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, 1997
( ) 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, 1997: 2,949,700
<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, 1997 are not necessarily indicative of the
results that may be expected for the year ended December 31, 1997. 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, 1996.
F-1
<PAGE>
IMMUNE RESPONSE, INC.
(A Development Stage Company)
Balance Sheet
September 30, 1997
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents .................................. $ 18,014
Note receivable, net of allowance
for doubtful accounts of $6,338 ......................... 6,338
Interest receivable, net of allowance
for doubtful accounts of $2,488 ....................... 2,488
---------
26,840
Other assets
Investment in IntraNet Solutions, Inc. .....................
(cost of $3,958) ........................................ 10,795
---------
$ 37,635
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable - related entity .......................... $ 3,227
Accounts payable - other ................................... 236
Interest payable - related entity .......................... 22,453
---------
25,916
Stockholders' equity
Common stock, $.0001 par value; 25,000,000
shares authorized; 3,124,700 shares
issued; 2,949,700 shares outstanding .................... 312
Additional paid-in capital ................................. 908,841
Unrealized gain on available for sale securities ........... 6,837
Deficit accumulated during the
development stage ....................................... (904,271)
Less: treasury stock, at cost
(175,000 shares) ........................................ --
---------
11,719
---------
$ 37,635
=========
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
1997 1996 1997 1996 SEPT. 30, 1997
---- ---- ---- ---- --------------
<S> <C> <C> <C> <C> <C>
Revenue
Interest income ........ $ 423 $ 2,055 $ 2,566 $ 8,641 $ 124,654
Laboratory test income . 50,187
Revenue from sale of
marketing rights to
related entity ...... 7,004
Miscellaneous income ... 154 154 12,851
Gain on sale of stock .. 71,464 192,189
Debt forgiveness income 35,147
----------- ----------- ----------- ----------- -----------
577 2,055 2,720 80,105 422,032
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 ............... 2,154 1,079 6,416 138,306
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 ....... 159 159 475 475 8,827
General and
administrative ...... 1,913 1,278 19,630 16,477 327,982
----------- ----------- ----------- ----------- -----------
2,072 3,591 21,184 23,368 1,326,303
----------- ----------- ----------- ----------- -----------
Net income (loss)
before income taxes .... (1,495) (1,536) (18,464) 56,737 (904,271)
Income tax provision:
Current (provision) .... (12,962) (12,962)
Utilization of net
operating loss
carryforward ........ 12,962 12,962
----------- ----------- ----------- ----------- -----------
Net income (loss) ...... $ (1,495) $ (1,536) $ (18,464) $ 56,737 $ (904,271)
=========== =========== =========== =========== ===========
</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
1997 1996 1997 1996 SEPT. 30, 1997
---- ---- ---- ---- --------------
<S> <C> <C> <C> <C> <C>
Net income (loss)
per common share ....... $ (--) $ (--) $ -- $ .02 $ (.36)
=========== =========== =========== =========== ===========
Weighted average
number of
common shares .......... 2,949,700 2,949,700 2,949,700 2,949,700 2,483,343
=========== =========== =========== =========== ===========
</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
1997 1996 SEPT. 30, 1997
---- ---- --------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) .................... $ (18,464) $ 56,737 $ (904,271)
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
Bad debt expense ................... 1,268
Realized net gain (loss) on
investments ...................... (71,464) (13,519)
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) (4,501)
Increase in accounts payable
to related entity ................ 284 310 3,227
(Decrease) in accrued legal expenses
payable to former director ....... (52,064)
(Decrease) increase in accounts
payable to directors ............ (400) (8,400)
(Decrease) in accrued salary to
officer ......................... (11,250)
Increase (decrease) in interest
payable to related entity ....... (21,821) 6,417 22,453
Increase (decrease) in accounts
payable to others ............... 236 (3,033) 236
----------- ----------- -----------
Net cash provided (used) by
operating activities ............ (51,890) (71,972) (1,060,342)
----------- ----------- -----------
Cash flows from investing activities:
Proceeds from sale of
investment in MacGregor ............ 298,070
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 ............ -- -- 206,222
----------- ----------- -----------
</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
1997 1996 SEPT. 30, 1997
---- ---- --------------
<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)
Payments to retire notes payable
to related entity .................. (76,100) (76,100)
(Increase) in deferred warrant
registration costs ................. (29,422)
Proceeds from issuance of common
stock .............................. 901,556
----------- ----------- -----------
Net cash provided (used) by
financing activities ............ (76,100) 872,134
----------- ----------- -----------
Net increase (decrease) in cash and
cash equivalents ..................... (127,990) 17,532 18,014
Cash and cash equivalents at
beginning of period .................. 146,004 130,362
----------- ----------- -----------
Cash and cash equivalents at
end of period ........................ $ 18,014 $ 147,894 $ 18,014
=========== =========== ===========
Supplemental cash flow information:
Interest received .................... $ 1,510 $ 4,297 $ 79,960
=========== =========== ===========
Interest paid ........................ $ 22,900 $ $ 77,810
=========== =========== ===========
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 decreased by $127,990 during the
nine months ended September 30, 1997. This decrease was caused by the $76,100
repayment of notes payable to a related entity and the retirement of other
outstanding debts.
The Company experienced a net loss from operations for the nine months
ended September 30, 1997 of $(18,464) which relates principally from its small
amount of interest income of $2,566 during the period not being sufficient to
cover its minimum basic operating expenses. The Company expects this trend to
continue for the balance of 1997. This net operating loss of $18,464 compares to
net income of $56,737 for the nine months ended September 30, 1996 when the
Company realized a gain of $71,464 on sales of the Company's investment in
common stock of MacGregor Sports & Fitness, Inc. The net losses for the three
months ended September 30, 1997 and September 30, 1996 are fairly comparable.
Higher interest income of $1,632 in 1996 was offset by $2,154 of higher interest
expense in 1996.
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, 1997, 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: November 12, 1997
F-8
<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, 1997, and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 18,014
<SECURITIES> 0
<RECEIVABLES> 17,652
<ALLOWANCES> 8,826
<INVENTORY> 0
<CURRENT-ASSETS> 26,840
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 37,635
<CURRENT-LIABILITIES> 25,916
<BONDS> 0
0
0
<COMMON> 312
<OTHER-SE> 915,678
<TOTAL-LIABILITY-AND-EQUITY> 37,635
<SALES> 0
<TOTAL-REVENUES> 2,720
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 19,630
<LOSS-PROVISION> 475
<INTEREST-EXPENSE> 1,079
<INCOME-PRETAX> (18,464)
<INCOME-TAX> 0
<INCOME-CONTINUING> (18,464)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (18,464)
<EPS-PRIMARY> (.006)
<EPS-DILUTED> (.006)
</TABLE>
