U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
================================================================================
      |X|   ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES 
            EXCHANGE ACT OF 1934
             For the fiscal year ended: DECEMBER 31, 1997

      | |   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
            SECURITIES EXCHANGE ACT OF 1934
             For transition period from ______ to ______
================================================================================
                       Commission File Number: 33-17922-C

                              IMMUNE RESPONSE, INC.
                 ----------------------------------------------
                 (Name of small business issuer in its charter)

COLORADO                                                              84-0950197
--------                                                              ----------
(State or other jurisdiction of                                 (I.R.S. Employer
incorporation or organization)                            Identification Number)

              7315 EAST PEAKVIEW AVENUE, ENGLEWOOD, COLORADO 80111
              ----------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                    Issuer's telephone number: (303) 796-8139

      Securities registered under Section 12 (b) of the Exchange Act: NONE

      Securities registered under Section 12 (g) of the Exchange Act: NONE
--------------------------------------------------------------------------------
Check  whether the Issuer (1) filed all reports  required to be filed by Section
13 or 15 (d) of the  Exchange  during  the past 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: Yes /X/ No / /

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-K in this form, and no disclosure will be contained, to the best of
the  Registrant's  knowledge,  in  definitive  proxy or  information  statements
incorporated  by reference  in Part III of this Form l0-KSB or any  amendment to
this Form 1Q-KSB: /X/

Issuer's revenues for its most recent fiscal year:   $3,181

The  aggregate  market value of the voting stock held by  non-affiliates  of the
Registrant  is  not  applicable  as  the  Registrant's   securities  which  were
previously  listed in the National  Quotation Bureau "Pink Sheets" stopped being
listed as of January 1992 and therefore  the  Registrant is unable to provide an
aggregate market value for its securities.

The issuer had 2,949,709 shares of common stock outstanding as of April 9, 1998.

Documents incorporated by reference: NONE

Transitional Small Business Disclosure Format:  Yes / /  No /X/
<PAGE>
                              IMMUNE RESPONSE, INC.
                                   FORM 10-KSB

THIS REPORT MAY CONTAIN  CERTAIN  "FORWARD-LOOKING"  STATEMENTS  AS SUCH TERM IS
DEFINED  IN THE  PRIVATE  SECURITIES  LITIGATION  REFORM  ACT OF  1995 OR BY THE
SECURITIES AND EXCHANGE COMMISSION IN ITS RULES, REGULATIONS AND RELEASES, WHICH
REPRESENT THE  REGISTRANT'S  EXPECTATIONS OR BELIEFS,  INCLUDING BUT NOT LIMITED
TO, STATEMENTS  CONCERNING THE REGISTRANT'S  OPERATIONS,  ECONOMIC  PERFORMANCE,
FINANCIAL CONDITION, GROWTH AND ACQUISITION STRATEGIES,  INVESTMENTS, AND FUTURE
OPERATIONAL  PLANS. FOR THIS PURPOSE,  ANY STATEMENTS  CONTAINED HEREIN THAT ARE
NOT  STATEMENTS  OF  HISTORICAL  FACT  MAY  BE  DEEMED  TO  BE   FORWARD-LOOKING
STATEMENTS.  WITHOUT  LIMITING THE  GENERALITY OF THE  FOREGOING,  WORDS SUCH AS
"MAY", "WILL", "EXPECT", "BELIEVE", "ANTICIPATE", "INTENT", "COULD", "ESTIMATE",
"MIGHT", OR "CONTINUE" OR THE NEGATIVE OR OTHER VARIATIONS THEREOF OR COMPARABLE
TERMINOLOGY  ARE  INTENDED  TO  IDENTIFY   FORWARD-LOOKING   STATEMENTS.   THESE
STATEMENTS BY THEIR NATURE INVOLVE SUBSTANTIAL RISKS AND UNCERTAINTIES,  CERTAIN
OF WHICH ARE BEYOND THE  REGISTRANT'S  CONTROL,  AND ACTUAL  RESULTS  MAY DIFFER
MATERIALLY  DEPENDING ON A VARIETY OF IMPORTANT FACTORS,  INCLUDING  UNCERTAINTY
RELATED TO THE REGISTRANT'S  OPERATIONS,  MERGERS OR ACQUISITIONS,  GOVERNMENTAL
REGULATION, THE VALUE OF THE REGISTRANT'S ASSETS AND ANY OTHER FACTORS DISCUSSED
IN  THIS  AND  OTHER  REGISTRANT   FILINGS  WITH  THE  SECURITIES  AND  EXCHANGE
COMMISSION.

                                     PART I
                                     ------


ITEM 1. DESCRIPTION OF BUSINESS

(a) Business Development

     (1) Immune Response,  Inc. was incorporated in the State of Colorado on May
24, 1984 as Med-Mark  Technologies,  Inc. for the purpose of  marketing  medical
products.  When the Registrant was unable to obtain suitable products, it ceased
operations and remained  inactive from July 1985 until November 10, 1986 when it
changed its name to Immune Response, Inc. From November 1986 until May 1991, the
Registrant was a biomedical  firm engaged in three levels of activity - clinical
testing, clinical research and basic research.

     While the  Registrant  established  and operated  the Clinical  Testing and
Research Division until May 1991, the Board of Directors,  following an analysis
of the results of the Division's operations, determined that the operations were
not commercially  viable and that it was highly unlikely that the Division would
ever be profitable. Accordingly, on May 10, 1991, the Registrant entered into an
Asset Purchase Agreement with Infinity Laboratories,  Inc. ("Infinity") pursuant
to which it sold to  Infinity  all of the  Registrant's  assets  relating to its
laboratory  services and paid Infinity a total of $15,623 in cash and notes.  In
return  for this sale,  the  President  of  Infinity,  who was the  Registrant's
laboratory  director  at the  time of the  sale  and  had  previously  been  the
president and a director of the  Registrant,  agreed to return to the Registrant
17,500,000  shares of the Registrant's  common stock owned by him; agreed to the
cancellation of stock options to purchase an additional 15,000,000 shares of the
Registrant's  common  stock owned by him;  and agreed to release the  Registrant
from any further obligations under an employment  agreement then in effect. This
sale was  approved  by the  Registrant's  stockholders  at a Special  Meeting of
Shareholders  held on June 3, 1991.  The  Registrant  suspended  its  biomedical
activities  following this transaction and has been  essentially  inactive since
such time except for evaluating alternative business opportunities.

                                      -1-
<PAGE>
     On  January 8, 1996,  the  Registrant  announced  that it had  executed  an
agreement to merge with Ocurest  Laboratories,  Inc.  ("Ocurest")  of Palm Beach
Gardens, Florida. Concurrent with executing the merger agreement, the Registrant
made a secured  loan to  Ocurest in the amount of  $125,000.  Ocurest  produces,
distributes and holds worldwide  patents on a new delivery system for dispensing
ophthalmic  drug  solutions  into the eye. On February 23, 1996,  the Registrant
announced the mutual termination of its merger agreement.  As part of the mutual
termination  agreement,  Ocurest  repaid the  aforementioned  loan with interest
during 1996. In addition, Ocurest agreed to pay the Registrant a fee of $10,000,
with  interest,  upon the  successful  completion of its planned  initial public
offering which fee was paid during the fourth quarter of 1996.

     On February 10, 1997 at an Annual Meeting of Stockholders, the Registrant's
shareholders  approved a one for one  hundred (1 for 100)  reverse  stock  split
whereby  every one hundred  shares of the  Registrant's  $.000l par value common
stock were  converted to one share of $.000l par value common stock and approved
a reduction in the number of authorized  shares from  950,000,000  to 25,000,000
effective  March 3,  1997.  As a result,  the  Registrants  issued  shares  were
decreased from  312,470,000 to 3,124,700 and outstanding  shares  decreased from
294,970,000 to 2,949,700.

     (2)(3) During the year ended December 31, 1997, the Registrant has not been
involved  in any  bankruptcy,  receivership  or  similar  proceedings;  has  not
undergone material reclassification,  merger or consolidation;  has not acquired
or disposed of any  material  amount of assets  otherwise  than in the  ordinary
course of business;  and has not  experienced any material change in its mode of
conducting business.

(b) Business of Issuer

     (1)(2)(3)  The  Registrant  is  currently  an  inactive  company  which  is
evaluating  alternative  business  opportunities.  On July 31,  1996,  MacGregor
Sports and Fitness,  Inc. and Technical Publishing  Solutions,  Inc. completed a
merger through a tax-free  exchange of common stock and the surviving entity was
renamed IntraNet  Solutions,  Inc.  ("IntraNet") . IntraNet provides  integrated
solutions for the management and distribution of business  critical  information
contained in documents  using  proprietary  and standard  internet  technologies
through  web  based  internet  software,   electronic  document  management  and
on-demand printing. During the year ended December 31, 1996, the Registrant sold
27,500  shares of IntraNet  common stock for net proceeds of $89,504.  Following
the merger and a  subsequent  4 for 1  reverse-split  declared  by  IntraNet  on
October 15, 1996,  the  Registrant  owns 1,489  shares of IntraNet  common stock
which comprises the Registrant's only non-cash asset.

     During 1997, the Registrant evaluated several business  opportunities which
included  preliminary  investigation  and due  diligence.  Following the initial
review it was determined  that none of the  opportunities  fit the  Registrant's
criteria for a viable merger or acquisition partner. While the Registrant is not
limiting its search for business  opportunities to one industry group or sector,
the  Registrant's  management  believes  that a  viable  merger  or  acquisition
candidate  should provide the  possibility  for short and long term  stockholder
value by providing  the  opportunity  for a liquid  market for the  Registrant's
common stock. The Registrant is presently  seeking a candidate with a product or
service,  which may be in the development  stage,  that is proprietary and which
possesses the possibility for long-term maximization of stockholder value.

     (4) As the  Registrant  is  currently  inactive,  the  Registrant  does not
directly compete with any company, individual or organization.

                                      -2-
<PAGE>
     (5) The Registrant does not require raw materials.

     (6) The Registrant's business is not dependent upon a single customer, or a
few  customers,  the  loss of any one or more of  which  would  have a  material
adverse effect on the Registrant.

     (7) The Registrant  holds no patents or trademarks,  and has no interest in
any franchises, concessions, royalty agreements or labor contracts.

     (8)(9)  The   Registrant   currently  is  not  subject  to  any  government
regulations which affect its business.

     (10)  During  the  last two  years  the  Registrant  spent  no  amounts  on
Registrant-sponsored or customer-sponsored research and development activities.

     (11)  The  Registrant  is  not  subject  to any  federal,  state  or  local
provisions  which have been  enacted  or adopted  regulating  the  discharge  of
materials into the  environment  or otherwise  relating to the protection of the
environment.

     (12)  The  Registrant's  executive  officers  are the  Company's  only  two
employees  and serve on a  part-time  basis.  The  Registrant  currently  has no
full-time employees.


ITEM 2. DESCRIPTION OF PROPERTY

(a) Description of Principal Plants and other Property

     The Registrant's  principal office is located at 7315 East Peakview Avenue,
Englewood, Colorado 80111. The Registrant is provided space on a rent free basis
by a significant stockholder.

(b) Investment Policies

     The  Registrant  currently  does not  invest in real  estate,  real  estate
mortgages,  or  securities  of  persons  who  primarily  engage  in real  estate
activities.

(c) Description of Real Estate and Operating Data

     The  Registrant  does not own property,  the book value of which amounts to
ten percent or more of the total assets of the Registrant.


ITEM 3. LEGAL PROCEEDINGS

     The Registrant currently is not a party to any pending legal proceeding.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     The Registrant did not submit any matters to a vote of its security holders
during the fourth quarter ended December 31, 1997.

                                      -3-
<PAGE>
                                     PART II
                                     -------


ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

(a) Market Information

     The Registrant's Units, Common Stock and Warrants have been traded as Units
on the  over-the-counter  market since July,  1988.  Trading in the Registrant's
securities was reported by the National  Quotation  Services "Pink Sheets" until
January 1992 when the Registrant's  securities ceased being listed. As a result,
there has been no known  trading  in the  Registrant's  Units,  Common  Stock or
Warrants for the years 1996 or 1997.

(b) Holders

     The number of record holders of the  Registrant's  Common Stock as of April
8, 1998, was  approximately  600 according to the  Registrant's  transfer agent.
This figure excludes an  indeterminate  number of stockholders  whose shares are
held in "street" or "nominee" name.

(c) Dividends

     Holders  of  shares of  Common  Stock of the  Registrant  are  entitled  to
dividends  when and if declared by the  Registrant's  Board of Directors  out of
funds legally available  therefor.  The Registrant has not paid any dividends on
its Common Stock and currently  intends to retain  earnings,  if any, to finance
the development and expansion of its business. Future dividend policy is subject
to the  discretion  of the Board of  Directors  and will depend upon a number of
factors,  including but not limited to future earnings, capital requirements and
the financial condition of the Registrant.


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS

     This Report may contain certain  "forward-looking"  statements as such term
is defined in the  Private  Securities  Litigation  Reform Act of 1995 or by the
Securities and Exchange Commission in its rules, regulations and releases, which
represent the  Registrant's  expectations or beliefs,  including but not limited
to, statements  concerning the Registrant's  operations,  economic  performance,
financial condition, growth and acquisition strategies,  investments, and future
operational  plans. For this purpose,  any statements  contained herein that are
not  statements  of  historical  fact  may  be  deemed  to  be   forward-looking
statements.  Without  limiting the  generality of the  foregoing,  words such as
"may", "will", "expect", "believe", "anticipate", "intent", "could", "estimate",
"might", or "continue" or the negative or other variations thereof or comparable
terminology  are  intended  to  identify   forward-looking   statements.   These
statements by their nature involve substantial risks and uncertainties,  certain
of which are beyond the  Registrant's  control,  and actual  results  may differ
materially  depending on a variety of important factors,  including  uncertainty
related to the Registrant's  operations,  mergers or acquisitions,  governmental
regulation, the value of the Registrant's assets and any other factors discussed
in  this  and  other  Registrant   filings  with  the  Securities  and  Exchange
Commission.

                                      -4-
<PAGE>
(a) Plan of Operation

     Although the  Registrant  has  virtually no operating  overhead  costs as a
result of its current inactive  status,  certain funds are necessary for payment
of legal and accounting costs related to keeping the Registrant current with its
regulatory  filings  as well  as  certain  minimal  general  and  administrative
expenses.  In  previous  years,  the  Registrant  relied on loans  from  related
entities in order to meet its  operating  expenses  as well as minimal  personal
loans from the Registrant's  President as described more fully in Part III. Item
12, Certain Relationships and Related Transactions.

     With the sales of a majority  of the  Registrant's  investment  in IntraNet
(f/k/a MacGregor Sports and Fitness, Inc.) during the fourth quarter of 1995 and
the first quarter of 1996, as well as the 1,489 shares still available for sale,
the Registrant has the capital necessary to fund its limited business activities
for the  foreseeable  future as it continues the search for  alternate  business
opportunities.  While the  Registrant  currently  does not  expect the level and
amount of its  expenses  will  change  significantly  during 1998 as compared to
1997,  should the  Registrant  identify and pursue a business  opportunity,  the
Registrant can expect increased  expenses  resulting from legal and other costs.
Such a change in the  Registrant's  business status as a result of identifying a
business  opportunity  which the Registrant's  Board of Directors feels would be
beneficial  for  the  Registrant  and  its  stockholders  may  require  securing
additional  financing  the  amount  and  source  of which  cannot  presently  be
determined.

     The  Registrant is not currently  engaged in any research and  development,
does not anticipate the purchase or sale of any plant or significant  equipment,
nor does it anticipate any changes in the number of employees,  which would have
any material effect on the financial condition of the Registrant.

(b) Management's  Discussion and Analysis of Financial  Condition and Results of
Operations

     Total  revenue for the year ended  December 31, 1997 was $3,181 as compared
to $92,851  for 1996 a decrease  of 97%. A majority  of the revenue for 1996 was
produced by the sale of a significant portion of the Registrant's  investment in
IntraNet.  While the  Registrant  still holds 1,489 shares of IntraNet,  no such
sales were made during 1997 resulting in  significantly  lower revenues,  all of
which  were  derived  from  interest  income.  In  addition,  during  1996,  the
Registrant  recorded  interest  income  from  its  loan  to  Ocurest  as well as
miscellaneous  income from a fee paid by Ocurest.  Total  expenses for 1997 were
$32,872 as compared to $21,415 during 1996.  Expenses increased 54% in 1997 over
1996 as a result of increased general and administrative  expenses as well as an
increase  in bad debt  expense  due to the  write  down of a note  and  interest
receivable.  This was partially  offset by lower interest expense as a result of
the  Registrant  extinguishing  all notes payable  during 1997.  The  Registrant
recorded a net loss for the year ended  December 31, 1997 of $29,691 as compared
to income of $71,436 for the year ended December 31, 1996.

     The gain on the  sale of the  IntraNet  shares  in 1996  accounted  for the
significant increase in the Registrant's  profitability for that year. While the
Registrant has an additional  1,489  IntraNet  shares  remaining for sale,  once
these shares are sold, the Registrant will have no significant assets other than
its cash balances and currently has no other means from which to produce  future
income.  As a result,  the  revenues  and net  income  produced  in 1996 did not
continue  in 1997 and are not  expected  to continue in 1998 in the absence of a
change in the Registrant's inactive business status.

                                      -5-
<PAGE>
     The  Company's  net worth at  December  31,  1997 was a  deficit  of $2,206
compared  to a  positive  $27,578  at the year  ended  December  31,  1996.  The
Registrant's net worth will continue to decrease in the absence of a significant
level of revenues which will offset its minimal operating expenses.

     The financial  results  incurred  during 1997 are indicative of what can be
expected for 1998 should the Registrant  continue as an inactive company. In the
absence of the Registrant  identifying  and  implementing  alternative  business
opportunities,  the Registrant will most likely incur losses without a change in
its inactive business status.

     As of  December  31,  1997,  the  Registrant  had  made no  other  material
commitments for capital expenditures.


ITEM 7. FINANCIAL STATEMENTS

     The financial statements are listed under Item 13.


ITEM  8.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE

     There have been no changes in or disagreements  with accountants during the
most recent two fiscal years.


                                    PART III
                                    --------

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT OF THE REGISTRANT

(a)IDENTIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS

                                                                     Length of
Name                        Age       Offices held                    Service
----                        ---       ------------                   ---------
Joseph W. Hovorka           68        President, Treasurer,          Since 1987
                                      Principal Executive,
                                      Financial and Accounting
                                      Officer and Director

Thomas B. Olson             32        Secretary and Director         Since 1990

R. Andrew Girardot, Jr.     54        Director                       Since 1996

     The directors of the  Registrant  are elected to hold office until the next
annual meeting of the shareholders  and until their  respective  successors have
been elected and qualified.  Officers of the Registrant are elected by the Board
of  Directors  and hold  office  until  their  successors  are duly  elected and
qualified.

     Effective  December  31,  1997,  R.  Andrew  Girardot,  Jr.,  resigned as a
director  of the  Registrant.  Dr.  Girardot  cited  personal  reasons  for  his
resignation  and had no  disagreements  with the  Registrant.  The Registrant is
currently searching for a qualified replacement for Dr. Girardot.

                                      -6-
<PAGE>
     No  arrangement  exists  between any of the above  officers  and  directors
pursuant  to which  any one of those  persons  was  elected  to such  office  or
position.

     JOSEPH W. HOVORKA.  Mr.  Hovorka has served as the  Registrant's  President
since  February  1990 and has been a Vice  President,  Treasurer  and a director
since September 1987. Mr. Hovorka has been President,  Chief Executive  Officer,
Treasurer  and a director  of  Proconnextions,  Inc.  since  August 1990 and the
Treasurer  and a  director  of Sports  Card  Connection,  Inc.,  a  wholly-owned
subsidiary of ProConnextions, Inc., since November 1990 ProConnextions, Inc. and
Sports Card Connection,  Inc. are privately-held  companies which were formed to
buy, trade and sell sports memorabilia. From 1989 to 1993, Mr. Hovorka served as
President,  Chief  Operating  Officer,  and  Treasurer  and  was a  director  of
William's Controls, Inc., a publicly-held manufacturer of pneumatic,  electronic
and  hydraulic  controls  for trucks,  buses,  mining,  construction  and refuse
collection vehicles.  Mr. Hovorka also served as President and was a director of
Enercorp,  Inc., a  publicly-held  investment  company from July 1986 until June
1993.  From  September  1990 until June 1993 Mr. Hovorka served as President and
was a director of Ajay Sports, Inc., a publicly-traded manufacturer of golf bags
and accessories. Mr. Hovorka had been engaged in commercial and business banking
for over thirty years. Mr. Hovorka devotes only such time as is necessary to the
affairs of the Registrant.

     THOMAS B.  OLSON.  Mr.  Olson has been a  Director  since 1988 and has been
Secretary of the Registrant since 1994. Since 1988, Mr. Olson has been Secretary
of Equitex,  Inc.,  a publicly  held  business  development  company  which is a
stockholder of the Registrant.  Mr. Olson has attended  Arizona State University
and the University of Colorado at Denver. Mr. Olson devotes only such time as is
necessary to the affairs of the Registrant.

     R.  ANDREW  GIRARDOT,  JR.,  D.D.S.  Dr.  Girardot  was a  director  of the
Registrant from November 1996 to December 31, 1997 when he resigned. Since 1972,
Dr.  Girardot has been  President of his solo  orthodontic  practice,  R. Andrew
Girardot, Jr., D.D.S., P.C. in Denver,  Colorado. Dr. Girardot is also currently
serving the cleft palate clinic at the Children's Hospital in Denver,  Colorado.
Dr. Girardot  graduated from the University of California  Orthodontic School in
1972 and is a member of the American Association of Orthodontists,  the American
Dental  Society,   The  Foundation  for  Orthodontic   Research,   the  American
Equilibration  Society,  The  Angle  Society  and the  Foundation  for  Advanced
Continuing Education.

(b) Significant Employees

     None

(c) Family Relationships

     Not applicable

(d) Involvement in Certain Legal Proceedings

     Not applicable

                                      -7-
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance

     Section  16 (a) of the  Securities  Exchange  Act of  1934  ("Section  16")
requires the Registrant's officers,  directors and persons who own more than ten
percent of the Registrant's voting securities to file reports of their ownership
and changes in such ownership with the Securities and Exchange  Commission  (the
"Commission"). Commission regulations also require that such persons provide the
Registrant with copies of all Section 16 reports they file.

     Based solely upon its review of such reports received by the Registrant, or
written representations from certain persons that they were not required to file
any reports under Section 16, the  Registrant  believes  that,  during 1996, its
officers and directors have complied with all Section 16 filing requirements.


ITEM 10. EXECUTIVE COMPENSATION

(a) General

     While Mr.  Hovorka is to receive a salary of $18,000 per year,  Mr. Hovorka
has agreed to suspend  payment or accrual of such salary during 1997, as well as
each of the previous four years,  until such time as the  Registrant is a viable
operating  company as may be determined by the Registrant's  Board of Directors.
Mr.  Olson  currently  receives no salary in his  capacity as  Secretary  of the
Registrant.  Both Mr.  Hovorka  and Mr.  Olson  receive  $400 for each  Board of
Directors meeting they attend (See also Item 10. (f) Compensation of Directors).

(b) Summary Compensation Table

     The following table sets forth information  regarding  compensation paid to
the officers of the Registrant  during the years ended  December 31, 1997,  1996
and 1995.

                           SUMMARY COMPENSATION TABLE

                            Annual Compensation ($$)
                             ------------------------
(a)                                        (b)                        (c)
Name & Principal                                                    Salary
Position                                  Year                        ($)
---------                   ----             -------
Joseph W. Hovorka                         1997                    18,000 (1)
President, Treasurer
Principal Executive
Officer and Accounting
Officer

Joseph W. Hovorka                         1996                    18,000 (1)

Joseph W. Hovorka                         1995                    18,000 (1)
----------
(1) Although Mr. Hovorka is to receive a salary of $18,000 per year, Mr. Hovorka
has agreed to suspend  payment or accrual of such salary as noted in Item 10 (a)
above.

                                      -8-
<PAGE>
(c) Option/SAR Grants Table

     The  Registrant  made no grants of stock  options  or SARs  during the year
ended December 31, 1997.

(d) Option/SAR Exercises and Fiscal Year-End Option/SAR Value Table

     The  Registrant  had no stock options or SARs  outstanding  during the year
ended December 31, 1997.

(e) Long Term Incentive Plans -- Awards in Last Fiscal Year

     The Registrant has no long term incentive  plans, and consequently had made
no such awards.

(f) Compensation of Directors

     (1) Standard Arrangements

     Each member of the Registrant's Board of Directors,  Messrs. Hovorka, Olson
and Girardot,  receives $400 for each Board of Directors meeting attended either
in person or by telephone.  For the year ended December 1997,  Messrs.  Hovorka,
Olson and Girardot each received  $1,600 for the four meetings held. Each member
of the Board of Directors also receives  reimbursement  for expense  incurred in
attending the meetings.

     (2) Other Arrangements

     There are no other  arrangements  with respect to compensation of directors
other than those explained in Item 10. (f)(l) above.

(g) Employment  Contracts and  termination  of Employment and  Change-in-Control
Arrangements

     No employment contract or  change-in-control  arrangements are currently in
effect for either of the Registrant's two executive officers.

(h) Report on Repricing of Options/SARs

     No options or SARs were repriced  during the fiscal year ended December 31,
1997.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The  following  table  contains  information  at  April  9,  1998 as to the
beneficial  ownership of shares of the Registrant's  common stock by each person
who, to the knowledge of the Registrant at that date,  was the beneficial  owner
of five percent or more of the outstanding  shares of the class, each person who
is a director or executive  officer of the Registrant and all persons as a group
who  are  executive  officers  and  directors  of the  Registrant  and as to the
percentage  of  outstanding  shares so held by them at April 9, 1998.  All share
amounts  below  reflect the one for one hundred (1 for 100) reverse  stock split
approved by the Registrant's stockholders effective March 3, 1997.

                                      -9-
<PAGE>
Name and address              Amount and Nature of          Percent
of beneficial owner          Beneficial Ownership (1)       of Class
-------------------          ------------------------       --------
Joseph W. Hovorka                         -0-                  0.0%
7315 East Peakview Avenue
Englewood, Colorado 80111

Thomas B. Olson                       100,000 (2)              3.4%
7315 East Peakview Avenue
Englewood, Colorado 80111

R. Andrew Girardot, Jr.                   -0-                  0.0%
4380 South Syracuse Circle
Suite 501
Denver, Colorado 80237

Henry Fong                            477,500 (3)             16.2%
7315 East Peakview Avenue
Englewood, Colorado 80111

All officers and directors            100,000 (2)              3.4%
as a group (three persons)
--------

(1)  The beneficial owners exercise sole voting and investment power.

(2)  Includes  100,000  shares owned by Equitex,  Inc. of which Mr. Olson is the
     Secretary. Mr. Olson disclaims beneficial ownership of these securities.

(3)  Includes  100,000  shares  owned by Equitex,  Inc. of which Mr. Fong is the
     President. Mr. Fong disclaims beneficial ownership of these securities.

(c) Changes in Control

     The Registrant  does not know of any  arrangements,  the operation of which
may, at a subsequent date, result in a change in control of the Registrant.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

(a) Transactions with Management and Others

     The Registrant  currently utilizes  approximately 150 square feet of office
space in Greenwood Executive Park, 6400 South Quebec, Englewood,  Colorado, from
Equitex,  Inc., a stockholder of the Registrant,  on a rent free  month-to-month
basis. The Registrant's  Secretary and Director, Mr. Olson, is also Secretary of
Equitex, Inc.

     In years prior to 1996,  Equitex,  Inc., a significant  stockholder  of the
Registrant of which the Registrant's Secretary is also an officer, loaned to the
Registrant  a total of  $76,100.  These  loans were due on demand and carried an
interest rate of 10% per annum.  During 1997,  the entire  principal  balance of
these loans was repaid by the Registrant  leaving  $22,453 in interest due as of
December 31, 1997.

     During  the  year  ended  December  31,  1994  as in  previous  years,  the
Registrant  incurred  legal costs from an attorney who was a former  officer and
director  of the  Registrant  in the amount of $1,823 for 1994 and  $11,025  for

                                      -10-
<PAGE>
1993. The aggregate amount due to the former officer and director for legal fees
at December 31, 1995 was $52,062.  The entire amount was repaid during the first
quarter of 1996.

(b) Information Which May be Excluded

     Not applicable

(c) Parents of Registrant

     Not applicable

(d) Transactions with Promoters

     Not applicable

                                     PART IV
                                     -------

ITEM 13. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K

(a) The  following  documents  are  filed as a part of this  report  immediately
following the signature page.

         1. Financial Statements and Supplementary Data

         Report of Independent Certified Public Accountants..................F-1
         Balance Sheet at December 31, 1997..................................F-2
         Statements  of Changes  in  Stockholders'  Equity  for the 
           period  from inception (May 14, 1984) to December 31, 1984
           and for the years ended December 31, 1985 through
           December 31, 1997.................................................F-3
         Statements of Operations for the years ended December 31, 1997
         and 1996 and the period from inception (May 14, 1984) to
         December 31, 1997..................................................F-11
         Statements of Cash Flows for the years ended December 31, 1997
           and 1996 and the period from inception (May 14, 1984)
           to December 31, 1997.............................................F-12
         Notes to Financial Statements......................................F-14

         2. Financial Statement Schedules

            Not applicable

         3. Exhibits

         3.1   Articles of  Incorporation(1)
         3.2   Bylaws(1)  
         21.1  Subsidiaries(1)
--------

(1)  Incorporated  by reference  from the like numbered  exhibits filed with the
     Registrant's Registration Statement on Form S-l8, No. 33-17922-C

(b) Reports on Form 8-K

     No Reports on Form 8-K were filed during the period covered by this report.

                                      -11-
<PAGE>
                                   SIGNATURES
                                   ----------


     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


Date:    April 14, 1998
                                  IMMUNE RESPONSE, INC.
                                  (Registrant)





                                   By: /S/ JOSEPH W. HOVORKA
                                       -----------------------------------
                                       Joseph N. Hovorka, President


     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated.


Date: April 14, 1998                   /S/ JOSEPH W. HOVORKA
                                       -----------------------------------
                                       Joseph W. Hovorka, President,
                                        Treasurer and Director
                                        (Principal Executive, Financial,
                                        and Accounting Officer)




Date: April 14, 1998                   /S/ THOMAS B. OLSON
                                       -----------------------------------
                                       Thomas B. Olson, Secretary and Director

                                      -12-
<PAGE>
               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors
Immune Response, Inc.

We have  audited the  accompanying  balance  sheet of Immune  Response,  Inc. (a
development stage company) as of December 31, 1997 and the related statements of
operations,  changes in  stockholders'  equity  (deficit) and cash flows for the
years ended  December 31, 1997 and 1996 and for the period from  inception  (May
14,  1984)  to  December  31,  1997.   These   financial   statements   are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about 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.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position of Immune  Response,  Inc. (a
development  stage  company)  at  December  31,  1997  and  the  results  of its
operations  and its cash flows for the years ended  December  31, 1997 and 1996,
and for the  period  from  inception  (May 14,  1984) to  December  31,  1997 in
conformity with generally accepted accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company will  continue as a going  concern.  As discussed in Note 8, the Company
has minimal capital  resources  presently  available to meet  obligations  which
normally  can be  expected  to be  incurred  by  similar  companies,  and has an
accumulated  deficit of  ($915,498)  at December 31, 1997.  These  factors raise
substantial  doubt about the Company's  ability to continue as a going  concern.
Management's  plans in regard to these matters are also described in Note 8. The
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.


                                               Davis & Co., CPAs, P.C.
                                               Certified Public Accountants
Englewood, Colorado
March 23, 1998

                                       F-1
<PAGE>
                              IMMUNE RESPONSE, INC.
                          (A Development Stage Company)
                                  Balance Sheet
                                December 31, 1997




ASSETS
Current assets
    Cash and cash equivalents ..................................      $  15,825
    Investment - available for sale securities
         (cost of $3,958) ......................................          8,097
                                                                      ---------
                                                                      $  23,922
                                                                      =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
    Accounts payable - related entity ..........................      $   3,227
    Accounts payable - other ...................................            448
    Interest payable - related entity ..........................         22,453
                                                                      ---------
                                                                         26,128

Contingency (Note 8)

Stockholders' equity (deficit)
    Common stock, $.0001 par value; 25,000,000
       shares authorized; 3,124,700 shares
       issued; 2,949,700 shares outstanding ....................            312
    Additional paid-in capital .................................        908,841
    Unrealized gain on available for sale securities ...........          4,139
    Deficit accumulated during the
       development stage .......................................       (915,498)
    Less:  treasury stock, at cost
       (175,000 shares) ........................................           --
                                                                      ---------
                                                                         (2,206)
                                                                      ---------
                                                                      $  23,922
                                                                      =========

The accompanying notes are a part of this statement.

                                       F-2
<PAGE>
                              IMMUNE RESPONSE, INC.
                          (A Development Stage Company)
             Statement of Changes in Stockholders' Equity (Deficit)
       For the period from inception (May 14, 1984) to December 31, 1984
       and for the years ended December 31, 1985, 1986, 1987, 1988, 1989,
                1990, 1991, 1992, 1993, 1994, 1995, 1996 and 1997

                                                                     ADDITIONAL
                                                  COMMON STOCK        PAID-IN
                                               SHARES      AMOUNT     CAPITAL
                                               ------      ------    ----------
Shares of common stock issued to
    officers and directors  during
    the formation of the Company in
    exchange for services valued
    at $.0001 per share ..................     900,000     $  90     $    --

Shares of common stock issued during
    the formation of the Company in
    exchange for cash of $.10 per
    share to unrelated individuals .......     140,000        14        13,986

Net loss for the period from inception
    (May 14, 1984) to Dec. 31, 1984          ---------     -----     ---------
Balance at December 31, 1984 .............   1,040,000       104        13,986

Net loss for the year ended
    December 31, 1985                        ---------     -----     ---------
Balance at December 31, 1985 .............   1,040,000       104        13,986

Shares of common stock issued
    to unrelated individuals in
    December 1986 in exchange
    for cash of:
        $.05 per share ...................     140,000        14         6,986
        $.005 per share ..................      15,000         1            74

Net loss for the year ended
    December 31, 1986                        ---------     -----     ---------
Balance at December 31, 1986 .............   1,195,000       119        21,046

Shares of common stock issued
    to unrelated individuals in
    exchange for cash of:
        $.05 per share in:
           April 1987 ....................      20,000         2           998
           May 1987 ......................     100,000        10         4,990
           June 1987 .....................     100,000        10         4,990
        $.025 per share in:
           April 1987 ....................     100,000        10         2,490

The accompanying notes are a part of this statement.

                                       F-3
<PAGE>
                              IMMUNE RESPONSE, INC.
                          (A Development Stage Company)
       Statement of Changes in Stockholders' Equity (Deficit)(Page 2 of 8)
       For the period from inception (May 14, 1984) to December 31, 1984
       and for the years ended December 31, 1985, 1986, 1987, 1988, 1989,
                1990, 1991, 1992, 1993, 1994, 1995, 1996 and 1997

                                                           DEFICIT     TOTAL
                                                 UN-       ACCUMU.     STOCK-
                                               REALIZED  DURING THE   HOLDERS'
                                                GAINS    DEVELOPMENT   EQUITY
                                               (LOSSES)     STAGE    (DEFICIT)
                                               --------   --------   ---------
Shares of common stock issued to
    officers and directors during
    the formation of the Company in
    exchange for services valued
    at $.0001 per share .....................  $          $          $     90

Shares of common stock issued during
    the formation of the Company in
    exchange for cash of $.10 per
    share to unrelated individuals ..........                          14,000

Net loss for the period from inception
    (May 14, 1984) to Dec. 31, 1984 .........              (11,185)   (11,185)
                                               --------   --------   --------
Balance at December 31, 1984 ................              (11,185)     2,905

Net loss for the year ended
    December 31, 1985 .......................              (64,398)   (64,398)
                                               --------   --------   --------
Balance at December 31, 1985 ................              (75,583)   (61,493)

Shares of common stock issued
    to unrelated individuals in
    December 1986 in exchange
    for cash of:
        $.05 per share ......................                           7,000
        $.005 per share .....................                              75

Net loss for the year ended
    December 31, 1986 .......................              (17,557)   (17,557)
                                               --------   --------   --------
Balance at December 31, 1986 ................              (93,140)   (71,975)

Shares of common stock issued
    to unrelated individuals in
    exchange for cash of:
        $.05 per share in:
           April 1987 .......................                           1,000
           May 1987 .........................                           5,000
           June 1987 ........................                           5,000
        $.025 per share in:
           April 1987 .......................                           2,500

The accompanying notes are a part of this statement.

                                       F-4
<PAGE>
                              IMMUNE RESPONSE, INC.
                          (A Development Stage Company)
       Statement of Changes in Stockholders' Equity (Deficit)(Page 3 of 8)
       For the period from inception (May 14, 1984) to December 31, 1984
       and for the years ended December 31, 1985, 1986, 1987, 1988, 1989,
                1990, 1991, 1992, 1993, 1994, 1995, 1996 and 1997

                                                                     ADDITIONAL
                                                  COMMON STOCK        PAID-IN
                                               SHARES      AMOUNT     CAPITAL
                                               ------      ------    ----------
Shares of common stock issued in
    August 1987 in exchange  for
    cash of $.05 per share to:
        Related parties ..................     275,000        28        13,722
        Others ...........................     160,000        16         7,984

Shares of common stock issued
    in August  1987 to an officer
    and director in exchange for
    services valued at $.05
    per share ............................     150,000        15     $   7,485

Net loss for the year ended
    December 31, 1987                        ---------     -----     ---------
Balance at December 31, 1987 .............   2,100,000       210        63,705

Shares of common stock issued
    in July 1988,  pursuant to a
     public offering, for cash
     of $1 per share, net of
    costs of $199,761 ....................     900,000        90       700,149

Shares of common stock issued to
    underwriter in July 1988,
    pursuant to public offering for
    cash of $.0001 per share .............      28,800         3          --

Shares of common stock issued in
    October 1988, pursuant to
    exercise of Class B warrants,
    for cash of $2 per share .............       3,000         1         5,999

Shares of common stock issued in
    October and November 1988,
    pursuant to exercise of
    Class A warrants, for cash
    of $1.50 per share, net
    of costs of $100 .....................      54,700         5        81,945

Net loss for the year ended
    December 31, 1988                        ---------     -----     ---------
Balance at December 31, 1988 .............   3,086,500       309       851,798

The accompanying notes are a part of this statement.

                                       F-5
<PAGE>
                              IMMUNE RESPONSE, INC.
                          (A Development Stage Company)
       Statement of Changes in Stockholders' Equity (Deficit)(Page 4 of 8)
       For the period from inception (May 14, 1984) to December 31, 1984
       and for the years ended December 31, 1985, 1986, 1987, 1988, 1989,
                1990, 1991, 1992, 1993, 1994, 1995, 1996 and 1997

                                                            DEFICIT     TOTAL
                                                 UN-       ACCUMU.     STOCK-
                                               REALIZED  DURING THE   HOLDERS'
                                                GAINS    DEVELOPMENT   EQUITY
                                               (LOSSES)     STAGE    (DEFICIT)
                                               --------   --------   ---------
Shares of common stock issued in
    August 1987,  in exchange for
    cash of $.05 per share to:
        Related parties .....................                          13,750
        Others ..............................                           8,000

Shares of common stock issued in
    August 1987 to an officer
    and director in exchange for
    services valued at $.05
    per share ...............................                        $  7,500

Net loss for the year ended
    December 31, 1987 .......................              (41,815)   (41,815)
                                               --------   --------   --------
Balance at December 31, 1987 ................             (134,955)   (71,040)

Shares of common stock issued in
    July 1988, pursuant to a
    public offering, for cash
    of $1 per share, net of
    costs of $199,761 .......................                         700,239

Shares of common stock issued to
    underwriter in July 1988,
    pursuant to public offering for
    cash of $.0001 per share ................                               3

Shares of common stock issued in
    October 1988, pursuant to
    exercise of Class B warrants,
    for cash of $2 per share ................                           6,000

Shares of common stock issued in
    October and November 1988,
    pursuant to exercise of
    Class A warrants, for cash
    of $1.50 per share, net
    of costs of $100 ........................                          81,950

Net loss for the year ended
    December 31, 1988 .......................             (102,626)  (102,626)
                                               --------   --------   --------
Balance at December 31, 1988 ................             (237,581)   614,526

The accompanying notes are a part of this statement.

                                       F-6
<PAGE>
                              IMMUNE RESPONSE, INC.
                          (A Development Stage Company)
       Statement of Changes in Stockholders' Equity (Deficit)(Page 5 of 8)
       For the period from inception (May 14, 1984) to December 31, 1984
       and for the years ended December 31, 1985, 1986, 1987, 1988, 1989,
                1990, 1991, 1992, 1993, 1994, 1995, 1996 and 1997

                                                                     ADDITIONAL
                                                  COMMON STOCK        PAID-IN
                                               SHARES      AMOUNT     CAPITAL
                                               ------      ------    ----------
Shares of common stock issued in
    January 1989, pursuant to
    the exercise of 10,300 "A"
    warrants at $1.50 per share,
    net of costs of $184 .................      10,300         1        15,265

Shares of common stock issued
    January 1989, pursuant to the
    exercise of 27,900 "A" warrants
    at $1.50 per share, net of
    costs of $70 .........................      27,900         3        41,777

Net loss for the year ended
    December 31, 1989                        ---------     -----     ---------
Balance at December 31, 1989 .............   3,124,700       312       908,841

Net loss for the year ended
    December 31, 1990                        ---------     -----     ---------
Balance at December 31, 1990 .............   3,124,700       312       908,841

Shares received from employee
    as part of June 1991 sale
    of laboratory assets .................    (175,000)

Shares placed in treasury in
    June 1991 ............................     175,000

Net loss for the year ended
    December 31, 1991                        ---------     -----     ---------
Balance at December 31, 1991 .............   3,124,700       312       908,841

Net loss for the year ended
    December 31, 1992                        ---------     -----     ---------
Balance at December 31, 1992 .............   3,124,700       312       908,841

The accompanying notes are a part of this statement.

                                       F-7
<PAGE>
                              IMMUNE RESPONSE, INC.
                          (A Development Stage Company)
       Statement of Changes in Stockholders' Equity (Deficit)(Page 6 of 8)
       For the period from inception (May 14, 1984) to December 31, 1984
       and for the years ended December 31, 1985, 1986, 1987, 1988, 1989,
                1990, 1991, 1992, 1993, 1994, 1995, 1996 and 1997

                                                           DEFICIT     TOTAL
                                                 UN-       ACCUMU.     STOCK-
                                               REALIZED  DURING THE   HOLDERS'
                                                GAINS    DEVELOPMENT   EQUITY
                                               (LOSSES)     STAGE    (DEFICIT)
                                               --------   --------   ---------
Shares of common stock issued in
    January 1989, pursuant to
    the  exercise of 10,300 "A"
    warrants at $1.50 per share,
    net of costs of $184 ....................                          15,266

Shares of common stock issued
    January 1989, pursuant to the
    exercise of 27,900 "A" warrants
    at $1.50 per share, net of
    costs of $70 ............................                          41,780

Net loss for the year ended
    December 31, 1989 .......................             (210,550)  (210,550)
                                               --------   --------   --------
Balance at December 31, 1989 ................             (448,131)   461,022

Net loss for the year ended
    December 31, 1990 .......................             (170,446)  (170,446)
                                               --------   --------   --------
Balance at December 31, 1990 ................             (618,577)   290,576

Shares received from employee
    as part of June 1991 sale
    of laboratory assets

Shares placed in treasury in
    June 1991

Net loss for the year ended
    December 31, 1991 .......................             (247,279)  (247,279)
                                               --------   --------   --------
Balance at December 31, 1991 ................             (865,856)    43,297

Net loss for the year ended
    December 31, 1992 .......................              (61,434)   (61,434)
                                               --------   --------   --------
Balance at December 31, 1992 ................             (927,290)   (18,137)

The accompanying notes are a part of this statement.

                                       F-8
<PAGE>
                              IMMUNE RESPONSE, INC.
                          (A Development Stage Company)
       Statement of Changes in Stockholders' Equity (Deficit)(Page 7 of 8)
       For the period from inception (May 14, 1984) to December 31, 1984
       and for the years ended December 31, 1985, 1986, 1987, 1988, 1989,
                1990, 1991, 1992, 1993, 1994, 1995, 1996 and 1997

                                                                     ADDITIONAL
                                                  COMMON STOCK        PAID-IN
                                               SHARES      AMOUNT     CAPITAL
                                               ------      ------    ----------
Net loss for the year ended
    December 31, 1993                        ---------     -----     ---------
Balance at December 31, 1993 .............   3,124,700     $ 312     $ 908,841

Net loss for the year ended
    December 31, 1994                        ---------     -----     ---------
Balance at December 31, 1994 .............   3,124,700       312       908,841

Unrealized gain on available for
    sale securities

Net income for the year ended
    December 31, 1995                        ---------     -----     ---------
Balance at December 31, 1995 .............   3,124,700       312       908,841

Unrealized gain on available
  for sale securities
Net income for the year ended
  December 31, 1996                          ---------     -----     ---------
Balance at December 31, 1996 .............   3,124,700       312       908,841

Unrealized gain (loss) on available
    for sale securities
Net loss for the year ended
    December 31, 1997
                                             ---------     -----     ---------
Balance at December 31, 1997 .............   3,124,700     $ 312     $ 908,841
                                             =========     =====     =========

The accompanying notes are a part of this statement.

                                       F-9
<PAGE>
                              IMMUNE RESPONSE, INC.
                          (A Development Stage Company)
       Statement of Changes in Stockholders' Equity (Deficit)(Page 8 of 8)
       For the period from inception (May 14, 1984) to December 31, 1984
       and for the years ended December 31, 1985, 1986, 1987, 1988, 1989,
                1990, 1991, 1992, 1993, 1994, 1995, 1996 and 1997

                                                           DEFICIT     TOTAL
                                                 UN-       ACCUMU.     STOCK-
                                               REALIZED  DURING THE   HOLDERS'
                                                GAINS    DEVELOPMENT   EQUITY
                                               (LOSSES)     STAGE    (DEFICIT)
                                               --------   --------   ---------
Net loss for the year ended
    December 31, 1993 .......................                (40,873)   (40,873)
                                               --------   ----------   --------
Balance at December 31, 1993 ................               (968,163)   (59,010)

Net loss for the year ended
    December 31, 1994 .......................                (95,355)   (95,355)
                                               --------   ----------   --------
Balance at December 31, 1994 ................             (1,063,518)  (154,365)

Unrealized gain on available for
    sale securities .........................    48,260                  48,260

Net income for the year ended
    December 31, 1995 .......................                106,277    106,277
                                               --------   ----------   --------
Balance at December 31, 1995 ................    48,260     (957,242)       171

Unrealized gain on available for
  sale securities ...........................   (44,028)                (44,028)
Net income for the year ended
  December 31, 1996 .........................                 71,435     71,435
                                               --------   ----------   --------
Balance at December 31, 1996 ................     4,232     (885,807)    27,578

Unrealized gain (loss) on available
    for sale securities .....................       (93)                    (93)
Net loss for the year ended
    December 31, 1997 .......................                (29,691)   (29,691)
                                               --------   ----------   --------

Balance at December 31, 1997 ................  $  4,139    $(915,498)  $ (2,206)
                                               ========   ==========   ========

The accompanying notes are a part of this statement.

                                      F-10
<PAGE>
                              IMMUNE RESPONSE, INC.
                          (A Development Stage Company)
                            Statements of Operations

                                                                   FOR THE
                                                                    PERIOD
                                                                     FROM
                                                                  INCEPTION
                                               FOR THE YEARS       (MAY 14,
                                             ENDED DECEMBER 31,    1984) TO
                                             1997         1996   DEC. 31, 1997
                                             ----         ----   -------------
Revenue
    Interest income ...................   $   3,181    $  10,587   $ 125,269
    Laboratory test income ............                               50,187
    Revenue from sale of marketing
        rights to related entity ......        --           --         7,004
    Miscellaneous income ..............        --         10,800      12,697
    Gain on sale of stock .............        --         71,464     192,189
    Debt forgiveness income ...........        --           --        35,147
                                          ---------    ---------   ---------
                                              3,181       92,851     422,493
Expenses
    Write-off of deferred warrant
        registration costs ............        --           --        29,422
    Loss on sale of laboratory ........        --           --        74,710
    Realized loss on investment .......        --           --       178,668
    Laboratory supplies ...............        --           --        55,244
    Consulting fees to related entities        --           --        37,500
    Interest ..........................       1,079        8,570     138,306
    Abandoned license agreement costs .        --           --        50,000
    Research and development ..........        --           --        28,680
    Rent ..............................        --           --        79,232
    Services for stock ................        --           --         7,597
    Salary ............................        --           --       275,287
    Depreciation and amortization .....        --           --        34,848
    Bad debt expense ..................       9,619          634      17,971
    General and administrative ........      22,174       12,211     330,616
                                          ---------    ---------   ---------
                                             32,872       21,415   1,337,991
                                          ---------    ---------   ---------

        Net income (loss) .............   $ (29,691)   $  71,436   $(915,498)
                                          =========    =========   =========

        Net income (loss) per
          common share ................   $    (.01)   $    .024   $    (.37)
                                          =========    =========   =========

Weighted average number of
    common shares .....................   2,949,700    2,949,700   2,454,763
                                          =========    =========   =========

The accompanying notes are a part of this statement.

                                      F-11
<PAGE>
                              IMMUNE RESPONSE, INC.
                          (A Development Stage Company)
                            Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                            FOR THE
                                                                             PERIOD
                                                                              FROM
                                                                            INCEPTION
                                                   FOR THE YEARS             (MAY 14,
                                                 ENDED DECEMBER 31,          1984) TO
                                                 1997           1996      DEC. 31, 1997
                                                 ----           ----      -------------
<S>                                         <C>            <C>            <C>
Cash flows from operating activities:
    Net income (loss) ...................   $   (29,691)   $    71,436    $  (915,498)
      Adjustments to reconcile net
        income (loss) to net cash
        provided by operating
        activities:
      Depreciation ......................          --             --           34,848
      Abandoned license agreement costs .          --             --           50,000
      Services for stock ................          --             --            7,597
      Bad debt expense ..................         9,619            634         10,887
      Realized net gain on investments ..          --          (71,464)       (13,519)
      Write-off of deferred warrant
        registration costs ..............          --             --           29,422
      Changes in assets and liabilities:
      (Increase) in notes
         receivable .....................          --             --         (287,102)
      (Increase) in interest
         receivable .....................        (1,268)        (1,268)          --
      Increase in accounts payable
        to related entity ...............           284            402          3,227
      (Decrease) in accrued legal
        expenses payable to former
        director ........................          --          (52,062)          --
      Increase (decrease) in accounts
         payable to directors ...........          (400)        (8,000)          --
      Increase (decrease) accrued salary
         to officer .....................       (11,250)          --             --
      Increase (decrease) in interest
         payable to related entity ......       (21,821)         8,571         22,453
      Increase (decrease) in accounts
         payable to others ..............           448        (22,110)           448
                                            -----------    -----------    -----------

      Net cash (used) by
         operating activities ...........       (54,079)       (73,861)    (1,062,531)
                                            -----------    -----------    -----------

Cash flows from investing activities:
    Proceeds from sale of
      investment in MacGregor ...........          --           89,503        298,070
    Purchase of certificate of deposit ..          --             --          (75,278)
    Redemption of certificates of deposit          --             --           75,278
    Capital expenditures ................          --             --          (92,094)
    Disposal of laboratory assets .......          --             --           57,246
    Purchase of license agreement .......          --             --          (50,000)
    Acquisition of investment -
         related entity .................          --             --           (7,000)
                                            -----------    -----------    -----------
      Net cash provided by
         investing activities ...........          --           89,503        206,222
                                            -----------    -----------    -----------
</TABLE>

The accompanying notes are a part of this statement.                 (Continued)

                                      F-12
<PAGE>
                              IMMUNE RESPONSE, INC.
                          (A Development Stage Company)
                        Statements of Cash Flows (Page 2)

<TABLE>
<CAPTION>
                                                                            FOR THE
                                                                             PERIOD
                                                                              FROM
                                                                            INCEPTION
                                                   FOR THE YEARS             (MAY 14,
                                                 ENDED DECEMBER 31,          1984) TO
                                                 1997           1996      DEC. 31, 1997
                                                 ----           ----      -------------
<S>                                         <C>            <C>            <C>
Cash flows from financing activities:
    Proceeds from issuance of note
      payable to bank ...................   $      --      $      --      $    50,000
    Proceeds from issuance of notes
      payable to related entity
      and others ........................          --             --          144,964
    Payments to retire notes payable
      to bank ...........................          --                         (50,000)
    Payments to retire notes payable
      to others .........................          --             --          (68,864)
    Payments to retire notes payable
      to related entity .................       (76,100)          --          (76,100)
    (Increase) in deferred warrant
      registration costs ................          --             --          (29,422)
    Proceeds from issuance of common
      stock .............................          --             --          901,556
                                            -----------    -----------    -----------
      Net cash provided  (used) by
         financing activities ...........       (76,100)          --          872,134
                                            -----------    -----------    -----------

Net (decrease) increase in cash
    and cash equivalents ................      (130,179)        15,642         15,825

Cash and cash equivalents at
    beginning of period .................       146,004        130,362
                                            -----------    -----------    -----------
Cash and cash equivalents at
    end of period .......................   $    15,825    $   146,004    $    15,825
                                            ===========    ===========    ===========

Supplemental cash flow information:
    Interest received ...................   $     1,663    $     4,298    $    80,548
                                            ===========    ===========    ===========
    Interest paid .......................   $    21,821    $      --      $    76,731
                                            ===========    ===========    ===========

Non-cash financing activities:
    Common stock issued for services ....   $      --      $      --      $     7,605
                                            ===========    ===========    ===========
    Investment in common stock of
      related entity received in
      exchange for marketing rights .....   $      --      $      --      $     7,000
                                            ===========    ===========    ===========
    Exchange of note receivable for
      investment in SAC .................   $      --      $      --      $   281,506
                                            ===========    ===========    ===========
</TABLE>

The accompanying notes are a part of this statement.

                                      F-13
<PAGE>
                              IMMUNE RESPONSE, INC.
                          (A Development Stage Company)
                          Notes to Financial Statements

Note 1: SIGNIFICANT ACCOUNTING POLICIES
      
        Significant accounting policies are as follows:

a.   BUSINESS HISTORY
        
     Immune Response,  Inc. ("the Company") was  incorporated  under the laws of
the State of  Colorado on May 14, 1984 as Med Mark  Technologies,  Inc.  and was
inactive  during the period from July 1, 1985 to  November 9, 1986.  On November
10, 1986 the Company changed its name to Immune  Response,  Inc. and resumed its
organizational activities.

     The Company is in the development  stage as more fully defined in Statement
No. 7 of the Financial  Accounting  Standards Board.  Until the Company sold its
laboratory  assets in May 1991,  the Company  performed  research  and  provided
testing  facilities  for  disorders of the immune  system.  Although the Company
received laboratory test income and revenue from the sale of marketing rights in
1990 and early 1991,  the amounts  received  were minimal and did not  represent
revenues from the Company's principal planned line of business.  The Company has
been inactive since the sale of its lab assets in May 1991.

b.   INVESTMENTS

     Effective January 1, 1995, the Company adopted SFAS 115.  Accordingly,  the
Company's  investment  in equity  securities  of  IntraNet  Solutions  (formerly
MacGregor Sports & Fitness) is classified as available-  for-sale securities and
is reported at fair value of $8,097 compared to historical  cost of $3,958.  The
unrealized gain of $4,139 is reported as a separate  component of  stockholders'
equity.

c.   SHARES ISSUED IN EXCHANGE FOR SERVICES

     The fair value of shares  issued for  services  rendered  to the Company in
exchange for stock was determined by the officers and directors.

d.   INCOME TAXES

     The Company has made no  provision  for income  taxes  because of financial
statement  and tax losses.  At December  31, 1996 the Company has net  operating
loss carryforwards for book and tax purposes available as follows:

                       YEAR OF
                      EXPIRATION     BOOK           TAX
                         1999     $  61,200      $  61,200
                         2000        14,400         14,400
                         2001        19,720         17,600
                         2002        41,800         41,800
                         2003       102,500        102,500
                         2004       210,300        209,100
                         2005       169,700        175,700
                         2006       247,000        174,400
                         2007        61,000         20,500
                         2008        40,900         36,900
                         2009        95,000         14,000
                         2010      (106,277)        44,000
                         2011       (71,436)       (70,802)
                         2012        29,691         38,517
                                  ---------      ---------
                                  $ 915,498      $ 879,815
                                  =========      =========

                                      F-14
<PAGE>
                              IMMUNE RESPONSE, INC.
                          (A Development Stage Company)
                          Notes to Financial Statements

Note 1: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

e.   NET INCOME (LOSS) PER COMMON SHARE

     The net loss per common share is computed by dividing the net income (loss)
by the weighted average number of shares  outstanding for each period shown. All
of the common  stock  issued prior to the public  offering is  considered  to be
"cheap"  stock in accordance  with Staff  Accounting  Bulletin  Topic 4d, and is
treated as outstanding  since  inception of the Company in the weighted  average
number of shares computation.

f.   CASH EQUIVALENTS

     For the purpose of the statements of cash flows, the Company  considers all
highly liquid investments purchased with an original maturity of three months or
less to be cash  equivalents  provided  they are not  legally  restricted  as to
withdrawal.

g.   RECLASSIFICATIONS

     Certain  minor  reclassifications  have  been  made to the  1996  financial
statements to conform to the 1997 presentation.

Note 2: NOTE RECEIVABLE

     Included in the balance  sheet at December  31, 1996 was a note  receivable
and  interest   receivable   (both  net  of  reserves)  of  $6,338  and  $2,013,
respectively,  from MacGregor Sports & Fitness, Inc. See Note 3 herein. The note
bears  interest  at 12 percent  per annum.  During  1997,  this  receivable  was
determined by management to be uncollectible and was written-off.

Note 3: INVESTMENT IN INTRANET SOLUTIONS (FORMERLY MACGREGOR SPORTS AND
FITNESS, INC.)

     In January of 1994,  the Company  converted its Class B preferred  stock of
MacGregor  Sports & Fitness into 133,904  shares of  unrestricted  common stock.
This  conversion  was completed in April of 1994 resulting in the Company owning
167,360  unrestricted  shares of MacGregor's  common stock at December 31, 1994.
During the fourth quarter of 1995, the Company sold 133,904 of the shares in the
open market for $208,567. During January of 1996, the Company sold an additional
27,500 shares in the open market for $89,503 leaving 5,956 shares still owned by
the Company.

     MacGregor successfully merged with Technical Publishing Solutions,  Inc. on
July 31, 1996 and the combined entity was renamed IntraNet  Solutions.  IntraNet
provides  integrated  solutions to large  corporations  for the  management  and
distribution  of business  critical  information  contained in  documents  using
proprietary  and  standard  internet  technologies.  In  October  1996  IntraNet
declared a 1-for-4  reverse stock split resulting in 1,489 shares still owned by
the Company at December 31, 1996 and 1997.

Note 4: NOTES PAYABLE

     Notes payable consist of the following:

                                      F-15
<PAGE>
                              IMMUNE RESPONSE, INC.
                          (A Development Stage Company)
                          Notes to Financial Statements

Note 4: NOTES PAYABLE (CONTINUED)
                                                              DECEMBER 31,
                                                            1997         1996
NOTES  PAYABLE - RELATED  ENTITY (a)
Uncollateralized  notes payable to related entity
issued May 1990 to June 1994, bearing interest
at 12 percent per annum, payable upon demand.               $ --        $76,100
                                                            ====        =======

(a) One of the Company's directors is also an officer of this entity.

Note 5: SALE OF STOCK TO PUBLIC

     On July 5, 1988 the Company completed a sale of 900,000 units of its $.0001
par value common  stock in a public  offering.  Net proceeds  from the sale were
$700,239  after  deducting  the  Underwriter's  commission of $90,000 and direct
offering costs of $109,761.

     Each unit consisted of one share of the Company's common stock, one Class A
common stock purchase warrant and one Class B common stock purchase warrant. One
Class A unit  warrant  entitles the holder to purchase one share of common stock
at $1.50 per share. One Class B unit warrant entitles the holder to purchase one
share of common  stock at $2.00  per  share.  The  Class A and Class B  warrants
expired on December 16, 1995.

     In October  and  November,  1988,  Class A warrants  to purchase a total of
54,700  shares of common stock of the Company were  exercised at $1.50 per share
for total proceeds of $81,950,  net of costs. In October,  1988 Class B warrants
to purchase  3,000  shares of common  stock were  exercised  at $2 per share for
total proceeds of $6,000. In January,  1989 Class A warrants to purchase a total
of 38,200  shares of common  stock of the Company  were  exercised  at $1.50 per
share for total proceeds of $57,046, net of costs.

     In  connection  with this public  offering,  the  Company  also sold 28,800
shares of its common  stock to the  Underwriter  for a total  price of $288.  No
warrants were exercised by the Underwriter.

     On  February  10,  1997 the  Company's  shareholders  approved a 1-for- 100
reverse split whereby every one hundred shares of the Company's $.0001 par value
common stock were  converted to one share of $.0001 par value common stock.  The
shareholders  also approved a reduction in the number of authorized  shares from
950,000,000 to 25,000,000  effective  March 3, 1997. As a result,  the Company's
issued and  outstanding  shares at both December 31, 1997 and 1996, as restated,
were 3,124,700 and 2,949,700, respectively. The financial statements herein have
been adjusted to reflect the  1-for-100  reverse stock split back to the date of
inception.

Note 6: RELATED PARTY TRANSACTIONS

     During 1997 and 1996, the Company paid $2,000 and $1,400, respectively,  to
each of its three directors (1997) and two directors (1996) for their attendance
in the meetings held in each year.

                                      F-16
<PAGE>
                              IMMUNE RESPONSE, INC.
                          (A Development Stage Company)
                          Notes to Financial Statements

Note 6: RELATED PARTY TRANSACTIONS (CONTINUED)

     During  the year ended  December  31,  1995 and to the  present  date,  the
Company has utilized approximately 150 square feet of office space from Equitex,
Inc., a significant shareholder, on a rent free month-to-month basis.

     See Note 4, herein,  regarding notes payable to a related entity which were
paid off during 1997.

Note 7: SALE OF LABORATORY ASSETS

     In May 1991,  the  Company  sold  certain  assets  with a net book value of
$59,971 to the Company's laboratory director,  who was also the Company's former
President,  and also agreed to pay this individual  $15,623  ($10,000 cash and a
45-day bank note payable for the remaining  $5,623).  In return,  the laboratory
director:

     1) agreed to the return of 175,000 shares of the Company's  common stock to
the  Company,
     2) agreed to the  cancellation  of his stock  options to  purchase  150,000
shares of the Company's common stock at $.10 per share.
     3) agreed to release the  Company  from any and all  remaining  obligations
under his employment agreement with the Company.

     This sale of assets was approved by the Company's  stockholders  on June 3,
1991.

Note 8: CONTINGENCY

     The Company has  minimal  capital  resources  presently  available  to meet
obligations which normally can be expected to be incurred by similar  companies,
and has an accumulated deficit of ($915,498) at December 31, 1997. These factors
raise  substantial  doubt  about the  Company's  ability to  continue as a going
concern.

     The Company has no significant fixed commitments as of December 31, 1997 or
the present  date.  Management  believes  that the  remaining  minimal cash flow
requirements needed to pursue potential mergers or other business  opportunities
can be met through use of the  Company's  current  cash  balance and  additional
sales of IntraNet stock.



                                      F-17