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 MARCH 31, 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 May 5, 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
months ended March 31, 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
March 31, 1997
(Unaudited)
<TABLE>
<S> <C>
ASSETS
Current assets
Cash and cash equivalents .................................. $ 60,848
Note receivable, net of allowance
for doubtful accounts of $6,338 ......................... 6,338
Interest receivable, net of allowance
for doubtful accounts of $2,171 ....................... 2,171
---------
69,357
Other assets
Investment in IntraNet Solutions (cost of $3,958) .......... 6,887
---------
$ 76,244
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable - related entity ............................. $ 1,100
Accounts payable - related entity .......................... 3,024
Accrued salary to officer .................................. 11,250
Accounts payable - others .................................. 2,967
Interest payable - related entity .......................... 45,344
---------
63,685
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 ........... 2,929
Deficit accumulated during the
development stage ....................................... (899,523)
Less: treasury stock, at cost
(175,000 shares) ........................................ --
---------
12,559
---------
$ 76,244
=========
</TABLE>
F-2
<PAGE>
IMMUNE RESPONSE, INC.
(A Development Stage Company)
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
FOR THE
PERIOD
FROM
INCEPTION
FOR THE THREE MONTHS (MAY 14,
ENDED MARCH 31, 1984)TO
1997 1996 MAR. 31, 1997
---- ---- -------------
<S> <C> <C> <C>
Revenue
Interest income ................... $ 1,392 $ 4,101 $ 123,480
Laboratory test income ............ -- -- 50,187
Revenue from sale of marketing
rights to related entity ...... -- -- 7,004
Miscellaneous income .............. -- -- 12,697
Gain on sale of stock ............. -- 71,464 192,189
Debt forgiveness income ........... -- -- 35,147
----------- ----------- -----------
1,392 75,565 420,704
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 .......................... 1,070 2,131 138,297
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 .................. 158 158 8,510
General and administrative ........ 13,880 10,457 322,232
----------- ----------- -----------
15,108 12,746 1,320,227
----------- ----------- -----------
Net income (loss) ............. $ (13,716) $ 62,819 $ (899,523)
=========== =========== ===========
Net income (loss) per
common share ................ $ (.005) $ .021 $ (.36)
=========== =========== ===========
Weighted average number of
common shares ..................... 2,949,700 2,949,700 2,465,326
=========== =========== ===========
</TABLE>
F-3
<PAGE>
IMMUNE RESPONSE, INC.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
INCEPTION
FOR THE THREE MONTHS (MAY 14,
ENDED MARCH 31, 1984) TO
1997 1996 MAR. 31, 1997
---- ---- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) .................... $ (13,716) $ 62,819 $ (899,523)
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 on investments ... -- (71,464) (13,519)
Write-off of deferred warrant
registration costs ............... -- -- 29,422
Changes in assets and liabilities:
(Increase) in notes
receivable ...................... -- (120,206) (287,102)
(Increase) in interest
receivable ...................... (158) (514) (4,184)
Increase in accounts payable
to related entity ................ 81 68 3,024
(Decrease) in accrued legal expenses
payable to former director ....... -- (52,062) --
Increase (decrease) in accounts
payable to directors ............ (400) (3,600) --
Increase-accrued salary to officer . -- -- 11,250
Increase in interest payable to
related entity .................. 1,070 2,131 45,344
(Decrease) in interest payable
to others ....................... -- -- --
Increase (decrease) in accounts
payable to others ............... 2,967 1,815 2,967
----------- ----------- -----------
Net cash (used) by
operating activities ............ (10,156) (181,014) (1,018,608)
----------- ----------- -----------
Cash flows from investing activities:
Proceeds from sale of
investment in MacGregor ............ -- 89,504 298,070
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 by
investing activities ............ -- 89,504 206,222
----------- ----------- -----------
</TABLE>
(Continued)
F-4
<PAGE>
IMMUNE RESPONSE, INC.
(A Development Stage Company)
Statements of Cash Flows (page 2)
(Unaudited)
<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
INCEPTION
FOR THE THREE MONTHS (MAY 14,
ENDED MARCH 31, 1984) TO
1997 1996 MAR. 31, 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 .................. (75,000) -- (75,000)
(Increase) in deferred warrant
registration costs ................. -- -- (29,422)
Proceeds from issuance of common
stock .............................. -- -- 901,556
----------- ----------- -----------
Net cash provided (used) by
financing activities ............ (75,000) -- 873,234
----------- ----------- -----------
Net increase (decrease) in cash
and cash equivalents ................. (85,156) (91,510) 60,848
Cash and cash equivalents at
beginning of period .................. 146,004 130,362 --
----------- ----------- -----------
Cash and cash equivalents at
end of period ........................ $ 60,848 $ 38,852 $ 60,848
=========== =========== ===========
Supplemental cash flow information:
Interest received .................... $ 1,075 $ -- $ 79,960
=========== =========== ===========
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-5
<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 $85,156 during the
quarter ended March 31, 1997. This decrease was caused principally by the
$75,000 repayment of notes payable to a related entity.
The Company experienced a net loss from operations of $13,716 which relates
principally from its small amount of interest income of $1,392 during the
quarter 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 $13,716 compares to net income of $62,819 for the quarter
ended March 31, 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.
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
On February 10, 1997, the Company held an Annual Meeting of its
stockholders at which three directors were elected to serve until their
successors have been elected and qualified with the votes being cast as follows:
For Against Abstain
----------- ------- ----------
Joseph W. Hovorka 154,032,815 -0- 16,660,994
Thomas B. Olson 154,128,015 -0- 16,565,794
R. Andrew Girardot, Jr. 154,220,815 -0- 16,472,994
Additionally, the following proposals were presented and voted upon at the
meeting and the votes were cast as follows:
An amendment to the Company's Articles of Incorporation to effect a one for
one hundred (1 for 100) reverse stock split and to reduce the number of
authorized shares of common stock of the Company from 950,000,000 to 25,000,000
shares as permitted under Section 7-106-105 of the Colorado Business Corporation
Act.
For Against Abstain
----------- ---------- -------
154,334,315 15,973,994 385,500
F-6
<PAGE>
Item 4: Submission of Matters to a Vote of Security Holders (Continued):
An amendment to the Company's Articles of Incorporation to indemnify the
directors, officers, employees, fiduciaries, and agents of the Company to the
full extent permitted by Colorado laws and to limit the personal liability of
the Company's directors for monetary damages for certain breaches of the
fiduciary duty of care as permitted under Section 7-108-402 of the Colorado
Business Corporation Act.
For Against Abstain
----------- ---------- ---------
144,580,855 18,150,094 7,962,860
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 March 31, 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: May 12, 1997
F-8
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements contained in the Regitrant's Quarterly Report on Form
10-QSB for the period ended March 31, 1997 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 60,848
<SECURITIES> 0
<RECEIVABLES> 17,018
<ALLOWANCES> 8,509
<INVENTORY> 0
<CURRENT-ASSETS> 69,357
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 76,244
<CURRENT-LIABILITIES> 63,685
<BONDS> 0
0
0
<COMMON> 312
<OTHER-SE> 911,770
<TOTAL-LIABILITY-AND-EQUITY> 76,244
<SALES> 0
<TOTAL-REVENUES> 1,392
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 13,880
<LOSS-PROVISION> 158
<INTEREST-EXPENSE> 1,070
<INCOME-PRETAX> (13,716)
<INCOME-TAX> 0
<INCOME-CONTINUING> (13,716)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (13,716)
<EPS-PRIMARY> (.005)
<EPS-DILUTED> (.005)
</TABLE>
