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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 September 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 November 7, 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 nine months ended September 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
September 30, 1996
(Unaudited)
<TABLE>
<S> <C>
ASSETS
Current assets
Cash and cash equivalents .................................. $ 147,894
Note receivable, net of allowance
for doubtful accounts of $6,338 ......................... 6,339
Interest receivable, net of allowance
for doubtful accounts of $1,854 ....................... 1,854
---------
156,087
Other assets
Investment in IntraNet Solutions, Inc. .....................
(cost of $3,958) ........................................ 14,146
---------
$ 170,233
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable - related entity ............................. $ 76,100
Accounts payable - related entity .......................... 2,851
Accrued salary to officer .................................. 11,250
Accounts payable - others .................................. 19,077
Interest payable - related entity .......................... 42,120
---------
151,398
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 ........... 10,188
Deficit accumulated during the
development stage ....................................... (900,506)
Less: treasury stock, at cost
(17,500,000 shares) ..................................... --
---------
18,835
---------
$ 170,233
=========
</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 nine from
months months inception
ended ended (May 14,
September 30, September 30, 1984) to
1996 1995 1996 1995 Sept. 30, 1996
---- ---- ---- ---- --------------
<S> <C> <C> <C> <C> <C>
Revenue
Interest income ................... $ 2,055 $ 317 $ 8,641 $ 951 $ 120,142
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 ........... 34,107 34,107 35,147
----------- ----------- ----------- ----------- -----------
2,055 34,424 80,105 35,058 406,567
Expenses
Write-off of deferred
warrant registration
costs .......................... 29,422
Loss on sale of
laboratory ..................... 74,710
Realized loss on
investment ..................... 875 178,668
Laboratory supplies ............... 55,244
Consulting fees to
related entities ............... 37,500
Interest .......................... 2,154 4,186 6,416 12,083 134,983
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 .................. 159 158 475 475 8,193
General and
administrative ................. 1,278 20,324 16,477 23,781 312,709
----------- ----------- ----------- ----------- -----------
3,591 24,668 23,368 37,214 1,307,073
----------- ----------- ----------- ----------- -----------
Net income (loss)
before income taxes ............... (1,536) 9,756 56,737 (2,156) (900,506)
Income tax provision:
Current (provision) ............... (12,962) (12,962)
Utilization of net
operating loss
carryforward ................... 12,962 12,962
----------- ----------- ----------- ----------- -----------
Net income (loss) ................. $ (1,536) $ 9,756 $ 56,737 $ (2,156) $ (900,506)
=========== =========== =========== =========== ===========
</TABLE>
(Continued)
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 nine from
months months inception
ended ended (May 14,
September 30, September 30, 1984) to
1996 1995 1996 1995 Sept. 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 nine months (May 14,
ended September 30, 1984) to
1996 1995 Sept. 30, 1996
---- ---- --------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) ......................................... $ 56,737 $ (2,156) $ (900,506)
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 (loss) on
investments ........................................... (71,464) 875 (12,647)
Write-off of deferred warrant
registration costs .................................... 29,422
Changes in assets and liabilities:
(Increase) in notes receivable .......................... (287,102)
(Increase) in interest receivable ........................ (475) (475) (3,472)
Increase in accounts payable
to related entity ..................................... 310 291 2,850
(Decrease) in accrued legal expenses
payable to former director ............................ (52,064)
(Decrease) increase in accounts
payable to directors ................................. (8,400) 4,995
Increase - accrued salary to officer .................... 11,250
Increase (decrease) in interest
payable to related entity ............................ 6,417 (22,024) 42,120
Increase (decrease) in accounts
payable to others .................................... (3,033) 11,167 19,077
----------- ----------- -----------
Net cash provided (used) by
operating activities ................................. (71,972) (7,327) (1,006,563)
----------- ----------- -----------
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 provided (used) by
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 nine months (May 14,
ended September 30, 1984) to
1996 1995 Sept. 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 .............................................. 10,000 144,964
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 ................................. 10,000 948,234
----------- ----------- -----------
Net increase in cash and
cash equivalents .......................................... 17,532 2,673 147,894
Cash and cash equivalents at
beginning of period ....................................... 130,362 11
----------- ----------- -----------
Cash and cash equivalents at
end of period ............................................. $ 147,894 $ 2,684 $ 147,894
=========== =========== ===========
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 $17,532 from
December 31, 1995 to September 30, 1996. The Company's net income for the nine
months ended September 30, 1996 of $56,737 was unusual compared to the net loss
for the corresponding period of the prior year of $(2,156). 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 September 30, 1996 as
compared to December 31, 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) Exhibit 27 - Financial Data Schedule (for SEC use only)
(b) During the quarter ended September 30, 1996, the Company
filed no reports on Form 8-K.
<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: November 14, 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 September 30, 1996 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 147,894
<SECURITIES> 0
<RECEIVABLES> 16,385
<ALLOWANCES> 8,192
<INVENTORY> 0
<CURRENT-ASSETS> 156,087
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 170,233
<CURRENT-LIABILITIES> 151,398
<BONDS> 0
0
0
<COMMON> 31,247
<OTHER-SE> 888,094
<TOTAL-LIABILITY-AND-EQUITY> 170,233
<SALES> 0
<TOTAL-REVENUES> 80,105
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 16,477
<LOSS-PROVISION> 475
<INTEREST-EXPENSE> 6,416
<INCOME-PRETAX> 56,737
<INCOME-TAX> 0
<INCOME-CONTINUING> 56,737
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 56,737
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
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