United States
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 2, 2003
IR BioSciences Holdings, Inc.
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(Exact name of registrant specified in charter)
Delaware 033-05384 13-3301899
------------------------- ------------------------- -------------------------
(State of (Commission File (IRS Employer
Incorporation) Number) Identification No.)
8655 East Via De Ventura, Suite E-155
Scottsdale, Arizona 85258
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(Address of principal executive offices) (Zip Code)
(480) 922-3926
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(Registrant's telephone number, including area code)
GPN Network, Inc.
1901 Avenue of the Stars, Suite 1500
Los Angeles, CA 90067
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(Former name or former address, if changed since last report)
EXPLANATORY NOTE: THIS FORM 8-K/A IS BEING FILED TO AMEND THE CURRENT REPORT
ON FORM 8-K PREVIOUSLY FILED ON JULY 7, 2003 AND PROVIDE THE FINANCIAL STATMENTS
AND PRO FORMA FINANCIAL INFORMATION REQUIRED UNDER ITEM 7.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a): Financial Statements of Businesses Acquired.
-------------------------------------------
2
INDEPENDENT AUDITORS' REPORT
Board of Directors
ImmuneRegen BioSciences, Inc.
Scottsdale, Arizona
We have audited the accompanying balance sheet of ImmuneRegen BioSciences, Inc.
as of December 31, 2002, and the related statements of operations, stockholders'
equity (deficit), and cash flows for the period from October 30, 2002
(inception) to December 31, 2002. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on the financial statements based on our audits.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ImmuneRegen BioSciences, Inc.
as of December 31, 2002, and the results of its operations and cash flows for
the period from October 30, 2002 (inception) to December 31, 2002, in conformity
with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
accompanying financial statements, the Company's significant operating losses
raise substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 1. The
financial statements do not include any adjustments to asset carrying amounts or
the amount and classification of liabilities that might result from the outcome
of this uncertainty.
/s/ Stonefield Josephson, Inc.
------------------------------
Stonefield Josephson, Inc.
Certified Public Accountants
Irvine, California
December 8, 2003
3
ImmuneRegen BioSciences, Inc.
Balance Sheet
June 30, December 31,
2003 2002
------------- -------------
(unaudited)
Assets
Current assets
Cash and cash equivalents $ 133,278 $ 32,155
Prepaid services 49,843 -
Due from officer 14,381 -
------------- -------------
197,502 32,155
Merger escrow account 350,000 -
Prepaid offering costs 90,000 -
------------- -------------
Total current assets 637,502 32,155
Other assets:
Licensed proprietary rights, net 8,710 9,173
Capitalized website costs, net 16,875 -
Furniture and equipment, net 3,134 -
------------- -------------
Total assets $ 666,221 $ 41,328
============= =============
Liabilities and Stockholders' Equity (Deficit)
Current liabilities
Accounts payable and accrued liabilities $ 131,236 $ 8,786
Due to officer - 22,427
NConvertible notesfpayable (net
of discount of $45,250 and $0) 465,306 15,000
------------- -------------
Total current liabilities 596,542 46,213
Commitments and Contingencies
Stockholders' equity (deficit)
Preferred stock, 0.001 par value:
10,000,000 shares authorized,
no shares is-ued and outstanding - -
Common stock, $0.001 par value;
100,000,000 shares authorized;
10,531,585 and 9,128,521shares
issued and outstanding at June 30,
2003 (unaudited) and December 31,
2002, respectively 10,532 9,128
Additional paid-in capital 496,781 40,905
Deferred compensation - (9,000)
Accumulated deficit (437,634) (45,918)
------------- -------------
Total stockholder's equity (deficit) 69,679 (4,885)
------------- -------------
Total liabilities and
stockholders' equity (deficit) $ 666,221 $ 41,328
============= =============
The accompanying notes are an integral part of these consolidated
financial statements.
4
ImmuneRegen BioSciences, Inc.
Statements of Operations
From the Date Cumulative from
of Inception Inception
For the Six (October 30, (October 30,
Months Ended 2002) to 2002) to
June 30, December 31, June 30,
2003 2002 2003
---------------- ---------------- ----------------
(unaudited) (unaudited)
Revenues $ - $ - $ -
Operating expenses:
Selling, general and administrative expenses 369,074 45,718 414,792
---------------- ---------------- ----------------
Total operating expenses 369,074 45,718 414,792
Operating loss (369,074) (45,718) (414,792)
Other expense:
Interest expense (22,642) (200) (22,842)
---------------- ---------------- ----------------
Total other expense (22,642) (200) (22,842)
---------------- ---------------- ----------------
Loss before income taxes (391,716) (45,918) (437,634)
---------------- ---------------- ----------------
Net loss $ (391,716) $ (45,918) $ (437,634)
================ ================ ================
Basic and diluted loss per common share $ (0.04) $ (0.02) $ (0.06)
================ ================ ================
Basic and diluted weighted average
common shares outstanding 9,597,207 2,212,042 7,712,926
================ ================ ================
5
The accompanying notes are an integral part of these consolidated
financial statements.
ImmuneRegen BioSciences, Inc.
Consolidated Statement of Stockholders' Equity (Deficit)
From date of inception (October 30, 2002) to June 30, 2003 (unaudited)
Common Stock Additional
------------------------ Paid-In Deferred Accumulated
Shares Amount Capital Compensation Deficit Total
------------ ---------- ------------ ------------ ------------ ------------
Balance at October 30, 2002 (date of inception) $ - $ - $ - $ - $ -
Shares of common stock issued to
founders for license of proprietary rights 8,306,138 8,306 944 - - 9,250
Shares of common stock issued to
founders for services rendered 702,655 703 79 - - 782
Shares of common stock issued to
consultants for services 26,939 27 8,973 (9,000) - -
Sale of shares of common stock for cash 92,789 92 30,909 - - 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
reverse stock split - see Note 10) 9,128,521 9,128 40,905 (9,000) (45,918) (4,885)
Shares granted to consultants for
services rendered 133,797 134 37,146 - - 37,280
Conversion of note payable to common stock 1,077,553 1,078 298,922 - - 300,000
Sale of shares of common stock for cash 191,714 192 64,808 - - 65,000
Beneficial conversion feature associated with
convertible notes (see Note 6) - - 55,556 - - 55,556
Amortization of deferred compensation - - - 9,000 - 9,000
Net loss for the six months ended
June 30, 2003 (unaudited) - - - - (391,716) (391,716)
------------ ---------- ------------ ------------ ------------ ------------
Balance at June 30, 2003 (unaudited) 10,531,585 $ 10,532 $ 497,337 $ - $ (437,634) $ 70,235
============ ========== ============ ============ ============ ============
6
The accompanying notes are an integral part of these consolidated
financial statements.
ImmuneRegen BioSciences, Inc.
Statements of Cash Flows
From the Date Cumulative from
of Inception Inception
For the Six (October 30, (October 30,
Months Ended 2002) to 2002) to
June 30, December 31, June 30,
2003 2002 2003
------------- ------------- -------------
(unaudited) (unaudited)
Cash flows from operating activities:
Net loss from continuing operations $ (391,716) $ (45,918) $ (437,634)
Adjustments to reconcile net to net cash used
in operating activities:
Non-cash compensation 19,779 782 20,561
Amortization of deferred compensation 9,000 - 9,000
Amortization of discount on notes payable 10,306 - 10,306
Depreciation 6,258 77 6,335
Changes in operating assets and liabilities:
Other assets (49,843) - (49,843)
Accounts payable and accrued expenses 95,024 8,786 103,810
------------- ------------- -------------
Net cash used in operating activities (301,192) (36,273) (337,465)
------------- ------------- -------------
Cash flows from investing activities:
Purchase of assets (3,304) - (3,304)
Increase in cash in related to acquisition (350,000) - (350,000)
Increase in prepaid acquisition costs (90,000) - (90,000)
------------- ------------- -------------
Net cash used in investing activities (443,304) - (443,304)
------------- ------------- -------------
Cash flows from financing activities:
Proceeds from notes payable 795,000 15,000 810,000
Shares of stock issued for cash 65,000 31,001 96,001
Due from officer (14,381) 22,427 8,046
------------- ------------- -------------
Net cash provided by financing activities 845,619 68,428 914,047
------------- ------------- -------------
Net increase in cash 101,123 32,155 133,278
Cash at beginning of period 32,155 - -
------------- ------------- -------------
Cash at end of period $ 133,278 $ 32,155 $ 133,278
============= ============= =============
7
The accompanying notes are an integral part of these consolidated
financial statements.
Non-cash investing and financing activities:
For the period ending December 31, 2002:
In December 2002, the Company issued 8,306,138 shares (post reverse-split) of
common stock with a fair value of $9,250 to the Company's founders for a license
to certain proprietary rights.
Also in December 2002, the Company issued 673,471 shares (post reverse-split) of
common stock with a fair value of $750 to a Company founder for services
provided.
In December 2002, the Company issued 56,123 shares (post reverse-split) of
common stock with a fair value of $9,032 to four service providers.
For the period ending June 30, 2003:
During January 2003, the Company issued 49,388 shares (post reverse-split) of
its common stock with a fair value of $13,780 (unaudited) to 2 service
providers.
During March 2003, the Company issued 77,225 shares (post reverse-split) of its
common stock with a fair value of $21,500 (unaudited) to a service provider.
In April 2003, the Company issued 7,184 shares (post reverse-split) of its
common stock with a fair value of $2,000 (unaudited) to a service provider.
In April 2003, the Company converted a note payable in the amount of $300,000
into 1,077,553 shares (post reverse-split) of its common stock.
In June 2003, the Company recorded a beneficial conversion feature on its
convertible notes payable amount of $55,000 as a discount to notes payable and
an addition to paid-in capital.
The accompanying notes are an integral part of these consolidated
financial statements.
8
IMMUNEREGEN BIOSCIENCES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM OCTOBER 30, 2002
(INCEPTION) TO DECEMBER 31, 2002 (AUDITED)
AND FOR THE PERIOD FROM JANUARY 1, 2003 TO
JUNE 30, 2003 (UNAUDITED)
1. Summary of Significant Accounting Policies:
Nature of Business
------------------
ImmuneRegen BioSciences, Inc. (the "Company" or "ImmuneRegen") is
currently a development stage company under the provisions of Statement
of Financial Accounting Standards ("SFAS") No. 7. The Company was
incorporated under the laws of the State of Delaware on October 30,
2002, and has a December 31 year-end. ImmuneRegen is a biotechnology
company and plans to develop and market applications utilizing modified
substance P, a naturally occurring immunomodulator.
Going Concern
-------------
The accompanying financial statements have been prepared in conformity
with accounting principles generally accepted in the United States of
America, which contemplate continuation of the Company as a going
concern. However, the Company has no established source of revenue.
This matter raises substantial doubt about the Company's ability to
continue as a going concern. These financial statements do not include
any adjustments relating to the recoverability and classification of
recorded asset amounts, or amounts and classification of liabilities
that might be necessary should the Company be unable to continue as a
going concern.
Management plans to take the following steps that it believes will be
sufficient to provide the Company with the ability to continue in
existence: Management intends to continue to raise additional financing
through private debt or equity financing or other means and interests
that it deems necessary, with a view to moving forward and sustaining a
prolonged growth in its strategy phases. On July 2, 2003, the Company
completed a merger (the "Merger") with GPN Network, Inc. ("GPN"), a
publicly traded company, in a transaction known as a "recapitalization"
(see Note 11). The Company believes that its status as a publicly
traded company will improve its chances of raising funds through either
equity or debt financings.
Unaudited Interim Financial Statements
--------------------------------------
The accompanying balance sheet as of June 30, 2003, and the statements
of operations and cash flows for both the six months ended June 30,
2003 and for the period from inception to June 30, 2003, are unaudited.
These unaudited interim financial statements include all adjustments
(consisting of normal recurring accruals) that, 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.
9
IMMUNEREGEN BIOSCIENCES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD FROM OCTOBER 30, 2002
(INCEPTION) TO DECEMBER 31, 2002 (AUDITED)
AND FOR THE PERIOD FROM JANUARY 1, 2003 TO
JUNE 30, 2003 (UNAUDITED)
1. Summary of Significant Accounting Policies, Continued:
Use of Estimates
----------------
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements, and the
reported amounts of revenues and expenses during the reported periods.
Actual results could materially differ from those estimates.
Cash Equivalents
----------------
For purposes of the statement of cash flows, cash equivalents include
all highly liquid debt instruments with original maturities of three
months or less which are not securing any corporate obligations.
Cash Concentration
------------------
The Company maintains its cash in bank deposit accounts that, at times,
may exceed federally insured limits. The Company has not experienced
any losses in such accounts.
Basic and Diluted Loss Per Share
--------------------------------
In accordance with SFAS No. 128, "Earnings Per Share," the basic loss
per common share is computed by dividing net loss available to common
stockholders by the weighted average number of common shares
outstanding. Diluted loss per common share is computed similar to basic
loss per common share except that the denominator is increased to
include the number of additional common shares that would have been
outstanding if the potential common shares had been issued and if the
additional common shares were dilutive. As of December 31, 2002, the
Company had no outstanding stock options or warrants. As of June 30,
2003, the Company has warrants granted to employees and consultants
that can be converted into additional shares of common stock. These
warrants would have an anti-dilutive effect and therefore are not
included in diluted loss per share.
10
1. Summary of Significant Accounting Policies, Continued:
Comprehensive Income
--------------------
SFAS No. 130, "Reporting Comprehensive Income," establishes standards
for the reporting and display of comprehensive income and its
components in the financial statements. As of December 31, 2002 and
June 30, 2003 (unaudited) the Company has no items that represent other
comprehensive income and, therefore, has not included a Statement of
Comprehensive Income.
Income Taxes
------------
The Company accounts for income taxes under SFAS 109, "Accounting for
Income Taxes." Under the asset and liability method of SFAS 109,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statements carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in
the years in which those temporary differences are expected to be
recovered or settled. Under SFAS 109, the effect on deferred tax assets
and liabilities of a change in tax rates is recognized in income in the
period the enactment occurs. A valuation allowance, if any, is provided
for certain deferred tax assets if it is more likely than not that the
Company will not realize tax assets through future operations.
Fair Value of Financial Instruments
-----------------------------------
The Company measures its financial assets and liabilities in accordance
with accounting principles generally accepted in the United States of
America. The estimated fair values approximate their carrying value
because of the short-term maturity of these instruments or the stated
interest rates are indicative of market interest rates.
11
1. Summary of Significant Accounting Policies, Continued:
Stock-Based Compensation
------------------------
The Company accounts for stock-based employee compensation arrangements
in accordance with the provisions of Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees," and
complies with the disclosure provisions of SFAS 123, "Accounting for
Stock-Based Compensation." Under APB 25, compensation cost is
recognized over the vesting period based on the excess, if any, on the
date of grant of the deemed fair value of the Company's shares over the
employee's exercise price. When the exercise price of the employee
share options is less than the fair value price of the underlying
shares on the grant date, deferred stock compensation is recognized and
amortized to expense in accordance with FASB Interpretation No. 28 over
the vesting period of the individual options. Accordingly, because the
exercise price of the Company's employee options equals or exceeds the
market price of the underlying shares on the date of grant, no
compensation expense is recognized. Options or shares awards issued to
non-employees are valued using the fair value method and expensed over
the period services are provided.
Prepaid Services
----------------
Prepaid services consist of outside services that the Company has paid
for in advance. The largest of these is a prepaid research contract
with the University of Arizona in the amount of $30,500. These items
are charged to expense as the services are performed.
Merger Escrow Account
---------------------
At June 30, 2003, the Company held in an escrow account cash in the
amount of $350,000 (unaudited), which was being held pursuant to the
Merger Agreement with GPN (Note 11). These funds were disbursed by the
Company at the close of the Merge that occurred on July 2, 2003. Also
at June 30, 2003, the Company has prepaid the amount of $90,000
(unaudited) for costs relating to the Private Placement Agreement (Note
9).
Licensed Proprietary Rights
---------------------------
The Company has licensed from its founders certain proprietary rights
which the Company intends to utilize in the execution of its business
plan. Consideration for this license was the issuance of 8,306,138
shares of the Company's common stock. These proprietary rights are
being amortized over the term of the license agreement, or ten years.
The shares issued were valued at $.001 per share (par value).
12
1. Summary of Significant Accounting Policies, Continued:
Capitalized Website Costs
-------------------------
The Company capitalized certain website development costs pursuant to
EITF 00-2. These costs are amortized over two years.
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
Furniture 7 years
Due To/From Officer
-------------------
The Company's Chief Executive Officer occasionally will forego salary
in order to conserve the Company's cash. The Company has at times also
paid certain amounts on the Officer's behalf. At December 31, 2002, the
Company owes the amount of $22,427 to the Officer. At June 30, 2003,
the Officer owes the Company the amount of $14,381 (unaudited).
New Accounting Pronouncements
-----------------------------
In July 2001, the FASB issued SFAS No. 141 "Business Combinations."
SFAS No. 141 supersedes Accounting Principles Board ("APB") No. 16 and
requires that any business combinations initiated after June 30, 2001
be accounted for as a purchase; therefore, eliminating the
pooling-of-interest method defined in APB 16. The statement is
effective for any business combination initiated after June 30, 2001
and applies to all business combinations accounted for by the purchase
method for which the date of acquisition is July 1, 2001 or later. The
adoption did not have a material impact on the Company's financial
position or results of operations as the Company has not participated
in such activities covered under this pronouncement after the effective
date.
In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other
Intangibles." SFAS No. 142 addresses the initial recognition,
measurement and amortization of intangible assets acquired individually
or with a group of other assets (but not those acquired in a business
combination) and addresses the amortization provisions for excess cost
over fair value of net assets acquired or intangibles acquired in a
business combination. The statement is effective for fiscal years
beginning after December 15, 2001, and is effective July 1, 2001 for
any intangibles acquired in a business combination initiated after June
30, 2001. The adoption of this statement had a minimal effect to the
Company's financial position and results of operations.
13
1. Summary of Significant Accounting Policies, Continued:
New Accounting Pronouncements, Continued
----------------------------------------
In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations," which addresses the financial accounting and
reporting for obligations associated with the retirement of tangible
long-lived assets and the associated asset retirement costs. The
Company adopted SFAS No. 143 on October 1, 2002 and does not expect it
to have a material impact on the Company's financial position, results
of operations and cash flows.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." SFAS No. 144 replaces
SFAS No. 121, "Accounting for the Impairment of Long-Lived assets and
for Long-Lived Assets to Be Disposed Of," and establishes a single
accounting model for the impairment or disposal of long-lived assets,
including discontinued operations. SFAS No. 144 requires that
long-lived assets to be disposed of by sale, including those of
discontinued operations, be measured at the lower of carrying value or
fair value less costs to sell, whether reported in continuing
operations or in discontinued operations. Discontinued operations will
no longer be measured at net realizable value or include amounts for
operating losses that have not yet been incurred. SFAS No. 144 also
broadens the reporting of discontinued operations to include all
components of an entity with operations that can be distinguished from
the rest of the entity and will be eliminated from the ongoing
operations of the entity in a disposal transaction. The adoption of
SFAS No. 144 did not have a material effect on the Company's financial
position, results of operations or cash flows.
In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections." This Statement rescinds SFAS No. 4, "Reporting
Gains and Losses from Extinguishment of Debt," and an amendment of that
Statement, SFAS No. 64, "Extinguishments of Debt Made to Satisfy
Sinking-Fund Requirements" and SFAS No. 44, "Accounting for Intangible
Assets of Motor Carriers." This Statement amends SFAS No. 13,
"Accounting for Leases," to eliminate an inconsistency between the
required accounting for sale-leaseback transactions and the required
accounting for certain lease modifications that have economic effects
that are similar to sale-leaseback transactions. The adoption of this
statement did not have a material effect on the Company's financial
statements.
14
1. Summary of Significant Accounting Policies, Continued:
New Accounting Pronouncements, Continued
----------------------------------------
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." SFAS No. 146 addresses
accounting and reporting for cost associated with exit or disposal
activities and nullifies Emerging Issues Task Force ("EITF") No. 94-3,
"Liability Recognition for Certain Employee Termination Benefits and
Other Costs to Exit an Activity (Including Certain Costs Incurred in a
Restructuring)." SFAS No. 146 requires that a liability for a cost
associated with an exit or disposal activity be recognized and measured
initially at fair value when the liability is incurred. SFAS No. 146 is
effective for exit or disposal activities that are initiated after
December 31, 2002, with early application encouraged. The adoption of
this statement did not have a material effect on the Company's
financial statements.
In October 2002, the FASB issued SFAS No. 147, "Acquisitions of Certain
Financial Institutions-an amendment of FASB Statements No. 72 and 144
and FASB Interpretation No. 9," which removes acquisitions of financial
institutions from the scope of both SFAS No. 72 and Interpretation 9
and requires that those transactions be accounted for in accordance
with SFAS No. 141, "Business Combinations," and SFAS No. 142, "Goodwill
and Other Intangible Assets." In addition, this Statement amends SFAS
No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets," to include in its scope long-term customer-relationship
intangible assets of financial institutions such as depositor- and
borrower-relationship intangible assets and credit cardholder
intangible assets. The requirements relating to acquisitions of
financial institutions are effective for acquisitions for which the
date of acquisition is on or after October 1, 2002. The provisions
related to accounting for the impairment or disposal of certain
long-term customer-relationship intangible assets are effective on
October 1, 2002. The adoption of this Statement did not have a material
impact to the Company's financial position or results of operations as
the Company has not engaged in either of these activities.
In December 2002, the FASB issued Statement No. 148, "Accounting for
Stock-Based Compensation-Transition and Disclosure," which amends FASB
Statement No. 123, Accounting for Stock-Based Compensation, to provide
alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee compensation.
In addition, this Statement amends the disclosure requirements of
Statement 123 to require prominent disclosures in both annual and
interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used on
reported results. The transition guidance and annual disclosure
provisions of Statement 148 are effective for fiscal years ending after
December 15, 2002, with earlier application permitted in certain
circumstances. The interim disclosure provisions are effective for
financial reports containing financial statements for interim periods
beginning after December 15, 2002. The adoption of SFAS 148 does not
have a material impact on its financial position or results of
15
1. Summary of Significant Accounting Policies, Continued:
New Accounting Pronouncements, Continued
----------------------------------------
operations. In November 2002, the FASB issued FASB Interpretation No.
45, "Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others" ("FIN 45").
FIN 45 requires that the guarantor recognize, at the inception of
certain guarantees, a liability for the fair value of the obligation
undertaken in issuing such guarantee. FIN 45 also requires additional
disclosure requirements about the guarantor's obligations under certain
guarantees that it has issued. The initial recognition and measurement
provisions of this interpretation are applicable on a prospective basis
to guarantees issued or modified after December 31, 2002 and the
disclosure requirements are effective for financial statement periods
ending after December 15, 2002. The Company does not expect the
adoption of FIN 45 will have a material impact on its financial
position, results of operations or cash flows.
In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement
133 on Derivative Instruments and Hedging Activities." This Statement
amends and clarifies financial accounting and reporting for derivative
instruments, including certain derivative instruments embedded in other
contracts (collectively referred to as derivatives) and for hedging
activities under SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities." This Statement amends Statement 133 for
decisions made (1) as part of the Derivatives Implementation Group
process that effectively required amendments to Statement 133, (2) in
connection with other Board projects dealing with financial
instruments, and (3) in connection with implementation issues raised in
relation to the application of the definition of a derivative, in
particular, the meaning of an initial net investment that is smaller
than would be required for other types of contracts that would be
expected to have a similar response to changes in market factors, the
meaning of underlying, and the characteristics of a derivative that
contains financing components. The Company does not anticipate that the
adoption of this pronouncement will have a material effect on the
financial statements.
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and
Equity." This Statement establishes standards for how an issuer
classifies and measures certain financial instruments with
characteristics of both liabilities and equity. It requires that an
issuer classify a financial instrument that is within its scope as a
liability (or an asset in some circumstances). Many of those
instruments were previously classified as equity. Some of the
provisions of this Statement are consistent with the current definition
of liabilities in FASB Concepts Statement No. 6, Elements of Financial
Statements. The remaining provisions of this Statement are consistent
with the Board's proposal to revise that definition to encompass
certain obligations that a reporting entity can or must settle by
issuing its own equity shares, depending on the nature of the
relationship
16
1. Summary of Significant Accounting Policies, Continued:
New Accounting Pronouncements, Continued
----------------------------------------
established between the holder and the issuer. While the Board still
plans to revise that definition through an amendment to Concepts
Statement 6, the Board decided to defer issuing that amendment until it
has concluded its deliberations on the next phase of this project. That
next phase will deal with certain compound financial instruments
including puttable shares, convertible bonds, and dual-indexed
financial instruments. The Company does not anticipate that the
adoption of this pronouncement will have a material effect on the
financial statements.
In January 2003, the FASB issued Interpretation No. 46, "Consolidation
of Variable Interest Entities." Interpretation 46 changes the criteria
by which one company includes another entity in its financial
statements. Previously, the criteria were based on control through
voting interest. Interpretation 46 requires a variable interest entity
to be by a company if that company is subject to a majority of the risk
of loss from the variable interest entity's activities or entitled to
receive a majority of the entity's residual returns or both. A company
that consolidates a variable interest entity is called the primary
beneficiary of that entity. The consolidation requirements of
Interpretation 46 apply immediately to variable interest entities
created after January 31, 2003. The consolidation requirements apply to
older entities in the first fiscal year or interim period beginning
after June 15, 2003. Certain of the disclosure requirements apply in
all financial statements issued after January 31, 2003, regardless of
when the variable interest entity was established. The Company does not
expect the adoption to have a material impact to the Company's
financial position or Results of operations.
During October 2003, the FASB issued Staff Position No. FIN 46
deferring the effective date for applying the provisions of FIN 46
until the end of the first interim or annual period ending after
December 31, 2003, if the variable interest was created prior to
February 1, 2003, and the public entity has not issued financial
statements reporting that variable interest entity in accordance with
FIN 46. The FASB also indicated it would be issuing a modification to
FIN 46 prior to the end of 2003. Accordingly, the Company has deferred
the adoption of FIN 46 with respect to VIE's created prior to February
1, 2003. Management is currently assessing the impact, if any, FIN 46
may have on the Company; however, management does not believe there
will be any material impact on its financial statements, results of
operations or liquidity resulting from the adoption of this
interpretation.
17
2. Related-Party Transactions:
Employment Contracts
--------------------
On December 16, 2002, the Company entered into an employment contract
with its President and CEO (the "CEO Contract") for a period of three
years terminating on December 16, 2005. The agreement calls for a
salary at the rate of $125,000 per annum for the first year, $175,000
for the second year, and $250,000 for the third year. The CEO Contract
also provides for the following various bonus incentives:
i) A quarterly discretionary bonus based upon the
Company's performance in the previous quarter. This
discretionary bonus will be in the form of stock
options.
ii) A quarterly a five-year warrant to purchase up to
4,490 shares (post reverse-split) of the Company's
common stock at 75% of the fair market value of the
stock on the date the warrant is granted.
iii) At such time as the CEO introduces a financial
partner to the Company through which the Company
raises at least $1,500,000 in equity or debt
financing, the CEO shall be granted a five-year
warrant to purchase 224,490 shares (post
reverse-split) of the Company's common stock
Consulting Agreements
---------------------
On December 16, 2002, the Company entered into consulting agreements
(the "Consulting Agreements") with its two founders and chief research
scientists (the "Consultants"). Under the terms of the Consulting
Agreements, the Consultants agree to place certain of their judgments
and expertise in the area of acute lung injury. In consideration for
these services, the Company agrees to pay each consultant a
non-refundable fee of $5,000 per month, which shall accrue until such
time as the Company raises at least $2,000,000 in equity or debt
financing, at which time such accrued amount will become due and
payable.
18
2. Related-Party Transactions, Continued:
Proprietary Rights Agreement
----------------------------
In December 2002, the Company entered into a royalty-free license
agreement (the "License Agreement") with its two founders and largest
shareholders (the "Licensors"). Under the terms of the License
Agreement, the Licensors grant to the Company an exclusive license to
use and sublicense certain patents, medical applications, and other
technologies developed by the Licensors. The Company's obligations
under the License Agreement include (i) reasonable efforts to protect
any licensed patents or other associated property rights; (ii)
reasonable efforts to maintain confidentiality of any proprietary
information; (iii) upon the granting by the U. S. Food and Drug
Administration to the Company the right to market a product, the
Company will maintain a broad form general liability and product
liability insurance. The Company has recorded a capital contribution of
$9,250 and an offsetting intangible asset as a result of this agreement
at December 31, 2002. It is being amortized over the 10-year term of
the agreement.
Due (To) From Related Parties
-----------------------------
Pursuant to the CEO contract, during the period from October 30, 2002
(inception) to December 31, 2002, the Company accrued $22,427 in salary
for its President and Chief Executive Officer ("CEO"). During the
period from January 1, 2003 to June 30, 2003, the Company continued to
accrue the amount due under the CEO contract, and from time to time
made payments to the Chief Executive Officer. At June 30, 2003, the
payments made exceeded the accrual amount by $14,381 (unaudited).
Pursuant to the Consulting Agreements, during the period from October
30, 2002 (inception) to December 31, 2002, the Company accrued $5,000
in consulting fees. During the period from January 1, 2003 to June 30,
2003, the Company accrued an additional $60,000 (unaudited) in
consulting fees.
19
2. Related-Party Transactions, Continued:
Office Lease
------------
The Company entered into a lease agreement for the period from December
1, 2002 to August 31, 2004. Rent expense is $2,734 per month.
ImmuneRegen subleases its office space from Foresight Capital Partners,
a company controlled by ImmuneRegen's CEO. The rent cost is passed
through to ImmuneRegen at the same rental rate that Foresight Capital
Partners is charged by the facility's primary landlord. The amounts due
under non-cancelable lease agreement at December 31, 2002 is as
follows:
Year ended
2003 $ 32,808
2004 21,872
------------
$ 54,680
============
Rent expense amounted to $2,734 and $16,404 (unaudited) for the year
ended December 31, 2002 and six months ended June 30, 2003,
respectively.
3. Commitments and Contingencies:
Minimum Fee - Advertising and Design
------------------------------------
The Company has a three-year contract for the period January 2003 to
January 2006 with its advertising and design agency. This contract
stipulates that there will be a minimum guaranteed annual fee for
consultation, planning, creative and account service of $100,000 for
each of the three years of the contract if termination of the contract
is the result of a merger or acquisition of the Company. The contract
was not terminated upon the GPN Merger Agreement (Note 11).
Public Relations Agreement
--------------------------
The Company has a six-month agreement with a provider of public
relations consulting services from April to September 2003 at the rate
of $5,000 per month (unaudited). The agreement then becomes month to
month. The Company may terminate this agreement after the initial
six-month period by providing 60 days notice to the provider.
20
4. Merger Escrow Account:
On July 2, 2003, the Company completed the GPN Merger Agreement.
$350,000 (unaudited) is presented on the Company's balance sheet at
June 30, 2003 as "merger escrow account." This represented a portion of
the proceeds received by the Company from the issuance of convertible
notes (see Note 6). These funds were designated to pay the purchase
price and other expenses for the GPN shell pursuant to the GPN Merger
Agreement (Note 11).
5. Prepaid Offering Costs:
The Company had prepaid offering costs of $90,000 at June 30, 2003
(unaudited), which represented funds advanced to VMR pursuant to the
Private Placement Agreement (Note 9).
6. Notes Payable:
Convertible Note
----------------
On November 1, 2002, the Company received a loan in the amount of
$15,000. On January 20, 2003, a convertible promissory note agreement
(the "Convertible Note") was executed in support of this loan. The
Convertible Note is due on January 20, 2004, and bears interest at the
rate of 8%. The Convertible Note is accelerated if certain events occur
with regard to a sale of the Company's assets or an initial public
offering of the Company's securities. The Convertible Note may be
converted into shares of the Company's common stock at any time prior
to the anniversary of the note by mutual consent of the Company and the
note holder at the conversion price of $1.67 per share. As additional
consideration, the note holder also received a warrant to purchase
13,469 shares (post reverse-split) of the Company's common stock at the
price of $1.67 per share. The Company calculated the value of both the
conversion feature of the Convertible Note and the value of the warrant
utilizing the Black-Scholes model and determined that neither
instrument had a beneficial conversion feature.
21
6. Notes Payable, Continued:
Secured Convertible Promissory Notes
------------------------------------
In May and June 2003, the Company entered into a series of note
agreements (the "Secured Convertible Promissory Notes") in the
aggregate principal amount of $495,000. These notes are due 120 days
from the date of issuance and are immediately convertible in to shares
of GPN common stock at the option of the note holder. Notes aggregating
a principal amount of $295,000 bear interest at the rate of 10% per
annum, and one note in the amount of $200,000 bears a flat fee of 20%
or $40,000. At the date of the notes, the Company was anticipating
entering into the GPN Merger Agreement, and further contemplated that
upon completion of the Merger, GPN would undertake an equity financing
(the "Reorganization Financing or Private Placement Agreement") that
would fund the operations of the Company. The Reorganization Financing
(Note 11) has not yet occurred. The holders of the Secured Convertible
Promissory Notes would have the option to be paid on the Secured
Convertible Promissory Notes from the first $495,000 raised in the
Reorganization Financing, or they could elect to extend the term of the
Secured Convertible Promissory Notes to one year from the date of
issuance (the "Non-Prepayment Option"). If a note holder elected the
Non Pre-Payment Option, the interest rate would change to 6% per annum
as of the election date in the case of notes aggregating a principal
amount of $295,000; the interest rate would change to the flat fee of
20% plus 6% per annum (as of the election date) in the case of a note
in the principal amount of $200,000.
If the Secured Convertible Promissory Notes are not paid when due, and
the Holder does not elect the Non-Prepayment option, then the notes
will bear interest at the rate otherwise applicable plus an additional
2% per annum.
22
6. Notes Payable, Continued:
Secured Convertible Promissory Notes, Continued
-----------------------------------------------
If the Holder elects the Non-Prepayment Option, commencing on the day
which is thirty days from the closing date of the Reorganization
Financing, the Holder would have the option of converting the Secured
Convertible Promissory Note into post recapitalization shares of GPN
common stock (the "Common Stock") at a price per share equal to 90% of
the average of the closing price of the Common Stock as quoted on the
NASDAQ Bulletin Board system for the three trading days immediately
preceding the notice of conversion. As an additional incentive to the
Holders, effective July 1, 2003, the Company also provided a five-year
warrant to purchase that number of shares of post recapitalization GPN
Common Stock equal to one-half the initial principal amount of the
Secured Convertible Promissory Notes at a price per share equal to the
price per share paid by investors in the Reorganization Financing. The
Bridge Notes are secured by substantially all the assets of ImmuneRegen
post-merger with GPN. The Bridge Notes are also guaranteed by GPN.
Following the guidance in EITF 00-27, the Company computed the value of
the beneficial conversion feature of the Convertible Secured Promissory
Notes and recorded the amount of $55,000 as a discount to notes payable
and as additional paid-in capital during the six months ended June 30,
2003 (unaudited). This discount is being amortized over the term of the
notes, or 120 days.
The warrants issued in conjunction with the Secured Convertible
Promissory Notes are not considered granted until the completion of the
Reorganization Financing. Because the Reorganization Financing had not
occurred at June 30, 2003, the Company ascribed no value to the
warrants at June 30, 2003 (unaudited).
On May 28, 2003, the Company entered into a registration rights
agreement (the "Registration Rights Agreement") with the Holders such
that if the Company receives a written request from a Holder to effect
a registration with respect to common stock obtained via conversion of
the Bridge Notes, the Company will (i) within ten days give written
notice of the proposed registration to all other Holders, and (ii) as
soon as practicable, use its best efforts to effect all such
registrations. The Company is not obligated to effect any such
registration within 180 days from the date of the Registration Rights
Agreement, or to initiate a third registration process if the Company
has previously effected two such registrations pursuant to the
Registration Rights Agreement and such registrations have been declared
effective.
23
7. Stockholders' Equity (Deficit):
Preferred Stock
---------------
The Company is authorized to issue 10,000,000 shares of preferred
stock, par value $0.001 per share. No shares of preferred stock have
been issued as of December 31, 2002 or June 30, 2003 (unaudited).
Common Stock
------------
The Company is authorized to issue 100,000,000 shares of common stock,
par value $0.001 per share. In December 2002, the Company issued
8,306,138 shares (post reverse-split) of common stock with a fair value
of $9,250 to the Company's founders for a license to certain
proprietary rights.
In December 2002, the Company issued 8,306,138 shares (post
reverse-split) of common stock with a fair value of $9,250 to the
Company's founders for a license to certain proprietary rights.
Also in December 2002, the Company issued 673,471 shares (post
reverse-split) of common stock with a fair value of $782 to a Company
founder for services provided.
In December 2002, the Company issued 26,939 shares (post reverse-split)
of common stock with a fair value of $9,000 to a vendor for services
rendered.
In December 2002, the Company sold 92,789 shares (post reverse-split)
of its common stock for net proceeds of $31,001.
During January 2003, the Company issued 49,388 shares (post
reverse-split) of its common stock with a fair value of $13,780
(unaudited) to 2 service providers.
During March 2003, the Company issued 77,225 shares (post
reverse-split) of its common stock with a fair value of $21,500
(unaudited) to a service provider.
In April 2003, the Company issued 7,184 shares (post reverse-split) of
its common stock with a fair value of $2,000 (unaudited) to a service
provider.
In April 2003, a convertible note in the amount of $300,000 was
converted into $1,077,553 shares of common stock.
In January, May and June 2003, the Company sold collectively 191,714
shares (post reverse-split) of its common stock for net proceeds of
$65,000 (unaudited).
24
7. Stockholders' Deficit, Continued:
Warrants
--------
At December 31, 2002, the Company had 13,469 of warrants outstanding
(Note 6).
At June 30, 2003, the Company had outstanding five-year warrants to
purchase 63,755 shares (post reverse-split) of the Company's common
stock at a weighted average exercise price of $0.76 (unaudited).
Warrants to purchase 13,469 shares (post reverse-split) of the
Company's common stock were issued in conjunction with the Company's
note payable. Warrants to purchase 50,286 shares (post reverse-split)
were issued to consultants. The Company valued the warrants using the
Black-Scholes calculation model, and none of the warrants were deemed
to have any value during the six months ended June 30, 2003 (unaudited)
and there is no effect to the Company's financial statements.
8. Stock Option Plan:
During June 2003 (unaudited), the Company adopted the 2003 Stock
Option, Deferred Stock and Restricted Stock Plan (the "Plan") which
authorizes the Board of Directors in accordance with the terms of the
Plan, among other things, to grant incentive stock options, as defined
by Section 422(b) of the Internal Revenue Code, nonstatutory stock
options (collectively, the "Stock Options") and awards of restricted
stock and deferred stock and to sell shares of common stock of the
Company ("Common Stock") pursuant to the exercise of such stock options
for up to an aggregate of 1,616,330 (post reverse-split) shares. The
options will have a term not to exceed ten years from the date of the
grant.
The Company has elected to follow APB Opinion No. 25 (Accounting for
Stock Issued to Employees) in accounting for its employee stock
options. Accordingly, no compensation expense is recognized in the
Company's financial statements related to options issued to employees
because the exercise price of the Company's employee stock options
equals the market price of the Company's common stock on the date of
grant. For options issued to consultants, pursuant to Financial
Accounting Standards Board Statement No. 123 (Accounting for
Stock-Based Compensation) the Company determined that there was no
compensation costs based on the fair value at the grant date for its
stock options.
At June 30, 2003, there were no options outstanding under the Plan
(unaudited).
25
9. Private Placement Agreement (Reorganization Financing) and Offering
Memorandum:
On May 28, 2003, the Company entered into an engagement agreement (the
"Private Placement Agreement") with VMR Capital Markets, U.S. ("VMR")
whereby VMR will act as the agent for the Company in connection with
the private placement of up to $2,000,000 of the Company's common stock
on a best efforts basis. The offering will be made only to "Qualified
Institutional Buyers" and individuals who are "Accredited Investors,"
as those terms are defined in Rule 144 and in Regulation D,
respectively, under the Securities Act of 1933, as amended. The term of
the Private Placement Agreement is for a period of six months. Upon
consummation of a financing under the Private Placement Agreement, the
Company will pay to VMR a fee equal to 10% of the principal amount of
any common stock sold in the Private Placement. In addition, the
Company will pay to VMR a non-accountable expense allowance equal to 3%
of the principal amount of stock sold in the Private Placement. At June
30, 2003, the Company had advanced $90,000 (unaudited) to VMR. On
November 28, 2003, the Private Placement Agreement expired and no funds
had been raised.
10. Non Cash Transactions:
Non-cash investing and financing activities
-------------------------------------------
For the period ending December 31, 2002:
In December 2002, the Company issued 8,306,138 shares (post
reverse-split) of common stock with a fair value of $9,250 to the
Company's founders for a license to certain proprietary rights.
Also in December 2002, the Company issued 673,471 shares (post
reverse-split) of common stock with a fair value of $782 to a Company
founder for services provided.
In December 2002, the Company issued 26,939 shares (post reverse-split)
of common stock with a fair value of $9,000 to a vendor for services
rendered.
For the period ending June 30, 2003:
During January 2003, the Company issued 49,388 shares (post
reverse-split) of its common stock with a fair value of $13,780
(unaudited) to 2 service providers.
26
10. Non Cash Transactions, Continued:
Non-cash investing and financing activities, Continued
------------------------------------------------------
During March 2003, the Company issued 77,225 shares (post
reverse-split) of its common stock with a fair value of $21,500
(unaudited) to a service provider.
In April 2003, the Company issued 7,184 shares (post reverse-split) of
its common stock with a fair value of $2,000 (unaudited) to a service
provider. In April 2003, a convertible note in the amount of $300,000
was converted into $1,077,553 shares of common stock.
11. Subsequent Events:
Reverse Stock Split
-------------------
On June 30, 2003, the Company's Board of Directors approved a
0.897960946 for 1.00 reverse-split of the Company's common stock.
Immediately before the reverse-split, there were 11,728,333 (unaudited)
shares of the Company's common stock issued and outstanding;
immediately after the split, there were 10,531,585 (unaudited) of the
Company's common stock issued and outstanding. The effect of the
reverse split has been presented in the accompanying financial
statement and footnote disclosures.
GPN Merger Agreement
--------------------
On July 2, 2003, the Company and GPN entered into and consummated an
Agreement and Plan of Merger (the "Merger"). In accordance with the
Merger, on July 2, 2003, GPN, through its wholly owned subsidiary, GPN
Acquisition Corporation, acquired the Company in exchange for
10,531,585 shares of the Registrant's common stock (unaudited). The
transaction contemplated by the Agreement was intended to be a
"tax-free" reorganization pursuant to the provisions of Section 351 and
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended. Also on
July 2, 2003, the $350,000 held in escrow was disbursed pursuant to the
terms of the Merger. The effects of the recapitalization have not been
reflected in the accompanying financial statements. Subsequent to the
recapitalization, GPN changed its name to IR BioSciences Holdings, Inc.
("IRBH").
27
11. Subsequent Events, Continued:
Repayment of Convertible Promissory Notes
-----------------------------------------
In September and October 2003, the Company repaid three of the
Convertible Promissory Notes with an aggregate principal amount of
$250,000 plus accrued interest in the amount of $40,863.
Extended Convertible Promissory Notes and Warrants
--------------------------------------------------
In October 2003, the Holders of the remaining five Secured Convertible
Promissory Notes with an aggregate principal amount of $245,000 agreed
to extend their loans to the Company by executing new notes (the
"Extended Convertible Notes"). The Extended Convertible Notes bear
interest at the rate of 8% per annum and have a term of 180 days.
Should the Company, within the term of the Extended Convertible Notes,
achieve a sale of shares of common stock in which the Company receives
at least $500,000 in proceeds from investors (a "Qualified Financing"),
the Extended Convertible Notes will automatically convert into shares
of common stock of IRBH, at a price per share equal to 60% of the
issuance price per share in the Qualified Financing. The Company also
issued to the holders of the Extended Convertible Notes a warrant to
purchase the number of shares of common stock of the Parent equal to
the principal amount of the Extended Convertible Note divided by two;
for example, the holder of an Extended Convertible Note in the
principal amount of $20,000 would have a warrant to purchase 10,000
shares of common stock. The exercise price of these warrants is $2.00
per share. The Extended Convertible Notes also were executed in
conjunction with a registration rights agreement and a security
agreement.
October Convertible Notes and Warrants
--------------------------------------
Also in October 2003, the Company executed 6 new convertible promissory
notes (the "October Convertible Notes" in the aggregate principal
amount of $265,000. The October Convertible Notes have a term of 180
days, and bear interest at the rate of 10% per annum. If the Company
achieves a Qualified Financing, the October Convertible Notes will
automatically convert into shares of common stock of the Parent at a
price per share equal to 80% of the issuance price per share in the
Qualified Financing. The Company also issued to the holders of the
October Convertible Notes a warrant to purchase the number of shares of
common stock of the Parent equal to the principal amount of the
Extended Convertible Note divided by two; for example, the holder of an
Extended Convertible Note in the principal amount of $20,000 would have
a warrant to purchase 10,000 shares of common stock. The exercise price
of these warrants is $2.00 per share. In addition, two of the Company's
founders each provided the holders of the October Convertible Notes
with a warrant to purchase directly from the
28
11. Subsequent Events, Continued:
October Convertible Notes and Warrants, Continued
-------------------------------------------------
founder 6,000 shares of common stock for each $12,500 in principal
amount of October Convertible Notes at an exercise price of $0.01 per
share. For example, if an investor in the October Convertible Notes
loaned the Company the principal amount of $20,000, they would receive
warrants to purchase 10,000 shares of common stock from the Company,
and in addition, warrants to purchase 6,000 shares of common stock from
each of two of the Company's founders, for a total of 22,000 shares.
Private Placement Agreement
---------------------------
On November 28, 2003, the Private Placement Agreement expired and no
funds had been raised.
29
(b): Pro Forma Financial Information.
--------------------------------
On July 2, 2003, GPN Network, Inc. (the "Registrant") and ImmuneRegen
BioSciences, Inc., a privately-held Delaware corporation ("ImmuneRegen"),
entered into and consummated an Agreement and Plan of Merger (the "Merger"). In
accordance with the Merger, on July 2, 2003, the Registrant, through its
wholly-owned subsidiary, GPN Acquisition Corporation, a Delaware Corporation,
("Merger Sub") acquired ImmuneRegen in exchange for 10,531,585 shares of the
Registrant's common stock. The transaction contemplated by the Agreement was
intended to be a "tax-free" reorganization pursuant to the provision of Section
351 and 368 (a)(1)(a) OF THE internal Revenue Code of 1986, as amended.
The stockholders of ImmuneRegen (aggregating approximately 40) owned
approximately 90% of the Registrant's common stock outstanding immediately after
the effective time of the Merger (excluding any additional shares issuable upon
outstanding options, warrants and other securities convertible into our common
stock). The operations of GPN Network, Inc. had substantially ceased before the
time of the Merger.
The operations of GPN Network, Inc. will not be continued by the surviving
entity. In light of these facts and circumstances, disclosure of prior financial
information in pro forma presentation is not deemed to be material to an
understanding of future operations and accordingly no pro forma financial
information is presented here. For an understanding of the prior financial
information of ImmuneRegen, please see the separate audited financial statements
attached as exhibits to this Form 8-K/A.
(c): Exhibits:
--------
2 * Agreement and Plan of Merger dated July 2, 2003 by and between
GPN Network, Inc., GPN Acquisition Corporation and ImmuneRegen
Biosciences, Inc.
99.1 * Press Release dated July 3, 2003 announcing the closing of the
Agreement and Plan of Merger by and among GPN Network, Inc., GPN
Acquisition Corporation and ImmuneRegen, Inc. ("GPN Network
Finalizes Merger With ImmuneRegen").
------------------------
* Previously filed with the current report on Form 8-K that was
filed on July 7, 2003.
30
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
IR BioSciences Holdings, Inc.
By: /S/ MICHAEL WILHELM
---------------------
Michael Wilhelm, President
Dated: December 23, 2003
31