UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                     Form 20-F



(X)  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934.

     For the Fiscal Year Ended December 31, 1999


                          IMMUNE NETWORK RESEARCH LTD.

             (Exact name of Registrant as specified in its charter)

                            British Columbia, Canada

                         (Jurisdiction of amalgamation)

       3650 Wesbrook Mall, Vancouver, British Columbia, Canada V6S 2L2

                     (Address of principal executive office)

Commission File Number:  0-27883

Securities registered or to be registered pursuant to Section 12(b) of the Act:
Not Applicable

Securities registered or to be registered pursuant to Section 12(g) of the Act:
Common Shares, Without Par Value

Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act:  None

Number of outstanding shares of each of the Registrant's classes of capital or
common stock as of May 31, 2000: 30,312,465 Common Shares Without Par Value

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 (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days:  Not Applicable

Indicate by check mark which financial statement item the Registrant has elected
to follow:

Item 17  X    Item 18
        ---           ---



<PAGE>
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                                TABLE OF CONTENTS
                                -----------------

                                                                        Page No.
                                                                        --------

CURRENCY EXCHANGE RATES                                                        4

SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS                              4

GLOSSARY                                                                       5

ITEM 1.     DESCRIPTION OF BUSINESS                                            6
  Formation of the Company                                                     6
  Business of the Company                                                      6
    Projects                                                                   8
    Summary of Research and Development Programs                               8
    AIDS Project                                                               9
    Alzheimers Disease Project                                                11
    Asthma Project                                                            12
  Material Agreements                                                         13
    Sidney Kimmel Cancer Center                                               13
    ImmPheron, Inc.                                                           13
    University of British Columbia                                            14
    Bridge Pharma, Inc.                                                       14
    Meditech Pharmaceuticals Inc.                                             15
    CroMedica Global Inc.                                                     15
  Markets                                                                     16

    AIDS Project                                                              17
    Alzheimer Disease Project                                                 17
    Asthma Project                                                            18
    Business Strategy                                                         19
  Research and Development Expenses                                           19
  Proprietary Protection                                                      20
    General                                                                   20
    AIDS Project                                                              20
    Alzheimer Disease Project                                                 21
    Asthma Project                                                            22
    Other                                                                     22
  Government Regulation                                                       22
    United States Regulation                                                  22
    Canadian Regulation                                                       24
    Additional Regulatory Considerations                                      24
    Regulation in Other Jurisdictions                                         25
  Risk Factors                                                                25

ITEM 2.     DESCRIPTION OF PROPERTY                                           32

ITEM 3.     LEGAL PROCEEDINGS                                                 32

ITEM 4.     CONTROL OF COMPANY                                                32

ITEM 5.     NATURE OF TRADING MARKET                                          33

<PAGE>
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ITEM 6.     EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING
            SECURITY HOLDERS                                                  34

ITEM 7.     TAXATION                                                          35

ITEM 8.     SELECTED FINANCIAL DATA                                           36

ITEM 9.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
            CONDITION AND RESULTS OF OPERATIONS                               39

  General                                                                     39
  Liquidity and Capital Resources                                             39
    Year Ended December 31, 1999                                              40
    Year Ended December 31, 1998                                              40
    Year Ended December 31, 1997                                              40
  Results of Operations                                                       41
    Year Ended December 31, 1999                                              41
    Year Ended December 31, 1998                                              41
    Year Ended December 31, 1997                                              42

ITEM 9A.    MARKET RISK                                                       42

ITEM 10.    DIRECTORS AND OFFICERS OF THE COMPANY                             42

ITEM 11.    COMPENSATION OF DIRECTORS AND OFFICERS                            43

ITEM 12.    OPTIONS TO PURCHASE SECURITIES FROM THE COMPANY                   43
  Incentive Stock Options                                                     43
  Share Purchase Warrants                                                     45
  Special Warrants                                                            45
  Agent's Special Warrants                                                    46

ITEM 13.    INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS                    47

ITEM 14.    DESCRIPTION OF SECURITIES TO BE REGISTERED                        47

ITEM 15.    DEFAULTS UNDER SENIOR SECURITIES                                  47

ITEM 16.    CHANGES IN SECURITIES AND CHANGES IN SECURITY FOR
            REGISTERED SECURITIES                                             47

ITEM 17.    FINANCIAL STATEMENTS                                              47

ITEM 18.    FINANCIAL STATEMENTS                                              47

ITEM 19.    FINANCIAL STATEMENTS AND EXHIBITS                                 48
  Financial Statements
  Exhibits
    Corporate Documentation
    Instruments Defining the Rights of Holders of Securities Being Registered
    Material Contracts

SIGNATURES


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                             CURRENCY EXCHANGE RATES
                             -----------------------

The Company's accounts are maintained in Canadian dollars. In this Annual
Report all currency references are expressed in Canadian dollars unless
otherwise indicated. As of April 30, 1999, the exchange rate for conversion
from U.S. dollars to Canadian dollars was US$1.00 = US$1.4818. The following
table sets forth the exchange rates for one U.S. dollar expressed in terms of
Canadian dollars for the past five calendar years.

Canadian Dollars per One U.S. Dollar
--------------------------------------------------------------------------------
                     2000(1)     1999      1998      1997      1996      1995
                       $           $         $         $         $         $
--------------------------------------------------------------------------------
High                 1.4538     1.5095    1.5745    1.4288     1.3747    1.4092
--------------------------------------------------------------------------------
Low                  1.4505     1.4578    1.4225    1.3474     1.3409    1.3401
--------------------------------------------------------------------------------
Average for Period   1.4520     1.4894    1.4898    1.3894     1.3646    1.3689
--------------------------------------------------------------------------------
End of Period        1.4538     1.4695    1.5375    1.4288     1.3697    1.3655
--------------------------------------------------------------------------------
(1)   Covers the period from January 1 through March 31, 2000.

Exchange rates are based upon the noon buying rate in New York City for cable
transfers in foreign currencies as certified for customs purposes by the Federal
Reserve Bank of New York.

                 SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
                --------------------------------------------------

Certain statements in this Annual Report constitute "forward looking
statements". Such forward looking statements involve known achievements of the
Company, or industry results, to be materially different from any future
results, performance or achievements expressed or implied by such forward
looking statements. These factors include, but are not limited to: the
Company's early stage of development; the fact that the Company's technology is
in the research stage and therefore its potential benefits for human therapy are
unproven; the possibility that favorable relationships with collaborators cannot
be established or, if established will be abandoned by the collaborators before
completion of product development; the possibility that the Company or its
collaborators will not successfully develop any products; the possibility that
advances by competitors will cause the Company's proposed products not to be
viable; uncertainties as to the requirement that a drug be found to be safe and
effective after extensive clinical trials and the possibility that the results
of such trials, if commenced and completed, will not establish the safety or the
efficacy of the Company's products; risks relating to requirements for approvals
by government agencies such as the FDA before products can be marketed and the
possibility that such approvals will not be obtained in a timely manner or at
all or will be conditioned in a manner that would impair the Company's ability
to market the product successfully; the risk that the Company's patents could be
invalidated or narrowed in scope by judicial actions or that the Company's
technology could infringe the patent or other intellectual property rights of
third parties; the possibility that the Company will not be able to raise
adequate capital to fund its operations through the process of developing and
testing a successful product or that future financing will be completed on
unfavourable terms; the possibility that any products successfully developed by
the Company will not achieve market acceptance; and other risks and
uncertainties which may not be described herein. Further information concerning
these and other risks and uncertainties is included under "Item 1 - Description
of Business - Risk Factors". These risks and uncertainties should be considered
when evaluating forward looking statements, and undue reliance should not be
placed upon forward looking statements.

The information in this Annual Report is as at April 30, 2000 unless otherwise
stated.

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                                     GLOSSARY
                                     --------

The following are abbreviations and definitions of terms used in this Annual
Report.

AIDS                    Acquired Immunodeficiency Syndrome.

Amalgamation            The amalgamation of Bobby Cadillac's Food Corporation
                        and Immune Network Research Ltd. effective April 24,
                        1996, whereby the Company was formed.

Antibody                A protein that is produced in response to an antigen
                        (often a virus or bacterium). It is able to combine with
                        and neutralize the antigen.

Anti-idiotypic         A special type of antibody that is directed against
antibody               a particular "idiotope", the unique amino acid sequence
                       that makes up the antigen binding site in the variable
                       region of another antibody.

BCFC                   Bobby Cadillac's Food Corporation.

clonotypic effect      A persistent tendency of the humoral immune response to
                       have a narrow range of targets.

Company                Immune Network Research Ltd., formed upon the
                       Amalgamation.

Financial Statements   The financial statements listed in Item 19(a) herein.

Fiscal 2000            The fiscal year of the Company ended December 31, 2000.

Fiscal 1999            The fiscal year of the Company ended December 31, 1999.

Fiscal 1998            The fiscal year of the Company ended December 31, 1998.

Fiscal 1997            The fiscal year of the Company ended December 31, 1997.

Fiscal 1996            The fiscal year of the Company ended December 31, 1996.

Fiscal 1995            The fiscal year of the Company ended December 31, 1995.

HIV                    Human immunodeficiency virus.

Immune Network         Immune Network Research Ltd., as it existed prior to the
                       Amalgamation.

Immunoglobulin         An antibody protein that is generated in response to and
                       will bind to a specific antigen.

in vivo                Occurring in a living organism.

in vitro               Occurring outside a living organism.

monoclonal antibodies  Antibodies which are produced by a single clone and are
                       homogenous.

Share                  A common share without par value in the capital stock of
                       the Company.


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ITEM 1.   DESCRIPTION OF BUSINESS

A.     Formation of the Company
       ------------------------

The Company was formed by the amalgamation, under the Company Act (British
Columbia), of Immune Network and BCFC on April 24, 1996.

The Amalgamation was completed pursuant to an agreement (the "Amalgamation
Agreement") between Immune Network and BCFC following receipt of (i) required
securityholders approval, (ii) an order from the Supreme Court of British
Columbia approving the Amalgamation under section 237 of the Company Act
(British Columbia), and (iii) acceptance from the Vancouver Stock Exchange to
the filing of documentation relating to the Amalgamation. The Amalgamation
became effective upon the issuance of a certificate of amalgamation by the
Registrar of Companies for the Province of British Columbia on April 24, 1996.

The principal features of the Amalgamation are summarized as follows:

   *  The property, assets and liabilities of each of Immune Network and BCFC
      became the property, assets and liabilities of the Company.

   *  The Company issued Shares to the shareholders of Immune Network and
      BCFC, as follows:

      (a) the issued and outstanding common shares of Immune Network were
          exchanged for 7,664,653 Shares, and 5,066,667 Shares in escrow, on the
          basis of 1.33 Shares for each one Immune Network common share held;
          and

      (b) the issued and outstanding common shares of BCFC were exchanged for
          4,263,309 Shares on the basis of two Shares for each three BCFC common
          shares held.

   *  The holders of options to acquire shares of BCFC were deemed to be holders
      of options to acquire that number of Shares (333,333 at the time of the
      Amalgamation) resulting from the application of a 3:2 share exchange ratio
      to the number of common shares of BCFC that such holder could previously
      acquire.

B.     Business of the Company
       -----------------------

The Company is a biotechnology company focused on the development of new drugs
to treat major diseases, predominantly involving the body's immune system.
Using both its internal expertise and external network, the Company's objective
is to accelerate the period in which a return on investment would typically be
recognized with traditional biotechnology companies through participation in
"special situations" in biotechnology. The Company's current projects, listed
below, may all be considered special situations:

   *  AIDS project
   *  Alzheimer Disease project
   *  Asthma project

The Company's goal is to capitalize on special situations through a strategy of
acquisition of rights or other interest in the project, addition of value, and
rapid divestiture through licenses, alliances, or other disposition. Special
situations in biotechnology are stalled projects that have an underlying
foundation of strong science, protectable intellectual property, and a clearly
indentified market niche. A stalled project is a project initiated by another
party, the development of which has been suspended for any of a number of

<PAGE>
Page 7

reasons such as a lack of financial or management resources, for such period of
time that the value of the project may have been materially reduced. The
Company differentiates itself from other biotechnology companies by focusing on
the potential for rapid return on investment rather than focusing on a
particular scientific or therapeutic specialization. The Company intends to
collaborate with development partners and contract research organizations on its
projects.

See "Item 1 - Description of Business - Projects".

During the five years preceding the date of this Annual Report, the general
development of the Company and its predecessor, Immune Network, has been as
follows:

   *  The Company was formed on April 24, 1996, the effective date of the
      Amalgamation.

   *  In December 1997, as amended in December 1998, the Company entered into a
      research agreement with Immpheron, Inc. regarding the AIDS project (see
      "Item 1 - Description of Business - Material Agreements - Immpheron,
      Inc.").

   *  On December 15, 1998, the Company was issued a U.S. patent for its
      "Anti-idiotypic antibody" and its use in diagnosis and therapy in HIV-
      related diseases (see "Item 1 - Description of Business - Patents").

   *  In July 1999, the Company entered into an agreement with the University of
      British Columbia (the "UBC Option Agreement") whereby the Company was
      granted an option to license dapsone, a drug currently in use for other
      conditions, for the treatment of Alzheimer disease (see "Item 1 -
      Description of Business - Material Agreements - University of British
      Columbia").

   *  In August 1999, the Company entered into a joint venture arrangement with
      Bridge Pharma, Inc. for the development of a new asthma therapeutic (see
      "Item 1 - Description of Business - Material Agreements - Bridge Pharma,
      Inc.").  The joint venture operations commenced in October 1999.

   *  In October 1999, the Company exercised its option to license dapsone from
      the University of British Columbia (see "Item 1 - Description of Business-
      Material Agreements - University of British Columbia").

   *  In December 1999, the Company entered into an agreement to reacquire the
      50% interest in the Antibody 1F7 previously acquired by ImmPheron, Inc.
      (see "Item 1 - Description of Business - Material Agreements - ImmPheron,
      Inc.")

   *  In February 2000, the Company acquired an option from Meditech
      Pharmaceuticals Inc. to acquire an exclusive license on two of Meditech
      Pharmaceutical Inc.'s drugs, Viraplex and MTCH-24 (see "Item 1 -
      Description of Business - Material Agreements - Meditech Pharmaceuticals
      Inc.").

   *  In March 2000, the Company and CroMedica Global, Inc., a contract research
      organization, entered into an agreement whereby CroMedica Global Inc. will
      provide services relating to the clinical trial program for the Company's
      patented drug candidate for Alzheimer disease (see "Item 1 - Description
      of Business - Material Agreements - CroMedica Global Inc.").

   *  In April 2000, the Company and Bridge Pharma, Inc. signed an addendum
      under which they agreed to add the use of certain compounds for the
      treatment of atopic dermatitis (eczema) (see "Item 1 - Description of
      Business - Material Agreements - Bridge Pharma, Inc.").

<PAGE>
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The Company expects to complete the following milestones in Fiscal 2000: (1)
completion of the investigational new drug application for its AIDS project drug
candidate IQ199, in either Canada or the United States; (2) initiation of a
Phase I/II clinical trial of IQ199 and Phase II trial of its Alzheimer drug
candidate IQ200; and (3) initiation of in vitro and in vivo testing of the
Asthma project compound. See "Item 1 - Description of Business - Projects" and
"Item 1 - Description of Business - Government Regulation".

During Fiscal 1999, the Company completed two private placements raising a total
of $996,997. Subsequent to December 31, 1999, the Company completed a
non-brokered private placement raising net proceeds of $318,000 and completed a
brokered private placement of 15,454,544 special warrants at $0.55 each, raising
net proceeds of $7,791,911.23 after deduction of agent's commission and expenses
incurred to date. See "Options to Purchase Securities From the Company" for
details of the special warrants issued.

The Company is dependent on generating income primarily by raising funds by the
issuance of shares in order to finance research and development activities and
meet general and administrative expenses in the medium term. The Company plans
to collaborate with development partners on its AIDS and Alzheimer disease
projects, reducing the requirement for capital. In the long term, the Company
intends to derive its income from licensing arrangements and divestitures of
intellectual property. There can be no assurance that the Company will be
successful in raising the required financing or in carrying out intellectual
property transactions that produce income. Reference should be made to "Item 1
- Business of the Company - Risk Factors" for disclosure of the distinctive or
special characteristics of the Company's operations or industry which may have a
material impact upon its future financial performance.

As at April 30, 2000, the Company had 9 full-time employees and 3 part-time
employees, 10 of whom are involved in research and development and 2 of whom are
engaged in administration.

The Company does not anticipate any material acquisition or any material
increase in the number of employees in the foreseeable future.

The Company has met all commitments to date and is not in arrears of its
financial obligations.

See also "Item 8 - Selected Financial Data".

C.   Projects
     --------

Summary of Research and Development Programs

The following table summarizes the Company's current research and development
programs:

================================================================================
    Project        Product Candidate   Development Status       Research and
                                                             Development Partner
================================================================================
   AIDS Project     Compound IQ199     Preclinical/Pre-IND(1)         ---
--------------------------------------------------------------------------------
Alzheimer Disease   Compound IQ200     Assessment for Phase II       CroMedica
   Project                              clinical research(2)         Global Inc.
--------------------------------------------------------------------------------
Alzheimer Disease   Compound IQ201         Preclinical                ---
   Project
--------------------------------------------------------------------------------
  Asthma Project    Compound IQ210         Preclinical                 Bridge
                                                                    Pharma, Inc.
================================================================================

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(1)   Preclinical includes pharmacological and efficacy testing in animals,
      toxicology testing and formulation work. After completion of such actions,
      the product, with the approval of a governing body, can enter human trials
      (Phases I, II and III). See "Item 1 - Description of Business - Government
      Regulation".
(2)   A Phase II clinical trial is a pivotal trial designed to test a drug's
      effectiveness in a relevant patient group. The Company has contracted with
      experts to assess the data available to date and to determine an optimal
      clinical testing and commercialization strategy.

AIDS Project

The goal of the Company's AIDS project is to develop an AIDS therapy, IQ199, a
type of monoclonal antibody that addresses two major problems facing current
drugs: (1) the existence of various strains of HIV with different sensitivity to
existing therapies; and (2) the ability of HIV to mutate which allows the virus
to become resistant to existing drug therapy.

AIDS is caused by HIV1 and is generally transmitted between humans through the
transfer of bodily fluids. AIDS occurs because the HIV virus destroys the immune
system of infected individuals2.  After initial infection, lymphatic B-cells of
the immune system begin producing antibodies specific to the infecting viral
strain3.  Antibodies are proteins secreted by cells in the blood that help the
body fight infections and diseases by searching out and selectively binding to
their targets to guard the immune system against infectious microorganisms.
Monoclonal antibodies are an important part of developing therapies that work.
The term "monoclonal" refers to the fact that the cells which secrete the
antibodies are derived from clones, or identical copies, of a single cell.
Monoclonal antibodies are screened in the laboratory and selected for their
sensitivity and specificity to particular target receptors so that they can be
utilized to diagnose and/or treat specific diseases.

Viral replication is initially suppressed by the immune system; however, due to
a high viral mutation rate, new forms of the virus are produced. The immune
system does not produce antibodies specific to the new variants but continues to
produce antibodies against the original strain4 - this is called the "clonotypic
effect". The antibodies produced against the original viral strain are
ineffective against the new variants.  Unchecked by the body's immune system,
the new viral strains proliferate, leading to the destruction or functional
impairment of cells of the immune system and inhibition of the body's ability to
fight infections and certain cancers5

Current therapy for HIV infection is often ineffective in the long term since
these agents usually target only specific strains of HIV. When the virus
mutates, the drugs become ineffective. Many drug companies have attempted to
overcome this problem by developing therapeutics that recognize more than one

--------------------------------------

 1 Horowitz, H.W., Telzak, E.E., Sepkowitz and K.A. Wormser,
   G.P. (1998). Human Immunodeficiency Virus Infection, Part I, Dis Mon. 44(10),
   545-606.

 2 Centers for Disease Control and Prevention (CDC). November 3.

 3 Kohler, H. Goudsmit and J., Nara, P. (1992)  Clonal dominance; a cause for a
   limited and failing immune system to HIV-1 infection and vaccination.  J.
   Acquir Immune Defic Syndr. 5(11), 1158-68.

 4 Muller, S., Margolin, D.H., Nara, P.L., Alvord, W.G. and Kohler, H. (1998).
   Stimulation of HIV-1 neutralizing antibodies in simian HIV-111B-infected
   macaques.  Proc Natl Acad Sci U.S.A. 95(1), 276-81.

 5 (1994).  The Evidence That HIV Causes AIDS.  Fact Sheet, Office of
   Communications and Public Liason, National Institute of Allergy and
   Infectious  Diseases, National Institute of Health.  November 1994.

<PAGE>
Page 10

strain of HIV (e.g. Glaxo Inc., Pfizer Inc.). However, with continuous viral
mutation, the long-term effectiveness of these therapies is limited.
Previously, combinations of several anti-HIV drugs were shown to be effective in
patients with AIDS symptom6.  Recently, however, as a result of the appearance
of new drug resistant HIV strains, trials using combination drug approaches have
been unsuccessful at reducing AIDS symptoms7.  In addition, serious drug side
effects and high medication costs make patient compliance difficult to maintain.
Therefore, current therapies may not provide a long-term solution to AIDS,
making alternative approaches in AIDS therapy increasingly desirable.

IQ199, the Company's 1F7 monoclonal antibody, is a novel approach for treating
HIV infection aimed at resetting the body's immune system to continue to fight
the AIDS virus even as the virus mutates. 1F7 was discovered in 1993 by Drs.
Sybille Muller, Heinz Kohler, Michael Grant and Haitao Wang and is
patent-protected by the authors in the U.S. (see "Item 1 - Description of
Business - Patents"). IQ199 is an antibody produced in mice that appears to
reset the body's immune system, thereby facilitating its response against new
strains of HIV8.  IQ199 is not directed against HIV itself but is able to
stimulate the immune system directly. IQ199 stimulates the immune system by
suppressing the "B-cells" that produce antibodies against the original HIV
strain and also stimulates other lines of "B-cells" to produce antibodies
against the new mutant virus strains8.

An experiment was carried out to test the efficacy of 1F7 in suppressing
dominant antibody responses in HIV-infected macaque monkeys8. Significant
increases in the number of anti-HIV antibodies for more than one virus strains
(HIV-1 IIIB and MN) were detected in the blood of the 1F7-inoculated macaques.
Moreover, in all three injected monkeys, antibody binding to three different HIV
strains (MN, CM and SF2) that are not targeted by the 1F7 antibody increased
following 1F7 injection. These results suggest that the monkey's immune system
became more effective against HIV strains after 1F7 injection.

In HIV patients the CD8+ "cytotoxic" cells of the immune system destroy its own
CD4+ "helper" T-cells that have become infected with the virus. It appears that
a key factor in the pathology of AIDS is that cytotoxic T-cells also kill
uninfected helper T-cells9.  Early in vitro experiments conducted by Dr. Michael
Grant have demonstrated that 1F7 selectively inhibited the destruction of
uninfected CD4+ cells by the cytotoxic T-cells in HIV-infected individuals10.

In summary, the experiments conducted by Dr. Muller and colleagues and Dr. Grant
suggest that the monoclonal antibody 1F7 has several important effects on both
humoral (antibody-mediated) and cellular immunity mechanisms that make it an
ideal candidate for an HIV therapy. In addition, the failure or limited success
of other drug therapies opens the market for new and novel AIDS therapeutics
such as 1F7.

--------------------------------------

 6 Horowitz, H.W., Telzak, E.E., Sepkowitz, K.A. and Wormser, G.P. (1998).
   Human Immunodeficiency Virus Infection Part I.  Di Mon 44(10), 545-606.

 7 Chesney, M.A., Morin, M. and Sherr, L. (2000).  Adherence to HIV combination
   therapy.  Soc Sci Med 50(11), 1599-605.

 8 Muller, S., Margolin, D.H., Nara., P.L., Alvord, W.G. and Kohler, H. (1998).
   Stimulation of HIV-1-neutralizing antibodies in simian HIV-111B-infected
   macaques.  Proc Natl Acad Sci U.S.A. 95(1), 276-81.

 9 Zarling, J.M., Ledbetter, J.A., Sias, J., Fultz, P., Eichberg, J., Gjerset,
   G. and Moran, P.A. (1990).  HIV-infected humans but not chimpanzees, have
   circulating cytotoxic T lymphocytes that lyse uninfected CD4+ celles.  J
   Immunol 144(8), 2992-8.

10 Grant, M., Smaill, F., Muller, S., Kohler, H., Rosenthal, K. (2000).  The
   anti-idiotypic antibody 1F7 selectively inhibits cytotoxic T-cells activated
   in HIV-infection.  Immunol Cell Biol 78(1), 20-7.

<PAGE>
Page 11

The Company has licensed the antibody 1F7 technology from the San Diego Regional
Cancer Center (see "Description of Business - Material Agreements - Sidney
Kimmel Cancer Center") and has further patents pending regarding the antibody
1F7 (see "Description of Business - Patents - AIDS Project").

The AIDS project is in the preclinical stage. The Company is currently
preparing an investigational new drug ("IND") application for filing with the
regulatory agencies upon completion of preclinical studies (see "Item 1 -
Description of Business - Government Regulation"). Once the IND becomes
effective, the Company can then begin the first of three phases of clinical
trials. Preliminary discussions are being held with various research
organizations and the regulatory agencies regarding the requirements and
conditions for a clinical trial.

Alzheimers Disease Project

The short term goal of the Company's Alzheimer disease project is to
demonstrate that dapsone, a drug currently in use for other conditions, is
effective in slowing the progression of Alzheimer disease. The Company has
developed a clinical, regulatory and commercial strategy for the project.
Clinical trials for IQ200, the first generation compound in this project, have
been designed to confirm the ability of the compound to slow the progression of
dementia in confirmed Alzheimer disease patients. The Company is also
conducting research on IQ201 and subsequent candidates as possible second
generation agents for prevention of onset and/or slowing the progression of
Alzheimer disease.

Alzheimer disease is a condition characterized by death of brain cells and
severe degradation of mental health. Primarily affecting the elderly, Alzheimer
disease currently afflicts over 35 million people worldwide11 and is the eighth
leading cause of death in people aged 65 and older in the United States12.
Presently, there are only two drugs approved for the treatment of this disease -
both treat the symptoms of the disease by temporarily improving brain function
but they do not arrest or slow the progression of the disease.

In 1992, researchers at the University of British Columbia conducted a
retrospective study on the prevalence of dementia among elderly Japanese
patients receiving dapsone13. They found that the occurrence of dementia was 37%
lower in patients chronically treated with dapsone as compared to patients not
receiving dapsone. These results suggest that continuous therapy with dapsone
(IQ200) may lower the incidence of dementia.

The Company entered into an option agreement with the University of British
Columbia (the "UBC Option Agreement") for an exclusive worldwide license on a
patent that covers the use of dapsone and related compounds for the treatment of
dementia, with rights to manufacture, distribute and sell products based on such
technology (see "Item 1 - Description of Business - Patents"). Subsequently the
Company exercised its option and is currently finalizing the terms of the
license agreement (see "Item 1 - Description of Business - Material Contracts -
UBC Option Agreement").

Based on a positive statistical analysis of data from the restrospective study,
the Company will be proceeding with a Phase II, multi-center clinical research

--------------------------------------

11 The World Health Report 1999.  World Health Organization.

12 1996 National Center for Health Statistics, U.S. Department of Health and
   Human Services.

13 McGeer et al, 1992.  Dementia, Volume 3:  146-149.

<PAGE>
Page 12

program for this drug candidate. The Phase II research program will be
conducted by CroMedical Global Inc. ("CroMedica"), an arm's length clinical
research operating facility (see "Description of Business - Material Agreements
- CroMedica Global Inc."). The three-country clinical trial program has been
designed by CroMedica to establish the efficacy of the Company's patented drug
candidate against the progression of Alzheimer disease. The patient selection
process is scheduled to begin before the end of the current year, with first
results anticipated in year 2001. CroMedica will be responsible for the
coordination, management and conduct of the studies. Total expenses are
expected to be US$13 million over three years. The Company will need to secure
additional funds, through financings and/or collaborative agreements, to cover
much of the cost associated with the completion of the Phase II clinical
research program. There can be no assurance that such additional funds will be
secured at all or in a timely manner.

A project plan is currently being developed for a second pharmaceutical
composition for Alzheimer disease therapy (IQ201). When this project is
initiated, IQ201 will enter into the preclinical stage of development. Initial
expenses for this project are expected to be nominal.

Asthma Project

The goal of the Company's asthma project is to synthesize and test several new
compounds that have, in laboratory studies, demonstrated possible
disease-modifying actions in asthma. Pursuant to a research agreement between
the Company and Bridge Pharma, Inc. (see "Item 1 - Description of Business -
Material Agreements - Bridge Pharma, Inc."), the research will involve the
exploration of targeted mast cell stabilizers which are effective but may not
possess the side-effects associated with steroids and other drugs that are
currently available for the treatment of asthma. Initial data from Bridge
Pharma, Inc. indicates that these novel, non-steroidal, disease-modifying
therapeutics have a better activity profile with fewer side effects than other
drugs of their class. Bridge Pharma, Inc. intends to screen these compounds in
laboratory models of asthma, select a clinical candidate and initiate clinical
testing of this candidate drug.

Asthma is a disorder characterized by chronic inflammation and hyper-sensitivity
of the air passages in the lung. People who suffer from asthma experience
"attacks" during which their air passages contract causing difficulty in
breathing. Temporary relief from the symptoms of asthma is currently achieved
through use of bronchodilators that re-open the air passages. Recently, a
better understanding of the underlying pathophysiology of asthma has led to the
conclusion that long-term management of asthma should be achieved with safe,
disease-modifying drugs, and to acutely maintain normal lung function with the
use of bronchodilator drugs only as needed. Although various bronchodilator
drugs are currently available, there is still a need for effective,
well-tolerated, non-steroidal, disease-modifying drugs.

Asthma appears to involve the release of many inflammatory agents that are
involved in allergic reactions. Inhibiting a single mediator is not always
effective. Inhibition of multiple mediators is more likely to produce a
broad-based anti-inflammatory effect. The only known method to meet such a goal
is to inhibit the release of inflammatory agents by stabilizing the cells that
produce them.

The patent application for the drug candidate under the Asthma project is part
of the intellectual property covered by the Company's agreement with Bridge
Pharma, Inc. The Asthma project is in the preclinical stage. Total expenses
related to this project are expected to be up to a maximum of $3 million over
two years. The Company will need to secure additional funds, through sources
such as financings and/or collaborative agreements, to cover much of the costs
associated with the completion of research and development relating to the
Asthma project. There can be no assurance that such additional funds will be
secured at all or in a timely manner.

<PAGE>
Page 13

D.   Material Agreements
     -------------------

Sidney Kimmel Cancer Center

By an arms length exclusive licensing agreement dated April 23, 1993 (the "1F7
License Agreement") entered into between the Company and the San Diego Regional
Cancer Center (now known as the Sidney Kimmel Cancer Center) (the "Cancer
Center"), the Company was granted an exclusive license to use and sublicense the
technology characterized as "Antibody 1F7" (see "Item 1 - Description of
Business - Patents") and to make or have made licensed products in all countries
of the world in which the Cancer Center has patent rights, and to sell licensed
products worldwide. Under the terms of the 1F7 License Agreement, the Company
is required to pay to the Cancer Center a royalty equal to 2% of net sales of
therapeutic licensed products and 5% of net sales of diagnostic licensed
products resulting from Antibody 1F7 technology.

The 1F7 License Agreement shall expire on the later of: (a) April 23, 2010; or
(b) expiry of the last remaining patent rights. The Company may continue to
utilize the technology under the 1F7 License Agreement after the expiration of
the last remaining patent rights, but shall not have any further royalty or
other payment obligations to the Cancer Center.

Subject to its terms and conditions, the 1F7 License Agreement may be
terminated: (a) at any time by the Cancer Center if the Company files in any
court a bankruptcy or insolvency petition; (b) by either party upon failure of
the other party to remedy a breach for which notice was given; and (c) upon 60
days' written notice by the Company to the Cancer Center.

The Company has paid a license fee of US$10,000 to the Cancer Center.

ImmPheron, Inc.

By an arms length agreement dated December 15, 1997, as amended December 15,1998
(the "Immpheron Agreement"), the Company formed a strategic partnership with
Immpheron, Inc. ("Immpheron") to continue research and development of monoclonal
Antibody 1F7 and the intellectual property related to its use as a therapeutic
for the prevention and treatment of HIV infection. See "Item 1 - Description of
Business - AIDS Project (1F7)". By incurring US$81,000 in preclinical trial
expenditures, Immpheron acquired a 50% interest in the Antibody 1F7 technology
licensed from the Cancer Center.

By letter agreement dated December 20, 1999 (the "Purchase Agreement"), the
Company reacquired the 50% interest in the Antibody 1F7 acquired by ImmPheron,
in consideration of the following payments and royalty grant to ImmPheron:


<PAGE>
(a)  US$4,000 on execution of the agreement (paid);

(b)  US$2,000 on each of January 31, February 29, March 31 and April 30,
     2000 (all paid);

(c)  US$88,000 on July 20, 2000;

(d)  US$10,000 within 30 business days of the commencement of a Phase I
     clinical trial; and

(e)  a 4% royalty on net earnings from the Antibody 1F7.

<PAGE>
Page 14

University of British Columbia

Pursuant to an arms length agreement (the "UBC Option Agreement"), the Company
has exercised an option granted by the University of British Columbia ("UBC")
for the world-wide license to use and sublicense dapsone, a drug currently in
use for other conditions, for the treatment of Alzheimer disease, and the
manufacture, distribution and sale of products based on such technology (see
"Item 1 - Description of Business - Alzheimer Disease Project"). A formal
license agreement is currently being negotiated by the Company and UBC which is
to include the following material terms:

(a)  an initial, non-refundable, license fee will be payable upon execution of
     the license agreement, which is intended to partially reimburse UBC for its
     costs of developing, protecting and licensing the technology;

(b)  payments will be made to UBC upon certain milestones being reached,
     including the initiation of phase III clinical trials, filing of an NDA
     with the FDA, and upon receipt of FDA approval for marketing;

(c)  a royalty will be paid to UBC based upon the total gross revenue derived
     from the sale of products using the technology;

(d)  an annual, non-refundable, license maintenance fee of $1,000 will be paid
     in advance to UBC;

(e)  UBC will own and manage the patent portfolio, including all patents for
     improvements. The Company will pay all future patent application, patent
     prosecution and patent maintenance costs and will reimburse all cost
     incurred to date by UBC and, in return, the Company will have the right to
     designate which technologies should be patented and shall become a licensee
     of all resulting patents on the same terms and provided in the license
     agreement;

(f)  although UBC does not generally assign its technology, provision will be
     made for such assignment upon the achievement of certain milestones; and

(g)  the license agreement will terminate with respect to any patent and
     royalties applicable thereto, on the expiration or official determination
     of invalidity of the patent, and with respect to the know-how and all other
     rights, on the later to occur of expiration or invalidity of the last
     patent, if any, licensed under the license agreement or the expiration of
     ten years from the date of the license agreement.

Bridge Pharma, Inc.

By an arms length agreement dated August 12, 1999 (the "Bridge Pharma
Agreement") with Bridge Pharma, Inc. ("BPI"), the Company has entered into a
joint venture arrangement, on a 50-50 basis, with BPI for the development of a
new asthma therapeutic. In order to retain its 50% interest, the Company is
required to provide up to US$2 million in funding to the project over a period
of two years. Any additional funding required above the first US$2 million will
be shared equally between the parties. The goal of the collaboration between
the Company and BPI is to finish the work necessary to complete clinical trials
either as a continuance of the joint venture or in alliance with a strategic
partner. See "Item 1 - Description of Business - Asthma Project".

Bridge Pharma, Inc. and the Company shall each own an undivided 50% interest in
all technology invented, discovered, acquired or developed under the joint
venture or with the use of the defined technology of the other party.

<PAGE>
Page 15

Pursuant to an addendum agreement dated April 4, 2000 (the "Bridge Pharma
Addendum"), the Company and Bridge Pharma, Inc. agreed to add to the joint
venture the use of certain additional compounds and the associated intellectual
property for the treatment of atopic dermatitis (eczema), subject to Canadian
Venture Exchange acceptance. The Company has agreed that it will increase its
initial funding obligation from US$2 million to US$3.5 million if and when the
Company and Bridge Pharma, Inc. both agree on the selection of at least one of
the additional compounds to proceed to clinical trials.

Meditech Pharmaceuticals Inc.

By an arms length agreement dated February 3, 2000 (the "Meditech Agreement"),
Meditech Pharmaceuticals Inc. ("Meditech") has granted to the Company an
irrevocable one year option (the "Option") to acquire an exclusive, worldwide
(exclusive of the United States) license on two of Meditech's drugs, Viraplex
and MTCH-24, or any derivatives or formulations thereof. In consideration of
the grant of the Option, the Company paid the sum of US$25,000 and incurred the
required amount of US$20,000 in research and development expenditures relating
to these two drugs.

The Company has exercised and is negotiating with Meditech the terms of the
license agreement. The license agreement will provide for the payment to
Meditech of a royalty on net sales of 7% for MTCH-24 or any derivatives or
formulations of MTCH-24, and 4% for Viraplex or any derivatives or formulations
of Viraplex.

CroMedica Global Inc.

Pursuant to an arm's length agreement entered into on March 27, 2000 (the
"CroMedica Agreement"), CroMedica Global Inc. ("CroMedica") has designed a
three-country clinical trial program to test the efficacy of the Company's
patented drug candidate against the progression of Alzheimer disease. CroMedica
will be responsible for the coordination, management and conduct of the studies
(see "Item 1 - Description of Business - Projects - Alzheimer Disease Project").
The CroMedica Agreement is a fixed price contract, with the price being either
US$13,199,286 ("Option A Pricing") or US$13,849,286 ("Option B Pricing"),
exclusive of all applicable taxes, dependent upon the involvement of the Company
in the program. As of April 30, 2000, the Company has paid CroMedica
$1,964,742 (net of GST) under the CroMedica Agreement. CroMedica has agreed to
defer payment by the Company of US$2,000,000 of the costs under the CroMedica
Agreement. The amount of the payment deferral from time to time will be secured
by a debenture issued by the Company on March 27, 2000 in favour of CroMedica
(the "CroMedica Debenture"). The CroMedica Debenture was accepted for filing by
the Canadian Venture Exchange on April 13, 2000.

The CroMedica Debenture will secure up to a maximum principal amount of
US$2,000,000 (approximately Cdn$2,907,000). As of April 30, 2000, the
principal amount secured under the CroMedica Debenture is US$1,000,000
(approximately Cdn$1,453,500). The principal amount shall be increased by
either US$200,000 (approximately Cdn$290,700) on the first day of each month
from June through October 2001 if Option A Pricing applies, or by US$200,000 on
the first day of each month from October 2001 through February 2002 if Option B
Pricing applies.

The principal amount outstanding under the CroMedica Debenture will be paid in
equal monthly instalments (except for one month's payment which will double the
amount of the payment made the other months) on the first day of each month from
October 2001 through August 2003. The CroMedica Debenture provides for interest
at the rate equal to the prime rate of interest charged by the Bank of Montreal
for Canadian loans to Canadian customers, plus 5%. Interest shall be payable
commencing on October 1, 2001 and shall be calculated from the time of their
deferral under the CroMedica Agreement.

<PAGE>
Page 16

As security for the payment of all amounts payable under the CroMedica Debenture
and the performance by the Company of its obligations thereunder, the Company
has granted CroMedica a security interest in all of its present and future
property and assets. Accordingly, if the Company is unable to repay the
indebtedness secured by the CroMedica Debenture, all of its property and assets,
including its intellectual property, shall be subject to seizure to the extent
of its indebtedness to CroMedica.

The Company may terminate the CroMedica Agreement upon 30 days' written notice
to CroMedica. If such termination is the result of an external development
partnership, licensing agreement, corporate merger or acquisition, a termination
fee equal to 30% of the remaining payments under the CroMedica Agreement will be
due to CroMedica. The termination fee will be 10% for termination of the
CroMedica Agreement by the Company for any other reason.

Donald Rix, a director of the Company, has disclosed his interest in this
transaction as a director of a subsidiary of CroMedica and, in accordance with
the provisions of the Company Act (British Columbia) abstained from voting on
approval of the CroMedica Agreement.

The CroMedica Agreement further provides that CroMedica is granted a right of
first refusal on all of the Company's clinical trials, other than the first
human trial, involving Antibody 1F7 (see "Item 1 - Description of Business -
Projects - AIDS Project").

The Company has the sole rights in any intellectual property arising from
research under the CroMedica Agreement.

E.   Markets
     -------

The pharmaceutical and related biotechnology industries are characterized by
extensive research efforts, rapid technology change and intense competition.
(See "Item 1 - Description of Business - Risk Factors".) Competition in the
biopharmaceutical industry is based primarily on product performance, including
efficacy, safety, ease of use and adaptability to various modes of
administration, patient compliance, price, acceptance by physicians, marketing,
and distribution. Barriers to entry into the market include the availability of
patent protection in the United States (the "U.S.") and other jurisdictions of
commercial interest, and the ability and time needed and cost to obtain
governmental approval for testing, manufacturing and marketing.

The Company's programs are in varying stages of development. Products that may
result from the Company's research and development programs are not expected to
be commercially available for a number of years, if at all, and it will be a
number of years, if ever, before the Company will receive any significant
royalty revenues from commercial sales of such products. Therefore, any
discussion of a market for the Company's products is of a very preliminary
nature. In addition, some of the Company's competition may have substantially
more financial and technical resources, more extensive research and development
capabilities, products at a later stage of development, and greater marketing,
distribution, production and human resources than the Company. (See "Item 1 -
Description of Business - Risk Factors").

The statistical information provided throughout this section has been sourced
from the Company's market research reports, from public offering disclosure
published by competitors believed by the Company to be accurate, from published
data, and from the Company's experience in the industry.



<PAGE>
Page 17

AIDS Project

AIDS was first recognized in 1981 and has since become a major epidemic,
affecting more than 30 million people worldwide14.

The current U.S. market for HIV drugs is estimated to be in excess of US$3
billion15. The Company feels that its 1F7 antibody, drug candidate IQ199, could
represent an important new treatment for HIV which would compete for a
significant portion of this market.

The monoclonal antibody IQ199 will compete primarily with other treatments that
improve the quality of life for HIV-infected individuals. Current treatment
includes two classes of agents known as antiviral and immune stimulating agents.
There are several problems with the current therapeutics such as viral
resistance, serious health complications, and high treatment cost. The
mechanism of action of IQ199 is different from current HIV drugs and may
represent a more effective approach, associated with a wider therapeutic window.
By blocking clonal dominance, an inherent immune response, IQ199 should allow
the immune system to regain its ability to respond to the endogenous virus.
This unique mechanism of action gives IQ199 a potential competitive advantage
over other drug therapies.

The Company has carried out a survey of the scientific and patent literature and
has not found, nor is the Company aware of, any existing or potential AIDS
therapies that have a similar mechanism of action as IQ199. Since multiple HIV
drugs are often used in combination chemotherapy regimens, it is unlikely that
IQ199 will directly compete with individual AIDS therapeutics. It is more
likely that IQ199 may become part of such combination regimens.

Alzheimer Disease Project

Competition currently exists among companies and research groups attempting to
develop new drugs to combat Alzheimer disease. There are numerous drugs in
various stages of clinical trials. These experimental drugs fall into one of
five categories: cholinominetics, antioxidants, estrogen replacement,
anti-inflammatories and others. The FDA, however, has approved only two drugs.
(See "Item 1 - Description of Business - Government Regulation") Both drugs are
acetylcholinesterase inhibitors, and their overall benefit to Alzheimer patients
is minimal. The first such drug approved, tacrine, had side effects that
prevented it from being accepted in the market. The most recently approved
agent, donepezil, produces only mild increases in alertness. Despite this, most
physicians treating Alzheimer disease patients are expected to prescribe
donepezil because there are so few alternatives16.

NSAIDS (non-steroidal anti-inflammatory drugs) have shown some promise for use
in Alzheimer treatment, but the potential for serious gastrointestinal side
effects complicate their therapeutic use. The new anti-inflammatory "COX-2
inhibitors" may be direct competitors with the Company's drug candidates. The
competitors in this area are Merck and Co. Inc. and Searle and Co. Inc. which
are both conducting phase III clinical trials with their COX-2 inhibitors.
Other potential competitors include Aventis Pharma Inc. which is conducting
phase III clinical trials for its phosphodiesterase inhibitor, propentofylline,
and Neotherapeutics Inc. which is in phase II trials for its drug Neotrofin, a
nerve growth factor.

--------------------------------------

14 The World Health Report 1999.  World Health Organization.

15 IMS Health, 1998.

16 Medical Science Bulletin, 1997;20.

<PAGE>
Page 18

The Company's Alzheimer disease drug candidates have a unique combination of
actions with a manageable and well-established toxicology profile17. The
Company's Alzheimer disease project represents a novel approach to
pharmacological therapy of Alzheimer disease by treating brain inflammation
which occurs during the illness18. The Company's review of patent literature
further suggests that the Company's approach to treatment of this illness is
unique.

Despite their limited effectiveness and serious side-effects, the few drugs that
are approved for use in Alzheimer disease have U.S. sales that exceed US$400
million annually19.

Asthma Project

Asthma morbidity and mortality are increasing worldwide. More than 12 million
Americans, including 5 million children, suffer from asthma. Among adults in
the U.S., 1 in 20 is asthmatic and among children the prevalence is higher -
about 1 in 1020.  Asthma related mortality in the U.S. and Canada has increased
by more than 25% during the last 20 years, with the direct annual cost estimated
at over $7 billion annually in the U.S. alone21.

Anti-asthmatic drugs for clinical use fall into two categories: (1) those which
primarily provide symptomatic relief (bronchodilators); and (2) those which
provide a long-term disease-modifying action22. There is now a sound medical
rationale for the use of disease modifying agents as first-line drugs in the
management of chronic asthma. Current asthma therapy is inadequate and
management believes that the future market for disease-modifying drugs, such as
IQ210 which is currently under development by Bridge Pharma, Inc. and the
Company, will be at least as large as the current market for symptomatic
bronchodilating drugs.

In the asthma therapeutic market, the Company's proposed asthma treatment will
compete primarily with other disease-modifying asthma therapies. Current
treatment includes inhaled steroids, antiallergenic agents such as sodium
cromoglycate (inhalant) and ketotifen fumarate (systemic). The anti-asthmatic
agent under research by the Company and its partner (see "Item 1 - Description
of Business - Material Agreements - Bridge Pharma, Inc.") has demonstrated in
Preclinical studies a better activity profile with fewer side effects than other
drugs of its class. It is expected that this agent could become an important
treatment for asthma.

Several companies are working on new approaches to the treatment of asthma.
Potential competitors include Novartis Inc. and Genentech Inc. which are
developing a monoclonal antibody to bind IgE, a major component of allergy
induced asthma attacks. Other potential competitors are Texas Biotechnology
Corporation, which is developing a selectin inhibitor that is currently in phase
II human trials; Inflazyme Pharmaceuticals Ltd., which has recently completed
phase I trials with a novel steroid analogue; Leukosite Inc., which has

--------------------------------------

17 Compendium of Pharmaceuticals and Specialties, 1999, Canadian Pharmaceutical
   Association.

18 Scientific American, June 2000, Nicola Jones.

19 Reuters news.

20 (1997) Allergy Clin Immun. 100, 771

21 (1995) Global Initiative for Asthma, Nat Inst Health.

22 Goodman and Gilman, Pharmacological Basis of Therapeutics, 1999.

<PAGE>
Page 19

completed phase I trials of a new compound to inhibit the production of
leukotrienes; and AVANIR Pharmaceuticals, Inc., which is in preclinical testing
of a compound to downregulate the production of IgE. These competitors,
however, face many of the same difficulties as the Company in eventually
bringing their drugs to market.

Business Strategy

The Company's objective is to accelerate the period in which a return on
investment would typically be recognized with traditional biotechnology
companies through participation in "special situations" in biotechnology. The
Company's current project may all be considered to be special situations.

Special situations in biotechnology are stalled projects that have an underlying
foundation of strong science, protectable intellectual property, and a clearly
identifiable market niche. A stalled project is a project initiated by another
party, the development of which has been suspended for any number of reasons
such as a lack of financial or management resources, for such period of time
that the value of the project may have been materially reduced. The Company's
goal is to capitalize on special situations through a strategy of acquisition of
rights or other interest in the project, addition of value, and rapid
divestiture through licenses, alliances, or other disposition. The stage at
which such divestiture may occur is dependent upon the individual milestones for
each project. The Company differentiates itself from other biotechnology
companies by focusing on the potential for rapid return on investments, rather
than focusing on a particular scientific or therapeutic specialization.

The Company conducts some of its own research and development but primarily
contracts out and seeks collaborative partners with experience in the
development and marketing of drugs in the relevant therapeutic areas. Potential
partners must possess both the human and financial resources to spearhead the
clinical development of the Company's products as required by the FDA, the HPB,
and drug regulatory agencies in other countries. The form of collaboration
depends, in part, on the product candidate, the stage of development, and the
partner's expertise. The Company also expects any potential partner to market
the products. No assurance can be given that any such proposed partnership
arrangements will be entered into, or, if entered into, will be successful in
completing the development programs for the drug candidate in any particular
jurisdiction. (See "Item 1 - Description of Business - Risk Factors".)

The rationale behind the Company's business strategy is to avoid the large
expenses incurred in the later stages of clinical development, to obtain early
returns in the form of upfront fees and milestone payments, to utilize expertise
and resources of major multinational pharmaceutical companies, and to obtain
long term revenue streams through royalty payments on product sales.

Notwithstanding the Company's business strategy described above, the Company has
no regular cash flow and is dependent on generating required funds primarily by
way of equity financing. The Company expects to continue to rely on outside
sources of financing to meet its capital requirements for at least the next two
years. There can be no assurance that the Company will be able to arrange and
complete the required financings on favourable terms. Such equity financings
could be highly dilutive. (See Item 1 - Description of Business - Risk
Factors".)

The Company presently has no plans for developing an in-house marketing or
manufacturing capability.

F.   Research and Development Expenses
     ---------------------------------

During Fiscal 1999, 1998 and 1997, the Company spent $420,195, $20,260 and
$61,772, respectively, on research and development, net of grant.

<PAGE>
Page 20

G.   Proprietary Protection
     ----------------------

General

The Company's patent strategy is to pursue, in selected jurisdictions, the
broadest possible patent protection on its proprietary products and technology.
The Company plans to protect its technology, inventions and improvements to
inventions by filing patent applications according to industry standards in a
timely fashion.

In addition to its patents, the Company also relies upon trade secrets, know-how
and the continuing technological innovations to develop its competitive
position. It is the Company's policy to require its directors, employees,
consultants, members of its scientific advisory board and parties to
collaborative agreements to execute confidentiality agreements upon the
commencement of employment, consulting or collaborative relationships with the
Company. These agreements provide that all confidential information developed
or made known during the course of the relationship with the Company is to be
kept confidential except in specific circumstances. In the case of employees
and consultants, the agreements provide that all inventions resulting from work
performed for the Company utilizing property of the Company or relating to the
Company's business and conceived or completed by the individual during
employment are the exclusive property of the Company to the extent permitted by
law.

The Company, and licensors who have granted the Company rights to their
respective technologies (see "Item 1 - Description of Business - Projects"),
have been granted patents or have filed patent applications in the United States
and other jurisdictions (such as Canada, Japan, Germany, France, Italy and the
United Kingdom) in respect of certain core technologies utilized by the Company.
Given that the patent applications for these technologies involve complex legal,
scientific and factual questions, there can be no assurance that patent
applications relating to the technology used by the Company will result in
patents being issued or that, if issued, the patents will provide a competitive
advantage or will afford protection against competitors with similar technology,
or will not be challenged successfully or circumvented by competitors.

The following patents granted or filed have either been assigned to the Company
or licensed for use by the Company.

AIDS Project

Title:                         Anti-Idiotypic Antibody and its use in Diagnosis
                               and Therapy in HIV-Related Disease
United States Patent Number:   5,849,583
Date Granted:                  December 15, 1998
Scope of Patent:               An active pharmaceutical composition comprising
                               an effective monoclonal antibody, for the use in
                               diagnosis and therapy of HIV-related diseases.

The Company has licensed this patent from the Sidney Kimmel Cancer Center (see
"Item 1 - Description of Business - Material Agreements - Sidney Kimmel Cancer
Center").

The Company has three additional patents pending regarding the 1F7 Antibody and
the above title:

United States
Application Number:           09/211,156

<PAGE>
Page 21

Scope of Pending Patent:      A method of reducing T cell-mediated cytotoxicity
                              in HIV+ sera comprising administering a
                              pharmaceutical composition comprised of a
                              monoclonal antibody or fragment thereof.

Canada and Europe
Application Number:           2131692 (Canada) and 92907381.3 (Europe)
Scope of Pending Patent:      An active pharmaceutical composition comprising an
                              effective monoclonal antibody, for the use in
                              diagnosis and therapy of HIV-related disease.

In addition, the Company has a further patent pending in Canada regarding the
1F7 Antibody:

Title:                        Methods and Compositions for Inhibiting Killing of
                              Uninfected Lymphocytes
Application Number:           2123551
Scope of Pending Patent:      Method and composition for inhibiting cytotoxic T-
                              lymphocytes mediated immunopathology in an HIV
                              infected individual.

Alzheimer Disease Project

Title:                        Dapsone and Promin for the treatment of dementia
United States Patent Number:  5,532,219
Date Granted:                 July 2, 1996
PCT Application:              Issued in Germany, France, U.K. and Italy, pending
                              in Japan.
European Patent Office
 Number:                      EP00642337B1
Application Number:           4509618 (Japan)
Date Granted:                 September 3, 1997
Scope of Pending and Issued
 Patents:                     A method for treating dementia is a human being
                              characterized by administering to the human being
                              through the novel use of a substance selected from
                              the group consisting of a 4,4'-
                              diaminodiphenylsulfone, its didextrose sulfonate
                              derivative, and other closely related sulfone
                              derivatives, and therapeutically acceptable salts
                              thereof.

The Patent Cooperation Treaty ("PCT") is a multilateral treaty that was
concluded in Washington in 1970 and entered into force in 1978. It is
administered by the International Bureau of the World Intellectual Property
Organization ("WIPO"), headquartered in Geneva, Switzerland. The PCT
facilitates the obtaining of protection for inventions where such protection is
sought in any or all of the PCT contracting states (total of 104 at July 1999).
It provides for the filing of one patent application (the "international
application"), with effect in several contracting states, instead of filing
several separate national and/or regional patent applications. At the present
time, an international application may include designations for regional patents
in respect of contracting states party to any of the following regional patent
treaties: The Protocol on Patents and Industrial Designs within the framework of
the African Regional Industrial Property Organization, the Eurasian Patent
Convention, the European Patent Convention, and the Agreement Establishing the
African Intellectual Property Organization. The PCT does not eliminate the
necessity of prosecuting the international application in the national phase of
processing before the national or regional offices, but it does facilitate such
prosecution in several important respects by virtue of the procedures carried
out first on all international applications during the international phase of
processing under the PCT. The formalities check, the international search and

<PAGE>
Page 22

(optionally) the international preliminary examination carried out during the
international phase, as well as the automatic deferral of national processing
which is entailed, give the applicant more time and a better basis for deciding
whether and in what countries to further pursue the application. Further
information may be obtained from the official WIPO internet website
(http://www.wipo.int).

World Intellectual Property
 Organization Patent Number:   WO9324118A1
Date Granted:                  December 3, 1993

The Company has exercised an exclusive option to license this technology and is
currently negotiating the terms of a license agreement with UBC (see "Item 1 -
Description of Business - Material Agreements - University of British
Columbia").

Asthma Project

A new PCT application was filed by Bridge Pharma, Inc. in April 1998 and is part
of the intellectual property covered by the joint venture with the Company (see
"Item 1 - Description of Business - Material Agreements - Bridge Pharma, Inc.").

Other

Pursuant to the Bridge Pharma Addendum (see "Item 1 - Description of Business -
Material Agreements - Bridge Pharma, Inc."), a provisional patent application
was filed in 1999 with the U.S. Patent Office.

H.   Government Regulation
     ---------------------

The research and development, manufacture and market of pharmaceutical products
are subject to regulation by the Food and Drug Administration (the "FDA") in
the United States, by the Health Protection Branch (the "HPB") of the Department
of Health and Welfare Canada in Canada, and by comparable regulatory authorities
in other countries. These national agencies and other federal, state,
provincial and local entities regulate the testing, manufacture, safety and
promotion of the Company's products.

Drug licensing laws require approval of manufacturing facilities, carefully
controlled research and testing of products, governmental review and approval of
results prior to marketing of therapeutic products, and adherence to Good
Manufacturing Practices during production. Compliance with Good Manufacturing
Practices requires considerable time and resources in the area of production and
quality control. Product approvals may be withdrawn if compliance with
regulatory standards is not maintained or if new evidence demonstrates that the
drug is unsafe or lacks efficacy for its intended use(s) becomes known after the
product reaches the market.

United States Regulation

The Company is required by the FDA to comply with the following procedures prior
to marketing its products:

   *  preclinical laboratory and animal toxicology tests;
   *  submission of an investigational new drug application ("IND"), which
      must become effective before human clinical trials commence;

<PAGE>
Page 23

   *  adequate and well-controlled human clinical trials to establish the
      safety and efficiacy of the drug for its intended application;
   *  the submission of a new drug application ("NDA") to the FDA; and
   *  FDA approval of a NDA prior to any commercial sale or shipment of the
      product, including pre-approval and post-approval inspections of
      manufacturing facilities.

Preclinical laboratory and animal toxicology tests must be performed to assess
the safety and potential efficacy of the product. The results of these
preclinical tests are then submitted to the FDA as part of an IND requesting
authorization to initial human clinical trials. Clinical trials may be
initiated only upon approval of the IND by the FDA.

Clinical trials involve the administration of the pharmaceutical product to
individuals under the supervision of qualified medical investigators. Clinical
studies are conducted in accordance with protocols that detail the objectives of
a study, the parameters to be used to monitor safety and the efficacy criteria
to be evaluated. Each protocol is submitted to the FDA prior to the
commencement of each clinical trial. Clinical studies are typically conducted
in three sequential stages, which may overlap:

   Phase I:   Initial introduction of the compound into human subjects to test
              for safety, dosage, tolerance, metabolic interaction,
              distribution, excretion and pharmacodynamics.

   Phase II:  Studies in a limited patient population to:
              *  determine the efficacy of the product for specific, targeted
                 indications;
              *  determine optimal dosage; and
              *  identify possible adverse effects and safety risks.

In the event Phase II evaluations demonstrate that the drug is effective and has
an acceptable safety profile, Phase III of the clinical trial will proceed.

   Phase III: Clinical trials are undertaken to further evaluate clinical
              efficacy of the product and to further test for its safety within
              an expanded patient population at geographically dispersed
              clinical study sites.

Two key factors influencing the rate of progression of clinical trials are the
rates at which patients are available to participate in the research programs
and whether the effective treatments are currently available for the disease the
drug is intended to treat.

The Company or the FDA may suspend clinical trials at any time if either
believes the clinical subjects are being exposed to unacceptable health risks.
The results of the product development, analytical laboratory studies and
clinical studies are submitted to the FDA as part of an NDA for approval of the
marketing and commercialization of the controlled release product.

If the approval being sought is for a new therapeutic area on a previously
clinically tested drug the approval process will require a new full clinical
trial regime, from preclinical to Phase III. However, if the approval being
sought is for a new indication within a therapeutic area on a drug that has been
through one or more stages of clinical trials, then it is possible, if the
indication is close enough to that of the original submission, that any clinical
data available on this drug might be used to avoid repetition of these trials.

The FDA may deny approval of an NDA if applicable regulatory criteria are not
satisfied or may require additional testing. Product approvals may be withdrawn

<PAGE>
Page 24

if compliance within regulatory standards is not maintained or if problems occur
after the product reaches the market. The FDA may require further testing and
surveillance programs to monitor the pharmaceutical product that has been
commercialized. Noncompliance with applicable requirements can result in fines
and other judicially imposed sanctions, including product seizures, injunction
actions and criminal prosecutions.

Canadian Regulation

The regulations concerning the sale of pharmaceutical products in Canada are
substantially similar to those of the United States described above.

The Company must submit an IND to the HPB prior to conducting clinical trials of
a new drug in Canada. This application includes information about the methods
of manufacture of the drug and controls, and preclinical laboratory and animal
toxicology tests on the safety and potential efficacy of the drug. If the HPB
does not notify the Company within 60 days of receiving the application that the
application is unsatisfactory, the Company may proceed with clinical trials of
the drug. The phases of clinical trials are the same as those described under
"United States Regulation" above.

The Company must submit a new drug submission ("NDS") to the HPB and receive a
notice of compliance from the HPB before selling a new drug in Canada. The NDS
includes information describing the new drug, including its proper name, the
proposed name under which the new drug will be sold, a quantitative list of
ingredients of the new drug, the methods of manufacturing, processing and
packaging of the new drug, the controls applicable to these operations, the
tests conducted to establish the safety of the new drug, the results of clinical
trials and the effectiveness of the new drug when used as intended. If the HPB
determines that the NDS meets the requirements of Canada's Food and Drugs Act
and Regulations, the HPB will issue a notice of compliance for the new drug.

The HPB may deny approval of an NDS if applicable regulatory criteria are not
satisfied, or the HPB may require additional testing of a product. Product
approvals may be withdrawn if compliance with regulatory standards is not
maintained or if problems occur after the product reaches the market. The HPB
may require further testing and surveillance programs to monitor the
pharmaceutical product which has been commercialized. Noncompliance with
applicable requirements can result in fines and other judicially imposed
sanctions, including product seizures and criminal prosecutions.

Additional Regulatory Considerations

In addition to the regulatory approval process, the Company is also subject to
regulations under provincial, state and federal law, including requirements
regarding occupational safety, laboratory practices, environmental protection
and hazardous substance control. Also, the Company may be subject to other
present and future local, provincial, state, federal and foreign regulations,
including possible future regulations of the biotechnology industry.

Certain provincial regulatory authorities in Canada have the ability to
determine whether the cost of a drug sold within its province will be reimbursed
by a provincial government health plan by listing drugs on formularies. These
provincial formularies may affect the prices and/or volume of drugs sold within
such provinces.

Proposals have recently been made that, if implemented, would significantly
change Canada's drug approval system. Basically, the recommendations emphasize
the need for efficiency in Canadian drug review. Proposals include the

<PAGE>
Page 25

establishment of a separate agency for drug regulation with a revised approval
system based on those found in European Community countries.  However, there is
no assurance that such changes will be implemented or will expedite the approval
of new drug products.

The Canadian government has regulations which prohibit the issuance of a notice
of compliance for a medicine, other than the first medicine marketed in Canada,
provided that the patent owner of the medicine has filed a list of its Canadian
patents covering that medicine with the HPB. After receiving such list, the HPB
may refuse to issue a notice of compliance permitting the importation or sale of
a patented medicine to persons other than a patent owner until patents on the
medicine expire or are declared invalid by a court of competent jurisdiction.

Regulation in Other Jurisdictions

The Company may decide to develop one or more of its compounds first in regions
outside of North America and Europe, depending upon clinical and commercial
factors. Currently, the Company has no plans in place for drug development
activities outside of these regions.

In addition to meeting the specific requirements of the country for which a drug
is first intended to be commercialized, the Company intends to meet and exceed
the North American regulatory guidelines for any of its drug development
programs that are not initially commenced in North America.

I.   Risk Factors
     ------------

The following provides a brief description of some of the risk factors which
should be considered in relation to the Company's business. It must be
recognized that there are three primary markets for pharmaceuticals: North
America, Europe and Japan/Asia, and the risk factors associated with the
Company's projects may vary according to the particular market being addressed.
Specific risk factors to be considered include, but are not limited to, those
listed below:

Early Stage of Development

All of the Company's products are in the research and/or development stage. At
present, the Company does not own or possess rights to a marketable product
except for MTCH-24 (see "Item 1 - Description of Business - Material Agreements
- Meditech Pharmaceuticals Inc."). There can be no assurance that any such
products will be fully developed and tested, and if fully developed and tested,
will perform in accordance with the Company's expectations. There is also no
assurance that necessary regulatory approvals or clearances will be obtained in
a timely manner, if at all, or that any of the Company's products can be
successfully and profitably developed, produced and marketed, including MTCH-24.
The research may fail or the compounds may not meet regulatory approval for
human use. Even if the Company's research programs are successful, development
of a marketable product will likely take several years.

There is no guarantee that the Company will make a satisfactory deal with a
major pharmaceutical company to conduct human clinical trials, to complete
product development, to obtain regulatory approval, or ultimately to market the
product.

Limited Revenues, History of Operating Loss and Accumulated Deficit

The Company has had no sales revenue to date. Although the Company has been
involved with pharmaceuticals since 1991, it has been engaged only in research
and development. The Company has incurred significant operating losses,
including net losses of $815,984 in Fiscal 1999, $201,671 in Fiscal 1998,

<PAGE>
Page 26

$262,744 in Fiscal 1997, $825,674 in Fiscal 1996, and $559,444 in Fiscal 1995.
At December 31, 1999, the Company had an accumulated deficit of $3,485,360.
Notwithstanding the Company's objective to accelerate the period in which a
return on investment would typically be recognized with traditional
biotechnology companies, for some projects it may be a number of years, if ever,
before the Company will receive any significant revenues from commercial sales
of products. The future growth and profitability of the Company will be
principally dependent upon its ability to successfully complete development of,
obtain regulatory approvals for, and market or license its proposed products.
Accordingly, the Company's prospects must be considered in light of the risks,
expenses and difficulties frequently encountered in connection with the
establishment of a new business in a highly competitive industry, characterized
by new product introductions. The Company anticipates that it will incur
substantial operating expenses in connection with the research, development,
testing and approval of its proposed products and expects these expenses to
result in continuing and significant losses until such time as the Company is
able to achieve adequate revenue levels. There can be no assurance that the
Company will be able to significantly increase revenues or achieve profitable
operations. Failure to obtain additional capital, if needed, would have a
material adverse effect on the Company's operations. See "Item 9 - Management's
Discussion and Analysis of Financial Condition and Results of Operations".

Uncertainties of Additional Funding Required

The Company has sufficient funds to undertake its currently planned research and
development activities through Fiscal 2000. However, the Company will require
substantial funds in order to conduct its future activities. The Company
intends to seek these funds through equity financing, collaborative arrangements
with corporate sponsors, or from other sources. The Company may also require
additional funds in order to acquire technology or products that complement the
Company's efforts. There can be no assurance that additional financing will be
available on acceptable terms, if at all. Additional equity financings could
result in significant dilution to existing shareholders. If sufficient capital
is not available, or is available but at a prohibitive cost, the Company may be
required to delay, reduce the scope of, eliminate or divest one or more of its
discovery, research or development programs, any of which could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Item 9 - Management's Discussion and Analysis of Financial
Condition and Results of Operations".

Security Interest Granted Over Property and Assets

The Company has issued the CroMedica Debenture to secure the repayment of the
principal amount of up to US$2,000,000 (approximately Cdn$2,907,000), of which
the principal amount of US$1,000,000 (approximately Cdn$1,453,500) is owing as
at April 30, 2000 (see "Item 1 - Description of Business - Material Agreements -
CroMedica Global Inc."). Repayment of this principal amount in instalments
commencing October 1, 2001 is secured by a security interest in all of its
property and assets, including the Company's intellectual property.

Agreements with Other Parties

The Company may, in the future, be unable to meet its share of costs incurred
under agreements to which it is a party and the Company may have its interests
in certain licenses, rights or products subject to such agreements reduced as a
result. Furthermore, if other parties to such agreements do not meet their
share of such costs, the Company may be unable to finance the costs required to
complete the recommended programs.



<PAGE>
Page 27


Patents, Permits and Licenses

The Company considers patent protection and proprietary technology to be
materially significant to its business. The Company relies on certain patents
and pending applications relating to various aspects of its potential products
and technology. These patents and patent applications are either owned by or
exclusively licensed to the Company. There can be no assurance that the Company
will be able to obtain and retain all necessary patents, licenses and permits
that may be required to carry out the research and development, manufacturing,
preclinical and clinical testing, obtaining regulatory approvals and marketing
of commercial products. There can also be no assurance that others will not
independently develop similar technologies, duplicate any technology developed
by the Company, the Company's technology will not infringe upon patents or other
rights owned by others, that any of the Company's patents will not be
challenged, invalidated or circumvented, or that the rights granted thereunder
will provide competitive advantages to the Company. Litigation, which could
result in substantial cost to the Company, may be necessary to enforce the
Company's rights provided by its patents or to determine the scope and validity
of others' proprietary rights.

There have been no patent infringement claims filed by or against the Company.

No Assurance of Protection of Proprietary Information

Certain of the Company's know-how and proprietary technology may not be
patentable. To protect its rights, the Company requires management personnel,
employees, consultants, advisors and collaborators to enter into confidentiality
agreements. There is no assurance, however, that these agreements will provide
meaningful protection for the Company's trade secrets, know-how or other
proprietary information in the event of any unauthorized use or disclosure.

No Assurance Regarding Licensing of Proprietary Technology Owned by Others

The manufacture and sale of any products developed by the Company will involve
the use of processes, products, or information, the rights to certain of which
are owned by others. Although the Company has obtained licenses or rights with
regard to the use of certain of such processes, products, and information, there
can be no assurance that such licenses or rights will not be terminated or
expire during critical periods, that the Company will be able to obtain licenses
or other rights which may be important to it, or, if obtained, that such
licenses will be obtained on favourable terms. Some of these licenses provide
for limited periods of exclusivity that may be extended only with the consent of
the licensor. There can be no assurance that extensions will be granted on any
or all such licenses. This same restriction may be contained in licenses
obtained in the future.

No Assurance of Regulatory Approval - Potential Delays

The preclinical testing and clinical trials of any products developed by the
Company or its collaborators and the manufacturing, labeling, sale,
distribution, export or import, marketing, advertising and promotion of any new
products resulting therefrom are subject to regulation by federal, state and
local governmental authorities in the United States, principally the FDA, and by
other similar agencies in other countries (see "Item 1 - Description of Business
- Government Regulation"). In order for a product developed by the Company or
its collaborators to be marketed and sold in a particular country, it must
receive all relevant regulatory approvals or clearances. The regulatory
process, which includes extensive preclinical studies and clinical trials of
each product in order to establish its safety and efficacy, is uncertain, can
take many years and requires the expenditures of substantial resources. Data

<PAGE>
Page 28

obtained from a preclinical trial and clinical activities are susceptible to
varying interpretations which could delay, limit or prevent regulatory approval
or clearance. In addition, delays or rejections may be encountered based upon
changes in regulatory policy during the period of product development and/or the
period of review of any application for regulatory approval or clearance for a
product. Delays in obtaining regulatory approvals or clearances would adversely
affect the marketing of any products developed by the Company or its
collaborators, impose significant additional costs on the Company and its
collaborators, diminish any competitive advantages that the Company or its
collaborators may attain and adversely affect the Company's ability to receive
royalties and generate revenues and profits. There can be no assurance that,
even after such time and expenditures, any required regulatory approvals or
clearances will be obtained for any products developed by or in collaboration
with the Company.

Any regulatory approval or clearances granted may entail limitations on the
indicated uses for which the new product may be marketed that could limit the
potential market for such product. In addition, product approvals or
clearances, once granted, may be withdrawn if problems occur after initial
marketing. Furthermore, manufacturers of approved products are subject to
pervasive review, including compliance with detailed regulation governing GMP
("Good Manufacturing Procedures"). Failure to comply with applicable regulatory
requirements can result in actions such as warning letters, fines, injunctions,
civil penalties, recall or seizure of products, total or partial suspension of
production and refusal of the government to renew marketing applications or
criminal prosecution.

The Company is also subject to numerous federal, state and local laws,
regulations and recommendations relating to safe working conditions, laboratory
and manufacturing practices, the experimental use of animals, the environment
and the use and disposal of hazardous substances, used in connection with the
Company's discovery, research and development activities. The Company is unable
to predict the extent of government regulations which might have an adverse
effect on the discovery, development, production and marketing of the Company's
products. Also, there can be no assurance that the Company will not be required
to incur significant costs to comply with current or future laws or regulations
or that the Company will not be adversely affected by the cost of such
compliance.

No Assurance of Successful Manufacturing

The Company has no experience manufacturing commercial quantities of products
and does not currently have the resources to manufacture any products that it
may develop. The Company presently has no plans for developing an in-house
marketing or manufacturing capability. Accordingly, the Company will be
dependent upon securing a contract manufacturer or other third party to
manufacture such products. There can be no assurance that the terms of any such
arrangement would be favorable enough to permit the products to compete
effectively in the marketplace. There are presently no such arrangements in
place.

Delays from Non-Compliance with Good Manufacturing Practices ("GMP")

The manufacture of the Company's pharmaceutical products will be subject to
current GMP or similar regulations prescribed by the FDA in the United States,
the HPB in Canada and similar authorities prior to the commercial manufacture of
any such products in the countries where the products are manufactured. There
can be no assurance that the Company or any entity manufacturing products on
behalf oft he Company will be able to comply with GMP or satisfy certain
regulatory inspections in connection with the manufacture of the Company's
proposed products. Failure or delay by any manufacturer of the Company's
products to comply with GMP or similar regulations or satisfy regulatory
inspections would have a material adverse effect on the Company.



<PAGE>
Page 29

Competition

The biotechnology industry is intensely competitive. Many companies, as well as
research organizations, currently engage in or have in the past engaged in
efforts related to the development of products in the same therapeutic areas as
the Company. Many of the competing companies have significantly greater
financial resources and expertise than the Company. Other smaller companies may
also prove to be significant competitors, particularly through collaborative
arrangements with large and established companies. Academic institutions,
government agencies and other public and private research organizations may also
conduct research, seek patent protection and establish collaborative
arrangements for discovery, research, clinical development and marketing of
products similar to those of the Company. There can be no assurance that
competitors will not develop more effective or more affordable products, or
achieve earlier patent protection or product commercialization than the Company
and its collaborators, or that such competitive products will not render the
Company's products obsolete.

With respect to the Company's Alzheimer disease project, Merck and Co. Inc. and
Searle & Co. Inc. may be direct competitors with the Company's drug candidates.
Other potential competitors include Aventis Pharma Inc. and Neotherapeutics Inc.
With respect to the Company's asthma project, potential competitors include
Novartis Inc., Genentech Inc., Texas Biotechnology Corporation, Inflazyme
Pharmaceuticals Inc., Leukosite Inc, and AVANIR Pharmaceuticals Inc. With
respect to the Company's AIDS project, it is unlikely that the Company's drug
candidate will directly compete with individual AIDS therapies; the Company's
drug candidate would likely be part of a combination regimen.

No Assurance of Market Acceptance

There can be no assurance that any products successfully developed by the
Company or its corporate collaborators, if approved for marketing, will ever
achieve market acceptance. The Company's products, if successfully developed,
may compete with a number of traditional drugs and therapies manufactured and
marketed by major pharmaceutical and biotechnology companies, as well as new
products currently under development by such companies and others. The degree
of market acceptance of any products developed by the Company or its corporate
collaborators will depend on a number of factors, including the establishment
and demonstration of the clinical efficacy and safety of the product candidates,
their potential advantage over alternative treatment methods and reimbursement
of policies of government and third party payors. There can be no assurance
that physicians, patients or the medical community in general will accept and
utilize any products that may be developed by the Company or its corporate
collaborators.

Dependence on and Management of Future Corporate Collaborations

The success of the Company's business strategy is largely dependent on its
ability to enter into collaborations and to effectively manage the relationships
that may come to exist as a result of this strategy. The Company is currently
seeking corporate collaborators, but there can be no assurance that such efforts
will lead to the establishment of any favourable collaboration.  There can be
no assurance that any of the Company's future or existing collaborators will
commit sufficient resources to the company's research and development programs
or the commercialization of its products. Also, there can be no assurance that
such collaborators will not pursue existing or other development-stage products
or alternative technologies in preference to those being developed in
collaboration with the Company, or that disputes will not arise with respect to
ownership of technology developed under any such collaborations. Management of
the Company's collaborative relationships will require significant time and
effort from the Company's management team and effective allocation of the
Company's resources.

<PAGE>
Page 30

Management of Growth

The Company's future growth, if any, may cause a significant strain on its
management, operational, financial and other resources. The Company's ability
to manage its growth effectively will require it to implement and improve its
operational, financial, manufacturing and management information systems and to
expand, train, manage and motivate its employees. These demands may require the
addition of new management personnel and the development of additional expertise
by management. Any increase in resources devoted to research, product
development and marketing and sales efforts without a corresponding increase in
the Company's operational, financial, manufacturing and management information
systems could have a material adverse effect on the Company's business,
financial condition, and results of operations.

Dependence Upon Key Personnel

The Company is dependent upon all members of its management team and the loss of
any of these employees could have an adverse effect on the Company to the extent
the Company is unable to hire a replacement in a timely manner. However, the
Company has implemented a continuous training program to expose its employees to
areas outside of their direct responsibility so as to minimize the disruption
encountered by the loss of any employee.  Competition among biotechnology and
biotechnology companies for qualified employees is intense, and the ability to
retain and attract qualified individuals is critical to the success of the
Company. In order to reduce its risk regarding key employees, the Company has
entered into an employment agreement with each of its key employees. The
Company is also dependent, to some extent, on the guidance of certain members of
its scientific advisory board, none of whom is obligated, or will devote his
full-time efforts, to the business of the Company. There can be no assurance
that the Company will be able to attract and retain such individuals currently
or in the future on acceptable terms, or at all. In addition, the Company does
not maintain "key person" life insurance on any officer, employee or consultant
of the Company except for Allen I. Bain, President and Chief Executive Officer.
The Company also has relationships with scientific collaborators at academic and
other institutions, some of whom conduct research at the Company's request or
assist the Company in formulating its research and development strategy. These
scientific collaborators are not employees of the Company and may have
commitments to, or consulting or advisory contracts with, other entities that
may limit their availability to the Company. In addition, these collaborators
may have arrangements with other companies to assist such other companies in
developing technologies that may prove competitive to those of the Company.

Conflicts of Interest

Certain officers and directors of the Company, namely Allen I. Bain, Robert J.
Gayton and Oh Kim Sun, also serve as officers and/or directors of other
           --
companies which engage in biotechnology/pharmaceutical research and development
activities. Although there are inherent conflicts arising from an officer or
director holding such positions with more than one company (such as in
determining the allocation of the individual's time and business opportunities
presented to the individual), there are presently no specific conflicts of
interest arising from the Company and such other companies having common
insiders. To the extent that such other companies may participate in ventures
in which the Company may participate, the directors of the Company would have a
conflict of interest in negotiating and concluding terms respecting the extent
of such participation. In the event that such a conflict of interest arises at
a meeting of the directors of the Company, a director who has such a conflict
will abstain from voting for or against the approval of the matter before the
meeting. In accordance with the laws of the Province of British Columbia, the
directors of the Company are required to act honestly, in good faith and in the
best interests of the Company. In determining whether the Company will
participate in a particular program, the directors will primarily consider the
potential benefits to the Company, the degree of risk to which the Company may

<PAGE>
Page 31

be exposed and its financial position at the time. Other than as indicated, the
Company has no other procedures or mechanisms to deal with conflicts of
interest.

Exposure from Product Liability Claims

The products the Company will attempt to develop will, in most cases, undergo
extensive clinical testing and will require FDA and HPB approval prior to sale
in the United States and Canada, respectively. However, despite all reasonable
efforts to ensure safety, it is possible that products which are defective or to
which patients react in an unexpected manner, or which are alleged to have side
effects, will be sold. The sale of such products may expose the Company to
potential liability resulting from the use of such products. Additionally, the
Company may be exposed to product liability claims in the development of the
products through administration of the drug candidates to volunteers and
patients in clinical trials. Such liability might result from claims made
directly by consumers or by pharmaceutical companies or others selling such
products. It is impossible to predict the scope of injury or liability from
such defects or unexpected reactions, or the impact on the market for such
products of any allegations of these claims (even if unsupported), or the
measure of damages which might be imposed as a result of any claims or the cost
of defending such claims. Although the Company's shareholders would not have
personal liability for such damages, the expenses of litigation in connection
with any such injuries or alleged injuries and the amount of any aware imposed
on the Company in excess of existing insurance coverage, if any, may have a
material adverse impact on the Company. In addition, any liability that the
Company may have as a result of the manufacture of any products could have a
material adverse effect on the Company's financial condition, business and
operations, to the extent insurance covering any such liability is not
available. It is the Company's policy to secure product liability coverage
prior to the commencement of each product's clinical trial. The Company is
presently in the process of acquiring product liability coverage for the
upcoming Alzheimer disease clinical trials. Currently, the Company has no other
product liability insurance. It is anticipated that insurance equivalent to
that customarily maintained by other entities in the Company's industry and of
its approximate size will be carried by the Company against such product
liability claims in the future. However, obtaining insurance of al kinds has
become increasingly most costly and difficult and there can be no assurance that
any such insurance will be available at all, available on commercial terms or,
if obtained, will be sufficient to satisfy asserted claims.

Currency Fluctuations

The Company reports its financial position and results of operations in Canadian
dollars in its annual financial statements. The Company's operations result in
exposure to foreign currency fluctuations and such fluctuations may materially
affect the Company's financial position and results of operations. The Company
does not currently take any steps to hedge against currency fluctuations.

Shares Reserved for Future Issuance

As at May 31, 2000, the Company had reserved 40,801,691 Shares for issuance upon
the exercise of stock options and other rights to purchase Shares. Such Shares
represent a potential dilution of approximately 134.6% based upon 30,312,465
Shares then outstanding. (See "Item 12 - Options to Purchase Securities From
Company".) The Company may in the future enter into commitments which would
require the issuance of additional Shares and may grant additional stock options
and/or issue share purchase warrants. The Company's share capital consists of
100,000,000 Shares. Issuance of such additional Shares is subject to Canadian
Venture Exchange approval and compliance with applicable securities legislation.


<PAGE>
Page 32

Dividends

To date, the Company has not declared or paid dividends on its Shares and does
not anticipate doing so in the foreseeable future. Investors will only realize
economic gain on their investments from appreciation in the price of the stock.

Volatility of Share Price

The market prices for the securities of biotechnology companies have
historically been highly volatile. The market has from time to time experienced
significant price and volume fluctuations that are unrelated to the operating
performance of any particular company. (See "Item 5 - Nature of Trading
Market".) Certain factors such as announcements by the Company, competition by
new therapeutic products or technological innovations, government regulations,
fluctuations in the operating results of the Company, results of clinical
trials, public concern on safety of drugs generally, general market conditions
and developments in patent and proprietary rights can have an adverse impact on
the market price of the Shares.

Forward Looking Statements

This Annual Report contains forward looking statements concerning the Company's
operations, economic performance and financial condition, including in
particular, the likelihood of the Company's success in operating as an
independent company and developing and expanding its business. These statements
are based upon a number of assumptions and estimates which are inherently
subject to significant uncertainties and contingencies, many of which are beyond
the control of the Company, and reflect future business decisions which are
subject to change. Some of these assumptions inevitably will not materialize,
and unanticipated events will occur which will affect the Company's future
results. All such forward looking statements are qualified by reference to
matters discussed under this section entitled "Risk Factors".

ITEM 2.   DESCRIPTION OF PROPERTY

The Company currently subleases 2000 square feet of office space for
administrative purposes in Vancouver, Canada. The sublease expires on May 31,
2001 unless extended by the Company for up to one year. The Company is required
to pay the amounts required to be paid under the head lease, the monthly total
of which is approximately $7,000.

ITEM 3.   LEGAL PROCEEDINGS

The Company is not a party to any material pending legal proceedings and is not
aware of any contemplated legal proceedings to which it may be a party.

ITEM 4.   CONTROL OF COMPANY

As far as known to the Company, the Company is not directly or indirectly owned
or controlled by another corporation or by any foreign government. The
following table sets forth certain information, as at May 31, 2000, concerning
(i) persons that are the registered owners of, or are known by the Company to
own beneficially, directly or indirectly, more than 10% of the outstanding
Shares and (ii) beneficial ownership of Shares by all directors and officers of
the Company, as a group:

<PAGE>
Page 33

================================================================================
 Identity of Holder           No. of Common Shares         Percentage of Class
================================================================================
    CDS & Co.(1)                  15,945,147                      52.6%
--------------------------------------------------------------------------------
    Allen Bain(2)                  4,562,355                      15.1%
--------------------------------------------------------------------------------
    Directors & Officers
    as a Group                     5,688,289                      18.8%
   (8 persons)(3)
================================================================================

(1)   The Company is unaware of the beneficial owner of these Shares.
(2)   Includes 4,315,555 Shares subject to escrow restrictions. See "Item 14
      - Description of Securities to be Registered - Escrow Shares".
(3)   Includes 4,682,222 Shares subject to escrow restrictions. See "Item 14
      - Description of Securities to be Registered - Escrow Shares".

ITEM 5.   NATURE OF TRADING MARKET

The Shares are traded in Canada on the Canadian Venture Exchange and trade under
the symbol "IMM". The following table sets out for each of the periods
indicated the market price range and the trading volume on the Canadian Venture
Exchange (or its predecessor, the Vancouver Stock Exchange, if prior to November
29, 1999) of the Shares for each quarterly period since January 1, 1998:

================================================================================
                                                High   Low            Volume
  Year     Quarterly Summary                    ($)    ($)       (Common Shares)
--------------------------------------------------------------------------------
  2000     First Quarter                        3.70   0.17        56,167,525
  1999     Fourth Quarter                       0.20   0.13         1,223,446
           Third Quarter                        0.26   0.13         2,080,784
           Second Quarter                       0.33   0.09         6,412,305
           First Quarter                        0.19   0.08         2,230,648
  1998     Fourth Quarter                       0.24   0.11         3,684,844
           Third Quarter                        0.25   0.09         1,964,582
           Second Quarter                       0.34   0.04         8,593,540
           First Quarter                        0.04   0.02           445,167
================================================================================

The closing price of the Shares on the Canadian Venture Exchange on Friday,
April 28, 2000 was $1.05.

There is no active trading market for the Shares in the United States, although
United States residents may purchase Shares. The following table indicates the
approximate number of record holders of Shares at April 30, 2000, the number of
record holders of Shares with United States addresses and the portion and
percentage of Shares so held in the United States. On such date, 30,223,965
Shares were outstanding.

================================================================================
 Total Number       Number of            Shares Held               Percentage
 of Holders         U.S. Holders          in the U.S.               of Shares
--------------------------------------------------------------------------------
    133                  61                1,645,121                  5.44%
================================================================================

Depositories, brokerage firms and financial institutions hold Shares in "street
names". Based upon enquiries made by the Company, management of the Company
estimates that the total number of Shares beneficially owned by U.S. persons is
approximately 2,114,162 representing approximately 6.99% of the Company's issued
and outstanding Shares.

<PAGE>
Page 34


The Company is not aware of the distribution of any warrants to U.S. residents.
United States residents may beneficially own Shares or warrants held of record
by non-United States residents.

ITEM 6.   EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS

There is no law or governmental decree or regulation in Canada that restricts
the export or import of capital, or affects the remittance of dividends,
interest or other payments to a non-resident holder of Shares, other than
withholding tax requirements. See "Item 7 - Taxation".

There is no limitation imposed by Canadian law or by the constituent documents
of the Company on the right of a non-resident to hold or vote Shares (the
"Voting Shares"), other than are provided in the Investment Canada Act (Canada)
(the "Investment Act"), as amended by the World Trade Organization Agreement
Implementation Act (the "WTOA Act"). The Investment Act generally prohibits
implementation of a reviewable investment by an individual, government, or
agency thereof, corporation, partnership, trust or joint venture that is not a
"Canadian", as defined in the Investment Act (a "non-Canadian"), unless, after
review, the minister responsible for the Investment Act is satisfied that the
investment is likely to be of net benefit to Canada. An investment in the
Voting Shares of the Company by a non-Canadian (other than a "WTO Investor", as
defined below) would be reviewable under the Investment Act if it were an
investment to acquire control of the Company and the company was not,
immediately prior to the implementation of the investment, controlled by a WTO
investor, and the value of the assets of the Company were $5.0 million or more.
An investment in Voting shares of the Company by a WTO investor would be
reviewable under the Investment Act if it were an investment to acquire direct
control of the company, and the value of the assets of the Company equaled or
exceeded $184 million (threshold amount for 1999). A non-Canadian, whether a
WTO Investor or otherwise, would acquire control of the Company for purposes of
the Investment Act if he or she acquired a majority of the Voting Shares of the
Company. The acquisition of less than a majority, but at least one-third of the
Voting Shares of the Company, would be presumed to be an acquisition of control
of the Company unless it could be established that the Company was not
controlled in fact by the acquirer through the ownership of the Voting Shares.
In general, an individual is a WTO Investor if he or she is a "national" of a
country (other than Canada) that is a member of the World Trade Organization
("WTO Member") or has a right of permanent residence in a WTO Member other than
Canada. A corporation or other entity will be a WTO Investor if it is a "WTO
Investor-controlled entity" pursuant to detailed rules set out in the Investment
Act. The United States is a WTO Member.

Certain transactions involving Voting Shares of the Company would be exempt from
the Investment Act, including:

   (a)  an acquisition of Voting Shares of the Company if the acquisition were
        made in connection with the person's business as a trader or dealer in
        securities;
   (b)  an acquisition or control of the Company in connection with the
        realization of a security interest granted for a loan or other
        financial assistance and not for the purpose related to the provisions
        of the Investment Act; and
   (c)  an acquisition of control of the Company by reason of an amalgamation,
        merger, consolidation or corporate reorganization, following which the
        ultimate direct or indirect control in fact of the Company, through the
        ownership of voting interests, remains unchanged.



<PAGE>
Page 35

ITEM 7.   TAXATION

A brief description of certain provisions of the tax treaty between Canada and
the United States is included below, together with a brief outline of income
taxes, including withholding provisions to which United States security holders
who are non-residents of Canada are subject under existing laws and regulations
of Canada and the United States; the consequences, if any, of state and local
taxes are not considered. Security holders should seek the advice of their own
tax advisors, tax counsel or accountants with respect to the applicability or
effect on their own taxes. The Company has not paid dividends on the Shares in
any of its last five fiscal years, and has no plans to pay dividends in the
immediate future. For additional particulars, see "Item 8 - Selected Financial
Data - Dividend Policy".

Canadian federal tax legislation would require a 25% withholding from any
dividends paid or deemed to be paid to the Company's non-resident shareholders.
However, a company resident in the United States that beneficially owns at least
10% of the voting stock of the Company would have this rate reduced to 5%
through the tax treaty between Canada and the United States. The rate of
Canadian non-resident withholding may not exceed 15% of the dividend in the case
of United States shareholders other than as described above. The amount of
stock dividends paid to non-residents of Canada would be subject to withholding
tax at the same rate as cash dividends. The amount of a stock dividend (for tax
purposes) would be equal to the amount by which the stated capital of the
Company had increased by reason of the payment of such a dividend. Interest
paid or deemed to be paid on the Company's debt securities held by non-Canadian
residents may also be subject to Canadian withholding tax, depending upon the
terms and provisions of such securities and any applicable tax treaty.

A non-resident holder is not subject to tax in Canada in respect of a capital
gain realized upon the disposition of a Share unless the Share represents
"taxable Canadian property" to the holder thereof. The Shares will be
considered taxable Canadian property to a non-resident holder only if:

(a)  the non-resident holder;
(b)  persons with whom the non-resident holder did not deal at arm's length; or
(c)  the non-resident holder and persons with whom he did not deal at arm's
     length,

owned not less than 25% of the issued shares of any class or series of the
Company at any time during the five year period preceding the disposition. In
the case of a non-resident holder to whom Shares represent taxable Canadian
property and who is resident in the United States, no Canadian taxes will
generally be payable on a capital gain realized on such Shares by reason of the
Treaty unless:

(a)  the value of such Shares is derived principally from real property
     (including resource property) situated in Canada,
(b)  they formed part of the business property or were otherwise effectively
     connected with a permanent establishment or fixed base that the holder has
     or had in Canada within the 12 months preceding the disposition; or
(c)  the holder is a U.S. LLC which is not subject to tax in the U.S.

If subject to Canadian tax on such a disposition, the taxpayer's capital gain
(or capital loss) from a disposition is the amount by which the taxpayer's
proceeds of distribution exceed (or are exceeded by) the aggregate of the
taxpayer's adjusted cost base of the shares and reasonable expenses of
disposition. For Canadian income tax purposes, the "taxable capital gain" is
equal to three quarters of the capital gain.

<PAGE>
Page 36

This discussion is not intended to be, nor should it be construed to be, legal
or tax advice to any holder or prospective holder of Shares and no opinion or
representation with respect to the United Sates federal income tax consequences
to any such holder or prospective holder is made. Holders and prospective
holders are urged to consult their own tax advisors with respect to their
particular circumstances.

ITEM 8.   SELECTED FINANCIAL DATA

The Company has a limited history of operations and has not generated any
operating revenues. The following table sets forth selected financial data for
the Company which has been derived from the audited financial statements of the
Company. The selected financial data provided below are not necessarily
indicative of the future results of operations or financial performance of the
Company. This information should be read in conjunction with the Company's
Financial Statements and "Item 9 - Management's Discussion and Analysis of
Financial Condition and Results of Operations" herein for a discussion of those
factors affecting comparability of the data in the following table.

The following financial data is expressed in Canadian dollars as used in the
Company's financial statements. The exchange rate for conversion to US dollars
is detailed in "Currency Exchange Rates".

<PAGE>
Page 37

--------------------------------------------------------------------------------
                               SELECTED FINANCIAL DATA
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                  Fiscal Year Ended December 31
                               1999           1998            1997           1996           1995
--------------------------------------------------------------------------------------------------------------
<S>                          <C>            <C>            <C>            <C>            <C>
OPERATING DATA:

REVENUE
Interest income              $   14,036     $      912     $    1,387     $  18,016      $       -
                              ---------      ---------       --------     ---------       ----------
                                 14,036            912          1,387        18,016              -
--------------------------------------------------------------------------------------------------------------
EXPENSES
General and Administrative
  and Interest                  368,974        166,855        147,618        475,276        286,233
Research and Development        420,195         20,260         61,772        328,990        350,956
Amortization                     40,851         10,795         15,776         19,744         19,255
                              ---------      ---------       --------      ---------      ----------
                                830,020        197,910        225,166        824,010        656,444
--------------------------------------------------------------------------------------------------------------

LOSS BEFORE UNDERNOTED ITEMS    815,984        196,998        223,779        805,994        656,444
Loss (gain) on disposition
 of capital assets                 -             4,673           -              -              -
Loss on disposition of
 intellectual properties           -              -            38,965           -              -
Write-down of intellectual         -              -              -            60,180           -
 properties
Refundable Investment
 Tax Credit                        -              -              -           (40,500)       (97,000)

NET LOSS                        815,984        201,671        262,744        825,674        559,444

DEFICIT, BEGINNING            2,669,376      2,467,705      2,204,961      1,359,357        799,913
--------------------------------------------------------------------------------------------------------------
NET MONETARY LIABILITIES
 ACQUIRED                          -              -              -            19,930(1)        -
--------------------------------------------------------------------------------------------------------------
DEFICIT, ENDING              $3,485,360     $2,669,376     $2,467,705     $2,204,961     $1,359,357
---------------------------===================================================================================
Net Loss per
Common Share                 $    0.034     $    0.010     $    0.013     $    0.048     $    0.053
---------------------------===================================================================================
Weighted Average
Number of
Outstanding Shares           24,253,222     20,137,118     19,970,452     17,360,000     10,522,000
---------------------------===================================================================================
BALANCE SHEET DATA:
Current Assets               $  218,545     $   78,606     $   10,586     $  244,865     $  355,905
Capital Assets                   76,805           -            12,988         16,566         17,025
Investment and other             29,896           -             -              -             55,506
Intellectual properties         327,121        147,462       143,609         204,074        253,606
Loan Receivable                  32,213           -             -               -              -

LIABILITIES                  $  353,575     $  137,654     $  32,098      $   67,676     $  775,785

SHARE CAPITAL                $3,816,365     $2,712,790     $2,602,790     $2,602,790     $1,265,614

SHARES TO BE ISSUED          $     -        $   45,000     $     -        $     -        $     -

DEFICIT                      $3,485,360     $2,669,376     $2,467,705     $2,204,961     $1,359,357
--------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>
Page 38

--------------------------------------------------------------------------------
                               SELECTED FINANCIAL DATA
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                  Fiscal Year Ended December 31
                               1999           1998            1997           1996           1995
--------------------------------------------------------------------------------------------------------------
<S>                          <C>            <C>            <C>            <C>            <C>
OPERATING DATA:

Loss - Canadian GAAP         $  815,984     $  201,671     $  262,744     $  825,674     $  559,444
Add stock-based
  compensation                  137,740        162,000           -           121,722           -
Add reverse acquisition
  costs                            -              -              -           155,875
                           -----------------------------------------------------------------------------------
Loss - U.S. GAAP             $  953,764     $  363,671     $  262,744     $1,103,271     $  559,444
                           -----------------------------------------------------------------------------------
DEFICIT
Beginning, U.S. GAAP          3,108,973      2,745,302      2,482,558      1,379,287(1)     799,913
                           -----------------------------------------------------------------------------------
Ending, U.S. GAAP             4,062,697      3,108,973      2,745,302      2,482,558      1,359,357
                           ===================================================================================
Loss per Share, U.S. GAAP    $     0.05     $     0.02     $    0.02      $     0.09     $     0.07
                           ===================================================================================
Weighted Average Number
 of Outstanding Shares       18,686,555     14,570,451     14,403,785     11,943,333      7,522,000
                           ===================================================================================
BALANCE SHEET DATA:
Share Capital
Canadian GAAP                 3,816,365      2,712,790      2,602,790      2,602,790      1,265,614
U.S. GAAP                     4,388,800      3,147,485      2,875,485      2,875,485      1,265,614

DEFICIT, ENDING
Canadian GAAP                 3,485,360      2,669,376      2,467,705      2,204,961      1,359,357
U.S. GAAP                     4,062,697      3,108,973      2,745,302      2,482,558      1,359,357
=============================================================================================================
</TABLE>

    (1)   On April 24, 1996, BCFC, a public company, and Immune Network
          amalgamated and continued as the Company. Pursuant to the
          Amalgamation, the former shareholders of BCFC received 4,263,309
          Shares on a 2 new for 3 old basis of the amalgamated company and the
          former shareholders of Immune Network received 12,731,319 Shares on a
          4 new for 3 old basis of the amalgamated company. As a result, the
          shareholders of Immune Network owned more than 50% of the amalgamated
          company. This business combination is considered a reverse acquisition
          of BCFC by Immune Network and a recapitalization of Immune Network.
          Accordingly, the prior year financial figures presented in the
          Financial Statements reflect the accounts of Immune Network at their
          historical carrying amounts
    (2)   Beginning deficit in 1996 was adjusted for net monetary liabilities
          acquired of $19,930. Detail is provided in Note 1 to the Financial
          Statements.

Under accounting principles generally accepted in the United States ("U.S.
GAAP"), stock based compensation to non-employees must be recorded at the fair
market value of the options granted. This compensation, determined using a
black-Scholes pricing model, is expenses over the vesting periods of each option
grant. For the purposes of reconciliation to U.S. GAAP, the Company would
record additional compensation expense of $137,740 in the year ended December
31, 1999, $162,000 in 1998 and $121,722 in 1996, in respect of options granted
to non-employees.

U.S. GAAP also requires escrow shares to be treated as contingent shares and as
such they are not included as outstanding shares for the purpose of calculating
basic earnings per share, but are included in the calculation of diluted
earnings per share if dilutive. When released from escrow, the fair market
value of these shares will be recognized as compensatory benefit and will be
charged to income.

<PAGE>
Page 39

Under U.S. GAAP, costs incurred in connection with the reverse acquisition in
1996 totaling $155,875, net of cash received from the acquisition of $15,028,
must be charged to expense.

As at December 31, 1999 there were 5,566,667 Shares held in escrow pursuant to
the terms of an escrow agreement dated December 7, 1995 among the Company,
Montreal Trust Company of Canada, as escrow agent, and the holders of the
Shares. The Shares may be released from escrow on a pro rata basis in
accordance with a prescribed formula based upon cumulative cash flow. No escrow
Shares have been released to date. Reference should be made to "Item 14 -
Description of Shares to be Registered".

To date, the Company has not paid any dividends on the Shares and it does not
expect to pay dividends in the foreseeable future.

The financial statements have been prepared in accordance with accounting
principles generally accepted in Canada ("Canadian GAAP"). These principles, as
applied to the Company, conform in all material respects to U.S. GAAP, except as
disclosed in Note 13 to the Financial Statements. For a comparison of these
differences between Canadian GAAP and U.S. GAAP, see Note 13 to the Financial
Statements.

ITEM 9.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

General
-------

The following discussion and analysis should be read in conjunction with the
Financial Statements and related notes. The Financial Statements are prepared
in accordance with Canadian generally accepted accounting principles. A
discussion of differences between Canadian and United States generally accepted
accounting principles is provided in Note 13 to the Financial Statements.

Since incorporation of Immune Network as a biotechnology company, the Company
has devoted its fiscal resources primarily to fund its research and development
programs. The Company's business remains at an early stage of development and
has been unprofitable. The Company expects to incur additional losses for the
next several years as it invests in product research and development,
preclinical studies and clinical trials, and regulatory compliance. The
Company's business is subject to significant risks, including uncertainties
associated with the regulatory approval process and with obtaining and enforcing
patents. See "Item 1 - Description of Business - Risk Factors".

Subsequent to December 31, 1999, the Company completed a non-brokered private
placement raising net proceeds of $318,000 and completed a brokered private
placement of special warrants raising net proceeds of $7,791,911, after
deducting the expenses of the offering of $708,088 incurred to date (see
"Description of Business - Business of the Company" and "Options to Purchase
Securities from the Company"). Subsequent to December 31, 1999 and up to May
31, 2000, the Company received $483,385 from the exercise of stock options.  In
June 2000, a shareholder of the Company exercised its right to convert its loan
to the Company in the principal amount of $50,000 into 200,000 Shares, at a
conversion price of $0.25 per Share.

Liquidity and Capital Resources
-------------------------------

The Company has financed its operations primarily through equity financings,
government grants and tax credits. From January 1, 1994 to December 31, 1999,
the Company received approximately $3,816,365 in net proceeds from the sale of
equity securities. Working capital at December 31, 1999 was a deficit of

<PAGE>
Page 40

$85,030 (1998: deficit of $9,048). At December 31, 1999, the Company had
$167,058 in cash and cash equivalents and short-term investments (1998:
$76,992).

The Company has material financial commitments under the Bridge Pharma Agreement
and Bridge Pharma Addendum, and the CroMedica Agreement (see "Item 1 -
Description of Business - Material Agreements - Bridge Pharma, Inc." and "Item 1
- Description of Business - Material Agreements - CroMedica Global Inc."). The
Company is still negotiating the terms of the license agreement with the
University of British Columbia (see "Item 1 - Description of Business - Material
Agreements - University of British Columbia"), and does not expect the license
fee and other amounts to be payable under the proposed agreement to be material.

The Company does not anticipate revenues from product sales for the foreseeable
future. Over the next several years, through preclinical development and the
early clinical stages of development, the Company expects to derive its sources
of funding primarily from equity financing. Additional funding may be obtained
through interest income. The long term sustainability of the Company is
expected to be achieved through collaborative and licensing arrangements and the
creation, development and ultimate disposition of intellectual property.
Although no such arrangements have yet been negotiated, it is likely that all or
a portion of the payments that may be received under such agreements will be
conditional upon the Company reaching developmental milestones. As much as
possible, the disposition of intellectual property is intended to be carried out
so as to ensure an appropriate balance between future earnings potential and
current liquidity.

Year Ended December 31, 1999

In February 1999, the Company completed a non-brokered private placement of
360,000 units at $0.15 per unit, each unit consisting of one Share and one share
purchase warrant exercisable for one year to purchase one additional Share at
$0.15. In July 1999 the Company completed two non-brokered private placements
raising gross proceeds of $942,977. In connection with these private
placements, a total of 6,286,513 share purchase warrants were issued, each
warrant exercisable to purchase one Share at $0.15 in the first year and $0.18
in the second year. During the period the Company also raised $116,175 from the
exercise of options ($93,750) and warrants ($22,425).

There were no material commitments for capital expenditures as at December 31,
1999.

Year Ended December 31, 1998

During Fiscal 1998, the Company completed a private placement of 400,000 units
for total proceeds of approximately $80,000. Each unit consisted of one Share
and one share purchase warrant exercisable for one year to purchase one Share at
$0.20. At December 31, 1998, the Company had a working capital deficit of
approximately $48. During the year the Company disposed of all of its capital
assets consisting of laboratory and office equipment to a private company. The
Company determined that its assets were no longer necessary in view of its
contract with ImmPheron under which ImmPheron was required to conduct
preclinical trials. The Company recognized a loss on the disposition of $4,673.
There was no material commitments for capital expenditures as at December 31,
1998.

Year Ended December 31, 1997

There were no share capital transactions during Fiscal 1997.

<PAGE>
Page 41

Results of Operations
---------------------

Year Ended December 31, 1999

Beginning June 1999 the Company resumed research activities for Antibody 1F7
which included the completion of viral load testing on blood samples from
previous studies and the compilation of existing data in preparation for
regulatory review. During 1998 research activities had been scaled down due to
a lack of funding and staff to carry out research.

During the second-half of Fiscal 1999, the Company exercised its option to
license the Alzheimer's drug candidates (see "Item 1 - Description of Business -
Material Agreements - University of British Columbia") and entered into a joint
venture agreement regarding the development of a new asthma therapeutic (see
"Item 1 - Description of Business - Material Agreements - Bridge Pharma, Inc.").
The Company carried out research in the form of due diligence on these
technologies and also began preparations for clinical testing of the Alzheimer's
disease project (AD2).

Research and development expenses, net of grant, were $420,195 in Fiscal 1999,
an increase of $399,935 from Fiscal 1998. The increased amount, which was due
to the costs associated with the research program of the AIDS 1F7 Antibody, the
Alzheimer disease project and the Asthma project, was comprised of an increase
in consulting fees ($32,167), salaries and benefits ($121,675 net of grant of
$12,704), contract research and collaboration ($51,323), laboratory, office and
sundry ($189,972) and travel ($4,798). General and administration costs were
$368,974 in Fiscal 1999, an increase of $202,119 from Fiscal 1998. The increase
in general and administrative expenses was primarily due to an increase in
administrative staff and office space, and costs associated with financing and
preparation of the Company's Registration Statement on Form 20-F filed with the
Securities and Exchange Commission on October 29, 1999. Significant increases
in general and administrative expenses include consulting ($24,229), legal,
audit and accounting ($94,247), office supplies ($25,620), salaries and benefits
($74,510), securities, brokerage and transfer agent fees ($17,846). Advertising
expense decreased by $35,249 as the Company increased its advertising
expenditures in Fiscal 1998 in an effort to raise capital to fund further
operations.

Year Ended December 31, 1998

During Fiscal 1998, the Company reported a net loss of $201,671 ($0.010 per
Share) as compared to $262,744 ($0.013 per Share) during Fiscal 1997. During
Fiscal 1998, the Company expended $20,260 in its research activities as compared
to $61,772 during Fiscal 1997. The decrease in research expenditures in 1998
was attributable to the research agreement between the Company and ImmPheron,
Inc. during the fourth quarter of 1997 wherein ImmPheron Inc. was required to
fund US$81,000 towards a live animal trial of the Antibody 1F7 program in 1998
in order to earn its 50% interest. For Fiscal 1998, the Company expended
$166,855 in its administrative activities as compared to $147,618 during Fiscal
1997. Advertising expense increased by $31,076 as the Company increased its
advertising expenditures in 1998 in an effort to raise capital to fund further
operations. The Company entered into an investor relations contract with an
arm's length party in August 1998 at a fee of $4,000 per month. The contract
was terminated in December of 1998 due to reduced cash flow. In addition, the
Company took out several advertisements in an attempt to raise capital. Legal
fees decreased by $26,424 (from $28,243 to $1,819) and accounting fees decreased
by $4,265 (from $20,044 to $15,779), as considerable fees were incurred in 1997
as related to a proposed asset sale. During the year, the Company disposed of
all of its capital assets consisting of laboratory and office equipment to a
private company. The Company determined that its assets were no longer
necessary in view of its contract with ImmPheron Inc. The Company recognized a
loss on the disposition of $4,673.

<PAGE>
Page 42

Year Ended December 31, 1997

During Fiscal 1997, the Company reported a net loss of $262,744 ($0.013 per
Share) as compared to $825,674 ($0.048 per Share) during Fiscal 1996. Included
in the net loss figure for Fiscal 1997 was a $38,965 loss arising upon the
finalization of a sale to a minority shareholder of technologies, comprised of a
patent and two patent applications, no longer being pursued by the Company (see
discussion under "Year Ended December 31, 1996"). During Fiscal 1997, the
Company expended $147,618 on administrative expenses as compared to $475,276
during Fiscal 1996. The significant decrease in administration expenses was
attributable to costs associated with the amalgamation in Fiscal 1996 of Immune
Network and BCFC and scaled back its expenditures in 1997 due to cash flow
considerations.

Advertising expense decreased by $20,196, and of the $24,369 incurred for
advertising in 1996, approximately $16,500 was paid to an arm's length party for
public relations in connection with an AIDS conference held in Vancouver. The
balance was paid pursuant to an investor relations contract. Legal fees
increased by $11,171 (from $17,072 to $28,243) relating largely to a proposed
sale of assets of the Company which was ultimately abandoned in 1997.
Accounting fees decreased by $18,320 (from $38,364 to $20,044). The 1996
accounting fees represent higher audit fees associated with the Company's
amalgamation.

During Fiscal 1997, the Company expended $61,772 in its research activities as
compared to $328,990 during Fiscal 1996. This decrease of $267,218 in research
and development expenditures can be primarily attributed to the decrease in
scientific collaboration ($83,310), research salaries and benefits ($88,883) and
consulting fees ($69,113).

ITEM 9A.   MARKET RISK

Interest Rate Risk

In June 2000, a shareholder of the Company exercised its right to convert its
loan to the Company in the principal amount of $50,000 into 200,000 Shares, at a
conversion price of $0.25 per Share. The Company was subject to interest rate
risk on the $50,000 shareholder loan, which carried a fixed annual rate of 12%.

Foreign Currency Risk

The Company reports its financial position and results of operations in Canadian
dollars in its annual financial statements. The Company's operations result in
exposure to foreign currency fluctuations and such fluctuations may materially
affect the Company's financial position and results of operations. The Company
does not currently take any steps to hedge against currency fluctuations.

ITEM 10.   DIRECTORS AND OFFICERS OF THE COMPANY

The directors and executive officers of the Company, the positions held by them
and the period during which they have served as a director or executive officer
are as follows:

================================================================================
     Name                Position                                 Period Served
--------------------------------------------------------------------------------
Allen I. BainAC      President, Chief Executive               Since May 14, 1999
                     Officer and Director
--------------------------------------------------------------------------------
Robert J. GaytonAC   Director                                 Since May 31, 1994
--------------------------------------------------------------------------------

<PAGE>
Page 43

================================================================================
     Name                Position                                 Period Served
--------------------------------------------------------------------------------
Oh Kim Sun           Director                             Since January 25, 2000
--
--------------------------------------------------------------------------------
Donald R. RixAC      Director                                Since June 24, 1996
--------------------------------------------------------------------------------
Ronald G. Paton      Corporate Secretary                     Since June 10, 1999
--------------------------------------------------------------------------------
Ron Kertesz          Commercial Director(1)                  Since June 29, 1999
--------------------------------------------------------------------------------
Danny Lowe           Controller                              Since June 29, 1999
--------------------------------------------------------------------------------
Mario Kasapi         Manager of Business Development    Since September 15, 1999
================================================================================

(AC)   Member of the audit committee of the Company.
(1)    Executive officer position (not a director of the Company).

Each director's term of office expires at the Company's next annual general
meeting. The term of office for the Company's executive officers and members of
the audit committee expires at its next annual general meeting. The board of
directors appoints the Company's executive officers and the audit committee for
the ensuing year following each annual general meeting.

ITEM 11.   COMPENSATION OF DIRECTORS AND OFFICERS

The aggregate amount of compensation paid by the Company during Fiscal 1999 to
all officers and directors, as a group, for services in all capacities was
$156,422.

None of the Company's directors and officers have received any manner of
compensation for services provided in their capacity as directors or officers
during the Company's most recently completed financial year with the exception
of stock options granted to certain directors and officers of the Company (see
"Item 12 - Options to Purchase Securities from the Company").

ITEM 12.   OPTIONS TO PURCHASE SECURITIES FROM THE COMPANY

Incentive Stock Options

As at May 31, 2000, the Company had outstanding incentive stock options pursuant
to which an aggregate of 2,457,000 Shares may be purchased from the Company as
follows:

--------------------------------------------------------------------------------
  Optionees          Exercise Price        Expiry Date       Shares Under Option
                         ($)
--------------------------------------------------------------------------------
Gunnar Aberg             $0.40           January 24, 2005            200,000
--------------------------------------------------------------------------------
Rupinder Bagri           $0.40           January 24, 2005            20,000
                         $1.20           April 19, 2005              15,000
--------------------------------------------------------------------------------
Allen Bain               $0.40           January 24, 2005           100,000
                         $0.15           May 21, 2004               120,000
                         $1.20           April 19, 2005             380,000
--------------------------------------------------------------------------------
Brian Conway             $1.20           April 19, 2005              20,000
--------------------------------------------------------------------------------

<PAGE>
Page 44

--------------------------------------------------------------------------------
  Optionees          Exercise Price        Expiry Date       Shares Under Option
                         ($)
--------------------------------------------------------------------------------
Doug Gavinchuk           $1.20           April 19, 2005              30,000
--------------------------------------------------------------------------------
Robert Gayton            $0.40           January 24, 2005            50,000
                         $1.20           April 19, 2005              50,000
--------------------------------------------------------------------------------
Michael D. Grant         $0.15           May 19, 2003                50,000
--------------------------------------------------------------------------------
Nigel Horsely            $1.20           April 19, 2005              30,000
--------------------------------------------------------------------------------
Mario Kasapi             $0.40           January 24, 2005            91,500
                         $1.20           April 19, 2005              50,000
--------------------------------------------------------------------------------
Ron Kertesz              $0.40           January 24, 2005           100,000
                         $0.23           July 25, 2004              160,000
--------------------------------------------------------------------------------
Heinz Kohler             $1.20           April 19, 2005              20,000
--------------------------------------------------------------------------------
Danny Lowe               $1.20           April 19, 2005             150,000
--------------------------------------------------------------------------------
Robert Mastico           $1.20           April 19, 2005              50,000
--------------------------------------------------------------------------------
Barry Osborne            $1.20           April 19, 2005              20,000
--------------------------------------------------------------------------------
Clive Page               $0.23           June 9, 2004                80,500
--------------------------------------------------------------------------------
James Pasieka            $1.20           April 19, 2005              50,000
--------------------------------------------------------------------------------
Ronald G. Paton          $0.40           January 24, 2005           100,000
                         $1.20           April 19, 2005             100,000
--------------------------------------------------------------------------------
Greg Polyakov            $1.20           April 19, 2005              20,000
--------------------------------------------------------------------------------
Ping Quin                $0.23           July 25, 2004               20,000
--------------------------------------------------------------------------------
Donald Rix               $1.20           April 19, 2005              50,000
--------------------------------------------------------------------------------
Steve Sacks              $1.20           April 19, 2005              20,000
--------------------------------------------------------------------------------
Matt Sadler              $0.23           July 25, 2004               25,000
                         $1.20           April 19, 2005              15,000
--------------------------------------------------------------------------------
Pasquale Sasso           $1.20           April 19, 2005              30,000
--------------------------------------------------------------------------------
Talieh Shakrokhi         $0.40           January 24, 2005            15,000
                         $0.23           July 25, 2004               25,000
                         $1.20           April 19, 2005              10,000
--------------------------------------------------------------------------------
Oh Kim Sun               $0.40           January 24, 2005           100,000
--------------------------------------------------------------------------------
Michael Walker           $1.20           April 19, 2005              25,000
--------------------------------------------------------------------------------
Michelle Wong            $0.40           January 24, 2005            20,000
--------------------------------------------------------------------------------

<PAGE>
Page 46

--------------------------------------------------------------------------------
  Optionees          Exercise Price        Expiry Date       Shares Under Option
                         ($)
--------------------------------------------------------------------------------
Stephanie Yip            $0.40           January 24, 2005            25,000
                         $1.20           April 19, 2005               5,000
--------------------------------------------------------------------------------
Alexander Zolotoy        $0.40           January 24, 2005            15,000
--------------------------------------------------------------------------------

A total of 1,601,500 stock options are held by directors and executive officers
of the Company.

All of the stock options are non-transferable and terminate on the earlier of
the expiry date or the 30th day following the day on which the optionee ceases
to be eligible to hold stock options pursuant to the applicable Canadian Venture
Exchange policy.

Share Purchase Warrants

As at May 31, 2000, share purchase warrants were outstanding entitling the
holders to purchase a total of 6,286,513 Shares as follows:

     ======================================================================
       Number of Warrants       Exercise Price            Expiry Date
     ======================================================================
        6,286,513(1)             $0.15 1st year           July 13, 2000
                                 $0.18 2nd year           July 13, 2001
     ======================================================================

(1)   A total of 76,500 share purchase warrants are held by directors and
      executive officers of the Company.

Special Warrants

As at May 31, 2000, the Company has reserved 17,574,544 Shares for issuance at
no additional cost upon exercise of special warrants, described as follows.

On January 24, 2000, the Company completed a private placement of 2,120,000
special warrants (the "January 2000 Special Warrants") at a price of $0.15 each.
Each January 2000 Special Warrant will be converted into one unit comprised of
one Share and one share purchase warrant. Each share purchase warrant entitles
the holder to purchase one Share (for a total of 2,120,000 Shares) at a price of
$0.15 until January 23, 2001 and at $0.17 from January 24, 2001 until January
23, 2002.

On March 9, 2000, the Company completed a private placement of 15,454,544
special warrants (the "March 2000 Special Warrants") at a price of $0.55 each.
Upon the exercise or deemed exercise of the March 2000 Special Warrants, each
March 2000 Special Warrant will be converted into one unit comprised of one
Share and one-half of one share purchase warrant. Each whole share purchase
warrant entitles the holder to purchase one Share (for a total of 7,727,272
Shares) at a price of $1.40 until September 8, 2001. An additional 2,318,181
Shares, including an additional 772,727 Shares issuable upon exercise of the
share purchase warrants, are reserved for issuance upon the exercise or deemed
exercise of the March 2000 Special Warrants in the event that receipts for a
prospectus are not obtained from the Securities Commissions in each of the
Provinces of British Columbia, Alberta, Ontario and Quebec qualifying the
distribution of the securities upon exercise of the March 2000 Special Warrants
by July 7, 2000. The March 2000 Special Warrants are identical in all respects
and subject to the terms of a special warrant indenture dated March 9, 2000,

<PAGE>
Page 46

entered into between the Company and Montreal Trust Company of Canada, as
trustee (the "Special Warrant Indenture"), and include the following terms and
conditions:

1.   no fractional Shares will be issued; holders of special warrants may be
     entitled to cash payment in respect of fractional entitlements;

2.   the March 2000 Special Warrants, including the number of Shares issuable
     upon exercise or deemed exercise thereof, may be subject to adjustment upon
     the occurrence of certain stated events, including the subdivision or
     consolidation of Shares, certain distributions of Shares, or securities
     convertible into or exchangeable for Shares, or of other securities or
     assets of the Company, certain offerings of rights, warrants or options and
     certain capital reorganizations;

3.   the holding of March 2000 Special Warrants will not give the holder rights
     as a shareholder of the Company; and

4.   March 2000 Special Warrants may be exercised by the holder at any time to
     and until the earlier of 4:30 p.m. (Vancouver time) on the earlier of
     September 8, 2001 and the fifth business day following the date on which
     the final receipts issued by the applicable securities commissions for the
     prospectus qualifying the distribution of the units on exercise of the
     March 2000 Special Warrants (together with the agent's compensation
     options on exercise of the Agent's Special Warrants) have all been issued
     (the "Expiry Time"), and March 2000 Special Warrants not exercised by the
     Expiry Time shall, immediately prior to the Expiry Time, be deemed to have
     been exercised without any further action on the part of the holder.

Agent's Special Warrants

The Company has issued 1,545,454 agent's warrants (the "Agent's Special
Warrants") in relation to the sale of the March 2000 Special Warrants described
above. Each Agent's Special Warrant is exercisable at no additional cost into
one compensation option (the "Agent's Compensation Option"). Each Agent's
Compensation Option will entitle the holder to acquire one unit (the "Agent's
Unit") at a price of $0.55 each. Each Agent's Unit will be exercisable into one
Share and one-half of one share purchase warrant (the "Agent's Unit Warrants").
Each whole Agent's Unit Warrant will entitle the holder to acquire one
additional Share at a price of $1.40 each until September 8, 2001. All of the
Agent's Special Warrants are identical in all respects and include the following
terms and conditions:

1.   no fractional Shares will be issued; the holder of the Agent's Special
     Warrants may be entitled to cash payment in respect of fractional
     entitlements;

2.   the Agent's Special Warrants, including the number of Shares issuable upon
     exercise or deemed exercise thereof, may be subject to adjustment upon the
     occurrence of certain stated events, including the subdivision or
     consolidation of Shares, certain distributions of Shares, or securities
     convertible into or exchangeable for Shares, or of other securities or
     assets of the Company, certain offerings of rights, warrants or options and
     certain capital reorganizations;

3.   the holding of Agent's Special Warrants will not give the holder rights as
     a shareholder of the Company; and

4.   the Agent's Special Warrants may be exercised, for no additional
     consideration, at any time prior to the Expiry Time, and any Agent's

<PAGE>
Page 47

     Special Warrants not exercised by the Expiry Time shall, immediately prior
     to the Expiry Time, be deemed to have been exercised into agent's
     compensation options without any further action on the part of the holder.

The Company estimates the value of the Agent's Special Warrants to be $480,000.

ITEM 13. INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS

Except as disclosed below, to the knowledge of current management, no director
or officer of the Company or any shareholder holding of record or beneficially,
directly or indirectly, owning more than 10% of the issued and outstanding
Shares, or any of their respective associates or affiliates or any relative or
spouse of any of the foregoing who has the same home, has had any material
interest, directly or indirectly, in any material transaction with the Company,
or in any proposed material transaction, since January 1, 1999.

Pursuant to a Loan Agreement dated September 13, 1999, Allen I. Bain, President,
CEO and a director of the Company, borrowed approximately $55,000 from the
Company. Interest was charged on the principal sum outstanding in an amount
equal to the rate of interest in effect from time to time as prescribed by
Revenue Canada.

The Company subleases its office premises from Allen I. Bain, the President, CEO
and a director of the Company. The sublease expires on May 31, 2001 and may be
extended by the Company for an additional year. The Company is required to pay
the amounts under the head lease required to be paid by Dr. Bain, the monthly
total of which is approximately $7,000.

ITEM 14.   DESCRIPTION OF SECURITIES TO BE REGISTERED

Disclosure under this item is not required for an Annual Report.

ITEM 15.   DEFAULTS UNDER SENIOR SECURITIES

None.

ITEM 16.   CHANGES IN SECURITIES AND CHANGES IN SECURITY FOR REGISTERED
           SECURITIES

None.

ITEM 17.   FINANCIAL STATEMENTS

The consolidated financial statements of the Company have been prepared on the
basis of Canadian GAAP. A reconciliation to U.S. GAAP is included therein. The
Financial Statements filed as part of this Annual Report are listed in "Item 19
- Financial Statements and Exhibits".

ITEM 18.   FINANCIAL STATEMENTS

Not applicable.


<PAGE>
Page 48

ITEM 19.   FINANCIAL STATEMENTS AND EXHIBITS

(a)   Financial Statements

The Financial Statements and related notes of the Company, as required under
Item 17, comprise of the following:

     Auditors' Report dated March 13, 2000, except for Note 14, which is as of
     May 5, 2000.

     Balance Sheets as of December 31, 1999 and 1998.

     Statements of Loss and Deficit, and Cash Flows for the years ended
     December 31, 1999, 1998 and 1997.

     Notes to the Financial Statements.

(b)  Exhibits

The following exhibits are filed as part of this Annual Report.

(1)  Corporate Documentation
     -----------------------

     The articles of incorporation and bylaws corresponding thereto currently in
     effect are as follows:

     1-1     Certificate of Amalgamation of the Company dated April 24, 1996(1);

     1-2     Form 21, Special Resolution, of the Company filed on March 14,
             1997, with respect to an amendment to the articles of incorporation
             (2);

     1-3     Form 1, Memorandum, of the Company approved by the British Columbia
             Registrar of Companies May 2, 1995(3); and

     1-4     Articles of incorporation of the Company(4).

(2)  Instruments Defining the Rights of Holders of Securities Being Registered
     -------------------------------------------------------------------------

     See Exhibit 1-4 above.

(3)  Material Contracts
     ------------------

     3-1     Escrow Agreement dated December 7, 1995(5);

     3-2     Incentive Stock Option Agreements(6);

     3-3     Licensing Agreement dated April 23, 1993 with the San Diego
             Regional Cancer Center (now known as the Sidney Kimmel Cancer
             Center)(7);

     3-4     Joint Venture Agreement, dated August 12, 1999, with Bridge Pharma,
             Inc.(8), together with Bridge Pharma Addendum dated April 4,
             2000(9);

<PAGE>
Page 49

     3-5     Executive Employment Agreement, dated May 21, 1999, with Allen Bain
             (10);

     3-6     Services Agreement, dated May 21, 1999, with Ron Kertesz(11);

     3-7     Services Agreement, dated June 1, 1999, with Danny Lowe(12);

     3-8     Loan Agreement, dated September 13, 1999, with Allen Bain(13);

     3-9     Purchase Agreement, dated December 20, 1999, with ImmPheron, Inc.
             (14);

     3-10   Option Agreement, dated February 3, 2000, with Meditech
            Pharmaceuticals Inc.(15);

     3-11   CroMedica Agreement, entered into March 27, 2000, with CroMedica
            Global, Inc.(16);

     3-12   CroMedica Debenture, issued on March 27, 2000(17);

     3-13   Special Warrant Indenture, dated March 9, 2000, with Montreal Trust
            Company of Canada(18); and

     3-14   Share Purchase Warrant Indenture, dated March 9, 2000, with Montreal
            Trust Company of Canada(19).

(1)  Filed as exhibit 1-1 to the Company's Registration Statement on Form 20-F
     (File No. 0-27883 filed on October 29, 1999).
(2)  Filed as exhibit 1-2 to the Company's Registration Statement on Form 20-F
     (File No. 0-27883 filed on October 29, 1999).
(3)  Filed as exhibit 1-3 to the Company's Registration Statement on Form 20-F
     (File No. 0-27883 filed on October 29, 1999).
(4)  Filed as exhibit 1-4 to the Company's Registration Statement on Form 20-F
     (File No. 0-27883 filed on October 29, 1999).
(5)  Filed as exhibit 3-1 to the Company's Registration Statement on Form 20-F
     (File No. 0-27883 filed on October 29, 1999).
(6)  The portion of this Exhibit predating October 29, 1999 was previously filed
     as exhibit 3-2 to the Company's Registration Statement on Form 20-F (File
     No. 0-027883 filed on October 29, 1999); the portion of this Exhibit dated
     after October 29, 1999 but predating April 12, 2000 was previously filed as
     exhibit 3-2 to the Company's Registration Statement on Form 20-F/A (File
     No. 0-27883 filed on April 17, 2000); and the portion of this Exhibit dated
     after April 12, 2000 but predating June 23, 2000 was previously filed as
     exhibit 3-2 to the Company's Registration Statement on Form 20-F/A (File
     No. 0-27883 filed on June 27, 2000.
(7)  Filed as exhibit 3-3 to the Company's Registration Statement on Form 20-F/A
     (filed on April 17, 2000).
(8)  Filed as exhibit 3-4 to the Company's Registration Statement on Form 20-F/A
     (filed on April 17, 2000).
(9)  Filed as exhibit 3-4 to the Company's Registration Statement on Form 20-F/A
     (filed on June 27, 2000).
(10) Filed as exhibit 3-9 to the Company's Registration Statement on Form 20-F/A
     (File No. 0-27883 filed on October 29, 1999).
(11) Filed as exhibit 3-6 to the Company's Registration Statement on Form 20-F/A
     (File No. 0-27883 filed on April 17, 2000).
(12) Filed as exhibit 3-7 to the Company's Registration Statement on Form 20-F/A
     (File No. 0-027883 filed on April 17, 2000).
(13) Filed as exhibit 3-10 to the Company's Registration Statement on Form 20-F
     (File No. 0-27883 filed on October 29, 1999).
(14) Filed as exhibit 3-9 to the Company's Registration Statement on Form 20-F/A
     (File No. 0-27883 filed on April 17, 2000).
(15) Filed as exhibit 3-10 to the Company's Registration Statement on Form
     20-F/A File No. 0-27883 filed on April 17, 2000).
(16) Filed as exhibit 3-11 to the Company's Registration Statement on Form
     20-F/A (File No. 0-27883 filed on June 27, 2000).
(17) Filed as exhibit 3-12 to the Company's Registration Statement on Form
     20-F/A (File No. 0-27883 filed on June 27, 2000).
(18) Filed as exhibit 3-13 to the Company's Registration Statement on Form
     20-F/A (File No. 0-27883 filed on April 17, 2000).
(19) Filed as exhibit 3-14 to the Company's Registration Statement on Form
     20-F/A (File No. 0-27883 filed on June 27, 2000).


<PAGE>





Consolidated Financial Statements

Immune Network Research Ltd.
(a development stage enterprise)
December 31, 1999

<PAGE>



                          AUDITORS' REPORT




To the Shareholders of
Immune Network Research Ltd.

We have audited the consolidated balance sheet of Immune Network Research Ltd.
(a development stage enterprise) as at December 31, 1999 and the consolidated
statements of loss and deficit and cash flows for the year then ended.  These
consolidated financial statements are the responsibility of the company's
management.  Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform an audit to obtain reasonable
assurance whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements.  An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all
material respects, the consolidated financial position of the company as at
December 31, 1999 and the consolidated results of its operations and its cash
flows for the year then ended in accordance with accounting principles generally
accepted in Canada.  As required by the Company Act (British Columbia), we
report that, in our opinion, these principles have been applied on a consistent
basis.

The financial statements as at December 31, 1998 and for the years ended
December 31, 1998 and 1997 and the period from February 25, 1991 (date of
inception) to December 31, 1998 were audited by other auditors who expressed an
opinion without reservation on those statements in their respective reports.



Vancouver, Canada,                                        /s/ Ernst & Young, LLP
March 13, 2000 (except for note 14,
which is as of May 5, 2000).                               Chartered Accountants

<PAGE>

Immune Network Research Ltd.
(a development stage enterprise)
Incorporated under the Company Act of British Columbia

                             CONSOLIDATED BALANCE SHEETS

As at December 31




                                                            1999          1998
                                                              $             $
--------------------------------------------------------------------------------

ASSETS
Current
Cash and cash equivalents                                  117,058       76,992
Short-term investment                                       50,000         -
Amounts receivable                                          16,852        1,614
Government grants receivable                                 5,736         -
Deposits and prepaid expenses                               28,899         -
--------------------------------------------------------------------------------
                                                           218,545       78,606
--------------------------------------------------------------------------------
Loan receivable [note 11]                                   32,213         -
Capital assets [note 5]                                     76,805         -
Intellectual properties [note 6]                           327,121      147,462
Investment                                                  29,896         -
--------------------------------------------------------------------------------
                                                           684,580      226,068
--------------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities                   303,575       87,654
--------------------------------------------------------------------------------
                                                           303,575       87,654
Loan payable to shareholder [note 7]                        50,000       50,000
--------------------------------------------------------------------------------
                                                           353,575      137,654
--------------------------------------------------------------------------------
Commitments and contingencies [note 9]
Shareholders' equity
Share capital [note 8]                                   3,816,365    2,712,790
Shares to be issued [note 8]                                  -          45,000
Deficit                                                 (3,485,360)  (2,669,376)
--------------------------------------------------------------------------------
                                                           331,005       88,414
--------------------------------------------------------------------------------
                                                           684,580      226,068
--------------------------------------------------------------------------------

See accompanying notes

On behalf of the Board:

                             /s/ Allen I. Bain              /s/ Robert J. Gayton
                             Director                       Director

<PAGE>

Immune Network Research Ltd.
(a development stage enterprise)

                     CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT


Years ended December 31


                                                                  From Inception
                                                                   (February 25,
                                                                        1991) to
                                                                    December 31,
                                     1999        1998        1997        1999
                                       $           $           $           $
--------------------------------------------------------------------------------

REVENUE
Interest income [note 11]            14,036         912       1,387      54,745
--------------------------------------------------------------------------------

EXPENSES
Research and development            432,899      20,260      61,772   1,891,229
Less grants                         (12,704)       -           -        (12,704)
Less investment tax credits            -           -           -       (477,900)
--------------------------------------------------------------------------------
                                    420,195      20,260      61,772   1,400,625
--------------------------------------------------------------------------------
General and administrative
  [note 11]                         368,974     166,855     147,618   1,845,464
Amortization                         40,851      10,795      15,776     142,944
Loss on writedown of
  intellectual properties              -           -           -         88,760
Loss on disposition of
  capital assets                       -          4,673        -          3,417
Loss on disposition of
  intellectual properties              -           -         38,965      38,965
--------------------------------------------------------------------------------
                                    830,020     202,583     264,131   3,520,175
--------------------------------------------------------------------------------
Loss for the period                 815,984     201,671     262,744   3,465,430

Net monetary liabilities
  acquired [note 15]                   -           -           -         19,930
Deficit, beginning of period      2,669,376   2,467,705   2,204,961        -
--------------------------------------------------------------------------------
Deficit, end of period            3,485,360   2,669,376   2,467,705   3,485,360
--------------------------------------------------------------------------------

Loss per common share                  0.03        0.01        0.01        -
--------------------------------------------------------------------------------

Weighted average number of
  outstanding shares             24,253,222  20,137,118  19,970,452        -
--------------------------------------------------------------------------------

See accompanying notes

<PAGE>

Immune Network Research Ltd.
(a development stage enterprise)

                        CONSOLIDATED STATEMENTS OF CASH FLOWS


Years ended December 31



                                                                  From Inception
                                                                   (February 25,
                                                                        1991) to
                                                                    December 31,
                                     1999        1998        1997        1999
                                       $           $           $           $
--------------------------------------------------------------------------------

OPERATING ACTIVITIES
Loss for the period                (815,984)   (201,671)   (262,744) (3,465,430)
Items not involving cash
   Amortization                      40,851      10,795      15,776     142,944
   Loss on writedown of
     intellectual properties           -           -           -         88,760
   Loss on disposition of
     capital assets                    -          4,673        -          3,417
   Loss on disposition of
     intellectual properties           -           -         38,965      38,965
--------------------------------------------------------------------------------
                                   (775,133)   (186,203)   (208,003) (3,191,344)
Amounts receivable                  (15,238)       (699)      2,528     (16,200)
Government grants receivable         (5,736)       -           -         (5,736)
Deposits and prepaid expenses       (28,899)      1,750       5,250     (28,899)
Accounts payable and accrued
  liabilities                        76,721      55,556     (35,578)    127,885
--------------------------------------------------------------------------------
Cash used in operating
  activities                       (748,285)   (129,596)   (235,803) (3,114,294)
--------------------------------------------------------------------------------

FINANCING ACTIVITIES
Proceeds from
   Shareholder loan [note 7]           -         50,000        -         50,000
   Share subscriptions received       9,000      45,000        -         54,000
Proceeds from issuance of
   common shares                  1,049,575     110,000        -      3,762,365
Loan to officer [note 11]           (55,000)       -           -        (55,000)
Loan to officer repayments           22,787        -           -         22,787
--------------------------------------------------------------------------------
Cash provided by financing
  activities                      1,026,362     205,000        -      3,834,152
--------------------------------------------------------------------------------

INVESTING ACTIVITIES
Purchase of intellectual
  properties                        (65,348)    (13,951)    (14,698)   (438,013)
Purchase of capital assets          (92,767)       -           -       (131,537)
Proceeds from disposal of
  capital and intellectual
  properties                           -          7,618      24,000      31,618
Purchase of investment              (29,896)       -           -        (29,896)
Purchase of short-term
  investment                        (50,000)       -           -        (50,000)
Cash acquired on business
  combination [note 15]                -           -           -         15,028
--------------------------------------------------------------------------------
Cash (used in) provided
  by investing activities          (238,011)     (6,333)      9,302    (602,800)
--------------------------------------------------------------------------------

Increase (decrease) in cash
 and cash equivalents                40,066      69,071    (226,501)    117,058
Cash and cash equivalents,
  beginning of period                76,992       7,921     234,422        -
--------------------------------------------------------------------------------
Cash and cash equivalents,
  end of period                     117,058      76,992       7,921     117,058
--------------------------------------------------------------------------------

See accompanying notes

<PAGE>
Page 1

Immune Network Research Ltd.
(a development stage enterprise)

                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 1999




1. NATURE OF OPERATIONS

Immune Network Research Ltd., (the "Company") amalgamated under the laws of the
Province of British Columbia, is a biotechnology company focused on the
development of new drugs to treat major diseases and bolster the body's immune
system. The Company is in the process of developing drugs for treatment against
AIDS, Alzheimer's Disease and Asthma. The Company's strategy is to acquire
technology rights where undervalued, add value by progressing their development,
and obtain a return of investment from the technologies rapidly through
licensing agreements, alliances, or spin-offs. The Company has not yet
determined the ultimate economic viability of the drugs. Commercial operations
have not yet commenced.

The Company has financed its cash requirements primarily from share issuances.
The Company's ability to realize the carrying value of its assets is dependent
on successfully bringing its technologies to the market and achieving future
profitable operations, the outcome of which cannot be predicted at this time.
It will be necessary for the Company to raise additional funds for the
continuing development of its technologies.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

These consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in Canada. A reconciliation of amounts
presented in accordance with United States generally accepted accounting
principles is detailed in Note 13. A summary of the significant accounting
policies are as follows:

Basis of presentation

These consolidated financial statements include the accounts of Immune Network
Research Ltd. and its 50% proportionate interest of the accounts of its joint
venture with Bridge Pharma Inc.

Use of estimates

The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts recorded in the consolidated financial
statements. Actual results could differ from those estimates.


<PAGE>
Page 2

Immune Network Research Ltd.
(a development stage enterprise)

                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 1999



2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd.)

Financial instruments

For certain of the Company's financial instruments, including cash and cash
equivalents, short-term investment, amounts and government grants receivable,
deposits and accounts payable and accrued liabilities, the carrying amounts
approximate fair value due to their short-term nature. The loan payable to
shareholder bears interest at a rate which, in management's opinion,
approximates the current interest rate and therefore, approximates fair value.

Foreign exchange

The Company follows the temporal method of accounting for the translation of
foreign currency amounts into Canadian dollars, including the accounts of the
Company's joint venture operation which is located in the United States and is
considered an integrated foreign operation. Under this method monetary assets
and liabilities are translated into Canadian dollars at the exchange rate in
effect at the balance sheet date and non-monetary assets and liabilities are
translated at exchange rates prevailing at the historical transaction date.
Revenue and expenses are translated at monthly average exchange rates throughout
the year. Exchange gains or losses are reflected in the results of operations.

Cash and cash equivalents

Cash and cash equivalents, which are comprised of treasury bills with original
maturities of three months or less, are recorded at cost which approximates
market value.

Short-term investment

Short-term investment, which comprises a term deposit with an interest rate of
4.2% maturing in June 2000, is recorded at the lower of cost and market value.
The carrying value of the investment approximates its market value.

Capital assets

Capital assets are recorded at cost less accumulated amortization. Amortization
is provided on a straight line basis over the expected useful lives as follows:

Office furniture and equipment          5 years
Computer equipment                      3 years
Software                                2 years

<PAGE>
Page 3

Immune Network Research Ltd.
(a development stage enterprise)

                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 1999



2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd.)

Investment

The investment, comprising of an investment of approximately 8% of the common
shares of a private company, is accounted for under the cost method. Fair value
information has not been included as there has not been a recent valuation of
the company.

Intellectual properties

The costs of acquiring technology, patents and license are capitalized, and
amortized on a straight-line basis over their estimated useful lives. At October
1, 1999, the Company changed the estimated useful lives of its technology and
license from 17 years to 5 years, and from 20 years to 5 years for patents,
after reviewing current industry information. This change in estimate has been
accounted for on a prospective basis. The change in estimate has resulted in
additional amortization expense in 1999 of approximately $10,000.

The amounts shown for technology, license and patent costs do not necessarily
reflect present or future values and the ultimate amount recoverable will be
dependent upon the successful development and commercialization of products
based on these intellectual properties. Management reviews the intellectual
properties for impairment whenever events or changes in circumstances indicate
that full recoverability is questionable. Management measures any potential
impairment by comparing the carrying value to the undiscounted amounts of
expected future cash flows.

Research and development costs

Research costs are charged as an expense in the period in which they are
incurred. Development costs are charged as an expense in the period incurred
unless the Company believes a development project meets generally accepted
criteria for deferral and amortization.

Future income taxes

Future income taxes are recognized for the future income tax consequences
attributable to differences between the carrying values of assets and
liabilities and their respective income tax bases. Future income tax assets and
liabilities are measured using enacted income tax rates expected to apply to
taxable income in the years in which temporary differences are expected to be
recovered or settled. The effect on future income tax assets and liabilities of
a change in rates is included in earnings in the period that includes the
enactment date. Future income tax assets are recorded in the financial
statements if realization is considered more likely than not.


<PAGE>
Page 4

Immune Network Research Ltd.
(a development stage enterprise)

                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 1999



2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd.)

Loss per share

Loss per share is calculated based on the weighted average number of shares
outstanding. Fully diluted loss per share has not been presented since the
Company's stock options and warrants are antidilutive.

Stock based compensation

The Company grants stock options to executive officers and directors, employees
and consultants pursuant to a stock option plan described in note 8. No
compensation is recognized for this plan when Common shares or stock options are
issued. Any consideration received on the exercise of stock options or the
purchase of stock is credited to share capital.

Cash flow statement

The Company has adopted the new recommendations of the Canadian Institute of
Chartered Accountants Handbook for cash flow statements and has restated the
comparative periods to conform to this revised standard.


3. CHANGE IN ACCOUNTING PRINCIPLES

Effective January 1, 1999, the Company adopted the new recommendations of The
Canadian Institute of Chartered Accountants Handbook with respect to accounting
for income taxes. The change has been applied retroactively and the comparative
financial statements have been restated accordingly. The change in accounting
policy did not result in a material adjustment in the current year or in the
prior years. Before the adoption of the new recommendations, income tax expense
was determined using the deferral method of tax allocation.



<PAGE>
Page 5

Immune Network Research Ltd.
(a development stage enterprise)

                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 1999



4. JOINT VENTURE

On August 12, 1999, the Company entered into an agreement with Bridge Pharma
Inc. for the development of a new asthma therapeutic in a 50% owned joint
venture. Pursuant to the joint venture agreement, the Company is required to
fund the first US $2 million of expenditures over a two year period in order to
maintain its 50% interest. As at December 31, 1999, the Company had contributed
$196,507 into the joint venture.

The Company's 50% interest in joint venture at December 31, 1999 is as follows:

                                                                            1999
                                                                              $
--------------------------------------------------------------------------------

Statement of loss and deficit
Interest income                                                             312
Research and development                                                (40,462)
General and administrative                                               (5,994)
Amortization                                                             (3,058)
--------------------------------------------------------------------------------
Loss from joint venture                                                 (49,202)
--------------------------------------------------------------------------------

                                                                            1999
                                                                              $
--------------------------------------------------------------------------------

Balance sheet
Assets
Cash and cash equivalents                                                11,051
Amounts receivable and prepaid expenses                                  14,280
Technology, license and patent costs                                     35,848
                                                                            1999
                                                                              $
--------------------------------------------------------------------------------
Total assets                                                             61,179
Accounts payable and accrued liabilities                                 12,128
--------------------------------------------------------------------------------
Net assets                                                               49,051
--------------------------------------------------------------------------------

                                                                            1999
                                                                              $
--------------------------------------------------------------------------------

Statement of cash flows
Cash (used in) operating activities                                     (48,296)
Cash (used in) investing activities                                     (38,906)
Cash provided by financing activities                                    98,253
--------------------------------------------------------------------------------

Increase in cash and cash equivalents                                    11,051
Cash and cash equivalents, beginning of year                               -
Cash and cash equivalents, end of year                                   11,051
--------------------------------------------------------------------------------

<PAGE>
Page 6

Immune Network Research Ltd.
(a development stage enterprise)

                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 1999



5. CAPITAL ASSETS

                                                     Accumulated        Net Book
                                         Cost        Amortization          Value
                                           $               $               $
--------------------------------------------------------------------------------

1999
Office furniture and equipment            9,074             908           8,166
Computer equipment                       58,693           8,804          49,889
Software                                 25,000           6,250          18,750
--------------------------------------------------------------------------------
                                         92,767          15,962          76,805
--------------------------------------------------------------------------------

As at December 31, 1998, the Company did not have any capital assets.


6. INTELLECTUAL PROPERTIES

                                                     Accumulated        Net Book
                                         Cost        Amortization          Value
                                           $               $               $
--------------------------------------------------------------------------------

1999
Technology                              206,257          26,497         179,760
License                                   5,000            -              5,000
Patents                                 195,820          53,459         142,361
--------------------------------------------------------------------------------
                                        407,077          79,956         327,121
--------------------------------------------------------------------------------

1998
Technology                               61,097          19,959          41,138
Patents                                 141,432          35,108         106,324
--------------------------------------------------------------------------------
                                        202,529          55,067         147,462
--------------------------------------------------------------------------------



<PAGE>
Page 7

Immune Network Research Ltd.
(a development stage enterprise)

                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 1999



7. LOAN PAYABLE TO SHAREHOLDER

On June 1, 1998 the Company borrowed $50,000 (the "Principal") from a
shareholder who holds less than 10% of the outstanding shares of the Company.
The loan plus any unpaid interest is due on or before June 15, 2001. The loan
bears interest at 12% to be paid quarterly. As at December 31, 1999, $6,371
[1998 - $3,371] of interest has been accrued on the loan and is included in
accounts payable and accrued liabilities.

The lender may, at any time, convert the Principal to common shares of the
Company at a price of $.20 per share before June 1, 2000. The conversion price
will increase by $.05 per share each year thereafter until maturity. The
Company can request conversion at any time after June 15, 1999.

At the time the convertible debt was issued, it was determined that the equity
conversion feature had nominal value and accordingly, the full amount was
recorded as debt.



<PAGE>
Page 8

Immune Network Research Ltd.
(a development stage enterprise)

                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 1999


8. SHARE CAPITAL

a]   Authorized
     100,000,000 common shares without par value

b]   Issued
                                                               Number     Amount
                                                             of Shares       $
--------------------------------------------------------------------------------

Issued upon incorporation                                         1           1
--------------------------------------------------------------------------------
Balance at December 31, 1991                                      1           1
Issued for cash pursuant to private placement,
net of issuance costs of $7,848                           1,999,999     492,154
--------------------------------------------------------------------------------
Balance at December 31, 1992 and 1993                     2,000,000     492,155
Issued for cash pursuant to private placement             4,100,000      48,750
--------------------------------------------------------------------------------
Balance at December 31, 1994                              6,100,000     540,905
Issued for cash pursuant to private placement,
  net of issuance costs of $92,100                        4,477,170     753,509
Share purchase loans forgiven                                  -        (28,800)
--------------------------------------------------------------------------------
Balance at December 31, 1995                             10,577,170   1,265,614
Issued for cash pursuant to private placements            2,120,816     572,620
Issued for technology                                        33,333       9,000
Issued as payment for subsidiary acquisition [note 15]    4,263,310        -
Issued for cash pursuant to private placement               500,000      45,090
Issued as payment of share issue costs                      559,159     150,973
Issued for cash pursuant to private placement,
net of issuance costs of $431,423                         1,725,000     517,327
Issued for cash upon exercise of options                    191,664      42,166
--------------------------------------------------------------------------------
Balance at December 31, 1996 and 1997                    19,970,452   2,602,790
Issued for cash pursuant to private placement               400,000      80,000
Issued for cash upon exercise of options                    200,000      30,000
--------------------------------------------------------------------------------
Balance at December 31, 1998                             20,570,452   2,712,790
Issued for cash pursuant to private placement               360,000      54,000
Issued for cash upon exercise of options                    625,000      93,750
Issued for cash upon exercise of warrants                    97,500      22,425
Issued for cash pursuant to private placement,
  net of issuance costs of $9,576                         6,286,513     933,400
--------------------------------------------------------------------------------
Balance at December 31, 1999                             27,939,465   3,816,365
--------------------------------------------------------------------------------


<PAGE>
Page 9

Immune Network Research Ltd.
(a development stage enterprise)

                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 1999


8. SHARE CAPITAL (cont'd.)

c]   Stock option plan

    From time to time, the Company has provided incentives in the form of stock
    options to the Company's consultants, directors, officers and employees. The
    exercise price of the options is determined by the Board but generally will
    be at least equal to the market price at the date of granting of the common
    shares and the term may not exceed five years. Options granted are also
    subject to certain vesting provisions.

    Stock option transactions for the respective periods and the number of
    stock options outstanding are summarized as follows:



                                                     Number of       Weighted
                                                    Optioned         Average
                                                  Common Shares  Exercised price
                                                         #               $
--------------------------------------------------------------------------------

Balance, December 31, 1997                             100,000           0.55
Options granted                                      1,835,000           0.15
Options exercised                                     (200,000)          0.15
--------------------------------------------------------------------------------
Balance, December 31, 1998                           1,735,000           0.17
Options granted                                      1,730,000           0.20
Options exercised                                     (625,000)          0.15
Options forfeited                                     (250,000)          0.31
--------------------------------------------------------------------------------
Balance, December 31, 1999                           2,590,000           0.18
--------------------------------------------------------------------------------

At December 31, 1999 common share purchase options outstanding are as follows:

   Number of        Exercise                                          Exercise
 stock options       Price                           Number of stock   Price
  outstanding          $      Expiry Date          options exercisable   $
--------------------------------------------------------------------------------

    860,000            0.15     May 20, 2003                860,000       0.15
    650,000            0.15     May 21, 2004                650,000       0.15
    545,000            0.23     June 9, 2004                545,000       0.23
    535,000            0.23     July 25, 2004               435,000       0.23
--------------------------------------------------------------------------------
  2,590,000            0.18                               2,490,000       0.18
--------------------------------------------------------------------------------


<PAGE>
Page 10

Immune Network Research Ltd.
(a development stage enterprise)

                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 1999



8. SHARE CAPITAL (cont'd.)

d]   Share purchase warrants

     At December 31, 1999 common share purchase warrants outstanding are as
     follows:

     Number of                             Exercise
   Common Shares                            Price
      Issuable                                $                     Expiry Date
--------------------------------------------------------------------------------

      6,286,513                           0.15 - 0.18             July 13, 2001
--------------------------------------------------------------------------------
      6,286,513
--------------------------------------------------------------------------------

e]   The Company has 5,566,667 common shares held in escrow. The release is
     subject to the approval of regulatory authorities and is based on the
     Company's cumulative cash flow. Any shares not released by April 24, 2006
     will be canceled.

f]   Shares to be issued

     Shares to be issued consists of amounts received in advance of the issuance
     of common shares. During 1998, the Company received subscriptions for
     360,000 common shares at $0.15 per share of which $45,000 cash was received
     prior to December 31, 1998.

9. COMMITMENT AND CONTINGENCY

a]   Lease commitment

The Company has minimum lease payments for its laboratory premises expiring
through 2001, as follows [see note 11]:

                                                                           $
--------------------------------------------------------------------------------

2000                                                                     82,000
2001                                                                     34,000
--------------------------------------------------------------------------------
                                                                        116,000
--------------------------------------------------------------------------------


<PAGE>
Page 11

Immune Network Research Ltd.
(a development stage enterprise)

                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 1999




9. COMMITMENT AND CONTINGENCY (cont'd.)

b]   Uncertainty due to Year 2000

The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
year 2000 dates is processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something other than a
date. Although the change in date has occurred, it is not possible to conclude
that all aspects of the Year 2000 Issue that may affect the entity, including
those related to customers, suppliers, or other third parties have been fully
resolved.


10. INCOME TAXES

As at December 31, 1999 the Company has scientific research and experimental
development expenditures of approximately $936,000 available for carryforward
indefinitely and temporary differences of approximately $131,000 relating to
capital assets and $82,000 relating to share issue costs which may be deducted
against future taxable income. The Company also has non-capital loss
carryforwards and investment tax credits available to offset future Canadian
taxable income and future Canadian federal income taxes payable respectively
that expire as follows:

                                                    Investment tax   Non-capital
                                                       credits         losses
                                                          $               $
--------------------------------------------------------------------------------

2000                                                      -             221,000
2001                                                     5,000          119,000
2002                                                     2,000          180,000
2003                                                     2,000          616,000
2004                                                      -             292,000
2005                                                      -             249,000
2006                                                      -             430,000
2007                                                      -                -
2008                                                      -                -
2009                                                    38,000             -
--------------------------------------------------------------------------------
                                                        47,000        2,107,000
--------------------------------------------------------------------------------

The ability of the Company to utilize the scientific research and development
expenditures and other tax balances carried forward in the future does not meet
the "more likely than not" criteria and therefore the tax benefits have not been
recognized in the financial statements.

<PAGE>
Page 12

Immune Network Research Ltd.
(a development stage enterprise)

                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 1999




11. RELATED PARTY TRANSACTIONS

During the year ended December 31, 1999, the Company incurred $7,417 [1998 -
$18,033; 1997 - $18,837; inception to date - $206,254] for consulting services
rendered by companies controlled by directors of the Company. In addition, the
Company incurred legal fees of $32,722 [1998 - $nil; 1997 - $nil; inception to
date - $nil] charged by a legal firm where one of the principals is an officer
of the Company.

The loan receivable at December 31, 1999 comprises an amount due from an officer
of the Company. The loan bears interest at the Canada Customs and Revenue
Agency prescribed rate [December 31, 1999 - 9.0%] and is due on March 2001 [see
note 14(d)]. Interest income earned during 1999 of $1,488 [1998 - $nil; 1997 -
$nil; inception to date - $1,488] is included in amounts receivable.

The Company subleases its laboratory premises from a director. The amount
charged for the premises and related facility costs for the year ended December
31, 1999 totalled $40,729 [1998 - $nil; 1997 - $nil; inception to date -
$40,729]. The amounts charged are based on the costs incurred by the director
pursuant to a premises lease agreement.


12. SEGMENTED INFORMATION

The Company operates primarily in one business segment with substantially all of
its assets and operations in Canada.


13.   RECONCILIATION OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

The Company prepares its consolidated financial statements in accordance with
accounting principles generally accepted in Canada ("Canadian GAAP") which as
applied in these consolidated financial statements conform in all material
respects to those accounting principles generally accepted in the United States
("U.S. GAAP"), except as follows:


<PAGE>
Page 13

Immune Network Research Ltd.
(a development stage enterprise)

                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 1999






13.   RECONCILIATION OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (cont'd.)

a]   Under U.S. GAAP basic earnings per share excludes any dilutive effects of
     options, warrants, and escrow shares. Diluted earnings per share under U.S.
     GAAP are calculated using the treasury stock method and are based on the
     weighted average number of common shares and dilutive common share
     equivalents outstanding.

b]   Under U.S. GAAP, stock based compensation to non-employees must be
     recorded at the fair market value of the options granted pursuant to
     Statement of Financial Accounting Standards No. 123 (SFAS 123). This
     compensation, determined using a Black-Scholes pricing model, is expensed
     over the vesting periods of each option granted. For purposes of
     reconciliation to U.S. GAAP, the Company will record additional
     compensation expense of $14,361 in respect of options granted to non-
     employees in future periods.

c]   U.S. GAAP requires investments in joint ventures to be accounted for
     under the equity method, while under Canadian GAAP, the accounts of joint
     ventures are proportionately consolidated. However, under rules promulgated
     by the Securities Exchange Commission, a foreign registrant may, subject to
     the provision of additional information, continue to follow proportionate
     consolidation for purposes of registration and other filings notwith-
     standing the departure from U.S. GAAP. Consequently, the balance sheet has
     not been adjusted to restate the accounting for joint venture under U.S.
     GAAP.  Additional information concerning the Company's interest in the
     joint venture is presented in Note 4.

d]   Under U.S. GAAP, the excess, if any, of the fair value of the shares in
     escrow over the nominal value paid would be recorded as compensation
     expense upon release from escrow.

e]   Effective January 1, 1999, the Company adopted SFAS No. 130, Reporting
     Comprehensive Income. In adopting the new requirements for calculating
     income, items of other comprehensive loss have been presented in the
     equity section of the statement of shareholders' deficit.


<PAGE>
Page 14

Immune Network Research Ltd.
(a development stage enterprise)

                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 1999




13.   RECONCILIATION OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (cont'd.)

f]   Under U.S. GAAP, costs incurred in connection with the reverse
     acquisition in 1996 [see note 15] totaling $155,875, must be expensed.

The effect of following U.S. GAAP on the Company's financial statements is set
out below:

Statements of loss and deficit

                                                                  From Inception
                                                                   (February 25,
                                                                        1991) to
                                                                    December 31,
                                     1999        1998        1997        1999
                                       $           $           $           $
--------------------------------------------------------------------------------

Loss for the year
   Canadian GAAP                    815,984     201,671     262,744   3,465,430
   Adjustment for stock-
     based compensation             137,740     162,000        -        421,462
   Adjustment for reverse
     acquisition costs                 -           -           -        155,875
--------------------------------------------------------------------------------
Loss and comprehensive loss
  for the year U.S. GAAP            953,724     363,671     262,744   4,042,767
Net monetary liabilities
  acquired [note 15]                   -           -           -         19,930
Deficit, beginning of the year,
   U.S. GAAP                      3,108,973   2,745,302   2,482,558        -
--------------------------------------------------------------------------------

Deficit, end of year, U.S. GAAP   4,062,697   3,108,973   2,745,302   4,062,697
--------------------------------------------------------------------------------

Loss per share, U.S. GAAP              0.05        0.02        0.02        -
--------------------------------------------------------------------------------
Weighted average number of
  shares outstanding             18,686,555  14,570,451  14,403,785        -
--------------------------------------------------------------------------------


<PAGE>
Page 15

Immune Network Research Ltd.
(a development stage enterprise)

                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 1999



13.   RECONCILIATION OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (cont'd.)

Loss per share

The following table sets forth the computation of basic and diluted loss per
share:


                                       1999            1998           1997
                                         $               $              $
--------------------------------------------------------------------------------

Numerator
Loss for the year                     953,724         363,671        262,744

Denominator
Weighted average number of common
shares outstanding                 24,253,222      20,137,118     19,970,452
Less escrowed shares               (5,566,667)     (5,566,667)    (5,566,667)
--------------------------------------------------------------------------------
                                   18,686,555      14,570,451     14,403,785

Basic and diluted loss per share         0.05            0.02           0.02
--------------------------------------------------------------------------------

The Company's common shares issuable upon the exercise of stock options,
warrants and the escrowed shares were excluded from the determination of diluted
loss per share as their effect would be anti-dilutive.

Balance sheets

The following table summarizes balance sheet items which vary significantly
under U.S. GAAP:

                                                       1999           1998
                                                         $              $
--------------------------------------------------------------------------------

Share capital                                       4,388,800      3,147,485
Deficit                                             4,062,697      3,108,973
--------------------------------------------------------------------------------



<PAGE>
Page 16

Immune Network Research Ltd.
(a development stage enterprise)

                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 1999





13.   RECONCILIATION OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (cont'd.)

Statements of cash flows


                                                                  From Inception
                                                                   (February 25,
                                                                        1991) to
                                                                    December 31,
                                     1999        1998        1997        1999
                                       $           $           $           $
--------------------------------------------------------------------------------

Cash used in operating activities,
  Canadian GAAP                    (748,285)   (129,596)   (235,803) (3,114,294)
Adjustment for reverse
  acquisition costs                    -           -           -       (155,875)
--------------------------------------------------------------------------------
Cash used in operating
  activities, U.S. GAAP            (748,285)   (129,596)   (235,803) (3,270,169)
Cash provided by financing
  activities, Canadian GAAP       1,026,362     205,000        -      3,834,152
Adjustment for reverse
  acquisition costs                    -           -           -        155,875
Adjustment for intellectual
  property acquired                    -           -           -         (9,000)
Cash provided by financing
  activities, U.S. GAAP           1,026,362     205,000        -      3,981,027
Cash (used in) provided by
  investing activities,
  Canadian GAAP                    (238,011)     (6,333)      9,302    (602,800)
Adjustment for intellectual
  property acquired                    -           -           -          9,000
--------------------------------------------------------------------------------
Cash (used in) provided by
  investing activities,
  U.S. GAAP                        (238,011)     (6,333)      9,302    (593,800)
--------------------------------------------------------------------------------



<PAGE>
Page 17

Immune Network Research Ltd.
(a development stage enterprise)

                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 1999



14. SUBSEQUENT EVENTS

a]   The Company issued 2,120,000 special warrants at $0.15 per warrant for
     gross proceeds of $318,000 pursuant to a private placement. Each warrant is
     convertible into one unit which is comprised of one common share and one
     purchase warrant. Each purchase warrant entitles the holder to acquire one
     common share at $0.15 up to January 23, 2001 and at $0.17 up to January 23,
     2002.

b]   The Company issued 2,284,500 common shares pursuant to the exercise of
     stock options. Additionally, the Company issued 1,100,000 stock options
     exerciseable at $0.40 per share, expiring January 24, 2005.

c]   The Company completed a private placement of 15,454,544 special warrants
     at a price of $0.55 each for gross proceeds of $8,500,000 before deducting
     the agent's commission of $633,088. Each special warrant entitles the
     holder to receive, at no additional cost, one unit which is comprised of
     one common share and half of one purchase warrant. Each whole purchase
     warrant entitles the holder to acquire one common share at $1.40 per share
     until September 8, 2001.  The agent also received 1,545,455 Agent's
     Compensation Options, entitling the agent to acquire 1,545,455 units at a
     price of $0.55 each. In the event the Company does not receive the receipt
     for a final prospectus from the applicable Securities Commission by July 7,
     2000, the holders of the special warrants are entitled to receive 1.1 units
     for each special warrant.

d]   The loan receivable from an officer of the Company in the amount of
     $32,213 was repaid.

e]   On March 27, 2000 the Company signed an agreement to engage Cromedica
     Global Inc., a worldwide contract research organization, to launch a
     three-country clinical trial program for Immune Network Research Ltd.'s
     patented drug candidate for Alzheimer disease. Total cost of the program to
     the Company is expected to be US $13 million over three years.

f]   On May 5, 2000 the Company announced that it intended to make an offer to
     acquire up to a two-thirds controlling interest of BC Research Inc. (BCR),
     a leading technology innovation incubator. The Company intends to issue one
     common share for every BCR share tendered on the closing date. Within 18
     months of the closing date, such BCR shareholders shall receive additional
     common shares of the Company on the basis of one dollar's worth of the
     Company's common shares for each BCR share tendered if payment is made
     within 12 months of the closing date, or one dollar and twenty-five cents'
     worth of the Company's common shares for every BCR share tendered if
     payment is made after the first anniversary of the closing date. The offer
     will be subject to certain conditions including regulatory approval.



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Page 18

Immune Network Research Ltd.
(a development stage enterprise)

                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 1999





15. OTHER

a]   On April 24, 1996, the Company amalgamated with an inactive public
     company and continued as Immune Network Research Ltd. As the shareholders
     of the Company owned more than 50% of the amalgamated company, the
     business combination was considered a "reverse" acquisition by the Company
     and a recapitalization of the public company. The net monetary liabilities
     acquired of $19,930 (including cash of $15,028) were charged to the
     deficit.

<PAGE>

                                    SIGNATURES



Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Company certifies that it meets all of the requirements for filing on
Form 20-F and has duly caused this Annual Report to be signed on its behalf by
the undersigned, thereunto duly authorized.


                                        IMMUNE NETWORK RESEARCH LTD.

                                        By:

                                        /s/ ALLEN BAIN
                                        ----------------------------------------
                                        ALLEN BAIN, President, Chief Executive
                                        Officer and Director


Dated:   June 28, 2000
Vancouver, British Columbia
Canada






<PAGE>


                             IMMUNE NETWORK RESEARCH LTD.
                              Annual Report ON FORM 20-F
                                  INDEX TO EXHIBITS
                             ----------------------------

Exhibit
Number     Name of Exhibit
------     ---------------

1-1        Certificate of Amalgamation of the Company dated April 24,
           1996(1)

1-2        Form 21, Special Resolution of the Company filed on March 14,
           1997, with respect to an amendment to the Articles of Incorporation
           (2)

1-3        Form 1, Memorandum of the Company approved by the British Columbia
           Registrar of Companies on May 2, 1995(3)

1-4        Articles of Incorporation of the Company(4)

2          (See Exhibit 1-4 above)

3-1        Escrow Agreement dated December 7, 1995(5)

3-2        Incentive Stock Option Agreements of Directors and Officers of the
           Company(6)

3-3        Licensing Agreement dated April 23, 1993 with the San Diego Regional
           Cancer Centre (now known as the Sidney Kimmel Cancer Centre)(7)*

3-4        Joint Venture Agreement dated August 12, 1999 with Bridge Pharma,
           Inc.(8)*, together with Bridge Pharma Addendum dated April 4, 2000
           (9)**

3-5        Executive Employment Agreement dated May 21, 1999 with Allen Bain(10)

3-6        Services Agreement dated May 21, 1999 with Ron Kertesz (11)

3-7        Services Agreement dated June 1, 1999 with Danny Lowe(12)

3-8        Loan Agreement dated September 13, 1999 with Allen Bain(13)

3-9        Purchase Agreement dated December 20, 1999 with ImmPheron,
           Inc.(14)*

3-10       Option Agreement dated February 3, 2000 with Meditech Pharmaceuticals
           Inc.(15)*

3-11       Agreement, entered into March 27, 2000, with CroMedica Global
           Inc.(16)**

3-12       Debenture, issued on March 27, 2000, in favour of CroMedica Global
           Inc.(17)

3-13       Special Warrant Indenture dated March 9, 2000 with Montreal Trust
           Company of Canada(18)

3-14       Share Purchase Warrant Indenture, dated March 9, 2000, with
           Montreal Trust Company of Canada(19)

<PAGE>

*   The document has been redacted and confidential information has been
    intentionally omitted. This exhibit has been filed separately with the
    Securities and Exchange Commission as part of an Application for Order
    Granting Confidential Treatment Pursuant to Rule 406, submitted concurrently
    with the Registration Statement on Form 20-F/A filed on April 17, 2000.

**  The document has been redacted and confidential information has been
    intentionally omitted. This exhibit will be filed separately with the
    Securities and Exchange Commission as part of an Application for Order
    Granting Confidential Treatment Pursuant to Rule 406, to be submitted in
    connection with the Registration Statement on Form 20-F/A filed on June 27,
    2000.

(1)   Filed as exhibit 1-1 to the Company's Registration Statement on Form
      20-F (File No. 0-27883 filed on October 29, 1999).
(2)   Filed as exhibit 1-2 to the Company's Registration Statement on Form
      20-F (File No. 0-27883 filed on October 29, 1999).
(3)   Filed as exhibit 1-3 to the Company's Registration Statement on Form
      20-F (File No. 0-27883 filed on October 29, 1999).
(4)   Filed as exhibit 1-4 to the Company's Registration Statement on Form
      20-F (File No. 0-27883 filed on October 29, 1999).
(5)   Filed as exhibit 3-1 to the Company's Registration Statement on Form
      20-F (File No. 0-27883 filed on October 29, 1999).
(6)   The portion of this Exhibit predating October 29, 1999 was previously
      filed as exhibit 3-2 to the Company's Registration Statement on Form 20-F
      (File No. 0-027883 filed on October 29, 1999); the portion of this Exhibit
      dated after October 29, 1999 but predating April 12, 2000 was previously
      filed as exhibit 3-2 to the Company's Registration Statement on Form 20-
      F/A (File No. 0-27883 filed on April 17, 2000); and the portion of this
      Exhibit dated after April 12, 2000 but predating June 23, 2000 was
      previously filed as exhibit 3-2 to the Company's Registration Statement on
      Form 20-F/A (File No. 0-27883 filed on June 27, 2000.
(7)   Filed as exhibit 3-3 to the Company's Registration Statement on Form
      20-F/A (filed on April 17, 2000).
(8)   Filed as exhibit 3-4 to the Company's Registration Statement on Form
      20-F/A (filed on April 17, 2000).
(9)   Filed as exhibit 3-4 to the Company's Registration Statement on Form
      20-F/A (filed on June 27, 2000).
(10)  Filed as exhibit 3-9 to the Company's Registration Statement on Form
      20-F (File No. 0-27883 filed on October 29, 1999).
(11)  Filed as exhibit 3-6 to the Company's Registration Statement on Form
      20-F/A (File No. 0-27883 filed on April 17, 2000).
(12)  Filed as exhibit 3-7 to the Company's Registration Statement on Form
      20-F/A (File No. 0-027883 filed on April 17, 2000).
(13)  Filed as exhibit 3-10 to the Company's Registration Statement on Form
      20-F (File No. 0-27883 filed on October 29, 1999).
(14)  Filed as exhibit 3-9 to the Company's Registration Statement on Form
      20-F/A (File No. 0-27883 filed on April 17, 2000).
(15)  Filed as exhibit 3-10 to the Company's Registration Statement on Form
      20-F/A (File No. 0-27883 filed on April 17, 2000).
(16)  Filed as exhibit 3-11 to the Company's Registration Statement on Form
      20-F/A (File No. 0-27883 filed on June 27, 2000).
(17)  Filed as exhibit 3-12 to the Company's Registration Statement on Form
      20-F/A (File No. 0-27883 filed on June 27, 2000).
(18)  Filed as exhibit 3-13 to the Company's Registration Statement on Form
      20-F/A (File No. 0-27883 filed on April 17, 2000).
(19)  Filed as exhibit 3-14 to the Company's Registration Statement on Form
      20-F/A (File No. 0-27883 filed on June 27, 2000).

<PAGE>