irbio-10q6302008.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
______________________
FORM
10-Q
______________________
x Quarterly Report
Pursuant to Section 13 or 15(d) of the Securities Exchange
Act
of 1934
For
the quarterly period ended June 30,
2008
or
oTransition Report
Pursuant to Section 13 or 15(d) of the Securities
Exchange
Act of 1934
For
the transition period from ___________ to _____________
Commission File Number: 033-05384
IR
BIOSCIENCES HOLDINGS, INC.
(Exact
name of Registrant as specified in its charter)
DELAWARE
|
|
13-3301899
|
(State
or Other Jurisdiction of Incorporation or Organization)
|
|
(I.R.S.
Employer Identification No.)
|
|
|
|
8767 E. Via De
Ventura, Suite 190, Scottsdale, AZ
|
|
85258
|
(Address
of Principal Executive Offices)
|
|
(Zip
Code)
|
Registrant's
telephone number, including area code: (480)
922-3926
_____________________________________N/A_____________________________________
(Former
name, former address and former fiscal year, if changed since last
report)
Indicate
by check mark whether Registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding twelve months or for such shorter period that the Registrant was
required to file such reports, and (2) has been subject to such filing
requirements for the past 90 days. Yes x
No o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check one):
Large
accelerated filer ¨
|
|
Accelerated
filer ¨
|
Non-accelerated
filer ¨ (Do
not check is a smaller reporting company)
|
|
Smaller reporting company
x
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes o
No x
The
number of shares outstanding of Registrant's common stock as of August 7, 2008
was 11,662,916.
IR BIOSCIENCES HOLDINGS, INC. AND SUBSIDIARY
Table Of
Contents
|
Page
|
PART I. FINANCIAL
INFORMATION
|
|
|
|
ITEM 1. FINANCIAL STATEMENTS
|
|
|
F-1
|
|
F-2
|
|
F-3
|
|
F-13
|
|
F-15
|
|
|
|
3
|
|
8
|
|
8
|
|
|
PART II OTHER
INFORMATION
|
|
|
|
|
10
|
|
10
|
|
10
|
|
10
|
|
11
|
|
11
|
|
12
|
|
|
|
13
|
ITEM
1. FINANCIAL INFORMATION
IR BioSciences Holdings, Inc. and Subsidiary
(A
Development Stage Company)
Condensed
Consolidated Balance Sheets as of June 30, 2008 (unaudited)
And
December 31, 2007
|
|
June
30, 2008
(unaudited)
|
|
December
31, 2007
|
|
Assets
|
Current
assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
813,015
|
|
|
$
|
221,120
|
|
Cash
– Restricted
|
|
|
203,125
|
|
|
|
-
|
|
Prepaid
services and other current assets (Note 1)
|
|
|
31,229
|
|
|
|
84,691
|
|
Salary
advance (Note 1)
|
|
|
700
|
|
|
|
2,025
|
|
|
|
|
|
|
|
|
|
|
Total
current assets
|
|
|
1,048,069
|
|
|
|
307,836
|
|
|
|
|
|
|
|
|
|
|
Deposits
and other assets (Note 1)
|
|
|
7,128
|
|
|
|
7,128
|
|
Furniture
and equipment, net of accumulated depreciation of $35,144 and $27,158
(Note 2)
|
|
|
31,882
|
|
|
|
38,271
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
1,087,079
|
|
|
$
|
353,235
|
|
|
|
|
|
|
|
|
|
|
Liabilities
and Stockholders' Deficit
|
Current
liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued liabilities (Note 4)
|
|
$
|
661,799
|
|
|
$
|
932,609
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
current liabilities
|
|
|
661,799
|
|
|
|
932,609
|
|
|
|
|
|
|
|
|
|
|
Notes
payable, net of discount of $188,962 (Note 5)
|
|
|
2,811,038
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
3,472,837
|
|
|
|
932,609
|
|
|
|
|
|
|
|
|
|
|
Commitments
and Contingencies
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
stock, $0.001 par value; 10,000,000 shares authorized, no shares issued
and outstanding
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Common
stock, $0.001 par value; 100,000,000 shares authorized; 11,601,754 shares
and 11,432,254 (post reverse split, does not include 120 shares issued on
August 1, 2008 for rounding) issued and outstanding at June 30,
2008 and December 31, 2007 respectively
|
|
|
11,601
|
|
|
|
11,432
|
|
|
|
|
|
|
|
|
|
|
Common
stock subscribed (Note 6)
|
|
|
29,198
|
|
|
|
153,000
|
|
Additional
paid-in capital
|
|
|
18,438,475
|
|
|
|
18,005,332
|
|
Deficit
accumulated during the development stage
|
|
|
(20,865,032
|
)
|
|
|
(18,749,138
|
)
|
Total
stockholders’ deficit
|
|
|
(2,385,758
|
)
|
|
|
(579,374
|
)
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders' deficit
|
|
$
|
1,087,079
|
|
|
$
|
353,235
|
|
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 Statements of Losses
for
the three and six months ended June 30, 2008 and 2007,
and
for the period of inception (October 30, 2002) to June 30, 2008
(Unaudited)
|
|
For
the Three Months Ended June 30,
|
|
|
For
the Six Months Ended June 30,
|
|
|
For
the Period October 30, 2002 to
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
June 30,
2008
|
|
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
general and administrative expenses
|
|
|
834,512
|
|
|
|
1,141,908
|
|
|
|
2,011,419
|
|
|
|
2,016,018
|
|
|
|
18,097,360
|
|
Merger
fees and costs
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
350,000 |
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
90,000
|
|
Impairment
of intangible asset costs
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
6,393 |
|
|
|
|
834,512
|
|
|
|
1,141,908
|
|
|
|
2,011,419
|
|
|
|
2,016,018
|
|
|
|
18,543,753
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(834,512
|
)
|
|
|
(1,141,908
|
)
|
|
|
(2,011,419
|
)
|
|
|
(2,016,018
|
)
|
|
|
(18,543,753
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of penalty for late registration of shares
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,192,160 |
|
(Gain)
loss from marking to market - warrant portion of penalty for late
registration of shares
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(378,198
|
)
|
(Gain)
loss from marketing to market - stock portion of penalty for late
registration of shares
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(760,058
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
(income) expense, net
|
|
|
58,148
|
|
|
|
(26,812
|
)
|
|
|
104,475
|
|
|
|
(47,678
|
)
|
|
|
1,256,831
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
other (income) expense
|
|
|
58,148
|
|
|
|
(26,812
|
)
|
|
|
104,475
|
|
|
|
(47,678
|
)
|
|
|
2,310,735
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) before income taxes
|
|
|
(892,660
|
)
|
|
|
(1,115,096
|
)
|
|
|
(2,115,894
|
)
|
|
|
(1,968,340
|
)
|
|
|
(20,854,488
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(8,115
|
)
|
|
|
(10,544
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(892,660 |
) |
|
$ |
(1,115,096 |
) |
|
$ |
(2,115,894 |
) |
|
$ |
(1,976,455 |
) |
|
$ |
(20,865,032 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss) per share - basic and diluted
|
|
$ |
(0.08 |
) |
|
$ |
(0.10 |
) |
|
$ |
(0.18 |
) |
|
$ |
(0.17 |
) |
|
$ |
(3.21 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding (post reverse stock split)- basic and
diluted
|
|
|
11,600,451 |
|
|
|
11,432,254 |
|
|
|
11,481,627 |
|
|
|
11,411,968 |
|
|
|
6,498,489 |
|
The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
IR BioSciences Holding, Inc. and Subsidiary
(A
Development Stage Company)
Condensed
Consolidated Statement of Stockholders' Equity (Deficit)
From
Date of Inception (October 30, 2002) to June 30, 2008
(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 $0.006 per share to founders for license of
proprietary right in December 2002
|
|
|
1,661,228 |
|
|
|
1,661 |
|
|
|
7,589 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
9,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
of common stock issued at $0.006 per share to founders for services
rendered in December 2002
|
|
|
140,531 |
|
|
|
141 |
|
|
|
641 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
782 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
of common stock issued at $1.671 per share to consultants for services
rendered in December 2002
|
|
|
5,388 |
|
|
|
5 |
|
|
|
8,995 |
|
|
|
(9,000 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale
of common stock for cash at $1.671 per share in December
2002
|
|
|
18,558 |
|
|
|
19 |
|
|
|
30,982 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
31,001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the period from inception (October 30, 2002) to December 31,
2002
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
(45,918 |
) |
|
|
(45,918 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2002 (reflective of stock splits)
|
|
|
1,825,704 |
|
|
$ |
1,826 |
|
|
$ |
48,207 |
|
|
$ |
(9,000 |
) |
|
$ |
- |
|
|
$ |
(45,918 |
) |
|
$ |
(4,885 |
) |
IR
BioSciences Holding, Inc. and Subsidiary
(A
Development Stage Company)
Condensed
Consolidated Statement of Stockholders' Equity (Deficit)
From
Date of Inception (October 30, 2002) to June 30, 2008
(Unaudited)
(Continued)
Shares
granted to consultants at $1.392 per share for services rendered in
January 2003
|
|
|
9,878 |
|
|
|
10 |
|
|
|
13,740 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
13,750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale
of shares of common stock for cash at $1.517 per share in January
2003
|
|
|
32,955 |
|
|
|
33 |
|
|
|
49,967 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
50,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
granted to consultants at $1.392 per share for services rendered in March
2003
|
|
|
15,445 |
|
|
|
15 |
|
|
|
21,485 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
21,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
of notes payable to common stock at $1.392 per share in April
2003
|
|
|
143,674 |
|
|
|
144 |
|
|
|
199,856 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
200,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
granted to consultants at $1.413 per share for services rendered in April
2003
|
|
|
1,437 |
|
|
|
1 |
|
|
|
2,029 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,030 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale
of shares of common stock for cash at $2.784 per share in May
2003
|
|
|
1,796 |
|
|
|
2 |
|
|
|
4,998 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
5,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
of shares of common stock for cash at $2.784 per share in June
2003
|
|
|
3,592 |
|
|
|
4 |
|
|
|
9,996 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
10,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
of notes payable to common stock at $1.392 per share in June
2003
|
|
|
71,837 |
|
|
|
72 |
|
|
|
99,928 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
100,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial
conversion feature associated with notes issued in June
2003
|
|
|
- |
|
|
|
- |
|
|
|
60,560 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
60,560 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
of deferred compensation
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
9,000 |
|
|
|
- |
|
|
|
- |
|
|
|
9,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs
of GPN Merger in July 2003
|
|
|
236,813 |
|
|
|
237 |
|
|
|
(121,036 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(120,799 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued with extended notes payable in October
2003
|
|
|
- |
|
|
|
- |
|
|
|
189,937 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
189,937 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
Value
of Company warrants issued in conjunction with fourth quarter notes
payable issued October through December 2003
|
|
|
- |
|
|
|
- |
|
|
|
207,457 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
207,457 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants contributed by founders in conjunction with fourth quarter
notes payable issued October through December 2003
|
|
|
- |
|
|
|
- |
|
|
|
183,543 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
183,543 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued for services in October through December
2003
|
|
|
- |
|
|
|
- |
|
|
|
85,861 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
85,861 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the twelve month period ended December 31, 2003
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,856,702 |
) |
|
|
(1,856,702 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
Balance
at December 31, 2003
|
|
|
2,343,130 |
|
|
$ |
2,343 |
|
|
$ |
1,056,529 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
(1,902,620 |
) |
|
$ |
(843,748 |
) |
IR
BioSciences Holding, Inc. and Subsidiary
(A
Development Stage Company)
Condensed
Consolidated Statement of Stockholders' Equity (Deficit)
From
Date of Inception (October 30, 2002) to June 30, 2008
(Unaudited)
(Continued)
Shares
granted at $10.00 per share pursuant to the Senior Note Agreement in
January 2004
|
|
|
60,000 |
|
|
|
60 |
|
|
|
599,940 |
|
|
|
(600,000 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued at $10.00 per share to a consultant for services rendered in
January 2004
|
|
|
80,000 |
|
|
|
80 |
|
|
|
799,920 |
|
|
|
(800,000 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to a consultant at $6.20 per share for services rendered in
February 2004
|
|
|
4,000 |
|
|
|
4 |
|
|
|
24,796 |
|
|
|
(24,800 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to a consultant at $4.00 per share for services rendered in March
2004
|
|
|
105,160 |
|
|
|
105 |
|
|
|
420,535 |
|
|
|
(420,640 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to a consultant at $5.00 per share for services rendered in March
2004
|
|
|
50,000 |
|
|
|
50 |
|
|
|
249,950 |
|
|
|
(250,000 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
sold for cash at $1.50 per share in March, 2004
|
|
|
800 |
|
|
|
1 |
|
|
|
1,199 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued at $5.00 per share to consultants for services rendered in March
2004
|
|
|
2,000 |
|
|
|
2 |
|
|
|
9,998 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
10,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to a consultant at $4.00 per share for services rendered
in March 2004
|
|
|
200 |
|
|
|
0 |
|
|
|
800 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to consultants at $3.20 per share for services rendered in March
2004
|
|
|
9,160 |
|
|
|
9 |
|
|
|
29,303 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
29,312 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
to be issued to consultant at $4.10 per share in April 2004 for services
to be rendered through March 2005
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(82,000 |
) |
|
|
- |
|
|
|
- |
|
|
|
(82,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
granted pursuant to the New Senior Note Agreement in April
2004
|
|
|
60,000 |
|
|
|
60 |
|
|
|
149,940 |
|
|
|
(150,000 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to officer at $3.20 per share for services rendered in
April 2004
|
|
|
20,000 |
|
|
|
20 |
|
|
|
63,980 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
64,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
of Note Payable to common stock at $1.00 per share in May
2004
|
|
|
35,000 |
|
|
|
35 |
|
|
|
34,965 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
35,000 |
|
IR
BioSciences Holding, Inc. and Subsidiary
(A
Development Stage Company)
Condensed
Consolidated Statement of Stockholders' Equity (Deficit)
From
Date of Inception (October 30, 2002) to June 30, 2008
(Unaudited)
(Continued)
Beneficial
Conversion Feature associated with note payable in May
2004
|
|
|
- |
|
|
|
- |
|
|
|
35,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
35,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of warrants to officers and founder for services rendered in May
2004
|
|
|
- |
|
|
|
- |
|
|
|
269,208 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
269,208 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
to a consultant at $2.00 per share as a due diligence fee in May
2004
|
|
|
12,500 |
|
|
|
13 |
|
|
|
24,988 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
25,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
|
|
|
50 |
|
|
|
499,950 |
|
|
|
(500,000 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Shares
issued to a consultant at $10.00 per share for services to be rendered
over twelve months beginning May 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial
Conversion Feature associated with notes payable issued in June
2004
|
|
|
- |
|
|
|
- |
|
|
|
3,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
3,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of warrants to note holders in April, May, and June 2004
|
|
|
- |
|
|
|
- |
|
|
|
17,915 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
17,915 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of warrants to employees and consultants for services rendered in April
through June 2004
|
|
|
- |
|
|
|
- |
|
|
|
8,318 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
8,318 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued in July to a consultant at $1.00 for services to be
rendered through July 2005
|
|
|
25,000 |
|
|
|
25 |
|
|
|
24,975 |
|
|
|
(25,000 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to a consultant in July and September at $4.10 per share for
services to be rendered through April 2005
|
|
|
20,000 |
|
|
|
20 |
|
|
|
81,980 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
82,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to a consultant in September at $1.20 to $2.20 for
services rendered through September 2004
|
|
|
12,728 |
|
|
|
13 |
|
|
|
16,896 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
16,909 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued in July to September 2004 as interest on note
payable
|
|
|
30,000 |
|
|
|
30 |
|
|
|
35,970 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
36,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of warrants with notes payable in July and August 2004
|
|
|
- |
|
|
|
- |
|
|
|
72,252 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
72,252 |
|
IR
BioSciences Holding, Inc. and Subsidiary
(A
Development Stage Company)
Condensed
Consolidated Statement of Stockholders' Equity (Deficit)
From
Date of Inception (October 30, 2002) to June 30, 2008
(Unaudited)
(Continued)
Accrued
deferred compensation in August 2004 to a consultant for 10,000 shares at
$1.00 per share, committed but unissued
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(10,000 |
) |
|
|
- |
|
|
|
- |
|
|
|
(10,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued in August 2004 at $1.40 to a consultant for services to be
performed through October 2004
|
|
|
10,000 |
|
|
|
10 |
|
|
|
13,990 |
|
|
|
(14,000 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued in August 2004 at $1.25 per share for conversion of $30,000 demand
loan
|
|
|
24,000 |
|
|
|
24 |
|
|
|
29,976 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
30,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued in August 2004 at $1.60 per share to a consultant for services
provided.
|
|
|
12,500 |
|
|
|
13 |
|
|
|
19,988 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
20,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to employees at $1.60 to $2.50 per share
|
|
|
4,880 |
|
|
|
5 |
|
|
|
8,379 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
8,384 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitment
to issue 10,000 shares of stock to a consultant at $2.30 per share for
services to be provided through September 2005
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(23,000 |
) |
|
|
- |
|
|
|
- |
|
|
|
(23,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale
of stock for cash in October at $1.25 per share, net of costs of
$298,155
|
|
|
1,816,000 |
|
|
|
1,816 |
|
|
|
1,362,107 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,363,923 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued with sale of common stock in October, net of
costs
|
|
|
- |
|
|
|
- |
|
|
|
607,922 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
607,922 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of warrant to officer in October
|
|
|
- |
|
|
|
- |
|
|
|
112,697 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
112,697 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of stock to investment bankers in October 2004 for commissions
earned
|
|
|
490,000 |
|
|
|
490 |
|
|
|
(490 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
of accounts payable to stock in October at $1.25 per share
|
|
|
125,775 |
|
|
|
126 |
|
|
|
108,514 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
108,640 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued with accounts payable conversions
|
|
|
- |
|
|
|
- |
|
|
|
48,579 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
48,579 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
of demand loan to stock in October at $1.10 per share
|
|
|
9,330 |
|
|
|
9 |
|
|
|
10,254 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
10,263 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forgiveness
of notes payable in October 2004
|
|
|
- |
|
|
|
- |
|
|
|
36,785 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
36,785 |
|
IR
BioSciences Holding, Inc. and Subsidiary
(A
Development Stage Company)
Condensed
Consolidated Statement of Stockholders' Equity (Deficit)
From
Date of Inception (October 30, 2002) to June 30, 2008
(Unaudited)
Issuance
of stock to officer and director at $1.25 per share in October for
conversion of liability
|
|
|
144,000 |
|
|
|
144 |
|
|
|
123,789 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
123,933 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued with officer and director conversion of
liabilities
|
|
|
- |
|
|
|
- |
|
|
|
56,067 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
56,067 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
of debt and accrued interest to common stock at $0.75 to $1.25 per
share
|
|
|
670,315 |
|
|
|
670 |
|
|
|
423,547 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
424,217 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued with conversion of debt
|
|
|
- |
|
|
|
- |
|
|
|
191,111 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
191,111 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
of Note Payable of $5,000 plus accrued interest of $71
|
|
|
6,761 |
|
|
|
7 |
|
|
|
4,993 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
5,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of warrants to note holders in October 2004
|
|
|
- |
|
|
|
- |
|
|
|
112,562 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
112,562 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of shares issued to CFO as compensation
|
|
|
10,000 |
|
|
|
10 |
|
|
|
34,990 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
35,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued to members of advisory committees in November and
December
|
|
|
- |
|
|
|
- |
|
|
|
16,348 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
16,348 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial
conversion feature associated with
notes payable
|
|
|
- |
|
|
|
- |
|
|
|
124,709 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
124,709 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued in error to be cancelled
|
|
|
(900 |
) |
|
|
(1 |
) |
|
|
1 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
of deferred compensation through December 31, 2004
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,729,454 |
|
|
|
- |
|
|
|
- |
|
|
|
2,729,454 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
for the twelve months ended December 31, 2004
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(5,305,407 |
) |
|
|
(5,305,407 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2004
|
|
|
6,242,339 |
|
|
$ |
6,242 |
|
|
$ |
7,979,124 |
|
|
$ |
(169,986 |
) |
|
$ |
- |
|
|
$ |
(7,208,027 |
) |
|
$ |
607,353 |
|
IR
BioSciences Holding, Inc. and Subsidiary
(A
Development Stage Company)
Condensed
Consolidated Statement of Stockholders' Equity (Deficit)
From
Date of Inception (October 30, 2002) to June 30, 2008
(Unaudited)
Sale
of shares of common stock for cash at $2.00 per share in March 2005 for
warrant exercise, net of costs
|
|
|
660,078 |
|
|
|
660 |
|
|
|
1,190,196 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,190,856 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued to members of advisory committees in March
2005
|
|
|
- |
|
|
|
- |
|
|
|
137,049 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
137,049 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
compensation in February 2005 to a consultant for 5,000 shares of common
stock at $6.50 per share.
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(32,500 |
) |
|
|
- |
|
|
|
- |
|
|
|
(32,500 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants
exercised at $0.50 per share in June 2003
|
|
|
8,000 |
|
|
|
8 |
|
|
|
3,992 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued to members of advisory committee in June
2005
|
|
|
- |
|
|
|
- |
|
|
|
70,781 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
70,781 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued to investors and service providers in June
2005
|
|
|
- |
|
|
|
- |
|
|
|
32,991 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
32,991 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of 23,215 shares of common stock in July 2005 for conversion of notes
payable
|
|
|
23,215 |
|
|
|
23 |
|
|
|
64,980 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
65,003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of 10,000 shares of common stock in August 2005 to a consultant
for services provided
|
|
|
10,000 |
|
|
|
10 |
|
|
|
9,990 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
10,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued to advisory committee in September 2005 for
services
|
|
|
- |
|
|
|
- |
|
|
|
20,491 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
20,491 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
of deferred comp for the twelve months ended December,
2005
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
199,726 |
|
|
|
- |
|
|
|
- |
|
|
|
199,726 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued in October and December 2005 to investors and service
providers
|
|
|
- |
|
|
|
- |
|
|
|
18,399 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
18,399 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
for the year ended December 31,2005
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(4,591,107 |
) |
|
|
(4,591,107 |
) |
|
|
|
6,943,632 |
|
|
$ |
6,943 |
|
|
$ |
9,527,993 |
|
|
$ |
(2,760 |
) |
|
$ |
- |
|
|
$ |
(11,799,134 |
) |
|
$ |
(2,266,958 |
) |
IR
BioSciences Holding, Inc. and Subsidiary
(A
Development Stage Company)
Condensed
Consolidated Statement of Stockholders' Equity (Deficit)
From
Date of Inception (October 30, 2002) to June 30, 2008
(Unaudited)
Issuance
of 10,000 shares to officer, previously accrued
|
|
|
10,000 |
|
|
|
10 |
|
|
|
41,406 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
41,416 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued to members of advisory committee in March
2006
|
|
|
- |
|
|
|
- |
|
|
|
8,399 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
8,399 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
of deferred compensation for the three months ended March 31,
2006
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,760 |
|
|
|
- |
|
|
|
- |
|
|
|
2,760 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock in May 2006 to a consultant for services
provided
|
|
|
3,446 |
|
|
|
3 |
|
|
|
16,194 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
16,197 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
of accrued interest to common stock at $1.25 per share in May,
2006
|
|
|
1,929 |
|
|
|
2 |
|
|
|
2,409 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,411 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
of accrued interest to common stock at $1.25 per share in May,
2006
|
|
|
1,632 |
|
|
|
2 |
|
|
|
2,039 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,041 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
of accrued interest to common stock at $1.00 per share in May,
2006
|
|
|
1,345 |
|
|
|
1 |
|
|
|
1,354 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,355 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued pursuant to the exercise of warrants at $0.90 per share in
June 2006
|
|
|
500 |
|
|
|
1 |
|
|
|
450 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
450 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued to members of advisory committee in June
2006
|
|
|
- |
|
|
|
- |
|
|
|
8,820 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
8,820 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued to members of advisory committee in September
2006
|
|
|
- |
|
|
|
- |
|
|
|
3,495 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
3,495 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued to officers
|
|
|
- |
|
|
|
- |
|
|
|
50,874 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
50,874 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of penalty Common Stock, previously accrued
|
|
|
415,080 |
|
|
|
415 |
|
|
|
871,250 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
871,665 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of penalty warrants, previously accrued
|
|
|
- |
|
|
|
- |
|
|
|
182,239 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
182,239 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of options issued to officer
|
|
|
- |
|
|
|
- |
|
|
|
78,802 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
78,802 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued to members of advisory committee in December
2006
|
|
|
- |
|
|
|
- |
|
|
|
1,974 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,974 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of Common Stock for cash
|
|
|
3,426,625 |
|
|
|
3,427 |
|
|
|
4,610,122 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4,613,549 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock to be issued as commission for equity fund raising
|
|
|
- |
|
|
|
- |
|
|
|
(5,483 |
) |
|
|
- |
|
|
|
5,483 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of options issued to officer
|
|
|
- |
|
|
|
- |
|
|
|
185,472 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
185,472 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of shares issued to officer
|
|
|
- |
|
|
|
- |
|
|
|
32,120 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
32,120 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
for the year ended December 31, 2006
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,486,046 |
) |
|
|
(1,486,046 |
) |
|
|
|
10,804,190 |
|
|
$ |
10,804 |
|
|
$ |
15,619,928 |
|
|
$ |
- |
|
|
$ |
5,483 |
|
|
$ |
(13,285,180 |
) |
|
$ |
2,351,035 |
|
IR
BioSciences Holding, Inc. and Subsidiary
(A
Development Stage Company)
Condensed
Consolidated Statement of Stockholders' Equity (Deficit)
From
Date of Inception (October 30, 2002) to June 30, 2008
(Unaudited)
Common
stock issued as commission for equity fund raising
|
|
|
548,260 |
|
|
|
548 |
|
|
|
4,935 |
|
|
|
- |
|
|
|
(5,483 |
) |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued to consultant in January 2007 at $1.50 per
share
|
|
|
29,804 |
|
|
|
30 |
|
|
|
44,676 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
44,706 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued to consultants in January 2007 at $1.55 per
share
|
|
|
40,000 |
|
|
|
40 |
|
|
|
61,960 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
62,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued to consultants in January 2007 at $1.50 per
share
|
|
|
10,000 |
|
|
|
10 |
|
|
|
14,990 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
15,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of options issued to officer in January, February and March
2007
|
|
|
- |
|
|
|
- |
|
|
|
471,457 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
471,457 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of options issued to employee in January 2007
|
|
|
- |
|
|
|
- |
|
|
|
5,426 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
5,426 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued to consultant in April 2007
|
|
|
- |
|
|
|
- |
|
|
|
166,998 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
166,998 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of options issued to employees in July 2007
|
|
|
- |
|
|
|
- |
|
|
|
996,133 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
996,133 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of options issued to directors in July 2007
|
|
|
- |
|
|
|
- |
|
|
|
537,833 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
537,833 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of options issued to consultants in July 2007
|
|
|
- |
|
|
|
- |
|
|
|
80,996 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
80,996 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock to be issued for consulting services in 2008 at $1.10 per
share
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
33,000 |
|
|
|
- |
|
|
|
33,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock to be issued for finders fee in 2008 at $1.20 per
share
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
120,000 |
|
|
|
- |
|
|
|
120,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
for the year ended December 31, 2007
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(5,463,958 |
) |
|
|
(5,463,958 |
) |
|
|
|
11,432,254 |
|
|
$ |
11,432 |
|
|
$ |
18,005,332 |
|
|
$ |
- |
|
|
$ |
153,000 |
|
|
$ |
(18,749,138 |
) |
|
$ |
(579,374 |
) |
IR
BioSciences Holding, Inc. and Subsidiary
(A
Development Stage Company)
Condensed
Consolidated Statement of Stockholders' Equity (Deficit)
From
Date of Inception (October 30, 2002) to June 30, 2008
(Unaudited)
Common
stock issued for consulting services previously accrued
|
|
|
30,000 |
|
|
|
30 |
|
|
|
32,970 |
|
|
|
- |
|
|
|
(33,000 |
) |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for finders fee previously accrued
|
|
|
100,000 |
|
|
|
100 |
|
|
|
119,900 |
|
|
|
- |
|
|
|
(120,000 |
) |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock to be issued for interest payment at $0.488 per
share
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
19,276 |
|
|
|
|
|
|
|
19,276 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued to consultant in April 2007
|
|
|
- |
|
|
|
- |
|
|
|
38,599 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
38,599 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued pursuant to convertible debt agreement
|
|
|
- |
|
|
|
- |
|
|
|
226,754 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
226,754 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of options issued to advisory board
|
|
|
- |
|
|
|
- |
|
|
|
3,729 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
3,729 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of options issued to employee in January 2007
|
|
|
- |
|
|
|
- |
|
|
|
1,357 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,357 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of options issued to consultants in July 2007
|
|
|
- |
|
|
|
- |
|
|
|
3,497 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
3,497 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
for the three months ended March 31, 2008
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,223,234 |
) |
|
|
(1,223,234 |
) |
|
|
|
11,562,254 |
|
|
$ |
11,562 |
|
|
$ |
18,432,138 |
|
|
$ |
- |
|
|
$ |
19,276 |
|
|
$ |
(19,972,372 |
) |
|
$ |
(1,509,396 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for interest payment at $0.488 per share
|
|
|
39,500 |
|
|
|
40 |
|
|
|
19,237 |
|
|
|
- |
|
|
|
(19,276 |
) |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock to be issued for interest payment at $0.699 per
share
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
19,726 |
|
|
|
|
|
|
|
19,726 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock to be issued for interest payment at $0.699 per
share
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,972 |
|
|
|
|
|
|
|
1,972 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock subscribed pursuant to the exercise of warrants at $0.375 per
share
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
7,500 |
|
|
|
- |
|
|
|
7,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of options issued to employee in January 2007
|
|
|
- |
|
|
|
- |
|
|
|
1,357 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,357 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of options issued to consultants in July 2007
|
|
|
- |
|
|
|
- |
|
|
|
3,497 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
3,497 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of options issued to employees in March 2008
|
|
|
- |
|
|
|
- |
|
|
|
1,220 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,220 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of options issued to a Director in March 2008
|
|
|
- |
|
|
|
- |
|
|
|
19,625 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
19,625 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued to consultant in April 2007, cancelled per
agreement
|
|
|
- |
|
|
|
- |
|
|
|
(38,599 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(38,599 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
for the three months ended June 30, 2008
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(892,660 |
) |
|
|
(892,660 |
) |
Balance
at June 30, 2008
|
|
|
11,601,754 |
|
|
$ |
11,602 |
|
|
$ |
18,438,475 |
|
|
$ |
- |
|
|
$ |
29,198 |
|
|
$ |
(20,865,032 |
) |
|
$ |
(2,385,758 |
) |
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 Statements of Cash Flows
For
the Six Months Ended June 30, 2008 and 2007,
And
For the Period of Inception (October 30, 2002) to June 30, 2008
(Unaudited)
|
|
For
the Six Months Ended June 30,
|
|
|
For
the Period October 30, 2002 to
|
|
|
|
2008
|
|
|
2007
|
|
|
June
30, 2008
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(2,115,894
|
)
|
|
$
|
(1,976,455
|
)
|
|
$
|
(20,865,032
|
)
|
Adjustments
to reconcile net loss to net
|
|
|
|
|
|
|
|
|
|
|
|
|
cash
used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash
compensation
|
|
|
61,782
|
|
|
|
564,168
|
|
|
|
6,870,141
|
|
Cost
of penalty for late registration of shares - stock portion
|
|
|
-
|
|
|
|
-
|
|
|
|
1,631,726
|
|
Cost
of penalty for late registration of shares - warrant
portion
|
|
|
-
|
|
|
|
-
|
|
|
|
560,434
|
|
(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
|
|
|
-
|
|
|
|
-
|
|
|
|
(378,198
|
)
|
Legal
fees for note payable
|
|
|
-
|
|
|
|
-
|
|
|
|
20,125
|
|
Placement
fees for note payable
|
|
|
-
|
|
|
|
-
|
|
|
|
65,000
|
|
Impairment
of intangible asset
|
|
|
-
|
|
|
|
-
|
|
|
|
6,393
|
|
Interest
expense
|
|
|
-
|
|
|
|
-
|
|
|
|
156,407
|
|
Amortization
of discount on notes payable
|
|
|
37,792
|
|
|
|
-
|
|
|
|
1,044,727
|
|
Amortization
of cash held in escrow
|
|
|
46,875
|
|
|
|
-
|
|
|
|
46,875
|
|
Depreciation
and amortization
|
|
|
7,986
|
|
|
|
6,109
|
|
|
|
60,501
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,868
|
)
|
Prepaid
services and other assets
|
|
|
25,962
|
|
|
|
-
|
|
|
|
(15,988
|
)
|
Accounts
payable and accrued expenses
|
|
|
(229,836
|
)
|
|
|
177,543
|
|
|
|
948,527
|
|
Salary
advance
|
|
|
1,325
|
|
|
|
(2,475
|
)
|
|
|
(700
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash used in operating activities
|
|
|
(2,164,008
|
)
|
|
|
(1,231,110
|
)
|
|
|
(10,613,988
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition
of property and equipment
|
|
|
(1,597
|
)
|
|
|
(7,614
|
)
|
|
|
(67,026
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash used in investing activities
|
|
|
(1,597
|
)
|
|
|
(7,614
|
)
|
|
|
(67,026
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from notes payable
|
|
|
2,750,000
|
|
|
|
-
|
|
|
|
4,703,375
|
|
Principal
payments on notes payable and demand loans
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,094,747
|
)
|
Shares
of stock sold for cash
|
|
|
-
|
|
|
|
-
|
|
|
|
7,873,451
|
|
Proceeds
from exercise of warrant
|
|
|
7,500
|
|
|
|
-
|
|
|
|
11,950
|
|
Officer
repayment of amounts paid on his behalf
|
|
|
-
|
|
|
|
-
|
|
|
|
19,880
|
|
Cash
paid on behalf of officer
|
|
|
-
|
|
|
|
-
|
|
|
|
(19,880
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by financing activities
|
|
|
2,757,500
|
|
|
|
-
|
|
|
|
11,494,029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash and cash equivalents
|
|
|
591,895
|
|
|
|
(1,238,724
|
)
|
|
|
813,015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents at beginning of period
|
|
|
221,120
|
|
|
|
2,752,103
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents at end of period
|
|
$
|
813,015
|
|
|
$
|
1,513,379
|
|
|
$
|
813,015
|
|
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 Statements of Cash Flows
For
the Six Months Ended June 30, 2008 and 2007,
And
For the Period of Inception (October 30, 2002) to June 30, 2008
(Unaudited)
(continued)
|
|
For
the Six Months Ended June 30,
|
|
|
For
the Period October 30, 2002 to
|
|
|
|
2008
|
|
|
2007
|
|
|
June
30, 2008
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
paid during the period for:
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
40,998
|
|
|
$
|
-
|
|
|
$
|
127,051
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxes
|
|
$
|
-
|
|
|
$
|
8,115
|
|
|
$
|
8,115
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition
and capital restructure:
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
acquired
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Liabilities
assumed
|
|
|
-
|
|
|
|
-
|
|
|
|
(120,799
|
)
|
Common
stock retained
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,369
|
)
|
Adjustment
to additional paid-in capital
|
|
|
-
|
|
|
|
-
|
|
|
|
123,168
|
|
Organization
costs
|
|
|
-
|
|
|
|
-
|
|
|
|
350,000
|
|
Total
consideration paid
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
350,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued in exchange for proprietary rights
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
9,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued in exchange for services
|
|
$
|
33,000
|
|
|
$
|
77,000
|
|
|
$
|
3,210,483
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued in exchange for previously incurred debt and accrued
interest
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,066,401
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued in exchange as interest
|
|
$
|
19,276
|
|
|
$
|
-
|
|
|
$
|
55,276
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
of beneficial conversion feature
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
223,269
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
options and warrants issued in exchange for services
rendered
|
|
$
|
61,782
|
|
|
$
|
457,300
|
|
|
$
|
3,440,274
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
202,486
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
value of common stock and warrants in payable in connection with late
filing of registration statement
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
3,684,664
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain
from marking to market - stock portion of penalty for late registration of
shares
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
(1,124,255
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain
from marking to market - warrant portion of penalty for late registration
of shares
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
(456,603
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment
of intangible asset
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
6,393
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of stock to Officer, previously accrued
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
41,416
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued to members of advisory board
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
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
|
|
$
|
120,000
|
|
|
$
|
5,483
|
|
|
$
|
125,483
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of warrants issued for financing
|
|
$
|
226,754
|
|
|
$
|
-
|
|
|
$
|
226,754
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of shares to be issued for interest payment
|
|
$
|
21,698
|
|
|
$
|
-
|
|
|
$
|
21,698
|
|
The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
IR BIOSCIENCES HOLDINGS, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2008
(Unaudited)
Note
1 - Summary Of Accounting Policies
General
The
accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q, and therefore, do not
include all the information necessary for a fair presentation of financial
position, results of operations and cash flows in conformity with accounting
principles generally accepted in the United States of America for a complete set
of financial statements.
In the
opinion of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. The results
from operations for the three- and six-month periods ended June 30, 2008 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2008. The unaudited condensed consolidated financial statements
should be read in conjunction with the December 31, 2007 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 March 31, 2008
10-KSB.
Business and basis of
presentation
IR
BioSciences Holdings, Inc. (the "Company," "we," or "us") formerly GPN Network,
Inc. ("GPN") is currently a development stage company under the provisions of
Statement of Financial Accounting Standards ("SFAS") No. 7. The Company, which
was incorporated under the laws of the State of Delaware on October 30, 2002, is
a development-stage biopharmaceutical company. Through our wholly owned
subsidiary, ImmuneRegen BioSciences, Inc., the Company is engaged in the
research and development of potential drugs. The Company’s goal is to develop
therapeutics to be used for the protection of the body from exposure to harmful
agents such as toxic chemicals and radiation, as well as, biological agents,
including influenza and anthrax. The Company’s research and development efforts
are at a very early stage and Radilex and Viprovex, the Company’s potential drug
candidates, have only undergone pre-clinical testing in mice. From its inception
through the date of these financial statements, the Company has recognized no
revenues and has incurred significant operating expenses.
The
consolidated financial statements include the accounts of the Company and its
wholly owned subsidiary, ImmuneRegen BioSciences, Inc. Significant inter-company
transactions have been eliminated in consolidation.
In July
2003, the Company effected a 1-for-20 reverse stock split of its common stock.
In April 2004, the Company effected a 2-for-1 forward split of its common
stock. On July 10, 2008, the Company effected a 1-for-10 reverse
stock split of its common stock and simultaneously reduced its total authorized
shares of common stock to 100,000,000. Par value remained unchanged
as a result of the July 2008 stock split and reduction of authorized shares.
Accordingly, the effect of the reverse-split has been presented in the
accompanying financial statement and footnote disclosures.
Reclassification
Certain
reclassifications have been made to conform 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.
IR
BIOSCIENCES HOLDINGS, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2008
(Unaudited)
A summary
of option activity under the Plan as of June 30, 2008, and changes during the
period ended are presented below:
|
|
Options
|
|
|
Weighted
Average
Exercise
Price
|
|
Outstanding
at December 31, 2007
|
|
|
1,601,421
|
|
|
$
|
2.92
|
|
Issued
|
|
|
39,747
|
|
|
|
1.21
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
Forfeited
or expired
|
|
|
-
|
|
|
|
-
|
|
Outstanding
at June 30, 2008
|
|
|
1,641,168
|
|
|
$
|
2.88
|
|
|
|
|
|
|
|
|
|
|
Non-vested
at June 30, 2008
|
|
|
3,625
|
|
|
$
|
1.12
|
|
Exercisable
at June 30, 2008
|
|
|
1,637,543
|
|
|
$
|
2.89
|
|
Aggregate
intrinsic value of options outstanding and exercisable at June 30, 2008 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
$0.80 as of June 30, 2008, and the exercise price multiplied by the number of
options outstanding. As of June 30, 2008, total unrecognized
stock-based compensation expense related to stock options was $3,445. The total
fair value of options vested during the three and six months ended June 30, 2008
was $25,699 and $34,282, respectively.
Interim financial
statements
The
accompanying balance sheet as of June 30, 2008, the statements of operations for
the three and six months ended June 30, 2008 and 2007, and for the period of
inception (October 30, 2002) to June 30, 2008, and the statements of cash flows
for six months ended June 30, 2008 and 2007, and from the period of inception
(October 30, 2002) to June 30, 2008 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.
IR
BIOSCIENCES HOLDINGS, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2008
(Unaudited)
Prepaid services and other
current assets
Prepaid
services and other current assets consist of the following:
|
|
June
30, 2008
|
|
|
December
31, 2007
|
|
Prepaid
insurance
|
|
$
|
11,448
|
|
|
$
|
29,502
|
|
Prepaid
expenses
|
|
|
19,781
|
|
|
|
55,189
|
|
|
|
$
|
31,229
|
|
|
$
|
84,691
|
|
Salary
Advance
The
Company has made an advance of salary to one employee in the amount of $700 and
$2,025 as of June 30, 2008 and December 31, 2007, respectively.
Deposits and other
assets
Deposits
and other assets consist of a deposit on leased office space in the amount of
$7,128 as of June 30, 2008 and December 31, 2007.
Restricted
Cash
The
Company has cash in the amount of $250,000 held in escrow pursuant to the
Securities Purchase Agreement that was entered into in January 2008, $175,000
was placed into escrow on January 3, 2008 and an additional $75,000 was placed
into escrow on June 12, 2008. These funds are amortized on a straight-line basis
over a 24 month period. From January 2008 until May 2008, the monthly
amortization expense was $7,292. With the addition of the additional $75,000
into escrow, monthly amortization expense increased to $10,417 until January
2010 when it decreases to $3,125 until May 2010. As of June 30, 2008, a total of
$46,875 of amortization expense was recognized, resulting in a balance in the
restricted cash escrow account of $203,125.
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:
Computer
equipment
|
3
years
|
Laboratory
equipment
|
3
years
|
Furniture
|
7
years
|
Depreciation
expense for the six months ended June 30, 2008 and 2007 was $7,986 and $6,109,
respectively. The amount depreciated from the date of inception (October
30, 2002) through June 30, 2008 was $60,501. Company’s furniture and
equipment consists of the following:
|
|
June
30, 2008
|
|
|
December
31, 2007
|
|
Office
Equipment
|
|
$
|
60,878
|
|
|
$
|
59,282
|
|
Office
furniture and fixtures
|
|
|
6,148
|
|
|
|
6,147
|
|
|
|
|
67,026
|
|
|
|
65,429
|
|
Accumulated
depreciation
|
|
|
(35,144
|
)
|
|
|
(27,158
|
)
|
Total
|
|
$
|
31,882
|
|
|
$
|
38,271
|
|
IR
BIOSCIENCES HOLDINGS, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2008
(Unaudited)
Note
3 - Related Party Transactions
Credit
Cards
The
Company has a line of credit with Bank of America for $35,000. Our Chief
Executive Officer co-signs this line of credit. At June 30, 2008 the Company had
an outstanding balance on the line of credit of $26,172.
The
Company has an additional line of credit with Bank of America for $25,000. Our
Chief Executive Officer co-signs this line of credit. At June 30, 2008 the
Company had an outstanding balance on the line of credit of
$13,720.
Note
4 - Accounts Payable And Accrued Liabilities
Accounts
payable and accrued liabilities consisted of the following:
|
|
June
30, 2008
|
|
|
December
31, 2007
|
|
Accounts
payable and accrued liabilities
|
|
$
|
580,568
|
|
|
$
|
852,
411
|
|
Accounts
payable - shell company
|
|
|
34,926
|
|
|
|
34,926
|
|
Credit
cards payable
|
|
|
39,891
|
|
|
|
36,765
|
|
Interest
payable
|
|
|
3,214
|
|
|
|
3,215
|
|
Accrued
payroll
|
|
|
-
|
|
|
|
2,092
|
|
State
income tax payable
|
|
|
3,200
|
|
|
|
3,200
|
|
|
|
$
|
661,799
|
|
|
$
|
932,609
|
|
Note
5 - Notes Payable
On June
12, 2008 the Company sold an additional $1,000,000 of convertible debentures
(the “Second Closing”) to YA Global Investments, L.P. (the
“Buyer”). The Convertible Debentures were sold pursuant to a
Securities Purchase Agreement dated as of January 3, 2008 (the “Agreement”)
providing for the issuance of (i) convertible debentures in an aggregate
principal amount up to $3,000,000 (collectively, the “Convertible Debentures”)
which are convertible into shares (the “Conversion Shares”) of the Company’s
common stock, par value $.001 per share (the “Common Stock”), and (ii) warrants
(the “Warrants”) to purchase 750,000 shares (post reverse-split) of Common Stock
(the “Warrant Shares”).
The
initial closing of the Agreement occurred on January 3, 2008, at which time the
Company sold to the Buyer $2 million of the Convertible Debentures and the
Warrants (the “First Closing”), and at the Second Closing the Company exercised
its option to sell and issue to the Buyer an additional $1 million of the
Convertible Debentures. Obligations under the Convertible Debentures
are guaranteed by ImmuneRegen BioSciences, Inc., the Company’s wholly-owned
subsidiary (the “Guarantor”). The Company’s obligations under the Convertible
Debentures are secured by (i) all of the assets and property of the Guarantor
pursuant to a Security Agreement, and (ii) by Patent Collateral of the Company
and the Guarantor in accordance with a Patent Security Agreement by and among
the Company, the Buyer and the Guarantor.
The
Convertible Debentures sold in the First Closing and Second Closing mature on
December 31, 2010 and May 31, 2011, respectively, unless extended by the holder,
and accrue interest at the rate of 8% per annum. Interest is payable
in cash quarterly on the last day of each calendar quarter beginning on March
31, 2008, or at the Company’s option if “Equity Conditions”(as defined in the
debenture) are satisfied, it may be paid by the issuance of Common
Stock. The Convertible Debentures are convertible at any time at the
option of the holder into shares of the Company’s Common Stock at a price equal
to $2.00 per share (post reverse-split). On or after December 31,
2009 or if the Company’s fails to achieve certain milestones based on
preclinical studies and submission of a Investigational New Drug Application, as
set forth in the Convertible Debenture, the conversion price of the Convertible
Debentures becomes the lower of (i) $2.00 per share (post reverse-split) or (ii)
80% of the lowest daily volume weighted average price during the five trading
days immediately preceding conversion.
The
Company may redeem a portion or all amounts outstanding under the Convertible
Debentures prior to May 31, 2011 provided that certain conditions to redemption
have been satisfied. The Company may force a conversion of the
Convertible Debentures into Common Stock, provided that specified conditions
have been satisfied. Holders of the Convertible Debentures are
subject to limitations on their right to convert the Convertible Debentures, or
receive shares of Common Stock as payment of interest, if after giving effect to
such conversion or receipt of shares, the holder would be deemed to beneficially
own more than 9.99% of the Company’s then outstanding Common
Stock. Upon the occurrence of certain events of default defined in
the Convertible Debentures, including the Company’s failure to pay the holder
any amount of principal, interest, or other amounts when due, the full principal
amount of the Convertible Debentures, together with interest and other amounts
due, become immediately due and payable in cash, provided however, that holder
may request payment of such amounts in Common Stock of the Company.
IR
BIOSCIENCES HOLDINGS, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2008
(Unaudited)
In the
event the Company effects any “fundamental transaction” as defined in the
Convertible Debentures, including a merger or consolidation of the Company or
sale of more than 50% of its assets, the holder may (i) require the redemption
of all amounts owed, including principal, accrued and unpaid interest and any
other charges; (ii) require the conversion of the Convertible Debentures into
shares of common stock and other securities, cash and property; or (iii) in the
case of a merger or consolidation, require the surviving entity to issue to the
holder a convertible debenture with a principal amount equal to the Convertible
Debentures then held by the holder, plus all accrued and unpaid interest and
other amounts, and with the same terms and conditions as the Convertible
Debentures.
The
Company placed $175,000 into an escrow account upon the First Closing and an
additional $75,000 into escrow upon the Second Closing. The funds in
escrow will be used to compensate the Buyer’s investment manager for monitoring
and managing the Buyer’s purchase and investment. These funds are
amortized on a straight-line basis over a 24 month period. From
January 2008 until May 2008, the monthly amortization expense was
$7,292. With the addition of the additional $75,000 into escrow,
monthly amortization expense increased to $10,417 until January 2010 when it
decreases to $3,125 until May 2010. As of June 30, 2008, a total of
$46,875 of amortization expense was recognized, resulting in a balance in the
restricted cash escrow account of $203,125.
The
Company agreed to pay a $20,000 structuring fee to the Buyer’s investment
manager. In addition, for the period from January 3, 2008 through 30 days after
all amounts owed to the Buyer under the Convertible Debentures have been paid,
the officers and directors of the Company agreed not to sell, transfer, pledge,
or otherwise encumber or dispose of any securities of the Company except in
accordance with the volume limitations set forth in Rule 144(e) of the General
Rules and Regulations under the Securities Act of 1933, as amended.
The
Warrants have an exercise price, subject to adjustments, of $2.50 per share
(post reverse-split) and are exercisable at any time on or prior to December 31,
2012. The Warrants provide a right of cashless exercise if, at the time of
exercise, there is no effective registration statement registering the resale of
the shares underlying the Warrants. Holders of the Warrants are subject to
limitations on their right to exercise the Warrants, if after giving effect to
the exercise, a holder and its affiliates would be deemed to beneficially own
more than 9.99% of the Company’s then outstanding Common Stock.
The Buyer
has a right of first refusal on any future funding that involves the issuance of
the Company’s capital stock for so long as a portion of the Convertible
Debentures is outstanding.
On July
18, 2008 the Buyer agreed to waive application of the provisions of debentures
it holds pursuant to the amendment to the Company’s Certificate of
Incorporation. Further, the Company agreed to increase the share
reserve as defined in the debenture. In addition, the Company and the
Buyer have agreed to amend the debentures to reduce the conversion price of the
debenture from $2.00 (post reverse-split) to $1.70 (post
reverse-split).
During
the three months ended June 30, 2008, the Company accrued interest in the amount
of $39,452 and $3,945 on the notes issued in the First Closing and Second
Closing, respectively. The Company paid $19,726 of the accrued
interest on the note from the First Closing in cash, and the remaining $19,726
will be paid in shares of common stock. The Company paid $1,973 of
the accrued interest on the note from the Second Closing in cash, and the
remaining $1,973 will be paid in shares of common stock. As of
June 30, 2008, the shares of common stock have not been issued and the interest
in the amount of $21,699 is shown as common stock subscribed on the Company’s
balance sheet at June 30, 2008.
Pursuant
to the Purchase Agreement, the Company issued warrants to acquire 750,000
additional shares (post reverse-split) of common stock. These
warrants were valued using the guidance of EITF 00-27, resulting in a value of
$226,754. The value of these warrants was taken as a discount to the
convertible note, and will be amortized over the three year life of the
note. As of June 30, 3008, the remaining discount to the convertible
notes payable is $188,962.
Note
6 - Equity
Common
stock
In July
2003, the Company effected a 1-for-20 reverse stock split of its common stock.
In April 2004, the Company effected a 2-for-1 forward split of its common
stock. On July 10, 2008, the Company effected a 1-for-10 reverse
stock split of its common stock and simultaneously reduced its authorized shares
of common stock to 100,000,000; par value remained
unchanged. Accordingly, the effect of the reverse-split has been
presented in the accompanying financial statement and footnote
disclosures.
In March
2008, the Company agreed to issue 39,500 shares (post reverse-split) of common
stock to a note holder for accrued interest in the amount of $19,276. These
shares were not issued as of March 31, 2008 and the value of the shares in the
amount of $19,276 was recorded in common stock subscribed at March 31,
2008. During the three months ended June 30, 2008, the Company issued
the 39,500 shares (post reverse-split) of common stock.
In June
2008, the Company agreed to issue 28,220 shares (post reverse-split) of common
stock to a note holder for accrued interest in the amount of
$19,726. These shares were not issued as of June 30, 2008 and the
fair value of these shares of $19,726 has been recorded as common stock
subscribed at June 30, 2008.
In June
2008, the Company agreed to issue 2,822 shares (post reverse-split) of common
stock to a note holder for accrued interest in the amount of
$1,973. These shares were not issued as of June 30, 2008 and the fair
value of these shares of $1,973 has been recorded as common stock subscribed at
June 30, 2008.
IR
BIOSCIENCES HOLDINGS, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2008
(Unaudited)
Warrants
In April
2007, the Company issued warrants to purchase 500,000 shares (post
reverse-split) of common stock to a consultant. The warrants vest
75,000 (post reverse-split) immediately and 17,708 (post reverse-split) every
month for the next two years. Pursuant to an agreement dated June 6,
2008, the Company cancelled 336,458 of these common stock purchase warrants
(post reverse-split) that were previously outstanding. The Company
credited to operations the amount of $38,599, representing the value of the
warrants that vested during the three months ended March 31, 2008.
In
January 2008, the Company issued warrants to purchase 750,000 shares (post
reverse-split) of common stock pursuant to a financing agreement. These
warrants were valued using the guidance of EITF 00-27, resulting in a value of
$226,754. The value of these warrants was taken as a discount to the
convertible note, and will be amortized over the three year life of the
note. As of June 30, 3008, the remaining discount to the convertible
notes payable is $188,962.
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)
|
$
|
0.50-1.00
|
|
|
|
36,580
|
|
|
|
0.56
|
|
|
$
|
0.50-1.00
|
|
|
|
36,580
|
|
|
|
0.56
|
|
1.25-2.20
|
|
|
|
181,473
|
|
|
|
2.30
|
|
|
|
1.25-2.20
|
|
|
|
181,473
|
|
|
|
2.30
|
|
2.30-5.60
|
|
|
|
3,587,718
|
|
|
|
3.03
|
|
|
|
2.30-5.60
|
|
|
|
3,587,718
|
|
|
|
3.03
|
|
10.00
|
|
|
|
62,411
|
|
|
|
0.48
|
|
|
|
10.00
|
|
|
|
62,411
|
|
|
|
0.48
|
|
20.00
|
|
|
|
655
|
|
|
|
1.07
|
|
|
|
20.00
|
|
|
|
655
|
|
|
|
1.07
|
|
|
|
|
|
3,868,837
|
|
|
|
2.93
|
|
|
|
|
|
|
|
3,868,837
|
|
|
|
2.93
|
Transactions
involving warrants are summarized as follows:
|
|
Number
of Shares
(post-split)
|
|
|
Weighted
Average
Price
Per Share
(post-split)
|
Outstanding
at December 31, 2007
|
|
|
3,516,064
|
|
|
$
|
3.60
|
Granted
|
|
|
750,000
|
|
|
|
2.50
|
Exercised
|
|
|
-
|
|
|
|
-
|
Cancelled
or expired
|
|
|
(33,268
|
)
|
|
|
4.27
|
Outstanding
at March 31, 2008
|
|
|
4,232,796
|
|
|
$
|
3.43
|
Granted
|
|
|
-
|
|
|
|
-
|
Exercised
|
|
|
(20,000
|
)
|
|
|
0.38
|
Cancelled
or expired
|
|
|
(343,959
|
)
|
|
|
3.12
|
Outstanding
at June 30, 2008
|
|
|
3,868,837
|
|
|
$
|
3.75
|
IR
BIOSCIENCES HOLDINGS, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2008
(Unaudited)
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:
|
|
2008
|
|
|
2007
|
|
Significant
assumptions (weighted-average):
|
|
|
|
|
|
|
Risk-free
interest rate at grant date
|
|
|
4.25 |
% |
|
|
4.75 |
% |
Expected
stock price volatility
|
|
82.54
to 93.11
|
% |
|
|
87.71 |
% |
Expected
dividend payout
|
|
|
- |
|
|
|
- |
|
Expected
warrant life-years
|
|
3
to 5
|
|
|
3
to 5
|
|
Options
In March
2008, the Company issued options to purchase 25,000 shares (post reverse-split)
of common stock a director. These options vested in 30
days. The Company valued these options at
$19,625. The Company charged to operations the amount of
$19,625, the value of the vested options during the three months ended June 30,
2008.
In March
2008, the Company issued options to purchase 1,500 shares (post reverse-split)
of common stock to an employee. Options to purchase 50% or 750 shares (post
reverse-split) vest in 30 days and options to purchase the remaining 50% or
750 (post reverse-split) shares vest twelve months. The Company
valued these options at $976. The amount will be charged to
operations as the options vest.
In March
2008, the Company issued options to purchase 1,500 shares (post reverse-split)
of common stock to an employee. Options to purchase 50% or 750 shares (post
reverse-split) vest in 30 days and options to purchase the remaining 50% or
750 shares (post reverse-split) vest twelve months. The Company
valued these options at $976. The amount will be charged to
operations as the options vest.
In March
2008, the Company issued options to purchase 11,747 shares (post reverse-split)
of common stock to a member of the Company’s advisory board. These
options vest upon issuance. The Company charged to operations the
amount of $3,729, the value of the vested options during the three months ended
March 31, 2008.
The
following table summarizes the changes in options outstanding and the related
prices for the shares of the Company's common stock.
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)
|
|
$
|
0.60-2.20
|
|
|
|
1,408,000
|
|
|
|
7.26
|
|
|
$
|
0.60-2.20
|
|
|
|
1,404,375
|
|
|
|
7.28
|
|
|
2.30-2.50
|
|
|
|
201,444
|
|
|
|
3.02
|
|
|
|
2.30-2.50
|
|
|
|
201,444
|
|
|
|
3.02
|
|
|
3.10
|
|
|
|
100
|
|
|
|
2.45
|
|
|
|
3.10
|
|
|
|
100
|
|
|
|
2.45
|
|
|
3.30
|
|
|
|
10,303
|
|
|
|
2.14
|
|
|
|
3.30
|
|
|
|
10,303
|
|
|
|
2.14
|
|
|
4.40
|
|
|
|
15,000
|
|
|
|
2.00
|
|
|
|
4.40
|
|
|
|
15,000
|
|
|
|
2.00
|
|
|
250.00
|
|
|
|
6,321
|
|
|
|
1.75
|
|
|
|
250.00
|
|
|
|
6,321
|
|
|
|
1.75
|
|
|
|
|
|
|
1,641,168
|
|
|
|
|
|
|
|
|
|
|
|
1,637,543
|
|
|
|
|
|
IR
BIOSCIENCES HOLDINGS, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2008
(Unaudited)
Options
not vested are not exercisable.
Transactions
involving stock options issued are summarized as follows:
|
|
Number
of Shares
|
|
|
Weighted
Average
Price
Per Share
|
|
Outstanding
at December 31, 2007
|
|
|
1,601,421 |
|
|
$ |
2.92 |
|
Granted
|
|
|
39,747 |
|
|
|
1.21 |
|
Exercised
|
|
|
- |
|
|
|
- |
|
Expired
|
|
|
- |
|
|
|
- |
|
Outstanding
at March 31, 2008
|
|
|
1,641,168 |
|
|
$ |
2.88 |
|
Granted
|
|
|
- |
|
|
|
- |
|
Exercised
|
|
|
- |
|
|
|
- |
|
Expired
|
|
|
- |
|
|
|
- |
|
Outstanding
at June 30, 2008
|
|
|
1,641,168 |
|
|
$ |
2.88 |
|
|
|
|
|
|
|
|
|
|
Non-vested
at June 30, 2008
|
|
|
3,625 |
|
|
$ |
1.12 |
|
Exercisable
June 30, 2008
|
|
|
1,637,543 |
|
|
$ |
2.89 |
|
Note
7 - Subsequent Events
Issuance of Shares for
Interest
On July
2, 2008 we issued 28,220 restricted shares of common stock to YA Global
Investments, L.P. (“YA Global”), who is an accredited investor, for accrued
interest on a $2 million convertible debenture through June 30, 2008 of $19,726.
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
2, 2008 we issued 2,822 restricted shares of common stock to YA Global, who is
an accredited investor, for accrued interest on a $1 million convertible
debenture through June 30, 2008 of $1,973. 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.
Warrant Exercise
In July
2008, five investors exercised warrants to purchase an aggregate of 30,000
shares of the Company’s common stock at a price of $0.375 per
share.
1-for-10 Reverse Stock
Split
On July
10, 2008, the Company filed an amendment with the Delaware Secretary of State to
its Certificate of Incorporation, as amended, (the “Amended Certificate”)
effectuating a 1-for-10 reverse stock split and a reduction in the number of
authorized shares of Common Stock to 100,000,000 shares. The Amended
Certificate and the reverse stock split were described in the Company’s Proxy
Statement filed with the SEC on May 9, 2008. As previously reported
in the Company’s Current Report on Form 8-K filed with the SEC on July 22, 2008,
the Amended Certificate, including the reverse stock split, was approved by the
stockholders at the Company’s annual meeting held on June 25, 2008.
On August
1, 2008 the Company issued an aggregate of 120 common shares to holders of
fractional shares in order to bring their number of shares held to the next
whole number of shares. Additionally, in conjunction with the reverse
stock split, our trading symbol on the Over-The-Counter Bulletin Board was
changed to IRBS.
Restructure With Regard to
Debentures Held By YA Global
On July
18, 2008 YA Global agreed to waive application of the provisions of debentures
it holds pursuant to the amendment to the Company’s Certificate of
Incorporation. Further, we have agreed to increase the share reserve
as defined in the debenture. In addition, the Company and YA Global
have agreed to amend the debentures to reduce the conversion price of the
debenture from $2.00 to $1.70.
IR
BIOSCIENCES HOLDINGS, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2008
(Unaudited)
Purchase Agreement with
Funds Managed by Brencourt Advisors, LLC
On August
8, 2008, the Company entered into a Securities Purchase Agreement (the “Purchase
Agreement”) with certain funds for which Brencourt Advisors, LLC is the
investment manager (the “Buyers”), pursuant to which the Buyers agreed to
purchase from the Company (i) up to $5 million of 10% subordinated secured
convertible debentures (the “Convertible Debentures”), which shall be
convertible into shares of the Company’s common stock, par value $0.001 per
share (the “Common Stock”) and (ii) warrants to acquire up to 2,500,000
additional shares of Common Stock (the “Warrants”) (the
“Financing”). The Warrants are exercisable after the six month and
one day anniversary from the date of issuance and have a term of exercise equal
to five years.
The
closing of the Financing occurred on August 8, 2008, at which time the Company
sold to the Buyers $5 million of the Convertible Debentures and the
Warrants. Obligations under the Convertible Debentures are guaranteed
by ImmuneRegen BioSciences, Inc., the Company’s wholly-owned subsidiary (the
“Guarantor”). The Company’s obligations under the Convertible Debentures are
secured by (i) all of the assets and property of the Guarantor pursuant to a
Security Agreement by and between the Company and the Guarantor in favor of the
Buyers; and (ii) by Patent Collateral of the Company and the Guarantor in
accordance with a Patent Security Agreement by and among the Company, the Buyers
and the Guarantor. The security interests granted to the Buyers are
subject to and subordinated to the senior security interests granted by the
Company and Guarantor to YA Global Investments, L.P. Notwithstanding
the subordinated security interests granted to the Buyers, the Company is
permitted to pay and the Buyers may receive any regularly scheduled payment of
principal, interest, liquidated damages, buy-in compensation or other amounts
due and payable on the Financing.
The
Convertible Debentures mature on August 8, 2013, unless extended by the holders,
and accrue interest at the rate of 10% per annum. Interest is payable
in cash quarterly on the last day of each calendar quarter beginning on
September 30, 2008, or at the Company’s option (i) if “Equity Conditions” (as
defined in the Convertible Debentures) are satisfied, it may be paid by the
issuance of Common Stock or (ii) by issuance of a 0% interest convertible
debenture with a five year term of exercise and a minimum conversion price of
$0.30 per share. The Company was required to prepay interest for the
first and last quarters of the term of the Convertible
Debentures. The Convertible Debentures are convertible at any time at
the option of the holders into shares of the Company’s Common Stock at a price
equal to $1.55 per share.
At any
time after the six-month anniversary of the issuance of the Convertible
Debentures, the Company may redeem a portion or all amounts outstanding under
the Convertible Debentures prior to August 8, 2013 provided that certain
conditions to redemption have been satisfied. The Company may
force a conversion of the Convertible Debentures into Common Stock, provided
that specified conditions have been satisfied. Holders of the
Convertible Debentures are subject to limitations on their right to convert the
Convertible Debentures, or receive shares of Common Stock as payment of
interest, if after giving effect to such conversion or receipt of shares, the
holder would be deemed to beneficially own more than 9.98% of the Company’s then
outstanding Common Stock. Upon the occurrence of certain events of
default defined in the Convertible Debentures, including the Company’s failure
to pay the holder any amount of principal, interest, or other amounts when due,
the full principal amount of the Convertible Debentures, together with interest
and other amounts due, become immediately due and payable in cash at the
“Mandatory Default Amount” as defined in the Convertible
Debentures.
In the
event the Company effects any “Fundamental Transaction” as defined in the
Convertible Debentures, including a merger or consolidation of the Company,
completion of a tender offer or exchange offer, or sale of substantially all of
its assets, the holder has the right to receive, upon any subsequent conversion
of the Convertible Debentures, the same kind and amount of securities, cash
and/or property that the holder would have been entitled to receive upon the
occurrence of the Fundamental Transaction if it held one share of Common Stock
for each conversion share of Common Stock (the “Alternate
Consideration”). In addition, any successor to the Company or
surviving entity shall issue to the holder a convertible debenture with a
principal amount equal to the Convertible Debentures then held by the holder,
plus all accrued and unpaid interest and other amounts, and with the same terms
and conditions as the Convertible Debentures including the right to convert into
the Alternate Consideration.
IR
BIOSCIENCES HOLDINGS, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2008
(Unaudited)
The
Warrants have an exercise price, subject to adjustments, of $2.00 per share and
are exercisable at any time on or after February 8, 2009 and prior to February
8, 2014. The Warrants provide a right of cashless exercise if, at the
time of exercise, there is no effective registration statement registering the
resale of the shares underlying the Warrants. To the extent not
previously exercised, the Warrants will automatically be exercised via cashless
exercise on February 8, 2014. Holders of the Warrants are subject to
limitations on their right to exercise the Warrants, if after giving effect to
the exercise, a holder and its affiliates would be deemed to beneficially own
more than 4.99% of the Company’s then outstanding Common Stock.
If, at
anytime beginning from the 6 month anniversary date of the Purchase Agreement,
the Company fails to satisfy the current public information requirements under
Rule 144, the Company is required to pay to the Buyers an amount in cash equal
to 2% of the aggregate subscription amount of the Buyers’ securities on the day
of such failure and on every 30th day, bearing interest at the
rate of 1.5% per month, until it is cured or such information is not
required. Subject to any prior rights granted to YA Global
Investments, L.P., the Buyers have a right to participate in up to an amount
equal to 50% of any subsequent financing that involves the issuance of the
Company’s capital stock or indebtedness for so long as the Convertible
Debentures are outstanding. The Buyers also have registration
rights in that it may include the shares issued and issuable pursuant to the
Convertible Debentures and Warrants in certain registration statements filed by
the Company.
Waiver and Amendment of YA
Debentures and Warrants and Issuance of Additional Warrants
The
Company previously issued to YA Global a Secured Convertible Debenture dated
January 3, 2008 in the principal sum of $2 million and a Secured Convertible
Debenture dated June 12, 2008 in the principal sum of $1 million (collectively,
the “YA Convertible Debentures”) pursuant to a Securities Purchase Agreement
dated January 3, 2008 (the “YA Agreement”) , which are previously reported in
the Company’s Form 8-K Current Reports filed with the SEC on January 9, 2008 and
June 12, 2008, respectively. The YA Convertible Debentures are
convertible into shares of the Company’s Common Stock (the “YA Conversion
Shares”). Pursuant to the YA Agreement, the Company also issued to YA
Global warrants (the “YA Warrants”) to purchase 7,500,000 shares of Common Stock
(the “YA Warrant Shares”). On August 8, 2008, in consideration for YA
Global’s consent to the Company conducting and closing the Financing, the
Company and YA Global agreed to amend the YA Convertible Debentures to increase
the annual interest rate from 8% to 10% and adjust the Conversion Price to $1.50
(the “Amended Debentures”). Additionally, under the Amended
Debentures, YA Global may elect on or after December 31, 2009 to have the
Company redeem up to $1.5 million of the YA Global Debentures as well as the
payment of a redemption premium of 20% of the principal amount
redeemed. The Company may also pay the interest on the Amended
Debentures, at the Company’s option, in cash, 0% interest convertible debentures
with a five year term of exercise and a minimum conversion price of $0.30 per
share, or, subject to the satisfaction of certain specified equity conditions,
in shares of the Company’s Common Stock. All overdue accrued and
unpaid interest to be paid on the Amended Debentures shall be subject to a late
fee at an interest rate equal to the lesser of 18% per annum or the maximum rate
permitted by applicable law that accrues daily until all overdue amounts are
paid in full.
In
addition, the Company and YA Global agreed to amend the YA Warrants to adjust
the exercise price of the warrants to $2.00 (the “YA Warrant Amendment”) and to
reduce the YA Warrant Shares to 750,000 pursuant to the terms of the YA Warrants
as a result of the Company’s 1 for 10 reverse stock split described
above. The Company also agreed to issue to YA Global additional
warrants to purchase an additional 750,000 shares of Common Stock on or before
December 31, 2012 (the “Expiration Date”) at an exercise price of $2.00, subject
to adjustment (the “YA Additional Warrants”). Holders of the YA
Additional Warrants are limited in their right to exercise the YA Additional
Warrants if, upon giving effect to such exercise, it would cause the aggregate
number of shares of Common Stock beneficially owned by the holder and its
affiliates to exceed 9.99% of the outstanding shares of the Common Stock
following such exercise, except within 60 days of the Expiration
Date. The YA Additional Warrants provide a right of cashless exercise
if, at the time of exercise, there is no effective registration statement
registering the resale of the shares underlying the warrants.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
Special
Note Regarding Forward-looking Statements
Some of
the statements under "Risk Factors," "Business" and elsewhere in this Quarterly
Report on Form 10-Q constitute forward-looking statements. These statements
involve known and unknown risks, uncertainties and other factors that may cause
our actual results, levels of activity, performance or achievements to be
materially different from any future results, levels of activity, performance,
or achievements expressed or implied by such forward-looking statements. Such
factors include, among other things, those described under "Risk Factors" and
elsewhere in this Quarterly Report on Form 10-Q and in the "Risk Factors"
section of our annual report on SEC Form 10-KSB filed with the Securities and
Exchange Commission on March 31, 2008.
In some
cases, you can identify forward-looking statements by terminology such as "may,"
"will," "should," "could," "expects," "plans," "intends," "anticipates,"
"believes," "estimates," "predicts," "potential" or "continue" or the negative
of such terms or other comparable terminology.
Although
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance,
or achievements. Moreover, neither we nor any other person assumes
responsibility for the accuracy and completeness of such statements. We are
under no duty to update any of the forward-looking statements after the date of
this report.
The
following information should be read in conjunction with the financial
statements and the notes thereto. The analysis set forth below is provided
pursuant to applicable Securities and Exchange Commission regulations and is not
intended to serve as a basis for projections of future events.
Overview
IR
BioSciences Holdings, Inc. is a development-stage biotechnology company. Through
our wholly-owned subsidiary ImmuneRegen BioSciences, Inc., we are engaged in the
research and development of potential drug candidates, Homspera® and its
derivatives, Radilex® and Viprovex®. Although containing the identical active
ingredient Homspera, we defined Radilex and Viprovex as derivatives of Homspera
due to the potential difference in formulations and indications for use. Our
goals include developing these potential drug candidates to be used as possible
countermeasures for homeland security threats, including radiological, chemical
and biological agents, and to meet the commercial need for similar beneficial
effects in conditions such as radiation therapy, influenza, anthrax and
potentially other microbial ailments. We have discovered activities of Homspera
that may potentially open additional commercialization opportunities in areas
such as human adult stem cell stimulation, vaccine adjuvants, which stimulate
the immune system above that of a stand-alone vaccine, and wound
healing.
Our
patents, patent applications and continued research are partially derived from
discoveries made during research studies related to the function of Substance P,
which is found in the body and has a large number of actions. These studies were
funded by the Air Force Office of Scientific Research (AFOSR) in the early 1990s
and were conducted by research scientists, including our co-founders Drs. Mark
Witten and David Harris. In the course of research on Substance P, scientists
created a number of synthetic analogues, structural derivatives with slight
chemical differences, for study. One of these, which we have named Homspera, is
the basis for our drug development efforts and our intellectual property. All of
our research and development efforts are at the pre-clinical stage and Homspera
has only undergone exploratory studies to evaluate its biological activity in
small animals. There can be no assurance that our interpretation of study
results will prove to be accurate after further testing, and our beliefs
regarding the potential uses of our drug candidates may never
materialize.
Our
current focus is to develop Homspera for regenerating or strengthening the human
immune system, in part, through stimulating human adult stem cells. It is the
belief of our management that the stem cell activity exhibited by Homspera
underlies some of the effects previously reported in potential applications like
treatment for radiation exposure and infectious disease using Homspera
derivatives Radilex and Viprovex, respectively, which are described
below. Recent studies have evaluated the effects of Homspera on human
adult stem cell activity. Additionally, ongoing studies are being performed to
evaluate the efficacy of Homspera as a potential product to increase the healing
rate of wounds.
We are
researching Radilex for use as a potential treatment for acute exposure to
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. We believe that Viprovex, if developed, can be used in potential
applications 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 as an adjuvant to other
existing drugs. Ongoing studies are being performed to evaluate the
efficacy of Viprovex as a vaccine adjuvant to enhance immune response to a given
dose of vaccine. Based on early studies on Homspera and existing
literature on Substance P, we are also researching the efficacy of Viprovex as a
potential treatment for exposure to chemical agents, such as
formalin.
To date
we have submitted preliminary study data to the U.S. Food and Drug
Administration (FDA) and have been issued two Pre-Investigational New Drug
(PIND) numbers, one for the potential use of Radilex in the treatment of acute
radiation syndrome and the other for the potential use of Viprovex in the
treatment of avian influenza. We have contracted with an FDA regulatory
consultant to assist us in our preparation and submission of an Investigational
New Drug application (IND), a necessary prerequisite to human clinical studies,
which can only follow after the FDA’s allowance of our IND.
We have
filed patent applications directed to various methods of using and compositions
comprising Substance P analogues. We presently own at least five issued patents,
including at least two issued U.S. patents and at least three issued foreign
patents, one of which has been registered in nine countries in the European
Union. We also have at least 61 pending patent applications, including at least
10 pending U.S. utility patent applications, at least 10 pending U.S.
provisional applications, at least 4 pending international patent applications,
and at least 37 pending foreign patent applications. All inventions
embodied in these applications and issued patents have been assigned to the
company by the inventors.
Our
potential drug candidates, Homspera, Radilex and Viprovex, are at pre-clinical
stages of development and may not be shown to be safe or effective and may never
receive regulatory approval. Neither Homspera, nor Radilex nor Viprovex have
been tested in large animals or humans. There is no guarantee that regulatory
authorities will ever permit human testing of Homspera, Radilex, Viprovex or any
other potential products derived from Homspera. Even if such testing is
permitted, none of Homspera, Radilex, Viprovex or any other potential drug
candidates, if any, derived from Homspera may be successfully developed or shown
to be safe or effective in humans.
The
results of our pre-clinical studies and clinical trials may not be indicative of
future clinical trial results. A commitment of substantial resources to conduct
time-consuming research, pre-clinical studies and clinical trials will be
required if we are to develop any commercial applications using Homspera or any
derivatives thereof. It is possible that partnerships and/or licensing
agreements will not develop during the preclinical and/or clinical stages of
development, if at all. Delays in planned patient enrollment in our future
clinical trials may result in increased costs, program delays or both. None of
our potential technologies may prove to be safe or effective in clinical trials.
Approval of the FDA, or other regulatory approvals, including export license
permissions, may not be obtained and even if successfully developed and
approved, our potential applications may not achieve market acceptance. Any
potential applications resulting from our programs may not be successfully
developed or commercially available for a number of years, if at
all.
To date,
we have not obtained regulatory approval for, or commercialized any
applications, using Homspera or any of its derivatives. We have incurred
significant losses since our inception and we expect to incur annual losses for
at least the next three years as we continue with our drug research and
development efforts.
Results
of Operations for the Three Month Periods Ended June 30, 2008 and June 30,
2007
Revenue
We have
not generated any revenues from operations from our inception. We believe we
will begin earning revenues from operations during calendar year 2010 as we
transition from a development stage company.
Sales, General, and
Administrative Expenses
SG&A
expenses were $2,011,419 for the six months ended June 30, 2008, a decrease of
$4,599, which is less than 1%, compared to SG&A expenses of $2,016,018
during the six months ended June 30, 2007. Higher costs for research
and development, payroll and related expenses and financing costs were offset by
lower costs for non-cash compensation. For the six months ended June 30, 2008,
this amount consisted primarily of research and development costs of $426,372,
payroll and related expenses of $617,910, inclusive of an incentive bonus of
$90,750 in cash for Michael K. Wilhelm, C.E.O. per the terms of his employment
agreement, financing costs of $116,875, legal and accounting fees of $344,903,
consulting and professional fees of $162,835, travel and entertainment expenses
of $91,961 inclusive of costs relating to the annual shareholders’ meeting and
facilities expenses of $61,076.
The
Company expects SG&A to increase during the coming twelve months as we
continue to build out the Company's infrastructure and to develop the Company's
potential drugs and therapeutics.
Interest Expense
(net)
Interest
expense (net) was $58,148 for the three months ended June 30, 2008, an increase
of $84,960 or approximately 317% compared to interest income of $26,812 for the
three months ended June 30, 2007. Interest expense increased during the three
months ended June 30, 2008 due to interest costs relating to the securities
purchase agreement with YA Global Investments, L.P. in first quarter of 2008 and
a subsequent securities purchase agreement with YA Global Investments on June
12, 2008.
The
Company expects interest expense to increase approximately 166% per quarter
beginning in the third quarter as we sell additional debt securities to YA
Global Investments L.P. or other investors.
Net Loss
For the
reasons stated above our net loss for the three months ended June 30, 2008 was
$892,660 or $0.08 per share (post reverse-split), an increase of $222,436 or
approximately 20% compared to a net loss of $1,115,096 for the three months
ended June 30, 2007.
Results
of Operations for the Six Month Periods Ended June 30, 2008 and June 30,
2007
Revenue
We have
not generated any revenues from operations from our inception.
Sales, General, and
Administrative Expenses
SG&A
expenses were $2,011,419 for the six months ended June 30, 2008, a decrease of
$4,599, which is less than 1%, compared to SG&A expenses of $2,016,018
during the six months ended June 30, 2007. Higher costs for research
and development, payroll and related expenses and financing costs were offset by
lower costs for non-cash compensation. For the six months ended June 30, 2008,
this amount consisted primarily of research and development costs of $426,372,
payroll and related expenses of $617,910, inclusive of an incentive bonus of
$90,750 in cash for Michael K. Wilhelm, C.E.O. per the terms of his employment
agreement, financing costs of $116,875, legal and accounting fees of $344,903,
consulting and professional fees of $162,835, travel and entertainment expenses
of $91,961 inclusive of costs relating to the annual shareholders’ meeting and
facilities expenses of $61,076.
Interest Expense
(net)
Interest
expense (net) was $104,475 for the six months ended June 30, 2008, an increase
of $152,153 or approximately 319% compared to interest income of $47,678 for the
six months ended June 30, 2007. Interest expense increased during the six months
ended June 30, 2008 due to interest costs relating to the securities purchase
agreement with YA Global Investments, L.P. in first quarter of 2008 and a
subsequent securities purchase agreement with YA Global Investments on June 12,
2008.
Net Loss
For the
reasons stated above our net loss for the six months ended June 30, 2008 was
$2,115,894 or $0.18 per share, an increase of $139,439 or approximately 7%
compared to a net loss of $1,976,455 for the six months ended June 30,
2007.
Going
Concern
Our
independent certified public accountants have stated in their report included in
our annual report on SEC Form 10-KSB filed with the Securities and Exchange
Commission on March 31, 2008 that we have incurred a net loss and negative cash
flows from operations of $5,463,958 and $2,456,038, respectively, for the year
ended December 31, 2007. 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, 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.
The
Company expects losses to increase during the coming twelve months. The Company
does not expect to begin to generate revenue in the coming twelve months, and
our costs are likely to increase as continue our research and development
efforts on our early, pre-clinical stage products and build out our corporate
infrastructure.
Plan
of Operations
We expect
to continue to incur increasing operating losses for the foreseeable future,
primarily due to our continued research and development activities attributable
to Homspera, Radilex, Viprovex or any other proposed product, if any, derived
from Homspera and general and administrative activities.
The
preliminary results of our pre-clinical studies using Homspera, Radilex 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.
Product Research and
Development
We
incurred expenses of $426,372 for the six months ended June 30, 2008 in research
and development activities related to the development of Homspera, Radilex and
Viprovex versus expenses of $234,467 for the six months ended June 30, 2007.
From our inception in October 2002, we have spent $1,994,558 on research and
development activities. These costs only include the manufacture and delivery of
our drug by third party manufacturers and payments to contract research
organizations and consultants for consulting related to our studies and costs of
performing such studies. Significant costs relating to research and development,
such as compensation for Dr. Siegel, have been classified in officers’ salaries
for consistency of financial reporting.
We
anticipate that during the next 12 months we will increase our research and
development spending to a total of approximately $3,000,000 in an effort to
further develop Homspera, Radilex and Viprovex. This research and development
cost estimate includes additional animal pharmacology studies, formulation and
animal safety/toxicity studies. If we receive additional funds, through
investment funding, licensing agreements or grants, we expect we will further
increase our research and development spending.
We
believe that initial revenues, if any, will likely be generated through
partnerships, alliances and/or licensing agreements with pharmaceutical or
biotechnology companies. Our focus during the next 12 months will be to identify
those companies which we believe may have an interest in our proposed products
and attempt to negotiate arrangements for potential partnerships, alliances
and/or licensing arrangements. Alliances between pharmaceutical and
biotechnology companies can take a variety of organizational forms and involve
many different payment structures such as upfront payments, milestone payments,
equity injections and royalty payments. To date, we have not entered into
discussions with and have no agreements or arrangements with any such companies.
Even if we are successful in entering into such a partnership or alliance or
licensing our technology, we anticipate that the earliest we may begin to
generate revenues from operations would be calendar year 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
June 30, 2008, we had no revenues from any product sales, royalties or licensing
fees, and have not achieved profitability on a quarterly or annual basis. Our
ability to achieve profitability depends upon, among other things, our ability
to develop products, obtain regulatory approval for products under development
and enter into agreements for product development, manufacturing and
commercialization. Moreover, we may never achieve significant revenues or
profitable operations from the sale of any of our potential products or
technologies.
If
product development or approval does not occur as scheduled, our time to reach
market will be lengthened and our costs will substantially increase.
Additionally, we may be requested to expand our findings to gather additional
data or we may not achieve the desired results. If so, we may have to design new
protocols and conduct additional studies. This will increase our costs and delay
the time to market for our potential products, if any. Any of these
occurrences would have a material negative impact on our business and our
liquidity as it may cause us to seek additional capital sooner than expected and
allow our competitors to successfully enter the market ahead of us.
If we are
successful in achieving desirable results for these applications, we intend to
design the protocols and begin further studies for this and other applications,
when capital is available. As we have only collected preliminary data and
additional studies are required, we cannot predict when, if ever, a viable
treatments for these indications can be commercialized. If we do not observe
significant results or we lack the capital to further the development, we may
abandon such research and development efforts; thereby limiting our future
potential revenues.
If we are
successful in completing our studies and the results are as we anticipate, we
intend to prepare and submit the necessary documentation to the FDA and other
regulatory agencies for approval. If approval for Homspera, Radilex and/or
Viprovex is granted, we expect to begin efforts to commercialize our product, if
any, immediately thereafter, however, since we are currently in the pre-clinical
stage of development, it will take an indeterminate amount of time in
development before we have a marketable drug, if ever.
Off-Balance
Sheet Arrangements
There
were no off-balance sheet arrangements as of June 30, 2008.
Liquidity
and Capital Resources
At June
30, 2008, we had current assets of $1,048,069 consisting of cash of $813,015 and
other current assets of $235,054. At June 30, 2008, we also had current
liabilities of $661,799, consisting of accounts payable of $540,812 and accrued
liabilities of $120,987. This resulted in net working capital at June 30, 2008
of $386,270. During the six months ended June 30, 2008, the Company used cash in
operating activities of $2,164,008. From the date of inception (October 30,
2002) to June 30, 2008, the Company has had a net loss of $20,865,032 and has
used cash of $10,613,988 in operating activities. These expenses were
associated principally with equity-based compensation to employees and
consultants, product development costs and professional services, and equity
based compensation to stockholders for the penalty incurred for the late
registration of shares.
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 June 30, 2008 via the private placement of $7,877,901
of our common stock and $3,658,628 from the issuance of notes payable, net of
repayments.
On
January 3, 2008, we entered into a securities purchase agreement with YA Global
Investments, L.P. (“YA Global”), pursuant to which YA Global agreed to purchase
from us (i) up to $3 million of secured convertible debentures, which shall be
convertible into shares of our common stock and (ii) warrants to acquire up to
750,000 additional shares of our common stock. The initial closing occurred on
January 3, 2008, at which time we sold to YA Global $2 million of the
convertible debentures and the warrants. On June 12, 2008 we sold an
additional $1,000,000 of convertible debentures to YA Global.
Pursuant
to an employment agreement with Michael Wilhelm, our President and Chief
Executive Officer, dated December 16, 2002, we paid Mr. Wilhelm an annual salary
of $125,000 and $175,000 during the first and second years of his employment,
respectively. Thereafter we paid Mr. Wilhelm an annual salary of $250,000
through August 10, 2005, when 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. Pursuant to the
agreement, Mr. Wilhelm’s salary is reviewed quarterly for possible increases and
is subject to adjustment pursuant to the Company's employee compensation
policies in effect from time to time but, in any event will be increased by at
least 10% per year at the end of each year of Mr. Wilhelm’s
employment. Mr. Wilhelm's salary is payable in regular installments
in accordance with the customary payroll practices of our company. Further,
pursuant to the terms of the change of control agreement between Mr. Wilhelm and
us, we agreed to pay Mr. Wilhelm his salary for a period of 18 months from the
date of an involuntary termination, payable in accordance with the Company's
compensation practice. Involuntary termination is defined as the termination of
Mr. Wilhelm’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.
Pursuant
to our two-year employment agreement with Hal N. Siegel, our Vice President and
Chief Scientific Officer, dated October 23, 2006, we will pay Mr. Siegel an
annual base salary of $200,000 for the first year and $210,000 for the second
year of the agreement. Mr. Siegel is also 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 20,000 shares of
our Common Stock. The options are exercisable at $2.00 per share. The two-year
employment agreement is subject to early termination provisions. Upon
termination of Mr. Siegel's employment by us without cause or constructive
termination, as defined in the agreement, we agreed to pay to Mr. Siegel the
remainder of his salary for the year in which he is terminated or six months
salary, whichever is greater, and any accrued vacation. In addition, we entered
into a change of control agreement with Hal Siegel. Pursuant to the
terms of the change of control agreement, we agreed to pay Mr. Siegel his salary
for a period of 18 months from the date of an involuntary termination, payable
in accordance with our compensation practice. Involuntary termination is defined
as the termination of Mr. Siegel's employment by us without cause or due to
constructive termination at any time within one-year of a change of control
event, as defined in the agreement.
We
executed a new two-year employment agreement with Mr. Fermanis on January 1,
2008, pursuant to which we will Mr. Fermanis an annual base salary of $130,000
for the first year and $140,000 for the second year of the
agreement. Mr. Fermanis will also be eligible for discretionary
bonuses under the Company’s stock option plan during his
employment. The two-year employment agreement is subject to early
termination provisions. The Company may terminate the employment
agreement at any time for cause, as defined in the employment agreement, and
upon 15 days written notice without cause. Mr. Fermanis may terminate
the employment agreement for any reason with 30 days written
notice. Upon termination of Mr. Fermanis’ employment by the Company
without cause or by constructive termination, as defined in the employment
agreement, the Company agrees to pay to Mr. Fermanis the remainder of his salary
for the year in which he is terminated or six months salary, whichever is
greater, and any accrued vacation.
Pursuant
to our two-year employment agreement with Hal N. Siegel, our Vice President and
Chief Scientific Officer, dated October 23, 2006, we will pay Mr. Siegel an
annual base salary of $200,000 for the first year and $210,000 for the second
year of the agreement. Mr. Siegel is also 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 20,000 shares of
our Common Stock. The options are exercisable at $2.00 per share. The two-year
employment agreement is subject to early termination provisions. Upon
termination of Mr. Siegel's employment by us without cause or constructive
termination, as defined in the agreement, we agreed to pay to Mr. Siegel the
remainder of his salary for the year [in which he is terminated] or six months
salary, whichever is greater, and any accrued vacation. In addition, we entered
into a change of control agreement with Hal Siegel. Pursuant to the
terms of the change of control agreement, we agreed to pay Mr. Siegel his salary
for a period of 18 months from the date of an involuntary termination, payable
in accordance with our compensation practice. Involuntary termination is defined
as the termination of Mr. Siegel's employment by us without cause or due to
constructive termination at any time within one-year of a change of control
event, as defined in the agreement.
Since our
inception, we have been seeking additional third-party funding. During such
time, we have retained a number of different investment banking firms to assist
us in locating available funding; however, we have not yet been successful in
obtaining any of the long-term funding needed to make us into a commercially
viable entity. During the period from October 2004 to June 30, 2008, we were
able to obtain financing of $11,561,529, including a series of private
placements of our securities which resulted in net proceeds to us of $7,877,901
and $3,658,628 from the sale of notes payable, net of repayments. The notes
payable include a transaction in January 2008 where we sold $2 million in
secured convertible debentures which resulted in net proceeds to us of
$1,825,000 and a transaction in June 2008 where we sold $1 million in secured
convertible debentures which resulted in net proceeds to us of $925,000.
Subsequent to June 30, 2008, on August 8, 2008 we sold $5 million in secured
convertible debentures which resulted in net proceeds to us of $4,975,000. Based
on our current plan of operations all of our current funding is expected to be
depleted by the end of August 2009. If we are not successful in
generating sufficient liquidity from operations or in raising sufficient capital
resources, it would have a material adverse effect on our business, results of
operations, liquidity and financial condition.
Our
registered independent certified public accountants have stated in their report,
dated March 28, 2008, that the Company's recurring losses and negative cash flow
raise substantial doubt about the Company's ability to continue as a going
concern.
While we
have raised capital to meet our working capital and financing needs in the past
through debt and equity financings, additional financing will be required in
order to implement our business plan and to meet our current and projected cash
flow deficits from operations and development. There can be no assurance that we
will be able to consummate future debt or equity financings in a timely manner
on a basis favorable to us, or at all. If we are unable to raise needed funds,
we will not be able to develop or enhance our potential products, take advantage
of future opportunities or respond to competitive pressures or unanticipated
requirements. A material shortage of capital will require us to take drastic
steps such as reducing our level of operations, disposing of selected assets or
seeking an acquisition partner.
Until
such time, if at all, as we receive adequate funding, we intend to continue to
defer payment of all of our obligations which are capable of being deferred,
which actions have resulted in some vendors demanding cash payment for their
goods and services in advance, and other vendors refusing to continue to do
business with us. We do not expect to generate a positive cash flow from our
operations for at least several years, if at all, due to anticipated
expenditures for research and development activities, administrative and
marketing activities, and working capital requirements and expect to continue to
attempt to raise further capital through one or more further private placements.
Based on our operating expenses and anticipated research and development
activities we believe we have sufficient capital to meet our operating needs
through August 2009. Thereafter, we believe that we will require an additional
$3,500,000 to meet our expenses over the next 12 months.
Acquisition or Disposition
of Plant and Equipment
We did
not dispose or acquire any significant property, plant or equipment during the
quarters ended June 30, 2008 and 2007. We do not anticipate the sale of any
significant property, plant or equipment during the next twelve
months.
Number of
Employees
From our
inception through the period ended June 30, 2008, we have relied primarily on
the services of outside consultants for services. As of June 30, 2008
we had eleven total employees: seven full-time employees, two part-time
employees and two contract 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., Vice President and Chief Scientific Officer, a
Science Director, two scientific program managers; and a seventh
employee who 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 twelve months.
Critical
Accounting Policies and Estimates
The
preparation of consolidated 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, disclosure of contingent assets and liabilities at the
date of the consolidated financial statements and the reported amounts of
revenues, expenses and allocated charges during the reporting period. Actual
results could differ from those estimates.
We
describe our significant accounting policies in the Notes to Consolidated
Financial Statements included in our Annual Report on Form 10-KSB as of and
for the year ended December 31, 2007. We discuss our critical accounting
policies and estimates in Management’s Discussion and Analysis of Financial
Condition and or Plan of Operation in the Form 10-KSB. Other
than as indicated in this quarterly report, there have been no material
revisions to the critical accounting policies as filed in our Annual Report on
Form 10-KSB as of and for the year ended December 31, 2007 with the
SEC on March 31, 2008.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Not
applicable to smaller reporting companies.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure
Controls and Procedures
Disclosure
controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed by us in the reports that we
file or submit under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Securities and Exchange
Commission's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed by us in the reports that we file under the Exchange
Act is accumulated and communicated to our management, including our principal
executive and financial officers, as appropriate to allow timely decisions
regarding required disclosure.
As of the
end of the period covered by this Quarterly Report, we conducted an evaluation,
under the supervision and with the participation of our Chief Executive Officer
and Chief Financial Officer, of our disclosure controls and procedures (as
defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon
this evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that the Company’s disclosure controls and procedures are effective to
ensure that information required to be disclosed by the Company in the reports
that we file or submit under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in the SEC’s rules and forms and
which also are effective in ensuring that information required to be disclosed
by the Company in the reports that it files or submits under the Exchange Act is
accumulated and communicated to the Company’s management, including the
Company’s Chief Executive Officer and Chief Financial Officer, to allow timely
decisions regarding required disclosure.
Our
management, including our Chief Executive Officer and Chief Financial Officer,
does not expect that our disclosure controls and procedures or our internal
controls will prevent all errors and all fraud. A control system, no matter how
well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met. Further, the design
of a control system must reflect the fact that there are resource constraints
and the benefits of controls must be considered relative to their costs. Because
of the inherent limitations in all control systems, no evaluation of controls
can provide absolute assurance that all control issues and instances of fraud,
if any, within the Company have been detected. These inherent limitations
include, but are not limited to, the realities that judgments in decision-making
can be faulty and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people, or by management override of the
control. The design of any system of controls also is based in part upon certain
assumptions about the likelihood of future events and there can be no assurance
that any design will succeed in achieving its stated goals under all potential
future conditions. Over time, controls may become inadequate because of changes
in conditions, or the degree of compliance with the policies or procedures may
deteriorate. Because of the inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and not be
detected.
Changes in internal
controls
There
have been no changes in our internal control over financial reporting identified
in connection with the evaluation required by paragraph (d) of Rule 13a-15 or
15d-15 under the Exchange Act that occurred during the second quarter of 2008
that have materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are
not currently a party to any material legal proceedings.
Not
applicable to smaller reporting companies.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
On
January 3, 2008, the Company entered into a securities purchase agreement with
YA Global Investments, L.P. (the “Buyer”), pursuant to which the Buyer agreed to
purchase from the Company (i) up to $3 million of secured convertible
debentures, which shall be convertible into shares of our common stock and (ii)
warrants to acquire up to 750,000 additional shares of our common stock (the
“Financing”). The initial closing of the Financing occurred on January 3, 2008,
at which time the Company sold to the Buyer $2 million of the convertible
debentures and the warrants. On June 12, 2008 the Company sold an additional
$1,000,000 of convertible debentures (the “Second Closing”) to the Buyer
pursuant to the securities purchase agreement. The debentures are
convertible at any time at the option of the holder into shares of the common
stock at a price equal to $2.00 per share. On or after December 31, 2009 or if
the Company’s fails to achieve certain milestones based on preclinical studies
and submission of a Investigational New Drug Application, as set forth in the
convertible debenture, the conversion price of the convertible debentures
becomes the lower of (i) $2.00 per share or (ii) 80% of the lowest daily volume
weighted average price during the five trading days immediately preceding
conversion. The warrants have an exercise price, subject to adjustments, of
$2.50 per share and are exercisable at any time on or prior to December 31,
2012. The warrants provide a right of cashless exercise if, at the time of
exercise, there is no effective registration statement registering the resale of
the shares underlying the warrants. Holders of the warrants are subject to
limitations on their right to exercise the warrants, if after giving effect to
the exercise, a holder and its affiliates would be deemed to beneficially own
more than 9.99% of the Company’s then-outstanding common stock. 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 April
3, 2008, the Company issued 39,500 restricted shares of common stock to YA
Global Investments, L.P., who is an accredited investor, for accrued interest
through March 31, 2008 of $19,276. 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
30, 2008, the Board of Directors approved of the issuance of 28,222 restricted
shares of common stock to YA Global Investments, L.P., who is an accredited
investor, for accrued interest of a $2 million convertible debenture through
June 30, 2008 of $19,726. 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
30, 2008, the Board of Directors approved of the issuance of 2,822 restricted
shares of common stock to YA Global Investments, L.P., who is an accredited
investor, for accrued interest of a $1 million convertible debenture through
June 30, 2008 of $1,973. The securities were issued in reliance upon exemptions
from registration pursuant to Section 4(2) under the Securities Act of 1933, as
amended, and Rule 506 promulgated thereunder.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITIES
HOLDERS
On June 25, 2008, we held our 2008
Annual Meeting of Stockholders (the "Stockholder Meeting"). At the Stockholder
Meeting, our shareholders voted to
(i)
reelect our directors to serve on our Board of Directors until the 2009 Annual
Meeting of Stockholders (share amounts do not reflect our 1-for-10 reverse stock
split effected in July 2008):
● Reelection
of Lance K. Gordon was approved by a vote of 61,328,029 votes for and 5,798,778
votes against, 4,476,974 votes withheld, zero abstained votes and zero were
broker non-votes;
●
Reelection of Robert J. Hariri was approved by a vote of 61,328,029 votes for
and 5,826,186 votes against, 4,476,974 votes withheld, zero abstained votes and
zero were broker non-votes;
●
Reelection of Hal N. Siegel was approved by a vote of 61,328,029 votes for and
5,818,778 votes against, 4,476,974 votes withheld, zero abstained votes and zero
were broker non-votes;
●
Reelection of Theodore E. Staahl was approved by a vote of 61,328,029 votes for
and 5,798,778 votes against, 4,476,974 votes withheld, zero abstained votes and
zero were broker non-votes;
●
Reelection of Michael K. Wilhelm was approved by a vote of 61,328,029 votes for
and 5,806,186 votes against, 4,476,974 votes withheld, zero abstained votes and
zero were broker non-votes; and,
●
Reelection of Jerome B. Zeldis was approved by a vote of 61,328,029 votes for
and 5,826,186 votes against, 4,476,974 votes withheld, zero abstained votes and
zero were broker non-votes.
(ii)
approve an amendment to our Certificate of Incorporation, as amended, to
increase the number of authorized shares of Common Stock from 250,000,000 to
450,000,000 which was approved by a vote of 63,919,117 votes for and 7,215,797
votes against, 496,275 votes withheld, zero abstained votes and zero were broker
non-votes;
(iii)
approve an amendment to our 2003 Stock Option, Deferred Stock and Restricted
Stock Plan (the "Plan") to increase the number of shares of our Common Stock
reserved and available for issuance under the Plan from 20,000,000 to
60,000,000, which was approved by a vote of 62,756,983 votes for and 7,785,706
votes against, 1,088,500 votes withheld, zero abstained votes and zero were
broker non-votes;
(iv)
approve an amendment to our Certification of Incorporation, as amended, (1) to
provide for a recapitalization in which the issued and outstanding shares of our
Common Stock would be reverse split in a ratio of one-for-ten at any time prior
to March 31, 2009, if at all, with the timing thereof to be determined by the
Board of Directors in its sole discretion and (2) to reduce the number of
authorized shares of Common Stock to 100,000,000, which was approved by a vote
of 69,553,248 votes for and 1,714,967 votes against, 362,974 votes withheld,
zero abstained votes and zero were broker non-votes; and
(v)
ratify the appointment of RBSM LLP as the Company's independent public
accountants for the fiscal year ending December 31, 2008, which was approved by
a vote of 71,221,071 votes for and 13,518 votes against, 396,600 votes withheld,
zero abstained votes and zero were broker non-votes.
ITEM 5: OTHER INFORMATION
On July
2, 2008 we issued 28,220 restricted shares of common stock to YA Global
Investments, L.P., who is an accredited investor, for accrued interest of a $2
million convertible debenture through June 30, 2008 of $19,726. 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
2, 2008 we issued 2,822 restricted shares of common stock to YA Global
Investments, L.P., who is an accredited investor, for accrued interest of a $1
million convertible debenture through June 30, 2008 of $1,973. 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.
1-for-10 Reverse Stock
Split
On July
10, 2008, the Company filed an amendment with the Delaware Secretary of State to
its Certificate of Incorporation, as amended, (the “Amended Certificate”)
effectuating a 1 for 10 reverse stock split and a reduction in the number of
authorized shares of Common Stock to 100 million. The Amended
Certificate and the reverse stock split were described in the Company’s Proxy
Statement filed with the SEC on May 9, 2008. As previously reported
in the Company’s Current Report on Form 8-K filed with the SEC on July 22, 2008,
the Amended Certificate, including the reverse stock split, was approved by the
stockholders at the Company’s annual meeting held on June 25, 2008.
On August
1, 2008 the Company issued an aggregate of 120 common shares to holders of
fractional shares in order to bring their number of shares held to the next
whole number of shares. Additionally, in conjunction with the reverse
stock split, our trading symbol on the Over-The-Counter Bulletin Board was
changed to IRBS.
Formation of Audit Committee
and Compensation Committee
On June
25, 2008, the Company formed an Audit Committee and Compensation
Committee. The Audit Committee consists of Lance Gordon (Chairman of
the Audit Committee) and Ted Staahl. The purpose of the Audit
Committee is to represent and assist our board of directors in its general
oversight of our accounting and financial reporting processes, audits of the
financial statements and internal control and audit functions. The
board of directors has adopted a written charter for the Audit Committee. A copy
of the Audit Committee Charter is posted on our corporate website at:
www.immuneregen.com.
The
Compensation Committee consists of Bob Hariri (Chairman of the committee) and
Lance Gordon. The Compensation Committee is responsible for the
design, review, recommendation and approval of compensation arrangements for our
directors, executive officers and key employees, and for the administration of
our equity incentive plans, including the approval of grants under such plans to
our employees, consultants and directors. The Compensation Committee also
reviews and determines compensation of our executive officers, including our
Chief Executive Officer. The board of directors has adopted a written charter
for the Compensation Committee. A current copy of the Compensation Committee
Charter is posted on our corporate website at:
www.immuneregen.com.
* This exhibit shall not be deemed
"filed" for purposes of Section 18 of the Securities Exchange Act of 1934 or
otherwise subject to the liabilities of that section, nor shall it be deemed
incorporated by reference in any filing under the Securities Act of 1933 or the
Securities Exchange Act of 1934, whether made before or after the date hereof
and irrespective of any general incorporation language in any
filings.
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized, on August 14, 2008.
|
IR
BioSciences Holdings, Inc.
|
|
|
|
|
By:
|
/s/ Michael K.
Wilhelm
|
|
Michael
K. Wilhelm
|
|
President,
Chief Executive Officer
|
|
|
|
/s/ John N.
Fermanis
|
|
John
N. Fermanis
|
|
Chief
Financial Officer
|