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, 1999
( ) 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. 33-17922-C
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 12, 1999: 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, 1999 are not necessarily indicative of the
results that may be expected for the year ended December 31, 1999. 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, 1998.
F-1
<PAGE>
IMMUNE RESPONSE, INC.
(A Development Stage Company)
Balance Sheet
September 30, 1999
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents .................................... $ 4,189
Investment - available for sale securities
(cost of $3,958) .................................. 12,470
---------
$ 16,659
=========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable ............................................. $ 8,812
Accounts payable - related entity ............................ 3,742
Accounts payable - directors ................................. 4,000
Interest payable - related entity ............................ 22,453
---------
Total Liabilities (all current) .......................... 39,007
---------
Stockholders' deficit
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 ....................... 8,513
Deficit accumulated during the
development stage ............................................ (940,014)
Less: treasury stock, at cost (175,000 shares)
---------
(22,348)
---------
$ 16,659
=========
F-2
<PAGE>
IMMUNE RESPONSE, INC.
(A Development Stage Company)
Statements of Loss and Comprehensive Loss
(Unaudited)
<TABLE>
<CAPTION>
PERIOD
FOR THE FOR THE FROM
THREE NINE INCEPTION
MONTHS MONTHS (MAY 14,
ENDED ENDED 1984) TO
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1999 1998 1999
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenue
Interest income ................... $ 42 $ 90 $ 173 $ 330 $ 125,850
Laboratory test income ............ -- -- -- -- 50,187
Revenue from sale of marketing
rights to related entity .......... -- -- -- -- 7,004
Miscellaneous income .............. -- 13 -- 13 12,710
Gain on sale of stock ............. -- -- -- -- 192,189
Debt forgiveness income ........... -- -- -- -- 35,147
----------- ----------- ----------- ----------- -----------
42 103 173 343 423,087
----------- ----------- ----------- ----------- -----------
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 .......................... -- -- -- -- 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 .................. -- -- -- -- 17,971
General and
administrative .................... 11,033 1,995 16,040 7,301 355,635
----------- ----------- ----------- ----------- -----------
11,033 1,995 16,040 7,301 1,363,100
----------- ----------- ----------- ----------- -----------
Net loss .......................... (10,991) (1,892) (15,867) (6,958) (940,013)
Other comprehensive income
(loss) net of tax:
Unrealized gains (losses) on
securities:
Unrealized holding gains
(losses) arising
during period ................ 280 (2,326) 5,211 (2,978) 8,512
----------- ----------- ----------- ----------- -----------
Other comprehensive
income (loss) ..................... 280 (2,326) 5,211 (2,978) 8,512
----------- ----------- ----------- ----------- -----------
</TABLE>
(Continued)
F-3
<PAGE>
IMMUNE RESPONSE, INC.
(A Development Stage Company)
Statements of Loss and Comprehensive Loss
(Unaudited)
(Page 2)
<TABLE>
<CAPTION>
PERIOD
FOR THE FOR THE FROM
THREE NINE INCEPTION
MONTHS MONTHS (MAY 14,
ENDED ENDED 1984) TO
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1999 1998 1999
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Comprehensive loss ................ $ (10,711) $ (4,218) $ (10,656) $ (9,936) $ (931,501)
=========== =========== =========== =========== ===========
Net loss per
common share ...................... $ (--) $ (--) $ -- $ (--) $ (.37)
=========== =========== =========== =========== ===========
Weighted average number
of common shares .................. 2,949,700 2,949,700 2,949,700 2,949,700 2,511,251
=========== =========== =========== =========== ===========
</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
1999 1998 SEPTEMBER 30, 1999
---- ---- ------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss ............................ $ (15,867) $ (6,958) $ (940,013)
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 ... -- -- (5,294)
Increase in accounts payable
to related entity ......... -- 503 3,742
Increase in accounts
payable to directors ...... 11,211 800 12,812
Increase in interest payable to
related entity ............ -- -- 22,453
(Decrease) in accounts
payable to others ......... (350) (448) --
----------- ----------- -----------
Net cash used in operating activities (5,006) (6,103) (1,074,167)
----------- ----------- -----------
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 NINE MONTHS (MAY 14,
ENDED SEPTEMBER 30, 1984) TO
1999 1998 SEPTEMBER 30, 1999
---- ---- ------------------
<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)
(Increase) in deferred warrant
registration costs .................. -- -- (29,422)
Proceeds from issuance of common
stock ............................... -- -- 901,556
----------- ----------- -----------
Net cash provided by
financing activities ..... -- -- 872,134
----------- ----------- -----------
Net increase (decrease) in cash and
cash equivalents .................... (5,006) (6,103) 4,189
Cash and cash equivalents at
beginning of period ................. 9,195 15,825 --
----------- ----------- -----------
Cash and cash equivalents at
end of period ....................... $ 4,189 $ 9,722 $ 4,189
=========== =========== ===========
Supplemental cash flow information:
Interest received ................... $ 173 $ 330 $ 125,850
=========== =========== ===========
Interest paid ....................... $ -- $ -- $ 138,306
=========== =========== ===========
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 $(10,991) for the
three months ended September 30, 1999 which relates principally to its
small amount of interest and miscellaneous income of $42 during the three
months ended September 30, 1999 not being sufficient to cover its minimum
basic operating expenses. The Company expects this trend to continue for
the balance of 1999 as management continues to investigate potential
business mergers and/or acquisitions. This net operating loss of
$(10,991) compares to a loss of $(1,892) for the three months ended
September 30, 1998. The Company incurred legal and accounting fees in the
third quarter of 1999 resulting in the increase in the loss. The net loss
for the nine months ended September 30, 1999 and 1998 was $(15,867) and
$(6,958), respectively. The increase in the loss is due primarily to
higher legal and accounting expenses in 1999.
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, 1999 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, 1999
<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, 1999, and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 4,189
<SECURITIES> 12,470
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 16,659
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 16,659
<CURRENT-LIABILITIES> 39,007
<BONDS> 0
0
0
<COMMON> 312
<OTHER-SE> 917,354
<TOTAL-LIABILITY-AND-EQUITY> 16,659
<SALES> 0
<TOTAL-REVENUES> 173
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 16,040
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (15,867)
<INCOME-TAX> 0
<INCOME-CONTINUING> (15,867)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (15,867)
<EPS-BASIC> (0)
<EPS-DILUTED> (0)
</TABLE>
