
harmed and our stock price would be adversely affected.
All
of
our applications are prone to the risks of failure inherent in biologic
development. The results of early-stage clinical trials of our applications
do
not necessarily predict the results of later-stage clinical trials. Applications
in later-stage clinical trials may fail to show desired safety and efficacy
traits despite having progressed through initial clinical testing. Even if
we
believe the data collected from clinical trials of our applications is
promising, this data may not be sufficient to support approval by the FDA or
any
other U.S. or foreign regulatory approval. Pre-clinical and clinical data can
be
interpreted in different ways. Accordingly, FDA officials could interpret such
data in different ways than we do which could delay, limit or prevent regulatory
approval. The FDA, other regulatory authorities, or we may suspend or terminate
clinical trials at any time. Any failure or significant delay in completing
clinical trials for our applications, or in receiving regulatory approval for
the sale of any products resulting from our applications, may severely harm
our
business and reputation.
Delays
in the conduct or completion of our pre-clinical or clinical studies or the
analysis of the data from our pre-clinical or clinical studies may result in
delays in our planned filings for regulatory approvals or adversely affect
our
ability to enter into collaborative arrangements.
We
may
encounter problems with some or all of our completed or ongoing studies that
may
cause us or regulatory authorities to delay or suspend our ongoing studies
or
delay the analysis of data from our completed or ongoing studies. If the results
of our ongoing and planned studies for our drug candidates are not available
when we expect or if we encounter any delay in the analysis of the results
of
our studies for our drug candidates:
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we
may not have the financial resources to continue research and development
of any of our drug candidates; and,
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we
may not be able to enter into collaborative arrangements relating
to any
drug candidate subject to delay in regulatory
filing.
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Any
of
the following reasons, among others, could delay or suspend the completion
of
our ongoing and future studies:
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delays
in enrolling volunteers;
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interruptions
in the manufacturing of our drug candidates or other delays in the
delivery of materials required for the conduct of our
studies;
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lower
than anticipated retention rate of volunteers in a
trial;
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unfavorable
efficacy results;
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serious
side effects experienced by study participants relating to the drug
candidate;
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new
communications from regulatory agencies about how to conduct these
studies; or,
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failure
to raise additional funds.
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Our
lack of commercial manufacturing, sales, distribution and marketing experience
may prevent us from successfully commercializing products, which would adversely
affect our level of future revenues, if any.
The
manufacturing process of Radilex, Viprovex or any other potential products,
if
any, derived from Homspera is expected to involve a number of steps and requires
compliance with stringent quality control specifications imposed by us and
by
the FDA. We have no experience in the sales, marketing and distribution of
pharmaceutical or biotechnology products and we have not manufactured any of
the
limited quantities of Radilex and Viprovex used in our studies to date. We
may
not successfully arrange for contract manufacturing of Radilex, Viprovex or
any
other potential products, if any, derived from Homspera in production quantities
and this could prevent us from commercializing products or limit our
profitability from any such proposed products.
We
rely on third party manufacturers for the manufacture of Radilex, Viprovex
and
Homspera. Our inability to manufacture Radilex, Viprovex and Homspera, and
our
dependence on such manufacturers, may delay or impair our ability to generate
revenues, or adversely affect our profitability.
For
the
manufacture of Radilex, Viprovex and Homspera, we obtain synthetic peptides
from
third party manufacturers. If any of these proposed manufacturing operations
prove inadequate, there may be no assurance that any other arrangements may
be
established on a timely basis or that we could establish other manufacturing
capacity on a timely basis. Our dependence on such manufacturers may delay
or
impair our ability to generate revenues, or adversely affect our
profitability.
We
rely
on arrangements with contract manufacturing companies in order to meet
requirements for Radilex, Viprovex and Homspera. By choosing to contract for
manufacturing services, we may encounter costs, delays and/or other difficulties
in producing, packaging and distributing our clinical trials and finished
product, if any. Further, contract manufacturers must also operate in compliance
with the cGMP requirements; failure to do so could result in, among other
things, the disruption of our proposed product supplies. Our planned dependence
upon third parties for the manufacture of our proposed products may adversely
affect our potential profit margins, if any, and our ability to develop and
deliver proposed products on a timely and competitive basis.
If
the manufacturers of our products do not comply with current good manufacturing
practices regulations, or cannot produce the amount of products we need to
continue our development, we will fall behind on our business
objectives.
The
manufacture of our product candidates or any future products, whether done
by
outside contractors as planned or internally, must comply with current Good
Manufacturing Practices, or cGMP, regulations enforced by the FDA and foreign
equivalents. If a manufacturer of our drug candidates does not conform to the
cGMP regulations and cannot be brought up to such a standard, we will be
required to find alternative manufacturers that do conform. This may be a long
and difficult process, and may delay our ability to receive FDA or foreign
regulatory approval of our products.
We
also
rely on our manufacturers to supply us with a sufficient quantity of our drug
candidates to conduct clinical trials. If we have difficulty in the future
obtaining our required quantity and quality of such supply, we could experience
significant delays in our development programs and regulatory
process.
Even
if we are permitted to market our potential products, adverse determinations
concerning product pricing, reimbursement and related matters could prevent
us
from successfully commercializing Radilex, Viprovex and Homspera which would
adversely affect our level of future revenues, if any.
Our
ability to earn any revenue on Radilex, Viprovex or any other potential
products, if any, derived from Homspera will depend in part on the extent to
which reimbursement for the costs of such products and related treatments will
be available from government health administration authorities, private health
coverage insurers, managed care organizations and other organizations. Failure
to obtain appropriate reimbursement may prevent us from successfully
commercializing Radilex, Viprovex or any other potential products, if any,
derived from Homspera. Third-party payers are increasingly challenging the
prices of medical products and services. If purchasers or users of Radilex,
Viprovex or any such other potential products, if any, derived from Homspera
are
not able to obtain adequate reimbursement for the cost of using such products,
they may forego or reduce their use. Significant uncertainty exists as to the
reimbursement status of newly approved health care products and whether adequate
third party coverage will be available.
The
medical community may not accept and utilize Radilex, Viprovex or any other
potential product, if any, derived from Homspera, the effect of which would
prevent us from successfully commercializing any proposed product and adversely
affect our level of future revenue, if any.
Our
ability to market and commercialize Radilex, Viprovex or any other potential
product, if any, derived from Homspera depends on the acceptance of potential
drug candidates based on Homspera by the medical community. We will need to
develop commercialization initiatives designed to increase awareness about
us
and Homspera among targeted audiences, including public health activists and
community-based outreach groups in addition to the investment community.
Currently, we have not developed any such initiatives. Without such acceptance
of potential drug candidates based on Homspera, we may not be able to
successfully commercialize any proposed products or generate
revenue.
Product
liability exposure may expose us to significant liability or costs which would
adversely impart our future operating results and divert funds from the
operation of our business.
We
face
an inherent business risk of exposure to product liability and other claims
and
lawsuits in the event that the development or use of our technology or
prospective products is alleged to have resulted in adverse effects. We may
not
be able to avoid significant liability exposure. We may not have sufficient
insurance coverage, and we may not be able to obtain sufficient coverage at
a
reasonable cost. An inability to obtain product liability insurance at
acceptable cost or to otherwise protect against potential product liability
claims could prevent or inhibit the commercialization of our products. A product
liability claim could hurt our financial performance. Even if we avoid liability
exposure, significant costs could be incurred that could hurt our financial
performance.
We
may fail to protect adequately our proprietary technology, which would allow
competitors to take advantage of our research and development efforts, the
effect of which could adversely affect any competitive advantage we may
have.
We
own
two issued U.S. and two issued foreign patents. We also have 39 pending patents
relating to the use of Sar9, Met (O2)11-Substance
P,
comprised of three pending Patent Cooperation Treaty (PCT) applications, ten
pending U.S. provisional patent applications and 26 pending foreign provisional
patent applications.
Our
success will depend in part on our ability to obtain additional United States
and foreign patent protection for our drug candidates and processes, preserve
our trade secrets and operate without infringing the proprietary rights of third
parties. We place considerable importance on obtaining patent protection for
significant new technologies, products and processes.
If
we
fail to obtain or maintain these protections, we may not be able to prevent
third parties from using our proprietary rights. Our currently pending or future
patent applications may not result in issued patents. In the United States,
patent applications are confidential until patent applications are published
or
the patent is issued, and because third parties may have filed patent
applications for technology covered by our pending patent applications without
us being aware of those applications, our patent applications may not have
priority over any patent applications of others. In addition, our issued patents
may not contain claims sufficiently broad to protect us against third parties
with similar technologies or products or provide us with any competitive
advantage. If a third party initiates litigation regarding our patents, and
is
successful, a court could revoke our patents or limit the scope of coverage
for
those patents.
Legal
standards relating to the validity of patents covering pharmaceutical and
biotechnology inventions and the scope of claims made under such patents are
still developing. In some of the countries in which we intend to market our
products, pharmaceuticals are either not patentable or have only recently become
patentable. Past enforcement of intellectual property rights in many of these
countries has been limited or non-existent. Future enforcement of patents and
proprietary rights in many other countries may be problematic or unpredictable.
Moreover, the issuance of a patent in one country does not assure the issuance
of a similar patent in another country. Claim interpretation and infringement
laws vary by nation, so the extent of any patent protection is uncertain and
may
vary in different jurisdictions. The U.S. Patent and Trademark Office, commonly
referred to as the USPTO, and the courts have not consistently treated the
breadth of claims allowed in biotechnology patents. If the USPTO or the courts
begin to allow broader claims, the incidence and cost of patent interference
proceedings and the risk of infringement litigation will likely increase. On
the
other hand, if the USPTO or the courts begin to allow narrower claims, the
value
of our proprietary rights may be limited. Any changes in, or unexpected
interpretations of the patent laws may adversely affect our ability to enforce
our patent position.
We
also
rely upon trade secrets, proprietary know-how and continuing technological
innovation to remain competitive. We protect this information with reasonable
security measures, including the use of confidentiality agreements with our
employees, consultants and corporate collaborators. It is possible that these
individuals will breach these agreements and that any remedies for a breach
will
be insufficient to allow us to recover our costs. Furthermore, our trade
secrets, know-how and other technology may otherwise become known or be
independently discovered by our competitors.
Our
rights to the US Patent Nos. 5,945,508 and 5,998,376, Substance P Treatment
for
Immunostimulation, are limited by the rights of the University of Arizona and
the United States Air Force and as a result, our ability to use of the patent
in
our business is also limited. Due to these limitations, we may not be able
to
use the patent in the most profitable or efficient manner and, as a result,
our
results of operations may suffer. If patents are issued
for any of our pending patent applications, the same limitations would most
likely apply.
Our
agreements with the University of Arizona outline very specific rights in regard
to our sponsored-supported projects. In accordance with our sponsored-supported
project agreements, the University of Arizona retains the right to use data
developed during these projects for non-commercial purposes, including teaching,
research and education.
Further,
because our patents are based on research funded by the government, the U.S.
Government has certain rights in any technology developed. These rights include
a non-exclusive, paid-up, worldwide license under such inventions for any
governmental purpose. In addition, under the federal Bayh Dole Act, a party
which acquires an exclusive license for an invention that was partially funded
by a federal research grant is subject to the following government rights:
(i)
products using the invention which are sold in the U.S. are to be manufactured
substantially in the U.S. unless a waiver is obtained; (ii) the government
may
force the granting of a license to a third party who will make and sell the
needed product if the licensee does not pursue reasonable commercialization
of a
needed product using the invention; and (iii) the U.S. Government may use the
invention for its own needs.
As
a
result, our potential future revenues, if any, may be lessened. Additionally,
our profit margins, if any, may be lessened as our cost of goods may increase
if
we are mandated to manufacture our products substantially in the United States.
Additionally, the U.S. Government may elect to manufacture and use any products
based on our technology without paying us any revenue.
Our
patents and proprietary technology may not be enforceable and the patents and
proprietary technology of others may prevent us from commercializing products,
which would adversely affect our level of future revenues, if
any.
Although
we believe our proprietary technology to be protected and our patents
enforceable, the failure to obtain meaningful patent protection for our
potential products and processes would greatly diminish the value of our
potential products and processes.
In
addition, whether or not our applications are issued, or issued with limited
coverage, others may receive patents that contain claims applicable to our
potential products. Patents we are not aware of may adversely affect our ability
to develop and commercialize any potential products.
The
patent positions of biotechnology and pharmaceutical companies are often highly
uncertain and involve complex legal and factual questions. Therefore, the
breadth of claims allowed in biotechnology and pharmaceutical patents cannot
be
predicted. We also rely upon non-patented trade secrets and know how, and others
may independently develop substantially equivalent trade secrets or know how.
We
also rely on protecting our proprietary technology in part through
confidentiality agreements with our current and former corporate collaborators,
employees, consultants and certain contractors. These agreements may be
breached, and we may not have adequate remedies for any such breaches.
Litigation may be necessary to defend against claims of infringement, to enforce
our patents or to protect trade secrets. Litigation could result in substantial
costs and diversion of management efforts regardless of the results of the
litigation. An adverse result in litigation could subject us to significant
liabilities to third parties, require disputed rights to be licensed or require
us to cease using certain technologies.
Our
potential products could infringe on the intellectual property rights of others,
which may cause us to engage in costly litigation and, if not successful, could
cause us to pay substantial damages and prohibit us from selling our products.
Because patent applications in the United States are not publicly disclosed
until the patent application is published or the patent is issued, applications
may have been filed which relate to services similar to those offered by us.
We
may be subject to legal proceedings and claims from time to time in the ordinary
course of our business, including claims of alleged infringement of the
trademarks and other intellectual property rights of third parties.
If
our
potential products violate third-party proprietary rights, we cannot assure
you
that we would be able to arrange licensing agreements or other satisfactory
resolutions on commercially reasonable terms, if at all. Any claims made against
us relating to the infringement of third-party proprietary rights could result
in the expenditure of significant financial and managerial resources and
injunctions preventing us from providing services. Such claims could severely
harm our financial condition and ability to compete.
In
addition, if another party claims the same subject matter or subject matter
overlapping with the subject matter that we have claimed in a United States
patent application or patent, we may decide or be required to participate in
interference proceedings in the USPTO in order to determine the priority of
invention. Loss of such an interference proceeding would deprive us of patent
protection sought or previously obtained and could prevent us from
commercializing our potential products. Participation in such proceedings could
result in substantial costs, whether or not the eventual outcome is favorable.
These additional costs could adversely affect our financial
results.
Failure
to comply with environmental laws or regulations could expose us to significant
liability or costs which would adversely impact our operating results and divert
funds from the operation of our business have a material adverse effect on
our
business.
We
may be
required to incur significant costs to comply with current or future
environmental laws and regulations. Our research and development processes
involve the controlled storage, use and disposal of hazardous materials,
biological hazardous materials and radioactive compounds. We are subject to
federal, state and local laws and regulations governing the use, manufacture,
storage, handling and disposal of these materials and some waste products.
Although we believe that our safety procedures for handling and disposing of
these materials comply with the standards prescribed by these laws and
regulations, the risk of contamination or injury from these materials cannot
be
completely eliminated. In the event of an incident, IR BioSciences Holdings,
Inc. or ImmuneRegen BioSciences, Inc. could be held liable for any damages
that
result, and any liability could exceed our resources. Current or future
environmental laws or regulations may have a material adverse effect on our
operations, business and assets.
We
depend on the continued services of our executive officers and the loss of
a key
executive could severely impact our operations.
The
execution of our present business plan depends on the continued services of
Michael K. Wilhelm, our Chief Executive Officer and President, and Hal Siegel,
Ph.D., our Senior Director, Product Development and Regulatory Affairs. We
currently maintain a key-man insurance policy on Mr. Wilhelm and Dr. Siegel
for
$1,000,000 and $250,000 respectively, payable to the company, on their lives.
While we have entered into employment agreements with Mr. Wilhelm and Dr.
Siegel, the loss of any of their services would be detrimental to us and could
have a material adverse effect on our business, financial condition and results
of operations.
Risks
Related To This Offering
A
limited prior public market and trading market may cause volatility in the
price
of our common stock.
Our
common stock is currently traded on a limited basis on the OTC Bulletin Board
(the "OTCBB") under the symbol "IRBO". The OTCBB is an inter-dealer,
Over-The-Counter market that provides significantly less liquidity than the
NASDAQ Stock Market. Therefore, prices for securities traded solely on the
OTCBB
may be difficult to obtain and holders of common stock may be unable to resell
their securities at or near their original offering price or at any
price.
The
quotation of our common stock on the OTCBB does not assure that a meaningful,
consistent and liquid trading market currently exists, and in recent years
such
market has experienced extreme price and volume fluctuations that have
particularly affected the market prices of many smaller companies like us.
Our
common stock is thus subject to this volatility.
Sales
or issuances of additional equity securities may adversely affect the market
price of our common stock and your rights in us may be
reduced.
We
expect
to continue to incur product development and selling, general and administrative
costs, and in order to satisfy our funding requirements, we will need to sell
additional equity securities, which may be subject to similar registration
rights. The sale or the proposed sale of substantial amounts of our common
stock
in the public markets may adversely affect the market price of our common stock.
The registration and subsequent sales of such shares of common stock will likely
have an adverse effect on the market price of our common stock.
The
registration and subsequent sales of shares of our common stock will likely
have
an adverse effect on the market price of our common stock. From time to time,
certain stockholders of our company may be eligible to sell all or some of
their
shares of common stock by means of ordinary brokerage transactions in the open
market pursuant to Rule 144, promulgated under the Act ("Rule 144"), subject
to
certain limitations. In general, pursuant to Rule 144, a stockholder (or
stockholders whose shares are aggregated) who has satisfied a one-year holding
periods may, under certain circumstances, sell within any three-month period
a
number of securities which does not exceed the greater of 1% of the then
outstanding shares of our common stock or the average weekly trading volume
of
the class during the four calendar weeks prior to such sale. Rule 144 also
permits, under certain circumstances, the sale of securities, without any
limitations, by a non-affiliate of our company who has satisfied a two-year
holding period. Any substantial sale of our common stock pursuant to Rule 144
or
pursuant to any resale prospectus may have an adverse effect on the market
price
of our securities.
Our
stockholders may experience substantial dilution and a reduction in the price
that they are able to obtain upon sale of their shares. Also, any new equity
securities issued, including any new series of preferred stock authorized by
our
Board of Directors, may have greater rights, preferences or privileges than
our
existing common stock. To the extent stock is issued or options and warrants
are
exercised, holders of our common stock will experience further dilution. In
addition, as in the case of the warrants, in the event that any future financing
should be in the form of, be convertible into or exchangeable for, equity
securities and upon the exercise of options and warrants, security holders
may
experience additional dilution.
Our
common stock is considered a "penny stock," and is subject to additional sale
and trading regulations that may make it more difficult to
sell.
Our
common stock is considered to be a "penny stock" since it does not qualify
for
one of the exemptions from the definition of "penny stock" under Section 3a51-1
of the Securities Exchange Act for 1934 as amended (the "Exchange Act"). Our
common stock is a "penny stock" because it meets one or more of the following
conditions (i) the stock trades at a price less than $5.00 per share; (ii)
it is
NOT traded on a "recognized" national exchange; (iii) it is NOT quoted on the
Nasdaq Stock Market, or even if so, has a price less than $5.00 per share;
or
(iv) is issued by a company that has been in business less than three years
with
net tangible assets less than $5 million.
The
principal result or effect of being designated a "penny stock" is that
securities broker-dealers participating in sales of our common stock will be
subject to the "penny stock" regulations set forth in Rules 15-2 through 15g-9
promulgated under the Exchange Act. For example, Rule 15g-2 requires
broker-dealers dealing in penny stocks to provide potential investors with
a
document disclosing the risks of penny stocks and to obtain a manually signed
and dated written receipt of the document at least two business days before
effecting any transaction in a penny stock for the investor's account. Moreover,
Rule 15g-9 requires broker-dealers in penny stocks to approve the account of
any
investor for transactions in such stocks before selling any penny stock to
that
investor. This procedure requires the broker-dealer to (i) obtain from the
investor information concerning his or her financial situation, investment
experience and investment objectives; (ii) reasonably determine, based on that
information, that transactions in penny stocks are suitable for the investor
and
that the investor has sufficient knowledge and experience as to be reasonably
capable of evaluating the risks of penny stock transactions; (iii) provide
the
investor with a written statement setting forth the basis on which the
broker-dealer made the determination in (ii) above; and (iv) receive a signed
and dated copy of such statement from the investor, confirming that it
accurately reflects the investor's financial situation, investment experience
and investment objectives. Compliance with these requirements may make it more
difficult and time consuming for holders of our common stock to resell their
shares to third parties or to otherwise dispose of them in the market or
otherwise.
NOTE
REGARDING THIS PROSPECTUS
Please
read this prospectus carefully. It describes our
business, our financial condition and results of operations. We
have prepared this prospectus so that you will have the
information necessary to make an
informed investment decision.
You
should rely on the information contained in
this prospectus. We have not authorized anyone to provide
you with information different from that contained in
this prospectus. The selling stockholders are offering to
sell shares of our common stock and seeking offers to buy shares of
our common stock only in jurisdictions where offers and sales
are permitted. The information contained in
this prospectus is accurate only as of the date of the
prospectus, regardless of the time the prospectus is delivered or the
common stock is sold.
In
addition
to historical information, this prospectus contains statements relating to
our
future business and/or results, including, without limitation, the statements
under the captions "Summary," "Risk Factors," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business."
These
statements include certain projections and business trends that are
"forward-looking" within the meaning of the United States Private Securities
Litigation Reform Act of 1995 (the "PSLRA"). The safe harbor for forward-looking
statements under the PSLRA does not apply to our company. You can identify
these
statements by the use of words like "may," "could," "should," "project,"
"believe," "anticipate," "expect," "plan," "estimate," "forecast," "potential,"
"intend," "continue" and variations of these words or comparable words.
Forward-looking statements do not guarantee future performance and involve
risks
and uncertainties. Actual results will differ, and may differ materially,
from
projected results as a result of certain risks and uncertainties. These risks
and uncertainties include, without limitation, those described under "Risk
Factors" and those detailed from time to time in our filings with the SEC,
and
include, among others, the following:
·
|
Our
ability to raise additional funding and the amounts
raised, if any;
|
·
|
Our ability
to successfully develop and commercialize any
other proposed products, if any, derived from
Homspera;
|
·
|
A
lengthy approval process and the uncertainty of
FDA and
other government regulatory requirements may have
a material adverse effect on our ability
to commercialize Radilex, Viprovex or any other
proposed product, if any, derived from
Homspera;
|
·
|
Clinical
trials may fail to demonstrate the safety and effectiveness of
Radilex, Viprovex or any other proposed product, if any,
derived from Homspera, which could have a
material adverse effect on our ability to obtain government
regulatory approval;
|
·
|
The
degree and nature of our
competition;
|
·
|
Our
ability to employ and retain qualified employees;
and,
|
·
|
The
other factors referenced in this prospectus, including,
without limitation, under the sections entitled "Risk Factors," "Management's
Discussion and Analysis of Financial Condition and Results of
Operations," and "Business."
|
Other
sections of this prospectus may include additional factors which could adversely
impact our business and financial performance. Moreover, we operate in a
very
competitive and rapidly changing environment. New risk factors emerge from
time
to time and it is not possible for our management to predict all risk factors,
nor can we assess the impact of all factors on our business or to the extent
to
which any factor, or combination of factors, may cause actual results to
differ
materially from those contained in any forward-looking statements. Given
these
risks and uncertainties, investors should not place undue reliance on
forward-looking statements as a prediction of actual results. These
forward-looking statements are made only as of the date of this prospectus.
Except for our ongoing obligation to disclose material information as required
by federal securities laws, we do not intend to update you concerning any
future
revisions to any forward-looking statements to reflect events or circumstances
occurring after the date of this prospectus.
We
will
not receive any proceeds from the sale of the shares of common stock
by the selling stockholders, but we will receive funds from the
exercise of warrants held by selling stockholders, if
exercised.
MARKET
FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
Our
common stock is approved for quotation on the NASD OTC Bulletin Board under
the
symbol "IRBO". The following table sets forth the high and low bid prices for
our common stock for the periods noted, as reported by the National Daily
Quotation Service and the Over-The-Counter Bulletin Board. Quotations reflect
inter-dealer prices, without retail mark-up, markdown or commission and may
not
represent actual transactions.
|
2007
|
|
High
|
|
Low
|
|
|
$ |
0.17
|
|
|
$ |
0.12
|
2nd
Quarter (through
June 11, 2007)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0.35
|
|
|
$ |
0.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1.00
|
|
|
$ |
0.33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On
June
11, 2007, the closing price of our common stock as reported by the OTC Bulletin
Board was $0.18 per share. There were approximately 1,200 shareholders of
record
and beneficial stockholders of our common stock as of June 11, 2007. We have
not
paid any dividends on our common stock since inception and do not intend
to do
so in the foreseeable future.
We
have
not declared or paid any cash dividends on our common stock, and we currently
intend to retain future earnings, if any, to finance the expansion of our
business, and we do not expect to pay any cash dividends in the foreseeable
future. The decision whether to pay cash dividends on our common stock will
be
made by our Board of Directors, in their discretion, and will depend on our
financial condition, operating results, capital requirements and other factors
that the Board of Directors considers significant. We have never declared or
paid any dividends on our securities. We currently intend to retain our earnings
for funding growth and, therefore, do not expect to pay any dividends in the
foreseeable future.
This
prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Please note that the
safe harbor
for forward-looking statements under the Securities Act
of 1933 and the Securities Exchange Act do not apply to our
company. Our actual results could
differ materially from those set forth as
a result of general economic conditions and changes in
the assumptions used in making such forward-looking statements.
The following discussion and analysis of our financial condition and results
of operations should be read together with the
audited consolidated financial statements and accompanying notes and the
other financial information appearing elsewhere in this prospectus. The
analysis set forth below is provided pursuant to applicable Securities and
Exchange Commission regulations and is not intended to serve as a basis for
projections of future events.
Except
for historical information contained herein, the matters discussed in this
prospectus are forward-looking statements that are subject to certain risks
and
uncertainties that could cause actual results to differ materially from those
set forth in such forward-looking statements. Such forward-looking statements
may be identified by the use of certain forward-looking terminology, such
as
"may," "expect," "anticipate," "intend," "estimate," "believe," or comparable
terminology that involves risks or uncertainties. Actual future results and
trends may differ materially from historical and anticipated results, which
may
occur as a result of a variety of factors. Such risks and uncertainties include,
without limitation, factors discussed in management's discussion and analysis
of
financial condition and results of operations set forth below, as well as
in
"risk factors" set forth herein. Except for our ongoing obligation to disclose
material information as required by federal securities laws, we do not intend
to
update you concerning any future revisions to any forward-looking statements
to
reflect events or circumstances occurring after the date of this
prospectus.
Overview
IR
BioSciences Holdings, Inc. is a development stage biotechnology company. Through
our wholly-owned subsidiary ImmuneRegen BioSciences, Inc., we are engaged in
the
research and development of potential drug candidates, Homspera™ and its
derivatives, Radilex™ and Viprovex™. We defined Radilex and Viprovex as
derivatives of Homspera due to the potential difference in formulations and
indications for use of such compounds. Our goal is to develop these potential
drug candidates to be used as possible countermeasures for homeland security
threats, including radiological, chemical and biological agents, such as
influenza and anthrax. We hope there may exist not only a market for products
related to biodefense through governmental purchasing, but there also may exist
a potential commercial market for treatments of cancer treatment side-effects
and seasonal influenza.
Our
patents, patent applications and continued research are derived from discoveries
made during research studies related to the function of Substance P, which
is
found in the body and has a large number of actions. These studies were funded
by the Air Force Office of Scientific Research (AFOSR) in the early 1990s and
were conducted by research scientists, including our co-founders Drs. Mark
Witten and David Harris. In the course of research on Substance P, these
scientists created a number of synthetic analogues, structural derivatives
with
slight chemical differences, for study. One of these, which we have named
Homspera, is the basis for our drug development efforts and our intellectual
property. All of our research and development efforts are early, pre-clinical
stage and Homspera has only undergone exploratory studies to evaluate its
biological activity in small animals. There can be no assurance that our
interpretation of the results of our studies will prove to be accurate after
further testing and our beliefs regarding the potential uses of our drug
candidates may never materialize.
Our
current focus is on the development of two potential formulations derived from
Homspera, Radilex and Viprovex.
We
are
researching Radilex for use as a potential treatment for acute exposure to
radiation. To date we have sponsored seven studies and co-sponsored three
studies all of which were conducted utilizing rodents. The results of these
studies suggest Radilex may play a role in increased survival among tested
rodents following exposure to lethal doses of gamma radiation. We believe that
Radilex, if developed, may be an acceptable candidate to be marketed to
governmental agencies for procurement. Further, we believe that a commercial
market may exist for the use of Radilex as it relates to the treatment of
radiation-induced side effects of cancer treatments, either as a stand alone
treatment or as a co-therapeutic agent to be used with other
therapies.
Viprovex
is being researched by us for use in potential treatments of exposure to
biological agents, such as infectious disease, which include influenza and
anthrax. Based on early studies on Homspera and existing literature on Substance
P, we are researching the efficacy of Viprovex as a potential treatment for
exposure to chemical agents, such as formalin. To date we have sponsored three
studies related to the treatment of influenza, three on the exposure to anthrax
spores and one on exposure to formalin. We believe the results of these studies
indicated potential efficacy in the use of Viprovex as both a stand alone
treatment and an adjuvant, to be used in conjunction with other drugs. If
Viprovex can be developed, we believe that potential applications may exist
for
sale to governments for the treatment of exposure to anthrax and pandemic
influenza. In addition, we believe that potential commercial opportunities
may
exist for the treatment of seasonal influenza and other viral or bacterial
infections, either as a stand-along drug or as an adjuvant to other existing
drugs.
To
date
we have submitted preliminary study data to the U.S. Food and Drug
Administration (FDA) and have been issued two Pre-Investigational New Drug
(PIND) numbers, one for the potential use of Radilex in the treatment of acute
radiation syndrome and the other for the potential use of Viprovex in the
treatment of avian influenza.
We
have
filed patent applications and provisional patent applications, for the use
of
Homspera and derivatives thereof. We own four registered patents, two issued
U.S. and two issued foreign patents. We also have 39 pending patents, comprised
of three pending Patent Cooperation Treaty (PCT) applications, ten pending
U.S.
provisional patent applications and 26 pending foreign provisional patent
applications.
Our
potential drug candidates, Radilex and Viprovex, are at early, pre-clinical
stages of development and may not be shown to be safe or effective and may
never
receive regulatory approval. Neither Radilex nor Viprovex have yet been tested
in large animals or humans. There is no guarantee that regulatory authorities
will ever permit human testing of Radilex, Viprovex or any other potential
products derived from Homspera. Even if such testing is permitted, none of
Radilex, Viprovex or any other potential drug candidates, if any, derived from
Homspera may be successfully developed or shown to be safe or
effective.
The
results of our pre-clinical studies and clinical trials may not be indicative
of
future clinical trial results. A commitment of substantial resources to conduct
time-consuming research, pre-clinical studies and clinical trials will be
required if we are to develop any commercial applications using Homspera or
any
derivatives thereof. Delays in planned patient enrollment in our future clinical
trials may result in increased costs, program delays or both. None of our
potential technologies may prove to be safe or effective in clinical trials.
Approval of the FDA, or other regulatory approvals, including export license
permissions, may not be obtained and even if successfully developed and
approved, our potential applications may not achieve market acceptance. Any
potential applications resulting from our programs may not be successfully
developed or commercially available for a number of years, if at
all.
To
date,
we have not obtained regulatory approval for or commercialized any applications
using Homspera or any of its derivatives. We have incurred significant losses
since our inception and we expect to incur annual losses for at least the next
three years as we continue with our drug research and development
efforts.
Plan
of Operations
We
expect
to continue to incur increasing operating losses for the foreseeable future,
primarily due to our continued research and development activities attributable
to Radilex, Viprovex or any other proposed product, if any, derived from
Homspera and general and administrative activities.
Product
Research and Development
We
incurred an expense of $76,834 for the three months ended March 31, 2007 in
research and development activities related to the development of Radilex and
Viprovex versus an expense of $111,516 for the three months ended March 31,
2006. Due to our liquidity and limited cash available, our spending on research
and development activities was limited. From our inception in October 2002,
we
have spent $1,103,431 in research and development activities. These costs only
include the manufacture and delivery of our drug by third party manufacturers
and payments to contract research organizations for consulting related to our
studies and costs of performing such studies. Significant costs relating to
research and development, such as compensation for Dr. Siegel have been
classified in officer’s salaries for consistency of financial
reporting.
We
anticipate that during the next 12 months we will increase our research and
development spending to a total of approximately $700,000 in an effort to
further develop Radilex and Viprovex. This research and development cost
estimate includes additional animal pharmacology studies, formulation and animal
safety/toxicity studies. If we receive additional funds, through either
investment funding or grants, we expect we will increase our research and
development spending.
We
believe we will be able to apply to the FDA for approval for the use of Radilex
for the treatment of acute radiation syndrome and for approval for the use
of
Viprovex for the treatment of maladies caused by exposure to biological and
chemical agents based upon the "animal efficacy rule." Therefore, we intend
to
apply for approval based upon a rule adopted by the FDA in 2002, titled
"Approval of New Drugs When Human Efficacy Studies Are Not Ethical or Feasible"
(Code of Federal Regulations, Title 21, Part 314, Subpart I), which is also
referred to as the "animal efficacy rule." Pursuant to this rule, in situations
where it would be unethical to conduct traditional Phase III efficacy studies
in
humans, as is the case with our applications relating to the treatment of
maladies caused by exposure to high level gamma radiation and various chemical
and biological agents, the FDA will review new drugs for approval on the basis
of safety in humans and efficacy in relevant animal models. Under either the
animal efficacy rule or traditional efficacy rules, we will not have marketable
applications unless and until our drug candidates complete all required safety
studies and clinical trials and receive FDA approval in the United States or
approval by regulatory agencies outside of the United States.
If
we are
successful in completing our studies and the results are as we anticipate,
we
intend to prepare and submit the necessary documentation to the FDA and other
regulatory agencies for approval. If approval for Radilex and/or Viprovex is
granted, we expect to begin efforts to commercialize our product, if any,
immediately thereafter, however, since we are currently in the pre-clinical
stage of development, it will take an indeterminate amount of time in
development before we have a marketable drug, if ever.
We
believe that initial revenues, if any, will likely be generated through
partnerships, alliances and/or licensing agreements with pharmaceutical or
biotechnology companies. Our focus during the next 24 months will be to identify
those companies which we believe may have an interest in our proposed products
and attempt to negotiate arrangements for potential partnerships, alliances
and/or licensing arrangements. Alliances between pharmaceutical and
biotechnology companies can take a variety of organizational forms and involve
many different payment structures such as upfront payments, milestone payments,
equity injections and royalty payments. To date, we have not entered into
discussions with and have no agreements or arrangements with any such companies.
Even if we are successful in entering into such a partnership or alliance or
licensing our technology, we anticipate that the earliest we may begin to
generate revenues from operations would be calendar 2009. There is no assurance
that we will ever be successful in reaching such agreements or ever generate
revenues from operations.
We
will
need to generate significant revenues from product sales and or related
royalties and license agreements to achieve and maintain profitability. Through
March 31, 2007, we had no revenues from any product sales, royalties or
licensing fees, and have not achieved profitability on a quarterly or annual
basis. Our ability to achieve profitability depends upon, among other things,
our ability to develop products, obtain regulatory approval for products under
development and enter into agreements for product development, manufacturing
and
commercialization. Moreover, we may never achieve significant revenues or
profitable operations from the sale of any of our potential products or
technologies.
Number
of Employees
From
our
inception through June 11, 2007, we have relied and continue to
rely on the services of outside consultants for services and
currently have seven total employees, five full-time employees and two part-time
employees. Our full-time employees are Michael K. Wilhelm, our Chief Executive
Officer; John N. Fermanis, our Chief Financial Officer; Hal N. Siegel, Ph.D.,
Senior Director, Product Development and Regulatory Affairs, Chris Romano,
Scientific Associate; and, the fifth serves in an administrative role. In
order
for us to attract and retain quality personnel, we anticipate we will have
to
offer competitive salaries to future employees. We do not anticipate our
employment base will significantly change during the next 12
months.
CRITICAL
ACCOUNTING POLICIES
The
preparation of our consolidated financial statements in conformity with
accounting principles generally accepted in the United States requires us to
make estimates and judgments that affect our reported assets, liabilities,
revenues, and expenses, and the disclosure of contingent assets and
liabilities.
We
base
our estimates and judgments on historical experience and on various other
assumptions we believe to be reasonable under the circumstances. Future events,
however, may differ markedly from our current expectations and assumptions.
While there are a number of significant accounting policies affecting our
consolidated financial statements; we believe the following critical accounting
policy involves the most complex, difficult and subjective estimates and
judgments:
Stock-based
Compensation
Effective
January 1, 2006, the Company adopted SFAS No. 123 (revised), "Share-Based
Payment" (SFAS 123(R)) utilizing the modified prospective approach. Prior to
the
adoption of SFAS 123(R) we accounted for stock option grant in accordance with
APB Opinion No. 25, "Accounting for Stock Issued to Employees" (the intrinsic
value method), and accordingly, recognized compensation expense for stock option
grants.
Under
the
modified prospective approach, SFAS 123(R) applies to new awards and to awards
that were outstanding on January 1, 2006 that are subsequently modified,
repurchased or cancelled. Under the modified prospective approach, compensation
cost recognized in the nine months of fiscal 2006 includes compensation cost
for
all share-based payments granted prior to, but not yet vested as of January
1,
2006, based on the grant-date fair value estimated in accordance with the
original provisions of SFAS 123, and compensation cost for all share-based
payments granted subsequent to January 1, 2006 based on the grant-date fair
value estimated in accordance with the provisions of SFAS 123(R). Prior periods
were not restated to reflect the impact of adopting the new
standard.
Recent
Accounting Pronouncements
In
February 2006, the FASB issued SFAS No. 155. “Accounting for certain Hybrid
Financial Instruments an amendment of FASB Statements No. 133 and 140,” or
SFAS No. 155. SFAS No. 155 permits fair value remeasurement for any hybrid
financial instrument that contains an embedded derivative that otherwise would
require bifurcation, clarifies which interest-only strips and principal-only
strips are not subject to the requirements of Statement No. 133, establishes
a
requirement to evaluate interests in securitized financial assets to identify
interests that are freestanding derivatives or that are hybrid financial
instruments that contain an embedded derivative requiring bifurcation, clarifies
that concentrations of credit risk in the form of subordination are not embedded
derivatives, and amends SFAS No. 140 to eliminate the prohibition on a
qualifying special purpose entity from holding a derivative financial instrument
that pertains to a beneficial interest other than another derivative financial
instrument. SFAS 155 is effective for all financial instruments acquired or
issued after the beginning of an entity’s first fiscal year that begins after
September 15, 2006. We do not expect the adoption of SFAS 155 to have a material
impact on our consolidated financial position, results of operations or cash
flows.
In
March
2006, the FASB issued FASB Statement No. 156, Accounting for Servicing of
Financial Assets - an amendment to FASB Statement No. 140. Statement 156
requires that an entity recognize a servicing asset or servicing liability
each
time it undertakes an obligation to service a financial asset by entering into
a
service contract under certain situations. The new standard is effective for
fiscal years beginning after September 15, 2006. The adoption of SFAS No.156
did
not have a material impact on the Company's financial position and results
of
operations.
In
July
2006, the FASB issued Interpretation No. 48 (FIN 48). “Accounting for
uncertainty in Income Taxes”. FIN 48 clarifies the accounting for Income
Taxes by prescribing the minimum recognition threshold a tax position is
required to meet before being recognized in the financial statements. It also
provides guidance on derecognition, measurement, classification, interest and
penalties, accounting in interim periods, disclosure and transition and clearly
scopes income taxes out of SFAS 5, “Accounting for Contingencies”. FIN
48 is effective for fiscal years beginning after December 15, 2006. The Company
does not expect adoption of this standard will have a material impact on its
financial position, operations or cash flows.
In
September 2006 the Financial Account Standards Board (the “FASB”) issued its
Statement of Financial Accounting Standards 157, Fair Value Measurements. This
Statement defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles (GAAP), and expands disclosures
about fair value measurements. This Statement applies under other accounting
pronouncements that require or permit fair value measurements, the Board having
previously concluded in those accounting pronouncements that fair value is
the
relevant measurement attribute. Accordingly, this Statement does not require
any
new fair value measurements. However, for some entities, the application of
this
Statement will change current practice. FAS 157 effective date is for fiscal
years beginning after November 15, 2007. The Company does not expect adoption
of
this standard will have a material impact on its financial position, operations
or cash flows.
In
September 2006 the FASB issued its Statement of Financial Accounting Standards
158 “Employers’ Accounting for Defined Benefit Pension and Other Postretirement
Plans”. This Statement improves financial reporting by requiring an employer to
recognize the overfunded or underfunded status of a defined benefit
postretirement plan (other than a multiemployer plan) as an asset or liability
in its statement of financial position and to recognize changes in that funded
status in the year in which the changes occur through comprehensive income
of a
business entity or changes in unrestricted net assets of a not-for-profit
organization. This Statement also improves financial reporting by requiring
an
employer to measure the funded status of a plan as of the date of its year-end
statement of financial position, with limited exceptions. The effective date
for
an employer with publicly traded equity securities is as of the end of the
fiscal year ending after December 15, 2006. The Company does not expect adoption
of this standard will have a material impact on its financial position,
operations or cash flows
In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities.” SFAS 159 permits entities to choose
to measure many financial instruments, and certain other items, at fair value.
SFAS 159 applies to reporting periods beginning after November 15, 2007. The
adoption of SFAS 159 is not expected to have a material impact on the Company’s
financial condition or results of operations.
Results
of Operations for the Three Month Periods Ended March 31, 2007 and March 31,
2006
Revenue
We
have
not generated any revenues from operations from our inception. We believe we
will begin earning revenues from operations during calendar year 2009 as we
transition from a development stage company.
Costs
and Expenses
From
our
inception through March 31, 2007, we have incurred losses of $14,146,539.
These
expenses were associated principally with equity-based compensation to
employees
and consultants, product development costs and professional services, and
equity
based compensation to shareholders for the penalty incurred for the late
registration of shares.
Sales,
General, and Administrative Expenses
Sales,
general, and administrative expenses ("SG&A") were $874,110 for the three
months ended March 31, 2007, an increase of $312,966 or approximately 56%
compared to SG&A of $561,144 during the three months ended March 31, 2006.
The increase is primarily due to higher costs for officer compensation, non-cash
compensation and public relations. For the three months ended March 31, 2007,
this amount consisted primarily of officer compensation of $235,864, inclusive
of an incentive bonus of $82,239 in cash for Michael K. Wilhelm, President
and
C.E.O. per the terms of his employment agreement, public relations and marketing
of $115,262, legal and accounting fees of $114,271, non-cash compensation costs
of $182,920, research and development of $76,834, other consulting fees of
$25,854 and payroll and related costs of $19,826.
We
expect
SG&A to increase during the coming twelve months as we continue to build out
our infrastructure and to develop our potential drugs and
therapeutics.
Late
Registration Penalty
The
cost
of penalties for the late registration of shares, including cost adjustments
for
marking to market, was $0 for the three months ended March 31, 2007, a decrease
of $601,528 compared to late registration penalty costs of $601,528 charged
to
other expense during the three months ended March 31, 2006.
Interest
Income (net)
Interest
income (net) was $20,866 for the three months ended March 31, 2007, an increase
of $20,700 or approximately 12,469% compared to interest income of $166 for
the
three months ended March 31, 2006. Interest income increased during the three
months ended March 31, 2007 due to higher cash balances from the Private
Placement in the fourth quarter of 2006.
We
expect
interest income to decrease during the coming twelve months as we use the
proceeds from the Private Placement to fund operations.
Net
Loss
For
the
reasons stated above our net loss for the three months ended March 31, 2007
was
$861,359 or $0.01 per share, a decrease of $301,147 or approximately 26%
compared to a net loss of $1,162,506 for the three months ended March 31,
2006.
For
the
reasons stated above, our net loss for the twelve months ending December
31,
2006 was $1,486,046, or $0.02 per share and our net loss for the three months
ended March 31, 2007 was $861,359 or $0.01 per share. From the date of inception
(October 30, 2002) to March 31, 2007, we had a net loss of $14,146,539 or
$0.28
per share. We expect that losses will continue at least through the period
ending December 31, 2009.
We
have
incurred a net loss and negative cash flows from operations of $1,486,046 and
$2,035,484 respectively, for the year ended December 31, 2006. This loss, in
addition to a lack of operational history, raises substantial doubt about our
ability to continue as a going concern. In the absence of significant revenue
and profits, and since we do not expect to generate significant revenues in
the
foreseeable future, we, in order to fund operations, will be completely
dependent on additional debt and equity financing arrangements. There is no
assurance that any financing will be sufficient to fund our capital
expenditures, working capital and other cash requirements for the fiscal year
ending December 31, 2007. No assurance can be given that any such additional
funding will be available or that, if available, can be obtained on terms
favorable to us. If we are unable to raise needed funds on acceptable terms,
we
will not be able to develop or enhance our products, take advantage of future
opportunities or respond to competitive pressures or unanticipated requirements.
A material shortage of capital will require us to take drastic steps such as
reducing our level of operations, disposing of selected assets or seeking an
acquisition partner. If cash is insufficient, we will not be able to continue
operations.
We
expect
losses to increase during the coming twelve months. We do not expect to begin
to
generate revenue in the coming twelve months, and our costs are likely to
increase as continue our research and development efforts on our early,
pre-clinical stage products and build out our corporate
infrastructure.
Results
of Operations for the Twelve Month Periods Ended December 31, 2006 And
2005
Revenues
We
have
not generated any revenues from operations from our inception. We believe we
will begin earning revenues from operations during calendar year 2009 as we
transition from a development stage company.
Costs
and Expenses
From
our
inception through December 31, 2006, we have incurred losses of $13,285,180.
These expenses were associated principally with equity-based compensation to
employees and consultants, product development costs and professional services,
and equity based compensation to shareholders for the penalty incurred for
the
late registration of shares.
For
the
twelve months ending December 31, 2006, Sales, General and Administrative
expenses (“SG&A”) were $2,445,317, a decrease of $89,100 or approximately 4%
compared to SG&A expenses of $2,534,417 during the 12 months ended December
31, 2005. The decrease was primarily due to lower costs for non-cash
compensation.
For
the
twelve months ending December 31, 2006, Interest Expense (net) was $48,508,
an
increase of approximately 526% compared to Interest Income (net) of $11,386
during the 12 months ended December 31, 2005. Interest Expense increased because
the Company entered into notes payable during the twelve months ended December
31, 2006. We expect Interest Expense to decrease during the coming twelve months
as we have paid off outstanding notes payable with the proceeds of the Private
Placement.
During
the twelve months ending December 31, 2006, we recognized a gain of $438,601
for
the cost of the penalty for the late registration of shares which was a decrease
of $3,069,362 or approximately 117% compared to the cost of penalty for late
registration of shares for the twelve months ended December 31, 2005. The
reduction of the expense was due to stopping the accrual of penalty shares
in
2006 and the reversal of the accrual for penalty shares and warrants which
had
been previously accrued in excess of the cap amount agreed to by the
shareholders.
Net
Loss
For
the
reasons stated above, our net loss for the twelve months ending December 31,
2006 was $1,486,046, or $0.02 per share versus a net loss for the twelve months
ending December 31, 2005 of $4,591,107 or $0.07 per share. For the period of
inception (October 30, 2002) through December 31, 2006, our net loss was
$13,285,180, or $0.28 per share. We expect that losses will continue through
the
period ending December 31, 2010.
Our
independent certified public accountants have stated in their report included
in
this Form 10-KSB that we have incurred a net loss and negative cash flows from
operations of $1,486,046 and $2,035,484, respectively, for the year ended
December 31, 2006. This loss, in addition to a lack of operational history,
raises substantial doubt about our ability to continue as a going concern.
We
currently have sufficient working capital to fund operations through January
2008. In the absence of significant revenue and profits, and since we do not
expect to generate significant revenues in the foreseeable future, we, in order
to fund future operations, will be completely dependent on additional debt
and
equity financing arrangements. There is no assurance that any financing will
be
sufficient to fund our capital expenditures, working capital and other cash
requirements beyond January 2008. No assurance can be given that any such
additional funding will be available or that, if available, can be obtained
on
terms favorable to us. If we are unable to raise needed funds on acceptable
terms, we will not be able to develop or enhance our products, take advantage
of
future opportunities or respond to competitive pressures or unanticipated
requirements. A material shortage of capital will require us to take drastic
steps such as reducing our level of operations, disposing of selected assets
or
seeking an acquisition partner. If cash is insufficient, we will not be able
to
continue operations.
Penalties
for Late Registration
During
the three months ended March 31, 2006, we accrued the issuance of 1,383,600
shares of common stock and warrants to purchase an additional 544,800 shares
of
common stock pursuant to a penalty calculation with regard to the late
registration of shares sold in a private placement in October 2004.
In
October 2004, we completed a private placement sale of shares of our common
stock and warrants to purchase additional shares of common stock. We issued
in
the private placement an aggregate of 19,600,000 shares of our common stock
and
warrants to purchase 9,800,000 shares of our common stock. We agreed to register
these shares along with the shares underlying these warrants within ninety
days
from the closing date of the transaction, or we would incur a penalty equivalent
to an additional 2% of the shares and warrants to be registered for every
30
days that we fail to complete this registration. This penalty amounted to
an
aggregate of 461,200 shares and 181,600 warrants per 30 day period until
such a
time as this registration statement is made effective. As of March 31, 2006,
we
were required to issue an additional 6,625,907 shares of common stock and
warrants to purchase an additional 2,724,000 shares of common stock. At the
time
these liabilities were incurred, the shares were valued at $2,448,511 and
the
warrants were valued at $744,177. The shares were valued at the market price
of
the Company's common stock at the time the liabilities were incurred. The
warrants were valued utilizing the Black-Scholes valuation model. The aggregate
amount of $555,973 was charged to operations as cost of penalty for late
registration of shares during the three months ended March 31, 2006. The
shares
and warrants were re-valued at March 31, 2006, and the result of this
re-valuation was to increase the value of the shares by $52,423 and to decrease
the value of the warrants by $6,868. These decreases were credited to other
(income) expense during the three months ended March 31, 2006. At March 31,
2006, the fair value of the common stock issuable under the penalty for late
registration of shares is $2,186,549, and the fair value of the warrants
issuable under the penalty for late registration of shares is $476,662. These
amounts appear as current liabilities on our condensed consolidated balance
sheet at March 31, 2006.
We
attempted to register the shares and warrants by filing a registration statement
with the Securities and Exchange Commission on November 24, 2004, and amended
this registration statement with pre-effective amendments no. 1, 2, 3 and
4 on
July 20, 2005, November 16, 2005, February 22, 2006 and April 7, 2006,
respectively. On July 10, 2006 we, pursuant to Rule 477 of Regulation C of
the
Securities Act of 1933, as amended, applied for an order granting the immediate
withdrawal of its Registration Statement on Form SB-2.
In
August
2006, we reached an agreement with the investors in the private placement
of
October 2004 which limits the number of warrants and shares which we are
obligated to issue pursuant to the penalty calculation to an aggregate of
18% of
the number of original number of shares and warrants issued in the October
2004
private placement. This agreement limits the number of shares and warrants
issuable pursuant to the penalty calculation to an aggregate of 4,150,798
shares
and warrants to purchase an additional 1,634,400 shares, respectively. This
resulted in a decrease in the number of share issuable 2,475,107 (with a
fair
value of $816,785) and a decrease in the number of warrant shares of 974,587
(with a fair value of $177,789). This resulted in a net realized gain of
$994,574 during the three months ended June 30, 2006.
In
August
2006, we issued 4,150,798 shares and warrants to purchase 1,634,400 shares
and
relieved accrued liabilities in the aggregate amount of $1,053,904.
For
the
twelve months ended December 31, 2006 we marked to market the value of the
shares and warrants issuable pursuant to the penalty calculation for an
aggregate gain in the amount of approximately $445,673 and $123,505,
respectively.
Liquidity
And Capital Resources
At
March
31, 2007, we had current assets of $2,231,654 consisting of cash of $2,124,695
and other current assets of $106,959. At March 31, 2007, we also had current
liabilities of $471,008, consisting of accounts payable and accrued liabilities
of $421,008 and notes payable of $50,000. This resulted in net working capital
at March 31, 2007 of $1,760,646. During the three months ended March 31,
2007,
the Company used cash in operating activities of $621,404. From the date
of
inception (October 30, 2002) to March 31, 2007, the Company has had a net
loss
of $14,146,539 and has used cash of $6,615,346 in operating
activities.
At
December 31, 2006, we had current assets of $2,831,502 consisting of cash
of
$2,752,103 and prepaid services of $79,399. Also, at December 31, 2006, we
had
current liabilities of $510,969, consisting of accounts payable and accrued
liabilities of $460,969 and notes payable of $50,000. This resulted in working
capital of $2,320,533. During the twelve months ended December 31, 2006,
we used
cash in operating activities of $2,035,484. From the date of inception (October
30, 2002) to December 31, 2006, we had a net loss of $13,285,180 and used
cash
of $5,993,942 in operating activities. We met our cash requirements from
our
inception through December 31, 2006 via the private placement of $7,877,901
of
our common stock and $908,628 from the issuance of notes payable, net of
repayments.
We
currently have no revenue. There is no guarantee that our business model
will be
successful, or that we will be able to generate sufficient revenue to fund
future operations. As a result, we expect our operations to continue to use
net
cash, and that we will be required to seek additional debt or equity financings
during the coming quarters. Since inception, we have financed our operations
through debt and equity financing. While we have raised capital to meet our
working capital and financing needs in the past, additional financing is
required in order to meet our current and projected cash flow deficits from
operations and development of our product line. We met our cash requirements
from our inception through March 31, 2007 via the private placement of
$7,877,901 of our common stock and $908,628 from the issuance of notes payable,
net of repayments.
Since
our
inception, we have been seeking additional third-party funding. During such
time, we have retained a number of different investment banking firms to
assist
us in locating available funding; however, we have not yet been successful
in
obtaining any of the long-term funding needed to make us into a commercially
viable entity. During the period from October 2004 to March 2007, we were
able
to obtain financing of $9,097,736 from a series of private placements of
our
securities (which resulted in net proceeds to us of $7,877,901). . During
the
period from October 2004 to December 2006, we were able to obtain financing
of
$9,097,736 from a series of private placements of our securities (which resulted
in net proceeds to us of $7,877,901). Based on our current plan of operations
all of our current funding is expected to be depleted by the end of January
2008. If we are not successful in generating sufficient liquidity from
operations or in raising sufficient capital resources, it would have a material
adverse effect on our business, results of operations, liquidity and financial
condition.
In
December 2006, we completed a private placement, whereby we sold an aggregate
of
$5,482,600 worth of units to accredited investors. In consideration of the
investment, we granted to each investor certain registration rights and
anti-dilution rights. We have agreed that not before 180 days after the closing
of the private placement and not later than 190 days thereafter, that we shall
file with the SEC an appropriate registration statement to register these shares
along with the shares underlying these warrants. In the event that we fail
to
comply with the filing deadline, there shall be a 1% penalty for each 30 day
period (or pro rata portion thereof) paid to each investor in cash or additional
shares. This penalty amounts to an aggregate of 342,662 shares and 171,331
warrants per 30 day period until such a time as a registration statement that
includes these shares and warrants is filed or 12 months. As of December 31,
2006, we are not subject to any penalty.
On
August
1, 2006, we converted two cash advances into unsecured senior promissory notes
bearing interest at the rate of 12% per annum, in the respective amounts of
$50,000 and $20,000. These notes were entered into with individual accredited
investors, one of whom was a Director. Following the payment of fees and
expenses, we received net proceeds of approximately $68,600. On October 6,
2006,
principal and interest of $733 was returned on the $20,000 note.
In
July
2006, we received a cash advance from a Director in the amount of $25,000 to
be
used as an upfront payment for a radiation study. This advance bears interest
at
the rate of 12% per annum. This cash advance was not used, as no upfront payment
was required, and subsequently, principal and interest of $370 was returned
on
August 30, 2006.
On
July
25, 2006, we entered into an unsecured senior promissory note bearing interest
at the rate of 12% per annum in the amount of $250,000 with an accredited
investor. Following the payment of commissions and expenses, the Company
received net proceeds of approximately $210,000. On October 6, 2006 principal
and interest of $5,583 was returned.
In
June
2006, we issued 5,000 shares of common stock for cash of $450 pursuant to the
exercise of a warrant at $0.09 per share.
In
June
2006, we issued a note payable in the amount of $9,750 in exchange for
consulting services. This note bears interest at the rate of 7% per annum.
In
addition to the note payable, the consulting agreement calls for the issuance
of
695,000 common stock purchase warrants if certain milestones are met. The
warrants expire five years from the date of issuance and have an exercise price
of $0.32. On October 11, 2006, principal and interest of $237 was
returned.
On
April
13, 2006, we entered into an unsecured senior promissory note bearing interest
at the rate of 12% per annum in the amount of $500,000 with an accredited
investor. Following the payment of commissions and expenses, we received net
proceeds of approximately $439,875 On October 6, 2006 principal and interest
of
$28,500 was returned.
On
July
25, 2006, we entered into an unsecured senior promissory note in the amount
of
$250,000 with an accredited investor. Following the payment of commissions
and
expenses, the Company received net proceeds of approximately
$210,000.
Pursuant
to our employment agreement with Michael Wilhelm, our President and Chief
Executive Officer, dated December 16, 2002, we paid a salary of $125,000 and
$175,000 to Mr. Wilhelm during the first and second years of his employment,
respectively. Thereafter we paid through August 10, 2005, an annual salary
of
$250,000. On August 10, 2005, we entered into a new employment agreement with
Mr. Wilhelm. The new employment agreement calls for a salary at the rate of
$275,000 per annum and provides for bonus incentives. Mr. Wilhelm's salary
is
payable in regular installments in accordance with the customary payroll
practices of our company.
Pursuant
to our employment agreement with John Fermanis, our Chief Financial Officer,
dated February 15, 2005, we paid a salary of $60,000 until the company completed
a financing of $500,000 or more. This occurred on March 4, 2005 when the company
completed a tender offer for warrants totaling $1,211,000 net of fees. From
March 4, 2005, until December 31, 2005, we paid an annual salary of $85,000.
Thereafter, we paid an annual salary of $98,000 for the second year ending
December 31, 2006 and will pay an annual salary of $112,000 for the third year
ending December 31, 2007. Mr. Fermanis' salary is payable in regular
installments in accordance with the customary payroll practices of our
company.
Pursuant
to our employment agreement with Hal N. Siegel, our Senior Director of Product
Development and Regulatory Affairs, dated October 23, 2006, we will pay an
annual base salary of $200,000 for the first year and $210,000
for the second year. Mr. Siegel will also be eligible for discretionary bonuses
under the Company's stock option plan during his employment. In addition, Mr.
Siegel received options with a term of five years to purchase 200,000 shares
of
common stock of the Company. The options are exercisable at $0.20 per share.
The
employment agreement has a term of two years, subject to early termination
provisions. Upon termination of Mr. Sigel's employment by the Company without
cause or constructive termination, as defined in the agreement, the Company
agrees to pay to Mr. Siegel the remainder of his salary for the year or six
months salary, whichever is greater, and any accrued vacation.
Pursuant
to the terms of the change of control agreement, the Company agrees to pay
Mr.
Siegel his salary for a period of 18 months from the date an involuntary
termination, payable in accordance with the Company's compensation practice.
Involuntary termination is defined as the termination of Mr. Siegel's employment
by Company without cause or due to constructive termination at any time within
one-year from a change of control event, as defined in the
agreement.
While
we
have raised capital to meet our working capital and financing needs in the
past
through debt and equity financings, additional financing will be required in
order to implement our business plan and to meet our current and projected
cash
flow deficits from operations and development. There can be no assurance that
we
will be able to consummate future debt or equity financings in a timely manner
on a basis favorable to us, or at all. If we are unable to raise needed funds,
we will not be able to develop or enhance our potential products, take advantage
of future opportunities or respond to competitive pressures or unanticipated
requirements. A material shortage of capital will require us to take drastic
steps such as reducing our level of operations, disposing of selected assets
or
seeking an acquisition partner.
Our
independent certified public accountants have stated in their report included
on
our annual report on SEC Form 10-KSB filed with the Securities and Exchange
Commission on April 17, 2007 and Form 10-KSB/A filed with the Securities and
Exchange Commission on April 30, 2007 that we have incurred a net loss and
negative cash flows from operations of $1,486,046 and $2,035,484, respectively,
for the year ended December 31, 2006. During the three months ended March 31,
2007, we used cash in operating activities of $621,404 and had a net loss of
$861,359. From the date of inception (October 30, 2002) to March 31, 2007,
we
had a net loss of $14,146,539 and has used cash of $6,615,346 in operating
activities.
This
loss, in addition to a lack of operational history, raises substantial doubt
about our ability to continue as a going concern. In the absence of significant
revenue and profits, and since we do not expect to generate significant revenues
in the foreseeable future, we, in order to fund operations, will be completely
dependent on additional debt and equity financing arrangements. There is no
assurance that any financing will be sufficient to fund our capital
expenditures, working capital and other cash requirements for the fiscal year
ending December 31, 2007. No assurance can be given that any such additional
funding will be available or that, if available, can be obtained on terms
favorable to us. If we are unable to raise needed funds on acceptable terms,
we
will not be able to develop or enhance our products, take advantage of future
opportunities or respond to competitive pressures or unanticipated requirements.
A material shortage of capital will require us to take drastic steps such as
reducing our level of operations, disposing of selected assets or seeking an
acquisition partner. If cash is insufficient, we will not be able to continue
operations.
Until
such time, if at all, as we receive adequate funding, we intend to continue
to
defer payment of all of our obligations which are capable of being deferred,
which actions have resulted in some vendors demanding cash payment for their
goods and services in advance, and other vendors refusing to continue to do
business with us. We do not expect to generate a positive cash flow from our
operations for at least several years, if at all, due to anticipated
expenditures for research and development activities, administrative and
marketing activities, and working capital requirements and expect to continue
to
attempt to raise further capital through one or more further private placements.
Based on our operating expenses and anticipated research and development
activities we believe we have sufficient to meet or operating needs through
January 2008. Thereafter, we believe that we will require at least an additional
$500,000 to meet our expenses over the next 12 months.
Inflation
Our
opinion is that inflation has not had a material effect on our
operations.
Off-Balance
Sheet Arrangements
There
were no off-balance sheet arrangements as of March 31, 2007.
Acquisition
or Disposition of Plant and Equipment
We
acquired $32,397 worth of property, plant or equipment for the year ended
December 31, 2006. We did not dispose or acquire any significant property,
plant
or equipment during the first quarter ended March 31, 2007. We do not anticipate
the sale of any significant property, plant or equipment during the next twelve
months.
Overview
IR
BioSciences Holdings, Inc. is a development stage biotechnology company. Through
our wholly-owned subsidiary ImmuneRegen BioSciences, Inc., we are engaged in
the
research and development of potential drug candidates, Homspera™ and its
derivatives, Radilex™ and Viprovex™. We defined Radilex and Viprovex as
derivatives of Homspera due to the potential difference in formulations and
indications for use of such compounds. Our goal is to develop these potential
drug candidates to be used as possible countermeasures for homeland security
threats, including radiological, chemical and biological agents, such as
influenza and anthrax. We hope there may exist not only a market for products
related to biodefense through governmental purchasing, but there also may exist
a potential commercial market for treatments of cancer treatment side-effects
and seasonal influenza.
Our
patents, patent applications and continued research are derived from discoveries
made during research studies related to the function of Substance P, which
is
found in the body and has a large number of actions. These studies were funded
by the Air Force Office of Scientific Research (AFOSR) in the early 1990s and
were conducted by research scientists, including our co-founders Drs. Mark
Witten and David Harris. In the course of research on Substance P, these
scientists created a number of synthetic analogues, structural derivatives
with
slight chemical differences, for study. One of these, which we have named
Homspera, is the basis for our drug development efforts and our intellectual
property. All of our research and development efforts are early, pre-clinical
stage and Homspera has only undergone exploratory studies to evaluate its
biological activity in small animals. There can be no assurance that our
interpretation of the results of our studies will prove to be accurate after
further testing and our beliefs regarding the potential uses of our drug
candidates may never materialize.
Our
current focus is on the development of two potential formulations derived
from Homspera, Radilex and Viprovex.
We
are
researching Radilex for use as a potential treatment for acute exposure to
radiation. To date we have sponsored seven studies and co-sponsored three
studies all of which were conducted utilizing rodents. The results of these
studies suggest Radilex may play a role in increased survival among tested
rodents following exposure to lethal doses of gamma radiation. We believe that
Radilex, if developed, may be an acceptable candidate to be marketed to
governmental agencies for procurement. Further, we believe that a commercial
market may exist for the use of Radilex as it relates to the treatment of
radiation-induced side effects of cancer treatments, either as a stand alone
treatment or as a co-therapeutic agent to be used with other
therapies.
Viprovex
is being researched by us for use in potential treatments of exposure to
biological agents, such as infectious disease, which include influenza and
anthrax. Based on early studies on Homspera and existing literature on Substance
P, we are researching the efficacy of Viprovex as a potential treatment for
exposure to chemical agents, such as formalin. To date we have sponsored three
studies related to the treatment of influenza, three on the exposure to anthrax
spores and one on exposure to formalin. We believe the results of these studies
indicated potential efficacy in the use of Viprovex as both a stand alone
treatment and an adjuvant, to be used in conjunction with other drugs. If
Viprovex can be developed, we believe that potential applications may exist
for
sale to governments for the treatment of exposure to anthrax and pandemic
influenza. In addition, we believe that potential commercial opportunities
may
exist for the treatment of seasonal influenza and other viral or bacterial
infections, either as a stand-along drug or as an adjuvant to other existing
drugs.
To
date
we have submitted preliminary study data to the U.S. Food and Drug
Administration (FDA) and have been issued two Pre-Investigational New Drug
(PIND) numbers, one for the potential use of Radilex in the treatment of acute
radiation syndrome and the other for the potential use of Viprovex in the
treatment of avian influenza.
We
have
filed patent applications and provisional patent applications, for the use
of
Homspera and derivatives thereof. We own four registered patents, two issued
U.S. and two issued foreign patents. We also have 39 pending patents, comprised
of three pending Patent Cooperation Treaty (PCT) applications, ten pending
U.S.
provisional patent applications and 26 pending foreign provisional patent
applications.
Our
potential drug candidates, Radilex and Viprovex, are at early, pre-clinical
stages of development and may not be shown to be safe or effective and may
never
receive regulatory approval. Neither Radilex nor Viprovex have yet been tested
in large animals or humans. There is no guarantee that regulatory authorities
will ever permit human testing of Radilex, Viprovex or any other potential
products derived from Homspera. Even if such testing is permitted, none of
Radilex, Viprovex or any other potential drug candidates, if any, derived from
Homspera may be successfully developed or shown to be safe or
effective.
The
results of our pre-clinical studies and clinical trials may not be indicative
of
future clinical trial results. A commitment of substantial resources to conduct
time-consuming research, pre-clinical studies and clinical trials will be
required if we are to develop any commercial applications using Homspera or
any
derivatives thereof. Delays in planned patient enrollment in our future clinical
trials may result in increased costs, program delays or both. None of our
potential technologies may prove to be safe or effective in clinical trials.
Approval of the FDA, or other regulatory approvals, including export license
permissions, may not be obtained and even if successfully developed and
approved, our potential applications may not achieve market acceptance. Any
potential applications resulting from our programs may not be successfully
developed or commercially available for a number of years, if at
all.
To
date,
we have not obtained regulatory approval for or commercialized any applications
using Homspera or any of its derivatives. We have incurred significant losses
since our inception and we expect to incur annual losses for at least the next
three years as we continue with our drug research and development
efforts.
SUBSTANCE
P AND HOMSPERA™
Our
patents, patent applications and continued research are derived from discoveries
made during research studies related to the function of Substance P, which
is
found in the body and has a large number of actions. These studies were funded
by the Air Force Office of Scientific Research (AFOSR) in the early 1990s and
were conducted by research scientists, including our co-founders Drs. Mark
Witten and David Harris. In the course of Substance P research, scientists
created for study a number of analogues, or structural derivatives with slight
chemical differences, of Substance P. One of these analogues of Substance P,
which we have termed Homspera, is the basis for our research and development
of
potential drug candidates.
Substance
P
The
elements carbon, oxygen, nitrogen and hydrogen can be combined to form amino
acids, a basic building block of life. When amino acids are combined through
a
specific biochemical process they form what are called peptides or proteins.
Proteins play a number of fundamental roles in living organisms, from structural
to messaging between cells. When components of the nervous system use chemicals
to transmit signals between nerves and brain cells to
propagate signaling throughout the body, those chemicals are called
neurotransmitters. When peptides are released by nerve cells or other cells
and
effect or modulate this neurotransmission, they are termed
neuropeptides.
One
such
neuropeptide is Substance P. Substance P is a relatively small peptide made
of
just eleven amino acids. Substance P was discovered in 1931 and found to have
local blood-pressure reducing effects. The peptide is difficult to isolate,
and
consequently was ignored for tens of years. When science developed to the point
that peptides could be recognized by their amino acid structures, Substance
P
was one of the first identified. The amino acid sequence (using the standard
three-letter acronyms for amino acids) of Substance P is presented
below:
Arg-Pro-Lys-Pro-Gln-Gln-Phe-Phe-Gly-Leu-Met-NH2.
Neuropeptides,
such as Substance P, were originally identified as being distributed throughout
the peripheral and central nervous systems of experimental animals, and then
of
humans. To date, Substance P has also been shown to be produced in
non-neuronal cells such as human endothelial cells, Leydig cells,
enterochromaffin cells, epithelial cells, fibroblasts, keratinocytes, intestinal
and airway smooth muscle cells, inflammatory and immune cells, and in cells
of
the female reproductive system.
In
early
research Substance P was revealed as playing a key role in the transmission
of
pain. Later on, Substance P was identified as being involved in the
pathophysiology of psychiatric disorders, like anxiety and depression.
Additionally, Substance P has been shown to be involved in a number of
physiological processes, such as blood vessel and smooth muscle contractions,
and in the levels and responses of the cells of the blood and immune
system.
Substance
P produces this wide variety of effects by acting through three different
molecular receptors, located on the surface membrane of sensitive cells. These
receptors are called NK1, NK2 and NK3 receptors, and binding of Substance P
to
one receptor subtype or another will cause different chemical signaling to
occur
both inside and outside cells. These receptor binding differences are believed
to be responsible for the different physiological results following the
stimulation of the different receptor subtypes.
Homspera
Within
a
few years following the discovery of the amino acid sequence of Substance P,
numerous synthetic analogues were being produced in an attempt to better
understand how the structure and function of the molecule were related. One
particular analogue was produced by the replacement of the amino acid glycine
(Gly) with Sarcosine (Sar or N-methyl glycine) at the ninth position and the
introduction of oxidized methionine (Met(O2)) in place
of
methionine (Met) at the eleventh position. The resulting peptide, still 11
amino
acids long, but now with a slightly different molecular weight, is thus called
Sar9, Met
(O2)11-Substance
P. The
amino acid sequence for Homspera is presented below:
Arg-Pro-Lys-Pro-Gln-Gln-Phe-Phe-Sar-Leu-Met(O2)-NH2.
It
is
these specific chemical alterations that are presumably responsible for the
different physiological actions of Homspera versus endogenous Substance P.
In
fact, Sar9, Met
(O2)11-Substance
P was
first synthesized in an attempt to make chemicals that had specific distinctions
in their activity from that of the parent Substance P molecule.
Homspera,
or Sar9, Met
(O2)11-Substance
P
differs from Substance P in at least two ways. It is reported to be active
at
only the NK1 receptor, and to be more resistant to the enzyme that usually
breaks down Substance P and thereby terminates its action. Thus Sar9, Met (O2)11-Substance
P is
both more specific than Substance P, and also more persistent in the
body.
In
December 2004 we filed an application with the US Patent and Trademark Office
in
an effort to trademark the name Homspera to refer to Sar9, Met (O2)11-Substance
P for
its potential usage in a number of applications. Our application is still
pending.
Radilex™
and Viprovex™
We
use
the trade names Radilex and Viprovex to differentiate these derivatives of
Homspera. The active ingredient, Homspera, is chemically equivalent in both
Radilex and Viprovex; however, since both Radilex and Viprovex are to be used
in
differing potential treatments, and thus have different indications for use,
we
anticipate that we will formulate them differently in the future to support
appropriate (and possibly different) modes of administration. For this reason,
we have created the trade names to more easily differentiate the potential
formulations, and thus applications, with respect to their development and
potential future market opportunities.
In
the
early AFOSR studies, it was observed that the exposure of animals to JP-8 jet
fuel resulted in pathological changes in the lungs and immune systems of those
exposed. Homspera was administered to the test animals after prolonged exposure
to the jet fuel. Based on the results of these studies, we believe that the
administration of Homspera prevented some of the harmful effects of the jet
fuel
exposure in the lungs, as well as having a positive effect on the immune system.
However, there is no guarantee that our interpretation of the results of these
studies will prove to be accurate after further testing.
Based
on
our interpretation of these results, our current focus is on the development
of
two potential drug applications, Radilex and Viprovex.
We
are
researching Radilex for use as a potential treatment for acute exposure to
radiation. To date we have sponsored seven studies and co-sponsored three
studies all of which were conducted utilizing rodents. We believe the results
of
these and other studies suggest Radilex may play a role in increasing an
individual’s ability to overcome the effects of radiation, and, in the cases of
exposure to potentially lethal radiation, to play a role in increased rates
of
survivability. Based on the sum of these studies, we believe that Radilex,
once
and if developed, could be an acceptable candidate to be purchased by
governmental agencies for national distribution in the event of a significant
nuclear or radiological threat. Further, we believe that a commercial market
may
exist for the use of Radilex as it relates to the treatment of radiation-induced
side effects of cancer treatments, either as a stand alone treatment or as
a
co-therapeutic agent to be used with other treatments.
Viprovex
is being researched by us for use in potential treatments of exposure to
biological agents, such as anthrax and infectious diseases, including influenza.
Based on early studies on Homspera and existing literature on Substance P,
we
are also researching Viprovex as a potential treatment for exposure to chemical
agents, such as formalin. Formalin, a highly toxic chemical, is a solution
of
formaldehyde gas dissolved in water and used industrially. To date we have
sponsored three studies related to the treatment of influenza, three on the
exposure to anthrax spores and one on exposure to formalin. We believe the
results of these studies indicated potential efficacy in the use of Viprovex
as
both a stand alone treatment and to be used in conjunction with other drugs.
If
Viprovex can be developed, we believe that potential applications may exist
for
sale to governments for the treatment of exposure to anthrax and pandemic
influenza. In addition, we believe that potential commercial opportunities
may
exist for the treatment of seasonal influenza and other viral or bacterial
infections, either as a stand-alone drug or in conjunction with other existing
drugs.
Applications
Our
initial pre-clinical applications that we are researching are in the treatment
of the effects on the body caused by (i) exposure to radiation (Radilex);(ii)
infectious disease and harmful biological materials (Viprovex); and, (iii)
harmful chemical agents (Viprovex). In addition to these three potential
applications, we continue to explore the potential capabilities of Homspera
and
strive to better understand the mechanisms of this compound in order to further
our development efforts with regard to not only our current application
research, but also potential future applications.
To
date
we have sponsored seven radiation studies and co-sponsored three radiation
studies all of which were conducted utilizing rodents. We have sponsored three
studies on the potential treatment of anthrax exposure and one study on avian
influenza all of which were conducted utilizing rodents. We have also sponsored
one chemical study in an attempt to determine initial indications of efficacy
on
the treatment of formalin exposure.
All
our
product candidates are in the pre-clinical stage of development. They have
only
been introduced to FDA via the pre-IND filings, submissions to which the FDA
offers no judgment thereon. To date we have been issued two
Pre-Investigational New Drug (PIND) numbers by the U.S. Food & Drug
Administration (FDA) - one for the potential use of Radilex in the treatment
of
acute radiation syndrome and one for the potential use of Viprovex in the
treatment of avian influenza. The table below illustrates our current product
candidates and their current stage of development within the FDA approval
process.
Product
Candidate
|
|
Pharmacological
Identification
|
|
Animal
Safety
|
|
Pre-Clinical
Mechanistic
|
|
Phase
I
|
|
Phase
II
|
|
Phase
III
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acute
Radiation Syndrome
|
|
|
|
|
|
|
|
|
Radilex
|
|
In-progress
|
|
In-progress
|
|
In-progress
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Infectious
disease
|
|
|
|
|
|
|
|
|
|
|
|
|
Viprovex
|
|
In-progress
|
|
In-progress
|
|
In-progress
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chemical
exposure
|
|
|
|
|
|
|
|
|
|
|
|
|
Viprovex
|
|
In-progress
|
|
Planned
|
|
In-progress
|
|
—
|
|
—
|
|
—
|
The
preliminary results of our pre-clinical studies using Radilex or Viprovex may
not be indicative of results that will be obtained from subsequent studies
or
from more extensive trials. Further, our pre-clinical or clinical trials may
not
be successful, and we may not be able to obtain the required regulatory
approvals in a timely fashion, or at all. See "Risk Factors."
RADILEX
All
of
our product candidates based on Radilex are in the pre-clinical stage of
development. On January 14, 2004, we received a Pre-Investigational New Drug
Application (PIND) number for the use of Radilex (PIND No. 63,255) in the
treatment of acute radiation syndrome.
To
date
we have sponsored seven radiation studies and co-sponsored three radiation
studies all of which were conducted utilizing rodents to study dose response
to
radiation, the impact on survival and to distinguish survival response using
different forms of drug delivery. In each of these studies mice were exposed
to
varying levels of radiation.
Radiation
is emitted electromagnetic energy. Excessive exposure to ionizing radiation
over
a short period of time, as is the case in nuclear or radiological attacks,
leads
to the development of radiation sickness, or Acute Radiation Syndrome (ARS).
Exposure to lower doses of radiation may, either by design or as a side effect
of cancer treatment, result in the destruction of bone marrow cells responsible
for maintaining the levels of red blood cells, white blood cells and platelets,
which are vital for the transport of oxygen and waste products; for immunity
and
disease/infection fighting ability; and for the formation of blood clots,
respectively. Hence, destruction results in compromised oxygen carrying
capacity, diminished immune system function, and uncontrollable
bleeding.
Certain bone
marrow cells are called hematopoietic stem cells, and they can multiply and
mature into precursor cells to the B-cells and T-cells of the immune system,
or
into precursors of the red blood cells or of the granulocytes and macrophages,
which are also of the immune system, and megakaryocytes, which produces
platelets. Thus all circulating cells of the immune system, red blood cells
and
platelets derive from these stem cells.
In
studies to date we have collected data that we believe suggests that Radilex
shows efficacy in treating ARS by combating neutropenia and thrombocytopenia,
which is the decrease in blood levels of white blood cells and platelets, the
major medical conditions associated with acute exposure to radiation. Loss
of
these cells results in increased sensitivity to infection and to uncontrolled
bleeding, both of which can be potentially life-threatening. Further, as
treatment for cancer often includes radiation treatment, we believe that the
potential also exists for Radilex to be used for cancer patients as a stand
alone treatment or a co-therapeutic agent to be used with other drugs as
treatment.
Data
collected in studies performed at the Oak Ridge National Laboratory in 2006,
we
believe, revealed that Radilex not only prolonged survival of animals exposed
to
lethal gamma irradiation, but also appeared to have increased platelet
concentrations in surviving animals.
There
is
also preliminary research data showing that the activity of a specific enzyme
(poly-(ADP-ribosyl) polymerase, or PARP), may be responsible for repairing
DNA
that has been damaged by radiation can be modified by Substance P. When damage
is severe, the activation of this enzyme becomes too much for the cell to
support, and the cell triggers its own destruction. The chain of events that
result in this destruction is called apoptosis, a process of deliberate life
termination that a cell undergoes following exposure to high levels of stress,
and agents that can control the rate of apoptosis are of significant importance
in controlling the functioning of organs and organisms. If a cell can be kept
alive long enough to repair cellular damage, it might be of more value to the
organism.
Based
on
the above referenced, and other, data, for example, claiming Substance P itself
is anti-apoptotic, we believe that one possible mechanism by which Radilex
is
able to prolong survival in animal models (either in addition to its effect
on
stem cells or perhaps as a mechanism by which it impacts stem cells), is by
modulating the activities of the PARP-1 enzyme within cells. By possibly
preventing cells from dying, Radilex may be effective in treating the impact
of
cell radiation, thereby decreasing the likelihood of death.
Further,
we believe that our survival data from irradiated mice studies and mechanistic
studies in cell culture have shown indications of hematopoietic stem cell
replenishment of circulating leukocytes and platelets, which could be of value
in radiation-treated cancer patients as well as other blood cell depleting
conditions.
Acute
total body irradiation exposure studies have been performed at the University
of
Arizona Cancer Center and at Oak Ridge National Laboratories (ORNL). These
studies show that radiation destroys the immune system resulting in pneumonia
and death, and that Radilex, we believe demonstrates efficacy at reversing
the
loss of white blood cells that comprise the immune system, as well as platelets
necessary to control blood clotting, subsequently leading to an increase in
survival rates.
Continuing
radiation studies are expected to be performed at TGen Drug Development Services
(TD2, the drug development arm of Translational Genomics Research Institute
(TGen)), Pacific Northwest National Laboratory, and Stem Cells Technology Inc.
to further explore the impact of radiation on the hematopoietic system of
Radilex-exposed animals. In addition, future studies will be designed to examine
mechanistic indicators at both high levels of radiation where Radilex has shown
protection, as well as at lower levels. If successful, these studies would
demonstrate the ability of Radilex to address both the government market, as
a
countermeasure to radiological dispersion devices, such as dirty bombs or
nuclear explosions, as well as the cancer market, as an adjuvant treatment
candidate potentially ameliorating the side effects resulting from cancer
radiotherapy.
We
are
also in discussions with LAB Research Inc. and Bridge Pharmaceuticals to conduct
an efficacy study in a whole body gamma irradiation model in non-human primates
utilizing Radilex. To date, we have discussed protocols and received price
quotations from LAB Research.
We
believe these animal studies provide support for our continued effort to
research and develop Radilex to treat the effects of exposure to radiation.
However, there is no assurance that our interpretation of the results of the
studies will prove to be accurate after further testing.
VIPROVEX
All
of
our product candidates based on Viprovex are in the pre-clinical stage of
development. We are researching the efficacy of Viprovex as a potential
treatment, either as a stand alone application or as co-therapeutic treatment,
for exposure to various biological agents, such as infectious disease, including
influenza and anthrax. We are also researching the efficacy of Viprovex as
a
potential treatment for exposure to chemical agents, such as formalin. Formalin,
a highly toxic chemical, is a solution of formaldehyde gas dissolved in water
and used industrially.
Biological
Exposure Applications
Infectious
Disease - Seasonal and Pandemic Influenza
We
believe that results from our studies may reveal the potential ability of
Viprovex to enhance flu therapies, minimize the respiratory impact of influenza
infection and augment the capability of vaccination to induce a protective
immune response.
In
October 2003 the AFOSR sponsored preliminary studies with the Hong Kong
influenza virus (A/Hong Kong/8/68) and Viprovex at the University of Arizona,
Arizona Health Sciences Center, Lung Injury Laboratory. We believe that these
studies suggest that when mice were exposed to the irritant JP-8 jet fuel and
then inoculated with the Hong Kong respiratory virus (HKV), they experience
elevated levels of inflammatory cells in their lungs. These levels were reduced
in animals also treated with Viprovex. In contrast to control animals exposed
to
the virus, the JP-8 treated animals also treated with Viprovex did not develop
the clinical symptoms of viral infection, which included increases in alveolar
macrophages and neutrophils in broncho-alveolar lavage fluid. These cells are
components of the immune system that are expressed out of the blood and into
the
fluid inside the lungs coating the alveoli. The alveoli, found in the
respiratory zone of the lungs, are primary sites of gas exchange where blood
and
air exchange oxygen and carbon dioxide carried by red blood cells.
Animals
treated with Viprovex also exhibited lower levels of leukotriene B4 (LTB4),
a
chemical released by white blood cells during an immune response, than animals
not treated with Viprovex. Elevated LTB4 would attract the inflammatory cells,
particularly neutrophils, which would follow infection with virus. Electron
micrographs showed healthier, normal appearing cells in the airways with no
virus particles in the Viprovex-treated animals, in contrast to the HKV/JP-8
controls, suggesting, in our opinion, that Viprovex actually prevented viral
replication and pathology, perhaps by stimulating the pulmonary alveolar
macrophages to actively attack, engulf and destroy the virus more
effectively. Without virus particles in the lungs, there would be no need
to mount an immune response. Based on the results of this study, we believe
that
Viprovex may be potentially used to increase the ability of the body's own
immune system to naturally fight off flu strains. We believed this
opened up the possibility that Viprovex could be used either as a stand alone
treatment or as an adjunct to a vaccine or other therapy.
On
November 29, 2005 we applied for a PIND from the Department of Health and Human
Services (HHS) for the use of Viprovex in the treatment of avian influenza.
The
PIND number for the use of Viprovex in treating avian influenza was issued
on
December 19, 2005 (PIND No. 73,709).
Subsequently,
we have sponsored three influenza studies conducted at Virion Systems, Inc,
one
of which is still ongoing, utilizing rodents to test the efficacy of Viprovex
in
treating the avian influenza A/Wuhan/359/95 (H3N2), a model system for studying
the H5N1 avian influenza.
In
our
opinion, the data acquired to date in examining the effect of Viprovex on
influenza infection suggests an anti-viral action occurs in lungs and, more
noticeably, in nose. Further, in conjunction with the suggested anti-viral
effect, animal weights and temperatures were normalized. Differences in
cytokines (small peptide signaling molecules released by cells of the immune
system to mediate inflammation and immune responses) such as certain
interleukins and interferons were also witnessed. In the opinion of management,
such Viprovex-induced changes in immune response as evinced by cytokine signals
and decreased viral titers in lung and nose demonstrate the potential efficacy
of Viprovex. Based on our results, we believe that Viprovex may show efficacy
as
a stand alone drug in the treatment of influenza. Further, when used in
conjunction with a neuraminidase inhibitor, currently the most effective
pharmacological agents (zanamivir (Relenza®, GlaxoSmithKline) and oseltamivir
(Tamiflu®, Roche) are neuraminidase inhibitors) to treat influenza (by
inhibiting an enzyme necessary for infectivity), Viprovex might be an effective
adjuvant therapeutic on treating or preventing influenza.
There
is
no assurance that our interpretation of the results of the studies will prove
to
be accurate after further testing.
Anthrax
Anthrax
is an often-fatal human disease resulting from infection of the bacterium
Bacillus anthracis. Anthrax is most often contracted by skin to skin,
or cutaneous, contact with an infected lesion, resulting from the handling
of
infected animal products. Cutaneous anthrax has a mortality rate of roughly
20%.
In contrast, the inhalation of B. anthracis spores results in a
significantly more severe and lethal infection, with mortality rates of greater
than 80%. As a result of the high mortality rate and route of infection, anthrax
is considered a prominent agent of bioterrorism.
To
date
we have sponsored three anthrax studies all of which were conducted utilizing
rodents to determine if Viprovex will reduce the mortality rate of an active
infection of pulmonary anthrax. In our opinion, when treated with Viprovex
prior
to exposure to anthrax spores, Viprovex elicited protective, prophylactic
efficacy and when treated a short time period after exposure to anthrax spores,
Viprovex elicited therapeutic efficacy.
In
2006
we completed a series of studies with Hyperion Biotechnology Inc. at their
laboratory facilities located at Brooks City-Base in San Antonio, Texas. The
purpose of these studies was to determine if Viprovex could reduce the mortality
rate of an active infection of pulmonary anthrax. The first of these studies
was
initiated in October 2005. This research indicated, in our opinion, that
Viprovex offers protection from anthrax exposure in a mouse model. In these
studies, we witnessed mice treated with Viprovex to exhibit a dose-dependent,
increased survival rate 11 days post-exposure to anthrax spores. Additionally,
based on this research, we believe Viprovex to elicit a dose-dependent
prophylactic protection from anthrax in a mouse model.
Further
research, in our opinion, has supported these findings of prophylactic efficacy
of Viprovex against anthrax and also demonstrated Viprovex to show efficacy
in
increasing survival rates in mice pretreated with anthrax. Additionally, while
these results are preliminary, we believe that Viprovex, when used as an
adjuvant, could play an important role, in conjunction with other therapies,
in
improving treatments of anthrax exposure.
There
is
no assurance that our interpretation of the results of the studies will prove
to
be accurate after further testing.
Other
Infectious Diseases
Melioidosis,
also called Whitmore's disease, is an infectious disease caused by the bacterium
Burkholderia pseudomallei, and is endemic to Southeast Asia and is seen
in the South Pacific, Africa, India, and the Middle East as well. The causative
agent, Burkholderia pseudomallei can be transmitted from animals to man
as well as from person to person. The bacteria can be found in contaminated
water and soil and is spread to humans and animals through direct contact with
the contaminated source. Mortality rate for melioidosis varies and is as high
as
90% particularly when aerosolized. The Centers for Disease Control and
Prevention (CDC) considers both B. pseudomallei and its related B.
mallei as potential agents for biological warfare and biological
terrorism.
In
March
2007, we began the first of a series of studies to investigate the therapeutic
effects of Viprovex on acute melioidosis. These studies are to be performed
in
conjunction with Singapore's Defense Medical & Environmental Research
Institute, DSO National Laboratories ("DSO"). The studies are to be funded
by
DSO and are expected to be completed during the third quarter of
2007.
Chemical
Exposure Applications
Based
on
early studies on Homspera and existing literature on Substance P, we are
researching the efficacy of Viprovex as a potential treatment for exposure
to
chemical agents, such as formalin. Formalin is a solution of formaldehyde gas
dissolved in water, used industrially and toxic typically via crosslinking
of
proteins to other nearby proteins. To date, we have only conducted limited
preclinical studies with regard to the development of Viprovex for indications
related to treatment of exposure to harmful chemicals.
JP-8
Jet Fuel and Smoke
We
believe our early AFOSR rodent studies demonstrated the administration of
Substance P and Homspera to animals exposed to JP-8 decreased the immune system
effects, while administration of Substance P antagonists compounded the
deleterious effects. Further experiments performed using Viprovex examined
effectiveness in preventing lung injury on inhalation of toxic fumes. In our
opinion based on our results, Viprovex has been shown to exhibit
anti-inflammatory effects in animal models.
There
is
no assurance that our interpretation of the results of the studies will prove
to
be accurate after further testing.
Formalin
Formaldehyde
is one of the 25 most abundantly produced chemicals in the world and has use
in
many industries. When dissolved in water at 30% to 50% formaldehyde, and often
with methanol as a stabilizer, the resulting formalin solution is toxic to
embryos and adult organisms.
We
have
conducted one pilot study to determine if aerosolized Viprovex could be
efficacious in attenuating lung injury after formalin exposure.
In
rats
exposed to an aerosol application of formalin data suggests, in our opinion,
that treatment with Viprovex may minimize lung damage concurrent with formalin
inhalation.
There
is
no assurance that our interpretation of the results of the studies will prove
to
be accurate after further testing.
ADJUVANT
THERAPEUTIC
Results
from studies also suggest that Homspera may also have potential value as an
adjuvant, co-therapeutic agent or as a vaccine adjuvant. Adjuvants are
unique among active ingredients in drugs in that they are designed to not
stimulate an immune response against themselves, but they are required to
augment the immune response against other, co-administered compounds. Studies
of
Homspera co-administered with anti-viral vaccines show immune-enhancing adjuvant
activity. Studies performed in animal models of influenza and acute radiation
syndrome have revealed the potential capability of Homspera to enhance the
action of approved anti-viral medications as well as to provide adjunctive
impact on anti-tumor radiation therapy.
Mechanistic
studies in cell culture have revealed elevations in components of what is the
most basic aspect of the immune system, termed the innate immune system, that
are consistent with activation of specific cell components called Toll-like
Receptors, a postulated mechanism by which some vaccine adjuvants increase
immune responses to vaccine components. Additionally, the anti-anthrax activity
reported by Homspera is similarly consistent with activation of components
of
innate immunity that have been reported to have anti-anthrax activity, such
as
defensins, small peptides found in immune cells that help destroy invading
bacteria.
The
potential efficacy of Homspera as a vaccine adjuvant likely results from
the
unique mechanism through which Homspera modulates the immune system. The
actions
of Homspera are presumably mediated predominately through interactions with
the
Neurokinin-1 receptor (NK1-R). Indeed, cells treated with Homspera show large
elevations in the messaging molecules that signal defensin production, but
Homspera does not seem to activate TLRs directly.
Vaccine
adjuvant studies with Homspera are currently being carried out by GenPhar Inc.
These studies are being conducted to examine the impact of vaccination with
pieces of influenza viruses (a current H5N1 "avian influenza" strain and from
the 1918 Spanish Influenza virus). We believe preliminary data
suggests that Homspera elevated host immune responsiveness above that induced
by
vaccine alone system.
Based
on
outside research on Substance P and our study results witnessed to date, we
believe that our results, although only preliminary, indicate that Homspera
may
demonstrate adjuvant capabilities, and thus be capable of augmenting host immune
system responsiveness to vaccines for diseases such as pandemic avian influenza,
seasonal influenza, and perhaps others for which vaccines exist or are under
development.
We
believe that there is also potential for Homspera to be used as a co-therapy
to
what is called adjuvant therapy for cancer patients, as secondary treatment
often involves radiation treatments following chemotherapy, in an attempt to
kill more of the cancer cells. Survival data from gamma-irradiated mice studies
have shown indications of hematopoietic stem cell replenishment of circulating
leukocytes and platelets, which could be of value in radiation-treated cancer
patients. There is no assurance that our interpretation of the results of the
studies will prove to be accurate after further testing.
POTENTIAL
FUTURE PIPELINE APPLICATIONS
During
our research and development efforts, we may, from time to time, observe results
that may lead to other potential applications using Homspera. At the time of
such an observation, we may design studies to further evaluate the use for
the
indication. If these further studies support our initial observations, we may
file provisional patent applications for the use of Homspera with the hope
of
protecting future development rights until we have the ability to design
additional studies and protocols and perform research with regard to such
applications.
To
date,
we have filed use patent applications in multiple jurisdictions, inside and
outside of the U.S., for use of the active ingredient in Homspera for: treatment
of avian influenza in mammals, use as an adjuvant to enhance response to a
vaccine, reducing the risk or severity of anthrax infection, treatment of blood
cell depletion, ameliorating or preventing damage caused by cigarette smoke,
for
treating patients with SARS (Severe Acute Respiratory Syndrome) or ARDS (Acute
Respiratory Distress Syndrome) or to prevent those exposed to their causative
agents, for inducing new hair growth or retarding hair loss, for reducing
certain ageing effects, such as interrupted sleep patterns, residual muscle
pain, short term memory loss, diminished visual accommodation, decreased muscle
strength, and arthritic pain, for stimulating wound healing in a
radiation-exposed mammal, for treating asthma, for treating skin diseases,
in
particular, eczema, psoriasis, acne, and basal cell carcinoma, for
prophylactically treating domestic fowl to prevent respiratory infections,
and
for maintaining or inducing hair color. To date, our development activities
in
these areas have been limited to only small pilot exploratory studies in order
to observe and collect data that would justify filing use patent applications.
In the future, we may choose to conduct additional research and development
to
further our observations in these areas.
DEVELOPMENT
PROGRAM
Research
and Development Spending
Due
to
our liquidity and limited cash available our spending on research and
development activities has been limited. We spent approximately $484,029 and
$237,005 in 2006 and 2005, respectively, in research and development activities
related to the development of Radilex and Viprovex as protectants against the
effects of biological and radiological/nuclear threats. From our inception
in
October 2002, we have spent $1,026,597 in research and development activities.
These costs only include the manufacture and delivery of our drug by third
party
manufacturers, payments to Contract Research Organizations for consulting
related to our studies and costs of performing such studies. Significant costs
relating to research and development, such as salary for Dr. Siegel, have been
classified in officer salaries for consistency of financial
reporting.
We
anticipate that during the next 12 months we will increase our research and
development spending to a total of approximately $700,000 in an effort to
further develop Radilex and Viprovex. This research and development cost
estimate includes additional animal pharmacology studies, formulation and animal
safety/toxicity studies. If we receive additional funds, through either
investment funding or grants, we expect we will increase our research and
development spending.
Grants
From
time
to time, we may apply for governmental grants and respond to formal requests
from the government for additional information, thereby possibly allowing us
to
be included as a candidate for potential future grants.
Since
our
incorporation in October 2002, we have made submissions for eleven grants either
by submitting Requests For Information (RFI), Requests for Proposal (RFP),
Broad
Agency Announcements (BAA), requests for white papers and/or fully executed
grant applications. To date our applications for grant funding have not been
accepted. We intend to continue to apply for grants; however, there can be
no
assurance that we will ever receive any grants.
Animal
Efficacy Rule
Using
traditional efficacy studies in the development of some of our potential
applications would require healthy human volunteers to be exposed to lethal
agents and pathogens. This cannot be done. Therefore, we intend to apply for
approval based upon a rule adopted by the FDA in 2002, titled "Approval of
New
Drugs When Human Efficacy Studies Are Not Ethical or Feasible" (Code of Federal
Regulations, Title 21, Part 314, Subpart I), which is also referred to as the
"animal efficacy rule." Pursuant to this rule, in situations where it would
be
unethical to conduct traditional Phase III efficacy studies in humans, as is
the
case with our applications relating to the treatment of maladies caused by
exposure to high level gamma radiation and various chemical and biological
agents, the FDA will review new drugs for approval on the basis of safety in
humans and efficacy in relevant animal models. Under either the animal efficacy
rule or traditional efficacy rules, we will not have marketable applications
unless and until our drug candidates complete all required safety studies and
clinical trials and receive FDA approval in the United States or approval by
regulatory agencies outside of the United States.
Contract
Research Organizations (CRO) and Collaborators
It
is
understood that extensive time and money is spent developing new drug
applications by the time they are approved by required regulatory agencies
for
use on the market. In order to efficiently and expeditiously navigate the
research, development and regulatory approval process in hopes of bringing
our
applications to market, our development program relies on the use of Contract
Research Organizations (CRO's) and collaborative relationships.
CRO's
are
independent laboratories or other facilities that provide contract services
to
the pharmaceutical industry. These CRO's offer broad therapeutic expertise,
advanced technologies and extensive resources for drug discovery and drug and
device development, and in some instances partnering opportunities. In the
opinion of management, using these outside organizations helps to maximize
our
flexibility and minimize our one-time costs in outsourcing very expensive
programs to those companies that maintain the necessary infrastructure to
perform these cost-effectively according to internationally recognized
standards. Further, as product demands change, we believe that this structure
will allow us to move our resources to more appropriate contract research or
development or formulation or manufacturing facilities without incurring loss
of
time or money on outdated projects and programs. As we move our candidate
products into FDA-compliant animal safety testing, we expect to contract with
specialty groups, organizations or companies that meet regulatory requirements
and have adequate and appropriate technical capabilities, rather than develop
and maintain an animal use and care facility ourselves that is compliant with
current Good Laboratory Practices.
In
addition, we have fostered and managed relationships with other laboratories
working in related areas of research and government agencies who are interested
in learning more of our applications, and perhaps helping to bring them to
commercialization.
Collaborators
and Contractors who we have already worked with or are implementing a program
with are described below.
·
|
University
of Arizona College of Medicine, Tucson, Arizona. We have sponsored or
co-sponsored seven mouse radiation studies and co-sponsored one inhalation
study at the University of Arizona College of Medicine, Tucson, Arizona
since January, 2005. In addition, the Air Force Office of Scientific
Research, AFOSR, has sponsored additional studies at the University
of
Arizona College of Medicine utilizing Homspera, Radilex and
Viprovex.
|
·
|
Hyperion
Biotechnology Inc. Hyperion Biotechnology performs research programs
in
the areas of probiotics, biomarker discovery, infectious disease
and human
performance enhancement. We have contracted a series of anthrax studies
with Hyperion testing Viprovex as a potential treatment to anthrax
infection. These studies are conducted by Hyperion at its research
facility located on the U.S. Air Force School of Aerospace Medicine
(USAFSAM) campus in Brooks City-Base in San Antonio, Texas. To date
we
have completed three studies on anthrax. Hyperion has also conducted
mechanistic studies in cell culture looking at cellular mechanisms
impacted by Homspera. These studies are
ongoing.
|
·
|
St.
Joseph's Hospital and Medical Center (Phoenix, Arizona). St. Joseph's
has performed assays on Homspera for us on a sub-contracting
basis.
|
·
|
Battelle
Memorial Institute's Medical Research and Evaluation Facility (MREF)
(Columbus, Ohio). Battelle has issued a letter of intent to support
us in
our testing of Homspera as an Avian Influenza therapeutic in mice.
Battelle is actively involved in analytical development studies through
activities at PNNL and studies protocols are in development for avian
influenza studies that may be initiated at
Battelle.
|
·
|
Pacific
Northwest National Laboratory (Richland, Washington). PNNL has issued
a
letter of intent to support us in our testing of Homspera as a Universal
Protectant therapeutic. In addition to ongoing analytical studies
at PNNL
and managed by Battelle, additional studies regarding radiation and
influenza in both small animals and non-human primates, are under
discussion and protocols are being
developed.
|
·
|
Oak
Ridge National Laboratory (Oak Ridge, Tennessee). We have contracted
with
Oak Ridge to conduct Proof of Concept mouse radiation studies that
began
in February, 2006 and to help facilitate additional pre-clinical
and
future clinical trials with regard to testing Radilex for potential
uses
to treat the effects of acute radiation. To date, we have completed
three
studies that have confirmed experimental results obtained previously
and
have expanded insight into radioprotection dosing and
mechanisms.
|
·
|
PanFlu
LLC and Virion Systems, Inc. We have contracted with PanFlu and Virion
to
conduct influenza studies to test the efficacy of Viprovex in treating
the
avian influenza A/Wuhan/359/95 (H3N2), a model system for studying
the
H5N1 avian influenza. To date two completed studies have provided
evidence
that we believe suggests viral reduction by Viprovex and provided
preliminary evidence for potential mechanisms. Planned studies include
a
co-treatment study with the neuraminidase inhibitor oseltamivir (Tamiflu®,
Roche).
|
·
|
TGen
(Translational Genomics Research Institute) Drug Development Services
(TD2
LLC) (Phoenix, Arizona). We have contracted with TD2 to perform
anti-cancer research designed to assess preclinical safety and efficacy
(with the ability to expand to Phase 1 and Phase 2a clinical studies
at
the associated Mayo Clinic Scottsdale, MD Anderson Cancer Center
and
Arizona Cancer Center Tucson). A broad spectrum of Preclinical Studies
are
ongoing at TD2, including cancer screening against established cell
lines
and chemo-therapeutics, analytical assay development, radioprotection
studies in small animals and non-GLP safety and pathology
studies.
|
·
|
AAIPharma.
We have contracted with AAIPharma to do analytical development
work.
|
·
|
GenPhar,
Inc. We have contracted with GenPhar to perform adjuvant studies
in mice
in conjunction with their vaccine platform
technology.
|
·
|
Covance
- Generation of antibodies and development of an assay to determine
Homspera concentrations in
blood.
|
·
|
Singapore's
Defense Medical & Environmental Research Institute, DSO National
Laboratories. We have contracted with Singapore's Defense Medical
&
Environmental Research Institute, DSO National Laboratories to perform
a
series of studies to investigate the therapeutic effects of Viprovex
on
acute melioidosis. The first in the series of studies began in March
2007.
|
·
|
We
are also in discussions with LAB Research Inc. and Bridge Pharmaceuticals
to conduct an efficacy study in a whole body gamma irradiation model
in
non-human primates utilizing Radilex. To date, we have discussed
protocols
and received price quotations.
|
Advisory
Boards and Consultants
To
assist
us in the research and development of our various applications we make use
of
outside consultants and advisory boards.
Consultants
We
currently contract two outside consultants related to the research and
development, including regulatory affairs, of our potential
products.
Kelly
McQueen, MD, MPH, PLLC was engaged in July 2005 to provide comprehensive public
health consulting and act as liaison with United States military services to
pursue collaborative research in the area of infectious diseases and upper
respiratory illnesses. Dr. McQueen is a practicing anesthesiologist and public
health consultant in Phoenix, Arizona. She currently works with the United
States (U.S.) Army and the US Northern Combatant Command on Infectious Disease,
Disaster Planning and other public health projects. Dr. McQueen also teaches
infectious disease threat management and treatment for the International
Committee for the Red Cross (ICRS) course on Health Emergencies in Large
Populations (HELP). Dr. McQueen's contract with us provides for cash
compensation on an hourly basis and reimbursement for travel and expenses.
The
original term of the agreement was until October 2005 but has been mutually
agreed to have been extended on the same terms on a month by month
basis.
Dr.
Jack
Caravelli, Ph.D. was contracted in November 2005 to provide advisory services
in
support of our initiative to commercialize radiation sickness treatments,
bio-defense applications and countermeasures. He is presently a senior advisor
for the Threat Reduction Cooperation with the Office of Policy at the U.S.
Department of Energy (D.O.E.). Dr. Caravelli's contract provides for cash
compensation at an hourly rate and reimbursement for any related travel and
expenses. The original term of the agreement was until January 2006 but has
been
mutually agreed to have been extended on the same terms on a month by month
basis.
Advisory
Boards
We
currently have two advisory boards - the Scientific Advisory Board and the
Bioterrorism Preparedness Advisory Board. Advisory board members are appointed
for one-year terms by our management. For services rendered, members of our
advisory boards are compensated on a quarterly basis in common stock purchase
warrants.
The
Scientific Advisory Board was formed to educate and provide direction with
regard to the discovery, research and development of applications using Homspera
in the areas of expertise of the various advisory board members. The following
individuals comprise our Scientific Advisory Board:
Dr.
John
Dann, M.D., D.D.S. Dr. Dann is a graduate of
Harvard University Dental School and
Washington University Medical School. He is a Board Certified
maxillofacial and cranial facial surgeon.
Dr.
Jeffery Friedman, M.D. Diplomat, American Board of Cosmetic Surgery, American
Board of Otolaryngology Head and Neck Surgery, Fellow of the American Academy
of
Cosmetic Surgery.
Sarah
A.
Kagan, J.D., Ph.D. Sarah Kagan is a partner in the Banner & Witcoff, Ltd.,
an intellectual property legal firm in Washington, D.C. Dr. Kagan holds a Ph.D.
degree in molecular biology from the University of Wisconsin (1981) and a J.D.
degree from George Washington University (1988). Dr. Kagan’s
professional memberships include the American Bar Association, Women’s Bar
Association of the District of Columbia, and the American Intellectual Property
Law Associations.
Susan
E.
Leeman, Ph.D. Dr. Leeman is a Professor in the Department of Pharmacology and
Experimental Therapeutics at the Boston University School of Medicine. Dr.
Leeman was one of the first scientists to isolate substance P in the central
nervous and gastrointestinal systems. Dr. Leeman was elected to the National
Academy of Sciences in 1991.
K.A.
Kelly McQueen, M.D., MPH. Anesthesiologist and Public Health Consultant;
Infectious Disease and Disaster Planning for U.S. Army and US Northern Combatant
Command.
Akihiro
Shimosaka, Ph.D. Dr. Shimosaka has extensive domestic and international
experience in consulting early and later stage biotechnology companies in
research and development, product development and regulatory
issues.
Dr.
Hal
Siegel Ph.D., Dr. Siegel has two decades of experience providing scientific,
clinical and regulatory assistance to life science client companies across
the
medical product spectrum, helping them meet business needs and FDA requirements
from pre-clinical studies through the regulatory submission process and into
the
post-approval marketplace. Dr. Siegel is a member of our Board of Directors
and
serves as our Senior Director, Product Development and Regulatory
Affairs.
The
Bioterrorism Preparedness Advisory Board was formed at the suggestion of the
U.S. Food and Drug Administration's (FDA) Division of Counterrorism (DCT) to
develop a "response team" that can be rapidly deployed to an incident site
in
the event of a biological or radiological attack to help in implementation,
conduct and data acquisition. As there are several first responder teams already
in place, we opted to concentrate on forming a group to discuss logistics and
coordination between agencies and these first responder groups in the event
of
an attack. We have attempted to appoint knowledgeable military and private
citizens that possess first hand experience in combat casualty and mass trauma
scenarios, including preparation for a bioterrorist attack and/or medical or
scientific expertise. The following individuals comprise our Bioterrorism
Preparedness Advisory Board:
Dennis
E.
Amundson, D.O., Senior Advisor: Captain, United States Navy, Medical Corps,
Naval Medical Center, San Diego, Pulmonary Medicine
Frederick
M. Burkle, Jr., M.D., Director, Asia-Pacific Center for Biosecurity, Disaster
& Conflict Research, and a Professor in Tropical Medicine, Public Health and
Epidemiology, at the University of Hawaii's John A. Burns School of Medicine,
Senior Fellow, the Harvard Humanitarian Initiative and Director of the
Asia-Pacific Branch and Senior Scholar, Scientist, and Visiting Professor at
John Hopkins University Medical Institutes' Center for Refugee & Disaster
Response.
Jack
Caravelli, Formerly Senior Advisor to the Department of Energy for Threat
Reduction Cooperation
Mr.
Michael Caridi, Senior Advisor: Chairman, MAJIC Development Group, SRC
Industries Inc. and Protection Plus Security Consultants, Inc.
Paul
Carlton, M.D., Senior Advisor: Lt. General, USAF, Medical Corps, (Ret.),
Director, Homeland Security for The Health Science Center The
Texas A&M University System, Former USAF Surgeon
General
Mr.
Michael Deutsch, Associate Advisor: Homeland Security Liaison, Principal,
Immediate Solutions, LLC
William
Hoehn, Ph.D., Associate Advisor: Visiting Professor, Georgia Tech,
Sam Nunn School of International Affairs, Center for International
Strategy, Technology, and Policy
The
Honorable Asa Hutchinson, J.D. Senior Advisor: former Under Secretary for Border
and Transportation Security at the Department of Homeland Security, Partner
and
chair of Venable LLP's Homeland Security Group.
Elizabeth
Ceilley Hyslop, M.D., Associate Advisor: Clinical Practitioner,
Durango Cancer Center.
John
Kalns Ph.D.: Vice President and Chief Scientific Officer Hyperion Biotechnology,
Inc. at Brooks City-Base.
Col.
Kerrie Lindberg (Ret.), Associate Advisor: Colonel, USAF, Nurse Corps, (Ret.),
Former Director, Defense Institute for Medical Operations (DIMO), Brooks
City-Base, Texas
K.A.
Kelly McQueen, M.D., MPH. Anesthesiologist and Public Health Consultant;
Infectious Disease and Disaster Planning for U.S. Army and US Northern Combatant
Command
MANUFACTURING
As
previously discussed, we expect that Radilex and Viprovex will ultimately have
distinct formulations and dosing regimens, however, at this early stage of
development, the formulations used are identical. We do not have, and do not
intend to establish, manufacturing facilities to produce Homspera, Radilex
or
Viprovex or any other potential products, if any, that may be derived from
Homspera.
We
have
used and expect to continue to use third party manufacturers to obtain synthetic
Homspera or Sar9, Met (O2)11-Substance
P, the
active ingredient in experimental formulations of Radilex and Viprovex. We
believe Sar9,
Met (O2)11-Substance
P is
readily available at low cost from several life science and technology companies
that provide biochemical and organic chemical products used in scientific and
genomic research, biotechnology, pharmaceutical development and the diagnosis
of
disease and chemical manufacturing. Further, we believe that the Sar9, Met (O2)11-Substance
P is
readily available from various sources, and several suppliers are capable of
supplying such in both clinical and initial commercial quality and
quantities.
Since
to
date we are only purchasing research quantities of the drug at this time, we
have not entered into any contracts or agreements with any third party
manufacturers, other than standard non-disclosure agreements.
The
manufacture of Radilex, Viprovex or any potential products, if any, derived
from
Homspera, whether done by outside contractors, as planned, or internally, will
be subject to rigorous regulations, including the need to comply with the FDA's
current Good Manufacturing Practice (cGMP) standards. As part of obtaining
FDA
approval for each product, each of the manufacturing facilities must be
inspected, approved by and registered with the FDA. In addition to obtaining
FDA
approval of the prospective manufacturer's quality control and manufacturing
procedures, domestic and foreign manufacturing facilities are subject to
periodic inspection by the FDA and/or foreign regulatory
authorities.
PATENTS
AND PROPRIETARY RIGHTS
Patents
and other proprietary rights are essential to our business. We file patent
applications to protect our technologies, inventions, and improvements to our
inventions that we consider important to the development of our business. We
also rely upon trade secrets, know-how, continuing technological innovations
and
licensing opportunities to develop and maintain our competitive
position.
We
have
filed patent applications and provisional patent applications for the use of
Sar9, Met
(O2)11-Substance
P, the
active ingredient in Homspera, Radilex and Viprovex. The intellectual property
owned by us, as further described below, is for various potential uses of
Sar9, Met
(O2)11-Substance
P. We
own four patents, comprised of two issued U.S. and two issued foreign
patents. We also have 39 pending patents relating to the use of Sar9, Met (O2)11-Substance
P. These
pending patents are comprised of three pending Patent Cooperation Treaty (PCT)
applications, ten pending U.S. provisional patent applications and 26 pending
foreign provisional patent applications. Additionally, we are in the process
of
pursuing several other use patent applications based on the use of
Homspera.
We
currently hold issued patents in the U.S. for use of Sar9, Met
(O2)11-Substance
P, the
active ingredient in Homspera, Radilex, and Viprovex for inhibiting tumor
growth
and/or metastasis in cancer patients and for stimulating the immune system
of
immunocompromised individuals such as Acute Radiation Syndrome victims. Similar
patent rights are held in Europe and Australia. In the latter two jurisdictions,
we also have been issued patent rights for use of the active ingredient in
Homspera, Radilex and Viprovex for stimulating the maturation of a juvenile
immune system, for stimulating an immune response to a viral or bacterial
infection, and for reducing the risk of cancer.
We
have
also filed patent applications in many jurisdictions, inside and outside
of the
U.S., for use of the active ingredient in Homspera, Radilex and Viprovex
for
treatment of avian influenza in mammals, use as an adjuvant to enhance response
to a vaccine, reducing the risk or severity of anthrax infection, treatment
of
blood cell depletion, ameliorating or preventing damage caused by cigarette
smoke; for treating patients with SARS (Severe Acute Respiratory Syndrome)
or
ARDS (Acute Respiratory Distress Syndrome) or to prevent these conditions
in
those exposed to putative causative agents; for inducing new hair growth
or
retarding hair loss; for reducing certain aging effects, such as interrupted
sleep patterns, residual muscle pain, short term memory loss, diminished
visual
accommodation, decreased muscle strength, and arthritic pain; for stimulating
wound healing in a radiation-exposed mammal; for treating asthma; for treating
skin diseases, in particular, eczema, psoriasis, acne, and basal cell carcinoma;
for prophylactically treating domestic fowl to prevent respiratory infections,
and for maintaining or inducing hair color. Because these applications have
not
yet been granted, the rights in these subject matters remain
inchoate.
In
March
of 2007, our patent attorneys completed a Freedom to Operate Search conducted
for freedom to use Sar9, Met
(O2)11-Substance
P as a
medicament for treatment/prevention of avian influenza in mammals; wound
healing
stimulation, especially in irradiated persons; enhancing response to a vaccine
(i.e. as an adjuvant); and immunostimulation of immunocompromised
individuals. The results of the Freedom to Operate Search uncovered
no obstacles or blocks to practice these fields of use. However, there can
be no assurance that others have not developed or will not develop similar
products, duplicate any of our products or design around any patents that
have
been or may be issued to us. Since patent applications in the U.S. are
maintained in secrecy until shortly before a patent's issuance, we also cannot
be certain that others did not first file applications for inventions covered
by
our pending patent applications, nor can we be certain that we will not infringe
any patents that may be issued to others on such applications.
The
following is a list of the registered patents and provisional patent
applications in our portfolio. All of the inventor rights for all patents
and
all patent applications listed have been assigned to us by the inventors
and the
assignments have been recorded with the USPTO. Some of our research has
been
funded by the Air Force Office of Scientific Research and has been conducted
at
the University of Arizona. We have received waivers of rights to the invention
from the United States Air Force and the University of Arizona in regard
to
patent and patent applications entitled “Substance P Treatment for
Immunostimulation” which includes the treating of cancer and the stimulating of
the maturation of a juvenile immune system and the treatment of viral or
bacterial infection, and the reduction of risk of cancer. We are expecting
to
receive similar waivers from the United States Air Force and the University
of
Arizona for the remaining patent applications in our intellectual property
portfolio.
In
total,
our patent portfolio consists of four registered patents, two issued U.S. and
two issued foreign patents. We also have 39 pending patents, comprised of three
pending Patent Cooperation Treaty (PCT) applications, ten pending U.S.
provisional patent applications and 26 pending foreign provisional patent
applications. The assignment documents are included as Exhibits.
Registered
Patents:
Title
|
|
Country
|
|
Registration
No.
|
Substance
P Treatment for Immunostimulation
|
|
United
States of America
|
|
5,998,376
|
Substance
P Treatment for Immunostimulation
|
|
United
States of America
|
|
5,945,508
|
|
|
|
|
|
|
|
|
|
|
Substance
P Treatment for Immunostimulation
|
|
Australia
|
|
737201
|
Substance
P Treatment for Immunostimulation
|
|
Canada
|
|
0957930
|
|
|
Switzerland
|
|
0957930
|
|
|
Germany
|
|
0957930
|
|
|
Spain
|
|
0957930
|
|
|
France
|
|
0957930
|
|
|
United
Kingdom
|
|
0957930
|
|
|
Ireland
|
|
0957930
|
|
|
Italy
|
|
0957930
|
|
|
Liechtenstein
|
|
0957930
|
|
|
Monaco
|
|
0957930
|
Patents
Pending:
Title
|
|
Country
|
|
Application
No.
|
Prevention
of Respiratory Infections in Fowl
|
|
Patent
Cooperation Treaty
|
|
PCT/USO5/42601
|
Treatment
of Skin Diseases
|
|
Patent
Cooperation Treaty
|
|
PCT/US05/45369
|
Treatment
for Asthma
|
|
Patent
Cooperation Treaty
|
|
PCT/US06/11833
|
|
|
|
|
|
Method
to Promote Wound Healing
|
|
United
States of America
|
|
tba
|
Amelioration
of Effects of Cigarette Smoke
|
|
United
States of America
|
|
10/645839
|
Stimulation
of Hair Growth
|
|
United
States of America
|
|
10/539734
|
Acute
Respiratory Syndromes
|
|
United
States of America
|
|
10/553232
|
Inducing
and Maintaining Hair Color
|
|
United
States of America
|
|
tba
|
Anti-Aging
Effects of Substance P
|
|
United
States of America
|
|
tba
|
Method
to Reduce the Risk and/or
|
|
United
States of America
|
|
60/828723
|
Severity
of Anthrax Infection
|
|
|
|
|
Method
to Treat Blood Cell Depletion
|
|
United
States of America
|
|
60/809391
|
Prophylactic
and Therapeutic Treatment
|
|
United
States of America
|
|
60/866901
|
of
Mammals for Avian Influenza Infections
|
|
|
|
|
Use
of Homspera (substance P analog) as an adjuvant
|
|
United
States of America
|
|
60/885562
|
|
|
|
|
|
Method
to Promote Wound Healing
|
|
Australia
|
|
tba
|
Method
to Promote Wound Healing
|
|
Canada
|
|
tba
|
Method
to Promote Wound Healing
|
|
European
Patent Office
|
|
tba
|
Method
to Promote Wound Healing
|
|
Japan
|
|
tba
|
Prevention
of Respiratory Infections in Fowl
|
|
Singapore
|
|
200500467-6
|
Prevention
of Respiratory Infections in Fowl
|
|
Thailand
|
|
97659
|
Prevention
of Respiratory Viral Infection in Fowl
|
|
Vietnam
|
|
1-2005-00599
|
Treatment
of Skin Diseases
|
|
Singapore
|
|
200500466-8
|
Treatment
of Skin Diseases
|
|
Vietnam
|
|
1-2005-00598
|
Treatment
of Skin Diseases
|
|
Thailand
|
|
98080
|
Treatment
of Asthma
|
|
Singapore
|
|
200504104-1
|
Amelioration
of Effects of Cigarette Smoke
|
|
Singapore
|
|
200501072-3
|
Amelioration
of Effects of Cigarette Smoke
|
|
China
|
|
3820184.4
|
Amelioration
of Effects of Cigarette Smoke
|
|
Japan
|
|
2004-532943
|
Amelioration
of Effects of Cigarette Smoke
|
|
European
Patent Office
|
|
3791722.6
|
Amelioration
of Effects of Cigarette Smoke
|
|
Canada
|
|
2496447
|
Amelioration
of Effects of Cigarette Smoke
|
|
Vietnam
|
|
1-2005-00215
|
Acute
Respiratory Distress Syndrome
|
|
Hong
Kong
|
|
6107144.4
|
Acute
Respiratory Syndrome
|
|
European
Patent Office
|
|
4759500.4
|
Acute
Respiratory Syndromes
|
|
Singapore
|
|
200507608-8
|
Medicaments
for Treating or Protecting SARS or ARDS
|
|
Vietnam
|
|
1-2005-01560
|
Anti-Aging
Effects of Substance P
|
|
Japan
|
|
tba
|
Anti-Aging
Effects of Substance P
|
|
Canada
|
|
PCT/US05/13113
|
Anti-Aging
Effects of Substance P
|
|
European
Patent Office
|
|
5755488.3
|
Anti-Aging
Effects of Substance P
|
|
China
|
|
tba
|
Anti-Aging
Effects of Substance P
|
|
Australia
|
|
2005240026
|
Our
rights to the US Patent Nos. 5,945,508 and 5,998,376, Substance P Treatment
for
Immunostimulation, have certain limitations with respect to the University
of
Arizona and the United States Air Force as described below. If patents are
issued for any of our pending patent applications, the same limitations would
most likely apply.
Our
agreements with the University of Arizona outline very specific rights in regard
to our sponsored-supported projects. In accordance with our sponsored-supported
project agreements, the University of Arizona retains the right to use data
developed during these projects for non-commercial purposes, including teaching,
research and education. ImmuneRegen BioSciences, Inc. retains the rights to
trade secrets, inventions, developments and discoveries as limited by the
University of Arizona's employment contracts in effect at the time the
intellectual property was created. Further to this point, the principal
investigator at the University of Arizona, Dr. Mark Witten, was a consultant
to
ImmuneRegen BioSciences, and, under the terms of his consulting agreement,
ImmuneRegen BioSciences, Inc. retains rights to any developments or discoveries
that he made in the course of working for us.
As
a
result of governmental funding, the U.S. Government has certain rights in the
technology developed with such funds. These rights include a non-exclusive,
paid-up, worldwide license under such inventions for any governmental purpose.
In addition, the government has the right to require us to grant an exclusive
license under any of such inventions to a third party if the government
determines that: (i) adequate steps have not been taken to commercialize such
inventions, (ii) such action is necessary to meet public health or safety needs,
or (iii) such action is necessary to meet requirements for public use under
federal regulations.
In
this
regard, the United States Air Force has reserved a non-exclusive license to
the
patents (US Patent Nos. 5,945,508 and 5,998,376) in connection with Air Force
grant F49620-94-1-0297 and may, under certain conditions, have commensurate
or
additional license rights under the Bayh-Dole Act. Those rights are set forth
in
35 USC 202(c)(4) and 37 CFR 401.9 and 14(a).
Under
the
federal Bayh Dole Act, a party which acquires an exclusive license for an
invention that was partially funded by a federal research grant is subject
to
the following government rights: (i) products using the invention which are
sold
in the U.S. are to be manufactured substantially in the U.S. unless a waiver
is
obtained; (ii) the government may force the granting of a license to a third
party who will make and sell the needed product if the licensee does not pursue
reasonable commercialization of a needed product using the invention; and (iii)
the U.S. Government may use the invention for its own needs.
Moreover,
besides the rights that have been granted to the U.S. Government, the validity
and breadth of claims in medical technology patents involve complex legal and
factual questions and, therefore, may be highly uncertain. No assurance can
be
given that any patents based on pending patent applications or any future patent
applications by us will be issued, that the scope of any patent protection
will
exclude competitors or provide competitive advantages to us, that any of the
patents that have been or may be issued to us will be held valid if subsequently
challenged or that others will not claim rights in or ownership of the patents
and other proprietary rights held by us. Furthermore, there can be no assurance
that others have not developed or will not develop similar products, duplicate
any of our products or design around any patents that have been or may be issued
to us. Since patent applications in the U.S. are maintained in secrecy until
shortly before a patent's issuance, we also cannot be certain that others did
not first file applications for inventions covered by our pending patent
applications, nor can we be certain that we will not infringe any patents that
may be issued to others on such applications.
We
also
rely on trade secrets and unpatentable know-how that we seek to protect, in
part, by confidentiality agreements. It is our policy to require our employees,
consultants, contractors, manufacturers, outside scientific collaborators and
sponsored researchers and other advisors to execute confidentiality agreements
upon the commencement of employment or consulting relationships with us. These
agreements provide that all confidential information developed or made known
to
the individual during the course of the individual's relationship with us is
to
be kept confidential and not disclosed to third parties except in specific
limited circumstances. We also require signed confidentiality or material
transfer agreements from any company that is to receive our confidential
information. In the case of employees, consultants and contractors, the
agreements generally provide that all inventions conceived by the individual
while rendering services to us shall be assigned to us as our exclusive
property. There can be no assurance, however, that these agreements will not
be
breached, that we would have adequate remedies for any breach, or that our
trade
secrets or unpatentable know-how will not otherwise become known or be
independently developed by competitors.
Our
potential success will also depend in part on our ability to develop
commercially viable products without infringing the proprietary rights of
others. We have not conducted freedom of use patent searches for all of our
potential applications and no assurance can be given that patents do not exist
or could not be filed which would have an adverse affect on our ability to
market our products or maintain our competitive position with respect to our
products. If our technology components, devices, designs, products, processes
or
other subject matter are claimed under other existing U.S. or foreign patents,
or are otherwise protected by third party proprietary rights, we may be subject
to infringement actions. In such event, we may challenge the validity of such
patents or other proprietary rights or we may be required to obtain licenses
from such companies in order to develop, manufacture or market our products.
There can be no assurances that we would be able to obtain such licenses or
that
such licenses, if available, could be obtained on commercially reasonable terms.
Furthermore, the failure to either develop a commercially viable alternative
or
obtain such licenses could result in delays in marketing our proposed products
or the inability to proceed with the development, manufacture or sale of
products requiring such licenses, which could have a material adverse affect
on
our business, financial condition and results of operations. If we are required
to defend ourselves against charges of patent infringement or to protect our
proprietary rights against third parties, substantial costs will be incurred
regardless of whether we are successful. Such proceedings are typically
protracted with no certainty of success. An adverse outcome could subject us
to
significant liabilities to third parties and force us to curtail or cease our
development and sale of our products and processes.
We
may
collaborate in the future with other entities on research, development and
commercialization activities. Disputes may arise about inventorship and
corresponding rights in know-how and inventions resulting from the joint
creation or use of intellectual property by us and our collaborators, partners,
licensors and consultants. As a result, we may not be able to maintain our
proprietary position.
Trademarks
On
December 9, 2004 we filed for trademarks with US Patent and Trademark Office
(USPTO) for Homspera, Radilex and Viprovex.
On
August
15, 2006, Viprovex became a federally registered trademark (Reg. No. 3,130,407)
in International Class 5 for pharmaceutical products, namely antidotes for
the
treatment of viral, chemical and biological warfare agents.
On
October 17, 2006, opposition to the Homspera mark was filed by another
pharmaceutical company that distributes an anti-viral compound under a name
which they claim has a “similar sound and appearance.” The matter is currently
being negotiated and we have granted an extension of the opposition
term.
On
December 5, 2006, the Trademark Office issued a Notice of Allowance to our
Intent-to-Use (ITU) trademark application for Radilex as biopharmaceuticals,
namely products for counteracting exposure to radiation and chemical agents.
As
of the date of this report, the time for opposition to the Radilex mark has
expired.
On
January 9, 2007, the Trademark Office issued a Notice of Allowance of our
Intent-to-Use (ITU) trademark application for ImmuneRegen for biotechnology
pharmaceuticals, namely adjuvants, counteractants and immunostimulant products
for enhancing the natural and reactive immunity to toxic agents.
RESEARCH
AND LICENSE AGREEMENTS
Our
patents and continued research on Sar9, Met (O2)11-Substance
P are
derived from discoveries made during research studies funded by the Air Force
Office of Scientific Research (AFOSR) in 1994 by our co-founders Drs. Mark
Witten and David Harris. In December 2002 we entered into consulting agreements
on a month-to-month basis with Dr. Mark Witten and Dr. David Harris. Under
the
terms of these agreements, Drs. Witten and Harris agreed to place at the
disposal of us their judgment and expertise in the area of acute lung injury.
In
consideration for these services, we agreed to pay each of Drs. Witten and
Harris a non-refundable fee of $5,000 per month. We and Dr. Harris agreed to
terminate the consulting agreement for Dr. Harris in March 2005. In January
2006, the company received correspondence from Dr. Witten stating that he would
terminate his consulting contract if his specific requirements were not met.
We
subsequently accepted his termination effective February 1, 2006.
In
December 2002, we entered into a royalty-free license agreement with Drs. Witten
and Harris. Under the terms of the license agreement, Drs. Harris and Witten
granted to us an exclusive license to use and sublicense certain patents,
medical applications, and other technologies developed by them. Our obligations
under this agreement include (i) reasonable efforts to protect any licensed
patents or other associated property rights; (ii) reasonable efforts to maintain
confidentiality of any proprietary information; (iii) upon the granting by
the
U. S. Food and Drug Administration to us the right to market a product, we
will,
for so long as we sell any product or medical application which incorporates
or
utilizes the patents, medical applications, and other technologies developed
by
Drs. Witten and Harris, maintain in full force and effect policies of general
liability insurance (with Broad Form General Liability and Product Liability
endorsements) with limits of not less than $1,000,000 per occurrence and
$1,000,000 annual aggregate. The license agreement will terminate ten years
after the date of the expiration of the last patent issued or issuing with
respect to the licensed patents, medical applications, and other technologies.
The resignation of Dr. Harris as a director of our company in December 2004
and
as a consultant in March 2005 does not have any impact upon the terms of the
license agreement. The resignation of Dr. Witten as a consultant to our company
in February 2006 does not have any impact upon the terms of the license
agreement.
In
February 2005, Drs. Witten and Harris executed assignment documents in which,
for good and valuable consideration, patent applications and patents developed
by them were assigned to ImmuneRegen BioSciences, Inc. The assignment documents
included all of the patents and patent applications which were included in
and
covered by the Licensing Agreement, as amended. Drs. Witten and Harris have
also
assigned all proprietary technology developed at ImmuneRegen subsequent to
the
execution of the February 2005 assignment documents.
GOVERNMENTAL
REGULATION
Our
research and development activities and the manufacturing and marketing of
our
applications are subject to the laws and regulations of governmental authorities
in the U.S. and other countries in which our applications may be potentially
marketed. Specifically, in the U.S., the FDA, among other activities, regulates
new product approvals to establish safety and efficacy of these applications.
Governmental authorities in the United States extensively regulate the
pre-clinical and clinical testing, safety, efficacy, research, development,
manufacturing, labeling, storage, record-keeping, advertising, promotion,
export, marketing and distribution, among other things, of pharmaceutical
products. Governments in other countries have similar requirements for testing
and marketing. In the U.S., in addition to meeting FDA regulations, we are
also
subject to other federal laws as well as certain state laws.
REGULATORY
PROCESS IN THE UNITED STATES
In
the
United States, the FDA, under the Federal Food, Drug, and Cosmetic Act (FFDCA),
the Public Health Service Act and other federal statutes and regulations,
subject pharmaceutical and biologic products to rigorous review. If we do not
comply with applicable requirements, we may be fined, the government may refuse
to approve our marketing applications or allow us to manufacture or market
our
products or product candidates, and we may be criminally prosecuted. The FDA
also has the authority to discontinue or suspend manufacture or distribution,
require a product withdrawal or recall or revoke previously granted marketing
authorizations, if we fail to comply with regulatory standards or if we
encounter problems following initial marketing.
Approval
of new pharmaceutical (and biological) products is a lengthy procedure leading
from development of a new product through pre-clinical and clinical testing.
This process takes a number of years and the expenditure of significant
resources. There can be no assurance that our product candidates will ultimately
receive regulatory approval.
Regardless
of how our product candidates are regulated, the FFDCA and other Federal
statutes and regulations govern or influence the research, testing, manufacture,
safety, labeling, storage, record-keeping, approval, distribution, use, product
reporting, advertising and promotion of such products. Noncompliance with
applicable requirements can result in civil penalties, recall, injunction or
seizure of products, refusal of the government to approve or clear product
approval applications or to allow us to enter into government supply contracts,
withdrawal of previously approved applications and criminal
prosecution.
PRODUCT
APPROVAL IN THE UNITED STATES
To
obtain
approval of a new product from the FDA, we must, among other requirements,
submit data demonstrating the product's safety and efficacy, as well as,
detailed information and reports on the manufacture and composition of the
product candidate. In most cases, this entails extensive laboratory tests,
pre-clinical and clinical trials. This testing and the preparation of necessary
applications and processing of those applications by the FDA are expensive
and
typically take many years to complete. The FDA may deny our applications or
may
not act quickly or favorably in reviewing these applications, and we may
encounter significant difficulties or costs in our efforts to obtain FDA
approvals that could delay or preclude us from marketing any products we may
develop. The FDA also may require post-marketing testing and surveillance to
monitor the effects of approved products or place conditions on any approvals
that could restrict the commercial applications of these products. Regulatory
authorities may withdraw product approvals if we fail to comply with regulatory
standards or if we encounter problems following initial marketing. With respect
to patented products or technologies, delays imposed by the governmental
approval process may materially reduce the period during which we will have
the
exclusive right to exploit the products or technologies.
The
process required by the FDA before a new drug or biologic may be marketed in
the
United States generally involves the following:
§
|
completion
of pre-clinical laboratory tests or trials and formulation
studies;
|
§
|
submission
to the FDA of an IND for a new drug or biologic, which must become
effective before human clinical trials may
begin;
|
§
|
performance
of adequate and well-controlled human clinical trials to establish
the
safety and efficacy of the proposed drug or biologic for its intended
use;
and,
|
§
|
submission
and approval of a New Drug Application, or NDA, for a drug, or
a Biologics
License Application, or BLA, for a
biologic.
|
Pre-clinical
tests include laboratory evaluation of product chemistry, formulation and
stability, as well as studies to evaluate toxicity. The results of pre-clinical
testing, together with manufacturing information and analytical data, are
submitted to the FDA as part of an IND application. The FDA requires a 30-day
waiting period after the filing of each IND application before clinical trials
may begin, in order to ensure that human research subjects will not be exposed
to unreasonable health risks. At any time during this 30-day period or at any
time thereafter, the FDA may halt proposed or ongoing clinical trials, or may
authorize trials only on specified terms. The IND application process may become
extremely costly and substantially delay development of our products. Moreover,
positive results of pre-clinical tests will not necessarily indicate positive
results in clinical trials.
The
sponsor typically conducts human clinical trials in three sequential phases,
which may overlap. These phases generally include the following:
Phase
I:
The product is usually first introduced into healthy humans or, on occasion,
into patients, and is tested for safety, dosage tolerance, absorption,
distribution, excretion and metabolism.
Phase
II:
The product is introduced into a limited patient population to:
· assess
its efficacy in specific, targeted indications;
· assess
dosage tolerance and optimal dosage; and,
· identify
possible adverse effects and safety risks.
Phase
III: These are commonly referred to as pivotal studies. If a product is found
to
have an acceptable safety profile and to be potentially effective in Phase
II
clinical trials, new clinical trials will be initiated to further demonstrate
statistically significant clinical efficacy, optimal dosage and safety within
an
expanded and diverse patient population at geographically-dispersed clinical
study sites.
As
described above, for several of the product opportunities we are pursuing,
we
may apply for approval based upon a rule adopted by the FDA in 2002, titled
"Approval of New Drugs When Human Efficacy Studies Are Not Ethical or Feasible"
(Code of Federal Regulations, Title 21, Part 314, Subpart I), which is also
referred to as the "animal efficacy rule." Pursuant to this rule, in situations
where it would be unethical to conduct traditional Phase III efficacy studies
in
humans, as is the case with our applications relating to the treatment of
maladies caused by exposure to various chemical and biological agents, the
FDA
will review new drugs for approval on the basis of safety in humans and efficacy
in relevant animal models. . Under either the animal efficacy rule or
traditional efficacy rules, we will not have marketable applications unless
and
until our drug candidates complete all required safety studies and clinical
trials and receive FDA approval in the United States or approval by regulatory
agencies outside of the United States.
If
the
FDA does ultimately approve the product, it may require post-marketing testing,
including potentially expensive Phase IV studies, to monitor its safety and
effectiveness.
Clinical
trials must meet requirements for Institutional Review Board, or IRB, oversight,
informed consent and the FDA's Good Clinical Practices. Prior to commencement
of
each clinical trial, the sponsor must submit to the FDA a clinical plan, or
protocol, accompanied by the approval of the committee responsible for
overseeing clinical trials at one of the clinical trial sites. The FDA and
the
IRB at each institution at which a clinical trial is being performed may order
the temporary or permanent discontinuation of a clinical trial at any time
if it
believes that the clinical trial is not being conducted in accordance with
FDA
requirements or presents an unacceptable risk to the clinical trial
patients.
The
sponsor must submit to the FDA the results of the pre-clinical and clinical
trials, together with, among other things, detailed information on the
manufacturing and composition of the product, in the form of an NDA, or, in
the
case of a biologic, a BLA. Once the submission has been accepted for filing,
the
FDA has 180 days to review the application and respond to the applicant. The
review process is often significantly extended by FDA requests for additional
information or clarification. The FDA may refer the BLA to an advisory committee
for review, evaluation and recommendation as to whether the application should
be approved, but the FDA is not bound by the recommendation of an advisory
committee.
It
is
possible that our product candidates will not successfully proceed through
this
approval process or that the FDA will not approve them in any specific period
of
time, or at all. The FDA may deny or delay approval of applications that do
not
meet applicable regulatory criteria, or if the FDA determines that the clinical
data do not adequately establish the safety and efficacy of the product.
Satisfaction of FDA pre-market approval requirements for a new biologic is
a
process that may take several years and the actual time required may vary
substantially based upon the type, complexity and novelty of the product or
disease. The FDA reviews these applications and, when and if it decides that
adequate data are available to show that the product is both safe and effective
and that other applicable requirements have been met, approves the drug or
biologic for marketing. Government regulation may delay or prevent marketing
of
potential products for a considerable period of time and impose costly
procedures upon our activities. Success in early stage clinical trials does
not
assure success in later stage clinical trials. Data obtained from clinical
activities is not always conclusive and may be susceptible to varying
interpretations that could delay, limit or prevent regulatory approval. Upon
approval, a product candidate may be marketed only for those indications
approved in the BLA or NDA and may be subject to labeling and promotional
requirements or limitations, including warnings, precautions, contraindications
and use limitations, which could materially impact profitability. Once approved,
the FDA may withdraw the product approval if compliance with pre- and
post-market regulatory standards is not maintained or if safety, efficacy or
other problems occur after the product reaches the marketplace.
The
FDA
may, during its review of an NDA or BLA, ask for additional test data. If the
FDA does ultimately approve the product, it may require post-marketing testing,
including potentially expensive Phase IV studies, to monitor the safety and
effectiveness of the product. In addition, the FDA may, in some circumstances,
impose restrictions on the use of the product, which may be difficult and
expensive to administer and may require prior approval of promotional
materials.
ONGOING
FDA REQUIREMENTS
Before
approving an NDA or BLA, the FDA will inspect the facilities at which the
product is manufactured and will not approve the product unless the
manufacturing facilities are in compliance with the FDA's current Good
Manufacturing Practices, or cGMP, requirements which govern the manufacture,
holding and distribution of a product. Manufacturers of biologics also must
comply with the FDA's general biological product standards. Following approval,
the FDA periodically inspects drug and biologic manufacturing facilities to
ensure continued compliance with the cGMP requirements. Manufacturers must
continue to expend time, money and effort in the areas of production, quality
control, record keeping and reporting to ensure full compliance with those
requirements. Failure to comply with these requirements subjects the
manufacturer to possible legal or regulatory action, such as suspension of
manufacturing, seizure of product, voluntary recall of product, withdrawal
of
marketing approval or civil or criminal penalties. Adverse experiences with
the
product must be reported to the FDA and could result in the imposition of
marketing restrictions through labeling changes or market removal. Product
approvals may be withdrawn if compliance with regulatory requirements is not
maintained or if problems concerning safety or efficacy of the product occur
following approval.
The
labeling, advertising, promotion, marketing and distribution of a drug or
biologic product also must be in compliance with FDA and FTC requirements which
include, among others, standards and regulations for direct-to-consumer
advertising, industry-sponsored scientific and educational activities, and
promotional activities involving the internet. The FDA and FTC have very broad
enforcement authority, and failure to abide by these regulations can result
in
penalties, including the issuance of a Warning Letter directing the company
to
correct deviations from regulatory standards, a requirement that future
advertising and promotional materials be pre-cleared by the FDA and enforcement
actions that can include seizures, injunctions and criminal
prosecution.
Manufacturers
are also subject to various state and Federal laws and regulations governing
laboratory practices (specifically, the requirement for certain studies to
comply with current Good Laboratory Practices), the experimental use of animals
and the use and disposal of hazardous or potentially hazardous substances in
connection with their research. In each of the above areas, the FDA has broad
regulatory and enforcement powers, including the ability to levy fines and
civil
penalties, suspend or delay issuance of approvals, seize or recall products
and
deny or withdraw approvals.
Some
of
our drug candidates may need to be administered using specialized drug delivery
systems. We may rely on drug delivery systems that are already approved to
deliver drugs like ours to similar physiological sites or, in some instances,
we
may need to modify the design or labeling of the legally available device for
delivery of our product candidate. In such an event, the FDA may regulate the
product as a combination product or require additional approvals or clearances
for the modified device. Further, to the extent the delivery device is owned
by
another company, we would need that company's cooperation to implement the
necessary changes to the device and to obtain any additional approvals or
clearances. Obtaining such additional approvals or clearances, and cooperation
of other companies, when necessary, could significantly delay, and increase
the
cost of obtaining, marketing approval, which could reduce the commercial
viability of a drug candidate.
HIPAA
REQUIREMENTS
Other
federal legislation may affect our ability to obtain certain health information
in conjunction with our research activities. The Health Insurance Portability
and Accountability Act of 1996, or HIPAA, mandates, among other things, the
adoption of standards designed to safeguard the privacy and security of
individually identifiable health information. In relevant part, the U.S.
Department of Health and Human Services, or HHS, has released two rules to
date
mandating the use of new standards with respect to such health information.
The
first rule imposes new standards relating to the privacy of individually
identifiable health information. These standards restrict the manner and
circumstances under which covered entities may use and disclose protected health
information so as to protect the privacy of that information. The second rule
released by HHS establishes minimum standards for the security of electronic
health information. While we do not believe we are directly regulated as a
covered entity under HIPAA, the HIPAA standards impose requirements on covered
entities conducting research activities regarding the use and disclosure of
individually identifiable health information collected in the course of
conducting the research. As a result, unless they meet these HIPAA requirements,
covered entities conducting clinical trials for us may not be able to share
with
us any results from clinical trials that include such health
information.
In
addition to the statutes and regulations described above, we are also subject
to
regulation under the Occupational Safety and Health Act, the Environmental
Protection Act, the Toxic Substances Control Act, the Resource Conservation
and
Recovery Act and other present and potential future federal, state and local
regulations.
SECURITIES
LAWS
Because
our common stock is publicly traded, we are subject to a variety of rules and
regulations of federal, state and financial market exchange entities charged
with the protection of investors and the oversight of companies whose securities
are publicly traded. These entities, including the Securities and Exchange
Commission, the Public Company Accounting Oversight Board and the NASD OTC
Bulletin Board, have recently issued new requirements and regulations and are
currently developing additional regulations and requirements in response to
recent laws enacted by Congress, most notably the Sarbanes-Oxley Act of 2002.
As
certain rules are not yet finalized, we do not know the level of resources
we
will have to commit in order to be in compliance. Our compliance with current
and proposed rules is likely to require the commitment of significant financial
and managerial resources. As a result, our management's attention might be
diverted from other business concerns, which could negatively affect our
business.
DISTRIBUTION
If
Radilex or Viprovex receives approval from the FDA, we will attempt to
commercialize these applications. Upon such approval, if Radilex we intend
to
use our best efforts to market it as a treatment to the damaging effects of
radiation injury that result after exposure to total body irradiation. If
Viprovex, we intend to use our best efforts to market it as a medical
countermeasure to the effects of exposure to various biological agents. We
intend to offer for sale these applications to various governmental agencies
at
the local, state and federal levels, both domestically and potentially outside
the United States.
COMPETITIVE
ENVIRONMENT
The
biotechnology and pharmaceutical industries are intensely competitive. We have
numerous competitors in the United States and elsewhere. Because we are pursuing
potentially large markets, our competitors include major multinational
pharmaceutical companies, specialized biotechnology firms and universities
and
other research institutions. Several of these entities have already successfully
marketed and commercialized products that will compete with our products,
assuming that our products gain regulatory approval. Competitors such as Amgen
Inc. and Cleveland Biolabs, Inc. have developed or are developing products
for
treating aspects of severe acute radiation injury. Companies such as VaxGen,
Inc., Acambis plc and Emergent BioSolutions have developed or are developing
vaccines against infectious diseases, including anthrax.
Many
of
our competitors have greater financial and other resources, larger research
and
development staffs and more effective marketing and manufacturing organizations
than we do. In addition, academic and government institutions have become
increasingly aware of the commercial value of their research findings. These
institutions are now more likely to enter into exclusive licensing agreements
with commercial enterprises, including our competitors, to develop and market
commercial products.
Our
competitors may succeed in developing or licensing technologies and drugs that
are more effective or less costly than the potential products we are developing.
Our competitors may succeed in obtaining FDA or other regulatory approvals
for
drug candidates before we do. If competing drug candidates prove to be more
effective or less costly than our drug candidates, our drug candidates, even
if
approved for sale, may not be able to compete successfully with our competitors'
existing products or new products under development. If we are unable to compete
successfully, we may never be able to sell enough of our potential products
at a
price sufficient to permit us to generate profits.
We
believe that due to the global political environment that time to market is
critical in the discovery of an effective countermeasure to radiation exposure
and other biological and chemical threats. New developments in areas in which
we
are conducting our research and development are expected to continue at a rapid
pace in both industry and academia. It is due to these reasons that we believe
that competition will be driven by time to market.
If
our
proposed product candidates are successfully developed and approved, we will
face competition based on the safety and effectiveness of our proposed products,
the timing and scope of regulatory approvals, availability of manufacturing,
sales, marketing and distribution capabilities, reimbursement coverage, price
and patent position. There can be no assurance that our competitors will not
develop more effective or more affordable technology or products, or achieve
earlier patent protection, product development or product commercialization
than
us. Accordingly, our competitors may succeed in commercializing products more
rapidly or effectively than us, which could have a material adverse effect
on
our business, financial condition and results of operations.
From
our
inception through June 11, 2007, we have relied and continue to rely on the
services of outside consultants for services and currently have seven total
employees, five full-time employees and two part-time employees. Our full-time
employees are Michael K. Wilhelm, our Chief Executive Officer; John N. Fermanis,
our Chief Financial Officer; Hal N. Siegel, Ph.D., Senior Director, Product
Development and Regulatory Affairs, Chris Romano, Scientific Associate; and,
the
fifth serves in an administrative role. In order for us to attract and retain
quality personnel, we anticipate we will have to offer competitive salaries
to
future employees. We do not anticipate our employment base will significantly
change during the next 12 months.
If
we are
able to expand our operations, we will incur additional costs for personnel.
This projected increase in personnel is dependent upon our generating revenues
and obtaining sources of financing. There is no guarantee that we will be
successful in raising the funds required or generating revenues sufficient
to
fund the projected increase in the number of employees.
Our
future success depends in large part upon our ability to attract and retain
highly skilled scientific personnel. The competition in the scientific industry
for such personnel is intense, and we cannot be sure that we will be successful
in attracting and retaining such personnel. Most of our consultants and
employees and several of our executive officers began working for us recently,
and all employees are subject to "at will" employment. We cannot guarantee
that
we will be able to replace any of our scientific personnel in the event their
services become unavailable.
None
of
our employees are covered by collective bargaining agreements, and we believe
our relations with our employees are favorable.
DESCRIPTION
OF PROPERTY
Our
corporate headquarters are currently located at 4021 N. 75th Street,
Suite 201,
Scottsdale, Arizona 85251, where we have leased approximately 1,800 square
feet of office space through September 30, 2007. Our rent expense is $2,380 per
month. We believe that our facilities are adequate for our current needs and
suitable additional or substitute space will be available on favorable terms
in
the future to replace our existing facilities, if necessary, or accommodate
expansion of our operations.
LEGAL
PROCEEDINGS
We
are
not currently a party to any material legal proceedings.
DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS
The
following tables set forth certain information with respect to our directors
and
officers as of June 11, 2007. The following persons serve as our directors
and executive officers.
Name
|
|
Age
|
|
Position
|
Michael
K. Wilhelm
|
|
40
|
|
President,
Chief Executive Officer and Director
|
John
N. Fermanis
|
|
53
|
|
Chief
Financial Officer
|
Hal
N. Siegel, Ph.D.
|
|
53
|
|
Sr.
Director of Product Development and Regulatory Affairs and
Director
|
Theodore
E. Staahl, M.D.
|
|
62
|
|
Director
|
Robert
J. Hariri, M.D., Ph.D.
|
|
48
|
|
Director
|
Lance
K. Gordon, Ph.D.
|
|
59
|
|
Director
|
Mark
L.
Witten, Ph.D. resigned as a member of the Board of Directors on May 18,
2006.
Background
of Executive Officers and Directors.
Michael
K. Wilhelm, President, Chief Executive Officer and Director. Mr.
Wilhelm has served as our President and Chief Executive Officer and on our
Board
of Directors since July 2003 and as President and Chief Executive Officer of
ImmuneRegen BioSciences, Inc. since December 2002 and on its Board of Directors
since November 2002. Mr. Wilhelm has been actively involved in the financial
industry since 1990. After leaving the brokerage industry, Mr. Wilhelm founded
Foresight Capital Corp. in July 1996, a company designed to identify early
stage
companies with above average growth potential and assist them in reaching the
next stage of development. In working with these companies, Mr. Wilhelm took
an
active role, provided advisory services and facilitated financing for continued
growth and development. Mr. Wilhelm retains the title of Managing Director
of
Foresight Capital Partners but the company has had limited and insignificant
business operations since December 2002.
John
N. Fermanis, Chief Financial Officer. Mr. Fermanis was appointed as our
Chief Financial Officer, effective as of December 22, 2004. Mr. Fermanis is
a
co-founder of AMPS Wireless Data, Inc., a privately held Arizona corporation
founded in 1998, where he served as Chief Financial Officer from May, 2001
to
October, 2004. Mr. Fermanis had overall financial responsibility at AMPS and
was
instrumental in raising over $5 million in venture capital. From 1997 to 2001,
he held the position of Treasury Manager for Peter Piper, Inc., a national
restaurant chain headquartered in Scottsdale, Arizona, where he was responsible
for managing a $25 million revolving line of credit and cash concentration
and
disbursement for a company with over $100 million annual sales. Mr. Fermanis
has
over 18 years of financial management experience with both the American Express
Corporation and Citigroup in New York City. Mr. Fermanis holds a Bachelor of
Arts degree from the S.U.N.Y. at Stony Brook and attended Pace University's
Graduate School of Management in New York City.
Hal
N. Siegel, Ph.D., Sr. Director of Product Development and Regulatory Affairs
and Director. Dr. Siegel has served on our Board
of Directors since June, 2006 and was appointed Senior Director of Product
Development and Regulatory Affairs of the Company in October, 2006. Dr. Siegel
first came to ImmuneRegen from Siegel Consultancy, which has been providing
strategic and tactical expertise to life science companies, helping them meet
FDA requirements from pre-clinical studies through the regulatory submission
process and into the post-approval marketplace. He has over a decade of
experience delivering scientific, clinical and regulatory compliance assistance
as well as submission preparation and management services to life science client
companies developing drugs, therapeutic biologics, combination products,
traditional devices, and in vitro diagnostic products. Dr. Siegel previously
provided strategic and tactical management consulting services to a start up
software company making knowledge management and collaboration tools for
regulated life science companies, as well as Sun Microsystem’s Global Life
Science group, working with sales, marketing, business development, legal and
professional services groups. His degrees are from Rensselaer Polytechnic
Institute and SUNY Buffalo (Ph.D., Biochemical Pharmacology).
Theodore
E. Staahl, M.D., Director. Dr. Staahl has served on our Board of
Directors since April 2003. Dr. Staahl is employed at the Cosmetic, Plastic
and
Reconstructive Surgery Center, a company which he founded in 1978. Dr.
Staahl's professional training was received at the University of Illinois and
the University of Wisconsin and is board certified by the American Board of
Facial, Plastic and Reconstruction Surgeons, the Board of Cosmetic Surgeons
and
the American Board of Head and Neck Surgeons. Dr. Staahl has presented papers
at
national and international meetings on hair transplant, rhinoplasty and cleft
lip deformities.
Robert
J. Hariri, M.D., Ph.D., Director. Dr. Hariri, M.D. has served on our
Board of Directors since April 2007. Dr. Hariri has been CEO of a division
of Celgene since 2005. Previously, he had been President of the division from
2002 to 2005. The division focuses on human stem and biomaterial solutions
for a
range of clinical indications. From 1998 to 2002, prior to joining Celgene,
Dr.
Hariri was Founder, Chairman and Chief Scientific Officer for Anthrogenesis
Corp./LIFEBANK, Inc., a New Jersey-based privately held biomedical technology
and service corporation involved in umbilical cord blood banking and its
supporting technology platform. LIFEBANK is one of the largest cord blood bank
companies and is recognized as a technological leader in the industry From
1987
to 1994, he was Co-founder, Vice Chairman and Chief Scientific Officer of
Neuordynamics, a privately held medical device and technology corporation.
While
there, he led the design, testing and development of several medical device
technologies. He also arranged and negotiated initial private seed investment
and private placement with Johnson & Johnson, Inc. Dr. Hariri has held
academic positions at Cornell University Medical College Cornell University
Graduate School of Medical Sciences. He has also played a prominent medical
role
at Cornell University Medical College, The New York
Hospital-Cornell Medical Center and The Jamaica Hospital-Cornell Trauma Center.
While at Cornell, he was the Director of The Center for Trauma Research. He
received his Medical Degree and Ph.D from Cornell University and was
awarded a Bachelor of Arts Degree from Columbia College.
Lance
K. Gordon, Ph.D., Director. Dr. Gordon has served on our Board of
Directors since May 2007. He is an accomplished corporate executive
with extensive experience leading biopharmaceutical companies focused on the
development, manufacture and commercialization of biologic products for the
prevention and treatment of human infectious disease. Dr. Gordon has
served as President, Chief Executive Officer and as a Director of VaxGen, Inc.
from 2001 to 2007 during which time, the Company generated over $250 million
in
income and $1 billion in contracts for biodefense vaccines. Prior to
joining Vaxgen, Dr. Gordon was Executive Director of North America for Acambis
plc. and a member of the Company’s Board of Directors from 1999 to
2001. Previously, he was President and CEO of OraVax, Inc. from 1990
to 1999, prior to its acquisition by Peptide Therapeutics to form
Acambis. Before joining OraVax, he was the CEO of North American
Vaccine from 1988 to 1990, prior to its acquisition by Baxter
International. He has also held positions as Associate Director,
Clinical Pharmacology at E. R. Squibb and Research Director, Viral and Bacterial
Vaccines, at Connaught Laboratories. Among his many Professional
Affiliations, Dr. Gordon is a member of the United States National Vaccines
Advisory Committee (NVAC) since 2005, a member of the Sabin Vaccine Institute
Board of Trustees since 2003 and a member of the Expert Panel of the Meningitis
Vaccine Project, WHO and PATH since 1999. He received his Ph.D. in
Biomedical Science, Immunology and Molecular Genetics from the University of
Connecticut at Farmington and was awarded a Bachelor of Arts Degree from the
University of California at Humboldt.
FAMILY
RELATIONSHIPS
Our
executive officers are appointed by and serve at the discretion of our Board
of
Directors. There are no family relationships between any director and/or any
executive officer.
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The
following table sets forth information concerning the compensation for the
two
fiscal years ended December 31, 2006 and 2005, of our principal executive
officer, our two most highly compensated executive officers other than our
principal executive officer whose annual compensation exceeded $100,000, and
up
to two additional individuals for whom disclosure would have been made in this
table but for the fact that the individual was not serving as an executive
officer of our company at December 31, 2006, if any (collectively, the “Named
Executive Officers”).
Name
and Principal Position
|
|
Year
|
|
Salary
($)
|
|
Bonus
($)(1)
|
|
Stock
Awards
($)
|
|
Option
Awards
($)
|
|
All
Other
Compensation
($)(2)
|
|
Total
($)
|
Michael
K. Wilhelm
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President,
CEO and
|
|
2006
|
|
$286,317
|
|
$41,278
|
|
—
|
|
$735,731
|
|
—
|
|
$1,063,326
|
Director
|
|
2005
|
|
$275,000
|
|
$28,870
|
|
—
|
|
$82,912
|
|
—
|
|
$386,782
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
N. Fermanis
|
|
2006
|
|
$98,000
|
|
$17,596
|
|
—
|
|
—
|
|
—
|
|
$115,596
|
Chief
Financial Officer
|
|
2005
|
|
$85,000
|
|
$4,590
|
|
$76,416
|
|
—
|
|
—
|
|
$166,006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hal
N. Siegel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior
Director, Product
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development
and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulatory
Affairs and
|
|
2006
|
|
$42,308
|
|
—
|
|
—
|
|
$32,071
|
|
$95,574
|
|
$169,953
|
Director
|
|
2005
|
|
—
|
|
—
|
|
—
|
|
—
|
|
$58,285
|
|
$58,285
|
(1)
|
The
amounts shown are the amounts of compensation cost recognized by
us in
fiscal year 2006 related to the issuance of common stock purchase
warrants
as bonus in fiscal year 2006 and prior fiscal
years.
|
(2)
|
The
amounts shown are the amounts of compensation cost recognized by
us in
fiscal year 2006 related to the issuance of common stock purchase
warrants
in fiscal year 2006 and prior fiscal
years.
|
STOCK
OPTIONS
As
of
June 11, 2007, we have issued 6,014,212 stock options at a
weighted average exercise price of $0.26, of which 5,951,000
are at an average price of $0.23 per share and were granted under our 2003
Stock
Option, Deferred Stock and Restricted Stock Plan and 63,212 shares at a
weighted average exercise price of $25.00 per share that
were granted outside of our 2003 Stock Option, Deferred Stock and
Restricted Stock Plan. At June 11, 2007, of this amount 974,495
stock options remain unvested. There are 10,472,493 shares reserved for future
grant under our 2003 Stock Option, Deferred Stock
and Restricted Stock Plan.
2003
Stock Option, Deferred Stock and Restricted Stock Plan
We
adopted the 2003 Stock Option, Deferred Stock and Restricted Stock Plan (the
“Plan”) which authorizes the Board of Directors in accordance with the terms of
the Plan, among other things, to grant incentive stock options as defined
by
Section 422(b) if the Internal Revenue Code, nonstatutory stock options
(collectively, the “Stock Options”) and awards of restricted stock and deferred
stock and to sell shares of our common stock (“Common Stock”) pursuant to the
exercise of such stock options to executive officers, together with our other
employees, for up to an aggregate of 6,465,316 shares. The options will have
a
term not to exceed ten years from the date of the grant. On June 28,
2006, our shareholders voted to approve an amendment to our 2003 Stock Option,
Deferred Stock and Restricted Stock Plan to increase the number of shares
of our
Common Stock reserved and available for issuance under the Plan from 3,600,000
to 20,000,000. As of June 11, 2007 we have 6,014,212 stock options
outstanding.
Option
Grants in Fiscal Year 2006
In
July
2006, we granted options to purchase 1,896,970 shares of common stock to our
Chief Executive Officer, Michael K. Wilhelm. The options vest 50% after ninety
days of continued employment and the balance in equal monthly installments
for
12 months thereafter.
In
September 2006, we issued options to purchase 3,500,000 shares of common stock
to our Chief Executive Officer, Michael K. Wilhelm. The options vest 50% after
thirty days of continued employment with the balance in equal monthly
installments for 12 months thereafter.
In
October 2006, we issued options to purchase 200,000 shares of common stock
to
our Senior Director, Product Development and Regulatory Affairs and Director,
Hal N. Siegel.
As
of
December 31, 2006, total unrecognized stock-based compensation expense related
to stock options was $264,274. During the year ended December 31, 2005 we
charged $296,394 to operations related to recognized stock-based compensation
expense for employee stock options.
Every
30-day period, options to
purchase a total of 224,874 shares of common stock held our president and chief
executive officer vest. During the three months ended March 31, 2007,
options to purchase a total of 782,570 shares of common stock held by our
president and chief executive officer were vested. As of June 11,
2007, options to purchase a total of 899,495 shares of common stock held our
president and chief executive officer remain unvested.
Employment
Agreements
President
and Chief Executive Officer:
On
August
10, 2005, we entered into a new employment agreement with our President and
Chief Executive Officer, Michael K. Wilhelm. The employment agreement calls
for
a salary at the rate of $275,000 per annum. The salary will be subject to
adjustment of at least 10% per year at the end of each year. We also agreed
to
defend and indemnify, to the fullest extent permitted by our certificate of
incorporation and bylaws and the Delaware General Corporation Law, Mr. Wilhelm
and hold him harmless against any liability that he incurs within the scope
of
his employment under the agreement. The agreement also provides for the
following various bonus incentives:
|
i)
A target incentive bonus in cash and/or stock if we consummate a
transaction with any unaffiliated third party such as an equity or
debt
financing, acquisition, merger , strategic partnership or other similar
transaction.
|
ii)
A one
time grant of an option to purchase 2,000,000 shares of our common stock at
an
exercise price equal to the fair market value per share on the date option
is
granted.
In
connection with Mr. Wilhelm's new employment agreement, we also entered into
a
change of control agreement and a severance agreement with him on August 10,
2005.
Chief
Financial Officer:
Pursuant
to our employment agreement with John Fermanis, our Chief Financial Officer,
dated February 15, 2005, we paid a salary of $60,000 until we completed a
financing of $500,000 or more. This occurred on March 4, 2005 when we completed
a Tender Offer for warrants totaling $1,190,857 net of fees. From March 4,
2005,
until December 31, 2005, we will pay an annual salary of $85,000. Thereafter,
we
will pay an annual salary of $98,000 for the second year ending December 31,
2006 and an annual salary of $112,000 for the third year ending December 31,
2007. Mr. Fermanis also receives 100,000 shares of our common stock,
which are earned at the rate of 1/12 or 8,333 per month beginning January
2005.
Senior
Director of Product Development and Regulatory Affairs:
Pursuant
to our two-year employment agreement with Hal N. Siegel, our Senior Director
of
Product Development and Regulatory Affairs, dated October 23, 2006, we will
pay
an annual base salary of $200,000 for the first year and $210,000 for the second
year. Mr. Siegel will also be eligible for discretionary bonuses under our
stock
option plan during his employment. In addition, Mr. Siegel received options
with
a term of five years to purchase 200,000 shares of our common stock. The options
are exercisable at $0.20 per share. Upon termination of Mr. Sigel's
employment by us without cause or constructive termination, as defined in the
agreement, we agree to pay to Mr. Siegel the remainder of his salary for the
year or six months salary, whichever is greater, and any accrued vacation. Pursuant
to the terms of the change of control agreement, we agree to pay Mr. Siegel
his
salary for a period of 18 months from the date an involuntary termination,
payable in accordance with our compensation practice.
Outstanding
Equity Awards at Fiscal Year-End as of December 31, 2006
As
of the
year ended December 31, 2006, the following Named Executive Officers had the
following outstanding equity awards:
|
|
Option
Awards
|
Name
|
|
Number
of
Securities
Underlying
Unexercised
Options
#
Exercisable
|
|
Number
of
Securities
Underlying
Unexercised
Options
#
Unexercisable
|
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned Options
(#)
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
Michael
K. Wilhelm
|
|
|
1,222,416
|
|
|
—
|
|
674,554
|
|
$
|
0.231
|
|
|
7/14/2011
|
President,
CEO and
|
|
|
279,299
|
|
|
—
|
|
175,246
|
|
$
|
0.220
|
|
|
9/13/2011
|
Director
|
|
|
1,871,304
|
|
|
—
|
|
1,174,151
|
|
$
|
0.220
|
|
|
9/13/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
N. Fermanis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief
Financial Officer
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hal
N. Siegel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior
Director, Product Development and Regulatory Affairs and
Director
|
|
|
200,000
|
|
|
—
|
|
—
|
|
$
|
0.200
|
|
|
10/23/2011
|
Director
Compensation
Name
|
|
|
Fees
Earned
or
Paid in
Cash
($)
|
|
|
Stock
Awards
($)
|
|
Option
Awards
($)
|
|
Non-Equity
Incentive
Plan
Compensation
($)
|
|
Nonqualified
Deferred
Compensation
Earnings
($)
|
|
All
Other
Compensation
($)
|
|
|
Total
($)
|
Mark
L. Witten, Ph.D. (1)
|
|
$
|
5,000
|
|
|
--
|
|
--
|
|
--
|
|
--
|
|
--
|
|
$
|
5,000
|
(1)
|
Mark
L. Witten, Ph.D. resigned as a member of the Board of Directors on
May 18,
2006. On December 16, 2002 we entered into a consulting agreement
with
Mark Witten, our chief research scientist and director. The consulting
agreement was entered into on a month-to-month basis. Under the terms
of
this agreement, Dr. Witten agreed to place at our disposal his judgment
and expertise in the area of acute lung injury. In consideration
for these
services, we agreed to pay Dr. Witten a non-refundable fee of $5,000
per
month. This contract was terminated effective February 1,
2006.
|
(2)
|
Subject
to approval by the State of Arizona of our 2003 Stock Option, Deferred
Stock and Restricted Stock Plan (the "2003 Stock Option Plan"),
we will
grant to Dr. Gordon and Dr. Hariri under the Company's 2003 Stock
Option
Plan, a non-qualified stock option to purchase 1,000,000 shares
of common
stock at an exercise price per share equal to 85% of the fair market
value
on the date of the grant approval to vest
immediately.
|
Compensation
of Directors
Standard
Arrangements. Directors currently receive no cash compensation from IR
BioSciences Holdings, Inc. for their services as members of the Board or for
attendance at committee meetings. Members of the Board are reimbursed for some
expenses in connection with attendance at Board and committee
meetings.
Other
Arrangements. We may from time to time issue options and/or warrants to
executives and directors for fulfilling certain performance goals.
DIRECTOR
INDEPENDENCE
As
we are
quoted on OTCBB and not one of the national securities exchanges, we are not
subject to any director independence requirements. With the exceptions of
Theodore E. Staahl, M.D., Robert J. Hariri, M.D., Ph.D. and Lance K. Gordon,
Ph.D., none of our present directors qualifies as an independent director
pursuant to Rule 10A-3 promulgated under the Exchange Act due to their
affiliation with us as employees. Our Board of Directors determined that Mr.
Staahl, Mr. Hariri and Mr. Gordon are "independent," as that term is defined
by
the NASDAQ Stock Market.
ImmuneRegen
Biosciences, Inc.
ImmuneRegen
BioSciences, Inc. is a wholly-owned subsidiary of IR BioSciences Holdings,
Inc.
IR BioSciences Holdings, Inc. and ImmuneRegen BioSciences, Inc. have
interlocking executive positions and share common ownership.
ImmuneRegen
BioSciences Asia PTE. LTD.
ImmuneRegen
BioSciences Asia PTE. LTD. ("ImmuneRegen Asia"), a Singaporean company, is
an
affiliate of IR BioSciences Holdings, Inc. Approximately 94% of the company
is
owned equally between our Chief Executive Officer and Chairman, Michael K.
Wilhelm, and our former Director and co-founder, Mark Witten. IR BioSciences
Holdings, Inc. holds less than 1% ownership in the company.
ImmuneRegen
Asia has not conducted any business since its creation in May 2004. On March
23,
2006, per shareholder and Board approval, ImmuneRegen Asia was struck off the
register of companies and dissolved. A notice of such action was published
in
the Governmental Gazette on April 7, 2006.
Officer
Bonus
Michael
K. Wilhelm, our President and Chief Executive officer, received an incentive
bonus of $82,239 in cash per the terms of his employment
agreement.
Related
Party Loans
There
were no loans to related parties entered into during the fiscal year ended
December 31, 2006. Additionally, there were no loans to related parties
outstanding at December 31, 2006.
Cash
Advances
In
July
2006, the Company received a cash advance from a director in the amount of
$25,000. This advance bears interest at the rate of 12% per annum. The Company
repaid this cash advance on August 30, 2006 plus accrued interest in the amount
of $370.
Credit
Cards
The
Company has a line of credit with Bank of America for $25,000. Our Chief
Executive Officer Michael Wilhelm co-signs this line of credit. At year end
December 31, 2006 the Company had an outstanding balance on the credit card
of
$21,373.
Consulting
Agreements
On
December 16, 2002 we entered into a consulting agreement with research
scientist, Mark L. Witten, Ph.D., who was one of our two founders. The
consulting agreement was on a month-to-month basis. Under the terms of these
agreements, Dr. Witten agreed to place at the disposal of us his judgment and
expertise in the area of acute lung injury. In consideration for these services,
we agreed to pay him a non-refundable fee of $5,000 per month.
In
January 2006, the company received correspondence from Dr. Witten stating that
he would terminate his consulting contract if his specific requirements were
not
met. We subsequently accepted his termination effective February 1,
2006.
Pursuant
to consulting agreement entered into with Dr. Witten during the period from
October 30, 2002 (inception) to December 31, 2002, we accrued $2,500 in
consulting fees. During the period from January 1, 2003 to December 31, 2003,
we
accrued an additional $60,000 in consulting fees. We had accrued payables
collectively due to Dr. Witten of $62,500 and $2,500 as of December 31, 2003
and
2002, respectively. In connection with our completed private offering in October
2004, $90,500 of such amount owed to Dr. Witten converted into 724,000 shares
of
our common stock and warrants to purchase 362,000 shares of common
stock.
License
Agreements
In
December 2002, we entered into a royalty-free license agreement with Mark L.
Witten, Ph.D. Under the terms of the license agreement, Dr. Witten granted
to us
an exclusive license to use and sublicense certain patents, medical
applications, and other technologies developed by him. Our obligations under
this agreement include (i) reasonable efforts to protect any licensed patents
or
other associated property rights; (ii) reasonable efforts to maintain
confidentiality of any proprietary information; (iii) upon the granting by
the
U. S. Food and Drug Administration to us the right to market a product, we
will
maintain a broad form general liability and product liability
insurance.
In
February 2005, Dr. Witten executed assignment documents in which, for good
and
valuable consideration, patent applications and patents developed by him were
assigned to ImmuneRegen BioSciences, Inc. The assignment documents included
all
of the patents and patent applications which were included in and covered by
the
licensing agreement, as amended. Dr. Witten have also assigned all proprietary
technology developed at ImmuneRegen subsequent to the execution of the February
2005 assignment documents.
The
termination of Dr. Witten's consulting agreement in February 2006 does not
have
any impact on the license agreement.
Outstanding
Loans
At
December 31, 2006, we have outstanding one note payable in the amount of $50,000
to a Director. This note bears interest at the rate of 12% per annum. This
note
matures in July 2007 at which time principal and accrued interest are
due.
We
believe that our arrangements with all related parties are at fair market value
and are on terms comparable to those that would have been reached in arms’
length negotiations had the parties been unaffiliated at the time of
negotiations.
DISCLOSURE
OF COMMISSION POSITION OF
INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Under Section 145
of the General Corporation Law of the State of
Delaware, we can indemnify our directors and officers
against liabilities they may incur in such capacities, including
liabilities under the Securities Act of 1933, as amended
(the "Securities Act"). Our certificate of incorporation
provides that, pursuant to Delaware law, our directors shall not be
liable for monetary damages for breach of the directors' fiduciary
duty of care to us and our stockholders. This provision in the
certificate of incorporation does not eliminate the duty of care, and in
appropriate circumstances equitable remedies such as injunctive or other
forms of nonmonetary relief will remain available
under Delaware law. In addition, each director will continue to
be subject to
liability for breach of the director's duty of loyalty to us or our
stockholders, for acts or omissions not in good faith or
involving intentional misconduct or knowing violations of
the law, for actions leading to improper personal benefit to
the director, and for payment of dividends or approval of
stock repurchases or redemptions that are
unlawful under Delaware law. The provision also does not affect
a director's responsibilities under any other law, such as the
federal securities laws or state or federal environmental laws.
Our
bylaws provide for the indemnification of our directors to the fullest
extent
permitted by the Delaware General Corporation Law. Our bylaws further provide
that our Board of Directors has sole discretion to indemnify our officers
and
other employees. We may limit the extent of such indemnification by individual
contracts with our directors and executive officers, but have not done
so. We
are required to advance, prior to the final disposition of any proceeding,
promptly on request, all expenses incurred by any director or executive
officer
in connection with that proceeding on receipt of an undertaking by or on
behalf
of that director or executive officer to repay those amounts if it should
be
determined ultimately that he or she is not entitled to be indemnified
under our
bylaws or otherwise. We are not, however, required to advance any expenses
in
connection with any proceeding if a determination is reasonably and promptly
made by our Board of Directors by a majority vote of a quorum of disinterested
Board members that (a) the party seeking an advance acted in bad faith
or
deliberately breached his or her duty to us or our stockholders and (b)
as a
result of such actions by the party seeking an advance, it is more likely
than
not that it will ultimately be determined that such party is not entitled
to
indemnification pursuant to the applicable sections of our bylaws.
Our directors sign an indemnification agreement to
provide substantial protection against personal liability and to
provide them with specific contractual assurance that the protection
promised by the Bylaws and Certificate of Incorporation will be available
to them regardless of, among other things, any amendment to or revocation
of such Bylaws and Certificate of Incorporation or any change in the composition
of the Company’s Board of Directors or any acquisition transaction relating to
the Company.
We
have
been advised that in the opinion of the Securities and Exchange Commission,
insofar as indemnification for liabilities arising under the Securities
Act of
1933 (the "Securities Act") may be permitted to our directors, officers
and
controlling persons pursuant to the foregoing provisions, or otherwise,
such
indemnification is against public policy as expressed in the Securities
Act and
is therefore unenforceable. In the event a claim for indemnification against
such liabilities (other than our payment of expenses incurred or paid by
our
director, officer or controlling person in the successful defense of any
action,
suit or proceeding) is asserted by such director, officer or controlling
person
in connection with the securities being registered, we will, unless in
the
opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by us is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
This prospectus relates to
the resale from time to time of up to a total of 57,480,548
shares of common stock by
the selling stockholders, comprising:
·
|
40,347,423
shares of our common stock that were issued to
selling stockholders pursuant to transactions exempt
from registration under the Securities Act of 1933;
and
|
·
|
17,133,125
shares of common stock underlying warrants that were issued
to selling stockholders pursuant to transactions exempt from
registration under the Securities Act of
1933.
|
The
following table sets forth certain information as of June 11, 2007 regarding
the
selling stockholders and the beneficial ownership of our common stock as
to (1)
each person known to us to beneficially own more than five percent of our
common
stock, (2) each director, (3) our executive officers, (4) all directors
and
executive officers as a group and (5) the shares offered by them in this
prospectus. Beneficial ownership is determined in accordance with the rules
of
the Securities and Exchange Commission, or SEC. In computing the number
of
shares beneficially owned by a selling stockholder and the percentage of
ownership of that selling stockholder, shares of common stock underlying
shares
of convertible preferred stock, options or warrants held by that selling
stockholder that are convertible or exercisable, as the case may be, within
60
days of June 11, 2007 are included. Those shares, however, are not deemed
outstanding for the purpose of computing the percentage ownership of any
other
selling stockholder. Each selling stockholder's percentage of ownership
in the
following table is based upon 114,322,539 shares of common stock outstanding
as
of June 11, 2007.
Except
as
described below, none of the selling stockholders within
the past three years has had any material relationship with
us or any of our affiliates:
·
|
Robert
J. Hariri, M.D., Ph.D. has served as a member of
our Board of Directors since April 2007;
and,
|
·
|
5,482,600
shares being registered hereunder are owned by registered representatives
of Joseph Stevens & Co., Inc. and are being registered hereby per
certain registration rights granted to them for participation in
our
private offering in December 2006.
|
The
term
"selling stockholders" also includes any transferees, pledges, donees, or
other successors in interest to the selling stockholders named in the table
below. To our knowledge, subject to applicable community property
laws, each person named in the table has sole voting and investment power
with respect to the shares of common stock set forth opposite such person's
name.
|
|
Number
of Shares of Common stock Beneficially Owned Prior to Offering
(1)(3)
|
|
Percentage
of Shares of Common Stock Beneficially Owned Prior to the Offering
(4)
|
|
Number
of Shares of Common Stock Registered for Sale
Hereby
|
|
Number
of Shares of Common Stock Beneficially Owned After Completion of
the
Offering (2)
|
|
Percentage
of Shares of Common Stock Beneficially Owned After Completion of
the
Offering (4)
|
|
|
|
|
|
|
|
|
|
|
|
Named
Executive Officers and directors (2):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
K. Wilhelm
|
|
9,219,041
|
5
|
7.6%
|
|
0
|
|
9,219,041
|
|
7.6%
|
|
|
|
|
|
|
|
|
|
|
|
John
N. Fermanis
|
|
180,000
|
6
|
*
|
|
0
|
|
180,000
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Hal
N. Siegel, Ph.D.
|
|
249,900
|
7
|
*
|
|
0
|
|
249,900
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Theodore
Staahl, M.D.
|
|
3,446,464
|
8
|
3.0%
|
|
0
|
|
3,446,464
|
|
3.0%
|
|
|
|
|
|
|
|
|
|
|
|
Robert
J. Hariri, M.D., Ph.D.
|
|
960,545
|
9
|
*
|
|
937,500
|
|
23,045
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Lance
K. Gordon, Ph.D.
|
|
0
|
|
*
|
|
0
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
directors and executive officers as a group
|
|
|
|
|
|
|
|
|
|
|
(4
persons)
|
|
14,055,950
|
10
|
11.5
|
|
937,500
|
|
13,118,450
|
|
10.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owners
of 5% or more:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark
Witten
|
|
|
|
|
|
|
|
|
|
|
1501
N. Campbell Avenue
|
|
|
|
|
|
|
|
|
|
|
Room
3352
|
|
|
|
|
|
|
|
|
|
|
Tucson,
AZ 85724
|
|
8,900,778
|
11
|
7.7%
|
|
0
|
|
8,900,778
|
|
7.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
Stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wayne
K. Adams
|
|
|
|
|
|
|
|
|
|
|
4845
Campo Sano Ct.
|
|
|
|
|
|
|
|
|
|
|
Coral
Gables, FL 33146
|
|
300,000
|
13
|
*
|
|
300,000
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Yombo
Aderinto
|
|
|
|
|
|
|
|
|
|
|
5651
Rockledge Drive
|
|
|
|
|
|
|
|
|
|
|
Buena
Park, CA 90621
|
|
56,250
|
14
|
*
|
|
56,250
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Daniel
Anderson
|
|
|
|
|
|
|
|
|
|
|
4409
Willow Creek Circle
|
|
|
|
|
|
|
|
|
|
|
Bellbrook,
OH 45305
|
|
93,750
|
15
|
*
|
|
93,750
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Jan
Arnett
|
|
|
|
|
|
|
|
|
|
|
Longwood
Road
|
|
|
|
|
|
|
|
|
|
|
Sandspoint,
NY 11050
|
|
234,375
|
16
|
*
|
|
234,375
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
The
Bahr Family L.P.
|
|
|
|
|
|
|
|
|
|
|
41
Cooke Street
|
|
|
|
|
|
|
|
|
|
|
Providence,
RI 02906
|
|
234,375
|
16
|
*
|
|
234,375
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
The
Henry H. Bahr QTIP Trust
|
|
|
|
|
|
|
|
|
|
|
D/T/D
2/22/88
|
|
|
|
|
|
|
|
|
|
|
41
Cooke Sreet
|
|
|
|
|
|
|
|
|
|
|
Providence,
RI 02906
|
|
234,375
|
16
|
*
|
|
234,375
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Lauren
Banjany
|
|
|
|
|
|
|
|
|
|
|
73
Rita Lane
|
|
|
|
|
|
|
|
|
|
|
Jackson,
NJ 08527
|
|
55,000
|
12
|
*
|
|
55,000
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Paul
J. Bargiel PC Employees Pension
|
|
|
|
|
|
|
|
|
|
|
Plan
& Trust D/T/D 06/01/1986
|
|
|
|
|
|
|
|
|
|
|
100
West Monroe Ste 902 Cook Co
|
|
|
|
|
|
|
|
|
|
|
Chicago,
IL 60603
|
|
496,875
|
17
|
*
|
|
496,875
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Delaware
Charter Guarantee & Trust Co.
|
|
|
|
|
|
|
|
|
|
|
F/B/O
Paul F. Berlin IRA R/O
|
|
|
|
|
|
|
|
|
|
|
230
W. Superior Street
|
|
|
|
|
|
|
|
|
|
|
Suite
510
|
|
|
|
|
|
|
|
|
|
|
Chicago,
IL 60610
|
|
468,750
|
18
|
*
|
|
468,750
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Louis
A. Best &
|
|
|
|
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|
|
|
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|
|
Madeline
M. Best JTWROS
|
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10120
Greensward Link
|
|
|
|
|
|
|
|
|
|
|
Ijamsville,
MD 21754
|
|
93,750
|
15
|
*
|
|
93,750
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Mohanlal
Bhagwansingh &
|
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|
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|
|
|
|
|
|
Leelautee
Bhagwansingh JT WROS
|
|
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|
|
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|
|
113
Crest Camp
|
|
|
|
|
|
|
|
|
|
|
Fyzabad
|
|
|
|
|
|
|
|
|
|
|
Trinidad
& Tobago
|
|
140,625
|
19
|
*
|
|
140,625
|
|
0
|
|
*
|
|
|
|
|
|
|
|
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|
|
Tom
Bleile
|
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|
|
961
Fair Rd.
|
|
|
|
|
|
|
|
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|
|
Norwalk,
OH 44857
|
|
206,250
|
20
|
*
|
|
206,250
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
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|
|
Lester
B. Boelter
|
|
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|
50
Shady Oak Court
|
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|
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|
|
Winona,
MN 55987
|
|
2,140,625
|
21
|
1.9%
|
|
1,640,625
|
|
500,000
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Delaware
Charter Guarantee &
|
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|
|
|
|
|
|
Trust
Co. F/B/O
|
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|
Roger
Bradshaw R/O IRA
|
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|
|
P.O.
Box 284
|
|
|
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|
|
Candler,
FL 32111
|
|
356,250
|
22
|
*
|
|
356,250
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
David
Briskie
|
|
|
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|
|
15006
Beltway Drive
|
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|
|
Addison,
TX 75001
|
|
334,375
|
16
|
*
|
|
234,375
|
|
100,000
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Keith
Buhrdorf
|
|
|
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4582
South Ulster Street
|
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|
|
Suite
1303
|
|
|
|
|
|
|
|
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|
|
Denver,
CO 80237
|
|
796,875
|
23
|
*
|
|
796,875
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Roy
M. Cappadona
|
|
|
|
|
|
|
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|
|
341
Boniface Parkway
|
|
|
|
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|
|
|
|
|
|
Unit
H
|
|
|
|
|
|
|
|
|
|
|
Anchorage,
AK 99504
|
|
93,750
|
15
|
*
|
|
93,750
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
George
L. Cartagena &
|
|
|
|
|
|
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|
|
|
|
Martha
Cartagena JT TEN
|
|
|
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|
|
Carr
125 KM 1.3 Camino C Bosques
|
|
|
|
|
|
|
|
|
|
|
Aquadilla,
PR 00603
|
|
234,375
|
16
|
*
|
|
234,375
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Edward
L. Chant
|
|
|
|
|
|
|
|
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|
|
226
Edward Street
|
|
|
|
|
|
|
|
|
|
|
Suite
200
|
|
|
|
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|
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|
|
Aurora,
Ontario L4G 3S8
|
|
|
|
|
|
|
|
|
|
|
Canada
|
|
498,750
|
18
|
*
|
|
468,750
|
|
30,000
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Daniel
A. Claps
|
|
|
|
|
|
|
|
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|
|
360
Lightner Avenue
|
|
|
|
|
|
|
|
|
|
|
Staten
Island, NY 10314
|
|
40,000
|
12
|
*
|
|
40,000
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Robert
Clauss
|
|
|
|
|
|
|
|
|
|
|
9923
Clark Street
|
|
|
|
|
|
|
|
|
|
|
Clive,
IA 50325
|
|
281,250
|
24
|
*
|
|
281,250
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Jeremy
Cohen
|
|
|
|
|
|
|
|
|
|
|
331
Franklin St.
|
|
|
|
|
|
|
|
|
|
|
Brownville,
NY 13615
|
|
110,000
|
12
|
*
|
|
110,000
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Guy
C. Collins
|
|
|
|
|
|
|
|
|
|
|
653
Grissom Parkway
|
|
|
|
|
|
|
|
|
|
|
Myrtle
Beach, SC 29577
|
|
150,000
|
25
|
*
|
|
150,000
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Buck
Core
|
|
|
|
|
|
|
|
|
|
|
162
W. Cedar Drive
|
|
|
|
|
|
|
|
|
|
|
Chandler,
AZ 85248
|
|
93,750
|
15
|
*
|
|
93,750
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Robert
Costomoris
|
|
|
|
|
|
|
|
|
|
|
305
Lexington Ave., Apt. #2B
|
|
|
|
|
|
|
|
|
|
|
New
York, New York 10016
|
|
14,000
|
12
|
*
|
|
14,000
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Sharon
Crowder
|
|
|
|
|
|
|
|
|
|
|
29
Saddlebow Road
|
|
|
|
|
|
|
|
|
|
|
Bell
Canyon, CA 91307
|
|
234,375
|
16
|
*
|
|
234,375
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Thomas
W. Dana
|
|
|
|
|
|
|
|
|
|
|
1429
Shenandoah Pkwy
|
|
|
|
|
|
|
|
|
|
|
Chesapeake,
VA 23320
|
|
234,375
|
16
|
*
|
|
234,375
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey
Davis
|
|
|
|
|
|
|
|
|
|
|
383
North West 112th
Ave
|
|
|
|
|
|
|
|
|
|
|
Coral
Springs, FL 33071
|
|
638,750
|
18
|
*
|
|
468,750
|
|
170,000
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Brad
Dehaan
|
|
|
|
|
|
|
|
|
|
|
1605
Vandyk Road
|
|
|
|
|
|
|
|
|
|
|
Lynden,
WA 98264
|
|
2,343,750
|
26
|
2.0%
|
|
2,343,750
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Thierry
Delfosse
|
|
|
|
|
|
|
|
|
|
|
Ave
Brassine, 44
|
|
|
|
|
|
|
|
|
|
|
Rhode
St Genese 1640
|
|
|
|
|
|
|
|
|
|
|
Belgium
|
|
568,750
|
18
|
*
|
|
468,750
|
|
100,000
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Michael
Doherty
|
|
|
|
|
|
|
|
|
|
|
14210
Stacey Street
|
|
|
|
|
|
|
|
|
|
|
Greenville,
MI 48838
|
|
229,687
|
27
|
*
|
|
229,687
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Richard
Edwards
|
|
|
|
|
|
|
|
|
|
|
18506
Upper Bay Road
|
|
|
|
|
|
|
|
|
|
|
Houston,
TX 77058
|
|
2,613,750
|
26
|
2.3%
|
|
2,343,750
|
|
270,000
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Chidi
Eze
|
|
|
|
|
|
|
|
|
|
|
255
Livingston Street
|
|
|
|
|
|
|
|
|
|
|
3rd
Floor
|
|
|
|
|
|
|
|
|
|
|
Brooklyn,
NY 11217
|
|
262,500
|
52
|
*
|
|
262,500
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Kristina
Fasullo
|
|
|
|
|
|
|
|
|
|
|
77
Claradon Lane
|
|
|
|
|
|
|
|
|
|
|
Staten
Island, NY 10305
|
|
150,000
|
12
|
*
|
|
150,000
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Ahsan
Farooqi
|
|
|
|
|
|
|
|
|
|
|
54
Kimberly Court
|
|
|
|
|
|
|
|
|
|
|
S.
Brunswick, NJ 08852
|
|
234,375
|
16
|
*
|
|
234,375
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Frank
R. Fleming
|
|
|
|
|
|
|
|
|
|
|
495
Washington Avenue #35
|
|
|
|
|
|
|
|
|
|
|
Titusville,
FL 32796
|
|
46,875
|
29
|
*
|
|
46,875
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Deborah
Francis
|
|
|
|
|
|
|
|
|
|
|
28
Monsey Place
|
|
|
|
|
|
|
|
|
|
|
Staten
Island, NY 10303
|
|
13,200
|
12
|
*
|
|
13,200
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
William
Christopher Frasco &
|
|
|
|
|
|
|
|
|
|
|
Gina
Frasco JT WROS
|
|
|
|
|
|
|
|
|
|
|
532
Nugent Ave
|
|
|
|
|
|
|
|
|
|
|
Staten
Island, NY 10305
|
|
165,000
|
12
|
*
|
|
165,000
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Patrick
Gallagher
|
|
|
|
|
|
|
|
|
|
|
700
N. Water Street
|
|
|
|
|
|
|
|
|
|
|
Milwaukee,
WI 53202
|
|
150,000
|
25
|
*
|
|
150,000
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Michael
C. Geiger
|
|
|
|
|
|
|
|
|
|
|
1608
Heather Heights
|
|
|
|
|
|
|
|
|
|
|
Sykesville,
MD 21784
|
|
93,750
|
15
|
*
|
|
93,750
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Anthony
Gentile
|
|
|
|
|
|
|
|
|
|
|
4280
Garibaldi Place
|
|
|
|
|
|
|
|
|
|
|
Pleasanton,
CA 94566
|
|
112,500
|
28
|
*
|
|
112,500
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Gerald
E. Gillett Trust UA Dated 08/18/95
|
|
|
|
|
|
|
|
|
|
|
Gerald
E. Gillett Trustee
|
|
|
|
|
|
|
|
|
|
|
12
Windrush Lane
|
|
|
|
|
|
|
|
|
|
|
Beachwood,
OH 44122
|
|
75,000
|
30
|
*
|
|
75,000
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Gordon
& Price, Inc.
|
|
|
|
|
|
|
|
|
|
|
Attention:
John Gordon
|
|
|
|
|
|
|
|
|
|
|
905
W. Deyoung Street
|
|
|
|
|
|
|
|
|
|
|
Maroin,
IL 62959
|
|
140,625
|
19
|
*
|
|
140,625
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
John
Grant
|
|
|
|
|
|
|
|
|
|
|
The
Malthouse, Manor Lane
|
|
|
|
|
|
|
|
|
|
|
Claverdon,
Warwick
|
|
|
|
|
|
|
|
|
|
|
CV35
8NH United Kingdom
|
|
468,750
|
18
|
*
|
|
468,750
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
El
Hadji S Gueye
|
|
|
|
|
|
|
|
|
|
|
26175
Langston Avenue A
|
|
|
|
|
|
|
|
|
|
|
Glen
Oaks, NY 11004
|
|
4,000
|
12
|
*
|
|
4,000
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Marshall
I. Gurian
|
|
|
|
|
|
|
|
|
|
|
3277
East Raven Court
|
|
|
|
|
|
|
|
|
|
|
Chandler,
AZ 85249
|
|
56,250
|
14
|
*
|
|
56,250
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Robert
Grossman &
|
|
|
|
|
|
|
|
|
|
|
Karen
Grossman JT WROS
|
|
|
|
|
|
|
|
|
|
|
9515
Deerfoot Way
|
|
|
|
|
|
|
|
|
|
|
Columbia,
MD 21046
|
|
212,500
|
31
|
*
|
|
187,500
|
|
25,000
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Steven
J. Hansel &
|
|
|
|
|
|
|
|
|
|
|
Sharon
M. Hansel JT TEN
|
|
|
|
|
|
|
|
|
|
|
7132
Dove Court
|
|
|
|
|
|
|
|
|
|
|
Parker,
CO 80134
|
|
281,250
|
24
|
*
|
|
281,250
|
|
0
|
|
*
|
The
Hariri Family Limited Partnership
|
|
|
|
|
|
|
|
|
|
|
One
Palmer Square, Suite 330
|
|
|
|
|
|
|
|
|
|
|
Princeton,
NJ 08542
|
|
937,500
|
53
|
*
|
|
937,500
|
|
0
|
|
*
|
Christopher
J. Heller
|
|
|
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|
|
8601
Tanque Verde Road
|
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|
Tucson,
AZ 85749
|
|
468,750
|
18
|
*
|
|
468,750
|
|
0
|
|
*
|
|
|
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|
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|
|
Dr.
Mark T. Hellner
|
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900
West Olive
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Suite
A
|
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|
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|
|
|
|
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|
Merced,
CA 95348
|
|
1,171,875
|
32
|
1.0%
|
|
1,171,875
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Pershing,
LLC as Custodian FBO
|
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|
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|
|
Kenneth
A. Hemstreet Rollover Account |
|
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22
W. 576 Sunset Terrace
|
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|
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|
|
|
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|
|
Medinah,
IL 60157
|
|
468,750
|
18
|
*
|
|
468,750
|
|
0
|
|
*
|
|
|
|
|
|
|
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|
Antonio
Hernandez
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1578
Bengal Street
|
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El
Paso, TX 79935
|
|
364,375
|
16
|
*
|
|
234,375
|
|
130,000
|
|
*
|
|
|
|
|
|
|
|
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|
|
|
Neil
Herskowitz
|
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|
|
|
|
|
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|
2109
Broadway
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Suite
206
|
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|
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|
|
New
York, NY 10023
|
|
234,375
|
16
|
*
|
|
234,375
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
The
Marianne Higgins Revocable
|
|
|
|
|
|
|
|
|
|
|
Trust
U A Dated 07/27/05
|
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|
|
Marianne
Higgins Trustee
|
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|
5803
Oak Grove Street
|
|
|
|
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|
|
|
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|
|
Mason
Neck, VA 22079
|
|
140,625
|
19
|
*
|
|
140,625
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
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|
|
Dave
W. Hill
|
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|
13240
N. Whitecloud Court
|
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|
Camby,
IN 46113
|
|
284,375
|
16
|
*
|
|
234,375
|
|
50,000
|
|
*
|
|
|
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|
|
Morgan
Hollis &
|
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Tracey
F. Hollis JT TEN
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11
Bartlett Ave
|
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|
|
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|
|
Nashua,
NH 03064
|
|
93,750
|
15
|
*
|
|
93,750
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
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|
|
Clifton
M. Horn
|
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125
Harrison Street
|
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|
|
Barrington,
IL 60010
|
|
314,375
|
16
|
*
|
|
234,375
|
|
80,000
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Arthur
S. James Jr.
|
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|
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|
315
Magellan Drive
|
|
|
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|
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|
|
|
|
|
Sarasota,
FL 34243
|
|
75,000
|
30
|
*
|
|
75,000
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Ken
Janckila
|
|
|
|
|
|
|
|
|
|
|
353
Goose Lane
|
|
|
|
|
|
|
|
|
|
|
Carbondale,
CO 81623
|
|
468,750
|
18
|
*
|
|
468,750
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
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|
|
Christopher
C. Jensen
|
|
|
|
|
|
|
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|
|
16214
East Vista Verde Court
|
|
|
|
|
|
|
|
|
|
|
Gilbert,
AZ 85297
|
|
243,750
|
53
|
*
|
|
243,750
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Robert
Kantor
|
|
|
|
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|
|
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|
|
7
Heller Drive
|
|
|
|
|
|
|
|
|
|
|
Upper
Montclair, NJ 07043
|
|
468,750
|
18
|
*
|
|
468,750
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Martin
L. Karlov
|
|
|
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|
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|
|
55
E. Erie Street
|
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|
|
Unit
4301
|
|
|
|
|
|
|
|
|
|
|
Chicago,
IL 60611
|
|
234,375
|
16
|
*
|
|
234,375
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Brian
J. Keller &
|
|
|
|
|
|
|
|
|
|
|
Debbie
M. Keller JT WROS
|
|
|
|
|
|
|
|
|
|
|
1246
130th
Avenue
|
|
|
|
|
|
|
|
|
|
|
New
Richmond, WI 54017
|
|
328,125
|
33
|
*
|
|
328,125
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Brian
G. Kiernan
|
|
|
|
|
|
|
|
|
|
|
781
Third Avenue
|
|
|
|
|
|
|
|
|
|
|
King
of Prussa, PA 19406
|
|
468,750
|
18
|
*
|
|
468,750
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Stephen
N. Kitchens &
|
|
|
|
|
|
|
|
|
|
|
Martha
M. Kitchens JT WROS
|
|
|
|
|
|
|
|
|
|
|
1053
Lake Colonial Dr.
|
|
|
|
|
|
|
|
|
|
|
Arrington,
TN 37014
|
|
468,750
|
18
|
*
|
|
468,750
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Lester
Krasno
|
|
|
|
|
|
|
|
|
|
|
400
North 2nd
Street
|
|
|
|
|
|
|
|
|
|
|
Pottsville,
PA 17901
|
|
234,375
|
16
|
*
|
|
234,375
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Daniel
J. Labrie &
|
|
|
|
|
|
|
|
|
|
|
Barbara
H. Labrie JT TEN
|
|
|
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|
|
|
|
|
|
P.O.
Box 7116
|
|
|
|
|
|
|
|
|
|
|
Kensington,
CT 06037
|
|
187,500
|
31
|
*
|
|
187,500
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Michael
J. Lane
|
|
|
|
|
|
|
|
|
|
|
37
Woodlands Avenue
|
|
|
|
|
|
|
|
|
|
|
Walsall
|
|
|
|
|
|
|
|
|
|
|
West
Midlands WS5 3LN
|
|
|
|
|
|
|
|
|
|
|
United
Kingdom
|
|
448,438
|
34
|
*
|
|
398,438
|
|
50,000
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Daniel
J. Lange
|
|
|
|
|
|
|
|
|
|
|
131
E. Wisconsin Avenue
|
|
|
|
|
|
|
|
|
|
|
Suite
100
|
|
|
|
|
|
|
|
|
|
|
Pewaukee,
WI 53072
|
|
234,375
|
16
|
*
|
|
234,375
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Kenneth
H. Langley
|
|
|
|
|
|
|
|
|
|
|
10
Lead Mine Road
|
|
|
|
|
|
|
|
|
|
|
Leverett,
MA 01054
|
|
93,750
|
15
|
*
|
|
93,750
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Peter
J. Lawrence
|
|
|
|
|
|
|
|
|
|
|
5
Landsdowne Crescent
|
|
|
|
|
|
|
|
|
|
|
London
W11 2NH
|
|
|
|
|
|
|
|
|
|
|
United
Kingdom
|
|
468,750
|
18
|
*
|
|
468,750
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Ken
Lehman &
|
|
|
|
|
|
|
|
|
|
|
Karen
Lehman JT WROS
|
|
|
|
|
|
|
|
|
|
|
5945
Grayson Road
|
|
|
|
|
|
|
|
|
|
|
Harrisburg,
PA 17111
|
|
468,750
|
18
|
*
|
|
468,750
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Scott
Levine
|
|
|
|
|
|
|
|
|
|
|
301
Avalon Pines Dr.
|
|
|
|
|
|
|
|
|
|
|
Coram,
NY 11727
|
|
20,000
|
12
|
*
|
|
20,000
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
George
B. Lewis
|
|
|
|
|
|
|
|
|
|
|
1185
Porter Street A
|
|
|
|
|
|
|
|
|
|
|
Vallejo,
CA 94590
|
|
103,125
|
35
|
*
|
|
103,125
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Bruce
Lifrieri
|
|
|
|
|
|
|
|
|
|
|
15
Bryant Crescent
|
|
|
|
|
|
|
|
|
|
|
Apt
2H
|
|
|
|
|
|
|
|
|
|
|
White
Plains, NY 10605
|
|
93,750
|
15
|
*
|
|
93,750
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Barry
Lind Revocable Trust U A
|
|
|
|
|
|
|
|
|
|
|
Dated
12/19/89
|
|
|
|
|
|
|
|
|
|
|
Barry
J. Lind Trustee
|
|
|
|
|
|
|
|
|
|
|
1000
West Washington St.
|
|
|
|
|
|
|
|
|
|
|
Suite
502
|
|
|
|
|
|
|
|
|
|
|
Chicago,
IL 60607
|
|
1,556,250
|
36
|
1.4%
|
|
1,406,250
|
|
150,000
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Dwight
E. Long
|
|
|
|
|
|
|
|
|
|
|
114
Addison Avenue
|
|
|
|
|
|
|
|
|
|
|
Franklin,
TN 37064
|
|
150,000
|
25
|
*
|
|
150,000
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Elvin
J. Lopez
|
|
|
|
|
|
|
|
|
|
|
59
Maiden Lane
|
|
|
|
|
|
|
|
|
|
|
New
York, NY 10038
|
|
217,125
|
12
|
*
|
|
217,125
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Jim
M. Macek
|
|
|
|
|
|
|
|
|
|
|
4356
Cloverdale Road NE
|
|
|
|
|
|
|
|
|
|
|
Cedar
Rapids, IA 52411
|
|
937,500
|
37
|
*
|
|
937,500
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Anthony
L. Markovic
|
|
|
|
|
|
|
|
|
|
|
8
Rookwood Road
|
|
|
|
|
|
|
|
|
|
|
London
N16 655
|
|
1,875,000
|
38
|
1.6%
|
|
1,875,000
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Michele
Markowitz
|
|
|
|
|
|
|
|
|
|
|
C/O
Joseph Stevens & Co., Inc.
|
|
|
|
|
|
|
|
|
|
|
59
Maiden Lane
|
|
|
|
|
|
|
|
|
|
|
32nd
Fl
|
|
|
|
|
|
|
|
|
|
|
New
York, NY 10038
|
|
400,000
|
12
|
*
|
|
400,000
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Anthony
Wayne McCarthy
|
|
|
|
|
|
|
|
|
|
|
699
Rosebank Road
|
|
|
|
|
|
|
|
|
|
|
Avondale
Auckland
|
|
|
|
|
|
|
|
|
|
|
New
Zealand
|
|
468,750
|
18
|
*
|
|
468,750
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Caeron
A. McClintock
|
|
|
|
|
|
|
|
|
|
|
59
Maiden Lane
|
|
|
|
|
|
|
|
|
|
|
New
York, NY 10038
|
|
217,125
|
12
|
*
|
|
217,125
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Robert
L. McEntire
|
|
|
|
|
|
|
|
|
|
|
112
Westcott Way
|
|
|
|
|
|
|
|
|
|
|
Dalton,
GA 30720
|
|
937,500
|
44
|
*
|
|
937,500
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Jason
M. McNamara
|
|
|
|
|
|
|
|
|
|
|
28494
Westinghouse Place #203
|
|
|
|
|
|
|
|
|
|
|
Valencia,
CA 91355
|
|
1,921,875
|
41
|
1.7%
|
|
1,921,875
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Pershing
LLC as Custodian FBO
|
|
|
|
|
|
|
|
|
|
|
Jagadish
Medarametla IRA Rollover
|
|
|
|
|
|
|
|
|
|
|
Account
|
|
|
|
|
|
|
|
|
|
|
7590
Wentworth Lane
|
|
|
|
|
|
|
|
|
|
|
Mentor,
OH 44060
|
|
375,000
|
42
|
*
|
|
375,000
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Samuel
Medina
|
|
|
|
|
|
|
|
|
|
|
C-18
Calle S Esr San Fernando
|
|
|
|
|
|
|
|
|
|
|
Carolina,
PR 00985
|
|
240,000
|
43
|
*
|
|
240,000
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Matt
Meehan
|
|
|
|
|
|
|
|
|
|
|
114
Narrows Road South
|
|
|
|
|
|
|
|
|
|
|
Staten
Island, NY 10305
|
|
14,000
|
12
|
*
|
|
14,000
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Neftali
Mercedes
|
|
|
|
|
|
|
|
|
|
|
100
John Street, Apt 3202
|
|
|
|
|
|
|
|
|
|
|
New
York, NY 10038
|
|
106,640
|
12
|
*
|
|
106,640
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Fabio
Migliaccio
|
|
|
|
|
|
|
|
|
|
|
658
Henry Street
|
|
|
|
|
|
|
|
|
|
|
Brooklyn,
NY 11231
|
|
354,290
|
12
|
*
|
|
354,290
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Mike
Milani &
|
|
|
|
|
|
|
|
|
|
|
Lorna
Milani JT TEN
|
|
|
|
|
|
|
|
|
|
|
2159
San Luis Road
|
|
|
|
|
|
|
|
|
|
|
Walnut
Creek, CA 94597
|
|
468,750
|
18
|
*
|
|
468,750
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Amanda
Miller
|
|
|
|
|
|
|
|
|
|
|
145
Fremont Avenue
|
|
|
|
|
|
|
|
|
|
|
Staten Island,
NY 10306
|
|
15,000
|
12
|
*
|
|
15,000
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
John
Richard Miller
|
|
|
|
|
|
|
|
|
|
|
29
Bishop Kirk Place
|
|
|
|
|
|
|
|
|
|
|
Woodstock
Road
|
|
|
|
|
|
|
|
|
|
|
N.
Oxford OX2 7HJ
|
|
|
|
|
|
|
|
|
|
|
United
Kingdom
|
|
1,975,000
|
38
|
1.7%
|
|
1,875,000
|
|
100,000
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Enrico
Monaco
|
|
|
|
|
|
|
|
|
|
|
2230
Ocean Ave.
|
|
|
|
|
|
|
|
|
|
|
Brooklyn,
NY 11229
|
|
187,500
|
31
|
*
|
|
187,500
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
David
R. Moore
|
|
|
|
|
|
|
|
|
|
|
10
Eagle Nest Cart
|
|
|
|
|
|
|
|
|
|
|
Bolton
Ontario L7W 5R8
|
|
|
|
|
|
|
|
|
|
|
Canada
|
|
187,500
|
31
|
*
|
|
187,500
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
MSB
Family Trust
|
|
|
|
|
|
|
|
|
|
|
DTD
06/25/93
|
|
|
|
|
|
|
|
|
|
|
295
Shadowood Lane
|
|
|
|
|
|
|
|
|
|
|
Northfield,
IL 60093
|
|
1,062,500
|
44
|
*
|
|
937,500
|
|
125,000
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Anthony
S. Mundy
|
|
|
|
|
|
|
|
|
|
|
9511
Shore Road
|
|
|
|
|
|
|
|
|
|
|
Apt
513
|
|
|
|
|
|
|
|
|
|
|
Brooklyn,
NY 11209
|
|
134,800
|
12
|
*
|
|
134,800
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Gregory
Nagel &
|
|
|
|
|
|
|
|
|
|
|
Mary
Jo Nagel JT TEN
|
|
|
|
|
|
|
|
|
|
|
5828
Sebastian Place
|
|
|
|
|
|
|
|
|
|
|
San
Antonio, TX 78249
|
|
2,423,750
|
26
|
2.1%
|
|
2,343,750
|
|
80,000
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
David
P. Nichols
|
|
|
|
|
|
|
|
|
|
|
2700
Oglesby Bridge Road SW
|
|
|
|
|
|
|
|
|
|
|
Conyers,
GA 30094
|
|
187,500
|
31
|
*
|
|
187,500
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Oweida
Orthopedic Assoc.
|
|
|
|
|
|
|
|
|
|
|
401K
Safe Habor Plan
|
|
|
|
|
|
|
|
|
|
|
Sam
Oweida Trustee
|
|
|
|
|
|
|
|
|
|
|
5405
Stones Throw Court
|
|
|
|
|
|
|
|
|
|
|
Charlotte,
NC 28226
|
|
468,750
|
18
|
*
|
|
468,750
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Peter
Orthos
|
|
|
|
|
|
|
|
|
|
|
52
Stone Hill Drive S
|
|
|
|
|
|
|
|
|
|
|
Manhasset,
NY 11030
|
|
200,000
|
12
|
*
|
|
200,000
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Alexandra
Orthos &
|
|
|
|
|
|
|
|
|
|
|
Peter
Orthos JT WROS
|
|
|
|
|
|
|
|
|
|
|
52
Stone Hill Drive S
|
|
|
|
|
|
|
|
|
|
|
Manhasset,
NY 11030
|
|
1,175,920
|
12
|
1.0%
|
|
1,175,920
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Jon
D. Packer
|
|
|
|
|
|
|
|
|
|
|
59
Emerald Lane
|
|
|
|
|
|
|
|
|
|
|
Stamford,
CT 06905
|
|
937,500
|
44
|
*
|
|
937,500
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Palisades
Financial Ltd.
|
|
|
|
|
|
|
|
|
|
|
1288
Alberni Street
|
|
|
|
|
|
|
|
|
|
|
Suite
806
|
|
|
|
|
|
|
|
|
|
|
Vancouver
BC V6E 4N5
|
|
|
|
|
|
|
|
|
|
|
Canada
|
|
234,375
|
16
|
*
|
|
234,375
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
William
C. Pawson
Revocable
Trust DTD 11/21/02 William C. Pawson Trustee
|
|
|
|
|
|
|
|
|
|
|
2330
North Star Lane
|
|
|
|
|
|
|
|
|
|
|
Avon,
OH 44011
|
|
2,343,750
|
26
|
2.0%
|
|
2,343,750
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
George
Paxinos
|
|
|
|
|
|
|
|
|
|
|
32-43
46th
Street
|
|
|
|
|
|
|
|
|
|
|
Astoria,
NY 11103
|
|
43,200
|
12
|
*
|
|
43,200
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Fred
Pearl &
|
|
|
|
|
|
|
|
|
|
|
Marylou
Pearl JT TEN
|
|
|
|
|
|
|
|
|
|
|
#2
Sussex Court
|
|
|
|
|
|
|
|
|
|
|
Rancho
Mirage, CA 92270
|
|
103,125
|
35
|
*
|
|
103,125
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Robert
Petrozzo
|
|
|
|
|
|
|
|
|
|
|
20
Woods Lane
|
|
|
|
|
|
|
|
|
|
|
East
Hampton, NY 11937
|
|
617,700
|
12
|
*
|
|
617,700
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Craig
T. Pio
|
|
|
|
|
|
|
|
|
|
|
2155
Kenwood Place
|
|
|
|
|
|
|
|
|
|
|
Bellmore,
NY 11710
|
|
703,125
|
45
|
*
|
|
703,125
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Sanford
Porter
|
|
|
|
|
|
|
|
|
|
|
833
Kehwood Avenue
|
|
|
|
|
|
|
|
|
|
|
Daluth,
MN 55811
|
|
93,750
|
15
|
*
|
|
93,750
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Randall
L. Powell
|
|
|
|
|
|
|
|
|
|
|
663A
Commerce Drive
|
|
|
|
|
|
|
|
|
|
|
Upper
Marlboro, MD 20774
|
|
187,500
|
31
|
*
|
|
187,500
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Vladimir
Prerad
|
|
|
|
|
|
|
|
|
|
|
1352
Dover Court Lane
|
|
|
|
|
|
|
|
|
|
|
Ormond
Beach, FL 32174
|
|
234,375
|
16
|
*
|
|
234,375
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Ronald
Primuth
|
|
|
|
|
|
|
|
|
|
|
8312
Getting Road
|
|
|
|
|
|
|
|
|
|
|
Racine,
WI 53406
|
|
93,750
|
15
|
*
|
|
93,750
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Professional
Traders Fund LLC
|
|
|
|
|
|
|
|
|
|
|
Marc
Swickle and Howard Berger**
|
|
|
|
|
|
|
|
|
|
|
1400
Old Country Road, Suite 206
|
|
|
|
|
|
|
|
|
|
|
Westbury,
NY 11590
|
|
366,420
|
46
|
*
|
|
366,420
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Benjamin
Raab Trust
|
|
|
|
|
|
|
|
|
|
|
UAD
06/04/99
|
|
|
|
|
|
|
|
|
|
|
Benjamin
Raab Trustee
|
|
|
|
|
|
|
|
|
|
|
3973
75th
Street
|
|
|
|
|
|
|
|
|
|
|
Suite
103
|
|
|
|
|
|
|
|
|
|
|
Aurora,
IL 60504
|
|
279,375
|
16
|
*
|
|
234,375
|
|
45,000
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
David
Jerome Raab
|
|
|
|
|
|
|
|
|
|
|
1830
Spruce Avenue
|
|
|
|
|
|
|
|
|
|
|
Highland
Park, IL 60035
|
|
234,375
|
16
|
*
|
|
234,375
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Pershing
LLC as Custodian F/B/O
|
|
|
|
|
|
|
|
|
|
|
Michael
J. Radlove IRA
|
|
|
|
|
|
|
|
|
|
|
2748
Blackbird Hollow
|
|
|
|
|
|
|
|
|
|
|
Cincinnati,
OH 45244
|
|
93,750
|
15
|
*
|
|
93,750
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Charles
M. Raspa
|
|
|
|
|
|
|
|
|
|
|
3663
Rt. 9 North, Suite 102
|
|
|
|
|
|
|
|
|
|
|
Old
Bridge, NY 08857
|
|
15,000
|
12
|
*
|
|
15,000
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
James
Rathgeber
|
|
|
|
|
|
|
|
|
|
|
14
Richboyrne Lane
|
|
|
|
|
|
|
|
|
|
|
Melville,
NY 11747
|
|
785,700
|
12
|
*
|
|
785,700
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Stephen
Renaud
|
|
|
|
|
|
|
|
|
|
|
6
Woodland Drive
|
|
|
|
|
|
|
|
|
|
|
Darien,
CT 06820
|
|
6,400
|
12
|
*
|
|
6,400
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Peter
Repole
|
|
|
|
|
|
|
|
|
|
|
6160
Greenbelt Road
|
|
|
|
|
|
|
|
|
|
|
Greenbelt,
MD 20770
|
|
93,750
|
15
|
*
|
|
93,750
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Andrew
H. Sabreen Revocable
|
|
|
|
|
|
|
|
|
|
|
Trust
D/T/D 12/17/04
|
|
|
|
|
|
|
|
|
|
|
Andrew
H. Sabreen &
|
|
|
|
|
|
|
|
|
|
|
Carol
Sabreen Trustees
|
|
|
|
|
|
|
|
|
|
|
2213
Kingridge Road
|
|
|
|
|
|
|
|
|
|
|
Pittsburgh,
PA 15237
|
|
350,000
|
13
|
*
|
|
300,000
|
|
50,000
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Donald
Ronning
|
|
|
|
|
|
|
|
|
|
|
70
Bridge Streer #11
|
|
|
|
|
|
|
|
|
|
|
Pelham,
NH 03076
|
|
609,375
|
47
|
*
|
|
609,375
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
David
C. Rouse &
|
|
|
|
|
|
|
|
|
|
|
Marcy
E, Rathjen Rouse JT TEN
|
|
|
|
|
|
|
|
|
|
|
253
Beverly Way
|
|
|
|
|
|
|
|
|
|
|
Gardnerville,
NV 89460
|
|
93,750
|
15
|
*
|
|
93,750
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Paul
Sallwasser &
|
|
|
|
|
|
|
|
|
|
|
Teri
Sallwasser JT WROS
|
|
|
|
|
|
|
|
|
|
|
301
Windmill Palm Avenue
|
|
|
|
|
|
|
|
|
|
|
Plantation,
FL 33324
|
|
937,500
|
44
|
*
|
|
937,500
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Kirt
Samuel
|
|
|
|
|
|
|
|
|
|
|
249
B15 Street, Apt L502
|
|
|
|
|
|
|
|
|
|
|
Queens,
NY 11691
|
|
62,000
|
12
|
*
|
|
62,000
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Suzette
T. Seigel
|
|
|
|
|
|
|
|
|
|
|
35
Watergate Drive Unit 404
|
|
|
|
|
|
|
|
|
|
|
Sarasota,
FL 34236
|
|
234,375
|
16
|
*
|
|
234,375
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Richard
S. Simms II &
|
|
|
|
|
|
|
|
|
|
|
Cynthia
Simms JT WROS
|
|
|
|
|
|
|
|
|
|
|
5951
S. Middlefield Road
|
|
|
|
|
|
|
|
|
|
|
Suite
105
|
|
|
|
|
|
|
|
|
|
|
Littleton,
CO 80123
|
|
93,750
|
15
|
*
|
|
93,750
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
David
Smith
|
|
|
|
|
|
|
|
|
|
|
312
Brooklea Drive
|
|
|
|
|
|
|
|
|
|
|
Fayetteville,
NY 13066
|
|
225,000
|
49
|
*
|
|
225,000
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Patricia
Sorbara
|
|
|
|
|
|
|
|
|
|
|
4
Windham Court
|
|
|
|
|
|
|
|
|
|
|
Muttontown,
NY 11545
|
|
400,000
|
12
|
*
|
|
400,000
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Robert
F. Starzel
|
|
|
|
|
|
|
|
|
|
|
99
22nd
Avenue
|
|
|
|
|
|
|
|
|
|
|
San
Francisco, CA 94121
|
|
234,375
|
16
|
*
|
|
234,375
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Michael
Sternberg
|
|
|
|
|
|
|
|
|
|
|
P.O.
Box 93794
|
|
|
|
|
|
|
|
|
|
|
Lubbock,
TX 79493
|
|
150,000
|
25
|
*
|
|
150,000
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
William
Strawbridge
|
|
|
|
|
|
|
|
|
|
|
11
Graceful Elm
|
|
|
|
|
|
|
|
|
|
|
The
Woodlands, TX 77381
|
|
150,000
|
25
|
*
|
|
150,000
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Timothy
Stritter
|
|
|
|
|
|
|
|
|
|
|
167
Ocean Blvd West
|
|
|
|
|
|
|
|
|
|
|
Holden
Beach, NC 28462
|
|
234,375
|
16
|
*
|
|
234,375
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Evan
S. Taub
|
|
|
|
|
|
|
|
|
|
|
148
Redwood Loop
|
|
|
|
|
|
|
|
|
|
|
Staten
Island, NY 10309
|
|
120,000
|
12
|
*
|
|
120,000
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Scott
P. Tierney
|
|
|
|
|
|
|
|
|
|
|
P.O.
Box 90333
|
|
|
|
|
|
|
|
|
|
|
Staten
Island, NY 10309
|
|
5,000
|
12
|
*
|
|
5,000
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
William
S. Tyrrell
|
|
|
|
|
|
|
|
|
|
|
2711
Edgehill Avenue
|
|
|
|
|
|
|
|
|
|
|
Bronx,
NY 10463
|
|
150,000
|
25
|
*
|
|
150,000
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
The
Philip A. & Pricilla S. Unverzagt
|
|
|
|
|
|
|
|
|
|
|
Living
Trust U A Dated 06/24/04
|
|
|
|
|
|
|
|
|
|
|
Philip
A. Unverzagt &
|
|
|
|
|
|
|
|
|
|
|
Pricilla
S. Unverzagt Trustees
|
|
|
|
|
|
|
|
|
|
|
3135
Mulberry Drive South
|
|
|
|
|
|
|
|
|
|
|
Salem,
OR 97302
|
|
937,500
|
44
|
*
|
|
937,500
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Value
Management Research AG
|
|
|
|
|
|
|
|
|
|
|
Attn:
Kevin Devine, CEO
|
|
|
|
|
|
|
|
|
|
|
Campus
Kronberg 7
|
|
|
|
|
|
|
|
|
|
|
D-61476
Kronberg im Taunus
|
|
|
|
|
|
|
|
|
|
|
Germany
|
|
232,153
|
50
|
*
|
|
232,153
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Paul
Vandyke
|
|
|
|
|
|
|
|
|
|
|
74
Sherwood Road
|
|
|
|
|
|
|
|
|
|
|
Norwood,
NJ 07648
|
|
319,375
|
16
|
*
|
|
234,375
|
|
85,000
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Anthony
Varbero
|
|
|
|
|
|
|
|
|
|
|
19
Seacreast Ln.
|
|
|
|
|
|
|
|
|
|
|
Staten
Island, NY 10307
|
|
21,500
|
12
|
*
|
|
21,500
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Thomas
Wiles
|
|
|
|
|
|
|
|
|
|
|
610
E. 9th St.
|
|
|
|
|
|
|
|
|
|
|
Gordon,
NE 69343
|
|
234,375
|
16
|
*
|
|
234,375
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Dick
Williams
|
|
|
|
|
|
|
|
|
|
|
270
Cornwall Avenue
|
|
|
|
|
|
|
|
|
|
|
Cheshire,
CT 06410
|
|
93,750
|
15
|
*
|
|
93,750
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Robert
Williams &
|
|
|
|
|
|
|
|
|
|
|
Aletha
Williams JT WROS
|
|
|
|
|
|
|
|
|
|
|
5963
North Cosby Avenue
|
|
|
|
|
|
|
|
|
|
|
Kansas
City, MO 64151
|
|
234,375
|
16
|
*
|
|
234,375
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Mark
A. Wilson
|
|
|
|
|
|
|
|
|
|
|
1930
Mount Vernon Road
|
|
|
|
|
|
|
|
|
|
|
Southington,
CT 06489
|
|
159,375
|
51
|
*
|
|
159,375
|
|
0
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Robert
Arthur Yates
|
|
|
|
|
|
|
|
|
|
|
Abadejos
158
|
|
|
|
|
|
|
|
|
|
|
COI
Aguilas
|
|
|
|
|
|
|
|
|
|
|
Distrito
Federal 01730
|
|
|
|
|
|
|
|
|
|
|
Mexico
|
|
668,750
|
18
|
*
|
|
468,750
|
|
200,000
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Alan
J. Young
|
|
|
|
|
|
|
|
|
|
|
1750
Braeside Avenue
|
|
|
|
|
|
|
|
|
|
|
Northbrook,
IL 60062
|
|
468,750
|
18
|
*
|
|
468,750
|
|
0
|
|
*
|
*
|
Less
than 1 percent.
|
|
|
|
(1)
|
Beneficial
owner(s) based information provided to us by the selling
stockholder
|
(2)
|
Except
as otherwise indicated, the address of each beneficial owner is
c/o IR
BioSciences Holdings, Inc., 4021 North 75th Street, Suite 201,
Scottsdale,
Arizona 85251.
|
(3)
|
Beneficial
ownership is determined in accordance with the rules of the Securities
and
Exchange Commission. In general, a person who has voting power
or
investment power with respect to securities is treated as beneficial
owner
of those securities. Common shares subject to options and warrants
currently exercisable or exercisable within 60 days of June 11,
2007 count
as outstanding for computing the percentage beneficially owned
by the
person holding these options or warrants.
|
(4)
|
Percentages
are based on 114,322,539 shares of common stock outstanding as
of June 11,
2007.
|
(5)
|
Includes
1,890,930 shares of common stock underlying warrants and 5,396,970
shares
of common stock underlying options that are currently exercisable
or
exercisable within 60 days of June 11, 2007. Includes 289,002 shares
of common stock and 61,000 common stock purchase warrants held
by
immediate family members.
|
(6)
|
Includes
80,000 shares of common stock underlying warrants that are currently
exercisable or exercisable within 60 days of June 11,
2007.
|
(7)
|
Includes
49,900 shares of common stock underlying warrants and 200,000 shares
of
common stock underlying options that are currently exercisable
or
exercisable within 60 days of June 11, 2007.
|
(8)
|
Includes
160,000 shares of common stock underlying warrants that are currently
exercisable or exercisable within 60 days of June 11, 2007. Includes
35,000 common stock purchase warrants issued by a third party that
are
exercisable or exercisable within 60 days of June 11,
2007.
|
(9)
|
Includes
625,000 shares of common stock and 312,500 common stock purchase
warrants
held by The Hariri Family Limited Partnership, a partnership
that
our director is the administrative manager thereof, as a listed
in the
selling stockholder table below.
|
(10)
|
Includes
2,533,541 shares of common stock underlying warrants and 5,596,970
shares
of common stock underlying options that are currently exercisable
or
exercisable within 60 days of June 11, 2007. Includes 35,000 common
stock
purchase warrants issued by third parties that are exercisable
or
exercisable within 60 days of June 11, 2007.
|
(11)
|
Includes
712,000 shares of common stock underlying warrants that are currently
exercisable or exercisable within 60 days of June 11,
2007.
|
(12)
|
Shares
included in this registration statement are part of the total of
5,482,600
shares owned by registered representatives of Joseph Stevens & Co.,
Inc. and are being registered hereby per certain registration rights
granted to them for participation in our private offering in December
2006.
|
(13)
|
Includes
100,000 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6, 2011.
|
(14)
|
Includes
18,750 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6, 2011.
|
(15)
|
Includes
31,250 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6, 2011.
|
(16)
|
Includes
78,125 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6, 2011.
|
(17)
|
Includes
165,625 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6, 2011.
|
(18)
|
Includes
156,250 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6, 2011.
|
(19)
|
Includes
46,875 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6, 2011.
|
(20)
|
Includes
68,780 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6, 2011.
|
(21)
|
Includes
546,875 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6, 2011.
|
(22)
|
Includes
118,750 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6, 2011.
|
(23)
|
Includes
265,625 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6, 2011.
|
(24)
|
Includes
93,750 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6, 2011.
|
(25)
|
Includes
50,000 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6, 2011.
|
(26)
|
Includes
781,250 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6, 2011.
|
(27)
|
Includes
76,562 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6, 2011.
|
(28)
|
Includes
37,500 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6, 2011.
|
(29)
|
Includes
15,625 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6, 2011.
|
(30)
|
Includes
25,000 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6, 2011.
|
(31)
|
Includes
62,500 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6, 2011.
|
(32)
|
Includes
390,625 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6, 2011.
|
(33)
|
Includes
109,375 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6, 2011.
|
(34)
|
Includes
132,813 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6, 2011.
|
(35)
|
Includes
34,375 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6, 2011.
|
(36)
|
Includes
468,750 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6, 2011.
|
(37)
|
Includes
312,500 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6, 2011.
|
(38)
|
Includes
625,000 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6, 2011.
|
(39)
|
Includes
150,000 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6, 2011.
|
(40)
|
Includes
162,500 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6, 2011.
|
(41)
|
Includes
640,625 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6, 2011.
|
(42)
|
Includes
125,000 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6, 2011.
|
(43)
|
Includes
80,000 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6, 2011.
|
(44)
|
Includes
312,500 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6, 2011.
|
(45)
|
Includes
234,375 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6, 2011.
|
(46)
|
Mark
Swickle and Howard Berger are the control persons of Professional
Traders
Fund LLC.
|
(47)
|
Includes
203,125 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6, 2011.
|
(48)
|
Includes
218,750 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6, 2011.
|
(49)
|
Includes
75,000 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6, 2011.
|
(50)
|
Kevin
Devine is the control person of Value Management Research
AG.
|
(51)
|
Includes
53,125 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6, 2011.
|
(52)
|
Includes
87,500 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6,
2011.
|
(53)
|
Includes
312,500 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6, 2011. Our director,
Robert Hariri, is the administrative manager thereof.
|
(54)
|
Includes
81,250 shares underlying warrants that are currently exercisable
at a
price of $0.50 and expire on December 6,
2011.
|
The
following description of our capital stock does not purport to be complete
and
is governed by and qualified by our certificate of incorporation
and bylaws, which are included as exhibits to
the registration statement of which this prospectus forms a part,
and by the provisions of applicable Delaware law.
Common
stock
We
are
authorized to issue 250,000,000 shares of common stock, $0.001 par value
per
share, of which 114,322,539 shares are issued and outstanding as of June
11,
2007.
The
holders of our common stock are entitled to one (1) vote per share on
all matters submitted to a vote of
our stockholders. In addition, such holders are entitled to
receive ratably such dividends, if any, as may
be declared from time to time by our Board
of Directors out
of funds legally available therefore. No dividends may
be paid on the common stock until all accrued but
unpaid dividends on the shares of our preferred stock have
been paid. In the event of the dissolution, liquidation or winding up of
our company, the holders of
common stock are entitled to share ratably in
all assets remaining after payment of
all liabilities of our company and
the preference amount distributable to the holders of
the shares of preferred stock. The holders of common
stock do not have any subscription, redemption or
conversion rights, nor do they have any preemptive or other rights to
acquire or subscribe for additional, unissued or treasury
shares.
The
holders of the common stock do not have cumulative voting
rights. Accordingly, the holders of more than half of the
outstanding shares of common stock can elect all of
the directors to be elected in any election, if
they choose to do so. In such event, the holders of
the remaining shares of common stock would not be able
to elect any directors. Our Board
of Directors is empowered to fill any vacancies on the Board
created by the resignation, death or removal of
directors.
In addition to
voting at duly called meetings at which a quorum
is present in person or
by proxy, Delaware law and
our bylaws provide that stockholders may take action without
the holding of a meeting by written consent or consents signed by the
holders of a majority of the outstanding shares of
our capital stock entitled to
vote thereon. Prompt notice of the taking of any action
without a meeting by less than unanimous consent of the stockholders
will be given to those stockholders who do not consent in writing to
the action. The purposes of this provision are
to facilitate action by stockholders and to reduce the
corporate expense associated with special meetings of stockholders.
PREFERRED
STOCK
The
Company is authorized to issue 10,000,000 shares of preferred stock, par
value
$0.001 per share. No shares of preferred stock have been issued as of June
11,
2007.
Under
our
certificate of incorporation, shares of our preferred stock may,
without any action by our stockholders, be issued by our Board of Directors
from
time to time in one or more series for
such consideration and with such
relative rights, privileges and preferences as the Board may determine.
Accordingly, our Board of Directors has the power, without stockholder approval,
to fix the dividend rate and to establish the provisions, if
any, relating to voting rights, redemption rate, sinking fund, liquidation
preferences and conversion rights for any series of preferred stock
(subject to the preferences of the shares of common stock offered hereby) issued
in the future, which could
adversely affect the voting power or other rights of
the holders of common stock.
Our
Board
of Directors' authority to issue preferred stock provides a convenient
vehicle in connection with possible acquisitions and other corporate
purposes, but could have the effect of making it more difficult for a
person or group to gain control of our company. As of the date of
the prospectus, there are no shares of preferred
stock outstanding, and we do not have present plans to issue any
shares of preferred stock or designate any series of preferred
stock.
WARRANTS
As
of
June 11, 2007, there were 35,295,647 shares of common stock underlying
outstanding warrants, 31,399,814 of which are currently exercisable, with
exercise prices ranging from $0.01 to $2.00 per share, with a weighted
average exercise price of $0.36.
MARKET
PRICE OF OUR COMMON STOCK
The
price
of our common stock has been volatile in the past and will likely continue
to
fluctuate in the future. The stock market in general and the market for shares
of biotechnology companies in particular have experienced extreme stock price
fluctuations. In some cases, these fluctuations have been unrelated to the
operating performance of the affected companies. Many companies in the life
science and related industries have experienced dramatic volatility in the
market prices of their common stock. We believe that a number of factors,
both
within and outside our control, could cause the price of our common stock
to
fluctuate, perhaps substantially. Factors such as the following could have
a
significant adverse impact on the market price of our common stock:
·
|
Our
ability to obtain additional financing and, if available, the terms
and conditions of the financing;
|
·
|
Our
financial position and results of
operations;
|
·
|
Biological
or medical discoveries by
competitors;
|
·
|
The
results of preclinical studies and clinical trials by us, our
collaborators or our competitors;
|
·
|
Concern
as to, or other evidence of, the safety or efficacy of our proposed
products or our competitors'
products;
|
·
|
Announcements
of technological innovations or new products by us or our
competitors;
|
·
|
U.S.
and foreign governmental regulatory
actions;
|
·
|
Delays in
the conduct or analysis of
our preclinical or clinical
studies;
|
·
|
Unfavorable
results from preclinical or clinical
studies;
|
·
|
Unfavorable developments concerning patents or other
proprietary rights;
|
·
|
Unfavorable
domestic or foreign regulatory
developments;
|
·
|
Actual
or anticipated changes in drug reimbursement
policies;
|
·
|
Developments
with our collaborators, if any;
|
·
|
Developments concerning
patent or other proprietary rights of us or our competitors (including
litigation);
|
·
|
Period-to-period
fluctuations in our operating
results;
|
·
|
Changes in estimates of
our company's performance by any securities
analysts;
|
·
|
New regulatory requirements and changes in the existing
regulatory environment;
|
·
|
Market
conditions for life science stocks in
general;
|
·
|
The issuance of
new equity securities pursuant to a future
offering;
|
·
|
Changes
in interest rates;
|
·
|
Competitive developments, including announcements by
competitors of new products or services or significant
contracts, acquisitions, strategic partnerships, joint
ventures or capital commitments;
|
·
|
Variations
in quarterly operating results;
|
·
|
Change
in financial estimates by securities analysts; o The depth
and liquidity of the market for our common
stock;
|
·
|
Investor perceptions of
our company and the technologies industries generally;
and,
|
·
|
General
economic and other national
conditions.
|
Trading in our securities could be subject to extreme price fluctuations
that could adversely affect your investment. The market prices
for securities of biotechnology
companies, particularly those that are not profitable, have
been highly volatile, especially recently. Publicized
events and announcements may have a significant impact
on the market price of our common stock. The
factors listed above may have the effect
of temporarily or permanently driving down the price of our
common stock. In addition, the stock market from time to time
experiences extreme price and volume fluctuations
which particularly affect the market prices for emerging and life
sciences companies, such as ours, and which are often unrelated to the
operating performance of the affected companies. For example, our per
share stock price has ranged from $0.12 to $1.00 between January 1, 2005
and June 11, 2007.
These
broad market fluctuations may adversely affect the ability of
a stockholder to dispose of his shares at a price equal to or
above the price at which the shares were purchased. In addition, in
the past, following periods
of volatility in the market price of a company's securities, securities class-action litigation has
often been instituted against that company. Any litigation
against our company, including this type of litigation, could
result in substantial costs and a diversion
of management's attention and resources, which could
materially adversely affect our business, financial condition
and results of operations.
We
are
subject to the provisions of Section 203 of the Delaware General Corporation
Law. In general, this statute prohibits a publicly-held Delaware corporation
from engaging in a "business combination" with an "interested stockholder"
for a
period of three years after the date that the person became an interested
stockholder unless, with certain exceptions, the business combination or
the
transaction in which the person became an interested stockholder is approved
in
a prescribed manner. Generally, a "business combination" includes a merger,
asset or stock sale, or other transaction resulting in a financial benefit
to
the stockholder.
Generally, an
"interested stockholder" is a person who, together with affiliates and
associates, owns or within three years prior, did own 15% or more of
the corporation's voting stock. These provisions may
have the effect of delaying, deferring or preventing a
change in control of us without further action by our
stockholders.
Our certificate
of incorporation and bylaws contain provisions that could
have the effect of discouraging potential acquisition proposals or
making a tender offer or delaying or preventing a change in
control of our company, including changes a stockholder might
consider favorable. In particular, our certificate
of incorporation and bylaws, as applicable, among other
things, will:
·
|
provide
our Board of Directors with the ability to alter our bylaws without
stockholder approval;
|
·
|
provide
that special meetings of stockholders can only be called by our Board
of Directors or by a committee of our Board of Directors that
has been duly designated by the Board and
whose powers and authority included the power to call such
meetings;
|
·
|
to provide for an advance notice procedure with regard to the
nomination of candidates for election as directors and with
regard to business to be brought before a meeting of
stockholders;
|
·
|
provide
that vacancies on our Board of Directors may be filled by a majority
of directors in office, although less than a quorum;
and,
|
·
|
allow
us to issue up to 10,000,000 shares of preferred stock with
rights senior to those of the common stock and that otherwise could
adversely affect the rights and powers, including voting rights, of
the holders of common stock. In some circumstances, this
issuance could have the effect of decreasing the market price of
our common stock, as well as having the anti-takeover effects discussed
above.
|
Such
provisions may have the effect of discouraging a third-party from acquiring
us, even if doing so would be beneficial to
our stockholders. These provisions are intended to enhance the
likelihood of continuity and stability in the composition of our Board
of Directors and in the policies formulated by them, and to
discourage some types of transactions that may involve an actual or
threatened change in control of our company. These provisions are
designed to
reduce our vulnerability to an unsolicited acquisition proposal and to
discourage some tactics that may be used in proxy fights. We
believe that the benefits of increased protection of our potential ability
to negotiate with the proponent of an unfriendly or unsolicited proposal to
acquire or restructure our company outweigh the disadvantages of discouraging
such proposals because, among other things, negotiation of
such proposals could result in an improvement of their
terms. However, these provisions could have the effect of
discouraging others from making tender offers for our shares that could result
from actual or
rumored takeover attempts. These provisions also may
have the effect of preventing changes in our
management.
TRANSFER
AGENT AND REGISTRAR
The
transfer agent for our common stock is Stalt, Inc., located at 671 Oak Grove
Avenue, Suite C, Menlo Park, California 94025.
As
of
June 11, 2007, we had outstanding 114,322,539 shares of common
stock.
RULE
144
Of
our outstanding shares, 37,771,803 shares of common stock
are immediately eligible for sale in
the public market without restriction or
further registration under the Securities Act. All other outstanding
shares of our common stock are "restricted securities" as such term is
defined under Rule 144, in that such shares were issued in
private transactions not involving a public offering and may not
be sold in the absence of registration other than in
accordance with Rules 144 or
another exemption from registration under the
Securities Act.. If shares are purchased by
our "affiliates" as that term is defined in Rule 144 under
the Securities Act of 1933, their sales of shares would be
governed by the limitations and restrictions that are described
below.
In
general, under Rule 144 as currently in effect, a person (or persons whose
shares are aggregated) who has beneficially owned shares of
our common stock for at least one
year, including any person who may be deemed to be an
"affiliate" (as the term "affiliate" is defined under
the Securities Act of 1933), would be entitled to
sell, within any three-month period, a number of shares that
does not exceed the greater of 1% of the number of shares of common stock
then outstanding, which as of June 11, 2007
would equal approximately 1,143,225 shares.
Sales
under Rule 144 are also governed by other requirements regarding
the manner of sale, notice filing and
the availability of current public information about us.
Under Rule 144, however, a person who is not, and for the three months
prior to the sale of such shares has not been, an affiliate of the issuer
is free to sell shares that are "restricted securities" which have
been held for at least two years without regard to the
limitations contained in Rule 144. The selling stockholders will not be
governed by the foregoing restrictions when selling their shares pursuant to
this prospectus.
Under
Rule 144(k), a person who is not deemed to have been one of our
affiliates at any time during the three months preceding a
sale, and who has
beneficially owned the shares proposed to be sold for
at least two years, including the holding period of any
prior owner other than an affiliate, is entitled to sell such
shares without complying with the manner of sale, notice filing,
volume limitation or notice provisions of Rule 144.
SEC
POSITION ON RULE 144 SALES
Prior
to
the merger with ImmuneRegen BioSciences, Inc., we were a blank
check company and did not have any operations or receive
any revenues since inception. A "blank check" company is a
development stage company that has no specific business plan or
purpose or has indicated its business plan is to engage in a
merger or acquisition with an unidentified company or companies, or other
entity or person.
The
Securities and Exchange Commission has taken the position that promoters
or
affiliates of a blank check company and their transferees, both before and
after
a business combination, would act as an "underwriter" under the Securities
Act
when reselling the securities of a blank check company because their resale
transactions would appear to be designed to distribute or redistribute
securities to the public without compliance with the registration requirement
of
the Securities Act. Accordingly, the Securities and Exchange Commission believes
that those securities can be resold only through a registered offering and
that
Rule 144 would not be available for those resale transactions despite technical
compliance with the requirements of Rule 144. As of the date hereof, 598,573
shares of our outstanding common stock, and 575,000 shares of our common
stock
issuable upon warrants presently issued and outstanding as of the date hereof
are held by promoters or affiliates (or their transferees) of our prior company,
GPN Networks, Inc.
Additionally, stockholders who
obtained securities directly from a blank check issuer and
through promoters and affiliates, cannot use Rule 144 to
resell their securities, since their
resale transactions would appear to be
designed to distribute or redistribute securities to the public without
compliance with the registration requirement of the Securities Act. As a result,
this policy applies to stockholders of ImmuneRegen Biosciences, Inc.,
prior to the merger with our company.
We
are
registering 598,573 shares of common stock in this registration statement
pursuant to registration rights granted to the holders of these
shares.
The
selling stockholders, and any of
their pledgees, assignees and successors-in-interest, may,
from time to time, sell any or all of their shares of our common stock on any
stock exchange, market or trading facility on which the shares are
traded or in private transactions. These sales may be at fixed or
negotiated prices. The selling stockholders may use
any one or more of the following methods when selling shares:
·
|
ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
|
·
|
block trades
in which the broker-dealer will attempt to sell the shares
as agent but may position and resell a portion of the block as
principal to facilitate the
transaction;
|
·
|
purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
|
·
|
an exchange distribution in accordance with the rules of
the applicable exchange;
|
·
|
privately
negotiated transactions;
|
·
|
settlement of short sales entered into after the
date of this prospectus;
|
·
|
broker-dealers may
agree with the selling stockholders to sell a specified
number of such shares at a stipulated price per
share;
|
·
|
through the writing
or settlement of options or other hedging
transactions, whether through an options exchange or otherwise;
or,
|
·
|
any
other method permitted pursuant to applicable
law.
|
The
selling stockholders may also sell shares under Rule 144 under the
Securities Act of 1933 as amended (the “Securities Act”), if available, rather
than under this prospectus.
Broker-dealers engaged
by the selling stockholders may arrange for
other brokers-dealers to participate in
sales. Broker-dealers may receive commissions or discounts from
the selling stockholders (or, if any broker-dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be
negotiated. Each selling stockholder does not expect
these commissions and discounts relating to its sales of shares
to exceed what is customary in the types of transactions involved. The
maximum commission or discount to be received by any NASD member or independent
broker dealer, however, will not be greater that eight (8) percent for the
sale
of any securities being registered hereunder pursuant to Rule 415 of the
Securities Act.
Joseph
Stevens & Co., Inc., is a registered broker dealer and NASD member firm and
associated persons of Joseph Stevens are listed as selling shareholders in
this
prospectus. Joseph Stevens & Co., Inc. served as placement agent in
our private placement offering which was completed on December 6, 2006, and
received, in addition to cash commissions and reimbursement of certain expenses,
5,482,600 shares of our common stock. The registration statement of which this
Prospectus forms a part includes the shares of Common Stock held
by associated persons of Joseph Stevens & Co., Inc. The SEC has
indicated that it is their position that any broker dealer firm or associated
person which is a selling shareholder is deemed an underwriter and therefore
Joseph Stevens & Co., Inc. or the associated persons may be
deemed an underwriter with respect to the securities being sold by
it.
The
5,482,600 shares of common stock held by Joseph Stevens & Co., Inc. and its
affiliates were acquired in connection with the private placement offering
which
expired on December 6, 2006.
Joseph
Stevens & Co., Inc. has indicated to us its willingness to act as selling
agent on behalf of certain of the selling shareholders named in the Prospectus
under "Selling Shareholders." that purchased our privately placed securities.
All shares sold, if any, on behalf of selling shareholders by First Montauk
Securities Corp would be in transactions executed by First Montauk Securities
Corp on an agency basis and commissions charged to its customers in connection
with each transaction shall not exceed a maximum of 4.5% of the gross proceeds.
Joseph Stevens & Co, Inc. does not have an underwriting agreement with us
and/or the selling shareholders and no selling shareholders are required to
execute transactions through Joseph Stevens & Co. Further, other than their
existing brokerage relationship as customers with Joseph Stevens &
Co. no selling shareholder has any pre-arranged agreement, written or
otherwise, with First Montauk Securities Corp to sell their securities through
Joseph Stevens & Co.
NASD
Rule
2710 requires NASD members firms (unless an exemption applies) to satisfy the
filing requirements of Rule 2710 in connection with the resale, on behalf of
selling shareholders, of the securities on a principal or agency basis.
NASD Notice to Members 88-101 states that in the event a
selling shareholder intends to sell any of the shares registered for resale
in this Prospectus through a member of the NASD participating in a distribution
of our securities, such member is responsible for insuring that a timely filing,
if required, is first made with the Corporate Finance Department of the NASD
and
disclosing to the NASD the following:
·
|
it
intends to take possession of the registered securities or to facilitate
the transfer of such
certificates;
|
·
|
the
complete details of how the selling shareholders shares are and will
be
held, including location of the particular
accounts;
|
·
|
whether
the member firm or any direct or indirect affiliates thereof have
entered
into, will facilitate or otherwise participate in any type of payment
transaction with the selling shareholders, including details regarding
any
such transactions; and
|
·
|
in
the event any of the securities offered by the selling shareholders
are
sold, transferred, assigned or hypothecated by any selling shareholder
in
a transaction that directly or indirectly involves a member firm
of the
NASD or any affiliates thereof, that prior to or at the time of said
transaction the member firm will timely file all relevant documents
with
respect to such transaction(s) with the Corporate Finance Department
of
the NASD for review.
|
The
NASD
has recently proposed rule changes to NASD Rule 2710 which may, if approved,
modify the requirements of its members to make filings under NASD Rule 2710.
Further, no NASD member firm may receive compensation in excess of that
allowable under NASD rules, including Rule 2710, in connection with the resale
of the securities by the selling shareholders, which total compensation may
not
exceed 8%.
We
have
advised the selling shareholders that the anti-manipulation rules of Regulation
M under the Exchange Act may apply to sales of shares in the market and to
the
activities of the selling shareholders and their affiliates. In addition, we
will make copies of this Prospectus available to the selling shareholders for
the purpose of satisfying the Prospectus delivery requirements of the Securities
Act.
The
shares of common stock issued to those selling stockholders who,
as indicated in the Selling Stockholder table above, received such warrants
as part of compensation pursuant to a placement agency
agreement between us and Joseph Stevens & Co., Inc. are restricted in
accordance with
Rule 2710(g)(I) of the NASD Conduct Rules. Accordingly, those selling
stockholders shall not directly or indirectly, offer, sell, agree
to offer or sell, transfer, assign, pledge, hypothecate or subject to
hedging, short sale, derivative, put or call transaction such shares
for a period of 180 days after the date this registration statement is declared
effective by the SEC.
In
connection with the sale of our common stock or interests therein, the
selling stockholders may enter into hedging transactions with broker-dealers
or
other financial institutions, which may in turn engage in short sales of
the common stock in the course of hedging
the positions they assume. The selling
stockholders may, after the date of this prospectus, also
sell shares of our common stock short
and deliver these securities to close out
their short positions, or loan or pledge the common stock to broker-dealers
that in turn may sell these securities. The selling stockholders
may also enter into option or other transactions with broker-dealers
or other financial institutions or the creation of one or more derivative
securities which require the delivery to such
broker-dealer or other financial institution of shares offered by this
prospectus, which shares such broker-dealer or other
financial institution may resell pursuant to this prospectus
(as supplemented or amended to reflect such transaction).
The selling stockholders and
any broker-dealers or agents that are involved in
selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such
event, any commissions received by
such broker-dealers or agents and any profit on the
resale of the shares purchased by them may
be deemed to be underwriting commissions or discounts under the
Securities Act. Each selling stockholders has informed us that it does not
have
any agreement or understanding, directly or indirectly, with any
person to distribute our common stock.
We
are required to
pay certain fees and expenses incurred by us
incident to the registration of the shares. We have agreed
to indemnify the selling stockholders against certain
losses, claims, damages and liabilities, including liabilities under
the Securities Act.
Because
selling stockholders may be deemed to be "underwriters" within
the meaning of the Securities Act, they will
be subject to the prospectus delivery requirements of the
Securities Act. In addition, any securities covered by
this prospectus which qualify for sale pursuant to
Rule 144 under the Securities Act may be sold under Rule
144 rather than under this prospectus.
Each selling stockholder has advised us that they have
not entered into any agreements, understandings or arrangements with
any underwriter or broker-dealer regarding the sale of the resale shares. There
is no underwriter or coordinating broker acting in connection with the
proposed sale of the resale shares by the selling stockholders.
We
agreed
to keep this prospectus effective until the earlier of (i) the
date on which the shares may be resold by the
selling stockholders without
registration and without regard to any
volume limitations by reason of Rule 144(k) under the Securities
Act or any other rule of similar effect or (ii) all of the shares have been
sold pursuant to the prospectus or Rule 144 under the
Securities Act or any other rule of similar effect. The resale
shares will be sold only through registered or licensed brokers or
dealers if required under applicable state securities laws. In
addition, in certain states, the resale shares may not be sold unless
they have been registered or qualified for sale in the
applicable state or an exemption from
the registration or qualification requirement is available and is
complied with.
Under applicable
rules and regulations under the Securities Exchange Act of 1934, any
person engaged in the distribution of the resale shares may not
simultaneously engage in market making activities with
respect to our common stock for a period of
two business days prior to the commencement of the
distribution. In addition, the selling stockholders will be subject to
applicable provisions of
the Exchange Act and the rules and regulations
thereunder, including Regulation M, which may limit the timing of purchases
and sales of shares of our common stock by
the selling stockholders or any other
person. We will make copies of
this prospectus available to the selling
stockholders and have informed them of the need
to deliver a copy of this prospectus to each purchaser at or prior to
the time of the sale.
The
validity of the common stock offered by this prospectus will
be passed upon for us by Kirkpatrick & Lockhart Preston Gates Ellis LLP, Los
Angeles, California.
EXPERTS
The
financial statements appearing in this Prospectus and Registration
Statement have
been audited by Russell Bedford Stefanou Mirchandani LLP,
independent accountants; to the extent and for the
periods indicated in their report appearing elsewhere herein, and are
included in reliance upon such report and upon the authority of such firms
as
experts in accounting and auditing.
ADDITIONAL
INFORMATION
We
filed
with the Securities and Exchange Commission a registration
statement on Form SB-2 under the Securities Act of 1933 for the shares of common
stock in this offering. This prospectus does not contain all of the
information in the registration statement and the exhibits and schedule that
were filed with the registration statement. For further information
with respect to us and our common stock, we refer you to
the registration statement and the exhibits and schedule that were
filed with the registration statement. Statements contained in this
prospectus about the contents of any contract or any other document that
is filed as an exhibit to
the registration statement are not necessarily
complete, and we refer you to the full text of the contract or
other document filed as an exhibit to
the registration statement. A copy of the registration statement
and the exhibits and schedules that were filed with the registration
statement may be inspected without charge at the Public Reference Room
maintained by the Securities and Exchange Commission at 100
F Street, N.E.,
Washington, D.C. 20549, and copies of all or
any part of the registration statement may be obtained from
the Securities and Exchange Commission upon payment of the
prescribed fee. Information regarding the operation of the Public Reference
Room
may be obtained by calling the Securities and Exchange Commission at
1-800-SEC-0330. The Securities and Exchange Commission maintains a web
site that contains reports, proxy and information statements, and
other information regarding registrants that file electronically with the
SEC. The address of the site is www.sec.gov.
We
are
subject to the information and periodic reporting requirements of the
Securities Exchange Act of 1934, and in accordance with the
Securities Exchange Act of 1934, we file annual, quarterly and special
reports, and other information with the Securities and Exchange
Commission. These periodic reports and other information are
available for inspection and copying at the regional offices, public
reference facilities and website of the Securities and Exchange Commission
referred to above.
IR
BioSciences Holdings, Inc.
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Page
No.
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F-2
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F-3
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F-4
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F-5
to F-11
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F-12
to F-13
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F-14
to F-32
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F-33
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F-34
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F-35
to F-41
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F-42
to F-43
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F-44
to F-51
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RUSSELL
BEDFORD
STEFANOU MIRCHANDANI LLP
CERTIFIED
PUBLIC ACCOUNTANTS
REPORT
OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM
Board
of
Directors
IR
BioSciences Holdings, Inc.
Scottsdale,
Arizona
We
have
audited the accompanying consolidated balance sheet of IR BioSciences Holdings,
Inc. a development stage company as of December 31, 2006 and the related
consolidated statements of losses, statement of stockholders' equity (deficit),
and cash flows for each of the two years in the period ended December 31, 2006
and the period October 22, 2002 (date of inception) through December 31, 2006.
These financial statements are the responsibility of the company's management.
Our responsibility is to express an opinion on the financial statements based
upon our audits.
We
have
conducted our audits in accordance with auditing standards of the Public Company
Accounting Oversight Board (PCAOB) (United States of America). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well
as evaluating the overall financial statement presentation. We believe our
audits provide a reasonable basis for our opinion.
In
our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of IR BioSciences Holdings, Inc.
a
development stage company at December 31, 2006 and the results of its operations
and its cash flows for each of the two years in the period ended December 31,
2006 and the period October 22, 2002 (date of inception) through December 31,
2006 in conformity with accounting principles generally accepted in the United
States of America.
As
discussed in Note A to the consolidated financial statements, the Company
adopted the provisions of Statement of Financial Accounting Standards No.
123(R), "Share-Based Payment", effective January 1, 2006.
The
accompanying financial statements have been prepared assuming the Company will
continue as a going concern. As discussed in the Note A to the accompanying
financial statements, the Company is in the development stage and has not
established a source of revenues. This raises substantial doubt about the
company’s ability to continue as a going concern. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
/s/
RUSSELL BEDFORD STEFANOU MIRCHANDANI LLP
Russell
Bedford Stefanou Mirchandani LLP
New
York,
New York
March
23,
2007
(A
Development Stage Company)
Consolidated
Balance Sheet as of December 31, 2006
|
|
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Cash
and cash equivalents
|
$ |
2,752,103
|
|
Prepaid
services and other current assets
|
|
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Deposits
and other assets
|
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|
|
Furniture
and equipment, net of accumulated depreciation of $12,242 (Note
B)
|
|
|
|
|
|
|
|
|
$ |
2,862,004
|
|
|
|
|
|
Liabilities
and Stockholders' Equity
|
|
|
|
|
Accounts
payable and accrued liabilities (Note C)
|
|
|
|
Current
portion of Notes Payable (Note
F)
|
|
|
|
|
|
|
|
Total
current liabilities
|
|
|
|
|
|
|
|
Commitments
and Contingencies (Note I)
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
stock, $0.001 par value:
|
|
|
|
10,000,000
shares authorized, no shares issued and outstanding
|
|
|
|
Common
stock, $0.001 par value; 250,000,000 shares
authorized;
|
|
|
|
108,041,897
shares issued and outstanding at December 31, 2006 (Note
G)
|
|
|
|
Additional
paid-in capital (Notes G, H)
|
|
|
|
|
|
|
|
Deficit
accumulated during the development stage
|
|
(13,285,180 |
) |
Total
stockholder's equity
|
|
|
|
|
|
|
|
Total
liabilities and stockholders' equity
|
$ |
2,862,004
|
|
The
accompanying notes are an integral part of these consolidated financial
statements.
(A
Development Stage Company)
Consolidated
Statements of Losses
For
the years ended December 31, 2006 and 2005,
And
for the period of inception
(October
30, 2002) to December 31, 2006
|
For
the Year Ended December 31,
|
|
|
For
the Period October 30, 2002 to
|
|
|
2006
|
|
|
2005
|
|
|
December
31, 2006
|
|
|
$ |
-
|
|
|
$ |
-
|
|
|
$ |
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
general and administrative expenses
|
$ |
2,445,317
|
|
|
$ |
2,534,417
|
|
|
$ |
10,569,618
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment
of intangible asset costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,445,317 |
) |
|
|
(2,540,810 |
) |
|
|
(11,016,011 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of penalty for late registration of shares
|
|
(438,601 |
) |
|
|
|
|
|
|
|
|
(Gain)
loss from marking to market - warrant portion
|
|
|
|
|
|
|
|
|
|
|
|
of
penalty for late registration of shares
|
|
(123,505 |
) |
|
|
(254,693 |
) |
|
|
(378,198 |
) |
(Gain)
loss from marketing to market - stock portion
|
|
|
|
|
|
|
|
|
|
|
|
of
penalty for late registration of shares
|
|
(445,673 |
) |
|
|
(314,385 |
) |
|
|
(760,058 |
) |
Interest
(income) expense, net
|
|
|
|
|
|
(11,386 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
other (income) expense
|
|
(959,271 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) before income taxes
|
|
(1,486,046 |
) |
|
|
(4,591,107 |
) |
|
|
(13,285,180 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(1,486,046 |
) |
|
$ |
(4,591,107 |
) |
|
|
(13,285,180 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) per share - basic and diluted
|
$ |
(0.02 |
) |
|
$ |
(0.07 |
) |
|
$ |
(0.28 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these consolidated financial
statements.
IR
Biosciences Holding, Inc. and Subsidiary
(A
Development Stage Company)
Consolidated
Statement of Stockholders' Equity (Deficit)
From
date of inception (October 30, 2002) to December 31, 2006
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
Common
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
|
Paid-In
|
|
|
Deferred
|
|
|
Stock
|
|
|
Accumulated
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Compensation
|
|
|
Subscribed
|
|
|
Deficit
|
|
|
Total
|
|
Balance
at October 30, 2002 (date of inception)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
of common stock issued at $0.0006 per share to founders for license
of
proprietary right in December 2002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
of common stock issued at $0.0006 per share to founders for services
rendered in December 2002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
of common stock issued at $0.1671 per share to consultants for
services
rendered in December 2002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale
of common stock for cash at $0.1671 per share in December
2002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the period from inception (October 30, 2002) to
December 31, 2002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2002 (reflective of stock splits)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
granted to consultants at $0.1392 per share for services rendered
in
January 2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale
of shares of common stock for cash at $0.1517 per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
granted to consultants at $0.1392 per share for services rendered
in March
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
of notes payable to common stock at $0.1392 per share in April
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
granted to consultants at $0.1413 per share for services rendered
in April
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale
of shares of common stock for cash at $0.2784 per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
of shares of common stock for cash at $0.2784 per share in June
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
of notes payable to common stock at $0.1392 per share in June
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial
conversion feature associated with notes issued in June
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
of deferred compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs
of GPN Merger in July 2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued with extended notes payable in October
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of Company warrants issued in conjunction with
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
fourth
quarter notes payable issued October through December
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants contributed by founders in conjunction with fourth
quarter
notes payable issued October through December
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued for services in October through December
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the twelve month period ended December 31,
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
granted at $1.00 per share pursuant to the Senior
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note
Agreement in January 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued at $1.00 per share to a consultant for
services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to a consultant at $0.62 per share for
services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
rendered
in February 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shars
issued to a consultant at $0.40 per share for
services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to a consultant at $0.50 per share for
services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
sold for cash at $0.15 per share in March, 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued at $0.50 per share to consultants for
services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to a consultant at $0.40 per share for
services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to consultants at $0.32 per share for
services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
to be issued to consultant at $0.41 per share in April 2004 for services
to be rendered through March 2005 |
|
-
|
|
|
-
|
|
|
-
|
|
|
(82,000
|
) |
|
-
|
|
|
-
|
|
|
(82,000
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
granted pursuant to the New Senior Note Agreement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to officer at $0.32 per share for services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
of Note Payable to common stock at $0.10 per share in May
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial
Conversion Feature associated with note payable in May
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of warrants to officers and founder for services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
to a consultant at $0.20 per share as a due diligence fee in
May
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to a consultant at $1.00 per share for
services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
to
be rendered over twelve months beginning May 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial
Conversion Feature associated with notes payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of warrants to note holders in April, May, and June
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of warrants to employees and consultants for services rendered
in April
through June 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued in July to a consultant at $0.10 for services to be rendered
through July 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to a consultant in July and September at $0.41 per share
for
services to be rendered through April 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to a consultant in September at $0.12 to $0.22 for services
rendered through September 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued in July to September 2004 as interest on note
payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of warrants with notes payable in July and August
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued
deferred compensation in August 2004 to a consultant for 100,000
shares at $0.10 per share, committed but unissued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued in August 2004 at $0.14 to a consultant for services to
be
performed through October 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued in August 2004 at $0.125 per share for conversion of $30,000
demand
loan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued in August 2004 at $0.16 per share to a consultant for
services
provided.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued in October 2004 to employees at $0.16 to $0.25 per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitment
to issue 100,000 shares of stock to a consultant at $0.23 per
share for
services to be provided through September
2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale
of stock for cash in October at $0.125 per share, net of costs
of
$298,155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued with sale of common stock in October, net of
costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of warrant to officer in October, 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of stock to investment bankers in October 2004 for commissions
earned
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
of accounts payable to stock in October at $0.125 per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued with accounts payable conversions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
of demand loan to stock in October at $0.11 per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forgiveness
of notes payable in October 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of stock to officer and director at $0.125 per share in October
for
conversion of liability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued with officer and director conversion of
liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
of debt and accrued interest to common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
at
$0.075 to $0.125 per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued with conversion of debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
of note payable in October into common stock at $0.075 per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of warrants to note holders in October 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of shares issued to CFO as compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued to members of advisory committees in November
and
December
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial
conversion feature associated with notes payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued in error to be cancelled
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
of deferred compensation through December 31, 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
for the twelve months ended December 31, 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale
of shares of common stock for cash at $0.20 per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in
March 2005 for warrant exercise, net of costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued to members of advisory committees in March 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
compensation in February 2005 to a consultant for 50,000 shares
of common
stock at $0.65 per share.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants
exercised at $0.05 per share in June 2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued to members of advisory committee in June
2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued to investors and service providers in June
2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of 232,153 shares of common stock in July 2005 for conversion of
notes
payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of 100,000 shares of common stock in August 2005 to a consultant
for
services provided
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued to advisory committee in September 2005 for
services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
of deferred comp for the twelve months ended December,
2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued in October and December 2005 to investors and
service
providers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
for the year ended December 31,2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of 100,000 shares to officer, previously accrued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued to members of advisory committee in March
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
of deferred compensation for the three months ended March 31,
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock in May 2006 to a consultant for services
provided
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
of accrued interest to common stock at $0.125 per share in May,
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
of accrued interest to common stock at $0.125 per share in May,
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
of accrued interest to common stock at $0.10 per share in May,
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued pursuant to the exercise of warrants at $0.09 per
share in
June 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued to members of advisory committee in June
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued to members of advisory committee in September
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued to officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of penalty Common Stock, previously accrued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of penalty warrants, previously accrued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of options issued to officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued to members of advisory committee in December
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of Common Stock for cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock to be issued as commission for equity fund
raising
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of options issued to officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of options issued to officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these consolidated financial
statements.
(A
Development Stage Company)
Consolidated
Statements of Cash Flows For the year
ended
December 31, 2006 and 2005,
and
for the period of inception (October 30, 2002)
to
December 31, 2006
|
For
the Year Ended December 31,
|
|
For
the Period October 30, 2002 to
|
|
|
2006
|
|
2005
|
|
December
31, 2006
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments
to reconcile net loss to net
|
|
|
|
|
|
|
|
|
|
cash
used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of penalty for late registration of shares - stock
portion
|
|
|
|
|
|
|
|
|
|
Cost
of penalty for late registration of shares - warrant
portion
|
|
|
|
|
|
|
|
|
|
(Gain)
loss from marking to market - stock portion of
penalty
|
|
|
|
|
|
|
|
|
|
for
late registration of shares
|
|
|
|
|
|
|
|
|
|
(Gain)
loss from marking to market - warrant portion of
penalty
|
|
|
|
|
|
|
|
|
|
for
late registration of shares
|
|
|
|
|
|
|
|
|
|
Legal
fees for note payable
|
|
|
|
|
|
|
|
|
|
Placement
fees for note payable
|
|
|
|
|
|
|
|
|
|
Impairment
of intangible asset
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
of discount on notes payable
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
|
|
|
|
|
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Prepaid
services and other assets
|
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash used in operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
|
Acquisition
of property and equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash used in investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Proceeds
from notes payable and cash advances
|
|
|
|
|
|
|
|
|
|
Principal
payments on notes payable and demand loans
|
|
|
|
|
|
|
|
|
|
Shares
of stock sold for cash
|
|
|
|
|
|
|
|
|
|
Proceeds
from exercise of warrant
|
|
|
|
|
|
|
|
|
|
Officer
repayment of amounts paid on his behalf
|
|
|
|
|
|
|
|
|
|
Cash
paid on behalf of officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents at beginning of period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents at end of period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
paid during the period for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition
and capital restructure:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment
to additional paid-in capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued in exchange for proprietary rights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued in exchange for services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued in exchange for previously incurred debt and accrued
interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued in exchange as interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
of beneficial conversion feature
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
options and warrants issued in exchange for services
rendered
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt
and accrued interest forgiveness from note holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued in satisfaction of amounts due to an Officer and a
Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued in satisfaction of accounts payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
compensation to a consultant accrued in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
of deferred compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
value of common stock and warrants in payable
|
|
|
|
|
|
|
|
|
|
in
connection with late filing of registration
statement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain
from marking to market - stock portion of penalty
|
|
|
|
|
|
|
|
|
|
for
late registration of shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain
from marking to market - warrant portion of penalty
|
|
|
|
|
|
|
|
|
|
for
late registration of shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment
of intangible asset
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of stock to Officer, previously accrued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued to members of advisory board
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services
for note payable
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these consolidated financial
statements
IR
BIOSCIENCES HOLDINGS, INC. AND SUBSIDIARY
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2006 AND 2005
AND
FOR THE PERIOD FROM OCTOBER 30, 2002
(INCEPTION)
TO DECEMBER 31, 2006
NOTE
A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A
summary
of the significant accounting policies applied in the preparation of the
accompanying consolidated financial statements follows.
Nature
of Business
IR
BioSciences Holdings, Inc. (the "Company," "we," or "us") formerly GPN Network,
Inc. ("GPN") is currently a development stage company under the provisions
of
Statement of Financial Accounting Standards ("SFAS") No. 7. The Company, which
was incorporated under the laws of the State of Delaware on October 30, 2002,
is
a development-stage biopharmaceutical company. Through our wholly owned
subsidiary, ImmuneRegen BioSciences, Inc., we are engaged in the research and
development of potential drugs. Our goal is to develop therapeutics to be used
for the protection of the body from exposure to harmful agents such as toxic
chemicals and radiation, as well as, biological agents, including influenza
and
anthrax. Our research and development efforts are at a very early stage and
Radilex and Viprovex have only undergone pre-clinical testing in mice. From
its
inception through the date of these financial statements, the Company has
recognized no revenues and has incurred significant operating
expenses.
The
consolidated financial statements include the accounts of the Company and
its
wholly owned subsidiary, ImmuneRegen BioSciences, Inc. Significant inter-company
transactions have been eliminated in consolidation.
Going
Concern
The
accompanying consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. As shown in the accompanying
financial statements during the years ended December 31, 2006 and 2005, the
Company incurred losses from operations of $1,486,046 and $4,591,107,
respectively. This among other factors may indicate that the Company will be
unable to continue as a going concern for a reasonable period of
time.
In
order
to address our capital requirements, we intend to seek to raise additional
cash
for working capital purposes through the public or private sales of debt or
equity securities, the procurement of advances on contracts or licenses, funding
from joint-venture or strategic partners, debt financing or short-term loans,
or
a combination of the foregoing. We may also seek to satisfy indebtedness without
any cash outlay through the private issuance of debt or equity securities.
There
can be no assurance the Company will be successful in its effort to secure
additional equity financing.
If
operations and cash flows continue to improve through these efforts, management
believes that the Company can continue to operate. However, no assurance can
be
given that management's actions will result in profitable operations or the
resolution of its liquidity problems.
The
accompanying consolidated financial statements do not include any adjustments
that might result should the Company be unable to continue as a going
concern.
Use
of
Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of
the financial statements, and the reported amounts of revenues and expenses
during the reported periods. Actual results could materially differ from those
estimates.
Cash
and Cash Equivalents
For
purposes of the statement of cash flows, cash equivalents include all highly
liquid debt instruments with original maturities of three months or less which
are not securing any corporate obligations.
Long-lived
Assets
The
Company accounts for its long-lived assets under the provision of Statements
of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets To Be Disposed Of." The Company's
long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of such assets may not be
recoverable. Events relating to recoverability may include significant
unfavorable changes in business conditions, recurring losses, or a forecasted
Inability to achieve break-even operating results over an extended period.
The
Company evaluates the recoverability of long-lived assets based upon forecasted
undiscounted cash flows. Should an impairment in value be indicated, the
carrying value of intangible assets will be adjusted, based on estimates of
future discounted cash flows resulting from the use and ultimate disposition
of
the asset.
Income
Taxes
The
Company has implemented the provisions on Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" (SFAS 109). SFAS 109 requires
that income tax accounts be computed using the liability method. Deferred taxes
are determined based upon the estimated future tax effects of differences
between the financial reporting and tax reporting bases of assets and
liabilities given the provisions of currently enacted tax laws.
Net
Loss Per Common Share
The
Company computes earnings per share under Financial Accounting Standard No.
128,
"Earnings Per Share" (SFAS 128). Net loss per common share is computed by
dividing net loss by the weighted average number of shares of common stock
and
dilutive common stock equivalents outstanding during the year. Dilutive common
stock equivalents consist of shares issuable upon conversion of convertible
notes and the exercise of the Company's stock options and warrants (calculated
using the treasury stock method). During 2006 2005 and 2004, common stock
equivalents were not considered in the calculation of the weighted average
number of common shares outstanding because they would be anti-dilutive, thereby
decreasing the net loss per common share.
Liquidity
As
shown
in the accompanying financial statements, the Company has incurred a net loss
of
$13,285,180 from its inception through December 31, 2006. The Company incurred
a
net loss of $1,486,046 and $ 4,591,107 from operations during the years ended
December 31, 2006 and 2005, respectively. The Company's has a net working
capital of $2,320,533 with cash and cash equivalents of $2,752,103 at December
31, 2006.
Research
and Development
The
Company accounts for research and development costs in accordance with the
Financial Accounting Standards Board's Statement of Financial Accounting
Standards No. 2 ("SFAS 2"), "Accounting for Research and Development Costs.
Under SFAS 2, all research and development costs must be charged to expense
as
incurred. Accordingly, internal research and development costs are expensed
as
incurred. Third-party research and developments costs are expensed when the
contracted work has been performed or as milestone results have been achieved.
Company-sponsored research and development costs related to both present and
future products are expensed in the period incurred. Total expenditures on
research and product development for the years 2006, 2005, and the period from
October 30, 2002 (date of inception) to December 31, 2006 were $484,029,
$237,005 and $1,026,597, respectively.
Concentrations
of Credit Risk
Financial
instruments and related items, which potentially subject the Company to
concentrations of credit risk, consist primarily of cash, cash equivalents
and
related party receivables. The Company places its cash and temporary cash
investments with credit quality institutions. At times, such investments may
be
in excess of the FDIC insurance limit. The Company periodically reviews its
trade receivables in determining its allowance for doubtful accounts. There
is
no allowance for doubtful accounts established as of December 31,
2006.
Comprehensive
Income
Statement
of Financial Accounting Standards No. 130 ("SFAS 130"), "Reporting Comprehensive
Income," establishes standards for reporting and displaying of comprehensive
income, its components and accumulated balances. Comprehensive income is defined
to include all changes in equity except those resulting from investments by
owners and distributions to owners. Among other disclosures, SFAS 130 requires
that all items that are required to be recognized under current accounting
standards as components of comprehensive income be reported in a financial
statement that is displayed with the same prominence as other financial
statements. The Company does not have any items of comprehensive income in
any
of the periods presented.
Stock
Based Compensation
Effective
January 1, 2006, the Company adopted SFAS No. 123 (revised), "Share-Based
Payment" (SFAS 123(R)) utilizing the modified prospective approach. Prior to
the
adoption of SFAS 123(R) we accounted for stock option grant in accordance with
APB Opinion No. 25, "Accounting for Stock Issued to Employees" (the intrinsic
value method), and accordingly, recognized compensation expense for stock option
grants.
Under
the
modified prospective approach, SFAS 123(R) applies to new awards and to awards
that were outstanding on January 1, 2006 that are subsequently modified,
repurchased or cancelled. Under the modified prospective approach, compensation
cost recognized in the nine months of fiscal 2006 includes compensation cost
for
all share-based payments granted prior to, but not yet vested as of January
1,
2006, based on the grant-date fair value estimated in accordance with the
original provisions of SFAS 123, and compensation cost for all share-based
payments granted subsequent to January 1, 2006 based on the grant-date fair
value estimated in accordance with the provisions of SFAS 123(R). Prior periods
were not restated to reflect the impact of adopting the new
standard.
A
summary
of option activity under the Plan as of December 31, 2006, and changes during
the period ended are presented below:
|
Options
|
|
|
Weighted
Average
Exercise
Price
|
|
Outstanding
at December 31, 2005
|
|
|
|
|
$ |
5.30
|
|
|
|
|
|
|
$ |
0.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
at December 31, 2006
|
|
|
|
|
$ |
0.50
|
|
|
|
|
|
|
|
|
|
Non-vested
at December 31, 2006
|
|
|
|
|
$ |
0.22
|
|
Exercisable
at December 31, 2006
|
|
|
|
|
$ |
0.64
|
|
Aggregate
intrinsic value of options outstanding and exercisable at December 31, 2006
was
$0. Aggregate intrinsic value represents the difference between the Company's
closing stock price on the last trading day of the fiscal period, which was
$0.15 as of December 29, 2006, and the exercise price multiplied by the number
of options outstanding. As of December 31, 2006, total unrecognized stock-based
compensation expense related to stock options was $264,274. During the year
ended December 31, 2006 the Company charged $296,394 to operations related
to
recognized stock-based compensation expense for employee stock
options.
For
purposes of pro forma disclosures, the estimated fair value of the options
is
amortized over the options' vesting period. The Company's pro forma information
was as follows:
|
Twelve
months ended December 31, 2005
|
|
|
$ |
(4,591,107 |
) |
Compensation
recognized under under APB 25
|
|
|
|
Compensation
recognized under SFAS 123
|
|
(83,150 |
) |
|
|
|
|
|
$ |
(4,674,257 |
) |
|
|
|
|
|
$ |
(0.07 |
) |
Segment
Information
Statement
of Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information" ("SFAS 131") establishes standards for
reporting information regarding operating segments in annual financial
statements and requires selected information for those segments to be presented
in interim financial reports issued to stockholders. SFAS 131 also establishes
standards for related disclosures about products and services and geographic
areas. Operating segments are identified as components of an enterprise about
which separate discrete financial information is available for evaluation by
the
chief operating decision maker, or decision-making group, in making decisions
how to allocate resources and assess performance. The information disclosed
herein materially represents all of the financial information related to the
Company's principal operating segment.
Fair
Value of Financial Instruments
The
Company measures its financial assets and liabilities in accordance with
accounting principles generally accepted in the United States of America. The
estimated fair values approximate their carrying value because of the short-term
maturity of these instruments or the stated interest rates are indicative of
market interest rates.
Prepaid
services and other current assets
Prepaid
services and other current assets at December 31, 2006 consist of the
following:
Salary
advance
The
Company has made an advance of salary to one employee in the amount of
$1,500.
Deposits
and other assets
Deposits
and other assets consist of a deposit on leased office space in the amount
of
$2,260.
Furniture
and Equipment
Furniture
and equipment are valued at cost. Depreciation and amortization are provided
over the estimated useful lives up to seven years using the straight-line
method. The estimated service lives of property and equipment are as
follows:
Computer
equipment
|
3
years
|
Laboratory
equipment
|
3
years
|
Furniture
|
7
years
|
Advertising
The
Company follows the policy of charging the costs of advertising to expenses
incurred. The Company has not incurred any advertising costs during the years
ended December 31, 2006 or 2005.
Reclassifications
Certain
reclassifications have been made in prior year's financial statements to conform
to classifications used in the current year.
New
Accounting Pronouncements
In
February 2006, the FASB issued SFAS No. 155. “Accounting for certain Hybrid
Financial Instruments an amendment of FASB Statements No. 133 and 140,” or
SFAS No. 155. SFAS No. 155 permits fair value remeasurement for any hybrid
financial instrument that contains an embedded derivative that otherwise would
require bifurcation, clarifies which interest-only strips and principal-only
strips are not subject to the requirements of Statement No. 133, establishes
a
requirement to evaluate interests in securitized financial assets to identify
interests that are freestanding derivatives or that are hybrid financial
instruments that contain an embedded derivative requiring bifurcation, clarifies
that concentrations of credit risk in the form of subordination are not embedded
derivatives, and amends SFAS No. 140 to eliminate the prohibition on a
qualifying special purpose entity from holding a derivative financial instrument
that pertains to a beneficial interest other than another derivative financial
instrument. SFAS 155 is effective for all financial instruments acquired or
issued after the beginning of an entity’s first fiscal year that begins after
September 15, 2006. We do not expect the adoption of SFAS 155 to have a material
impact on our consolidated financial position, results of operations or cash
flows.
In
March
2006, the FASB issued FASB Statement No. 156, Accounting for Servicing of
Financial Assets - an amendment to FASB Statement No. 140. Statement 156
requires that an entity recognize a servicing asset or servicing liability
each
time it undertakes an obligation to service a financial asset by entering into
a
service contract under certain situations. The new standard is effective for
fiscal years beginning after September 15, 2006. The adoption of SFAS No.156
did
not have a material impact on the Company's financial position and results
of
operations.
In
July
2006, the FASB issued Interpretation No. 48 (FIN 48). “Accounting for
uncertainty in Income Taxes”. FIN 48 clarifies the accounting for Income
Taxes by prescribing the minimum recognition threshold a tax position is
required to meet before being recognized in the financial statements. It also
provides guidance on derecognition, measurement, classification, interest and
penalties, accounting in interim periods, disclosure and transition and clearly
scopes income taxes out of SFAS 5, “Accounting for Contingencies”. FIN
48 is effective for fiscal years beginning after December 15, 2006. The Company
does not expect adoption of this standard will have a material impact on its
financial position, operations or cash flows.
In
September 2006 the Financial Account Standards Board (the “FASB”) issued its
Statement of Financial Accounting Standards 157, Fair Value Measurements. This
Statement defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles (GAAP), and expands disclosures
about fair value measurements. This Statement applies under other accounting
pronouncements that require or permit fair value measurements, the Board having
previously concluded in those accounting pronouncements that fair value is
the
relevant measurement attribute. Accordingly, this Statement does not require
any
new fair value measurements. However, for some entities, the application of
this
Statement will change current practice. FAS 157 effective date is for fiscal
years beginning after November 15, 2007. The Company does not expect adoption
of
this standard will have a material impact on its financial position, operations
or cash flows.
In
September 2006 the FASB issued its Statement of Financial Accounting Standards
158 “Employers’ Accounting for Defined Benefit Pension and Other Postretirement
Plans”. This Statement improves financial reporting by requiring an employer to
recognize the overfunded or underfunded status of a defined benefit
postretirement plan (other than a multiemployer plan) as an asset or liability
in its statement of financial position and to recognize changes in that funded
status in the year in which the changes occur through comprehensive income
of a
business entity or changes in unrestricted net assets of a not-for-profit
organization. This Statement also improves financial reporting by requiring
an
employer to measure the funded status of a plan as of the date of its year-end
statement of financial position, with limited exceptions. The effective date
for
an employer with publicly traded equity securities is as of the end of the
fiscal year ending after December 15, 2006. The Company does not expect adoption
of this standard will have a material impact on its financial position,
operations or cash flows
In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities.” SFAS 159 permits entities to choose
to measure many financial instruments, and certain other items, at fair value.
SFAS 159 applies to reporting periods beginning after November 15, 2007. The
adoption of SFAS 159 is not expected to have a material impact on the Company’s
financial condition or results of operations.
NOTE
B - PROPERTY, PLANT AND EQUIPMENT
The
Company's property and equipment at December 31, 2006 consists of the
following:
|
|
|
|
Office
Fixtures and Furniture
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
expense included as a charge to income amounted to $2,495, $2,274, and $13,075
for the years ended December 31, 2006 and 2005 and from inception to December
31, 2006, respectively.
NOTE
C - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts
payable and accrued liabilities at December 31, 2006 are as
follows:
Accounts
payable and accrued liabilities
|
|
|
Accounts
payable - Pre-merger
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In
addition, $24,814 remains as an amount to be amortized for prepaid insurance
for
Directors and Officers and liability insurance.
NOTE
D - PENALTY FOR LATE REGISTRATION OF SHARES
In
October 2004, we completed a private placement sale of shares of our common
stock and warrants to purchase additional shares of common stock. We issued
in
the private placement an aggregate of 19,600,000 shares of our common stock
and
warrants to purchase 9,800,000 shares of our common stock. We agreed to register
these shares along with the shares underlying these warrants within ninety
days
from the closing date of the transaction, or we would incur a penalty equivalent
to an additional 2% of the shares and warrants to be registered for every 30
days that we failed to complete this registration. This penalty amounts to
an
aggregate of 461,200 shares and 181,600 warrants per 30 day period until such
a
time as this registration statement is made effective. We were unable to
register the securities as required.
The
Company attempted to register the shares and warrants by filing a registration
statement with the Securities and Exchange Commission on November 24, 2004,
and
amended this registration statement with pre-effective amendments no. 1, 2,
3
and 4 on July 20, 2005, November 16, 2005, February 22, 2006 and April 7, 2006,
respectively. On July 10, 2006 the Company, pursuant to Rule 477 of Regulation
C
of the Securities Act of 1933, as amended, applied for an order granting the
immediate withdrawal of its Registration Statement on Form SB-2.
In
August
2006, we reached an agreement with the investors in the private placement of
October 2004 which limits the number of warrants and shares which we are
obligated to issue pursuant to the penalty calculation to an aggregate of 18%
of
the number of original number of shares and warrants issued in the October
2004
private placement. This agreement limits the number of shares and warrants
issuable pursuant to the penalty calculation to an aggregate of 4,150,798 shares
and warrants to purchase an additional 1,634,400 shares, respectively. This
resulted in a decrease in the number of share issuable 2,475,107 (with a fair
value of $816,785) and a decrease in the number of warrant shares of 974,587
(with a fair value of $177,789). This resulted in a net realized gain of
$994,574 during the three months ended June 30, 2006.
In
August
2006, we issued 4,150,798 shares and warrants to purchase 1,634,400 shares
and
relieved accrued liabilities in the aggregate amount of $1,053,904.
For
the
twelve months ended December 31, 2006 the Company marked to market the value
of
the shares and warrants issuable pursuant to the penalty calculation for an
aggregate gain in the amount of approximately $445,673 and $123,505,
respectively.
NOTE
E - RELATED-PARTY TRANSACTIONS
Cash
Advances
In
July
2006, the Company received a cash advance from a director in the amount of
$25,000. This advance bears interest at the rate of 12% per annum. The Company
repaid this cash advance on August 30, 2006 plus accrued interest in the amount
of $370.
Credit
Cards
The
Company has a line of credit with Bank of America for $25,000. Our Chief
Executive Officer Michael Wilhelm co-signs this line of credit. At year end
December 31, 2006 the Company had an outstanding balance on the credit card
of
$21,373.
Employment
Agreements
PRESIDENT
AND CHIEF EXECUTIVE OFFICER:
On
August
10, 2005, the Company entered into a new employment agreement with its President
and Chief Executive Officer, Michael K. Wilhelm. The employment agreement calls
for a salary at the rate of $275,000 per annum. The salary will be subject
to
adjustment of at least 10% per year at the end of each year. The registrant
also
agreed to defend and indemnify, to the fullest extent permitted by the
registrant's certificate of incorporation and bylaws and the Delaware General
Corporation Law, Mr. Wilhelm and hold him harmless against any liability that
he
incurs within the scope of his employment under the agreement. The agreement
also provides for the following various bonus incentives:
|
i)
A target incentive bonus in cash and/or stock if the Company consummates
a
transaction with any unaffiliated third party such as an equity or
debt
financing, acquisition, merger , strategic partnership or other similar
transaction.
|
ii)
A one
time grant of an option to purchase 2,000,000 shares of the Company's common
stock at an exercise price equal to the fair market value per share on the
date
option is granted.
In
connection with Mr. Wilhelm's new employment agreement, the Company also entered
into a change of control agreement and a severance agreement with him on August
10, 2005.
Under
the
change of control agreement, Mr. Wilhelm shall be entitled to a continuation
of
his base salary for a period of 18 months following an involuntary termination,
which means, at any time within that period which is one-year from the change
of
control date (including such date), the termination of the employment of Mr.
Wilhelm (i) by the Company without cause or (ii) due to constructive
termination, as such terms are defined in the change of control agreement.
Further, in the event of an involuntary termination, the agreement provides
that
the registrant shall pay Mr. Wilhelm a lump sum amount in cash, equal to the
sum
of (i) any unpaid incentive compensation which has been allocated or awarded
to
Mr. Wilhelm for a completed fiscal year or other measuring period preceding
the
date of involuntary termination under any annual or long-term incentive plan
and
which, as of the date of involuntary termination, is contingent only upon the
continued employment of Mr. Wilhelm to a subsequent date, and (ii) a pro rata
portion to the date of involuntary termination of the aggregate value of all
contingent incentive compensation awards to Mr. Wilhelm for all then uncompleted
periods under any such plan. Further, 100% of the unvested portion of each
outstanding stock option granted to Mr. Wilhelm shall be accelerated so that
they become immediately exercisable upon the date of involuntary
termination.
Under
the
severance agreement, Mr. Wilhelm shall be entitled to a continuation of his
base
salary for a period of 18 months following an involuntary termination, which
means the termination of the employment of Mr. Wilhelm (i) by the Company
without cause or (ii) due to constructive termination, as such terms are defined
in the severance agreement. Further, in the event of an involuntary termination,
the agreement provides that the registrant shall pay Mr. Wilhelm an amount
equal
to the amount of executive incentive pay (bonus) that he would have received
for
the year in which the involuntary termination occurred had he met one hundred
percent (100%) of the target for such incentive pay. Also, under this agreement,
100% of the unvested portion of each outstanding stock option granted to Mr.
Wilhelm shall be accelerated so that they become immediately exercisable
upon the date of involuntary termination.
CHIEF
FINANCIAL OFFICER:
Pursuant
to our employment agreement with John Fermanis, our Chief Financial Officer,
dated February 15, 2005, we paid a salary of $60,000 until the Company completed
a financing of $500,000 or more. This occurred on March 4, 2005 when the Company
completed a Tender Offer for warrants totaling $1,190,857 net of fees. From
March 4, 2005, until December 31, 2005, we will pay an annual salary of $85,000.
Thereafter, we will pay an annual salary of $98,000 for the second year ending
December 31, 2006 and an annual salary of $112,000 for the third year ending
December 31, 2007. Mr. Fermanis' salary is payable in regular installments
in
accordance with the customary payroll practices of the Company. Mr. Fermanis
also receives 100,000 shares of the Company's common stock, which are earned
at
the rate of 1/12 or 8,333 per month beginning January 2005. The Company charges
to operations the market value of these shares as of the first day of each
month. For the twelve months ended December 31, 2006, the Company charged
$41,416 to operations for the issuance of 100,000 shares to Mr. Fermanis. This
amount is carried in accrued liabilities at December 31, 2006.
SENIOR
DIRECTOR OF PRODUCT DEVELOPMENT AND REGULATORY AFFAIRS
Pursuant
to our employment agreement with Hal N. Siegel, our Senior Director of Product
Development and Regulatory Affairs, dated October 23, 2006, we will pay an
annual base salary of $200,000 for the first year and $210,000 for the second
year. Mr. Siegel will also be eligible for discretionary bonuses under the
Company's stock option plan during his employment. In addition, Mr. Siegel
received options with a term of five years to purchase 200,000 shares of common
stock of the Company. The options are exercisable at $0.20 per share. The
employment agreement has a term of two years, subject to early termination
provisions. Upon termination of Mr. Sigel's employment by the Company without
cause or constructive termination, as defined in the agreement, the Company
agrees to pay to Mr. Siegel the remainder of his salary for the year or six
months salary, whichever is greater, and any accrued vacation.
Pursuant
to the terms of the change of control agreement, the Company agrees to pay
Mr.
Siegel his salary for a period of 18 months from the date an involuntary
termination, payable in accordance with the Company's compensation practice.
Involuntary termination is defined as the termination of Mr. Siegel's employment
by Company without cause or due to constructive termination at any time within
one-year from a change of control event, as defined in the
agreement.
Office
Lease
During
the period from December 1, 2002 through August 31, 2004, the Company leased
office space from an entity controlled by the Company's Chief Executive Officer
under a sub-let agreement. The rental cost of $2,734 per month was passed
through to the Company at the same rental rate charged by the facility's primary
landlord.
In
July
2004, the Company leased a new office facility from a third party.
NOTE
F - NOTES PAYABLE
At
December 31, 2006, the Company has outstanding one note payable in the amount
of
$50,000 to a Director. This note bears interest at the rate of 12% per
annum.
NOTE
G - CAPITAL STOCK
Common
stock
The
Company is authorized to issue 10,000,000 shares of preferred stock, par value
$0.001 per share. No shares of preferred stock have been issued as of December
31, 2006. The company has authorized 250,000,000 shares of common stock, with
a
par value of $.001 per share.
In
July,
2003 a one for twenty reverse stock split of the Company's common stock was
effected . On April 6, 2004, the Company effected a 2 for 1 forward split of
its
common stock. Total authorized shares and par value remain unchanged.
Accordingly, the effect of the reverse and subsequent forward split has been
presented in the accompanying financial statement and footnote disclosures.
On
June 28, 2006, our shareholders voted to approve an amendment to our Certificate
of Incorporation, as amended, to increase the number of authorized shares of
Common Stock from 100,000,000 to 250,000,000. As of December 31, 2006, the
Company has 108,041,897 shares of common stock issued and
outstanding.
During
the year ended December 31, 2002, the Company issued an aggregate of 1,459,188
shares of common stock to employees and consultants for services in the amount
of $ 9,782. All valuations of common stock issued for services were based upon
the value of the services rendered, which did not differ materially from the
fair value of the Company's common stock during the period the services were
rendered. In addition, the Company issued 16,612,276 shares of common stock
to
its founders in exchange for a proprietary license charged to operations, valued
at $ 9,250 (see Note C) . The Company also issued an aggregate of 185,578 shares
of common stock in exchange for $ 31,001, net of costs and fees.
During
the year ended December 31, 2003, the Company issued an aggregate of 267,594
shares of common stock to consultants for services in the amount of $37,280.
All
valuations of common stock issued for services were based upon the value of
the
services rendered, which did not differ materially from the fair value of the
Company's common stock during the period the services were rendered. In
addition, the Company issued 2,155,104 shares of common stock in exchange for
$
300,000 of previously incurred debt. The Company also issued an aggregate of
383,430 shares of common stock in exchange for $ 65,000 net of costs and fees.
In July, 2003, the Company issued 2,368,130 in connection with the Company's
acquisition and merger with GPN Network, Inc. (see Note A.)
During
the year ended December 31, 2004, the Company issued an aggregate of 5,481,280
shares of common stock to consultants for services in the amount of $2,877,872.
All valuations of common stock issued for services were based upon the value
of
the services rendered, which did not differ materially from the fair value
of
the Company's common stock during the period the services were rendered. In
addition, the Company issued 300,000 shares of common stock as with a fair
value
of $36,000 as interest on a note payable. In addition, in conjunction with
a
private placement of stock (see below), the Company issued 6,855,062 shares
of
common stock in exchange for $ 630,591 of previously incurred debt and accrued
interest. In addition, the Company issued 590,000 shares of common stock in
exchange for $65,000 of previously issued debt. Total debt exchanged for stock
during the year ended December 31, 2004 was $695,591 of debt and interest for
7,745,062 shares of common stock. The Company also sold an aggregate of
18,160,000 shares of common stock in exchange for $ 1,971,045 cash, net of
costs
and fees. The Company also sold 8,000 shares of common stock for $1,200. The
Company also issued an aggregate of 4,900,000 shares of common stock to its
investment bankers as fees. The Company also issued 1,257,746 shares of common
stock in settlement of $157,219 of accounts payable. In addition, the Company
issued an aggregate 1,440,000 shares of common stock to an officer and a
director in satisfaction $180,000 of liabilities.
During
the year ended December 31, 2005, the Company issued 100,000 shares of common
stock to a consultant for services in the amount of $10,000. All valuations
of
common stock issued for services were based upon the value of the services
rendered, which did not differ materially from the fair value of the Company's
common stock during the period the services were rendered. In addition, the
Company issued 232,153 shares of common stock as with a fair value of $65,003
in
exchange for previously issued debt and accrued interest. In addition, 6,600,778
shares of common stock were sold for cash of $1,390,856 net of costs pursuant
to
a tender offer to certain of the Company’s warrant holders whereby the exercise
price of the warrants was temporarily reduced. The Company also issued 80,000
shares of common stock for cash of $4,000 pursuant to the exercise of a warrant
at a price of $0.05 per share.
Private
Placement of Common Stock
In
October 2004, the Company completed a private placement of its common stock
(the
"Private Placement") whereby the Company sold an aggregate of $2,450,000 worth
of units (each a "Unit" and collectively, the "Units") to accredited investors
(as defined by Rule 501 under the Securities Act of 1933, as amended) (the
transaction is referred to herein as the "Private Placement"). The Company
received proceeds of $1,971,845 after costs of the issuance of
$298,155.
Included
in the $2,450,000 sale was conversion of $180,000 of accrued salary and
consulting fees due to an officer and an director of the Company. The number
of
shares of common stock issued pursuant to the Private Placement was 19,600,000,
along with warrants to purchase an additional 9,080,000 shares, plus warrants
to
purchase an additional 720,000 shares issued to the officer and director.
The
Company
also issued an additional 4,900,000 shares of common stock to its investment
banker as commission. The investment bankers did not acquire any warrants
pursuant to this transaction.
Pursuant
to the terms of the Private Placement, each Unit was sold for $10,000 (the
"Unit
Price") and consisted of the following:
(a)
a
number of shares (the "Shares") of common stock of the Registrant, par value
$0.001 per share (the "Common Stock"), determined by dividing: (i) the Unit
Price by (ii) $0.125; and
(b)
a
warrant (each a "Warrant" and collectively, the "Warrants") to purchase, at
any
time prior to the fifth (5th) anniversary following the date of issuance of
the
Warrant, a number of shares of Common Stock equal to fifty percent (50%) of
the
number of Shares included within the Unit, at a price equal to fifty cents
($0.50) per share of Common Stock.
In
consideration of the investment, the Company granted to each investor certain
registration rights and anti-dilution rights. The Company is obligated to file
a
registration statement for the shares of common stock issued in the private
placement and shares of common stock underlying the warrants issued in the
private placement within 30 days of the final closing date of October 26, 2004,
or November 25, 2004. The Company is also obligated to effectuate the
registration statement within 90 days of the final closing date of October
26,
2004, or January 24, 2005. Failure to meet either of these deadlines results
in
the Company subject to a penalty of a 2% increase in the number of shares to
be
registered, or 461,200 shares and warrants to purchase an additional 181,600
shares, for every 30 day period beyond the deadline date. As of the date of
the
financial statements, the registration statement has not been deemed effective
and as a result, the Company has incurred penalties in the amount of $2,061,683
representing the obligation to issue an additional 5,242,307 shares of common
stock and warrants to purchase an additional 2,064,187 shares of common stock
at
a price of $0.50 per share. The accrued penalties in connection with the
issuance of the shares of common stock is included in accounts payable and
accrued expenses at December 31, 2005.
In
conjunction with raising capital through the private placement of our common
stock, the Company issued a warrant that has registration rights for the
underlying shares. As the contract must be settled by the delivery of registered
shares and the delivery of the registered shares is not controlled by the
Company, pursuant to EITF 00-19, "Accounting for Derivative Financial
Instruments Indexed to, and Potentially Settled in, a Company's Own Stock",
the
net value of the 9,800,000 warrants and an additional 2,064,187 penalty warrants
at their respective dates of issuance has been recorded as a warrant liability
on the balance sheet ($638,838) and the change in fair value from the date
of
issuance to December 31, 2005 has been included in other income (expense).
The
assumptions used in the Black Scholes model are as follows: (1) dividend yield
of 0%; (2) expected volatility of 79%, (3) risk-free interest rate of 4.5%,
and
(4) expected life of 5 years. Upon the registration statement being declared
effective, the fair value of the warrant on that date will be reclassified
to
equity.
For
the
year ended December 31, 2006 the fair value of the warrants issued with
registration rights decreased by approximately $123,505 to $182,236 at August
21, 2006 and is recognized in other income (expense). On August 21, 2006, the
Company issued the 1,634,400 warrants to purchase shares of common stock in
satisfaction of the penalty due to investors for the late registration of
shares.
In
October 2004, the Company converted certain notes payable with an aggregate
principal amount of $558,500 plus accrued interest of $56,757 for a total of
$630,328 into Units with terms identical to those provided to investors in
the
Private Placement. The number of shares of common stock issued via these note
conversions was 6,694,149 along with warrants to purchase an additional
3,347,076 shares (see Note H).
Also
in
October 2004, the Company entered into a settlement agreements with certain
creditors whereby for full and complete satisfaction of claims totaling an
aggregate of $157,219 the Company issued Units with terms identical to those
provided to investors in the Private Placement. The number of shares of common
stock issued via these creditor conversions was 1,257,746, along with warrants
to purchase an additional 628,873 shares.
On
January 24, 2005, the Company made a tender offer to certain of the Company's
shareholders whereby the exercise price of certain warrants issued in October
2004 (the "Warrants") would be reduced from $0.50 to $0.20 per share. In March
2005, 6,600,778 shares of common stock were sold pursuant to this offer for
aggregate proceeds of $1,320,156 less costs of $129,300.
In
June
2005, the Company issued 80,000 shares of common stock pursuant to the Exercise
of a warrant at a price of $0.05 per share.
In
July
2005, the Company issued 232,153 shares of common stock at a price of $0.28
per
share pursuant to the conversion of a note payable (see Note F.)
In
August
2005, the Company issued 100,000 shares of common stock pursuant to an agreement
with a service provider. The fair value of these shares of $10,000 was amortized
over the life of the contract, from July 2004 to July 2005.
In
March
2006, the Company issued 100,000 shares of common stock to its Chief Financial
Officer for a total compensation of $41,416 These shares were earned, and
accrued during the year ended December 31, 2006. share to an investor for the
conversion of accrued interest.
In
May
2006, the Company issued 34,464 shares of S-8 common stock at $0.125 per share
to a consultant for services provided for business development.
In
May
2006, the Company issued 19,288 shares of common stock at $0.125 per share
to an
investor for the conversion of accrued interest.
In
May
2006, the Company issued 16,324 shares of common stock at $0.125 per share
to an
investor for the conversion of accrued interest.
In
May
2006, the Company issued 13,454 shares of common stock at $0.10 per share to
an
investor for the conversion of accrued interest.
In
June
2006, the Company issued 5,000 shares of common stock at $0.09 per share for
the
exercise of warrants by an investor.
In
August
2006, the Company issued 4,150,798 shares of common stock for the penalty for
late registration of shares, which were previously accrued.
During
the fourth quarter of 2006, we completed a private placement, whereby we sold
an
aggregate of $5,482,600 worth of units to accredited investors. Each unit was
sold for $25,000 and consisted of (a) a number of shares of our common stock
determined by dividing the unit price by $0.16, and (b) a five-year warrant
to
purchase a number of shares of our common stock equal to 50% of the number
of
shares included within the unit, at $0.50 per share. We issued in the private
placement an aggregate of 34,266,250 shares of our common stock and warrants
to
purchase 17,133,125 shares of our common stock. In consideration of the
investment, we granted to each investor certain registration rights and
anti-dilution rights. We agreed that not before 180 days after the closing
of
the private placement and not later than 190 days thereafter, that we will
file
with the SEC a registration statement to register these shares along with the
shares underlying these warrants. In the event that we fail to comply with
the
filing deadline, there shall be a 1% penalty for each 30 day period (or pro
rata
portion thereof) paid to each investor in cash or additional shares. This
penalty amounts to an aggregate of 342,662 shares and 171,331 warrants per
30
day period until a registration statement that includes these shares and
warrants is filed or 12 months. As of December 31, 2006, we are not subject to
any penalty. As placement agent for the private placement, Joseph Stevens &
Co., Inc. and its designees received 5,482,600 shares of our common upon the
closing of the private placement. As of December 31, 2006, the shares to be
issued to Joseph Stevens & Co. were not issued and are included in common
stock subscribed.
The
Company has evaluated the Registration Rights Agreement related to the December
2006 private placement, specifically the 1% liquidated damages clause under
EITF
Issue No. 00-19 to determine whether the warrants issued with the private
placement should be classified as a liability versus equity. According to EITF
Issue No. 00-19, paragraph 16 "If a settlement alternative includes a penalty
that would be avoided by a company under other settlement alternatives, the
uneconomic settlement alternative should be disregarded in classifying the
contract. In the case of delivery of unregistered shares, a discount from the
value of the corresponding registered shares that is a reasonable estimate
of
the difference in fair values between registered and unregistered shares (that
is, the discount reflects the fair value of the restricted shares determined
using commercially reasonable means) is not considered a penalty."
The
Company concluded that the 12% cap added to the liquidated damages clause,
represents an economically reasonable difference between registered and
unregistered shares. As a result, the Company has not classified the fair value
of the warrants issued related to the private placement as a
liability.
The
Company completed the private placement with the following three
transactions:
On
October 4, 2006, the Company completed the closing of a private placement of
its
common stock whereby the Company sold an aggregate of $2,276,500 worth of units
to accredited investors (as defined by Rule 501 under the Securities Act of
1933, as amended). The Company received proceeds of $1,841,724 after costs
of
$434,776.
The number of share of common stock issued pursuant to the Private Placement
was
14,228,125, along with warrants to purchase an additional 7,114,063
shares.
On
October 26, 2006, the Company completed the closing of a private placement
of
its common stock whereby the Company sold an aggregate of $2,697,100 worth
of
units to accredited investors (as defined by Rule 501 under the Securities
Act
of 1933, as amended). The Company received proceeds of $2,344,020 after costs
of
$353,080. The number of share of common stock issued pursuant to the Private
Placement was 16,856,875, along with warrants to purchase an additional
8,428,438 shares.
On
December 6, 2006, the Company completed the closing of a private placement
of
its common stock whereby the Company sold an aggregate of $509,000 worth of
units to accredited investors (as defined by Rule 501 under the Securities
Act
of 1933, as amended). The Company received proceeds of $427,805 after costs
of
$81,195. The number of share of common stock issued pursuant to the Private
Placement was 3,181,250, along with warrants to purchase an additional 1,590,625
shares.
Shares
and warrants issued due to late filing of registration
statement
In
October 2004, we completed a private placement sale of shares of our common
stock and warrants to purchase additional shares of common stock. We issued
in
the private placement an aggregate of 19,600,000 shares of our common stock
and
warrants to purchase 9,800,000 shares of our common stock. We agreed to register
these shares along with the shares underlying these warrants within ninety
days
from the closing date of the transaction, or we would incur a penalty equivalent
to an additional 2% of the shares and warrants to be registered for every 30
days that we failed to complete this registration. This penalty amounts to
an
aggregate of 461,200 shares and 181,600 warrants per 30 day period until such
a
time as this registration statement is made effective. We were unable to
register the securities as required.
The
Company attempted to register the shares and warrants by filing a registration
statement with the Securities and Exchange Commission on November 24, 2004,
and
amended this registration statement with pre-effective amendments no. 1, 2,
3
and 4 on July 20, 2005, November 16, 2005, February 22, 2006 and April 7, 2006,
respectively. On July 10, 2006 the Company, pursuant to Rule 477 of Regulation
C
of the Securities Act of 1933, as amended, applied for an order granting the
immediate withdrawal of its Registration Statement on Form SB-2.
In
August
2006, we reached an agreement with the investors in the private placement of
October 2004 which limits the number of warrants and shares which we are
obligated to issue pursuant to the penalty calculation to an aggregate of 18%
of
the number of original number of shares and warrants issued in the October
2004
private placement. This agreement limits the number of shares and warrants
issuable pursuant to the penalty calculation to an aggregate of 4,150,798 shares
and warrants to purchase an additional 1,634,400 shares, respectively. This
resulted in a decrease in the number of share issuable 2,475,107 (with a fair
value of $816,785) and a decrease in the number of warrant shares of 974,587
(with a fair value of $177,789). This resulted in a net realized gain of
$994,574 during the three months ended June 30, 2006.
In
August
2006, we issued 4,150,798 shares and warrants to purchase 1,634,400 shares
and
relieved accrued liabilities in the aggregate amount of $1,053,904.
For
the
twelve months ended December 31, 2006 the Company marked to market the value
of
the shares and warrants issuable pursuant to the penalty calculation for an
aggregate gain in the amount of approximately $445,673 and $123,505,
respectively.
NOTE
H - STOCK OPTIONS AND WARRANTS
Employee
Stock Options
The
Company has adopted the 2003 Stock Option, Deferred Stock and Restricted Stock
Plan (the “Plan”) which authorizes the Board of Directors in accordance with the
terms of the Plan, among other things, to grant incentive stock options as
defined by Section 422(b) if the Internal Revenue Code, nonstatutory stock
options (collectively, the “Stock Options”) and awards of restricted stock and
deferred stock and to sell shares of common stock of the Company (“Common
Stock”) pursuant to the exercise of such stock options for up to an aggregate of
6,465,316 shares. The options will have a term not to exceed ten years from
the
date of the grant.
On
June
28, 2006, our shareholders voted to (i) approve an amendment to our Certificate
of Incorporation, as amended, to increase the number of authorized shares of
Common Stock from 100,000,000 to 250,000,000 and (ii) approve an amendment
to
our 2003 Stock Option, Deferred Stock and Restricted Stock Plan to increase
the
number of shares of our Common Stock reserved and available for issuance under
the Plan from 3,600,000 to 20,000,000.
Through
December 31, 2002, GPN had granted pre-merger stock options to certain employees
and consultants which are exercisable over various periods through March 2010.
These stock options are currently held by the Company outside of this
Plan.
In
July
2006, the Company issued options to purchase 1,893,970 shares of common stock
to
our Chief Executive Officer. The options vest 50% after ninety days of continued
employment and the balance in equal monthly installments for 12 months
thereafter.
In
September 2006, the Company issued options to purchase 3,500,000 shares of
common stock to our Chief Executive Officer. The options vest 50% after thirty
days of continued employment with the balance in equal monthly installments
for
one year thereafter.
In
October 2006, the Company issued options to purchase 200,000 shares of common
stock to an employee.
As
of
December 31, 2006, total unrecognized stock-based compensation expense related
to stock options was $264,274. During the year ended December 31, 2000 the
Company charged $296,394 to operations related to recognized stock-based
compensation expense for employee stock options.
The
following table summarizes the changes in options outstanding and the related
prices for the shares of the Company's common stock issued to employees of
the
Company under a non-qualified employee stock option plan.
Options
Outstanding
|
|
Options
Exercisable
|
Exercise
Prices
|
|
Number
Outstanding
|
|
Weighted
Average Remaining
Contractual
Life (years)
|
|
Weighted
Average Exercise Price
|
|
Number
Exercisable
|
|
Weighted
Average Remaining
Contractual
Life (years)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
not vested are not exercisable. Transactions involving stock options issued
to
employees are summarized as follows:
|
Number
of Shares
|
|
Weighted
Average Price Per Share
|
Outstanding
at December 31, 2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
at December 31, 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
at December 31, 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
at December 31, 2006
|
|
|
|
|
|
Warrants
The
following table summarizes the changes in warrants outstanding and the related
prices for the shares of the company’s common stock issued to non-employees of
the Company. These warrants were granted in lieu of cash for compensation for
services performed of financing expenses and in connection with placement of
convertible debentures.
Warrants
Outstanding
|
|
Warrants
Exercisable
|
Exercise
Prices
|
|
Number
Outstanding
|
|
Weighted
Average Remaining
Contractual
Life (years)
|
|
Weighted
Average
Exercise
Price
|
|
Number
Exercisable
|
|
Weighted
Average
Remaining
Contractual
Life
(years)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transactions
involving warrants are summarized as follows:
|
Number
of Shares
(post-split)
|
|
Weighted
Average
Price
Per Share
(post-split)
|
Outstanding
at December 31, 2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
at December 31, 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
at December 31, 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
at December 31, 2006
|
|
|
|
|
|
The
estimated value of the compensatory warrants granted to non-employees in
exchange for services and financing expenses was determined using the
Black-Scholes pricing model and the following assumptions:
|
2006
|
|
2005
|
|
Significant
assumptions (weighted-average):
|
|
|
|
|
Risk-free
interest rate at grant date
|
|
|
|
|
Expected
stock price volatility
|
|
|
|
|
|
|
|
|
|
Expected
option life-years (a)
|
|
|
|
|
At
December 31, 2002, the Company had outstanding warrants to purchase 26,939
shares (post-split) of common stock at $0.835 per share
(post-split).
During
the twelve months ended December 31, 2003, the Company issued warrants to
purchase 169,572 shares (post-split) of common stock at prices ranging from
$0.125 to $1.00 per share (post-split) to eight service providers. The Company
valued the warrants using the Black-Scholes calculation model, and the warrants
were deemed to have a combined value of $85,860. This amount was charged to
expense on the Company's financial statements for the twelve months ending
December 31, 2003.
In
October 2003, pursuant to the Amended Note agreements, the Company issued the
Amended Note Warrants to purchase 245,000 shares (post-split) of its common
stock at a price of $1.00 per share (post-split). The Company valued the Amended
Note Warrants using the Black-Scholes calculation model, and the warrants were
deemed to have a combined value of $189,937. This amount was recorded as a
discount to the Amended Notes and an addition to paid-in capital, and was
charged to expense over the term of the notes, or 180 days. During the twelve
months ended December 31, 2003, the Company recognized $84,169 of expense in
relation to these warrants. During the twelve months ended December 31, 2004,
the remaining $105,768 was charged to operations.
In
October, November, and December 2003, pursuant to the Fourth Quarter Note
agreements, the Company issued the Fourth Quarter Company Warrants to purchase
391,000 shares (post-split) of its common stock at a price of $1.00 per share
(post-split).
As
an
additional incentive to investors in the Secured Convertible Promissory Notes,
the Company provided five-year warrants (the "Secured Note Warrants") to
purchase that number of shares of common stock equal to one-half the initial
principal amount of the Secured Convertible Promissory Notes. For example,
an
investor who purchased a $10,000 Secured Convertible Promissory Note would
receive a warrant to purchase 8,979 shares (post-split) of common stock. The
exercise price of the Secured Note Warrants is equal to 60% of the price per
share paid by investors in a future equity financing (the "Reorganization
Financing"). The Secured Note Warrants are not considered granted until the
completion of the Reorganization Financing. In accordance with EITF 00-27,
because the Reorganization Financing had not occurred at December 31, 2003,
the
Company ascribed no value to the Secured Note Warrants at December 31, 2003.
At
the time of the first closing of the Private Placement in October 2004, warrants
to purchase a total of 444,490 shares (post-split) of common stock at $0.075
per
share (post-split) were issued under the Secured Note Warrants. The value of
these warrants was computed utilizing the Black-Scholes valuation model, and
the
total value of these warrants, or $112,562 was charged to operations during
the
twelve months ended December 31, 2004.
The
Company has outstanding warrants to purchase 250,000 shares of common stock
at
$0.30 per share which were issued in 2002 by its predecessor company GPN
Network.
In
April
through June 2004, the Company issued warrants to purchase 32,500 shares
(post-split) at price ranging from $0.25 to $2.00 to consultants for services
performed. The Company valued these warrants using the Black-Scholes valuation
model, and charged the amount of $8,318 to operations during the twelve months
ended December 31, 2004.
In
May
2004, the Company issued a warrant to its President and a warrant to a Director,
each warrant to purchase 500,000 shares (post-split) of common stock at a price
of $0.25 per share (post-split). The warrants were issued as performance
bonuses. The Company valued these warrants using the Black-Scholes model, and
charged the amount of $134,604 for each warrant, or a total of $269,208, to
operations during the twelve months ended December 31, 2004.
In
October 2004, the Company issued a warrant to its President to purchase 448,980
shares (post-split) at a price of $0.125 per share (post-split) as a performance
bonus for achieving certain objectives. The Company valued this warrant using
the Black-Scholes valuation model, and charged the amount of $112,697 to
operations during the twelve months ended December 31, 2004.
In
November and December 2004, the Company issued a warrant to purchase 50,000
shares (post-split) of its common stock at a price of $0.125 per share
(post-split) and a warrant to purchase 10,000 shares (post-split) of its common
stock at a price of $0.075 per share (post-split) to two members of its advisory
boards. The Company valued these warrants using the Black-Scholes valuation
model, and charged the aggregate amount of $16,348 to operations during the
twelve months ended December 31, 2004.
In
October 2004, the Company issued warrants to purchase 9,080,000 shares
(post-split) of its common stock at a price of $0.50 per share (post-split)
to
the investors in its private placement of equity securities. The Company
allocated $607,922 of the total proceeds of $1,971,845 to the warrants, and
charged this amount to additional paid-in capital during the twelve months
ended
December 31, 2004.
In
October 2004, the Company issued warrants to purchase an aggregate of 720,000
shares (post-split) of its common stock at a price of $0.50 per share
(post-split) to the an officer and a director for converting a total of $180,000
of amounts owed to these individuals for accrued salary and accrued consulting
fees. The Company allocated $56,067 of the total proceeds of $180,000 to the
warrants, and charged this amount to additional paid-in capital during the
twelve months ended December 31, 2004.
In
October 2004, the Company issued warrants to purchase 3,347,076 shares
(post-split) of its common stock at a price of $0.50 per share (post-split)
to
the convertible note holders who invested its private placement of equity
securities via conversion of their notes. The Company allocated $191,111 of
the
total amount converted of $615,328 to the warrants, and charged this amount
to
additional paid-in capital during the twelve months ended December 31,
2004.
In
October 2004, the Company issued warrants to purchase 628,873 shares
(post-split) of its common stock at a price of $0.50 per share (post-split)
to
the vendors who invested in its private placement of equity securities via
conversion of amounts owed to them by the Company. The Company allocated $48,579
of the total amount converted of $157,219 to the warrants, and charged this
amount to additional paid-in capital during the twelve months ended December
31,
2004.
In
April
through June 2004, the Company issued warrants to purchase 77,500 shares
(post-split) of its common stock at prices ranging from $0.25 to $2.00 per
share
(post-split) to certain investors as additional incentive under notes payable
agreements. The Company valued these warrants using the Black-Scholes model,
and
charged the amount of $17,915 to additional paid-in capital during the twelve
months ended December 31, 2004.
In
July
and August 2004, the Company issued warrants to purchase 744,280 shares
(post-split) of its common stock at prices ranging from $0.05 to $2.00 per
share
(post-split) to certain investors as additional incentive under notes payable
agreements. The Company valued these warrants using the Black-Scholes model,
and
charged the amount of $72,252 to additional paid-in capital during the twelve
months ended December 31, 2004.
During
the three months ended March 31, 2005, the Company issued warrants to purchase
268,033 shares of common stock at prices ranging from $0.125 to $1.00 to
consultants for services performed. The Company valued these warrants using
the
Black-Scholes valuation model, and charged the amount of $137,049 to operations
during the twelve months ended December 31, 2005.
During
the three months ended June 30, 2005, the Company issued warrants to purchase
366,814 shares of common stock at prices ranging from $0.038 to $1.00 per share
to consultants and advisory board members. The Company also cancelled warrants
to purchase 123,530 shares of common stock at a price of $2.00 per share. The
Company valued these issuance and cancellations using the Black-Scholes
valuation model, and charged the amount of $103,772 to operations during the
twelve months ended December 31, 2005.
Also
during the three months ended June 30, 2005, warrants to purchase 80,000 shares
of common stock at a price of $0.05 per share were exercised.
During
the three months ended September 30, 2005, the Company issued warrants to
purchase 77,250 shares of common stock at prices ranging from $0.125 to $1.00
per share to consultants and advisory board members. The Company valued these
warrants using the Black-Scholes valuation model, and charged the amount of
$20,491 to operations during the twelve months ended December 31,
2005.
In
October and December 2005, the Company issued warrants to purchase 62,467 shares
of common stock at prices ranging from $0.125 to $1.00 to consultants and
advisory board members for services provided. The Company valued these warrants
using the Black-Scholes valuation model, and charged the amount of $18,399
to
operations during the twelve months ended December 31, 2005.
During
the three months ended March 31, 2006, the Company issued warrants to purchase
61,500 shares of common stock at prices ranging from $0.125 to $1.00 to
consultants for services performed. The Company valued these warrants using
the
Black-Scholes valuation model, and charged the amount of $8,399 to operations
during the three months ended March 31, 2006.
During
the three months ended June 30, 2006, the Company issued warrants to purchase
84,653 shares of common stock at prices ranging from $0.20 to $1.00 to
consultants for services performed. The Company valued these warrants using
the
Black-Scholes valuation model, and charged the amount of $8,819 to operations
during the three months ended June 30, 2006.
Also
during the three months ended June 30, 2006, an investor exercised a warrant
to
purchase 5,000 shares of the Company's common stock at a price of $0.09 per
share.
During
the three months ended September 30, 2006, the Company issued warrants to
purchase 46,000 shares of common stock at prices ranging from $0.20 to $1.00
to
consultants for services performed. The Company valued these warrants using
the
Black-Scholes valuation model, and charged the amount of $3,495 to operations
during the three months ended September 30, 2006.
During
the three months ended September 30, 2006, the Company issued warrants to
purchase 300,000 shares of common stock at $0.25 to our Chief Executive Officer,
Michael Wilhelm. The Company valued these warrants using the Black-Scholes
valuation model, and charged the amount of $41,278 to operations during the
three months ended September 30, 2006.
Also,
during the three months ended September 30, 2006, the Company issued warrants
to
purchase 62,500 shares of common stock at $0.158 to our Chief Financial Officer,
John Fermanis per the terms of his employment agreement. The Company valued
these warrants using the Black-Scholes valuation model, and charged the amount
of $9,596 to operations during the three months ended September 30,
2006.
During
the three months ended September 30, 2006, the Company issued warrants to
purchase an additional 1,634,400 shares of common stock in satisfaction of
the
penalty due to investors for the late registration of shares. The Company had
accrued the value of these warrants using the Black-Scholes valuation model,
and
relieved the accrued liability of $258,986.
In
October 2006, the Company issued warrants to purchase 7,114,063 shares of its
common stock at a price of $0.50 per share to the investors in its first closing
of private placement of equity securities. The Company allocated $804,003 of
the
total proceeds of $1,057,640 to the warrants, and charged this amount to
additional paid-in capital during the twelve months ended December 31,
2006.
In
October 2006, the Company issued warrants to purchase 8,428,437 shares of its
common stock at a price of $0.50 per share to the investors in its second
closing of private placement of equity securities. The Company allocated
$759,384 of the total proceeds of $2,344,020 to the warrants, and charged this
amount to additional paid-in capital during the twelve months ended December
31,
2006.
In
October 2006, the Company issued warrants to purchase 1,590,625 shares of its
common stock at a price of $0.50 per share to the investors in its final closing
of private placement of equity securities. The Company allocated $162,952 of
the
total proceeds of $427,805 to the warrants, and charged this amount to
additional paid-in capital during the twelve months ended December 31,
2006.
During
the three months ended December 31, 2006, the Company issued warrants to
purchase 43,500 shares of common stock at prices ranging from $0.20 to $1.00
to
consultants for services performed. The Company valued these warrants using
the
Black-Scholes valuation model, and charged the amount of $1,974 to operations
during the three months ended December 31, 2006.
NOTE
I - COMMITMENTS AND CONTINGENCIES
Office
Leases
Our
corporate headquarters are currently located at 4021 N. 75th Street, Suite
201,
Scottsdale, Arizona 85251, where we have leased approximately 1,800 square
feet of office space through September 30, 2007. Our rent expense is $2,320
per
month in year one and will increase to $2,380 in year two. We believe that
our
facilities are adequate for our current needs and suitable additional or
substitute space will be available in the future to replace our existing
facilities, if necessary, or accommodate expansion of our
operations.
Rent
expense amounted to $28,622 for the years ended December 31, 2006, $27,785
for
the year ended December 31, 2005, and $131,561 for the period from October
30,
2002 (inception) through December 31, 2006.
Employment
and Consulting Agreements
The
Company has employment agreements with the President and Chief Executive Officer
(See Note E). In addition to salary and benefit provisions, the agreements
include non-disclosure and confidentiality provisions for the protection of
the
Company's proprietary information. The Company also has a severance agreement
and a change of control agreement in place with its President and Chief
Executive Officer.
The
Company also has an employment agreement with its Chief Financial Officer and
Senior Director, Product Development and Regulatory Affairs which provide salary
and benefit provisions.
The
Company has consulting agreements with outside contractors to provide marketing
and financial and scientific advisory services. The Agreements are generally
for
a term of 12 months from inception and renewable automatically from year to
year
unless either the Company or Consultant terminates such engagement by written
notice.
Litigation
The
Company is subject to other legal proceedings and claims, which arise in the
ordinary course of its business. Although occasional adverse decisions or
settlements may occur, the Company believes that the final disposition of such
matters should not have a material adverse effect on its financial position,
results of operations or liquidity.
NOTE
J - INCOME TAXES
The
Company has adopted Financial Accounting Standard No. 109 which requires the
recognition of deferred tax liabilities and assets for the expected future
tax
consequences of events that have been included in the financial statement or
tax
returns. Under this method, deferred tax liabilities and assets are determined
based on the difference between financial statements and tax bases of assets
and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse. Temporary differences between taxable
income reported for financial reporting purposes and income tax purposes are
insignificant.
For
income tax reporting purposes, the Company's aggregate unused net operating
losses approximate $6,100,000 which expire through 2027, subject to limitations
of Section 382 of the Internal Revenue Code, as amended. The deferred tax asset
related to the carryforward is approximately $2,135,000. The Company has
provided a valuation reserve against the full amount of the net operating loss
benefit, because in the opinion of management based upon the earning history
of
the Company, it is more likely than not that the benefits will not be
realized.
Components
of deferred tax assets as of December 31, 2006 are as
follows:
Non
Current:
|
|
|
|
Net
operating loss carryforward
|
|
|
|
|
|
|
|
|
|
|
|
NOTE
K - SUBSEQUENT EVENTS
On
January 1, 2007 we entered into a three month agreement with an investor
relations firm. For services provided the consulting firm is to receive a
monthly cash fee. In addition to the cash fee, we issued to the firm 100,000
restricted shares of common stock.
On
January 1, 2007 we entered into a six month agreement with a second investor
relations firm. For services provided the consulting firm is to receive a
monthly cash fee. In addition to the cash fee, we issued to the firm 400,000
restricted shares of common stock.
On
January 1, 2007 we entered into a two year employment agreement for a Market
and
Regulatory Affairs Analyst. In addition to the monthly cash salary the employee
received statutory options with a term of five years to purchase 100,000 shares
of common stock of the Company. The options are exercisable at $0.128 per share
and vest in equal amounts quarterly over the term of the contract. The employee
also received 298,039 common shares of stock for past services provided between
June 2006 and December 2006. The amount of $44,706 was accrued at December
31,
2006 for this past service.
(A
Development Stage Company)
Condensed
Consolidated Balance Sheet as of March 31, 2007
(Unaudited)
Assets
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
|
|
Prepaid
services and other current assets (Note 1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
and other assets (Note 1)
|
|
|
|
Furniture
and equipment, net of accumulated depreciation of $15,092 (Note
2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
and Stockholders' Equity
|
|
|
|
|
Accounts
payable and accrued liabilities (Note 4)
|
|
|
|
Current
portion of Notes Payable (Note 5)
|
|
|
|
|
|
|
|
Total
current liabilities
|
|
|
|
|
|
|
|
Commitments
and Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
stock, $0.001 par value:
|
|
|
|
10,000,000
shares authorized, no shares issued and outstanding
|
|
|
|
Common
stock, $0.001 par value; 250,000,000 shares
authorized;
|
|
|
|
114,322,536
shares issued and outstanding at March 31, 2007 (Note
6)
|
|
|
|
Additional
paid-in capital
|
|
|
|
Deficit
accumulated during the development stage
|
|
|
|
Total
stockholders’ equity
|
|
|
|
|
|
|
|
Total
liabilities and stockholders' equity
|
|
|
|
The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
IR
BioSciences Holdings, Inc. and Subsidiary
(A
Development Stage Company)
Condensed
Consolidated Statement of Losses
For
the three months ended March 31, 2007 and 2006,
And
for the period of inception (October 30, 2002) to March 31,
2007
(Unaudited)
|
For
the Three Months Ended March 31,
|
|
|
For
the Period October 30, 2002 to
|
|
|
2007
|
|
|
2006
|
|
|
March
31, 2007
|
|
|
$ |
-
|
|
|
$ |
-
|
|
|
$ |
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
general and administrative expenses
|
$ |
874,110
|
|
|
$ |
561,144
|
|
|
$ |
11,443,728
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment
of intangible asset costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(874,110 |
) |
|
|
(561,144 |
) |
|
|
(11,890,121 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of penalty for late registration of shares
|
|
|
|
|
|
|
|
|
|
|
|
(Gain)
loss from marking to market - warrant portion
|
|
|
|
|
|
|
|
|
|
|
|
of
penalty for late registration of shares
|
|
|
|
|
|
(6,868 |
) |
|
|
(378,198 |
) |
(Gain)
loss from marketing to market - stock portion
|
|
|
|
|
|
|
|
|
|
|
|
of
penalty for late registration of shares
|
|
|
|
|
|
|
|
|
|
(760,058 |
) |
Interest
(income) expense, net
|
|
(20,866 |
) |
|
|
(166 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
other (income) expense
|
|
(20,866 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) before income taxes
|
|
(853,244 |
) |
|
|
(1,162,506 |
) |
|
|
(14,138,424 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes
|
|
(8,115 |
) |
|
|
|
|
|
|
(8,115 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(861,359 |
) |
|
$ |
(1,162,506 |
) |
|
$ |
(14,146,539 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) per share - basic and diluted
|
$ |
(0.01 |
) |
|
$ |
(0.02 |
) |
|
$ |
(0.28 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
IR
Biosciences Holding, Inc. and Subsidiary
(A
Development Stage Company)
Consolidated
Statement of Stockholders' Equity (Deficit)
From
date of inception (October 30, 2002) to March 31, 2007
(Unaudited)
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
Common
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
|
Paid-In
|
|
|
Deferred
|
|
|
Stock
|
|
|
Accumulated
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Compensation
|
|
|
Subscribed
|
|
|
Deficit
|
|
|
Total
|
|
Balance
at October 30, 2002 (date of inception)
|
|
$ |
-
|
|
|
$ |
-
|
|
|
$ |
-
|
|
|
$ |
-
|
|
|
$ |
-
|
|
|
$ |
-
|
|
|
$ |
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
of common stock issued at $0.0006 per share to founders for license
of
proprietary right in December 2002
|
|
|
|
|
|
|
|
|
|
|
(7,362 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
of common stock issued at $0.0006 per share to founders for services
rendered in December 2002
|
|
|
|
|
|
|
|
|
|
|
(623 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
of common stock issued at $0.1671 per share to consultants for
services
rendered in December 2002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale
of common stock for cash at $0.1671 per share in December
2002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the period from inception (October 30, 2002) to December
31,
2002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(45,918 |
) |
|
|
(45,918 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2002 (reflective of stock splits)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9,000 |
) |
|
|
|
|
|
|
(45,918 |
) |
|
|
(4,885 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
granted to consultants at $0.1392 per share for services rendered
in
January 2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale
of shares of common stock for cash at $0.1517 per share in January
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
granted to consultants at $0.1392 per share for services rendered
in March
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
of notes payable to common stock at $0.1392 per share in April
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
granted to consultants at $0.1413 per share for services rendered
in April
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale
of shares of common stock for cash at $0.2784 per share in May
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
of shares of common stock for cash at $0.2784 per share in June
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
of notes payable to common stock at $0.1392 per share in June
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial
conversion feature associated with notes issued in June
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
of deferred compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs
of GPN Merger in July 2003
|
|
|
|
|
|
|
|
|
|
|
(123,168 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(120,799 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued with extended notes payable in October
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of Company warrants issued in conjunction with fourth quarter notes
payable issued October through December 2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants contributed by founders in conjunction with fourth
quarter
notes payable issued October through December 2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued for services in October through December
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the twelve month period ended December 31,
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,856,702 |
) |
|
|
(1,856,702 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,902,620 |
) |
|
|
(843,748 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
granted at $1.00 per share pursuant to the Senior Note Agreement
in
January 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(600,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued at $1.00 per share to a consultant for services rendered
in January
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(800,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to a consultant at $0.62 per share for services rendered
in
February 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(24,800 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to a consultant at $0.40 per share for services rendered
in March
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(420,640 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to a consultant at $0.50 per share for services rendered
in March
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(250,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
sold for cash at $0.15 per share in March, 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued at $0.50 per share to consultants for services rendered
in March
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to a consultant at $0.40 per share for services rendered
in March
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to consultants at $0.32 per share for services rendered
in March
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
to be issued to consultant at $0.41 per share in April 2004 for
services to be rendered through March 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(82,000 |
) |
|
|
|
|
|
|
|
|
|
|
(82,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
granted pursuant to the New Senior Note Agreement in April
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(150,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to officer at $0.32 per share for services rendered in April
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
of Note Payable to common stock at $0.10 per share in May
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial
Conversion Feature associated with note payable in May
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of warrants to officers and founder for services rendered in May
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
to a consultant at $0.20 per share as a due diligence fee in May
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to a consultant at $1.00 per share for services to be rendered
over
twelve months beginning May 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(500,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial
Conversion Feature associated with notes payable issued in June
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of warrants to note holders in April, May, and June
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of warrants to employees and consultants for services rendered
in April
through June 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued in July to a consultant at $0.10 for services to be rendered
through July 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(25,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to a consultant in July and September at $0.41 per share
for
services to be rendered through April 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to a consultant in September at $0.12 to $0.22 for services
rendered through September 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued in July to September 2004 as interest on note
payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of warrants with notes payable in July and August
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued
deferred compensation in August 2004 to a consultant for 100,000
shares at
$0.10 per share, committed but unissued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10,000 |
) |
|
|
|
|
|
|
|
|
|
|
(10,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued in August 2004 at $0.14 to a consultant for services to
be
performed through October 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(14,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued in August 2004 at $0.125 per share for conversion of $30,000
demand
loan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued in August 2004 at $0.16 per share to a consultant for services
provided.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued in October 2004 to employees at $0.16 to $0.25 per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitment
to issue 100,000 shares of stock to a consultant at $0.23 per share
for
services to be provided through September 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(23,000 |
) |
|
|
|
|
|
|
|
|
|
|
(23,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale
of stock for cash in October at $0.125 per share, net of costs
of
$298,155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued with sale of common stock in October, net of
costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of warrant to officer in October, 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of stock to investment bankers in October 2004 for commissions
earned
|
|
|
|
|
|
|
|
|
|
|
(4,900 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
of accounts payable to stock in October at $0.125 per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued with accounts payable conversions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
of demand loan to stock in October at $0.11 per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forgiveness
of notes payable in October 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of stock to officer and director at $0.125 per share in October
for
conversion of liability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued with officer and director conversion of
liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
of debt and accrued interest to common stock at $0.075 to $0.125
per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued with conversion of debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
of note payable in October into common stock at $0.075 per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of warrants to note holders in October 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of shares issued to CFO as compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued to members of advisory committees in November
and
December
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial
conversion feature associated with notes payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued per conversion of Note Payable - correction
|
|
|
(9,002 |
) |
|
|
(9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
of deferred compensation through December 31, 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
for the twelve months ended December 31, 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,305,407 |
) |
|
|
(5,305,407 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(169,986 |
) |
|
|
|
|
|
|
(7,208,027 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale
of shares of common stock for cash at $0.20 per share in March
2005 for
warrant exercise, net of costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued to members of advisory committees in
March
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
compensation in February 2005 to a consultant for 50,000 shares
of common
stock at $0.65 per share.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(32,500 |
) |
|
|
|
|
|
|
|
|
|
|
(32,500 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants
exercised at $0.05 per share in June 2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued to members of advisory committee in June
2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued to investors and service providers in June
2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of 232,153 shares of common stock in July 2005 for conversion of
notes
payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of 100,000 shares of common stock in August 2005 to a consultant
for
services provided
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued to advisory committee in September 2005 for
services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
of deferred comp for the twelve months ended December,
2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued in October and December 2005 to investors and
service
providers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
for the year ended December 31,2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,591,107 |
) |
|
|
(4,591,107 |
) |
Balance
at December 31, 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,760 |
) |
|
|
|
|
|
|
(11,799,134 |
) |
|
|
(2,266,958 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of 100,000 shares to officer, previously accrued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued to members of advisory committee in March
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
of deferred compensation for the three months ended March 31,
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock in May 2006 to a consultant for services
provided
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
of accrued interest to common stock at $0.125 per share in May,
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
of accrued interest to common stock at $0.125 per share in May,
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
of accrued interest to common stock at $0.10 per share in May,
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued pursuant to the exercise of warrants at $0.09 per
share in
June 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued to members of advisory committee in June
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued to members of advisory committee in September
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued to officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of penalty Common Stock, previously accrued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of penalty warrants, previously accrued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of options issued to officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued to members of advisory committee in December
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of Common Stock for cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock to be issued as commission for equity fund
raising
|
|
|
|
|
|
|
|
|
|
|
(5,483 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of options issued to officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of options issued to officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
for the year ended December 31, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,486,046 |
) |
|
|
(1,486,046 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(13,285,180 |
) |
|
|
|
|
Common
stock issued as commission for equity fund raising
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,483 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued to consultant in January, 2007 at $0.15 per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued to consultants in January, 2007 at $0.155 per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued to consultants in January, 2007 at $0.15 per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of options issued to officer in January, February and March
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of options issued to employee in January, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
for the three months ended March 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(861,359 |
) |
|
|
(861,359 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at March 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(14,146,539 |
) |
|
|
|
|
The
accompanying notes are an integral part of these consolidated financial
statements.
IR
BioSciences Holdings, Inc. and Subsidiary
(A
Development Stage Company)
Condensed
Consolidated Statements of Cash Flows
For
the Three Months Ended March 31, 2007 and 2006,
And
For the Period of Inception (October 30, 2002) to March 31,
2007
(Unaudited)
|
For
the Three Months Ended March 31,
|
|
|
For
the Period October 30, 2002 to
|
|
|
2007
|
|
|
2006
|
|
|
March
31, 2007
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
|
|
$ |
(861,359 |
) |
|
$ |
(1,162,506 |
) |
|
$ |
(14,146,539 |
) |
Adjustments
to reconcile net loss to net
|
|
|
|
|
|
|
|
|
|
|
|
cash
used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of penalty for late registration of shares - stock
portion
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of penalty for late registration of shares - warrant
portion
|
|
|
|
|
|
|
|
|
|
|
|
(Gain)
loss from marking to market - stock portion of
penalty
|
|
|
|
|
|
|
|
|
|
|
|
for
late registration of shares
|
|
|
|
|
|
|
|
|
|
(760,058 |
) |
(Gain)
loss from marking to market - warrant portion of
penalty
|
|
|
|
|
|
|
|
|
|
|
|
for
late registration of shares
|
|
|
|
|
|
(12,822 |
) |
|
|
(378,198 |
) |
Legal
fees for note payable
|
|
|
|
|
|
|
|
|
|
|
|
Placement
fees for note payable
|
|
|
|
|
|
|
|
|
|
|
|
Impairment
of intangible asset
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
of discount on notes payable
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
|
|
|
|
|
|
|
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid
services and other assets
|
|
(23,565 |
) |
|
|
|
|
|
|
(58,723 |
) |
Accounts
payable and accrued expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(750 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash used in operating activities
|
|
(621,404 |
) |
|
|
(293,231 |
) |
|
|
(6,615,346 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition
of property and equipment
|
|
(6,004 |
) |
|
|
(16,475 |
) |
|
|
(46,488 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash used in investing activities
|
|
(6,004 |
) |
|
|
(16,475 |
) |
|
|
(46,488 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from notes payable and cash advances
|
|
|
|
|
|
|
|
|
|
|
|
Principal
payments on notes payable and demand loans
|
|
|
|
|
|
|
|
|
|
(1,044,747 |
) |
Shares
of stock sold for cash
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from exercise of warrant
|
|
|
|
|
|
|
|
|
|
|
|
Officer
repayment of amounts paid on his behalf
|
|
|
|
|
|
|
|
|
|
|
|
Cash
paid on behalf of officer
|
|
|
|
|
|
|
|
|
|
(19,880 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash and cash equivalents
|
|
(627,408 |
) |
|
|
(259,706 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents at beginning of period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents at end of period
|
$ |
2,124,695
|
|
|
$ |
6,154
|
|
|
$ |
2,124,695
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
paid during the period for:
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
-
|
|
|
$ |
220
|
|
|
$ |
80,053
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
8,115
|
|
|
$ |
-
|
|
|
$ |
8,115
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition
and capital restructure:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(120,799 |
) |
|
|
|
|
|
|
|
|
|
|
(2,369 |
) |
Adjustment
to additional paid-in capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
-
|
|
|
$ |
-
|
|
|
$ |
350,000.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued in exchange for proprietary rights
|
$ |
-
|
|
|
$ |
-
|
|
|
$ |
9,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued in exchange for services
|
$ |
77,000
|
|
|
$ |
-
|
|
|
$ |
3,018,483
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued in exchange for previously incurred debt and accrued
interest
|
$ |
-
|
|
|
$ |
-
|
|
|
$ |
1,066,401
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued in exchange as interest
|
$ |
-
|
|
|
$ |
-
|
|
|
$ |
36,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
of beneficial conversion feature
|
$ |
-
|
|
|
$ |
-
|
|
|
$ |
223,269
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
options and warrants issued in exchange for services
rendered
|
$ |
182,920
|
|
|
$ |
-
|
|
|
$ |
1,227,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt
and accrued interest forgiveness from note holders
|
$ |
-
|
|
|
$ |
-
|
|
|
$ |
36,785
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued in satisfaction of amounts due to an Officer and a
Director
|
$ |
-
|
|
|
$ |
-
|
|
|
$ |
180,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued in satisfaction of accounts payable
|
$ |
-
|
|
|
$ |
-
|
|
|
$ |
157,219
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
compensation to a consultant accrued in March 2005
|
$ |
-
|
|
|
$ |
-
|
|
|
$ |
2,630,761
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
of deferred compensation
|
$ |
-
|
|
|
$ |
2,760
|
|
|
$ |
202,486
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
value of common stock and warrants in payable in connection with
late
filing of registration statement
|
$ |
-
|
|
|
$ |
555,973
|
|
|
$ |
3,684,664
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain
from marking to market - stock portion of penalty for late registration
of
shares
|
$ |
-
|
|
|
$ |
52,423
|
|
|
$ |
(1,124,255 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Gain
from marking to market - warrant portion of penalty for late registration
of shares
|
$ |
-
|
|
|
$ |
(6,868 |
) |
|
$ |
(456,603 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Impairment
of intangible asset
|
$ |
-
|
|
|
$ |
-
|
|
|
$ |
6,393
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of stock to Officer, previously accrued
|
$ |
-
|
|
|
$ |
41,416
|
|
|
$ |
41,416
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued to members of advisory board
|
$ |
-
|
|
|
$ |
8,399
|
|
|
$ |
22,688
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services
for note payable
|
$ |
-
|
|
|
$ |
-
|
|
|
$ |
9,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of shares for accounts payable
|
$ |
44,706
|
|
|
$ |
-
|
|
|
$ |
44,706
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
issued as commission for equity fund raising
|
$ |
5,483
|
|
|
$ |
-
|
|
|
$ |
5,483
|
|
The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March
31, 2007
(Unaudited)
Note
1 - Summary Of Accounting Policies
General
The
accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with the instructions to Form 10-QSB, and therefore,
do
not include all the information necessary for a fair presentation of financial
position, results of operations and cash flows in conformity with accounting
principles generally accepted in the United States of America for a complete
set
of financial statements.
In
the
opinion of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. The results
from operations for the three-month period ended March 31, 2007 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2007. The unaudited condensed consolidated financial statements
should be read in conjunction with the December 31, 2006 financial statements
and footnotes thereto included in the Company's annual report on SEC Form 10-KSB
filed with the Securities and Exchange Commission on April 17, 2007 and Form
10-KSB/A filed with the Securities and Exchange Commission on April 30, 2007
and
on May 8, 2007.
Business
and basis of presentation
IR
BioSciences Holdings, Inc. (the "Company," "we," or "us") formerly GPN Network,
Inc. ("GPN") is currently a development stage company under the provisions
of
Statement of Financial Accounting Standards ("SFAS") No. 7. The Company, which
was incorporated under the laws of the State of Delaware on October 30, 2002,
is
a development stage biotechnology company. Through its wholly-owned subsidiary
ImmuneRegen BioSciences, Inc., the Company is engaged in the research and
development of potential drug candidates, Homspera™ and its derivatives,
Radilex™ and Viprovex™. The goal of the Company is to develop these potential
drug candidates to be used as possible countermeasures for homeland security
threats, including radiological, chemical and biological agents, such as
influenza and anthrax. From its inception through the date of these financial
statements, the Company has recognized no revenues and has incurred significant
operating expenses.
The
consolidated financial statements include the accounts of the Company and
its
wholly owned subsidiary, ImmuneRegen BioSciences, Inc. Significant inter-company
transactions have been eliminated in consolidation.
Reclassification
Certain
reclassifications have been made to conform to prior periods' data to the
current presentation. These reclassifications had no effect on reported
losses.
Stock
based compensation
Effective
January 1, 2006, the Company adopted SFAS No. 123 (revised), "Share-Based
Payment" (SFAS 123(R)) utilizing the modified prospective approach. Prior to
the
adoption of SFAS 123(R) we accounted for stock option grant in accordance with
APB Opinion No. 25, "Accounting for Stock Issued to Employees" (the intrinsic
value method), and accordingly, recognized compensation expense for stock option
grants.
Under
the
modified prospective approach, SFAS 123(R) applies to new awards and to awards
that were outstanding on January 1, 2006 that are subsequently modified,
repurchased or cancelled. Under the modified prospective approach, compensation
cost recognized in the nine months of fiscal 2006 includes compensation cost
for
all share-based payments granted prior to, but not yet vested as of January
1,
2006, based on the grant-date fair value estimated in accordance with the
original provisions of SFAS 123, and compensation cost for all share-based
payments granted subsequent to January 1, 2006 based on the grant-date fair
value estimated in accordance with the provisions of SFAS 123(R). Prior periods
were not restated to reflect the impact of adopting the new
standard.
A
summary
of option activity under the Plan as of March 31, 2007, and changes during
the
period ended are presented below:
|
|
|
|
|
Outstanding
at December 31, 2006
|
|
|
|
|
$ |
0.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
at March 31, 2007
|
|
|
|
|
$ |
0.49
|
|
|
|
|
|
|
|
Non-vested
at March 31, 2007
|
|
|
|
|
$ |
0.22
|
Exercisable
at March 31, 2007
|
|
|
|
|
$ |
0.57
|
Aggregate
intrinsic value of options outstanding and exercisable at March 31, 2007 was
$0.
Aggregate intrinsic value represents the difference between the Company's
closing stock price on the last trading day of the fiscal period, which was
$0.13 as of March 31, 2007, and the exercise price multiplied by the number
of
options outstanding. As of March 31, 2007, total unrecognized stock-based
compensation expense related to stock options was $299,389 The total fair value
of options vested during the three months ended March 31, 2007 was
$182,920.
Interim
financial statements
The
accompanying balance sheet as of March 31, 2007, the statements of losses for
the three months ended March 31, 2007 and 2006, and for the period of inception
(October 30, 2002) to March 31, 2007, and the statements of cash flows for
three
ended March 31, 2007 and 2006, and from the period of inception (October 30,
2002) to March 31, 2007 are unaudited. These unaudited interim financial
statements include all adjustments (consisting of normal recurring accruals),
which, in the opinion of management, are necessary for a fair presentation
of
the results of operations for the periods presented. Interim results are not
necessarily indicative of the results to be expected for a full
year.
Use
of
estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of
the financial statements, and the reported amounts of revenues and expenses
during the reported periods. Actual results could materially differ from those
estimates.
Long-lived
assets
The
Company accounts for its long-lived assets under the provision of Statements
of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets To Be Disposed Of." The Company's
long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of such assets may not be
recoverable. Events relating to recoverability may include significant
unfavorable changes in business conditions, recurring losses, or a forecasted
Inability to achieve break-even operating results over an extended period.
The
Company evaluates the recoverability of long-lived assets based upon forecasted
undiscounted cash flows. Should an impairment in value be indicated, the
carrying value of intangible assets will be adjusted, based on estimates of
future discounted cash flows resulting from the use and ultimate disposition
of
the asset.
Recent
Accounting Developments
In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”
(“SFAS 157”). This statement defines fair value, establishes a framework
for measuring fair value and expands disclosures about fair value measurements.
This statement does not require any new fair value measurements. The effective
date of this statement is for fiscal years beginning after November 15,
2007. The Company is currently evaluating the impact, if any, of the adoption
of
SFAS 157.
In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities—Including an amendment of FASB
Statement No. 115” (“SFAS 159”). This statement permits all entities to
choose, at specified election dates, to measure eligible items at fair value
(the “fair value option”). A business entity must report unrealized gains
and losses on items for which the fair value option has been elected in earnings
at each subsequent reporting date. Upfront costs and fees related to items
for which the fair value option is elected must be recognized in earnings as
incurred and not deferred. This statement is effective as of the beginning
of an
entity’s first fiscal year that begins after November 15, 2007. The Company
is currently evaluating the impact, if any, of the adoption of SFAS
159.
In
July 2006, the FASB issued Financial Interpretation No. 48,
“Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement
No. 109” (“FIN 48”), which is a change in accounting for income taxes. FIN
48 specifieshow tax benefits for uncertain tax positions are to be recognized,
measured, and derecognized in financial statements; requires certain disclosures
of uncertain tax matters; specifies how reserves for uncertain tax positions
should be classified on the balance sheet; and provides transition and interim
period guidance, among other provisions. FIN 48 is effective for fiscal years
beginning after December 15, 2006. We do not anticipate that this FASB will
have any material impact on our financial condition or results of
operations.
In
September 2006, the SEC issued SAB No. 108, “Considering the Effects
of Prior Year Misstatements When Quantifying Misstatements in Current Year
Financial Statements” (“SAB 108”), which provides interpretive guidance on how
the effects of the carryover or reversal of prior year misstatements should
be
considered in quantifying a current year misstatement. The guidance is
applicable for fiscal years ending after November 15, 2006. We do not
anticipate that this SAB will have any material impact on our financial
condition or results of operations.
Prepaid
services and other current assets
Prepaid
services and other current assets at March 31, 2007 consist of the
following:
Salary
Advance
The
Company has made an advance of salary to one employee in the amount of
$750.
Deposits
and other assets
Deposits
and other assets consist of a deposit on leased office space in the amount
of
$2,260.
Note
2 - Furniture and equipment
Furniture
and equipment are valued at cost. Depreciation and amortization are provided
over the estimated useful lives up to seven years using the straight-line
method. The estimated service lives of property and equipment are as
follows:
Depreciation
expense for the three months ended March 31, 2007 and 2006 was $2,850 and
$1,941, respectively. The amount depreciated from the date of inception (October
30, 2002) through March 31, 2007 was $15,092.
The
Company’s furniture and equipment at March 31, 2007 consists of the
following:
|
$ |
40,341
|
|
Office
furniture and fixtures
|
|
|
|
|
|
|
|
|
|
(15,092 |
) |
|
$ |
31,396
|
|
Note
3 - Related Party Transactions
Credit
Cards
The
Company has a line of credit with Bank of America for $25,000. Our Chief
Executive Officer Michael Wilhelm co-signs this line of credit. At month-end
March 31, 2007 the Company had an outstanding balance on the credit card of
$20,983.
Options
During
the three months ended March 31, 2007, options to purchase a total of 782,570
shares at prices of $0.22 to $0.231 per share were vested. These options are
held by the Company’s president and chief executive officer. The Company charged
the amount of $106,894 to operations during the three months ended March 31,
2007.
Outstanding
Loans
At
March
31, 2007, we have outstanding one note payable in the amount of $50,000 to
a
Director. This note bears interest at the rate of 12% per annum.
Note
4 - Accounts Payable And Accrued Liabilities
Accounts
payable and accrued liabilities consisted of the following at March 31,
2007:
Accounts
payable and accrued liabilities
|
$ |
339,795
|
Accounts
payable - shell company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
421,008
|
Note
5 - Notes Payable
In
August
2006, the cash advance in the amount of $50,000 the Company received from a
director was converted into a promissory note payable. This note bears interest
at the rate of 12% per annum. During the three months ended March 31, 2007,
the
Company accrued interest in the amount of $1,479 on this note.
Note
6 - Equity
Common
stock
The
Company is authorized to issue 10,000,000 shares of preferred stock, par value
$0.001 per share. No shares of preferred stock have been issued as of December
31, 2006. The company has authorized 250,000,000 shares of common stock, with
a
par value of $.001 per share
In
January 2007, the Company issued 5,482,600 shares of common stock as commission
for the Company’s equity financing completed during the year ended December 31,
2006. These shares were shown as common stock subscribed on the Company’s
balance sheet at December 31, 2006.
In
January 2007, the Company issued 298,039 shares of common stock at a price
of
$0.15 per share to an employee in satisfaction of a liability previously
accrued.
In
January 2007, the Company issued 400,000 shares of common stock at a price
of
$0.155 per share to a consultant for services to be performed through June
2007.
The Company charged the amount of $62,000 to prepaid services during the three
months ended March 31, 2007.
In
January 2007, the Company issued 100,000 shares of common stock at a price
of
$0.15 per share to a consultant for services to be performed through March
2007.
The Company charged the amount of $15,000 to operations during the three months
ended March 31, 2007.
Warrants
The
following table summarizes the changes in warrants outstanding and the related
prices for the shares of the Company's common stock issued to non-employees
of
the Company. These warrants were granted in lieu of cash compensation for
services performed or financing expenses and in connection with placement of
convertible debentures.
Warrants
Outstanding
|
|
Warrants
Exercisable
|
|
|
|
|
Weighted
|
|
|
|
|
|
Weighted
|
|
|
|
|
Average
|
|
Weighted
|
|
|
|
Average
|
|
|
|
|
Remaining
|
|
Average
|
|
|
|
Remaining
|
Exercise
|
|
Number
|
|
Contractual
|
|
Exercise
|
|
Number
|
|
Contractual
|
Prices
|
|
Outstanding
|
|
Life
(years)
|
|
Price
|
|
Exercisable
|
|
Life
(years)
|
$
.05-.10
|
|
594,780
|
|
2.16
|
|
$.05-.10
|
|
594,780
|
|
2.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transactions
involving warrants are summarized as follows:
|
Number
of Shares
(post-split)
|
|
Weighted
Average
Price
Per Share
(post-split)
|
Outstanding
at December 31, 2006
|
|
|
|
$ |
0.37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(251,400 |
) |
|
|
Outstanding
at March 31, 2007
|
|
|
|
$ |
0.37
|
The
estimated value of the compensatory warrants granted to non-employees in
exchange for services and financing expenses was determined using the
Black-Scholes pricing model and the following assumptions:
|
2007
|
|
2006
|
|
Significant
assumptions (weighted-average):
|
|
|
|
|
Risk-free
interest rate at grant date
|
|
|
|
|
Expected
stock price volatility
|
|
|
|
|
|
|
|
|
|
Expected
option life-years (a)
|
|
|
|
|
Options
In
January 2007, the Company issued options to purchase 100,000 shares of common
stock an employee. The options vest 12,500 every quarter for the next two years.
The Company charged to operations the amount of $1,480 the value of the options
that vested during the three months ended March 31, 2007.
During
the three months ended March 31, 2007, options to purchase a total of 782,570
shares of common stock held by the Company’s president and chief executive
officer were vested. The Company charged to operations the amount of $181,440
for the value of the options during the three months ended March 31,
2007.
The
following table summarizes the changes in options outstanding and the related
prices for the shares of the Company's common stock issued to employees of
the
Company under a non-qualified employee stock option plan.
|
Options
Outstanding
|
|
Options
Exercisable
|
Exercise
Prices
|
|
Number
Outstanding
|
|
Weighted
Average Remaining Contractual Life (years)
|
|
Weighted
Average Exercise Price
|
|
Number
Exercisable
|
|
Weighted
Average Remaining Contractual Life (years)
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
not vested are not exercisable.
Transactions
involving stock options issued to employees are summarized as
follows:
|
Number
of Shares
|
|
Weighted
Average
Price
Per Share
|
Outstanding
at December 31, 2006
|
|
|
|
$ |
0.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
at March 31, 2007
|
|
|
|
$ |
0.49
|
Non-vested
at March 31, 2007
|
|
|
|
$ |
0.22
|
Exercisable
at March 31, 2007
|
|
|
|
$ |
0.57
|
Note
7 - Subsequent Events
On
April
23, 2007, the Company entered into a consulting agreement for a term of 24
months to obtain strategic advisory and development services. Consultant will
analyze the Company’s business plan and prepare corporate materials for
dissemination to related industry professionals to be used for identifying
potential acquisition candidates, partners and collaborators. On a monthly
basis, consultant shall prepare and present the Company with a written report
describing its activities and actions In return for identifying and analyzing
possible strategic alliances, the Company will pay to consultant a monthly
cash
fee of $4,000. In addition, consultant will be issued up to 5,000,000 common
stock purchase warrants with a Net Issue Exercise provision to allow for
cashless exercise unless and until the shares underlying the warrants are
registered by us. The warrants shall consist of three year warrants to purchase
up to 4,000,000 shares of common stock exercisable at strike prices ranging
from
$.16 to $.30 per share and 1,000,000 five year warrants to purchase common
stock
exercisable at $.50 per share. 750,000 of the $0.16 strike price warrants will
vest immediately and the remainder will vest in equal monthly installments
over
the 24 month term of the contract. The contract is cancellable by either party
for any reason by providing 30 days written notice and the warrants contain
forfeiture provisions as to all unvested warrants in the event the agreement
is
terminated prior to vesting date.
On
April
24, 2007, the Board of Directors of IR BioSciences Holdings, Inc. (the "Company"
or “IR BioSciences”) appointed a new director, Robert J. Hariri, M.D., Ph.D., to
the Company's Board of Directors to fill a vacant directorship. Dr. Hariri
will
serve until his successor is duly elected and qualified.
Dr.
Hariri and the Company expect to enter into a Director’s Agreement which
describes the duties of Dr. Hariri, the fees and compensation and expense
reimbursement for his service, subject to the Board’s approval, the grant of
non-qualified stock options to Dr. Hariri for service as a director, his term
of
service and other covenants and provisions. In addition, the parties expect
to
enter into the IR BioSciences’ standard form of director Indemnification
Agreement. Pursuant to this agreement, subject to the exceptions and limitations
provided therein, the Company, has agreed to hold harmless and indemnify Dr.
Hariri to the fullest extent authorized by the Company’s articles of
incorporation and Delaware law, and against any and all expenses, judgments,
fines and settlement amounts actually and reasonably incurred by him in
connection with any threatened, pending or completed action, suit or proceeding
arising out of his services as a director.
INFORMATION
NOT REQUIRED IN PROSPECTUS
ITEM
24 INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under
Section 145 of the General Corporation Law of the State of Delaware, we can
indemnify our directors and officers against liabilities they may incur in
such
capacities, including liabilities under the Securities Act of 1933, as amended
(the "Securities Act"). Our certificate of incorporation provides that, pursuant
to Delaware law, our directors shall not be liable for monetary damages for
breach of the directors' fiduciary duty of care to us and our stockholders.
This
provision in the certificate of incorporation does not eliminate the duty
of
care, and in appropriate circumstances equitable remedies such as injunctive
or
other forms of nonmonetary relief will remain available under Delaware law.
In
addition, each director will continue to be subject to liability for breach
of
the director's duty of loyalty to us or our stockholders, for acts or omissions
not in good faith or involving intentional misconduct or knowing violations
of
the law, for actions leading to improper personal benefit to the director,
and
for payment of dividends or approval of stock repurchases or redemptions
that
are unlawful under Delaware law. The provision also does not affect a director's
responsibilities under any other law, such as the federal securities laws
or
state or federal environmental laws.
Our
bylaws provide for the indemnification of our directors to the fullest extent
permitted by the Delaware General Corporation Law. Our bylaws further provide
that our Board of Directors has sole discretion to indemnify our officers
and
other employees. We may limit the extent of such indemnification by individual
contracts with our directors and executive officers, but have not done so.
We
are required to advance, prior to the final disposition of any proceeding,
promptly on request, all expenses incurred by any director or executive officer
in connection with that proceeding on receipt of an undertaking by or on
behalf
of that director or executive officer to repay those amounts if it should
be
determined ultimately that he or she is not entitled to be indemnified under
our
bylaws or otherwise. We are not, however, required to advance any expenses
in
connection with any proceeding if a determination is reasonably and promptly
made by our Board of Directors by a majority vote of a quorum of disinterested
Board members that (a) the party seeking an advance acted in bad faith or
deliberately breached his or her duty to us or our stockholders and (b) as
a
result of such actions by the party seeking an advance, it is more likely
than
not that it will ultimately be determined that such party is not entitled
to
indemnification pursuant to the applicable sections of our bylaws.
Our
directors sign an indemnification agreement to provide substantial
protection against personal liability and to provide them with specific
contractual assurance that the protection promised by the Bylaws and Certificate
of Incorporation will be available to them regardless of, among other
things, any amendment to or revocation of such Bylaws and Certificate of
Incorporation or any change in the composition of the Company’s Board of
Directors or any acquisition transaction relating to the Company.
We
also
have directors' and officers' liability insurance.
ITEM
25 OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The
following table sets forth the costs and expenses, other than underwriting
discounts and commissions, if any, payable by the Registrant relating to
the
sale of common stock being registered. All amounts are estimates except the
SEC
registration fee.
|
|
|
Printing
and engraving expenses
|
|
|
Legal
fees and expenses
|
|
70,000
|
Accounting
fees and expenses
|
|
|
Transfer
agent and registrar's fees and expenses
|
|
2,000
|
|
|
|
|
|
|
|
|
|
The
Registrant has agreed to bear expenses incurred by the selling stockholders,
up
to a maximum limit of $20,000, that relate to the registration of the shares
of
common stock being offered and sold by the selling stockholders. All such
expenses in excess of $20,000 will be borne by the selling stockholders in
proportion to the number of shares being registered by each
stockholder.
ITEM
26 RECENT SALES OF UNREGISTERED SECURITIES
During
the last three years, we have issued unregistered securities to the persons,
as
described below. None of these transactions involved any underwriters,
underwriting discounts or commissions, except as specified below, or any
public
offering, and we believe that each transaction was exempt from the registration
requirements of the Securities Act of 1933 by virtue of Section 4(2) thereof
and/or Regulation D promulgated thereunder. All recipients had adequate access,
through their relationships with us, to information about us.
On
June
18, 2004, the Company entered into a $10,000 Convertible Promissory Note
bearing
8% interest for a term of 120 days to an individual accredited investor.
The
term was extended to October 16, 2004, the closing date of the Private
Placement. Immediately upon the closing of the Private Placement, and in
accordance with the terms of the Promissory Note, all outstanding principal
and
accrued interest converted into 136,919 shares of our common stock along
with
five-year warrants to purchase an additional 68,460 shares of common stock
at
$.50 per share releasing the Company from any further obligation under the
Note.
No general solicitation or advertising was undertaken in connection with
the
offer and sale of the Note. The investor represented to the Company that
the
investor was purchasing the Note for the investor's own account and not with
a
present view towards the distribution thereof. In addition, the investor
acknowledged and agreed that the Note and the underlying securities had not
been
registered under the Securities Act and may not be offered or sold unless
subsequently registered and/or offered, sold or transferred pursuant to an
exemption from the registration requirements. Therefore, the Company believes
that the securities were offered and sold in reliance upon exemptions from
registration pursuant to Section 4(2) under the Securities Act of 1933, as
amended, and Rule 506 promulgated thereunder.
In
July
2004, we issued 250,000 shares of common stock at $0.10 per share to an
accredited entity in exchange for Investor and Public Relations services
to be
provided though July, 2005. The services were valued at approximately $25,000.
No general solicitation or advertising was undertaken in connection with
the
offer and sale of the shares. The consultant represented to the Company that
the
consultant was purchasing the securities for the consultant's own account
and
not with a present view towards the distribution thereof. In addition, the
consultant acknowledged and agreed that the shares had not been registered
under
the Securities Act and may not be offered or sold unless subsequently registered
and/or offered, sold or transferred pursuant to an exemption from registration
requirements. Therefore, the Company believes that the shares were offered
and
sold in reliance upon exemptions from registration pursuant to Section 4(2)
under the Securities act of 1933, as amended, and Rule 506 promulgated
thereunder.
In
August
2004, we issued 100,000 shares of common stock at $0.14 per share to an
accredited consultant in exchange for Strategic Planning services to be provided
though October 2004. The services were valued at approximately $14,000. No
general solicitation or advertising was undertaken in connection with the
offer
and sale of the shares. The consultant represented to the Company that the
consultant was purchasing the securities for the consultant's own account
and
not with a present view towards the distribution thereof. In addition, the
consultant acknowledged and agreed that the shares had not been registered
under
the Securities Act and may not be offered or sold unless subsequently registered
and/or offered, sold or transferred pursuant to an exemption from registration
requirements. Therefore, the Company believes that the shares were offered
and
sold in reliance upon exemptions from registration pursuant to Section 4(2)
under the Securities act of 1933, as amended, and Rule 506 promulgated
thereunder.
In
July
and September of 2004, we issued a total of 200,000 shares of common stock
at
$0.41 per share to an accredited consultant in exchange for financial consulting
services to be provided though April 2005. The services were valued at
approximately $82,000. No general solicitation or advertising was undertaken
in
connection with the offer and sale of the shares. The consultant represented
to
the Company that the consultant was purchasing the securities for the
consultant's own account and not with a present view towards the distribution
thereof. In addition, the consultant acknowledged and agreed that the shares
had
not been registered under the Securities Act and may not be offered or sold
unless subsequently registered and/or offered, sold or transferred pursuant
to
an exemption from registration requirements. Therefore, the Company believes
that the shares were offered and sold in reliance upon exemptions from
registration pursuant to Section 4(2) under the Securities act of 1933, as
amended, and Rule 506 promulgated thereunder.
On
August
16, 2004, the Company entered into a $15,000 Convertible Promissory Note
bearing
$500 interest per month for a term of 30 days to an individual accredited
investor. The term was extended to October 16, 2004, the closing date of
the
Private Placement. Immediately upon the closing of the Private Placement,
and in
accordance with the terms of the Promissory Note, all outstanding principal
and
accrued interest converted into 131,467 shares of our common stock along
with
five-year warrants to purchase an additional 65,734 shares of common stock
at
$.50 per share releasing the Company from any further obligation under the
Note.
No general solicitation or advertising was undertaken in connection with
the
offer and sale of the Note. The investor represented to the Company that
the
investor was purchasing the Note for the investor's own account and not with
a
present view towards the distribution thereof. In addition, the investor
acknowledged and agreed that the Note and the underlying securities had not
been
registered under the Securities Act and may not be offered or sold unless
subsequently registered and/or offered, sold or transferred pursuant to an
exemption from the registration requirements. Therefore, the Company believes
that the securities were offered and sold in reliance upon exemptions from
registration pursuant to Section 4(2) under the Securities Act of 1933, as
amended, and Rule 506 promulgated thereunder.
On
August
23, 2004, the Company entered into a $5,000 Convertible Promissory Note bearing
8% interest per month to an individual accredited investor. On October 26,
2004
in accordance with the terms of the Promissory Note, principal of $5,000
and
accrued interest of $71 was converted into 67,613 shares of our common stock
releasing the Company from any further obligation under the Note. These shares
have been accrued pending issuance. No general solicitation or advertising
was
undertaken in connection with the offer and sale of the Note. The investor
represented to the Company that the investor was purchasing the Note for
the
investor's own account and not with a present view towards the distribution
thereof. In addition, the investor acknowledged and agreed that the Note
and the
underlying securities had not been registered under the Securities Act and
may
not be offered or sold unless subsequently registered and/or offered, sold
or
transferred pursuant to an exemption from the registration requirements.
Therefore, the Company believes that the securities were offered and sold
in
reliance upon exemptions from registration pursuant to Section 4(2) under
the
Securities Act of 1933, as amended, and Rule 506 promulgated
thereunder.
In
September 2004, we issued 127,276 shares of common stock at $0.12 - $0.22
per
share to an accredited consultant in exchange for financial consulting services
provided though September 2004. The services were valued at approximately
$16,909. No general solicitation or advertising was undertaken in connection
with the offer and sale of the shares. The consultant represented to the
Company
that the consultant was purchasing the securities for the consultant's own
account and not with a present view towards the distribution thereof. In
addition, the consultant acknowledged and agreed that the shares had not
been
registered under the Securities Act and may not be offered or sold unless
subsequently registered and/or offered, sold or transferred pursuant to an
exemption from registration requirements. Therefore, the Company believes
that
the shares were offered and sold in reliance upon exemptions from registration
pursuant to Section 4(2) under the Securities act of 1933, as amended, and
Rule
506 promulgated thereunder.
In
October 2004, we completed a private placement, whereby we sold
an aggregate of $2,450,000 worth of units to
accredited investors (the "Private Placement"). Each unit
was sold for $10,000 (the "Unit Price") and consisted of (a) a number of
shares of our common stock determined by dividing the Unit
Price by $0.125, and (b)
a warrant to purchase, at any time prior to
the fifth anniversary following the date of issuance of the warrant, a
number of shares of our common stock equal to fifty percent (50%) of the
number of shares included within the unit, at a price equal to $0.50
per share of common stock. Thus, each unit consisted of 80,000 shares
of our common stock and a five-year warrant to purchase an additional
40,000 shares of our common stock at an exercise price of $0.50 per
share. We issued an aggregate 27,560,897 shares of our common
stock and warrants to purchase 13,780,449 shares of our
common stock in the Private Placement. In consideration of
the investment, we granted to
each investor certain registration rights and
anti-dilution rights. The registration rights provide, if the
Registration Statement is not effective as of 90-days following the
second closing date (October 26, 2004), we must issue
to the holders of units sold in the Private Offering
an additional 2% of their securities each month. As of
March 31, 2006, we have accrued liabilities to
issue 6,625,907 shares of common stock and warrants to purchase an
additional 2,608,987 shares for total shares
of 9,234,895. No
general solicitation or advertising was undertaken in connection with
the offer and sale of the Units. The investors each represented
to the Company that the investor was purchasing Units for the his or
her own account and not with a
present view towards the distribution thereof. In
addition, each investor acknowledged and agreed that the Units
and the underlying securities had not been registered under the
Securities Act and may not be offered or sold unless
subsequently registered and/or offered, sold or transferred
pursuant to an exemption from the registration
requirements. The securities were offered and sold in reliance
upon
exemption from registration pursuant to Section 4(2)
of
the Securities Act and Rule 506 promulgated thereunder.
Further
to the Private Placement, on October 26, 2004 we entered into a settlement
agreement with 8 accredited creditors whereby for full and complete satisfaction
of claims totaling an aggregate of $157,218 (the "Claim Amount"), we issued
to
the creditors the following: (a) a number of shares of our common stock
determined by dividing the Claim Amount by $0.125, and (b) warrants to purchase,
at any time prior to the fifth anniversary following the date of issuance
of the
warrant, a number of shares of our common stock equal to fifty percent (50%)
of
the number of shares described above, at a price equal to $0.50 per share
of
common stock. The warrants are identical to the warrants issued in the Private
Placement. No general solicitation or advertising was undertaken in connection
with the offer and sale of the securities. The investors each represented
to the
Company that the investor was acquiring the securities for the his or her
own
account and not with a present view towards the distribution thereof. In
addition, each investor acknowledged and agreed that the securities had not
been
registered under the Securities Act and may not be offered or sold unless
subsequently registered and/or offered, sold or transferred pursuant to an
exemption from the registration requirements. The securities were offered
and
sold in reliance upon exemption from registration pursuant to Section 4(2)
of
the Securities Act and Rule 506 promulgated thereunder.
Pursuant
to the terms of a placement agency agreement, dated September 3, 2004, by
and
between us and Joseph Stevens & Co., Inc., we issued 4,900,000 shares of our
common stock to Joseph Stevens & Co., Inc. or its designees, upon the
closing of the Private Placement. The shares were issued as consideration
for
the services of Joseph Stevens & Co., Inc. as our placement agent in the
Private Placement. There were 98 accredited investors who purchased units
in the
Private Placement. The securities were offered and sold in reliance upon
exemption from registration pursuant to Section 4(2) of the Securities Act
and
Rule 506 promulgated thereunder.
In
September 2004 we entered into a settlement agreement with one of our Directors,
Theodore Staahl, whereby for full and complete satisfaction of claims totaling
$10,263.01, we issued to our Director 93,300 shares of our common stock,
determined by dividing the amount owed by $0.11. Under the terms of the
settlement agreement, our Director released us from all claims, known or
unknown, relating to the amount owed. The securities were issued in reliance
upon exemptions from registration pursuant to Section 4(2) under the Securities
Act of 1933, as amended, and Rule 506 promulgated thereunder. The Director
qualified as an accredited investor (as defined by Rule 501 under the Securities
Act of 1933, as amended).
On
November 18, 2004 we issued warrants to a member of our Bioterrorism
Preparedness Advisory Board to purchase, at any time prior to the third
anniversary following the date of issuance of the warrant, a number of shares
of
our common stock equal to 50,000, at a price equal to $0.125 per share of
common
stock for advice on logistics, introductions to various organizations and
attendance of meetings. No general solicitation or advertising was undertaken
in
connection with the offer and sale of the securities. The investor acknowledged
and agreed that the securities had not been registered under the Securities
Act
and may not be offered or sold unless subsequently registered and/or offered,
sold or transferred pursuant to an exemption from the registration requirements.
The securities were issued in reliance upon exemptions from registration
pursuant to Section 4(2) under the Securities Act of 1933, as amended, and
Rule
506 promulgated thereunder. The investor qualified as an accredited investor
(as
defined by Rule 501 under the Securities Act of 1933, as
amended).
On
December 16, 2004 we issued warrants to a member of our Oncology and Dermatology
Advisory Board to purchase, at any time prior to the third anniversary following
the date of issuance of the warrant, a number of shares of our common stock
equal to 10,000, at a price equal to $0.50 per share of common stock for
advice
on potential oncology applications for Homspera. No general solicitation
or
advertising was undertaken in connection with the offer and sale of the
securities. The investor acknowledged and agreed that the securities had
not
been registered under the Securities Act and may not be offered or sold unless
subsequently registered and/or offered, sold or transferred pursuant to an
exemption from the registration requirements. The securities were issued
in
reliance upon exemptions from registration pursuant to Section 4(2) under
the
Securities Act of 1933, as amended, and Rule 506 promulgated thereunder.
The
investor qualified as an accredited investor (as defined by Rule 501 under
the
Securities Act of 1933, as amended).
In
January 2005, we made a tender offer to temporarily reduce the exercise price
of
certain warrants issued in October 2004 from $0.50 to $0.20 per share. The
tender offer expired on March 4, 2005. We accepted for exercise a total of
6,600,778 warrants validly tendered and not withdrawn pursuant to the terms
of
the tender offer, which represents approximately 48% of the aggregate 13,780,449
warrants that were subject to the offer. The tender offer was made in reliance
upon exemption from registration pursuant to Sections 3(a)(9), which provide
an
exemption for any security exchanged by the issuer with its existing security
holders where no commission or other remuneration is paid or given directly
or
indirectly for soliciting such exchange. We did not pay or give any commission
or other remuneration to any person for soliciting the tender offer. The
tender
offer also falls within Section 4(2) of the Securities Act since all the
investors were current holders of the warrants and received their securities
from the October 2004 private placement or from issuances in October 2004
pursuant to the terms of settlement agreements or convertible promissory
notes.
These transactions were conducted under Section 4(2) and the rules and
regulations promulgated thereunder, including Regulation D.\
In
May
2005, per his employment agreement we issued 100,000 shares of our common
stock
to our Chief Financial Officer, John Fermanis. No general solicitation or
advertising was undertaken in connection with the offer and sale of the shares.
The Company's Chief Financial Officer qualifies as an "accredited investor"
and
acknowledged and agreed that the shares had not been registered under the
Securities Act and may not be offered or sold unless subsequently registered
and/or offered, sold or transferred pursuant to an exemption from the
registration requirements. The securities were issued in reliance upon
exemptions from registration pursuant to Section 4(2) under the Securities
Act
of 1933, as amended, and Rule 506 promulgated thereunder.
On
June
13, 2005, the Company issued 80,000 shares of common stock for cash of $4,000
pursuant to the exercise of a warrant at $0.05 per share. On April 15, 2004,
the
Company entered into a $5,000 Convertible Promissory Note bearing 12% interest
for a term of 60 days to an individual investor. The term of the Note was
extended to June 30, 2004. As additional incentive to the extension of the
note,
the investor was issued 5-year warrants to purchase up to 40,000 shares of
common stock at $0.05 per share. The term of the Note was again extended
to
October 16, 2004, the closing date of the Private Placement. As additional
incentive to the extension of the note, the investor was issued 5-year warrants
to purchase up to 40,000 shares of common stock at$0.05 per share. Immediately
upon the closing of the Private Placement, and in accordance with the terms
of
the Promissory Note, the principal of $5,000 and $299.56 of accrued interest
was
repaid to the investor releasing the Company from any further obligation
under
the warrants. The investor was financially able to bear the economic risk
of the
investment and capable of evaluating the merits and risks of the acquisition
of
the warrants. The investor also had received and reviewed all information
necessary or appropriate for deciding whether to purchase the shares, including
the Company's periodic SEC reports. No general solicitation or advertising
was
undertaken in connection with the offer and sale of the warrants. The investor
represented to the Company that the investor was purchasing the warrants
for the
investor's own account and not with a present view towards the distribution
thereof. In addition, the investor acknowledged and agreed that the warrants
and
the underlying securities had not been registered under the Securities Act
and
may not be offered or sold unless subsequently registered and/or offered,
sold
or transferred pursuant to an exemption from the registration requirements.
Therefore, the Company believes that the securities were offered and sold
in
reliance upon exemptions from registration pursuant to Section 4(2) under
the
Securities Act of 1933, as amended, and Rule 506 promulgated
thereunder.
On
September 28, 2001, the Company entered into a $50,000 Convertible Promissory
Note bearing 8% interest per month with an accredited investor. On June 7,
2005
in accordance with the terms of the Promissory Note, the outstanding principal
and accrued interest was converted into 232,153 shares of our common stock
releasing the Company from any further obligation under the Note. No general
solicitation or advertising was undertaken in connection with the offer and
sale
of the Note and the shares. The investor represented to the Company that
the
investor was purchasing the securities for the investor's own account and
not
with a present view towards the distribution thereof. In addition, each investor
acknowledged and agreed that the note and the shares had not been registered
under the Securities Act and may not be offered or sold unless subsequently
registered and/or offered, sold or transferred pursuant to an exemption from
the
registration requirements. Therefore, the Company believes that the securities
were offered and sold in reliance upon exemptions from registration pursuant
to
Section 4(2) under the Securities Act of 1933, as amended, and Rule 506
promulgated thereunder.
In
May
2005, for assignment of patents we issued to our Director, Dr. Mark Witten,
50,000 common stock purchase warrants with a strike price of $0.125. The
warrants expire five years after date of issuance. No general solicitation
or
advertising was undertaken in connection with the offer and sale of the shares.
Mr. Witten, as a director of the Company, qualifies as an "accredited investor"
and acknowledged and agreed that the securities had not been registered under
the Securities Act and may not be offered or sold unless subsequently registered
and/or offered, sold or transferred pursuant to an exemption from the
registration requirements. The securities were issued in reliance upon
exemptions from registration pursuant to Section 4(2) under the Securities
Act
of 1933, as amended, and Rule 506 promulgated thereunder.
In
July
2005, we issued to our Chief Executive Officer, Michael Wilhelm, per his
employment agreement, 150,000 stock options at a weighted average exercise
price
of $0.44 per share under our 2003 Stock Option, Deferred Stock and Restricted
Stock Plan. No general solicitation or advertising was undertaken in connection
with the offer and sale of the shares. The Company's Chief Executive Officer
qualifies as an "accredited investor" and acknowledged and agreed that
the
securities had not been registered under the Securities Act and may not
be
offered or sold unless subsequently registered and/or offered, sold or
transferred pursuant to an exemption from the registration requirements.
The
securities were issued in reliance upon exemptions from registration pursuant
to
Section 4(2) under the Securities Act of 1933, as amended, and Rule 506
promulgated thereunder.
For
the
year ended December 31, 2005 we accrued the issuance of 91,888 common stock
purchase warrants pursuant to the respective terms of the employment agreements
of our Chief Executive Officer and Chief Financial Officer. Our Chief Executive
Officer is to receive 79,388 warrants with an exercise price of $0.30 and
a term
of five years. Our Chief Financial Officer is to receive 12,500 warrants
with an
exercise price of $0.41 and a term of five years. No general solicitation
or
advertising was undertaken in connection with the offer and sale of the
shares.
Each of the Company's Chief Executive Officer and Chief Financial Officer
qualifies as an "accredited investor" and acknowledged and agreed that
the
securities had not been registered under the Securities Act and may not
be
offered or sold unless subsequently registered and/or offered, sold or
transferred pursuant to an exemption from the registration requirements.
The
securities were issued in reliance upon exemptions from registration pursuant
to
Section 4(2) under the Securities Act of 1933, as amended, and Rule 506
promulgated thereunder.
In
March
2006, we issued 67,616 shares of our common stock for the conversion of
principal and accrued interest of an outstanding note payable. The securities
were issued in reliance upon exemptions from registration pursuant to Section
4(2) under the Securities Act of 1933, as amended, and Rule 506 promulgated
thereunder.
During
the three months ended March 31, 2006, we issued warrants to purchase 61,500
shares of common stock at prices ranging from $0.125 to $1.00 per share.
Pursuant to the terms of their respective agreement with us, these warrants
were
granted to current members of the Bioterrorism Advisory Board and Scientific
Advisory Board for participation during the quarter ended March 31, 2006.
The
warrants will bear a restrictive legend regarding the sale or transfer
of such
or the underlying securities. The warrants were issued in reliance upon
exemptions from registration pursuant to Section 4(2) under the Securities
Act
of 1933, as amended, and Rule 506 promulgated thereunder. There were less
than
35 investors and each investor had such knowledge and experience in financial
and business matters that the investor was capable of evaluating the merits
and
risks of investing in the warrants. No general solicitation or advertising
was
undertaken in connection with the offer and sale of these shares. Each
investor
was also provided with access to our Exchange Act reports including our
annual
report on Form 10-KSB and our quarterly reports on Form 10-QSB.
On
December 12, 2003, the Company entered into a $20,000 promissory note bearing
8%
interest per year to an individual accredited investor. On October 15,
2004 in
accordance with the terms of the promissory note, accrued interest of $1,354
was
converted into 13,454 shares of our common stock releasing the Company
from any
further obligation under the note. From the date of the note's conversion,
these
shares were accrued for by the Company and the certificate representing
the
shares was issued in May 2006. No general solicitation or advertising was
undertaken in connection with the offer and sale of the Note. The investor
represented to the Company that the investor was purchasing the Note for
the
investor's own account and not with a present view towards the distribution
thereof. In addition, the investor acknowledged and agreed that the Note
and the
underlying securities had not been registered under the Securities Act
and may
not be offered or sold unless subsequently registered and/or offered, sold
or
transferred pursuant to an exemption from the registration requirements.
Therefore, the Company believes that the securities were offered and sold
in
reliance upon exemptions from registration pursuant to Section 4(2) under
the
Securities Act of 1933, as amended, and Rule 506 promulgated
thereunder.
In
June
2006, the Company issued 5,000 shares of common stock at $0.09 per share
for the
exercise of warrants by an investor. The securities were issued in reliance
upon
exemptions from registration pursuant to Section 4(2) under the Securities
Act
of 1933, as amended, and Rule 506 promulgated thereunder.
In
June
2006, the Company issued a note payable in the amount of $9,750 in exchange
for
consulting services. This note bears interest at the rate of 7% per annum.
In
addition to the note payable, the consulting agreement calls for the issuance
of
695,000 common stock purchase warrants if certain milestones are met. The
warrants expire five years from the date of issuance and have an exercise
price
of $0.32. The securities were issued in reliance upon exemptions from
registration pursuant to Section 4(2) under the Securities Act of 1933,
as
amended, and Rule 506 promulgated thereunder.
During
the three months ended June 30, 2006, we issued warrants to purchase 84,653
shares of common stock at prices ranging from $0.20 to $1.00 per share.
Pursuant
to the terms of their respective agreement with us, these warrants were
granted
to current members of the Bioterrorism Advisory Board and Scientific Advisory
Board for participation during the quarter ended June 30, 2006. The warrants
will bear a restrictive legend regarding the sale or transfer of such or
the
underlying securities. The warrants were issued in reliance upon exemptions
from
registration pursuant to Section 4(2) under the Securities Act of 1933,
as
amended, and Rule 506 promulgated thereunder. There were less than 35 investors
and each investor had such knowledge and experience in financial and business
matters that the investor was capable of evaluating the merits and risks
of
investing in the warrants. No general solicitation or advertising was undertaken
in connection with the offer and sale of these shares. Each investor was
also
provided with access to our Exchange Act reports including our annual report
on
Form 10-KSB and our quarterly reports on Form 10-QSB.
On
July
14, 2006, we issued to our Chief Executive Officer, Michael K. Wilhelm, 300,000
common stock purchase warrants for collateralization of promissory notes
in
2004. These warrants have an exercise price of $0.25 and expire five years
from
the date of issuance. The securities were issued in reliance upon exemptions
from registration pursuant to Section 4(2) under the Securities Act of 1933,
as
amended, and Rule 506 promulgated thereunder.
On
July
14, 2006, pursuant to the term of his employment agreement we issued to our
Chief Financial Officer, John N. Fermanis, 62,500 common stock purchase
warrants. The warrants have an exercise price of $0.158 and expire five years
from the date of issuance. The securities were issued in reliance upon
exemptions from registration pursuant to Section 4(2) under the Securities
Act
of 1933, as amended, and Rule 506 promulgated thereunder.
In
August
2006, pursuant to an agreement with the investors in the private placement
of
October 2004, we issued 4,150,800 shares of common stock and warrants to
purchase an additional 1,634,400 shares as penalty for late registration
of
shares and warrants issued in the placement. The agreement limited the number
of
shares and warrants which the Company was obligated to issue pursuant to
the
penalty calculation to an aggregate of 18% of the number of original number
of
shares and warrants issued in the October 2004 private placement. The securities
were issued in reliance upon exemptions from registration pursuant to Section
4(2) under the Securities Act of 1933, as amended, and Rule 506 promulgated
thereunder.
During
the three months ended September 30, 2006, we issued warrants to purchase
46,000
shares of common stock at prices ranging from $0.20 to $1.00 per share. Pursuant
to the terms of their respective agreement with us, these warrants were granted
to current members of the Bioterrorism Advisory Board and Scientific Advisory
Board for participation during the quarter ended September 30, 2006. The
warrants will bear a restrictive legend regarding the sale or transfer of
such
or the underlying securities. The warrants were issued in reliance upon
exemptions from registration pursuant to Section 4(2) under the Securities
Act
of 1933, as amended, and Rule 506 promulgated thereunder. There were less
than
35 investors and each investor had such knowledge and experience in financial
and business matters that the investor was capable of evaluating the merits
and
risks of investing in the warrants. No general solicitation or advertising
was
undertaken in connection with the offer and sale of these shares. Each investor
was also provided with access to our Exchange Act reports including our annual
report on Form 10-KSB and our quarterly reports on Form 10-QSB. The securities
were issued in reliance upon exemptions from registration pursuant to Section
4(2) under the Securities Act of 1933, as amended, and Rule 506 promulgated
thereunder.
In
December 2006, we completed a private placement, whereby we sold an aggregate
of
$5,482,600 worth of units to accredited investors. Each unit was sold for
$25,000 and consisted of (a) a number of shares of our common stock determined
by dividing the unit price by $0.16, and (b) a five-year warrant to purchase
a
number of shares of our common stock equal to 50% of the number of shares
included within the unit, at $0.50 per share. We issued in the private placement
an aggregate of 34,266,250 shares of our common stock and warrants to purchase
17,133,125 shares of our common stock. In consideration of the investment,
we
granted to each investor certain registration rights and anti-dilution rights.
We agreed that not before 180 days after the closing of the private placement
and not later than 190 days thereafter, that we will file with the SEC a
registration statement to register these shares along with the shares underlying
these warrants. In the event that we fail to comply with the filing deadline,
there shall be a 1% penalty for each 30 day period (or pro rata portion thereof)
paid to each investor in cash or additional shares. This penalty amounts
to an
aggregate of 342,662 shares and 171,331 warrants per 30 day period until
a
registration statement that includes these shares and warrants is filed or
12
months. As of December 31, 2006, we are not subject to any penalty. As placement
agent for the private placement, Joseph Stevens & Co., Inc. and its
designees received 5,482,600 shares of our common upon the closing of the
private placement. The shares and warrants issued in the private placement
and
to the placement agent were offered and sold to investors in reliance upon
exemptions from registration pursuant to Section 4(2) under the Securities
Act
of 1933, as amended, and Rule 506 promulgated thereunder.
During
the three months ended December 31, 2006, we issued warrants to purchase
43,500
shares of common stock at prices ranging from $0.20 to $1.00 per share. Pursuant
to the terms of their respective agreement with us, these warrants were granted
to current members of the Bioterrorism Advisory Board and Scientific Advisory
Board for participation during the quarter ended December 31, 2006. The warrants
will bear a restrictive legend regarding the sale or transfer of such or
the
underlying securities. The warrants were issued in reliance upon exemptions
from
registration pursuant to Section 4(2) under the Securities Act of 1933, as
amended, and Rule 506 promulgated thereunder. There were less than 35 investors
and each investor had such knowledge and experience in financial and business
matters that the investor was capable of evaluating the merits and risks
of
investing in the warrants. No general solicitation or advertising was undertaken
in connection with the offer and sale of these shares. Each investor was
also
provided with access to our Exchange Act reports including our annual report
on
Form 10-KSB and our quarterly reports on Form 10-QSB.
ITEM
27 EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) Exhibits
Exhibit
Number
|
|
Description
of Exhibit
|
|
|
|
2.1
|
|
Agreement
and Plan of Merger dated July 2, 2003 among the Registrant, GPN
Acquisition Corporation and ImmuneRegen BioSciences, Inc. (incorporated
by
reference to exhibit 2 of the Registrant's current report on Form
8-k
filed with the Securities and Exchange Commission on July 7,
2003).
|
|
|
|
3.1
|
|
Certificate
of Incorporation filed with the Delaware Secretary of State on June
4,
1985 (incorporated by reference to exhibit 3.1 of the Registrant's
annual
report on Form 10-KSB for the year ended December 31, 2001 filed
with the
Securities and Exchange Commission on April 16, 2002).
|
|
|
|
3.1(a)
|
|
Certificate
of Amendment filed with the Delaware Secretary of State on July 16,
1987
(incorporated by reference to exhibit 3.1(a) of the Registrant's
annual
report on Form 10-KSB for the year ended December 31, 2001 filed
with the
Securities and Exchange Commission on April 16, 2002).
|
|
|
|
3.1(b)
|
|
Certificate
of Amendment filed with the Delaware Secretary of State on February
3,
1992 (incorporated by reference to exhibit 3.1(b) of the Registrant's
annual report on Form 10-KSB for the year ended December 31, 2001
filed
with the Securities and Exchange Commission on April 16,
2002).
|
|
|
|
3.1(c)
|
|
Certificate
of Amendment filed with the Delaware Secretary of State on November
23,
1992 (incorporated by reference to exhibit 3.1(c) of the Registrant's
annual report on Form 10-KSB for the year ended December 31, 2001
filed
with the Securities and Exchange Commission on April 16,
2002).
|
|
|
|
3.1(d)
|
|
Certificate
of Amendment filed with the Delaware Secretary of State on December
15,
1994 (incorporated by reference to exhibit 3.1(d) of the Registrant's
annual report on Form 10-KSB for the year ended December 31, 2001
filed
with the Securities and Exchange Commission on April 16,
2002).
|
|
|
|
3.1(e)
|
|
Certificate
of Amendment filed with the Delaware Secretary of State on November
7,
1995 (incorporated by reference to exhibit 3.1(e) of the Registrant's
annual report on Form 10-KSB for the year ended December 31, 2001
filed
with the Securities and Exchange Commission on April 16,
2002).
|
|
|
|
3.1(f)
|
|
Certificate
of Amendment filed with the Delaware Secretary of State on December
30,
1996 (incorporated by reference to exhibit 3.1(f) of the Registrant's
annual report on Form 10-KSB for the year ended December 31, 2001
filed
with the Securities and Exchange Commission on April 16,
2002).
|
|
|
|
3.1(g)
|
|
Certificate
of Amendment filed with the Delaware Secretary of State on November
8,
2000 (incorporated by reference to exhibit 3.1(h) of the Registrant's
annual report on Form 10-KSB for the year ended December 31, 2001
filed
with the Securities and Exchange Commission on April 16,
2002).
|
|
|
|
3.2
|
|
Amended
and Restated Bylaws of the Registrant dated as of January 1, 2002
(incorporated by reference to exhibit 3(b) of the Registrant's annual
report on Form 10-KSB for the year ended December 31, 2001 filed
with the
Securities and Exchange Commission on April 16, 2002).
|
|
|
|
4.1
|
|
Specimen
Common Stock Certificate (incorporated by reference to exhibit 4.1
of the
Registrant's registration statement on Form SB-2 (File No. 333-120784)
filed with the Securities and Exchange Commission on November 24,
2004).
|
Exhibit
Number
|
|
Description
of Exhibit
|
4.2
|
|
2003
Stock Option, Deferred Stock and Restricted Stock Plan (incorporated
by
reference to exhibit 4.1 of the Registrant's registration statement
on
Form S-8 (file no. 333-113511) filed with the Securities and
Exchange
Commission on March 11, 2004).
|
|
|
|
4.3
|
|
Form
of Warrant by and between the Registrant and each of the Investors
or
Creditors, as the case may be, who entered into an Agreement
filed as
Exhibit 10.6, 10.7, 10.8 or 10.9 herewith (incorporated by reference
to
exhibit 4.1 of the Registrant's current report on Form 8-K filed
with the
Securities and Exchange Commission on October 19,
2004).
|
|
|
|
4.4
|
|
Form
of Registration Rights (Annex A to Subscription Agreement) by
and between
the Registrant and each of the Investors who entered into the
Agreements
filed as Exhibits 10.6 and 10.8 herewith (incorporated by reference
to
exhibit 4.2 of the Registrant's current report on Form 8-K filed
with the
Securities and Exchange Commission on October 19,
2004).
|
|
|
|
4.5
|
|
Form
of Anti-Dilution Rights (Annex B to Subscription Agreement) by
and between
the Registrant and each of the Investors who entered into the
Agreements
filed as Exhibits 10.6 and 10.8 herewith (incorporated by reference
to
exhibit 4.3 of the Registrant's current report on Form 8-K filed
with the
Securities and Exchange Commission on October 19,
2004).
|
|
|
|
4.6
|
|
Promissory
Note issued from the Registrant to SBM Certificate Company as
of April 28,
2004 (incorporated by reference to exhibit 4.6 of the Registrant's
registration statement on Form SB-2 (File No. 333-120784) filed
with the
Securities and Exchange Commission on November 24,
2004).
|
|
|
|
4.7
|
|
Form
of Warrant by and between the Registrant and each of the investors
who
entered into the Subscription Agreements filed as Exhibits 10.18,
10.19
and 10.20 herewith (incorporated by reference from Exhibit 4.1
to the
Quarterly Report on Form 10-QSB as filed with the Securities
and Exchange
Commission on November 14, 2006).
|
|
|
|
5.1*
|
|
Opinion
of Kirkpatrick & Lockhart Preston Gates Ellis LLP.
|
|
|
|
10.1
|
|
License
Agreement dated December 16, 2002 among ImmuneRegen BioSciences,
Inc., a
subsidiary of the Registrant, David Harris and Mark Witten (incorporated
by reference to exhibit 10.4 of the Registrant's registration
statement on
Form SB-2 (File No. 333-120784) filed with the Securities and
Exchange
Commission on November 24, 2004).
|
|
|
|
10.1(a)
|
|
First
Amendment to License Agreement dated December 20, 2002 among
ImmuneRegen
BioSciences, Inc., a subsidiary of the Registrant, David Harris
and Mark
Witten (incorporated by reference to exhibit 10.4(a) of the Registrant's
registration statement on Form SB-2 (File No. 333-120784) filed
with the
Securities and Exchange Commission on November 24,
2004).
|
|
|
|
10.1(b)
|
|
Second
Amendment to License Agreement dated June 26, 2003 among ImmuneRegen
BioSciences, Inc., a subsidiary of the Registrant, David Harris
and Mark
Witten (incorporated by reference to exhibit 10.4(b) of the Registrant's
registration statement on Form SB-2 (File No. 333-120784) filed
with the
Securities and Exchange Commission on November 24,
2004).
|
|
|
|
10.1(c)
|
|
Assignment
Agreement dated February 23, 2005 between ImmuneRegen BioSciences,
Inc., a
subsidiary of the Registrant and Mark Witten (incorporated by
reference to
exhibit 10.4(c) of the Registrant's registration statement on
Form SB-2
(File No. 333-120784) filed with the Securities and Exchange
Commission on
July 20, 2005).
|
|
|
|
10.1(d)
|
|
Assignment
Agreement dated February 23, 2005 among ImmuneRegen BioSciences,
Inc., a
subsidiary of the Registrant, David Harris and Mark Witten (incorporated
by reference to exhibit 10.4(d) of the Registrant's registration
statement
on Form SB-2 (File No. 333-120784) filed with the Securities
and Exchange
Commission on July 20, 2005).
|
|
|
|
10.1(e)
|
|
Assignment
Agreement dated November 7, 2005 between ImmuneRegen BioSciences,
Inc., a
subsidiary of the Registrant and Mark Witten (incorporated by
reference to
exhibit 10.4(e) of the Registrant's registration statement on
Form SB-2
(File No. 333-120784) filed with the Securities and Exchange
Commission on
November 16, 2005).
|
|
|
|
10.1(f)
|
|
Assignment
Agreement dated November 7, 2005 between ImmuneRegen BioSciences,
Inc., a
subsidiary of the Registrant and Mark Witten (incorporated by
reference to
exhibit 10.4(f) of the Registrant's registration statement on
Form SB-2
(File No. 333-120784) filed with the Securities and Exchange
Commission on
February 22, 2006).
|
|
|
|
10.1(g)
|
|
Assignment
Agreement dated November 7, 2005 between ImmuneRegen BioSciences,
Inc., a
subsidiary of the Registrant and Mark Witten (incorporated by
reference to
exhibit 10.4(g) of the Registrant's registration statement on
Form SB-2
(File No. 333-120784) filed with the Securities and Exchange
Commission on
November 16, 2005).
|
|
|
|
10.1(h)
|
|
Assignment
Agreement dated November 7, 2005 between ImmuneRegen BioSciences,
Inc., a
subsidiary of the Registrant and Mark Witten (incorporated by
reference to
exhibit 10.4(h) of the Registrant's registration statement on
Form SB-2
(File No. 333-120784) filed with the Securities and Exchange
Commission on
November 16, 2005).
|
|
|
|
10.2
|
|
Lease
Agreement dated July 1, 2004 between ImmuneRegen BioSciences,
Inc., a
subsidiary of the Registrant, and The Clayton Companies (incorporated
by
reference to exhibit 10.5 of the Registrant's registration statement
on
Form SB-2 (File No. 333-120784) filed with the Securities and
Exchange
Commission on November 24,
2004).
|
Exhibit
Number
|
|
Description
of Exhibit
|
10.3
|
|
Form
of Subscription Agreement entered into as of October 13, 2004 between
the
Registrant and each of the Investors set forth on the Schedule of
Investors thereto (incorporated by reference to exhibit 10.1 of the
Registrant's current report on Form 8-K filed with the Securities
and
Exchange Commission on October 19, 2004).
|
|
|
|
10.4
|
|
Form
of Settlement Agreement entered into as of October 13, 2004 between
the
Registrant and each of the Creditors set forth on the Schedule of
Creditors thereto (incorporated by reference to exhibit 10.2 of the
Registrant's current report on Form 8-K filed with the Securities
and
Exchange Commission on October 19, 2004).
|
|
|
|
10.5
|
|
Form
of Subscription Agreement entered into as of October 26, 2004 between
the
Registrant and each of the Investors set forth on the Schedule of
Investors thereto (incorporated by reference to exhibit 10.1 of the
Registrant's current report on Form 8-K filed with the Securities
and
Exchange Commission on October 27, 2004).
|
|
|
|
10.6
|
|
Form
of Settlement Agreement entered into as of October 26, 2004 between
the
Registrant and each of the Creditors set forth on the Schedule of
Creditors thereto (incorporated by reference to exhibit 10.2 of the
Registrant's current report on Form 8-K filed with the Securities
and
Exchange Commission on October 27, 2004).
|
|
|
|
10.7
|
|
Employment
Agreement dated February 15, 2005 between the Registrant and John
N.
Fermanis (incorporated by reference to exhibit 10.10 of the Registrant's
Amendment No. 1 on Form 10-K/A to its annual report for the year
ended
December 31, 2004).
|
|
|
|
10.8
|
|
Employment
Agreement dated August 10, 2005 by and between the Registrant and
Michael
K. Wilhelm (incorporated by reference to exhibit 10.1 of the Registrant's
quarterly report on Form 10-QSB for the three months ended September
30,
2005).
|
|
|
|
10.9
|
|
Change
of Control Agreement dated August 10, 2005 by and between the Registrant
and Michael K. Wilhelm (incorporated by reference to exhibit 10.2
of the
Registrant's quarterly report on Form 10-QSB for the three months
ended
September 30, 2005).
|
|
|
|
10.10
|
|
Severance
Agreement dated November 7, 2005 by and between the Registrant and
Michael
K. Wilhelm (incorporated by reference to exhibit 10.3 of the Registrant's
quarterly report on Form 10-QSB for the three months ended September
30,
2005).
|
|
|
|
10.11
|
|
Authorization
for Regulatory Contact dated November 7, 2005 between ImmuneRegen
BioSciences, Inc., a subsidiary of the Registrant, and Synergos,
Inc.
(incorporated by reference to exhibit 10.14 of the Registrant's
registration statement on Form SB-2 (File No. 333-120784) filed with
the
Securities and Exchange Commission on February 22,
2006).
|
|
|
|
10.12
|
|
Proforma
invoice/quotation dated November 7, 2005 from Sigma-Aldrich, Inc.
to
ImmuneRegen BioSciences, Inc., a subsidiary of the Registrant
(incorporated by reference to exhibit 10.15 of the Registrant's
registration statement on Form SB-2 (File No. 333-120784) filed with
the
Securities and Exchange Commission on November 16,
2005).
|
|
|
|
10.13
|
|
Letter
of acceptance dated October 2, 2003, from Huntingdon Life Sciences
to
ImmuneRegen BioSciences, Inc., a subsidiary of the Registrant
(incorporated by reference to exhibit 10.16 of the Registrant's
registration statement on Form SB-2 (File No. 333-120784) filed with
the
Securities and Exchange Commission on February 22,
2006).
|
|
|
|
10.14
|
|
Price
Quotation dated June 27, 2003 received by ImmuneRegen BioSciences,
Inc., a
subsidiary of the Registrant from AppTec Laboratory Services (incorporated
by reference to exhibit 10.17 of the Registrant's registration statement
on Form SB-2 (File No. 333-120784) filed with the Securities and
Exchange
Commission on February 22, 2006).
|
Exhibit
Number
|
|
Description
of Exhibit
|
10.15
|
|
Consulting
Agreement dated March 15, 2005 between ImmuneRegen BioSciences, Inc.,
a
subsidiary of the Registrant and Dr. Hal Siegel, Ph.D. (Siegel
Consultancy) (incorporated by reference to exhibit 10.18 of the
Registrant's registration statement on Form SB-2 (File No. 333-120784)
filed with the Securities and Exchange Commission on February 22,
2006).
|
|
|
|
10.16
|
|
Consulting
Agreement dated November 3, 2005 between ImmuneRegen BioSciences,
Inc., a
subsidiary of the Registrant and Dr. Jack Caravelli, Ph.D (incorporated
by
reference to exhibit 10.19 of the Registrant's registration statement
on
Form SB-2 (File No. 333-120784) filed with the Securities and Exchange
Commission on February 22, 2006).
|
|
|
|
10.17
|
|
Consulting
Agreement dated July 29, 2005 between ImmuneRegen BioSciences, Inc.,
a
subsidiary of the Registrant and Dr. Kelly McQueen, MD, MPH (incorporated
by reference to exhibit 10.20 of the Registrant's registration statement
on Form SB-2 (File No. 333-120784) filed with the Securities and
Exchange
Commission on February 22, 2006).
|
|
|
|
10.18
|
|
Form
of Subscription Agreement entered into as of December 6, 2006 between
the
Registrant and each of the Investors set forth on the Schedule of
Investors contained therein (incorporated by reference from Exhibit
10.1
to the Report on Form 8-K as filed with the Securities and Exchange
Commission on December 7, 2006).
|
|
|
|
10.19
|
|
Form
of Subscription Agreement entered into as of October 4, 2006 between
the
Registrant and each of the Investors set forth on the Schedule of
Investors contained therein. (incorporated by reference from Exhibit
10.2
to the Quarterly Report on Form 10-QSB as filed with the Securities
and
Exchange Commission on November 14, 2006).
|
|
|
|
10.20
|
|
Form
of Subscription Agreement entered into as of October 26, 2006 between
the
Registrant and each of the Investors set forth on the Schedule of
Investors contained therein (incorporated by reference from Exhibit
10.2
to the Quarterly Report on Form 10-QSB as filed with the Securities
and
Exchange Commission on November 14, 2006).
|
|
|
|
10.21
|
|
Employment
Agreement dated May 14, 2007 by and between the Company and Dr. Lance
K.
Gordon (incorporated by reference from Exhibit 10.2 to the Report
on Form
8-K as filed with the Securities and Exchange Commission on May 17,
2007).
|
|
|
|
10.22
|
|
Form
of Indemnification Agreement (incorporated by reference from Exhibit
10.2
to the Report on Form 8-K as filed with the Securities and Exchange
Commission on May 17, 2007).
|
|
|
|
21.1
|
|
Subsidiaries
of Registrant (incorporated by reference to exhibit 21.1 of the
Registrant's registration statement on Form SB-2 (File No. 333-120784)
filed with the Securities and Exchange Commission on November 24,
2004).
|
|
|
|
23.1
|
|
Consent
of Russell Bedford Stefanou Mirchandani LLP
|
|
|
|
23.2
|
|
Consent
of Kirkpatrick & Lockhart Preston Gates Ellis LLP (contained in
Exhibit 5.1).*
|
|
|
|
24.1
|
|
Power
of Attorney (included on signature
page).+
|
_________________________
+ Previously filed
*
To be
filed by amendment
(B) FINANCIAL
STATEMENT SCHEDULES
All
such
schedules have been omitted because the information required to
be set forth therein is not applicable or
is shown in the financial statements or notes
thereto.
ITEM
28 UNDERTAKINGS
The
undersigned small business issuer hereby undertakes to:
(1)
Each
prospectus filed by the undersigned small business issuer pursuant to Rule
424(b)(3) shall be deemed to be part of the registration statement as of the
date the filed prospectus was deemed part of and included in the registration
statement.
(2)
Each
prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7)
as
part of a registration statement in reliance on Rule 430B relating to an
offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose
of
providing the information required by section 10(a) of the Securities Act shall
be deemed to be part of and included in the registration statement as of the
earlier of the date such form of prospectus is first used after effectiveness
or
the date of the first contract of sale of securities in the offering described
in the prospectus. As provided in Rule 430B, for liability purposes of the
issuer and any person that is at that date an underwriter, such date shall
be
deemed to be a new effective date of the registration statement relating to
the
securities in the registration statement to which that prospectus relates,
and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof. Provided, however, that no statement made in a
registration statement or prospectus that is part of the registration statement
or made in a document incorporated or deemed incorporated by reference into
the
registration statement or prospectus that is part of the registration statement
will, as to a purchaser with a time of contract of sale prior to such effective
date, supersede or modify any statement that was made in the registration
statement or prospectus that was part of the registration statement or made
in
any such document immediately prior to such effective date.
The
undersigned small business issuer hereby undertakes with respect to the
securities being offered and sold in this offering:
(1)
To
file, during any period in which it offers or sells securities, a post-
effective amendment to this Registration Statement to:
(a)
Include any prospectus required by Section 10(a)(3) of the Securities
Act;
(b)
Reflect in the prospectus any facts or events which, individually or together,
represent a fundamental change in the information in this registration
statement. Notwithstanding the foregoing, any increase or decrease in volume
of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end
of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Securities and Exchange Commission pursuant to Rule 424(b) if,
in
the aggregate, the changes in volume and price represent no more than a 20
percent change in the maximum aggregate offering price set forth in the
“Calculation of Registration Fee” table in the effective registration statement;
and
(c)
Include any additional or changed material information on the plan of
distribution.
(2)
For
determining liability under the Securities Act, treat each post- effective
amendment as a new registration statement of the securities offered, and the
offering of the securities at that time to be the initial bona fide
offering.
(3)
File
a post-effective amendment to remove from registration any of the securities
that remain unsold at the end of the offering.
(4)
For
determining liability of the undersigned small business issuer under the
Securities Act to any purchaser in the initial distribution of the securities,
the undersigned small business issuer undertakes that in a primary offering
of
securities of the undersigned small business issuer pursuant to this
registration statement, regardless of the underwriting method used to sell
the
securities to the purchaser, if the securities are offered or sold to such
purchaser by means of any of the following communications, the undersigned
small
business issuer will be a seller to the purchaser and will be considered to
offer or sell such securities to such purchaser:
(a)
Any
preliminary prospectus or prospectus of the undersigned small business issuer
relating to the offering required to be filed pursuant to Rule 424;
(b)
Any
free writing prospectus relating to the offering prepared by or on behalf of
the
undersigned small business issuer or used or referred to by the undersigned
small business issuer;
(c)
The
portion of any other free writing prospectus relating to the offering containing
material information about the undersigned small business issuer or its
securities provided by or on behalf of the undersigned small business issuer;
and
(d)
Any
other communication that is an offer in the offering made by the undersigned
small business issuer to the purchaser.
Each
prospectus filed pursuant to Rule 424(b) as part of a registration statement
relating to an offering, other than registration statements relying on Rule
430B
or other than prospectuses filed in reliance on Rule 430A, shall be deemed
to be
part of and included in the registration statement as of the date it is first
used after effectiveness. Provided, however, that no statement made in a
registration statement or prospectus that is part of the registration statement
or made in a document incorporated or deemed incorporated by reference into
the
registration statement or prospectus that is part of the registration statement
will, as to a purchaser with a time of contract of sale prior to such first
use,
supersede or modify any statement that was made in the registration statement
or
prospectus that was part of the registration statement or made in any such
document immediately prior to such date of first use.
Insofar
as indemnification by the undersigned small business issuer for liabilities
arising under the Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the small business issuer pursuant to the foregoing
provisions, or otherwise, the small business issuer has been advised that in
the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act, and is, therefore,
unenforceable.
In
the
event that a claim for indemnification against such liabilities (other than
the
payment by the small business issuer of expenses incurred or paid by a director,
officer or controlling person of the small business issuer in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
small business issuer will, unless in the opinion of its counsel the matter
has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
Pursuant
to the requirements of the Securities Act, the Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Scottsdale, State of Arizona, on the 15 day
of June, 2007.
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IR
BIOSCIENCES HOLDINGS, INC.
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President
and Chief Executive Officer
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SIGNATURES
PURSUANT
TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND
ON THE
DATES INDICATED:
SIGNATURE
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TITLE
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DATE
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/s/
Michael K.
Wilhelm
Michael
K. Wilhelm
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Chief
Executive Officer, President and Director (Principal Executive
Officer)
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June
15, 2007
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/s/
John N.
Fermanis
John
N. Fermanis
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Chief
Financial Officer (Principal Financial and Accounting
Officer)
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June
15, 2007
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*
Hal
N. Siegel, Ph.D.
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Director
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June
15, 2007
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*
Theodore
E. Staahl, M.D.
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Director
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June
15, 2007
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*
Robert
J. Hariri, M.D., Ph.D.
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Director
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June
15, 2007
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*
Lance
K. Gordon, Ph.D.
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Director
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June
15, 2007
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*By:
/s/ Michael K.
Wilhelm
Michael
K. Wilhelm
Attorney-in-fact
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Director
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June
15, 2007
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INDEX
TO EXHIBITS
Exhibit
Number
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Description
of Exhibit
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2.1
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Agreement
and Plan of Merger dated July 2, 2003 among the Registrant, GPN
Acquisition Corporation and ImmuneRegen BioSciences, Inc. (incorporated
by
reference to exhibit 2 of the Registrant's current report on Form
8-k
filed with the Securities and Exchange Commission on July 7,
2003).
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3.1
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Certificate
of Incorporation filed with the Delaware Secretary of State on June
4,
1985 (incorporated by reference to exhibit 3.1 of the Registrant's
annual
report on Form 10-KSB for the year ended December 31, 2001 filed
with the
Securities and Exchange Commission on April 16, 2002).
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3.1(a)
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Certificate
of Amendment filed with the Delaware Secretary of State on July 16,
1987
(incorporated by reference to exhibit 3.1(a) of the Registrant's
annual
report on Form 10-KSB for the year ended December 31, 2001 filed
with the
Securities and Exchange Commission on April 16, 2002).
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3.1(b)
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Certificate
of Amendment filed with the Delaware Secretary of State on February
3,
1992 (incorporated by reference to exhibit 3.1(b) of the Registrant's
annual report on Form 10-KSB for the year ended December 31, 2001
filed
with the Securities and Exchange Commission on April 16,
2002).
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3.1(c)
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Certificate
of Amendment filed with the Delaware Secretary of State on November
23,
1992 (incorporated by reference to exhibit 3.1(c) of the Registrant's
annual report on Form 10-KSB for the year ended December 31, 2001
filed
with the Securities and Exchange Commission on April 16,
2002).
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3.1(d)
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Certificate
of Amendment filed with the Delaware Secretary of State on December
15,
1994 (incorporated by reference to exhibit 3.1(d) of the Registrant's
annual report on Form 10-KSB for the year ended December 31, 2001
filed
with the Securities and Exchange Commission on April 16,
2002).
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3.1(e)
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Certificate
of Amendment filed with the Delaware Secretary of State on November
7,
1995 (incorporated by reference to exhibit 3.1(e) of the Registrant's
annual report on Form 10-KSB for the year ended December 31, 2001
filed
with the Securities and Exchange Commission on April 16,
2002).
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3.1(f)
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Certificate
of Amendment filed with the Delaware Secretary of State on December
30,
1996 (incorporated by reference to exhibit 3.1(f) of the Registrant's
annual report on Form 10-KSB for the year ended December 31, 2001
filed
with the Securities and Exchange Commission on April 16,
2002).
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3.1(g)
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Certificate
of Amendment filed with the Delaware Secretary of State on November
8,
2000 (incorporated by reference to exhibit 3.1(h) of the Registrant's
annual report on Form 10-KSB for the year ended December 31, 2001
filed
with the Securities and Exchange Commission on April 16,
2002).
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3.2
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Amended
and Restated Bylaws of the Registrant dated as of January 1, 2002
(incorporated by reference to exhibit 3(b) of the Registrant's annual
report on Form 10-KSB for the year ended December 31, 2001 filed
with the
Securities and Exchange Commission on April 16, 2002).
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4.1
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Specimen
Common Stock Certificate (incorporated by reference to exhibit 4.1
of the
Registrant's registration statement on Form SB-2 (File No. 333-120784)
filed with the Securities and Exchange Commission on November 24,
2004).
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Exhibit
Number
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Description
of Exhibit
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4.2
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2003
Stock Option, Deferred Stock and Restricted Stock Plan (incorporated
by
reference to exhibit 4.1 of the Registrant's registration statement
on
Form S-8 (file no. 333-113511) filed with the Securities and Exchange
Commission on March 11, 2004).
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4.3
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Form
of Warrant by and between the Registrant and each of the Investors
or
Creditors, as the case may be, who entered into an Agreement filed
as
Exhibit 10.6, 10.7, 10.8 or 10.9 herewith (incorporated by reference
to
exhibit 4.1 of the Registrant's current report on Form 8-K filed
with the
Securities and Exchange Commission on October 19,
2004).
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4.4
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Form
of Registration Rights (Annex A to Subscription Agreement) by and
between
the Registrant and each of the Investors who entered into the Agreements
filed as Exhibits 10.6 and 10.8 herewith (incorporated by reference
to
exhibit 4.2 of the Registrant's current report on Form 8-K filed
with the
Securities and Exchange Commission on October 19,
2004).
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4.5
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Form
of Anti-Dilution Rights (Annex B to Subscription Agreement) by and
between
the Registrant and each of the Investors who entered into the Agreements
filed as Exhibits 10.6 and 10.8 herewith (incorporated by reference
to
exhibit 4.3 of the Registrant's current report on Form 8-K filed
with the
Securities and Exchange Commission on October 19,
2004).
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4.6
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Promissory
Note issued from the Registrant to SBM Certificate Company as of
April 28,
2004 (incorporated by reference to exhibit 4.6 of the Registrant's
registration statement on Form SB-2 (File No. 333-120784) filed with
the
Securities and Exchange Commission on November 24,
2004).
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4.7
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Form
of Warrant by and between the Registrant and each of the investors
who
entered into the Subscription Agreements filed as Exhibits 10.18,
10.19
and 10.20 herewith (incorporated by reference from Exhibit 4.1 to
the
Quarterly Report on Form 10-QSB as filed with the Securities and
Exchange
Commission on November 14, 2006).
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5.1*
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Opinion
of Kirkpatrick & Lockhart Preston Gates Ellis LLP. |
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10.1
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License
Agreement dated December 16, 2002 among ImmuneRegen BioSciences,
Inc., a
subsidiary of the Registrant, David Harris and Mark Witten (incorporated
by reference to exhibit 10.4 of the Registrant's registration statement
on
Form SB-2 (File No. 333-120784) filed with the Securities and Exchange
Commission on November 24, 2004).
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10.1(a)
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First
Amendment to License Agreement dated December 20, 2002 among ImmuneRegen
BioSciences, Inc., a subsidiary of the Registrant, David Harris and
Mark
Witten (incorporated by reference to exhibit 10.4(a) of the Registrant's
registration statement on Form SB-2 (File No. 333-120784) filed with
the
Securities and Exchange Commission on November 24,
2004).
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10.1(b)
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Second
Amendment to License Agreement dated June 26, 2003 among ImmuneRegen
BioSciences, Inc., a subsidiary of the Registrant, David Harris and
Mark
Witten (incorporated by reference to exhibit 10.4(b) of the Registrant's
registration statement on Form SB-2 (File No. 333-120784) filed with
the
Securities and Exchange Commission on November 24,
2004).
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10.1(c)
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Assignment
Agreement dated February 23, 2005 between ImmuneRegen BioSciences,
Inc., a
subsidiary of the Registrant and Mark Witten (incorporated by reference
to
exhibit 10.4(c) of the Registrant's registration statement on Form
SB-2
(File No. 333-120784) filed with the Securities and Exchange Commission
on
July 20, 2005).
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10.1(d)
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Assignment
Agreement dated February 23, 2005 among ImmuneRegen BioSciences,
Inc., a
subsidiary of the Registrant, David Harris and Mark Witten (incorporated
by reference to exhibit 10.4(d) of the Registrant's registration
statement
on Form SB-2 (File No. 333-120784) filed with the Securities and
Exchange
Commission on July 20, 2005).
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10.1(e)
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Assignment
Agreement dated November 7, 2005 between ImmuneRegen BioSciences,
Inc., a
subsidiary of the Registrant and Mark Witten (incorporated by reference
to
exhibit 10.4(e) of the Registrant's registration statement on Form
SB-2
(File No. 333-120784) filed with the Securities and Exchange Commission
on
November 16, 2005).
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10.1(f)
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Assignment
Agreement dated November 7, 2005 between ImmuneRegen BioSciences,
Inc., a
subsidiary of the Registrant and Mark Witten (incorporated by reference
to
exhibit 10.4(f) of the Registrant's registration statement on Form
SB-2
(File No. 333-120784) filed with the Securities and Exchange Commission
on
February 22, 2006).
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10.1(g)
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Assignment
Agreement dated November 7, 2005 between ImmuneRegen BioSciences,
Inc., a
subsidiary of the Registrant and Mark Witten (incorporated by reference
to
exhibit 10.4(g) of the Registrant's registration statement on Form
SB-2
(File No. 333-120784) filed with the Securities and Exchange Commission
on
November 16, 2005).
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10.1(h)
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Assignment
Agreement dated November 7, 2005 between ImmuneRegen BioSciences,
Inc., a
subsidiary of the Registrant and Mark Witten (incorporated by reference
to
exhibit 10.4(h) of the Registrant's registration statement on Form
SB-2
(File No. 333-120784) filed with the Securities and Exchange Commission
on
November 16, 2005).
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10.2
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Lease
Agreement dated July 1, 2004 between ImmuneRegen BioSciences, Inc.,
a
subsidiary of the Registrant, and The Clayton Companies (incorporated
by
reference to exhibit 10.5 of the Registrant's registration statement
on
Form SB-2 (File No. 333-120784) filed with the Securities and Exchange
Commission on November 24, 2004).
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Exhibit
Number
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Description
of Exhibit
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10.3
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Form
of Subscription Agreement entered into as of October 13, 2004 between
the
Registrant and each of the Investors set forth on the Schedule of
Investors thereto (incorporated by reference to exhibit 10.1 of the
Registrant's current report on Form 8-K filed with the Securities
and
Exchange Commission on October 19, 2004).
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10.4
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Form
of Settlement Agreement entered into as of October 13, 2004 between
the
Registrant and each of the Creditors set forth on the Schedule of
Creditors thereto (incorporated by reference to exhibit 10.2 of the
Registrant's current report on Form 8-K filed with the Securities
and
Exchange Commission on October 19, 2004).
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10.5
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Form
of Subscription Agreement entered into as of October 26, 2004 between
the
Registrant and each of the Investors set forth on the Schedule of
Investors thereto (incorporated by reference to exhibit 10.1 of the
Registrant's current report on Form 8-K filed with the Securities
and
Exchange Commission on October 27, 2004).
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10.6
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Form
of Settlement Agreement entered into as of October 26, 2004 between
the
Registrant and each of the Creditors set forth on the Schedule of
Creditors thereto (incorporated by reference to exhibit 10.2 of the
Registrant's current report on Form 8-K filed with the Securities
and
Exchange Commission on October 27, 2004).
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10.7
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Employment
Agreement dated February 15, 2005 between the Registrant and John
N.
Fermanis (incorporated by reference to exhibit 10.10 of the Registrant's
Amendment No. 1 on Form 10-K/A to its annual report for the year
ended
December 31, 2004).
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10.8
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Employment
Agreement dated August 10, 2005 by and between the Registrant and
Michael
K. Wilhelm (incorporated by reference to exhibit 10.1 of the Registrant's
quarterly report on Form 10-QSB for the three months ended September
30,
2005).
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10.9
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Change
of Control Agreement dated August 10, 2005 by and between the Registrant
and Michael K. Wilhelm (incorporated by reference to exhibit 10.2
of the
Registrant's quarterly report on Form 10-QSB for the three months
ended
September 30, 2005).
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10.10
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Severance
Agreement dated November 7, 2005 by and between the Registrant and
Michael
K. Wilhelm (incorporated by reference to exhibit 10.3 of the Registrant's
quarterly report on Form 10-QSB for the three months ended September
30,
2005).
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10.11
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Authorization
for Regulatory Contact dated November 7, 2005 between ImmuneRegen
BioSciences, Inc., a subsidiary of the Registrant, and Synergos,
Inc.
(incorporated by reference to exhibit 10.14 of the Registrant's
registration statement on Form SB-2 (File No. 333-120784) filed with
the
Securities and Exchange Commission on February 22,
2006).
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10.12
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Proforma
invoice/quotation dated November 7, 2005 from Sigma-Aldrich, Inc.
to
ImmuneRegen BioSciences, Inc., a subsidiary of the Registrant
(incorporated by reference to exhibit 10.15 of the Registrant's
registration statement on Form SB-2 (File No. 333-120784) filed with
the
Securities and Exchange Commission on November 16,
2005).
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10.13
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Letter
of acceptance dated October 2, 2003, from Huntingdon Life Sciences
to
ImmuneRegen BioSciences, Inc., a subsidiary of the Registrant
(incorporated by reference to exhibit 10.16 of the Registrant's
registration statement on Form SB-2 (File No. 333-120784) filed with
the
Securities and Exchange Commission on February 22,
2006).
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10.14
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Price
Quotation dated June 27, 2003 received by ImmuneRegen BioSciences,
Inc., a
subsidiary of the Registrant from AppTec Laboratory Services (incorporated
by reference to exhibit 10.17 of the Registrant's registration statement
on Form SB-2 (File No. 333-120784) filed with the Securities and
Exchange
Commission on February 22, 2006).
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Exhibit
Number
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Description
of Exhibit
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10.15
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Consulting
Agreement dated March 15, 2005 between ImmuneRegen BioSciences, Inc.,
a
subsidiary of the Registrant and Dr. Hal Siegel, Ph.D. (Siegel
Consultancy) (incorporated by reference to exhibit 10.18 of the
Registrant's registration statement on Form SB-2 (File No. 333-120784)
filed with the Securities and Exchange Commission on February 22,
2006).
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10.16
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Consulting
Agreement dated November 3, 2005 between ImmuneRegen BioSciences,
Inc., a
subsidiary of the Registrant and Dr. Jack Caravelli, Ph.D (incorporated
by
reference to exhibit 10.19 of the Registrant's registration statement
on
Form SB-2 (File No. 333-120784) filed with the Securities and Exchange
Commission on February 22, 2006).
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10.17
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Consulting
Agreement dated July 29, 2005 between ImmuneRegen BioSciences, Inc.,
a
subsidiary of the Registrant and Dr. Kelly McQueen, MD, MPH (incorporated
by reference to exhibit 10.20 of the Registrant's registration statement
on Form SB-2 (File No. 333-120784) filed with the Securities and
Exchange
Commission on February 22, 2006).
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10.18
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Form
of Subscription Agreement entered into as of December 6, 2006 between
the
Registrant and each of the Investors set forth on the Schedule of
Investors contained therein (incorporated by reference from Exhibit
10.1
to the Report on Form 8-K as filed with the Securities and Exchange
Commission on December 7, 2006).
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10.19
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Form
of Subscription Agreement entered into as of October 4, 2006 between
the
Registrant and each of the Investors set forth on the Schedule of
Investors contained therein. (incorporated by reference from Exhibit
10.2
to the Quarterly Report on Form 10-QSB as filed with the Securities
and
Exchange Commission on November 14, 2006).
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10.20
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Form
of Subscription Agreement entered into as of October 26, 2006 between
the
Registrant and each of the Investors set forth on the Schedule of
Investors contained therein (incorporated by reference from Exhibit
10.2
to the Quarterly Report on Form 10-QSB as filed with the Securities
and
Exchange Commission on November 14, 2006).
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10.21
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Employment
Agreement dated May 14, 2007 by and between the Company and Dr. Lance
K.
Gordon (incorporated by reference from Exhibit 10.2 to the Report
on Form
8-K as filed with the Securities and Exchange Commission on May 17,
2007).
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10.22
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Form
of Indemnification Agreement (incorporated by reference from Exhibit
10.2
to the Report on Form 8-K as filed with the Securities and Exchange
Commission on May 17, 2007).
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21.1
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Subsidiaries
of Registrant (incorporated by reference to exhibit 21.1 of the
Registrant's registration statement on Form SB-2 (File No. 333-120784)
filed with the Securities and Exchange Commission on November 24,
2004).
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23.1
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Consent
of Russell Bedford Stefanou Mirchandani LLP
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23.2 |
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Consent
of Kirkpatrick & Lockhart Preston Gates Ellis LLP (contained in
Exhibit 5.1).* |
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24.1 |
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Power
of Attorney (included on signature
page).+ |
_________________________
+ Previously filed
*
To be
filed by amendment