FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended June 30, 2003
or
( ) Transition 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
GPN Network, Inc.
-----------------
(Exact name of Registrant as specified in its charter)
Delaware 13-3301899
--------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8655 East Via De Ventura, Suite E-155, Scottsdale, Arizona 85258
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(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code (408) 922-3926
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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
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The number of shares outstanding of Registrant's common stock as of
August 12, 2003 was 11,715,650.
GPN NETWORK, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
Page Number
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheet as of June 30, 2003 (unaudited)........3
Consolidated Statements of Operations for the three months
ended June 30, 2003 (unaudited) and 2002 (unaudited) and six
months ended June 30, 2003 (unaudited) and 2002 (unaudited)........4
Consolidated Statement of Cash Flows for the six months ended
June 30, 2003 (unaudited) and 2002.................................5
Notes to Consolidated Financial Statements.........................6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.........................................9
Item 3. Controls and Procedures...........................................21
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.................................................22
Item 2. Changes in Securities and Use of Proceeds.........................22
Item 3. Defaults Upon Senior Securities...................................22
Item 4. Submission of Matters to a Vote of Securities Holders.............22
Item 5. Other Information.................................................22
Item 6. Exhibits and Reports on Form 8-K..................................22
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
GPN Network, Inc. and Subsidiaries
Consolidated Balance Sheet
June 30,
2003
-----------
(unaudited)
Assets
Current assets
Cash and cash equivalents $ --
-----------
Total current assets --
-----------
Total assets $ --
===========
Liabilities and Stockholders' Deficit
Current liabilities
Bank Overdraft $ 34,162
Accounts payable and accrued liabilities 105,518
Note payable 55,821
Promissory note to shareholder 4,486
Net liabilities of discontinued operations 90,417
-----------
Total current liabilities 290,404
Commitments and Contingencies --
Stockholders' deficit
Preferred stock, 0.001 par value:
10,000,000 shares authorized,
no shares outstanding --
Common stock, $0.001 par value;
50,000,000 shares authorized,
23,681,297 shares issued and outstanding 23,681
Additional paid-in capital 3,499,586
Accumulated deficit (3,813,671)
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Total stockholders' deficit (290,404)
-----------
Total liabilities and stockholders' deficit $ --
===========
See accompanying notes to consolidated financial statements.
3
GPN Network, Inc. and Subsidiaries
Consolidated Statements of Operations
For the Three For the Three For the Six For the Six
Months Ended Months Ended Months Ended Months Ended
June 30, June 30, June 30, June 30,
2003 2002 2003 2002
------------- ------------- ------------- -------------
(unaudited) (unaudited) (unaudited) (unaudited)
Revenues $ -- $ -- $ -- $ --
Operating expenses:
Employee compensation -- -- -- --
Selling, general and administrative expenses 10,662 70,325 14,454 120,814
------------- ------------- ------------- -------------
Total operating expenses 10,662 70,325 14,454 120,814
Operating loss (10,662) (70,325) (14,454) (120,814)
Other income (expense):
Interest (expense) (1,338) (1,174) (3,157) (2,976)
Gain on settlement of liabilities 369,964 -- 369,964 --
------------- ------------- ------------- -------------
Total other income (expense) 368,626 (1,174) 366,807 (2,976)
Income (loss) before income taxes 357,964 (71,499) 352,353 (123,790)
Provision for income taxes -- 289 800 1,889
------------- ------------- ------------- -------------
Net income (loss) $ 357,964 $ (71,788) $ 351,553 $ (125,679)
============= ============= ============= =============
Basic and diluted income (loss) per common share $ 0.02 $ -- $ 0.02 $ (0.01)
Basic and diluted weighted average
common shares outstanding 20,206,651 16,677,897 18,190,972 16,456,903
============= ============= ============= =============
See accompanying notes to consolidated financial statements
4
GPN Network, Inc and Subsidiaries
Consolidated Statements of Cash Flows
For the Six For the Six
Months Ended Months Ended
June 30, June 30,
2003 2002
----------- -----------
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net income (loss) from continuing operations $ (18,411) $ (125,679)
Adjustments to reconcile net to net cash used
in operating activities:
Changes in operating assets and liabilities:
Other assets -- 689
Increase in bank overdraft 34,162 --
Accounts payable and accrued expenses 7,253 85,354
----------- -----------
Net cash provided by (used in)
continuing operating activities 23,004 (39,636)
Net cash provided by (used in)
discontinued operating activities (27,505) (98,874)
----------- -----------
Total net cash provided by (used in)
operating activities (4,501) (138,510)
Cash flows from financing activities:
Proceeds from short term loan - shareholder 8,986 11,500
Principal payment of short term loan - shareholder (4,500) (15,000)
Proceeds from the sale of common stock,
net of offering costs -- 138,776
----------- -----------
Net cash provided by financing activities 4,486 135,276
Net increase (decrease) in cash (15) (3,234)
Cash at beginning of period 15 5,275
----------- -----------
Cash at end of period $ -- $ 2,041
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Stock issued in exchange for debt: $ 75,284 $ --
See accompanying notes to consolidated financial statements.
5
GPN Network, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
NOTE 1 - BASIS OF PRESENTATION
The financial statements of GPN Network, Inc. ("GPN" or the "Company") for the
three and six months ended June 30, 2003 are unaudited. Certain information and
note disclosures normally included in the financial statements prepared in
accordance with accounting principles generally accepted in the United States of
America have been omitted. These financial statements should be read in
conjunction with the audited financial statements and notes thereto included in
GPN's Form 10-KSB as of and for the period ended December 31, 2002. In the
opinion of management, the financial statements contain all adjustments,
consisting of normal recurring adjustments, necessary to present fairly the
financial position of GPN for the periods presented. The interim operating
results may not be indicative of operating results for the full year or for any
other interim periods.
NOTE 2 - THE COMPANY
GPN Network, Inc. is a Delaware corporation and, until July 2001, was engaged in
the business, through its subsidiaries, affiliates and strategic alliances, of
assisting unaffiliated early-stage development and small to mid-sized emerging
growth companies with financial and business development services, including
raising capital in private and public offerings. During 2001, due in large part
to the decreased availability of investment capital to the Company's target
market of Internet related, small growth companies, GPN failed to meet its
revenue targets. On July 27, 2001, a majority interest in the Company was
acquired by a private investor, and the Company installed new management and
adopted a new business plan. The immediate action taken regarding this new
business plan was to discontinue the Company's current operations effective July
27, 2001.
On July 2, 2003, the Company 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. Except where
noted otherwise, references in this report, pre-Merger, to "we," "us," "our,"
"GPN" and the "Company" are to us, and references in this report, post-Merger,
to "we," "us," "our," "GPN" and the "Company" are to us and our wholly-owned
subsidiary, ImmuneRegen. The transaction contemplated by the Merger 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.
ImmuneRegen is a biotechnology company engaged in the research and development
of applications utilizing modified substance P, a naturally occurring
immunomodulator. ImmuneRegen's goal is to enter into overseas licensing and
royalty agreements for its applications while awaiting approval by the FDA in
the Unites States. Once approval has been obtained by the FDA, ImmuneRegen hopes
to further expand its sales efforts internationally and will attempt to begin to
generate sales domestically through the licensing and the direct sales of its
products in the United States.
The shares of common stock of the Company are traded on the NASD OTC Bulletin
Board under the symbol "GPNN". The Company is headquartered in Los Angeles,
California.
6
Principles of Consolidation
---------------------------
The consolidated financial statements include the accounts of the Company and
its subsidiaries GPN Securities, Inc., and Dermedics, Inc. Both of these
subsidiaries are inactive. The Merger with ImmuneRegen BioSciences, Inc. was
effective July 2, 2003, and accordingly the accounts of ImmuneRegen are not
included in the Company's financial statements for the period ended June 30,
2003. All significant intercompany balances and transactions have been
eliminated in consolidation.
Going Concern
-------------
The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles which contemplate
continuation of the Company as a going concern. As of June 30, 2003, the Company
had an accumulated deficit of $3,813,671 and total stockholders' deficit of
$290,404. The Company also had significant negative cash flows from operations
for the twelve months ended December 31, 2002. These factors, along with the
Company's lack of an operational history, among other matters, raise substantial
doubt about its ability to continue as a going concern. The successful outcome
of future activities cannot be determined at this time and there are no
assurances that if achieved, the Company will have sufficient funds to execute
its intended business plan or generate positive operating results.
Lease Liability
---------------
During the three months ended June 30, 2003, the Company entered into a
settlement agreement and mutual release with its former landlord regarding the
lease of its former corporate headquarters. Pursuant to the terms of this
agreement, the Company agreed to pay the sum of $25,000 in return for a complete
release of any further liability under the lease.
Earnings Per Share
------------------
The Company calculates earnings per share in accordance with SFAS No. 128,
"Earnings Per Share." Basic earnings per share is computed by dividing income
available to common shareholders by the weighted-average number of common shares
assumed to be outstanding during the period of computation. Diluted earnings per
share is computed similar to basic earnings per 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.
The following potential common shares have been excluded from the computation of
diluted net loss per share for all periods presented because the effect would
have been anti-dilutive:
Options/warrants
outstanding at June 30,
---------------------
2003 2002
---- ----
Options outstanding under the
Company's stock option plans.............632,125 632,125
Warrants outstanding issued with
the sale of common stock................4,722,244 4,722,244
Warrants outstanding issued to
consultants for services rendered..........20,125 20,125
NOTE 3 - LIABILITIES
In September 2001, the Company borrowed the principal amount of $50,000.
Interest at 6% is compouneded quarterly. Principal and accrued interest is due
September 7, 2003.
In May 2003, a note payable to a shareholder in the amount of $75,284 was
cancelled in exchange for the issuance of an aggregate of 7,528,400 shares of
the Company's common stock.
7
NOTE 4 - STOCKHOLDERS' DEFICIT
Common Stock
------------
In May 2003, an aggregate of 7,528,400 shares of the the Company's common stock
was sold and issued in a private offering pursuant to Regulation D of the
Securities Act of 1933 in exchange for the cancellation of $75,284 of
indebtedness.
Preferred Stock
---------------
The Company's articles of incorporation authorize up to 10,000,000 shares of
$0.001 par value preferred stock. Shares of preferred stock may be issued in one
or more classes or series at such time the Board of Directors determine. All
shares of any series shall be equal in rank and identical in all respects. As of
June 30, 2003, no preferred shares have been designated or issued.
NOTE 5 - CONTINGENCIES
In June 2003, ImmuneRegen entered into Secured Convertible Promissory Note
agreements in the aggregate amount of $550,000. The Company has guaranteed these
notes.
NOTE 6 - SUBSEQUENT EVENTS
On July 1, 2003, the Company effected a one-for-twenty reverse split of its
common stock. The number of shares of common stock outstanding immediately
before the reverse split was 23,681,297. Immediately after the reverse split,
the number of shares of common stock outstanding was 1,184,065.
On July 2, 2003, the Company and ImmuneRegen entered into and consummated the
Merger, and the Company, through Merger Sub, acquired ImmuneRegen in exchange
for 10,531,585 shares of the Company's common stock. The transaction
contemplated by the Merger 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. Immediately after the transaction, the Company
had outstanding 11,715,650 shares of common stock. The Company anticipates
filing Form 8-K/A with the audited financial statements of ImmuneRegen along
with the pro forma combined financial statements of the combined entities on or
before September 5, 2003.
8
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following information should be read in conjunction with the financial
statements and the notes thereto appearing elsewhere in this quarterly report on
Form 10-QSB. The analysis set forth below is provided pursuant to applicable
Securities and Exchange Commission regulations and is not intended to serve as a
basis for projections of future events.
Except for historical information contained herein, the matters discussed in
this quarterly report on form 10-QSB are forward-looking statements that are
subject to certain risks and uncertainties that could cause actual results to
differ materially from those set forth in such forward looking statements. Such
forward-looking statements may be identified by the use of certain
forward-looking terminology, such as "may," "will," "expect," "anticipate,"
"intend," "estimate," "believe" or comparable terminology that involves risks or
uncertainties. Actual future results and trends may differ materially from
historical and anticipated results, which may occur as a result of a variety of
factors. Such risks and uncertainties include, without limitation, our limited
operating history, the unpredictability of our future revenues, the effects of
the Merger, the ability to obtain additional funds, and lack of a trading market
for our stock. We undertake no obligation to update any forward-looking
statement, whether as a result of new information, future events or otherwise.
Readers should carefully review the risk factors set forth elsewhere in this
report under "Risk Factors" and in other reports or documents that we file from
time-to-time with the Securities and Exchange Commission.
Overview
--------
During 2001, due in large part to the decreased availability of investment
capital to the our target market of internet related, small growth companies, we
failed to meet our revenue targets. On July 27, 2001, a majority interest in us
was acquired by a private investor, and we installed new management and adopted
a new business plan. The immediate action taken regarding this new business plan
was to discontinue our then current operations effective July 27, 2001. As a
result, our operations through December 31, 2001 are reported as discontinued
operations.
During 2002 and 2003, we were engaged in discussions regarding possible business
combinations or asset acquisitions. On July 2, 2003, we entered into and
consummated the Merger with ImmuneRegen.
In accordance with the Merger, on July 2, 2003, through Merger Sub, we acquired
ImmuneRegen in exchange for 10,531,585 shares of our common stock. The
transaction contemplated by the Merger 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.
ImmuneRegen is a biotechnology company engaged in the research and development
of applications utilizing modified substance P, a naturally occurring
immunomodulator. ImmuneRegen's goal is to enter into overseas licensing and
royalty agreements for its applications while awaiting approval by the FDA in
the Unites States. Once approval has been obtained by the FDA, ImmuneRegen hopes
to further expand its sales efforts internationally and will attempt to begin to
generate sales domestically through the licensing and the direct sales of its
products in the United States.
9
RESULTS OF OPERATIONS - THREE MONTHS ENDED JUNE 30, 2003 COMPARED TO THREE
MONTHS ENDED JUNE 30, 2002
Revenue
-------
Because we discontinued our only revenue producing activity during 2001, there
is no revenue shown on the consolidated statement of operations for the period
ending June 30, 2003 or June 30, 2002.
Employee Compensation
---------------------
There was no employee compensation during the three months ended June 30, 2003
or June 30, 2002.
Selling, General and Administrative Expenses
--------------------------------------------
Selling, general, and administrative expenses from continuing operations were
$10,662 for the three months ended June 30, 2003, which is an 85% decrease from
selling, general and administrative expenses of $70,325 for the three months
ended June 30, 2002. The primary components of this amount for the three months
ended June 30, 2003 were legal and accounting fees. The decrease was caused by
decreased legal and accounting fees due to our discontinuation of our business
activities.
Interest Income and Expense
---------------------------
Interest expense for the three months ended June 30, 2003 was $1,338. Interest
expense for the three months ended June 30, 2002 was $1,174. The net difference
of $164 is due to higher balances during 2003 on the notes payable to
shareholder and affiliate.
Other Income
------------
During the three months ended June 30, 2003, we entered into settlement
agreements with our previous landlord and with many of our vendors. These
agreements resulted in a gain on settlement of liabilities of $369,964 during
the three months ended June 30, 2003, compared to no such gain during the three
months ended June 30, 2002.
Net Income (Loss)
-----------------
For the reasons stated above, we had a net income of $357,964 for the three
months ended June 30, 2003 compared to a net loss of ($71,788) for the three
months ended June 30, 2002, or an increase of $429,270.
RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 2003 COMPARED TO SIX MONTHS
ENDED JUNE 30, 2002
Revenue
-------
Because we discontinued our only revenue producing activity during 2001, there
is no revenue shown on the consolidated statement of operations for the period
ending June 30, 2003 or June 30, 2002.
Employee Compensation
---------------------
There was no employee compensation during the six months ended June 30, 2003 or
June 30, 2002.
10
Selling, General and Administrative Expenses
--------------------------------------------
Selling, general, and administrative expenses from continuing operations were
$14,454 for the six months ended June 30, 2003, which is an 88% decrease from
selling, general and administrative expenses of $120,814 for the six months
ended June 30, 2002. The primary components of this amount for the six months
ended June 30, 2003 were legal and accounting fees. The decrease was caused by
decreased legal and accounting fees due to our discontinuation of our business
activities.
Interest Income and Expense
---------------------------
Interest expense for the six months ended June 30, 2003 was $3,157. Interest
expense for the six months ended June 30, 2002 was $2,976. The increase $181 is
due to higher balances during 2003 on the notes payable to shareholder and
affiliate.
Other Income
------------
During the six months ended June 30, 2003, we entered into settlement agreements
with our previous landlord and with many of our previous vendors. These
agreements resulted in a gain on settlement of liabilities of $369,964 during
the three months ended June 30, 2003, compared to no such gain during the three
months ended June 30, 2002.
Net Income (Loss)
-----------------
For the reasons stated above, we had a net income of $351,553 for the six months
ended June 30, 2003 compared to a net loss of ($125,679) for the six months
ended June 30, 2002, or an increase of $477,232.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2003, we had no current assets. Also at June 30, 2003 current
liabilities were $290,404 resulting in negative working capital of ($290,404).
During the six months ended June 30, 2003, we had cash provided by its operating
activities of $23,004. During the six months ended June 30, 2002, we used cash
in its operating activities of $39,636.
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. 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.
Risk Factors
------------
THE ACTUAL RESULTS OF THE COMBINED COMPANY MAY DIFFER MATERIALLY FROM THOSE
ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS. GPN AND IMMUNEREGEN WILL
OPERATE AS A COMBINED COMPANY IN A MARKET ENVIRONMENT THAT IS DIFFICULT TO
PREDICT AND THAT INVOLVES SIGNIFICANT RISKS AND UNCERTAINTIES, MANY OF WHICH
WILL BE BEYOND THE COMBINED COMPANY'S CONTROL. ADDITIONAL RISKS AND
UNCERTAINTIES NOT PRESENTLY KNOWN, OR THAT ARE NOT CURRENTLY BELIEVED TO BE
IMPORTANT TO YOU, IF THEY MATERIALIZE, ALSO MAY ADVERSELY AFFECT THE COMBINED
COMPANY.
11
RISKS RELATED TO THE MERGER
---------------------------
The market price of our common stock may decline as a result of the merger.
---------------------------------------------------------------------------
The market price of our common stock may decline as a result of the merger for a
number of reasons, including if:
o the integration of GPN and ImmuneRegen is not completed in a timely and
efficient manner;
o the combined company does not achieve the perceived benefits of the
Merger as rapidly or to the extent anticipated by financial or industry
analysts;
o the effect of the Merger on the combined company's financial results
is not consistent with the expectations of financial or industry
analysts; or
o significant GPN stockholders decide to dispose of their shares following
the Merger.
The merger may result in loss of key employees.
-----------------------------------------------
Despite ImmuneRegen's efforts to retain key employees, the combined company
might lose some key employees following the Merger. Competition for qualified
technical and management employees is intense. Competitors and other companies
may recruit employees prior to the merger and during the integration process
following the closing of the merger, which has become a common practice. As a
result, employees could leave with little or no prior notice, which could cause
delays and disruptions in the effort to integrate the two companies and result
in expenses associated with finding replacement employees.
There may be sales of substantial amounts of our common stock after the merger,
--------------------------------------------------------------------------------
which could cause our stock price to fall.
------------------------------------------
A substantially large number of shares of our common stock may be sold into the
public market within short periods of time at various dates following the
closing of the Merger. As a result, our stock price could fall.
Our stock price is volatile and could decline in the future.
------------------------------------------------------------
The price of our common stock has been volatile in the past and will likely
continue to fluctuate in the future. The stock market in general and the market
for shares of life science companies in particular have experienced extreme
stock price fluctuations. In some cases, these fluctuations have been unrelated
to the operating performance of the affected companies. Many companies in the
life science and related industries have experienced dramatic volatility in the
market prices of their common stock. We believe that a number of factors, both
within and outside our control, could cause the price of our common stock to
fluctuate, perhaps substantially. Factors such as the following could have a
significant adverse impact on the market price of our common stock:
o Our ability to obtain additional financing and, if available, the terms
and conditions of the financing;
o ImmuneRegen's financial position and results of operations;
o The results of preclinical studies and clinical trials by ImmuneRegen,
its collaborators or its competitors;
o Concern as to, or other evidence of, the safety or efficacy of
ImmuneRegen's proposed products or its competitors' products;
o Announcements of technological innovations or new products by
ImmuneRegen or its competitors;
12
o U.S. and foreign governmental regulatory actions;
o Actual or anticipated changes in drug reimbursement policies;
o Developments with ImmuneRegen's collaborators, if any;
o Developments concerning patent or other proprietary rights of
ImmuneRegen or its competitors (including litigation);
o Status of litigation;
o Period-to-period fluctuations in ImmuneRegen's operating results;
o Changes in estimates of the combined company's performance by any
securities analysts;
o New regulatory requirements and changes in the existing regulatory
environment;
o Market conditions for life science stocks in general.
RISKS RELATED TO IMMUNEREGEN
----------------------------
ImmuneRegen has an accumulated deficit, is not currently profitable and expects
--------------------------------------------------------------------------------
to incur significant expenses in the near future.
-------------------------------------------------
ImmuneRegen has incurred a substantial net loss for the period from its
inception in October 2002 to June 30, 2003, and currently experiencing negative
cash flow. ImmuneRegen expects to continue to experience negative cash flow and
operating losses through at least 2004 and possibly thereafter. As a result,
ImmuneRegen will need to generate significant revenues to achieve profitability.
If ImmuneRegen's revenues grow more slowly than it anticipates, or if its
operating expenses exceed its expectations, ImmuneRegen may experience reduced
profitability.
We will be required to raise additional capital to fund ImmuneRegen's
--------------------------------------------------------------------------------
operations. We may not be able to raise needed additional capital in the future
--------------------------------------------------------------------------------
to fund ImmuneRegen's operations.
---------------------------------
ImmuneRegen requires substantial working capital to fund its operations.
ImmuneRegen's working capital requirements and cash flow provided by operating
activities is expected to vary from quarter to quarter depending on revenues,
operating expenses, capital expenditures and other factors. The cost, timing and
amount of funds needed by ImmuneRegen cannot be precisely determined at this
time and will be based on numerous factors, including, but not limited to,
approval by the U.S. Food and Drug Administration and market acceptance of its
products. To the extent that existing resources and future earnings are
insufficient to fund future activities, we will need to raise additional funds
through additional public or private equity offerings of its securities or debt
financings. No assurance can be given that any such additional funding will be
available or that, if available, can be obtained on terms favorable to we. If we
is unable to raise needed funds on acceptable terms, ImmuneRegen will not be
able to develop or enhance its products, take advantage of future opportunities
or respond to competitive pressures or unanticipated requirements. A material
shortage of capital will require we to take drastic steps such as reducing
ImmuneRegen's level of operations, disposing of selected assets or seeking an
acquisition partner. If cash is insufficient, ImmuneRegen will not be able to
continue operations.
13
ImmuneRegen's limited operating history makes it difficult to evaluate the
--------------------------------------------------------------------------------
ImmuneRegen's plan is not successful, or management is not effective, the value
--------------------------------------------------------------------------------
of our common stock may decline.
--------------------------------
ImmuneRegen was founded in October 2002. As a result, ImmuneRegen has a limited
operating history on which you can base your evaluation of its business and
prospects. ImmuneRegen's business and prospects must be considered in light of
the risks and uncertainties frequently encountered by companies in their early
stages of development. These risks and uncertainties include the following:
o Our ability to raise additional funding and the amounts raised, if any;
o The time and costs involved in obtaining regulatory approvals;
o Continued scientific progress in ImmuneRegen's research and development
programs;
o The scope and results of preclinical studies and clinical trials;
o The costs involved in filing, prosecuting and enforcing patent claims;
o Competing technological and market developments;
o Effective commercialization activities and arrangements;
o The costs of defending against and settling lawsuits; and
o Other factors not within the combined company's control or known to it.
The combined company cannot be sure that it will be successful in meeting these
challenges and addressing these risks and uncertainties. If it are unable to do
so, ImmuneRegen's business will not be successful.
ImmuneRegen's failure to successfully develop and commercialize products may
--------------------------------------------------------------------------------
cause us to cease operations.
-----------------------------
ImmuneRegen's failure to develop and commercialize products successfully may
cause it to cease operations. Its potential therapies utilizing Homspera will
require significant additional research and development efforts and regulatory
approvals prior to potential commercialization in the future. ImmuneRegen cannot
guarantee that it, or its corporate collaborators, if any, will ever obtain any
regulatory approvals of Homspera. ImmuneRegen currently is focusing its core
competencies on Homspera although there may be no assurance that it will be
successful in so doing.
ImmuneRegen's therapies and technologies utilizing Homspera is at early stages
of development and may not be shown to be safe or effective and may never
receive regulatory approval. ImmuneRegen's technologies utilizing Homspera has
not yet been tested in humans. Regulatory authorities may not permit human
testing of potential products based on these technologies. Even if human testing
is permitted, any potential products based on Homspera may not be successfully
developed or shown to be safe or effective.
The results of ImmuneRegen's preclinical studies and clinical trials may not be
indicative or future clinical trial results. A commitment of substantial
resources to conduct time-consuming research, preclinical studies and clinical
trials will be required if it is to develop any products. Delays in planned
patient enrollment in ImmuneRegen's clinical trials may result in increased
costs, program delays or both. None of ImmuneRegen's potential products may
prove to be safe or effective in clinical trials. Approval of the Unites States
Food and Drug Administration, the FDA, or other regulatory approvals, including
export license permissions, may not be obtained and even if successfully
14
developed and approved, ImmuneRegen's potential products may not achieve market
acceptance. Any products resulting from ImmuneRegen's programs may not be
successfully developed or commercially available for a number of years, if at
all.
Moreover, unacceptable toxicity or side effects could occur at any time in the
course of human clinical trials or, if any products are successfully developed
and approved for marketing, during commercial use of any of ImmuneRegen's
proposed products. The appearance of any unacceptable toxicity or side effects
could interrupt, limit, delay or abort the development of any of ImmuneRegen's
proposed products or, if previously approved, necessitate their withdrawal from
the market.
The lengthy product approval process and uncertainty of government regulatory
--------------------------------------------------------------------------------
requirements may delay or prevent ImmuneRegen from commercializing proposed
--------------------------------------------------------------------------------
products.
---------
Clinical testing, manufacture, promotion, export and sale of ImmuneRegen's
proposed products are subject to extensive regulation by numerous governmental
authorities in the United States, principally the FDA, and corresponding state
and foreign regulatory agencies. This regulation may delay or prevent
ImmuneRegen from commercializing proposed products. Noncompliance with
applicable requirements can result in, among other things, fines, injunctions,
seizure or recall of such products, total or partial suspension of product
manufacturing and marketing, failure of the government to grant premarket
approval, withdrawal of marketing approvals and criminal prosecution.
The regulatory process for new therapeutic drug products, including the required
preclinical studies and clinical testing, is lengthy and expensive. ImmuneRegen
may not receive necessary FDA clearances for any of its potential products in a
timely manner, or at all. The length of the clinical trial process and the
number of patients the FDA will require to be enrolled in the clinical trials in
order to establish the safety and efficacy of ImmuneRegen's proposed products is
uncertain.
Even if human clinical trials of Homspera are initiated and successfully
completed, the FDA may not approve Homspera for commercial sale. ImmuneRegen may
encounter significant delays or excessive costs in its efforts to secure
necessary approvals. Regulatory requirements are evolving and uncertain. Future
United States or foreign legislative or administrative acts could also prevent
or delay regulatory approval of our products. ImmuneRegen may not be able to
obtain the necessary approvals for clinical trials, manufacturing or marketing
of any of our products under development. Even if commercial regulatory
approvals are obtained, they may include significant limitations on the
indicated uses for which a product may be marketed.
In addition, a marketed product is subject to continual FDA review. Later
discovery of previously unknown problems or failure to comply with the
applicable regulatory requirements may result in restrictions on the marketing
of a product or withdrawal of the product from the market, as well as possible
civil or criminal sanctions.
Among the other requirements for regulatory approval is the requirement that
prospective manufacturers conform to the FDA's Good Manufacturing Practices, or
GMP, requirements. In complying with the FDA's GMP requirements, manufacturers
must continue to expend time, money and effort in production, record keeping and
quality control to assure that products meet applicable specifications and other
requirements. Failure to comply and maintain compliance with the FDA's GMP
requirements subjects manufacturers to possible FDA regulatory action and as a
result, may have a material adverse effect on ImmuneRegen. ImmuneRegen, or its
contract manufacturers, if any, may not be able to maintain compliance with the
FDA's GMP requirements on a continuing basis. Failure to maintain compliance
could have a material adverse effect on ImmuneRegen.
15
The FDA has not designated expanded access protocols for Homspera as "treatment"
protocols. The FDA may not determine that Homspera meets all of the FDA's
criteria for use of an investigational drug for treatment use. Even if Homspera
is allowed for treatment use, third party payers may not provide reimbursement
for the costs of treatment with Homspera. The FDA also may not consider Homspera
to be an appropriate candidate for accelerated approval, expedited review or
fast track designation.
Marketing any drug products outside of the United States will subject
ImmuneRegen to numerous and varying foreign regulatory requirements governing
the design and conduct of human clinical trials and marketing approval.
Additionally, ImmuneRegen's ability to export drug candidates outside the United
States on a commercial basis will be subject to the receipt from the FDA of
export permission, which may not be available on a timely basis, if at all.
Approval procedures vary among countries and can involve additional testing, and
the time required to obtain approval may differ from that required to obtain FDA
approval. Foreign regulatory approval processes include all of the risks
associated with obtaining FDA approval set forth above, and approval by the FDA
does not ensure approval by the health authorities of any other country.
Technological change and competition may render ImmuneRegen's potential products
--------------------------------------------------------------------------------
obsolete.
---------
The life science industry continues to undergo rapid change, and competition is
intense and is expected to increase. Competitors may succeed in developing
technologies and products that are more effective or affordable than any that
ImmuneRegen is developing or that would render ImmuneRegen's technology and
proposed products obsolete or noncompetitive. Most of ImmuneRegen's competitors
have substantially greater experience, financial and technical resources and
production, marketing and development capabilities than it. Accordingly, some of
ImmuneRegen's competitors may succeed in obtaining regulatory approval for
products more rapidly or effectively than it, or technologies and products that
are more effective and affordable than any that ImmuneRegen is developing.
ImmuneRegen's lack of commercial manufacturing and marketing experience may
--------------------------------------------------------------------------------
prevent it from successfully commercializing products.
------------------------------------------------------
ImmuneRegen has not manufactured any of its products in commercial quantities.
ImmuneRegen may not successfully make the transition from manufacturing clinical
trial quantities to commercial production quantities or be able to arrange for
contract manufacturing and this could prevent us from commercializing products
or limit our profitability from our products. Even if Homspera is successfully
developed and receives FDA approval, ImmuneRegen has not demonstrated the
capability to manufacture Homspera in commercial quantities. ImmuneRegen has not
demonstrated the ability to manufacture Homspera in large-scale clinical
quantities. ImmuneRegen expects to rely on third parties for the final
activation step of the Homspera manufacturing process. If any of these proposed
manufacturing operations prove inadequate, there may be no assurance that any
other arrangements may be established on a timely basis or that ImmuneRegen
could establish other manufacturing capacity on a timely basis.
ImmuneRegen has no experience in the sales, marketing and distribution of
pharmaceutical or biotechnology products. Thus, ImmuneRegen's proposed products
may not be successfully commercialized even if they are developed and approved
for commercialization.
The manufacturing process of ImmuneRegen's proposed products is expected to
involve a number of steps and requires compliance with stringent quality control
specifications imposed by ImmuneRegen and by the FDA. Moreover, it is expected
that ImmuneRegen's proposed products may be manufactured only in a facility that
has undergone a satisfactory inspection and certification by the FDA. For these
reasons, ImmuneRegen would not be able to quickly replace its manufacturing
capacity if we were unable to use its manufacturing facilities as a result of a
16
fire, natural disaster (including an earthquake), equipment failure or other
difficulty, or if such facilities are deemed not in compliance with the GMP
requirements, and the noncompliance could not be rapidly rectified.
ImmuneRegen's inability or reduced capacity to manufacture its proposed products
would prevent it from successfully commercializing its proposed products.
ImmuneRegen may enter into arrangements with contract manufacturing companies in
order to meet requirements for its products, or to attempt to improve
manufacturing efficiency. If ImmuneRegen chooses to contract for manufacturing
services, ImmuneRegen may encounter costs, delays and/or other difficulties in
producing, packaging and distributing its clinical trials and finished product.
Further, contract manufacturers must also operate in compliance with the GMP
requirements; failure to do so could result in, among other things, the
disruption of its product supplies. ImmuneRegen's potential dependence upon
third parties for the manufacture of its proposed products may adversely affect
its profit margins and its ability to develop and deliver proposed products on a
timely and competitive basis.
Adverse determinations concerning product pricing, reimbursement and related
--------------------------------------------------------------------------------
matters could prevent ImmuneRegen from successfully commercializing homspera.
-----------------------------------------------------------------------------
ImmuneRegen's ability to earn sufficient revenue on Homspera or any other
proposed products will depend in part on the extent to which reimbursement for
the costs of such products and related treatments will be available from
government health administration authorities, private health coverage insurers,
managed care organizations and other organizations. Failure to obtain
appropriate reimbursement may prevent it from successfully commercializing
Homspera or any proposed products. Third-party payers are increasingly
challenging the prices of medical products and services. If purchasers or users
of Homspera or any such other proposed products are not able to obtain adequate
reimbursement for the cost of using such products, they may forego or reduce
their use. Significant uncertainty exists as to the reimbursement status of
newly approved health care products and whether adequate third party coverage
will be available.
ImmuneRegen's success may depend upon the acceptance of homspera by the medical
--------------------------------------------------------------------------------
community.
----------
ImmuneRegen's ability to market and commercialize Homspera depends on the
acceptance and utilization of Homspera by the medical community. ImmuneRegen
will need to develop commercialization initiatives designed to increase
awareness about it and Homspera among targeted audiences, including public
health activists and community-based outreach groups in addition to the
investment community. Currently, ImmuneRegen has not developed any such
initiatives. Without such acceptance of Homspera, the product upon which
ImmuneRegen expects to be substantially dependent, ImmuneRegen may not be able
to successfully commercialize Homspera or generate revenue.
Product liability exposure may expose ImmuneRegen to significant liability.
---------------------------------------------------------------------------
ImmuneRegen faces an inherent business risk of exposure to product liability and
other claims and lawsuits in the event that the development or use of its
technology or prospective products is alleged to have resulted in adverse
effects. ImmuneRegen may not be able to avoid significant liability exposure.
ImmuneRegen may not have sufficient insurance coverage, and ImmuneRegen may not
be able to obtain sufficient coverage at a reasonable cost. An inability to
obtain product liability insurance at acceptable cost or to otherwise protect
against potential product liability claims could prevent or inhibit the
commercialization of its products. A product liability claim could hurt its
financial performance. Even if ImmuneRegen avoids liability exposure,
significant costs could be incurred that could hurt its financial performance.
If ImmuneRegen fails to attract and retain consultants and employees, its growth
--------------------------------------------------------------------------------
could be limited and its costs could increase, which may adversely affect its
--------------------------------------------------------------------------------
results of operations and financial position.
---------------------------------------------
17
ImmuneRegen's future success depends in large part upon its ability to attract
and retain highly skilled executive-level management and scientific personnel.
The competition in the scientific industry for such personnel is intense, and
ImmuneRegen cannot be sure that it will be successful in attracting and
retaining such personnel. Most of ImmuneRegen's consultants and employees and
several of its executive officers began working for ImmuneRegen recently, and
all employees are subject to "at will" employment. Most of ImmuneRegen's
consultants and employees are not subject to non-competition agreements.
ImmuneRegen cannot guarantee that it will be able to replace any of its
management personnel in the event their services become unavailable.
ImmuneRegen's patents and proprietary technology may not be enforceable and the
--------------------------------------------------------------------------------
patents and proprietary technology of others may prevent ImmuneRegen from
--------------------------------------------------------------------------------
commercializing products.
-------------------------
Although ImmuneRegen believes its patents to be protected and enforceable, the
failure to obtain meaningful patent protection products and processes would
greatly diminish the value of its potential products and processes.
In addition, whether or not ImmuneRegen's patents are issued, or issued with
limited coverage, others may receive patents, which contain claims applicable to
its products. Patents we are not aware of may adversely affect ImmuneRegen's
ability to develop and commercialize products.
The patent positions of biotechnology and pharmaceutical companies are often
highly uncertain and involve complex legal and factual questions. Therefore, the
breadth of claims allowed in biotechnology and pharmaceutical patents cannot be
predicted. ImmuneRegen also relies upon non-patented trade secrets and know how,
and others may independently develop substantially equivalent trade secrets or
know how. ImmuneRegen also relies on protecting our proprietary technology in
part through confidentiality agreements with its current and former corporate
collaborators, employees, consultants and certain contractors. These agreements
may be breached, and ImmuneRegen may not have adequate remedies for any such
breaches. In addition, ImmuneRegen's trade secrets may otherwise become known or
independently discovered by ImmuneRegen's competitors. Litigation may be
necessary to defend against claims of infringement, to enforce ImmuneRegen's
patents or to protect trade secrets. Litigation could result in substantial
costs and diversion of management efforts regardless of the results of the
litigation. An adverse result in litigation could subject ImmuneRegen to
significant liabilities to third parties, require disputed rights to be licensed
or require ImmuneRegen to cease using certain technologies.
ImmuneRegen's products and services could infringe on the intellectual property
--------------------------------------------------------------------------------
rights of others, which may cause it to engage in costly litigation and, if is
--------------------------------------------------------------------------------
not successful, could cause it to pay substantial damages and prohibit it from
--------------------------------------------------------------------------------
selling our products or servicing ImmuneRegen's clients.
---------------------------------------------------------
ImmuneRegen cannot be certain that its technology and other intellectual
property does not infringe upon the intellectual property rights of others.
Authorship and priority of intellectual property rights may be difficult to
verify. Because patent applications in the United States are not publicly
disclosed until the patent is issued, applications may have been filed which
relate to services similar to those offered by ImmuneRegen. ImmuneRegen may be
subject to legal proceedings and claims from time to time in the ordinary course
of its business, including claims of alleged infringement of the trademarks and
other intellectual property rights of third parties.
If ImmuneRegen's products violate third-party proprietary rights, it cannot
assure you that it would be able to arrange licensing agreements or other
satisfactory resolutions on commercially reasonable terms, if at all. Any claims
made against us relating to the infringement of third-party propriety rights
could result in the expenditure of significant financial and managerial
18
resources and injunctions preventing it from providing services. Such claims
could severely harm ImmuneRegen's financial condition and ability to compete.
Hazardous materials and environmental matters could expose ImmuneRegen to
--------------------------------------------------------------------------------
significant costs.
------------------
ImmuneRegen may be required to incur significant costs to comply with current or
future environmental laws and regulations. Although ImmuneRegen does not
currently manufacture commercial quantities of its proposed products, it does
produce limited quantities of these products for its clinical trials.
ImmuneRegen's research and development and manufacturing processes involve the
controlled storage, use and disposal of hazardous materials, biological
hazardous materials and radioactive compounds. ImmuneRegen is subject to
federal, state and local laws and regulations governing the use, manufacture,
storage, handling and disposal of these materials and some waste products.
Although ImmuneRegen believes that its safety procedures for handling and
disposing of these materials comply with the standards prescribed by these laws
and regulations, the risk of contamination or injury from these materials cannot
be completely eliminated. In the event of an incident, ImmuneRegen could be held
liable for any damages that result, and any liability could exceed our
resources. Current or future environmental laws or regulations may have a
material adverse effect on ImmuneRegen's operations, business and assets.
RISKS RELATED TO CAPITAL STRUCTURE
----------------------------------
There is no assurance of an established public trading market.
--------------------------------------------------------------
Although our common stock trades on the NASD OTC Bulletin Board, a regular
trading market for the securities may not be sustained in the future. The NASD
has enacted recent changes that limit quotations on the OTC Bulletin Board to
securities of issuers that are current in their reports filed with the
Securities and Exchange Commission. The effect on the OTC Bulletin Board of
these rule changes and other proposed changes cannot be determined at this time.
The OTC Bulletin Board is an inter-dealer, Over-The-Counter market that provides
significantly less liquidity than the NASD's automated quotation system (the
"NASDAQ Stock Market"). Quotes for stocks included on the OTC Bulletin Board are
not listed in the financial sections of newspapers as are those for the NASDAQ
Stock Market. Therefore, prices for securities traded solely on the OTC Bulletin
Board may be difficult to obtain and holders of common stock may be unable to
resell their securities at or near their original offering price or at any
price. Market prices for our common stock will be influenced by a number of
factors, including:
o the issuance of new equity securities pursuant to a future offering;
o changes in interest rates;
o competitive developments, including announcements by competitors of new
products or services or significant contracts, acquisitions, strategic
partnerships, joint ventures or capital commitments;
o variations in quarterly operating results;
o change in financial estimates by securities analysts;
o the depth and liquidity of the market for our common stock;
o investor perceptions of our company and the technologies industries
generally; and
o general economic and other national conditions.
19
Our common stock could be considered a "penny stock."
-----------------------------------------------------
Our common stock could be considered to be a "penny stock" if it meets one or
more of the definitions in Rules 15g-2 through 15g-6 promulgated under Section
15(g) of the Securities Exchange Act of 1934, as amended. These include but are
not limited to the following: (i) the stock trades at a price less than five
dollars ($5.00) per share; (ii) it is NOT traded on a "recognized" national
exchange; (iii) it is NOT quoted on the NASDAQ Stock Market, or even if so, has
a price less than five dollars (5.00) per share; or (iv) is issued by a company
with net tangible assets less than $2,000,000, if in business more than a
continuous three years, or with average revenues of less than $6,000,000 for the
past three years. The principal result or effect of being designated a "penny
stock" is that securities broker-dealers cannot recommend the stock but must
trade in it on an unsolicited basis.
Broker-dealer requirements may affect trading and liquidity.
------------------------------------------------------------
Section 15(g) of the Securities Exchange Act of 1934, as amended, and Rule 15g-2
promulgated thereunder by the SEC require broker-dealers dealing in penny stocks
to provide potential investors with a document disclosing the risks of penny
stocks and to obtain a manually signed and dated written receipt of the document
before effecting any transaction in a penny stock for the investor's account.
Potential investors in our common stock are urged to obtain and read such
disclosure carefully before purchasing any shares that are deemed to be "penny
stock." Moreover, Rule 15g-9 requires broker-dealers in penny stocks to approve
the account of any investor for transactions in such stocks before selling any
penny stock to that investor. This procedure requires the broker-dealer to (i)
obtain from the investor information concerning his or her financial situation,
investment experience and investment objectives; (ii) reasonably determine,
based on that information, that transactions in penny stocks are suitable for
the investor and that the investor has sufficient knowledge and experience as to
be reasonably capable of evaluating the risks of penny stock transactions; (iii)
provide the investor with a written statement setting forth the basis on which
the broker-dealer made the determination in (ii) above; and (iv) receive a
signed and dated copy of such statement from the investor, confirming that it
accurately reflects the investor's financial situation, investment experience
and investment objectives. Compliance with these requirements may make it more
difficult for holders of our common stock to resell their shares to third
parties or to otherwise dispose of them in the market or otherwise.
Our executive officers, directors and principal stockholders control our
--------------------------------------------------------------------------------
business and may make decisions that are not in our best interests.
-------------------------------------------------------------------
Our officers, directors and principal stockholders, and their affiliates, in the
aggregate, own over a majority of the outstanding shares of our common stock. As
a result, such persons, acting together, have the ability to substantially
influence all matters submitted to our stockholders for approval, including the
election and removal of directors and any merger, consolidation or sale of all
or substantially all of our assets, and to control our management and affairs.
Accordingly, such concentration of ownership may have the effect of delaying,
deferring or preventing a change in discouraging a potential acquirer form
making a tender offer or otherwise attempting to obtain control of our business,
even if such a transaction would be beneficial to other stockholders.
Sales of additional equity securities may adversely affect the market price of
--------------------------------------------------------------------------------
our common stock and your rights in we may be reduced.
------------------------------------------------------
Certain of our stockholders have the right to hold securities registered
pursuant to registration rights agreements. The sale or the proposed sale of
substantial amounts of our equity securities or convertible debt securities may
adversely affect the market price of its common stock and its stockholders may
experience substantial dilution. Also, any new equity securities issued may have
greater rights, preferences or privileges than our existing common stock.
20
We can issue shares of preferred stock with rights superior to those of the
--------------------------------------------------------------------------------
holders of our common stock. Such issuances can dilute the tangible net book
--------------------------------------------------------------------------------
value of shares of our common stock.
------------------------------------
Our Board of Directors is authorized to issue up to 10,000,000 shares of blank
check preferred stock with rights that are superior to the rights of the
stockholders of its common stock, at a purchase price substantially lower than
the market price of shares of its common stock without stockholder approval.
We have no intention to pay dividends.
--------------------------------------
We have never declared or paid any dividends on our securities. We currently
intend to retain our earning for funding growth and, therefore, does not expect
to pay any dividends in the foreseeable future.
Item 3. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
------------------------------------------------
The term "disclosure controls and procedures" refers to the controls and
procedures of a company that are designed to ensure that information required to
be disclosed by a company in the reports that it files under Rules 13a - 14 of
the Securities Exchange Act of 1934 (the "Exchange Act") is recorded, processed,
summarized and reported within required time periods. Within 90 days prior to
the date of filing of this report (the "Evaluation Date"), we carried out an
evaluation under the supervision and with the participation of our Chief
Executive Officer and Chief Financial Officer of the effectiveness of our
disclosure controls and procedures. Based on that evaluation, our Chief
Executive Officer and Chief Financial Officer have concluded that, as of the
Evaluation Date, such controls and procedures were effective in ensuring that
required information will be disclosed on a timely basis in our periodic reports
filed with the Securities and Exchange Commission under the Exchange Act.
Changes in Internal Controls
----------------------------
There were no significant changes in our internal controls or in other factors
that could significantly affect internal controls subsequent to the Evaluation
Date.
21
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities and Use of Proceeds
On May 12, 2003, an aggregate of 7,528,400 shares of the Registrant's common
stock was sold and issued in a private offering pursuant to Regulation D of the
Securities Act of 1933 in exchange for the cancellation of $75,284 of
indebtedness.
Effective as of July 2, 2003, GPN completed the Merger that was entered into by
and between GPN and ImmuneRegen, which set forth the terms and conditions of the
business combination between the parties, as a result of which ImmuneRegen
became a wholly-owned subsidiary of GPN. Pursuant to the Merger, the
stockholders of ImmuneRegen received an aggregate of 10,531,585 shares of our
common stock, representing approximately 89.9% of our outstanding common stock
immediately following the Merger. Our common stock is listed for quotation on
the National Association of Securities Dealers, Inc.'s OTC Bulletin Board under
the symbol "GPNN."
Item 3. Defaults Upon Senior Securities
None.
Item 4: Submission of Matters to a Vote of Security Holders
On May 26, 2003, the Registrant's Board of Directors unanimously adopted
resolutions declaring the advisability of, and recommending that its
stockholders approve, a one-for-twenty reverse stock split. In connection with
the adoption of this resolution, the Board of Directors elected to seek the
written consent of the holders of a majority of the Registrant's outstanding
shares in order to reduce the costs and implement the proposal in a timely
manner. On May 26, 2003, two individuals who collectively owned approximately
88% of the Registrant's common stock on such date consented in writing to the
reverse stock split.
Item 5. Other Information
None.
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits
31.1 Certification of Chief Executive Officer pursuant to Securities Exchange
Act Rule 13a - 14(a).
31.2 Certification of Chief Financial Officer pursuant to Securities Exchange
Act Rule 13a - 14(a).
32 Certification pursuant to 18 U.S.C. 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K
None.
22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, on August 13, 2003
GPN Network, Inc.
By: /s/ Michael Wilhelm
----------------------------------
Michael Wilhelm
President and Chief Executive Officer
By: /s/ Eric Hopkins
----------------------------------
Eric Hopkins
Chief Financial Officer
23