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, 1998
( ) 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 July 31, 1998: 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 six months ended June 30, 1998 are not necessarily indicative of the results
that may be expected for the year ended December 31, 1998. 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, 1997.
F-1
<PAGE>
IMMUNE RESPONSE, INC.
(A Development Stage Company)
Balance Sheet
June 30, 1998
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents ................................ $ 10,760
Investment - available for sale securities
(cost of $3,958) .................................... 7,445
---------
$ 18,205
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable - related entity ........................ $ 3,626
Accounts payable - other ................................. 50
Interest payable - related entity ........................ 22,453
---------
26,129
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
Accumulated other comprehensive income ................... 3,487
Deficit accumulated during the
development stage ..................................... (920,564)
Less: treasury stock, at cost
(175,000 shares) ...................................... --
---------
(7,924)
---------
$ 18,205
=========
F-2
<PAGE>
IMMUNE RESPONSE, INC.
(A Development Stage Company)
Statements of Income (Loss) and Comprehensive Income (Loss)
(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
1998 1997 1998 1997 JUNE 30, 1998
---- ---- ---- ---- -------------
<S> <C> <C> <C> <C> <C>
Revenue
Interest income ........ $ 107 $ 751 $ 240 $ 2,143 $ 125,509
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 .. 192,189
Debt forgiveness income 35,147
----------- ----------- ----------- ----------- -----------
107 751 240 2,143 422,733
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 ............... 9 1,079 138,306
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 ....... 158 316 17,971
General and
administrative ...... 1,726 3,837 5,306 17,717 335,832
----------- ----------- ----------- ----------- -----------
1,726 4,004 5,306 19,112 1,343,297
----------- ----------- ----------- ----------- -----------
Net income (loss)
before income taxes .... (1,619) (3,253) (5,066) (16,969) (920,564)
Income tax provision:
Current (provision) .... (12,962)
Utilization of net
operating loss
carryforward ........ 12,962
----------- ----------- ----------- ----------- -----------
Net income (loss) ...... (1,619) (3,253) (5,066) (16,969) (920,564)
</TABLE>
(Continued)
F-3
<PAGE>
IMMUNE RESPONSE, INC.
(A Development Stage Company)
Statements of Income (Loss) and Comprehensive Income (Loss)
(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
1998 1997 1998 1997 JUNE 30, 1998
---- ---- ---- ---- -------------
<S> <C> <C> <C> <C> <C>
Other comprehensive
income, net of tax:
Unrealized gains
(losses) on
securities:
Unrealized holding
gains (losses)
arising during
period ............ (1,955) -- (652) (1,303) 3,487
----------- ----------- ----------- ----------- -----------
Other comprehen-
sive income (1,955) -- (652) (1,303) 3,487
----------- ----------- ----------- ----------- -----------
Comprehensive income
(loss) ................. $ (3,574) $ (3,253) $ (5,718) $ (18,272) $ (917,077)
=========== =========== =========== =========== ===========
Net income (loss)
per common share ....... $ (--) $ (--) $ (--) $ (.01) $ (.37)
=========== =========== =========== =========== ===========
Weighted average
number of
common shares .......... 2,949,700 2,949,700 2,949,700 2,949,700 2,472,335
=========== =========== =========== =========== ===========
</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
1998 1997 JUNE 30, 1998
---- ---- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net (loss) .......................... $ (5,066) $ (16,969) $ (920,564)
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 .................. -- -- 10,887
Realized net gain on investments .. -- -- (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 .. -- (316) (5,294)
Increase in accounts payable
to related entity ............... 399 284 3,626
Increase (decrease) in accounts
payable to directors ............ -- (400) --
Increase in interest payable to
related entity .................. -- (21,821) 22,453
Increase (decrease) in accounts
payable to others ............... (398) 410 50
----------- ----------- -----------
Net cash (used) by
operating activities ........... (5,065) (38,812) (1,067,596)
----------- ----------- -----------
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 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 SIX MONTHS (MAY 14,
ENDED JUNE 30, 1984) TO
1998 1997 JUNE 30, 1998
---- ---- -------------
<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 .................... (5,065) (114,912) 10,760
Cash and cash equivalents at
beginning of period ................. 15,825 146,004 --
----------- ----------- -----------
Cash and cash equivalents at
end of period ....................... $ 10,760 $ 31,092 $ 10,760
=========== =========== ===========
Supplemental cash flow information:
Interest received ................... $ 240 $ 1,510 $ 80,788
=========== =========== ===========
Interest paid ....................... $ -- $ 22,900 $ 76,731
=========== =========== ===========
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
experienced a net loss from operations of $5,066 for the six months ended June
30, 1998 which relates principally to its small amount of interest income of
$240 during the six months ended June 30, 1998 not being sufficient to cover its
minimum basic operating expenses. The Company expects this trend to continue for
the balance of 1998 as management continues to investigate potential business
mergers and/or acquisitions. This net operating loss of $5,066 compares to a
loss of $16,969 for the six months ended June 30, 1997. During the six months
ended June 30, 1997 the Company experienced higher postage and printing costs
relative to proxies and annual meeting costs, and also higher directors' fees,
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 June 30, 1998, 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 13, 1998
<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, 1998, and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 10,760
<SECURITIES> 7,445
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 18,205
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 18,205
<CURRENT-LIABILITIES> 26,129
<BONDS> 0
0
0
<COMMON> 312
<OTHER-SE> 912,328
<TOTAL-LIABILITY-AND-EQUITY> 18,205
<SALES> 0
<TOTAL-REVENUES> 240
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,306
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (5,066)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,066)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,066)
<EPS-PRIMARY> (0)
<EPS-DILUTED> (0)
</TABLE>
