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, 1996

    | |  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:   $92,851

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 7, 1997.

Documents incorporated by reference: NONE

Transitional Small Business Disclosure Format:       Yes / /  No /X/

<PAGE>

                              IMMUNE RESPONSE, INC.
                                   FORM 10-KSB

                                     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.

     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.

                                      -1-
<PAGE>

     (2)(3) During the year ended December 31, 1996, 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.  Prior to 1995, the Registrant's
only  asset was  167,360  shares of the  common  stock of  MacGregor  Sports and
Fitness,  Inc.  ("MacGregor")  a  publicly-traded  (NASDAQ)  company  which  was
primarily engaged in licensing the usage of the MacGregor trade name for certain
sporting  goods related  products in exchange for  royalties.  During 1995,  the
Registrant  sold 133,904 of these  shares for net  proceeds of $208.567.  During
1996,  27,500 shares were sold for net proceeds of $89,504.  The  Registrant has
used the proceeds  from the sales of the  MacGregor  common stock to  extinguish
debt,  fund  its  operating  needs  and  provide  capital  for  future  business
activities.

     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.  Following the
merger and a  subsequent 4 for 1  reverse-split  declared by IntraNet on October
15, 1996, the Registrant owned 1,489 shares of IntraNet common stock.

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

     (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.

                                      -2-
<PAGE>

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 shareholder.

(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, 1996.



                                     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 1995 or 1996.

(b) Holders

     The number of record holders of the  Registrant's  Common Stock as of April
7, 1997,  was 620  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

                                      -3-
<PAGE>

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

(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 MacGregor
during the fourth  quarter of 1995 and the first quarter of 1996, 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 1997 as compared to
1996,  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  shareholders  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, 1996 was $92,851 as compared
to $157,141  for 1995.  A majority of the revenue for both years was produced by
the sale of a majority of the Registrant's  investment in MacGregor as described
more  fully  in Part  1.  Item 1  Description  of  Business.  In  addition,  the
Registrant  recorded  interest  income  from  its  loan  to  Ocurest  as well as
miscellaneous  income from a fee paid by Ocurest.  Total  expenses for 1996 were
$21,415 as compared to $50,864 during 1995.  Expenses decreased 57% in 1996 over
1995  as a  result  of  lower  interest  expense  for  1996  as  the  Registrant
extinguished  a significant  portion of its notes  payable.  In addition,  lower
legal expenses were recorded  during 1996  contributing to a decrease in general
and administrative  expenses of approximately 65%. Net income for the year ended
December  31, 1996 was  $71,436 as  compared to income of $106,277  for the year
ended December 31, 1995.

     The gain on the sale of the MacGregor shares in 1995 and 1996 accounted for
the significant  increase in the Registrant's  profitability during the past two
years.  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 with which
to produce future income.  As a result,  the revenues and net income produced in

                                      -4-
<PAGE>

1995 and 1996 are not expected to continue in 1997 in the absence of a change in
the Registrant's inactive business status.

     The Company's  net worth at December 31, 1996 was $27,578  compared to $171
at the year ended December 31, 1995. The increase in the  Registrant's net worth
at December 31, 1996 as compared to the previous  year is due to the  Registrant
extinguishing a significant amount of its notes and accounts payable in 1996 for
which it  received  certain  concessions  from its  creditors  on the payment of
interest  due coupled  with the profits  received  on the  Registrant's  sale of
MacGregor common stock.

     The financial  results  incurred during 1996 are not indicative of what can
be  expected  for 1997 as the  Registrant  has sold a majority  of its  IntraNet
common  stock.  While  expenses are  expected to continue as similar  levels for
1997,  revenues are expected to decrease as the  Registrant  has no  significant
source of revenue. 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,  1996,  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

<TABLE>
<CAPTION>
                                                                       Length
                                                                         of
Name                         Age       Offices held                    Service
----                         ---       ------------                    -------
<S>                          <C>       <C>                             <C>
Joseph W. Hovorka            67        President, Treasurer,           Since
                                       Principal Executive,            1987
                                       Financial and Accounting
                                       Officer and Director

Thomas B. Olson              31        Secretary and Director          Since
                                                                       1990

R. Andrew Girardot, Jr.      53        Director                        Since
                                                                       1996
</TABLE>

                                      -5-
<PAGE>

     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.

     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
shareholder 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 has been a director of the
Registrant  since November 1996.  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

                                      -6-
<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 1996, as well as
each of the previous three 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, 1996,  1995
and 1994.

<TABLE>
<CAPTION>
                           SUMMARY COMPENSATION TABLE

                            Annual Compensation ($$)
                             ------------------------
(a)                                        (b)                      (c)
Name & Principal                                                  Salary
Position                                  Year                      ($)
---------                                 ----                    -------
<S>                                       <C>                     <C>    
Joseph W. Hovorka                         1996                    18,000 <F1>
President, Treasurer
Principal Executive
Officer and Accounting
Officer

Joseph W. Hovorka                         1995                    18,000 <F1>

Joseph W. Hovorka                         1994                    18,000 <F1>
----------
<FN>
<F1>  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.
</FN>
</TABLE>

                                      -7-
<PAGE>


(c) Option/SAR Grants Table

     The  Registrant  made no grants of stock  options  or SARs  during the year
ended December 31, 1996.

(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, 1996.

(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,  each receive $400 for each Board of Directors  meeting  attended
either in person or by  telephone.  For the year ended  December  1996,  Messrs.
Hovorka  and Olson each  received  $1,600 for the four  meetings  held while Dr.
Girardot received $400 for the one meeting he attended following his appointment
to the Board of  Directors.  Each member of the Board of Directors  also receive
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,
1996.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The  following  table  contains  information  at  April  7,  1997 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 7, 1997.  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.

                                      -8-
<PAGE>

<TABLE>
<CAPTION>
Name and address                Amount and Nature of         Percent
of beneficial owner          Beneficial Ownership <F1>       of Class
-------------------          -------------------------       --------
<S>                                   <C>                      <C> 
Joseph N. Hovorka                         -0-                   0.0%
7315 East Peakview Avenue
Englewood, Colorado 80111

Thomas B. Olson                       100,000 <F2>              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 <F3>             16.2%
7315 East Peakview Avenue
Englewood, Colorado 80111

All officers and directors            100,000 <F2>              3.4%
as a group (three persons)
--------
<FN>
<F1> The beneficial owners exercise sole voting and investment power.

<F2> Includes  100,000  shares owned by Equitex,  Inc. of which Mr. Olson is the
Secretary. Mr. Olson disclaims beneficial ownership of these securities.

<F3> Includes  100,000  shares owned by Equitex,  Inc. of which  Mr. Fong is the
President. Mr. Fong disclaims beneficial ownership of these securities.
</FN>
</TABLE>

(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 shareholder 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.

     During the year ended  December  31,  1995 as in previous  years,  Equitex,
Inc., a significant  shareholder  of the  Registrant  of which the  Registrant's
Secretary is also an officer,  loaned $10,000 to the  Registrant.  When added to
the previous  years' balance,  the total loans  outstanding at December 31, 1995
were  $76,100.  These loans are due on demand and carry an interest  rate of 10%
per annum.  Total  interest due at December 31, 1996 on these loans was $44,274.
During the first quarter of 1997,  $75,000  principal balance of these loans was
repaid by the Registrant leaving $1,100 principal and all of the interest due.

                                      -9-
<PAGE>

     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
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

                                      -10-
<PAGE>


                                     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

<TABLE>
<CAPTION>
<S>                                                                          <C>
     Report of Independent Certified Public Accountants......................F-1
     Balance Sheet at December 31, 1996......................................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 31,1996......................................F-3
     Statements of Operations for the years ended December 31, 1996
      and 1995 and the period from inception (May 14, 1984) to
      December 31, 1996.....................................................F-11
     Statements of Cash Flows for the years ended December 31, 1996
      and 1995 and the period from inception (May 14, 1984)
      to December 31, 1996..................................................F-12
     Notes to Financial Statements..........................................F-14
</TABLE>

     2. Financial Statement Schedules

        Not applicable


     3. Exhibits
<TABLE>
<CAPTION>
         <S>    <C>
         3.1    Articles of Incorporation <F1>
         3.2    Bylaws <F1>
         21.1   Subsidiaries <F1>
--------
<FN>
<F1>  Incorporated  by reference from the like numbered  exhibits filed with the
Registrant's Registration Statement on Form S-l8, No. 33-17922-C
</FN>
</TABLE>

(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, 1997
                                  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, 1997              /S/ JOSEPH W. HOVORKA
                                  ---------------------------------------
                                  Joseph W. Hovorka, President,
                                  Treasurer and Director
                                  (Principal Executive, Financial,
                                  and Accounting Officer)




Date: April 14, 1997              /S/ THOMAS B. OLSON
                                  ---------------------------------------
                                  Thomas B. Olson, Secretary and Director




Date: April 14, 1997              /S/ R. ANDREW GIRARDOT, JR.
                                  ---------------------------------------
                                  R. Andrew Girardot, Jr., 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, 1996 and the related statements of
operations,  changes in  stockholders'  equity  (deficit) and cash flows for the
years ended  December 31, 1996 and 1995 and for the period from  inception  (May
14,  1984)  to  December  31,  1996.   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,  1996  and  the  results  of its
operations  and its cash flows for the years ended  December  31, 1996 and 1995,
and for the  period  from  inception  (May 14,  1984) to  December  31,  1996 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  ($885,807)  at December 31, 1996.  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.


                                       /S/ DAVIS & CO., CPAs, P.C.
                                       Davis & Co., CPAs, P.C.
                                       Certified Public Accountants
Englewood, Colorado
March 21, 1997

                                       F-1

<PAGE>

                              IMMUNE RESPONSE, INC.
                          (A Development Stage Company)
                                  Balance Sheet
                                December 31, 1996

<TABLE>
<S>                                                                   <C>
ASSETS
Current assets
    Cash and cash equivalents ..................................      $ 146,004
    Note receivable, net of allowance
       for doubtful accounts of $6,338 .........................          6,338
    Interest receivable, net of allowance
         for doubtful accounts of $2,013 .......................          2,013
                                                                      ---------
                                                                        154,355
Other assets
    Investment in IntraNet Solutions (cost of $3,958) ..........          8,190
                                                                      ---------
                                                                      $ 162,545
                                                                      =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
    Notes payable - related entity .............................      $  76,100
    Accounts payable - related entity ..........................          2,943
    Accrued salary to officer ..................................         11,250
    Accounts payable - directors ...............................            400
    Interest payable - related entity ..........................         44,274
                                                                      ---------
                                                                        134,967

Contingency (Note 8)

Stockholders' equity
    Common stock, $.0001 par value; 25,000,000
       shares authorized; 3,124,700 shares
       issued; 2,949,700 shares outstanding ....................            312
    Additional paid-in capital .................................        908,841
    Unrealized gain on available for sale securities ...........          4,232
    Deficit accumulated during the
       development stage .......................................       (885,807)
    Less:  treasury stock, at cost
       (175,000 shares) ........................................           --
                                                                      ---------
                                                                         27,578
                                                                      ---------
                                                                      $ 162,545
                                                                      =========
</TABLE>

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 and 1996

<TABLE>
<CAPTION>
                                                                        ADDITIONAL
                                                COMMON STOCK             PAID-IN
                                            SHARES         AMOUNT        CAPITAL
                                         ------------   ------------   ------------
<S>                                      <C>            <C>            <C>
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
</TABLE>

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 and 1996

<TABLE>
<CAPTION>
                                                          DEFICIT        TOTAL
                                             UN-          ACCUMU.        STOCK-
                                           REALIZED     DURING THE      HOLDERS'
                                            GAINS       DEVELOPMENT      EQUITY
                                           (LOSSES)        STAGE        (DEFICIT)
                                         ------------   ------------   ------------
<S>                                      <C>            <C>            <C>
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
</TABLE>

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 and 1996

<TABLE>
<CAPTION>
                                                                        ADDITIONAL
                                                COMMON STOCK             PAID-IN
                                            SHARES         AMOUNT        CAPITAL
                                         ------------   ------------   ------------
<S>                                      <C>            <C>            <C>
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
</TABLE>

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 and 1996

<TABLE>
<CAPTION>
                                                          DEFICIT        TOTAL
                                             UN-          ACCUMU.        STOCK-
                                           REALIZED     DURING THE      HOLDERS'
                                            GAINS       DEVELOPMENT      EQUITY
                                           (LOSSES)        STAGE        (DEFICIT)
                                         ------------   ------------   ------------
<S>                                      <C>            <C>            <C>
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
</TABLE>

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 and 1996

<TABLE>
<CAPTION>
                                                                        ADDITIONAL
                                                COMMON STOCK             PAID-IN
                                            SHARES         AMOUNT        CAPITAL
                                         ------------   ------------   ------------
<S>                                      <C>            <C>            <C>
Shares of common stock issued in
    January 1989, pursuant to
    the exercise of 103 "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 279 "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
</TABLE>

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 and 1996

<TABLE>
<CAPTION>
                                                          DEFICIT        TOTAL
                                             UN-          ACCUMU.        STOCK-
                                           REALIZED     DURING THE      HOLDERS'
                                            GAINS       DEVELOPMENT      EQUITY
                                           (LOSSES)        STAGE        (DEFICIT)
                                         ------------   ------------   ------------
<S>                                      <C>            <C>            <C>
Shares of common stock issued in
    January 1989, pursuant to the
    exercise of 103 "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 279 "A" warrants
    at $.015 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)
</TABLE>

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 and 1996

<TABLE>
<CAPTION>
                                                                        ADDITIONAL
                                                COMMON STOCK             PAID-IN
                                            SHARES         AMOUNT        CAPITAL
                                         ------------   ------------   ------------
<S>                                      <C>            <C>            <C>
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
                                         ============   ============   ============
</TABLE>

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 and 1996

<TABLE>
<CAPTION>
                                                          DEFICIT        TOTAL
                                             UN-          ACCUMU.        STOCK-
                                           REALIZED     DURING THE      HOLDERS'
                                            GAINS       DEVELOPMENT      EQUITY
                                           (LOSSES)        STAGE        (DEFICIT)
                                         ------------   ------------   ------------
<S>                                      <C>            <C>            <C>
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
                                         ============   ============   ============
</TABLE>

The accompanying notes are a part of this statement.

                                      F-10

<PAGE>

                              IMMUNE RESPONSE, INC.
                          (A Development Stage Company)
                            Statements of Operations

<TABLE>
<CAPTION>
                                                                          FOR THE
                                                                          PERIOD
                                                                           FROM
                                                                         INCEPTION
                                                FOR THE YEARS            (MAY 14,
                                              ENDED DECEMBER 31,         1984) TO
                                             1996           1995       DEC. 31, 1996
                                         ------------   ------------   -------------
<S>                                      <C>            <C>            <C>
Revenue
    Interest income ..................   $     10,587   $      1,268   $    122,088
    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        120,726        192,189
    Debt forgiveness income ..........           --           35,147         35,147
                                         ------------   ------------   ------------
                                               92,851        157,141        419,312
Expenses
    Write-off of deferred warrant
        registration costs ...........           --             --           29,422
    Loss on sale of laboratory .......           --             --           74,710
    Realized loss on investment ......           --              875        178,668
    Laboratory supplies ..............           --             --           55,244
    Consulting fees to related entities          --             --           37,500
    Interest .........................          8,570         15,261        137,227
    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 .................            634            634          8,352
    General and administrative .......         12,211         34,094        308,442
                                         ------------   ------------   ------------
                                               21,415         50,864      1,305,119
                                         ------------   ------------   ------------

        Net income (loss) ............   $     71,436   $    106,277   $   (885,807)
                                         ============   ============   ============

        Net income (loss) per
          common share ...............   $       .024   $        .04   $       (.37)
                                         ============   ============   ============

Weighted average number of
    common shares ....................      2,949,700      2,949,700      2,415,211
                                         ============   ============   ============
</TABLE>

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
                                                 1996           1995       DEC. 31, 1996
                                             ------------   ------------   -------------
<S>                                          <C>            <C>            <C>
Cash flows from operating activities:
    Net income (loss) ....................   $     71,436   $    106,277   $   (885,807)
      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 ...................            634            634          1,268
      Realized net gain on investments ...        (71,464)      (119,851)       (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)        (4,026)
      Increase in accounts payable
        to related entity ................            402            613          2,943
      (Decrease) in accrued legal expenses
        payable to former director .......        (52,062)          --             --
      Increase (decrease) in accounts
         payable to directors ............         (8,000)         2,995            400
      Increase-accrued salary to officer .           --             --           11,250
      Increase in interest payable to
         related entity ..................          8,571          8,037         44,274
      (Decrease) in interest payable
         to others .......................           --          (27,923)          --
      Increase (decrease) in accounts
         payable to others ...............        (22,110)        11,134           --
                                             ------------   ------------   ------------
      Net cash (used) by
         operating activities ............        (73,861)       (19,352)    (1,008,452)
                                             ------------   ------------   ------------

Cash flows from investing activities:
    Proceeds from sale of
      investment in MacGregor ............         89,503        208,567        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        208,567        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
                                                 1996           1995       DEC. 31, 1996
                                             ------------   ------------   -------------
<S>                                          <C>            <C>            <C>
Cash flows from financing activities:
    Proceeds from issuance of note
      payable to bank ....................   $       --     $       --     $     50,000
    Proceeds from issuance of notes
      payable to related entities
      and others .........................           --           10,000        144,964
    Payments to retire notes payable
      to bank ............................           --             --          (50,000)
    Payments to retire notes payable
      to others ..........................           --          (68,864)       (68,864)
    (Increase) in deferred warrant
      registration costs .................           --             --          (29,422)
    Proceeds from issuance of common
      stock ..............................           --             --          901,556
      Net cash provided  (used) by
         financing activities ............           --          (58,864)       948,234
                                             ------------   ------------   ------------
Net increase in cash and
    cash equivalents .....................         15,642        130,351        146,004

Cash and cash equivalents at
    beginning of period ..................        130,362             11           --
                                             ------------   ------------   ------------
Cash and cash equivalents at
    end of period ........................   $    146,004   $    130,362   $    146,004
                                             ============   ============   ============

Supplemental cash flow information:
    Interest received ....................   $      4,298   $       --     $     78,885
                                             ============   ============   ============
    Interest paid ........................   $       --     $       --     $     54,910
                                             ============   ============   ============

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

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. DEFERRED WARRANT REGISTRATION COSTS

     Registration  costs incurred in connection with a post-effective  amendment
registration  statement to register outstanding stock warrants had been deferred
and were to be charged against capital if the registration  generated additional
capital, and against operations if the registration did not result in additional
capital.  At  December  31,  1991,  management  determined  that  $15,000 of the
original  costs  deferred were for work that was no longer  useable.  Such costs
were charged to 1991  operations.  At December 31, 1994,  management  determined
that the $14,422 of  remaining  original  costs were for work that was no longer
usable and such costs were charged to 1994 operations.

c. FIXED ASSETS

     Expenditures  for property and equipment  and for renewals and  betterments
which extend the originally estimated economic life of assets are capitalized at
cost.  Expenditures  for  maintenance,  repairs and other  renewals of items are
charged  to  expense.  When  items are  disposed  of,  the cost and  accumulated
depreciation are eliminated from the accounts,  and any gain or loss is included
in the results of operations.

     The provision  for  depreciation  was  calculated  using the  straight-line
method over the estimated useful lives of two to seven years.

d. 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 $8,190 compared to historical  cost of $3,958.  The
unrealized gain of $4,232 is reported as a separate  component of  stockholders'
equity.

                                      F-14

<PAGE>

                              IMMUNE RESPONSE, INC.
                          (A Development Stage Company)
                          Notes to Financial Statements

Note 1: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

e. 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.

f. 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:

<TABLE>
<CAPTION>
            YEAR OF
           EXPIRATION          BOOK            TAX
           ----------        --------       --------
              <S>            <C>            <C>     
              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)
                             --------       --------
                             $885,807       $841,298
                             ========       ========
</TABLE>

g. 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.

h. 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.

i. RECLASSIFICATIONS

     Certain  minor  reclassifications  have  been  made to the  1995  financial
statements to conform to the 1996 presentation.

                                      F-15

<PAGE>

                              IMMUNE RESPONSE, INC.
                          (A Development Stage Company)
                          Notes to Financial Statements

Note 2: NOTE RECEIVABLE

     Included in the balance sheet at December 31, 1996 is 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.  The collection of this  receivable is  indeterminable;
however, management believes this receivable (as adjusted) is fully collectible.

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.

     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.

Note 4: NOTES PAYABLE
               
     Notes payable consist of the following:
<TABLE>
<CAPTION>
                                                              DECEMBER 31,
                                                          1996            1995
                                                         -------         -------
<S>                                                      <C>             <C> 
NOTES  PAYABLE - RELATED  ENTITY (a)<F1>  
Uncollateralized  notes payable to related
entity issued May 1990 to June 1994, bearing interest
at 12 percent per annum, payable upon demand.            $76,100         $76,100
                                                         =======         =======
--------
<FN>
<F1>(a) One of the Company's directors is also an officer of this entity.
</FN>
</TABLE>

Note 5: SALE OF STOCK TO PUBLIC

     On July 5, 1988 the Company  completed a sale of 900,000 units (as adjusted
for the stock split  described in Note 9, herein) 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  entitled 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.

                                      F-16

<PAGE>

                              IMMUNE RESPONSE, INC.
                          (A Development Stage Company)
                          Notes to Financial Statements

Note 5: SALE OF STOCK TO PUBLIC (CONTINUED)

     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.

Note 6: RELATED PARTY TRANSACTIONS

     During 1995 and 1996, the Company paid $2,800 and $1,400,  respectively  to
each of its two directors  for their  attendance in meetings held from late 1994
through 1996.

     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.  Since
December 31, 1996, the Company has repaid  $75,000 of the principal  balance due
on these notes.

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 as discussed in Note 5a.,
herein,

     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 ($885,807) at December 31, 1996. These factors
raise  substantial  doubt  about the  Company's  ability to  continue as a going
concern.

                                      F-17

<PAGE>

                              IMMUNE RESPONSE, INC.
                          (A Development Stage Company)
                          Notes to Financial Statements

Note 8: CONTINGENCY (CONTINUED)

     The Company has no significant fixed commitments as of December 31, 1996 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.

Note 9: SUBSEQUENT EVENT - REVERSE STOCK SPLIT

     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 December 31, 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.

                                      F-18