UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended JUNE 30, 1996
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 1-11996
IMMUNE RESPONSE, INC.
----------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Colorado 84-0950197
- -------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
7315 East Peakview Avenue
Englewood, Colorado 80111
- ------------------- -----
(Address of principal executive offices) (Zip code)
(303) 796-8139
--------------
(Registrant's telephone number including area code)
Indicate by check mark whether the 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 12 months, and (2) has been subject to such filing requirements
for the past 90 days. Yes ( X ) No ( )
Number of shares of common stock outstanding at August 5, 1996: 294,970,000
<PAGE>
IMMUNE RESPONSE, INC.
Part 1. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
The accompanying interim unaudited condensed financial statements have been
prepared in accordance with the instructions to Form 10-QSB and do not include
all the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring adjustments) considered necessary
for a fair presentation have been included, and the disclosures are adequate to
make the information presented not misleading. Operating results for the three
and six months ended June 30, 1996 are not necessarily indicative of the results
that may be expected for the year ended December 31, 1996. These statements
should be read in conjunction with the financial statements and notes thereto
included in the Annual 10-KSB Report (filed with the Securities and Exchange
Commission) for the year ended December 31, 1995.
F-1
<PAGE>
IMMUNE RESPONSE, INC.
(A Development Stage Company)
Balance Sheet
June 30, 1996
(Unaudited)
<TABLE>
<S> <C>
ASSETS
Current assets
Cash and cash equivalents .................................. $ 158,500
Note receivable, net of allowance
for doubtful accounts of $6,338 ......................... 6,339
Interest receivable, net of allowance
for doubtful accounts of $1,695 ....................... 1,696
---------
166,535
Other assets
Investment in MacGregor (cost of $3,907) ................... 28,291
---------
$ 194,826
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable - related entity ............................. $ 76,100
Accounts payable - related entity .......................... 2,782
Accrued salary to officer .................................. 11,250
Accounts payable - others .................................. 23,813
Accounts payable - directors ............................... 6,400
Interest payable - related entity .......................... 39,965
---------
160,310
Stockholders' equity
Common stock, $.0001 par value; 950,000,000
shares authorized; 312,470,000 shares
issued; 294,970,000 shares outstanding .................. 31,247
Additional paid-in capital ................................. 877,906
Unrealized gain on available for sale securities ........... 24,333
Deficit accumulated during the
development stage ....................................... (898,970)
Less: treasury stock, at cost
(17,500,000 shares) ..................................... --
---------
34,516
---------
$ 194,826
=========
</TABLE>
F-2
<PAGE>
IMMUNE RESPONSE, INC.
(A Development Stage Company)
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
For the
For the For the period
three six from
months months inception
ended ended (May 14,
June 30, June 30, 1984) to
1996 1995 1996 1995 June 30, 1996
---- ---- ---- ---- -------------
<S> <C> <C> <C> <C> <C>
Revenue
Interest income ........ $ 2,485 $ 317 $ 6,586 $ 634 $ 118,087
Laboratory test income . 50,187
Revenue from sale of
marketing rights to
related entity ...... 7,004
Miscellaneous income ... 1,897
Gain on sale of stock .. 71,464 192,190
Debt forgiveness income 35,147
----------- ----------- ----------- ----------- -----------
2,485 317 78,050 634 404,512
Expenses
Write-off of deferred
warrant registration
costs ............... 29,422
Loss on sale of
laboratory .......... 74,710
Realized loss on
investment .......... 178,668
Laboratory supplies .... 55,244
Consulting fees to
related entities .... 37,500
Interest ............... 2,131 3,949 4,262 7,897 132,829
Abandoned license
agreement costs ..... 50,000
Research and development 28,680
Rent ................... 79,232
Services for stock ..... 7,597
Salary ................. 275,287
Depreciation and
amortization ........ 34,848
Bad debt expense ....... 158 1,034 316 1,192 8,034
General and
administrative ...... 4,742 2,172 15,199 3,457 311,520
----------- ----------- ----------- ----------- -----------
7,031 7,155 19,777 12,546 1,303,482
----------- ----------- ----------- ----------- -----------
Net income (loss)
before income taxes .... (4,546) (6,838) 58,273 (11,912) (898,970)
Income tax provision:
Current (provision) .... (12,962) (12,962)
Utilization of net
operating loss
carryforward ........ 12,962 12,962
----------- ----------- ----------- ----------- -----------
Net income (loss) ...... $ (4,546) $ (6,838) $ 58,273 $ (11,912) $ (898,970)
=========== =========== =========== =========== ===========
</TABLE>
F-3
<PAGE>
IMMUNE RESPONSE, INC.
(A Development Stage Company)
Statements of Operations (page 2)
(Unaudited)
<TABLE>
<CAPTION>
For the
For the For the period
three six from
months months inception
ended ended (May 14,
June 30, June 30, 1984) to
1996 1995 1996 1995 June 30, 1996
---- ---- ---- ---- -------------
<S> <C> <C> <C> <C> <C>
Net income (loss)
per common share ....... $ (--) $ (--) $ -- $ (--) $ (.004)
=========== =========== =========== =========== ===========
Weighted average
number of
common shares .......... 294,970,000 294,970,000 294,970,000 294,970,000 242,696,935
=========== =========== =========== =========== ===========
</TABLE>
F-4
<PAGE>
IMMUNE RESPONSE, INC.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the
period
from
inception
For the six months (May 14,
ended June 30, 1984) to
1996 1995 June 30, 1996
-------- -------- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) .................... $ 58,273 $ (5,074) $(898,970)
Adjustments to reconcile net income
(loss) to net cash provided
by operating activities:
Depreciation ....................... 34,848
Abandoned license agreement costs .. 50,000
Services for stock ................. 7,597
Realized net gain on investments ... (71,464) (12,647)
Write-off of deferred warrant
registration costs ............... 29,422
Changes in assets and liabilities:
(Increase) decrease in notes
receivable ...................... 158 (287,102)
Decrease (increase) in interest
receivable ...................... (319) (317) (3,391)
Increase in accounts payable
to related entity ................ 241 25 2,782
(Decrease) in accrued legal expenses
payable to former director ....... (52,062)
(Decrease) increase in accounts
payable to directors ............ (2,000) 70 6,400
Increase-accrued salary to officer . 11,250
Increase in interest payable to
related entity .................. 4,262 3,947 39,965
Increase in accounts payable
to others ....................... 1,703 1,199 23,813
--------- --------- ---------
Net cash provided (used) by
operating activities ............ (61,366) 8 (996,033)
--------- --------- ---------
Cash flows from investing activities:
Proceeds from sale of
investment in MacGregor ............ 89,504 298,071
Purchase of certificate of deposit ... (75,278)
Redemption of certificates of deposit 75,278
Capital expenditures ................. (92,094)
Disposal of laboratory assets ........ 57,246
Purchase of license agreement ........ (50,000)
Acquisition of investment -
related entity .................. (7,000)
--------- --------- ---------
Net cash used in investing
activities ...................... 89,504 -- 206,223
--------- --------- ---------
</TABLE>
(Continued)
F-5
<PAGE>
IMMUNE RESPONSE, INC.
(A Development Stage Company)
Statements of Cash Flows (page 2)
(Unaudited)
<TABLE>
<CAPTION>
For the
period
from
inception
For the six months (May 14,
ended June 30, 1984) to
1996 1995 June 30, 1996
-------- -------- -------------
<S> <C> <C> <C>
Cash flows from financing activities:
Proceeds from issuance of note
payable to bank .................... $ $ $ 50,000
Proceeds from issuance of notes
payable to related entities
and others ......................... 144,964
Payments to retire notes payable
to bank ............................ (50,000)
Payments to retire notes payable
to others .......................... (68,864)
(Increase) in deferred warrant
registration costs ................. (29,422)
Proceeds from issuance of common
stock .............................. 901,556
--------- --------- ---------
Net cash provided (used) by
financing activities ............ 948,234
--------- --------- ---------
Net increase (decrease) in cash
and cash equivalents ................. 28,138 8 28,138
Cash and cash equivalents at
beginning of period .................. 130,362 11
--------- --------- ---------
Cash and cash equivalents at
end of period ........................ $ 158,500 $ 19 $ 158,500
========= ========= =========
Supplemental cash flow information:
Interest received .................... $ 4,297 $ $ 78,884
========= ========= =========
Interest paid ........................ $ $ $ 54,910
========= ========= =========
Non-cash financing activities:
Common stock issued for services ..... $ $ $ 7,605
========= ========= =========
Investment in common stock of
related entity received in
exchange for marketing rights ...... $ $ $ 7,000
========= ========= =========
Exchange of note receivable for
investment in SAC .................. $ $ $ 281,506
========= ========= =========
</TABLE>
F-6
<PAGE>
IMMUNE RESPONSE, INC.
Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations.
LIQUIDITY, CAPITAL RESOURCES AND RESULTS OF OPERATIONS
The Company's cash and cash equivalents showed an increase of $28,138 from
December 31, 1995 to June 30, 1996. The Company's net income for the six months
ended June 30, 1996 of $58,273 was unusual compared to the net loss for the
corresponding period of the prior year of $(11,912). This was due to recognizing
a realized gain of $71,464 on sales of the Company's investment in common stock
of MacGregor Sports & Fitness, Inc. The Company sold 27,500 shares of its
MacGregor stock in the open market during the first quarter of 1996 and the
related proceeds of $160,968 were used to retire debts and pay operating
expenses with the balance causing the increase in cash at June 30, 1996 as
compared to December 31, 1995. In addition, the Company had advanced $125,000 in
early 1996 pursuant to a merger agreement which was terminated in February 1996.
The Company was repaid the advanced funds during the second quarter of 1996.
The Company's net loss of $(4,546) for the three months ended June 30, 1996
is fairly comparable to the net loss of $(6,838) for the three months ended June
30, 1995.
PART II. OTHER INFORMATION
Item 1: Legal Proceedings
None
Item 2: Changes in Securities
None
Item 3: Defaults upon Senior Securities
None
Item 4: Submission of Matters to a Vote of Security Holders
None
Item 5: Other Information
None
Item 6: Exhibits and Reports on Form 8-K
(a) No exhibits in addition to those previously filed or contained
above in this report are required.
(b) During the quarter ended June 30, 1996, the Company filed no
reports on Form 8-K.
F-7
<PAGE>
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.
IMMUNE RESPONSE, INC.
(Registrant)
By: /S/ JOSEPH W. HOVORKA
------------------------------------
Joseph W. Hovorka, President and
Chief Financial Officer
Date: August 16, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements contained in the Registrant's Quarterly Report on
Form 10-QSB for the quarter ended June 30, 1996 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 158,500
<SECURITIES> 0
<RECEIVABLES> 16,068
<ALLOWANCES> 8,033
<INVENTORY> 0
<CURRENT-ASSETS> 166,535
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 194,826
<CURRENT-LIABILITIES> 160,310
<BONDS> 0
0
0
<COMMON> 31,247
<OTHER-SE> 902,239
<TOTAL-LIABILITY-AND-EQUITY> 194,826
<SALES> 0
<TOTAL-REVENUES> 78,050
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 15,199
<LOSS-PROVISION> 316
<INTEREST-EXPENSE> 4,262
<INCOME-PRETAX> 58,273
<INCOME-TAX> 0
<INCOME-CONTINUING> 58,273
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 58,273
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
