Form 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities and Exchange Act of 1934
For the period of June, July, August and September 2001
-------------------------------------------------------------
Immune Network Ltd.
------------------------------------------------------------------------
(Translation of registrant's name into English)
3650 Wesbrook Mall, Vancouver, BC, V6S 2L2, Canada
------------------------------------------------------------------------
(Address of principal executive offices)
[Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F
---------- ----------
[Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes No X
---------- ----------
[If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82-
-------------------
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Immune Network Ltd.
----------------------------------------
(Registrant)
Date October 16, 2001 By /s/ Allen Bain
----------------------- ----------------------------------------
(Signature)
Allen Bain, President and Chief
Executive Officer
*Print the name and title of the signing officer under his signature.
Table of Exhibits
Exhibit 1-Quarterly Report
2.1 Schedule A
2.2 Schedules B and C
Exhibit 2 - News Releases
Immune Network Cancels Share Consolidation
Immune Network Announces Cromedica Deal Closure and InNexus Progress
Immune Network Reports Second Quarter Results
Immune Network Signs Letter of Intent for CDT License
Immune Software Subsidiary Signs Contract with YMCA
Exhibit 3 - Material Change Reports
July 26th
August 2nd
August 29th
September 17th
September 19th
British Columbia QUARTERLY REPORT
Securities Commission Form 51-901F
--------------------------------------------------------------------------------
================================================================================
Issuer Details For Quarter Ended Date of Report
Name of Issuer Y M D
IMMUNE NETWORK LTD. JUNE 30, 2001 01 08 29
--------------------------------------------------------------------------------
Issuer's Address
3650 WESBROOK MALL
--------------------------------------------------------------------------------
City Province Postal Code Issuer Fax No. Issuer Telephone No
VANCOUVER B.C. V6S 2L2 (604) 222-5542 (604) 222-5541
--------------------------------------------------------------------------------
Contact Person Contact's Position Contact Telephone No.
ALLEN BAIN PRESIDENT & CEO (604) 222-5541
--------------------------------------------------------------------------------
Contact Email Address Web Site Address
info@immunenetwork.com http://www.immunenetwork.com
================================================================================
CERTIFICATE
The three schedules required to complete this Quarterly Report are attached and
the disclosure contained therein has been approved by the Board of Directors. A
copy of this Quarterly Report will be provided to any shareholder who requests
it.
================================================================================
Director's Signature Print Full Name Date Signed
Y M D
/s/ Allen I. Bain ALLEN I. BAIN 01 08 29
--------------------------------------------------------------------------------
Director's Signature Print Full Name Date Signed
Y M D
/s/ Mike Muzylowski MIKE MUZYLOWSKI 01 08 29
================================================================================
Page 1
IMMUNE NETWORK LTD.
INTERIM FINANCIAL STATEMENTS
JUNE 30, 2001
--------------------------------------------------------------------------------
IMMUNE NETWORK LTD.
Amalgamated under the Company Act of British Columbia
(a development stage enterprise)
(unaudited - prepared by management)
(expressed in Canadian Dollars)
CONSOLIDATED BALANCE SHEETS
As at June 30 As at December 31
---------------------------------------------------
2001 2000
$ $
ASSETS
--------------------------------------------------------------------------------
Current
Cash and cash equivalents 465,858 2,578,731
Short-term investment 55,712 5,000
Restricted investments 75,000 75,000
Accounts receivable 1,153,625 1,063,543
Unbilled revenue 242,371 210,555
Note receivable 750,000 -
Investment tax credit and taxes recoverable - 94,077
Government grants receivable - 10,000
Deposits and prepaid expenses 192,374 262,906
--------------------------------------------------------------------------------
2,934,940 4,299,812
--------------------------------------------------------------------------------
Loan receivable from an officer - -
Capital assets 1,744,198 1,774,140
Intellectual properties 283,238 407,724
Long-term investments 7,865,429 8,857,877
Other assets 3,714,758 3,868,158
Goodwill 5,127,513 5,408,143
--------------------------------------------------------------------------------
21,670,076 24,615,854
================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities 3,647,228 1,259,980
Unearned revenue 214,323 177,531
Current portion of long-term debt 1,617,882 513,553
Current portion of obligations under capital leases 133,283 128,018
Current Income Tax payable 213,000 -
--------------------------------------------------------------------------------
5,825,716 2,079,082
Loan payable to shareholder - -
Obligations under capital leases 181,202 240,605
Long-term liability 455,600 1,133,296
Future income taxes 3,109,000 3,109,000
Deferred dilution gain 786,669 877,439
Minority interest in subsidiaries 3,835,983 4,148,683
--------------------------------------------------------------------------------
14,194,170 11,588,105
--------------------------------------------------------------------------------
Shareholders' equity
Preferred shares 7,532,021 7,532,021
Common shares 17,887,253 17,790,272
Special warrants - 75,000
Contributed surplus 57,589 57,589
Dividends (38,484) -
Deficit (17,962,473) (12,427,133)
--------------------------------------------------------------------------------
7,475,906 13,027,749
--------------------------------------------------------------------------------
21,670,076 24,615,854
================================================================================
On behalf of the Board:
/s/ Allen I. Bain /s/ Mike Muzylowski
Allen I. Bain, Director Mike Muzylowski, Director
Page 2
IMMUNE NETWORK LTD.
INTERIM FINANCIAL STATEMENTS
JUNE 30, 2001
--------------------------------------------------------------------------------
IMMUNE NETWORK LTD.
Amalgamated under the Company Act of British Columbia
(a development stage enterprise)
(unaudited - prepared by management)
(expressed in Canadian Dollars)
CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT
Current fiscal year to Preceding fiscal year
date Current interim period to date Preceding interim period
June 30 June 30 June 30 June 30
------------------------------------------------- -------------------------------------------------
2001 2001 2000 2000
$ $ $ $
------------------------------------------------- ------------------------------------------------
REVENUE
Contract revenue $ 2,877,393 $ 1,487,325 $ - $ -
Direct costs on contract revenue (1,715,645) (886,920) - -
--------------------------------------------------------------------------------- ------------------------------------------------
Gross margin 1,161,748 600,405 - -
Rental revenue 640,620 333,285 - -
--------------------------------------------------------------------------------- ------------------------------------------------
1,802,368 933,690 - -
--------------------------------------------------------------------------------- ------------------------------------------------
EXPENSES
Research and development 4,081,546 2,108,079 4,497,100 4,124,064
General and administrative 2,335,992 1,256,739 523,790 290,123
Amortization 672,668 322,029 79,812 46,300
Loss on writedown of intellectual
properties 94,682 94,682 - -
--------------------------------------------------------------------------------- ------------------------------------------------
7,184,888 3,781,529 5,100,702 4,460,487
--------------------------------------------------------------------------------- ------------------------------------------------
Loss before undernoted items 5,382,520 2,847,839 5,100,702 4,460,487
-
Interest and other income (35,076) (12,080) (107,246) (79,197)
Capital gain (11,675) (11,675) - -
Interest on long-term liability 105,593 44,842 - -
Interest on capital leases 19,016 8,404 - -
Gain on disposal of Azure (936,663) (891,279) - -
Dilution gain amortization (90,770) (90,770) - -
Equity in loss of significantly
influenced companies 1,182,096 579,405 - -
--------------------------------------------------------------------------------- ------------------------------------------------
232,521 (373,153) (107,246) (79,197)
================================================================================= ================================================
Loss before income taxes and
minority Interest 5,615,041 2,474,686 4,993,456 4,381,290
Income taxes- Current 233,000 233,000 - -
Income taxes- Future - - - -
--------------------------------------------------------------------------------- -------------------------------------------------
Loss before minority interest 5,848,041 2,707,686 4,993,456 4,381,290
Minority interest in loss from
subsidiaries (312,701) (31,012) - -
--------------------------------------------------------------------------------- -------------------------------------------------
Net loss for the period 5,535,340 2,676,674 4,993,456 4,381,290
Deficit, beginning of period 12,427,133 15,285,799 3,485,360 4,097,526
-
--------------------------------------------------------------------------------- -------------------------------------------------
Deficit, end of period $ 17,962,473 $ 17,962,473 $ 8,478,816 $ 8,478,816
================================================================================= ================================================
Loss per common share 0.09 0.04 0.17 0.15
--------------------------------------------------------------------------------- -------------------------------------------------
Weighted average number of
outstanding shares 63,321,405 63,321,405 30,041,831 30,041,831
-------------------------------------------------------------------------------- -------------------------------------------------
Page 3
IMMUNE NETWORK LTD.
INTERIM FINANCIAL STATEMENTS
JUNE 30, 2001
--------------------------------------------------------------------------------
IMMUNE NETWORK LTD.
Amalgamated under the Company Act of British Columbia
(a development stage enterprise)
(unaudited - prepared by management)
(expressed in Canadian Dollars)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Current fiscal year to Preceding fiscal year
date Current interim period to date Preceding interim period
June 30 June 30 June 30 June 30
------------------------------------------------ -------------------------------------------------
2001 2001 2000 2000
$ $ $ $
------------------------------------------------- ------------------------------------------------
OPERATING ACTIVITIES
Loss for the period $ (5,535,340) $ (2,676,674) $ (4,993,456) $ (4,381,290)
Items not involving cash
Amortization 672,668 332,229 79,812 46,300
Amortization of deferred
charges 19,076 8,876 2,580 2,580
Minority interest in loss
from subsidiary (312,700) (31,007) - -
Dilution gain amortization (90,770) (45,386) - -
Equity in loss from
significantly influenced
companies 1,182,096 579,405 - -
Gain on Disposal of shares
in Azure Dynamics (936,663) (936,663) - -
Loss on writedown of
intellectual properties 94,682 94,682 - -
Long term liability for
clinical research 409,133 348,379 1,502,002 1,502,002
------------------------------------------------- ------------------------------------------------
(4,497,818) (2,326,159) (3,409,062) (2,830,408)
Accounts receivable (88,679) (69,806) (255,474) (222,238)
Unbilled revenue (31,816) (20,758) - -
Government grants receivable 10,000 7,500 (7,604) (7,688)
Investment tax credit and
taxes recoverable 94,077 94,112 - -
Deposits and prepaid expenses 90,532 70,480 (100,232) (8,597)
Accounts payable and accrued
liabilities 2,347,170 1,833,003 144,639 (79,242)
Taxes payable 213,000 213,000 - -
Receivable on sale of shares (750,000) (750,000) - -
Unearned revenue 36,792 (63,168) - -
------------------------------------------------- ------------------------------------------------
Cash used in operating activities (2,576,741) (1,011,795) (3,627,733) (3,148,173)
------------------------------------------------- ------------------------------------------------
FINANCING ACTIVITIES
Proceeds from
share subscription received - - - -
special warrants (75,000) (75,000) 7,962,890 (137,853)
Proceeds from issuance of
common shares 96,981 75,000 874,985 442,800
Repayment (advance) of loan
from (to) officer - - - -
Payment on obligations under
capital leases (65,453) (32,308) (1,389) (1,389)
Repayment (advance) of loan
from (to) officer - - 32,213 12,113
Dividend on common shares (38,484) (38,484) - -
------------------------------------------------- ------------------------------------------------
Cash provided by financing
activities (81,956) (70,792) 8,868,699 315,671
------------------------------------------------- ------------------------------------------------
INVESTING ACTIVITIES
Purchase of intellectual
properties (8,712) (8,712) (209,064) (169,764)
Process from disposition
of Azure 1,037,500 1,037,500 - -
Purchase of capital assets (140,364) (70,885) (63,922) (37,480)
Purchase of investments (291,888) 8,152 (24,995) (10,709)
Purchase of short term
investment (50,712) 5,538 (25,000) 1,578,352
Purchase of convertible loan - - (74,241) (74,241)
------------------------------------------------- ------------------------------------------------
Cash used in investing
activities 545,824 971,593 (397,222) 1,286,158
------------------------------------------------- ------------------------------------------------
Increase (decrease) in cash
and cash equivalents (2,112,873) (110,994) 4,843,744 (1,546,344)
------------------------------------------------- ------------------------------------------------
Cash and cash equivalents,
beginning of period 2,578,731 576,852 117,058 6,507,146
------------------------------------------------- ------------------------------------------------
Cash and cash equivalents,
end of period $ 465,858 $ 465,858 $ 4,960,802 $ 4,960,802
================================================================================= ================================================
British Columbia QUARTERLY REPORT
Securities Commission Form 51-901F
--------------------------------------------------------------------------------
================================================================================
Issuer Details For Quarter Ended Date of Report
Name of Issuer Y M D
IMMUNE NETWORK LTD. JUNE 30, 2001 01 08 29
--------------------------------------------------------------------------------
Issuer's Address
3650 WESBROOK MALL
--------------------------------------------------------------------------------
City Province Postal Code Issuer Fax No. Issuer Telephone No
VANCOUVER B.C. V6S 2L2 (604) 222-5542 (604) 222-5541
--------------------------------------------------------------------------------
Contact Person Contact's Position Contact Telephone No.
ALLEN BAIN PRESIDENT & CEO (604) 222-5541
--------------------------------------------------------------------------------
Contact Email Address Web Site Address
info@immunenetwork.com http://www.immunenetwork.com
================================================================================
CERTIFICATE
The three schedules required to complete this Quarterly Report are attached and
the disclosure contained therein has been approved by the Board of Directors. A
copy of this Quarterly Report will be provided to any shareholder who requests
it.
================================================================================
Director's Signature Print Full Name Date Signed
Y M D
/s/ Allen I. Bain ALLEN I. BAIN 01 08 29
--------------------------------------------------------------------------------
Director's Signature Print Full Name Date Signed
Y M D
/s/ Mike Muzylowski MIKE MUZYLOWSKI 01 08 29
================================================================================
Page 1
IMMUNE NETWORK LTD.
SCHEDULE B: SUPPLEMENTAL INFORMATION
June 30, 2001
--------------------------------------------------------------------------------
SECTION 1 - For the Fiscal Year-to-Date (January 1, 2001 to June 30, 2001)
a) Deferred costs
i). Intellectual Properties
Accumulated Net Book
Cost Amortization Value
$ $ $
============================================================================
2001
Technology 208,835 88,889 119,946
License 5,000 1,500 3,500
Patents 275,000 123,196 151,805
Trademarks 9,068 1,082 7,987
----------------------------------------------------------------------------
497,904 214,667 283,238
============================================================================
ii). Goodwill
Accumulated Net Book
Cost Amortization Value
$ $ $
----------------------------------------------------------------------------
2001
Goodwill 5,612,597 485,084 5,127,513
============================================================================
iii). Other Assets
Accumulated Net Book
Cost Amortization Value
$ $ $
----------------------------------------------------------------------------
2001
Benefit from favourable lease 3,947,400 264,131 3,683,269
Deferred foreign exchange loss 64,200 32,711 31,489
----------------------------------------------------------------------------
4,011,600 296,842 3,714,758
============================================================================
Page 2
IMMUNE NETWORK LTD.
SCHEDULE B: SUPPLEMENTAL INFORMATION
June 30, 2001
--------------------------------------------------------------------------------
b) Research and development expenditures
-------------------------------------------------
2001
$
=================================================
Consulting 177,665
Laboratory, Office, Sundry 181,145
Salaries & Benefits 146,678
Clinical trials 3,528,811
Contract research and collaboration 31,650
Travel 23,097
-------------------------------------------------
4,089,046
Less grants and SRED ITC's (7,500)
-------------------------------------------------
Total Expenses 4,081,546
=================================================
c) General and administrative expenditures
-------------------------------------------------
2001
$
=================================================
Consulting 66,840
Interest and bank charges 12,275
Legal, audit and accounting 129,382
Office supplies 241,861
Postage 3,829
Promotion & entertainment 37,622
Rent 523,167
Salaries & benefits 1,183,068
Securities, brokerage and transfer
agent fees 74,335
Subscriptions 15,479
Telephone 35,347
Travel 12,787
-------------------------------------------------
Total Expenses 2,335,992
=================================================
Page 3
IMMUNE NETWORK LTD.
SCHEDULE B: SUPPLEMENTAL INFORMATION
June 30, 2001
--------------------------------------------------------------------------------
SECTION 2. Related Party Transactions
Legal fees and expenses totaling $60,337, were incurred during the six
months ended June 30, 2001 [June 30 $61,597] to a legal firm where one of
the principals is an officer of the company.
SECTION 3 - For the quarter Under Review (January 1, 2001 to June 30, 2001)
a) Summary of securities issued during the quarter
-------------------------------------------------------------------------------------------------------------------------------
Date of Type of Type of Number Price Total Type of Commission
Issue Security Issue Proceeds Consideration Paid
===============================================================================================================================
April - 25 Common shares Special Warrant 400,000 0.15 60,000 Cash NIL
Converted
April - 25 Common shares Special Warrant 100,000 0.15 15,000 Cash NIL
Converted
-------------------------------------------------------------------------------------------------------------------------------
Total 500,000 75,000
===============================================================================================================================
b) Summary of options granted during the quarter
i) Insiders
Name of Optionee No. of Options Exercise Price Grant Date Expire Date
============================================================================
Mario Kasapi 100,000 0.10 24-May-01 May-06
Mark Glusing 400,000 0.10 24-May-01 May-06
Markham Moore 225,000 0.10 24-May-01 May-06
Matthew Sadler 300,000 0.10 24-May-01 May-06
Employees 775,000 0.10 24-May-01 May-06
----------------------------------------------------------------------------
Total 1,800,000
============================================================================
Page 4
IMMUNE NETWORK LTD.
SCHEDULE B: SUPPLEMENTAL INFORMATION
June 30, 2001
--------------------------------------------------------------------------------
SECTION 4 - As at the End of the Quarter (June 30, 2001)
a) Authorized capital and summary of shares issued and outstanding
i) Common shares without par value,- 200,000,000 authorized
Number Amount
Common shares of Shares $
============================================================================
Issued upon incorporation 1 1
----------------------------------------------------------------------------
Balance at December 31, 1991 1 1
Issued for cash pursuant to private placement,
net of issuance costs of $7,848 1,999,999 492,154
----------------------------------------------------------------------------
Balance at December 31, 1992 and 1993 2,000,000 492,155
Issued for cash pursuant to private placement 4,100,000 48,750
----------------------------------------------------------------------------
Balance at December 31, 1994 6,100,000 540,905
Issued for cash pursuant to private placement,
net of issuance costs of $92,100 4,477,170 753,509
Share purchase loans forgiven - (28,800)
----------------------------------------------------------------------------
Balance at December 31, 1995 10,577,170 1,265,614
Issued for cash pursuant to private placements 2,120,816 572,620
Issued for technology 33,333 9,000
Issued as payment for subsidiary acquisition 4,263,310 (19,930)
Issued for cash pursuant to private placement,
(net) 1,059,159 196,063
Issued for cash pursuant to private placement,
net of issuance costs of $431,423 1,725,000 517,327
Issued for cash upon exercise of options 191,664 42,166
----------------------------------------------------------------------------
Balance at December 31, 1996 and 1997 19,970,452 2,582,860
Issued for cash pursuant to private placement 400,000 80,000
Issued for cash upon exercise of options 200,000 30,000
----------------------------------------------------------------------------
Balance at December 31, 1998 20,570,452 2,692,860
Issued for cash pursuant to private placement 360,000 54,000
Issued for cash upon exercise of options 625,000 93,750
Issued for cash upon exercise of warrants 97,500 22,425
Issued for cash pursuant to private placement,
net of issuance costs of $9,576 6,286,513 933,400
----------------------------------------------------------------------------
Balance at December 31, 1999 27,939,465 3,796,435
Issued for cash upon exercise of options 2,428,000 492,885
Issued for cash upon exercise of warrants 5,563,301 843,975
Issued via conversion of shareholder's loan 200,000 50,000
Issued on acquisition of BC Research Inc. 7,532,021 4,368,572
Issue for cash appointed of Agents Compensation
Options 38,136 20,975
Issued upon conversion of Special Warrants 1,620,000 243,000
Issued for cash pursuant to private placement,
net of issuance costs of $925,569 17,727,247 7,974,430
----------------------------------------------------------------------------
Balance at December 31, 2000 63,048,170 17,790,272
Issued for cash upon exercise of warrants 123,225 21,981
Issued upon conversion of Special Warrants 500,000 75,000
----------------------------------------------------------------------------
Balance at June 30, 2001 63,671,395 17,887,253
============================================================================
Page 5
IMMUNE NETWORK LTD.
SCHEDULE B: SUPPLEMENTAL INFORMATION
June 30, 2001
--------------------------------------------------------------------------------
ii) Class "A" Convertible Preferred Shares, par value of $1.00 per share-
20,000,000 authorized
The Class "A" convertible preferred shares have priority over the common
shares to any remaining net assets of the Company in the event of a
liquidation, dissolution or winding-up.
Each Class "A" convertible preferred share shall be entitled to
dividends in an amount equal to the amount of any dividends paid on that
number of common shares having a value (at the record date relating to
such common shares dividend declaration) of $1.00 if such common shares
dividend is paid before August 18, 2001, and thereafter in an amount
equal to the amount of any dividends paid on that number of common
shares having a value (at the record date relating to such common shares
dividend declaration) of $1.25.
Number Amount
Common shares of Shares $
----------------------------------------------------------------------------
Balance at December 31, 1999 - -
Issued on acquisition of BC Research Inc. 7,532,021 7,532,021
============================================================================
Balance at December 31, 2000 7,532,021 7,532,021
----------------------------------------------------------------------------
Balance at June 30, 2001 7,532,021 7,532,021
============================================================================
c) Summary of options, warrants and convertible securities outstanding
i). Share Purchase Warrants Outstanding
Common share purchase warrants outstanding are as follows:
Number of Exercise
Common Shares Price
Issuable $ Expiry Date
============================================================================
919,987 0.18 13-Jul-01
1,800,000 0.17 24-Jan-02
8,499,997 1.40 8-Sep-01
19,068 1.40 8-Sep-01
363,636 1.40 31-Aug-02
----------------------------------------------------------------------------
11,602,688
============================================================================
Page 6
IMMUNE NETWORK LTD.
SCHEDULE B: SUPPLEMENTAL INFORMATION
June 30, 2001
--------------------------------------------------------------------------------
ii). Stock Option Outstanding
At June 30, 2001 common share purchase options outstanding are as follows:
Exercise Exercise
Stock Options Price Number of Stock Price
Outstanding $ Expiry Date Options Exercisable $
===================================================================================================
70,000 0.15 21-May-04 70,000 0.15
50,000 0.15 20-May-03 50,000 0.15
80,500 0.23 09-Jun-04 80,500 0.23
70,000 0.23 25-Jul-04 70,000 0.23
681,500 0.40 24-Jan-05 731,500 0.40
1,020,000 1.20 20-Apr-05 1,020,000 1.20
1,485,000 0.25 02-Jan-06 445,500 0.25
50,000 0.30 04-Mar-02 - 0.30
1,800,000 0.10 22-May-06 - 0.10
===================================================================================================
5,307,000 0.40 2,467,500 0.68
===================================================================================================
d) Number of shares in escrow or subject to a pooling agreement
The Company has 5,566,667 common shares held in escrow.
SECTION 5. List of Directors and Officers
-----------------------------------------
Mr. Mike Muzylowski (Director)
Dr. Allen I. Bain (Director, Chief Executive Officer, President)
Mr. Oh, Kim Sun, CA (Director)
Mr. Mark Glusing (Chief Operating Officer)
Mr. Ron Paton (Corporate Secretary)
Page 1
IMMUNE NETWORK LTD.
SCHEDULE C: MANAGEMENT DISCUSSION
JUNE 30, 2001
--------------------------------------------------------------------------------
QUARTERLY REPORT TO SHAREHOLDERS -
FOR THE SIX MONTHS ENDED JUNE 30, 2001
FORM 51 - SCHEDULE C: MANAGEMENT DISCUSSION
The following information should be read in conjunction with the unaudited
consolidated financial statements included therein, which are prepared in
accordance with generally accepted accounting principles in Canada.
SECTION 1 DESCRIPTION OF BUSINESS
Immune Network Ltd., amalgamated under the laws of the Province of British
Columbia, is a biotechnology company focused on the development of new drugs to
treat major diseases involving the immune system with a focus on Alzheimer
disease. The Company is in the process of developing drugs for treatment
against AIDS, Alzheimer Disease, asthma and skin disorders. The Company's
strategy is to acquire technology rights where undervalued, add value by
progressing their development, and obtain a return on investment from the
technologies rapidly through licensing agreements, alliances, or spin-offs. The
Company is a development stage company and commercial operations have not yet
commenced. The Company has not yet determined the ultimate economic viability of
the drugs under development and has not earned significant revenues from these
drugs.
SECTION 2 DISCUSSION OF OPERATIONS AND FINANCIAL CONDITION
RESEARCH PROGRESS
During the second quarter, Immune Network completed enrollment of patients into
its multi-national Phase II clinical trial of dapsone in Alzheimer disease
(known as the "DAD2000" trial). DAD2000 trial enrollment was completed on June
22, 2001. There are now a total of 201 Alzheimer patients in Immune Network's
dapsone trial. Patients had been joining the trial since November 2000. Patients
are randomly assigned to receive either capsules of dapsone or of placebo, daily
for one year.
Page 2
IMMUNE NETWORK LTD.
SCHEDULE C: MANAGEMENT DISCUSSION
JUNE 30, 2001
--------------------------------------------------------------------------------
PERSONNEL CHANGES
a). As previously mentioned, Dr. Donald Rix and Dr. Robert J. Gayton
resigned as the Directors of the Company on April 2, 2001 and May 24,
2001 respectively; and were replaced by Mr. Mike Muzylowski.
b). The Company appointed Mr. Mark Glusing as Chief Operating Officer of
Immune Network.
c). Immune Network also announced that effective June 15, 2001, David Goold,
C.A., Chief Financial Officer, and Danny Lowe, C.M.A., Controller,
resigned from their management positions with Immune Network.
FINANCIAL HIGHLIGHTS
For the six months ended June 30, Immune Network Ltd. incurred a consolidated
net loss of $5,535,340 or $0.09 per share. This compared to net loss for the
six months ended June 30, 2000 of $4,993,456 or $0.166 per share.
Research and development expenses, for the six months ended June 30, 2001 were
$4,081,546 as compared to $4,497,100 during the six months ended June 30, 2000.
Research and development expenses incurred in 2001 were primarily due to the
phase II clinical trial cost of the Alzheimer project. General and
administrative expenses for the six months ended June 30, 2001 were $2,335,992
as compared to $523,790 during the six months ended June 30, 2000. The results
of operations for the quarter ended June 30, 2001 include the consolidated
operations of BC Research Inc, which was acquired in the 3rd quarter of the
prior year.
During the second quarter, a dividend was declared by Immune Network's
subsidiary, BC Research, resulting in a receipt by Immune Network of $74,015.67.
On May 25th, 2001 Immune Network Ltd. has entered into a new agreement with
Meditech Pharmaceuticals Inc. (OTC BB: MDCH) regarding Meditech's potential
agricultural product and its cold sore products. This agreement replaces the
terms of the license previously negotiated with Meditech. According to
management evaluation, loss from the write down in licensing and the trademark
of $94,682 related to the previous agreement with Meditech.
Under the new agreement, ownership and all sales and marketing rights remain
with Meditech. Immune Network will receive a royalty on sales of products
covered by claims of the recent provisional patent applications filed by the two
Page 3
IMMUNE NETWORK LTD.
SCHEDULE C: MANAGEMENT DISCUSSION
JUNE 30, 2001
--------------------------------------------------------------------------------
companies. On agricultural products, Immune Network will receive 2 percent of
worldwide sales. On cold sore products, Immune Network will receive 2 percent of
worldwide sales, excluding sales in the United States. Immune Network is
positioned to receive royalty revenue in next ten years.
No transactions were recorded in the second quarter with respect to the Bridge
Pharma joint venture. Certain aspects of Immune Network's funding of the joint
venture arrangement with Bridge Pharma are being disputed by the joint venture
parties, as reported in a news release dated June 14, 2001.
SECTION 3 SUBSEQUENT EVENTS
---------------------------
a). On July 26, 2001 the Company announced that the transaction involving
the purchase two-third interest in B.C. Research Inc. by Cromedica
International Inc. officially closed. The transaction has permitted
Immune Network Ltd. to continue the DAD2000 Phase II clinical trial on a
fully prepaid basis by Cromedica until its conclusion in 2002. The
trial continued uninterrupted and achieved full enrollment for patient
worldwide.
b). On July 26, 2001, Immune Network reported that InNexus Corporation
(http://www.innexuscorp.com), a privately held monoclonal antibody
development company and option holder on Immune Network's two Antibody
Projects, has signed a letter of intent to form a joint venture with
ImmPheron Inc. of Lexington, KY. This collaboration will focus on a
technology platform, superantibody, which is a molecular approach to
create monoclonal antibody products with increased potency and enhanced
therapeutic properties.
c). On August 2, 2001, Immune Network Ltd. announced that it will not be
proceeding with the share consolidation (reverse share split).
SECTION 4 - FINANCINGS
----------------------
On June 14, 2001, due to the anticipated availability of funds for Immune
Network's continuing research and development operations arising from dividends
from a subsidiary, as well as from disposition of certain Immune Network capital
assets, and due to market conditions and lack of investor interest, Immune
Network cancelled the $700,000 private placement originally announced on May 17,
2001.
Page 4
IMMUNE NETWORK LTD.
SCHEDULE C: MANAGEMENT DISCUSSION
JUNE 30, 2001
--------------------------------------------------------------------------------
SECTION 5 LIQUIDITY AND CAPITAL RESOURCES
-----------------------------------------
The Company had a working capital deficit as at June 30, 2001 of $2,890,776
(June 30, 2000:Working capital $4,987,836). At June 30, 2001, the Company had
$465,858 in cash and cash equivalents (June 30, 2000: $4,960,802).
The Company has financed its cash requirements primarily from share issuances.
The Company's ability to realize the carrying value of its assets is dependent
on successfully bringing its technologies to the market and achieving future
profitable operations, the outcome of which cannot be predicted at this time. It
will be necessary for the Company to raise additional funds for the continuing
development of its technologies.
Currently, the Company is actively seeking sources of equity or debt financing
to sustain its operations. Although the Company has been successful in the past
in obtaining financing through the sale of its equity securities, it cannot be
assured that adequate financing or financing on acceptable terms can be obtained
in the future. In the event the Company cannot obtain the necessary funds, it
will be necessary to delay, curtail or cancel further development of its
technologies.
FOR IMMEDIATE RELEASE
IMMUNE NETWORK ANNOUNCES CROMEDICA DEAL CLOSURE AND INNEXUS PROGRESS
--------------------------------------------------------------------
VANCOUVER, CANADA, July 26, 2001 - Immune Network Ltd. (OTCBB: IMMKF; CDNX: IMM)
announced today that the transaction involving the purchase of B.C. Research
Inc. by Cromedica International Inc. has officially closed and all litigation
proceedings against the company have been discontinued.
The closing of this agreement with Cromedica ensures the continuous treatment of
over two hundred patients in Immune Network's fully enrolled DAD2000 Phase II
clinical trial of Dapsone for Alzheimer disease. The agreement also allows for
prepayment of expenses for an additional clinical trial expected to be carried
out with Immune Network's improved version of Dapsone, and prepayment of other
Immune Network operating costs at the BC Research complex.
Immune Network also reports that InNexus Corporation
(http://www.innexuscorp.com), a privately held monoclonal antibody development
company and option holder on Immune Network's two Antibody Projects, has signed
a letter of intent to form a joint venture with ImmPheron Inc. of Lexington, KY.
This collaboration will focus on a technology platform, superantibody, which is
a molecular approach to create monoclonal antibody products with increased
potency and enhanced therapeutic properties.
The InNexus / ImmPheron joint venture is anticipated to lead to the scientific
and clinical development of the next generation of therapeutic antibody products
including those of InNexus. InNexus is developing two later stage antibody
products, hNM01 and 1F7, both under option from Immune Network (see January 8th,
2001 news release). An initial focus of the joint venture is to create a next
generation anti-viral antibody derived from hNM01 with higher avidity and
potency. The option agreement between InNexus and Immune Network has been
extended pending the financing of InNexus.
Finally, Immune Network reports that Dr. Charles Morgan, CEO of InNexus, will be
presenting at IBC's Antimicrobial & Anti-Viral Drug Discovery conference on
August 14 in Boston, MA; http://www.lifesciencesinfo.com/2647. Dr. Morgan will
------------------------------------
be speaking about the potential of 1F7 and hNM01 in treating HIV infection.
On behalf of the Board of Directors
Allen Bain, Ph.D., CEO
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
-----------------------------------------------------------------------------
1995:
-----
This news release contains forward looking statements that are not historical
facts and are subject to risks and uncertainties which could cause actual
results to differ materially from those set forth in or implied herein. These
risks are described in detail in the company's Securities and Exchange
Commission filings.
-30-
Company Contact:
Investor Relations
Immune Network Ltd.
3650 Wesbrook Mall, Vancouver, BC, Canada V6S 2L2
Tel. (604) 222-5541
Toll Free 1-877-644-5541 extension 466
Fax. (604) 222-5542
Internet: http://www.immunenetwork.com
----------------------------
Email: info@immunenetwork.com
THE CANADIAN VENTURE EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT
RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THE CONTENT OF THIS NEWS RELEASE
BC FORM 53-901F
SECURITIES ACT
MATERIAL CHANGE REPORT UNDER SECTION 85(1) OF THE SECURITIES ACT
Item 1. Reporting Issuer
----------------
Immune Network Ltd. (the "Issuer")
3650 Wesbrook Mall
Vancouver, BC V6S 2L2
Item 2. Date of Material Change
-----------------------
July 26, 2001
Item 3. Press Release
-------------
News Release dated July 26, 2001 was disseminated through Canada
Stockwatch and Market News.
Item 4. Summary of Material Change
--------------------------
The sale by the Issuer of its two-thirds interest in B.C. Research
Inc. to Cromedica International Inc. has closed and all litigation
proceedings against the Issuer have been discontinued. In addition,
InNexus Corporation has signed a letter of intent to form a joint
venture with ImmPheron Inc.
Item 5. Full Description of Material Change
-----------------------------------
The sale by the Issuer of its two-thirds interest in B.C. Research
Inc. to Cromedica International Inc. ("Cromedica") has closed and
all litigation proceedings against the Issuer have been
discontinued. The closing of this agreement with Cromedica permits
the continuous treatment of over two hundred patients in the
Issuer's fully enrolled DAD2000 Phase II clinical trial of Dapsone
for Alzheimer disease. The agreement also provides for prepayment
of expenses for an additional clinical trial expected to be carried
out with the Issuer's modified version of Dapsone, and prepayment of
other operating costs of the Issuer at the BC Research complex.
In addition, InNexus Corporation, a privately held monoclonal
antibody development company and option holder on the Issuer's two
antibody projects, has signed a letter of intent to form a joint
venture with ImmPheron Inc. of Lexington, KY. This collaboration
will focus on a technology platform, superantibody, which is a
molecular approach to create monoclonal antibody products with
increased potency and enhanced therapeutic properties. It is
anticipated that this joint venture will lead to the scientific and
clinical development of the next generation of therapeutic antibody
products including those of InNexus.
InNexus is developing two later stage antibody products, hNM01 and
1F7, both under option from the Issuer as more particularly
described in the Issuer's January 8, 2001 news release. An initial
Page 2
focus of the joint venture is to create a next generation anti-viral
antibody derived from hNM01 with higher avidity and potency. The
option agreement between InNexus and the Issuer has been extended
pending the financing of InNexus.
Item 6. Reliance on Section 85(2) of the Act
------------------------------------
If the report is being filed on a confidential basis in reliance on
Section 85(2) of the Act, state the reasons for that reliance.
Not applicable
Item 7. Omitted Information
-------------------
Not applicable
Item 8. Senior Officers
---------------
Allen Bain, President and Chief Executive Officer
Telephone: (604) 222-5541
Item 9. Statement of Senior Officer
---------------------------
The foregoing accurately discloses the material change referred to
herein.
DATED at Vancouver, British Columbia, the 26th day of July, 2001.
IMMUNE NETWORK LTD.
Per: /s/ Allen Bain
_______________________________
Allen Bain
President and Chief Executive Officer
FOR IMMEDIATE RELEASE
IMMUNE NETWORK CANCELS SHARE CONSOLIDATION
------------------------------------------
VANCOUVER, CANADA, August 2, 2001 - Immune Network Ltd. (OTCBB: IMMKF; CDNX:
IMM) announced today that it will not be proceeding with the share consolidation
(reverse share split) reported in the company's news release of May 17, 2001.
The decision to maintain the current corporate and share structure resulted from
analysis of the company's present operations, the recent transaction involving
the sale of B.C. Research Inc. to Cromedica International Inc., the prepaid
Phase II DAD2000 trial, and ongoing positive developments at subsidiary
companies.
Allen Bain, president, said, "It is now clear that a change in our share
structure is not a necessary move for the health and growth of Immune Network.
In spite of difficult business conditions, our business model is being proven
successful - acquiring, adding value, and divesting promising drug discovery
projects. Most of our projects are already managed by other companies, with
their own project teams. Our internal resources are now focused on a very
promising way to interfere with the relentless degradation of brain function
that is the hallmark of Alzheimer disease."
In addition to Immune Network's focus on developing a new treatment for
Alzheimer disease, the company holds interests in several other projects,
including Bridge Pharma's asthma/eczema project, Meditech's anti-infective and
anti-cancer projects, and monoclonal antibody projects in conjunction with
InNexus.
On behalf of the Board of Directors
Allen Bain, Ph.D., CEO
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
-----------------------------------------------------------------------------
1995:
-----
This news release contains forward looking statements that are not historical
facts and are subject to risks and uncertainties which could cause actual
results to differ materially from those set forth in or implied herein. These
risks are described in detail in the company's Securities and Exchange
Commission filings.
-30-
Company Contact:
Investor Relations
Immune Network Ltd.
3650 Wesbrook Mall, Vancouver, BC, Canada V6S 2L2
Tel. (604) 222-5541
Toll Free 1-877-644-5541 extension 466
Fax. (604) 222-5542
Internet: http://www.immunenetwork.com
----------------------------
Email: info@immunenetwork.com
THE CANADIAN VENTURE EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT
RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THE CONTENT OF THIS NEWS RELEASE
BC FORM 53-901F
SECURITIES ACT
MATERIAL CHANGE REPORT UNDER SECTION 85(1) OF THE SECURITIES ACT
Item 1. Reporting Issuer
----------------
Immune Network Ltd. (the "Issuer")
3650 Wesbrook Mall
Vancouver, BC V6S 2L2
Item 2. Date of Material Change
-----------------------
August 2, 2001
Item 3. Press Release
-------------
News release dated August 2, 2001 was disseminated through Canada
Stockwatch and Market News.
Item 4. Summary of Material Change
--------------------------
The Issuer reports that it will not be proceeding with the share
consolidation reported in its May 17, 2001 news release.
Item 5. Full Description of Material Change
-----------------------------------
The Issuer reports that it will not be proceeding with a
consolidation of its common shares as reported in its May 17, 2001
and will be maintaining its current corporate and share structure.
An analysis of the Issuer's present operations, the recent
transaction involving the sale of B.C. Research Inc. to Cromedica
International Inc., the prepaid Phase II DAD2000 trial, and ongoing
positive developments at subsidiary companies determined that a
change in the Issuer's share structure is not presently necessary.
Item 6. Reliance on Section 85(2) of the Act
------------------------------------
If the report is being filed on a confidential basis in reliance on
Section 85(2) of the Act, state the reasons for that reliance.
Not applicable
Item 7. Omitted Information
-------------------
Not applicable
Item 8. Senior Officers
---------------
Allen Bain, President and Chief Executive Officer
Telephone: (604) 222-5541
Item 9. Statement of Senior Officer
---------------------------
The foregoing accurately discloses the material change referred to
herein.
DATED at Vancouver, British Columbia, the 2nd day of August, 2001.
IMMUNE NETWORK LTD.
Per: /s/ Allen Bain
_______________________________
Allen Bain
President and Chief Executive Officer
FOR IMMEDIATE RELEASE
IMMUNE NETWORK REPORTS SECOND QUARTER RESULTS
---------------------------------------------
VANCOUVER, CANADA, August 29, 2001 -- Immune Network Ltd. (OTC: IMMKF; CDNX:
IMM) today reports consolidated second quarter results for the period ending
June 30, 2001.
The consolidated financial statements of Immune Network at the end of the second
quarter include the financial results of B.C. Research Inc. Total revenue of
$1,802,368 resulted from B.C. Research operations during the quarter, which was
not sold until after the end of the quarter. Research and development expenses
for the six months ended June 30, 2001 were $4,081,546 as compared to $4,497,100
during the six months ended June 30, 2000.
IMMUNE NETWORK LTD.
Amalgamated under the Company Act of British Columbia
(a development stage enterprise)
(unaudited - prepared by management)
(expressed in Canadian Dollars)
CONSOLIDATED BALANCE SHEETS
----------------------------
As at June 30 As at December 31
-----------------------------------------
2001 2000
$ $
ASSETS
c
Current
Cash and cash equivalents $ 465,858 $ 2,578,731
Short-term investment 55,712 5,000
Restricted investments 75,000 75,000
Accounts receivable 1,153,625 1,063,543
Unbilled revenue 242,371 210,555
Note receivable 750,000 -
Investment tax credit and taxes recoverable - 94,077
Government grants receivable - 10,000
Deposits and prepaid expenses 192,374 262,906
--------------------------------------------------------------------------------
2,934,940 4,299,812
--------------------------------------------------------------------------------
Loan receivable from an officer - -
Capital assets 1,744,198 1,774,140
Intellectual properties 283,238 407,724
Long-term investments 7,865,429 8,857,877
Other assets 3,714,758 3,868,158
Goodwill 5,127,513 5,408,143
--------------------------------------------------------------------------------
$ 21,670,076 $ 24,615,854
================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities $ 3,647,228 $ 1,259,980
Unearned revenue 214,323 177,531
Current portion of long-term debt 1,617,882 513,553
Current portion of obligations under
capital leases 133,283 128,018
Current Income Tax payable 213,000 -
--------------------------------------------------------------------------------
5,825,716 2,079,082
Loan payable to shareholder - -
Obligations under capital leases 181,202 240,605
Long-term liability 455,600 1,133,296
Future income taxes 3,109,000 3,109,000
Deferred dilution gain 786,669 877,439
Minority interest in subsidiaries 3,835,983 4,148,683
--------------------------------------------------------------------------------
14,194,170 11,588,105
--------------------------------------------------------------------------------
Shareholders' equity
Preferred shares 7,532,021 7,532,021
Common shares 17,887,253 17,790,272
Special warrants - 75,000
Contributed surplus 57,589 57,589
Dividends (38,484) -
Deficit (17,962,473) (12,427,133)
--------------------------------------------------------------------------------
7,475,906 13,027,749
--------------------------------------------------------------------------------
$ 21,670,076 $ 24,615,854
================================================================================
On behalf of the Board:
/s/ Allen I. Bain /s/ Mike Muzylowski
Allen I. Bain, Director Mike Muzylowski, Director
IMMUNE NETWORK LTD.
(a development stage enterprise)
(unaudited - prepared by management)
(expressed in Canadian Dollars)
CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT
-------------------------------------------
Current fiscal year to Preceding fiscal year
date Current interim period to date Preceding interim period
June 30 June 30 June 30 June 30
------------------------------------------------- -------------------------------------------------
2001 2001 2000 2000
$ $ $ $
------------------------------------------------- ------------------------------------------------
REVENUE
Contract revenue $ 2,877,393 $ 1,487,325 $ - $ -
Direct costs on contract revenue (1,715,645) (886,920) - -
--------------------------------------------------------------------------------- ------------------------------------------------
Gross margin 1,161,748 600,405 - -
Rental revenue 640,620 333,285 - -
--------------------------------------------------------------------------------- ------------------------------------------------
1,802,368 933,690 - -
--------------------------------------------------------------------------------- ------------------------------------------------
EXPENSES
Research and development 4,081,546 2,108,079 4,497,100 4,124,064
General and administrative 2,335,992 1,256,739 523,790 290,123
Amortization 672,668 322,029 79,812 46,300
Loss on writedown of intellectual
properties 94,682 94,682 - -
--------------------------------------------------------------------------------- ------------------------------------------------
7,184,888 3,781,529 5,100,702 4,460,487
--------------------------------------------------------------------------------- ------------------------------------------------
Loss before undernoted items 5,382,520 2,847,839 5,100,702 4,460,487
-
Interest and other income (35,076) (12,080) (107,246) (79,197)
Capital gain (11,675) (11,675) - -
Interest on long-term liability 105,593 44,842 - -
Interest on capital leases 19,016 8,404 - -
Gain on disposal of Azure (936,663) (891,279) - -
Dilution gain amortization (90,770) (90,770) - -
Equity in loss of significantly
influenced companies 1,182,096 579,405 - -
--------------------------------------------------------------------------------- ------------------------------------------------
232,521 (373,153) (107,246) (79,197)
================================================================================= ================================================
Loss before income taxes and
minority Interest 5,615,041 2,474,686 4,993,456 4,381,290
Income taxes- Current 233,000 233,000 - -
Income taxes- Future - - - -
--------------------------------------------------------------------------------- -------------------------------------------------
Loss before minority interest 5,848,041 2,707,686 4,993,456 4,381,290
Minority interest in loss from
Current fiscal year to Preceding fiscal year
date Current interim period to date Preceding interim period
June 30 June 30 June 30 June 30
------------------------------------------------- ------------------------------------------------
2001 2001 2000 2000
$ $ $ $
------------------------------------------------- ------------------------------------------------
subsidiaries (312,701) (31,012) - -
-------------------------------------------------------------------------------- -------------------------------------------------
Net loss for the period 5,535,340 2,676,674 4,993,456 4,381,290
Deficit, beginning of period 12,427,133 15,285,799 3,485,360 4,097,526
-
--------------------------------------------------------------------------------- ------------------------------------------------
Deficit, end of period $ 17,962,473 $ 17,962,473 $ 8,478,816 $ 8,478,816
================================================================================= ================================================
Loss per common share 0.09 0.04 0.17 0.15
--------------------------------------------------------------------------------- ------------------------------------------------
Weighted average number of
outstanding shares 63,321,405 63,321,405 30,041,831 30,041,831
--------------------------------------------------------------------------------- ------------------------------------------------
IMMUNE NETWORK LTD.
(a development stage enterprise)
(unaudited - prepared by management)
(expressed in Canadian Dollars)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Current fiscal year to Preceding fiscal year
date Current interim period to date Preceding interim period
June 30 June 30 June 30 June 30
------------------------------------------------- ------------------------------------------------
2001 2001 2000 2000
$ $ $ $
------------------------------------------------- ------------------------------------------------
OPERATING ACTIVITIES
Loss for the period $ (5,535,340) $ (2,676,674) $ (4,993,456) $ (4,381,290)
Items not involving cash
Amortization 672,668 332,229 79,812 46,300
Amortization of deferred
charges 19,076 8,876 2,580 2,580
Minority interest in loss
from subsidiary (312,700) (31,007) - -
Dilution gain amortization (90,770) (45,386) - -
Equity in loss from
significantly influenced
companies 1,182,096 579,405 - -
Gain on Disposal of shares
in Azure Dynamics (936,663) (936,663) - -
Loss on writedown of
intellectual properties 94,682 94,682 - -
Long term liability for
clinical research 409,133 348,379 1,502,002 1,502,002
------------------------------------------------- ------------------------------------------------
(4,497,818) (2,326,159) (3,409,062) (2,830,408)
Accounts receivable (88,679) (69,806) (255,474) (222,238)
Unbilled revenue (31,816) (20,758) - -
Government grants receivable 10,000 7,500 (7,604) (7,688)
Investment tax credit and
taxes recoverable 94,077 94,112 - -
Deposits and prepaid expenses 90,532 70,480 (100,232) (8,597)
Accounts payable and accrued
liabilities 2,347,170 1,833,003 144,639 (79,242)
Taxes payable 213,000 213,000 - -
Receivable on sale of shares (750,000) (750,000) - -
Unearned revenue 36,792 (63,168) - -
------------------------------------------------- ------------------------------------------------
Cash used in operating activities (2,576,741) (1,011,795) (3,627,733) (3,148,173)
------------------------------------------------- ------------------------------------------------
FINANCING ACTIVITIES
Proceeds from
share subscription received - - - -
special warrants (75,000) (75,000) 7,962,890 (137,853)
Proceeds from issuance of
common shares 96,981 75,000 874,985 442,800
Current fiscal year to Preceding fiscal year
date Current interim period to date Preceding interim period
June 30 June 30 June 30 June 30
------------------------------------------------- ------------------------------------------------
2001 2001 2000 2000
$ $ $ $
------------------------------------------------- ------------------------------------------------
Repayment (advance) of loan
from (to) officer - - - -
Payment on obligations under
capital leases (65,453) (32,308) (1,389) (1,389)
Repayment (advance) of loan
from (to) officer - - 32,213 12,113
Dividend on common shares (38,484) (38,484) - -
------------------------------------------------- ------------------------------------------------
Cash provided by financing
activities (81,956) (70,792) 8,868,699 315,671
------------------------------------------------- ------------------------------------------------
INVESTING ACTIVITIES
Purchase of intellectual
properties (8,712) (8,712) (209,064) (169,764)
Process from disposition
of Azure 1,037,500 1,037,500 - -
Purchase of capital assets (140,364) (70,885) (63,922) (37,480)
Purchase of investments (291,888) 8,152 (24,995) (10,709)
Purchase of short term
investment (50,712) 5,538 (25,000) 1,578,352
Purchase of convertible loan - - (74,241) (74,241)
------------------------------------------------- ------------------------------------------------
Cash used in investing
activities 545,824 971,593 (397,222) 1,286,158
------------------------------------------------- ------------------------------------------------
Increase (decrease) in cash
and cash equivalents (2,112,873) (110,994) 4,843,744 (1,546,344)
------------------------------------------------- ------------------------------------------------
Cash and cash equivalents,
beginning of period 2,578,731 576,852 117,058 6,507,146
------------------------------------------------- ------------------------------------------------
Cash and cash equivalents,
end of period $ 465,858 $ 465,858 $ 4,960,802 $ 4,960,802
================================================================================= ================================================
To review the complete quarterly report please visit Immune Network Ltd.'s
website (www.immunenetwork.com) or our Sedar filing (www.sedar.com), that will
---------------------
include the supplemental information and management discussion.
Allen Bain, Immune Network CEO said, "Second quarter research expenditures
demonstrated our continued commitment to our Alzheimer disease research program.
The DAD2000 Phase II trial is fully enrolled at 201 patients and is proceeding
on schedule. Related preclinical research that is ongoing supports the
scientific hypotheses underpinning our Alzheimer drug development undertaking.
We hope to make an early and significant contribution to the battle against
Alzheimer disease."
Immune Network is a "biotech merchant developer" that acquires, adds value, and
divests drug discovery projects. Our current drug development focus is
Alzheimer disease.
On behalf of the Board of Directors
Allen Bain, Ph.D., CEO
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
-----------------------------------------------------------------------------
1995:
-----
This news release contains forward looking statements that are not historical
facts and are subject to risks and uncertainties which could cause actual
results to differ materially from those set forth in or implied herein. These
risks are described in detail in the company's Securities and Exchange
Commission filings.
-30-
Company Contact:
Investor Relations
Immune Network Ltd.
3650 Wesbrook Mall, Vancouver, BC, Canada V6S 2L2
Tel. (604) 222-5541
Toll Free 1-877-644-5541 Ext. 466
Fax. (604) 222-5542
Internet http://www.immunenetwork.com
----------------------------
Email info@immunenetwork.com
THE CANADIAN VENTURE EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT
RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THE CONTENT OF THIS NEWS RELEASE
BC FORM 53-901F
SECURITIES ACT
MATERIAL CHANGE REPORT UNDER SECTION 85(1) OF THE SECURITIES ACT
Item 1. Reporting Issuer
----------------
Immune Network Ltd. (the "Issuer")
3650 Wesbrook Mall
Vancouver, BC V6S 2L2
Item 2. Date of Material Change
-----------------------
August 29, 2001
Item 3. Press Release
-------------
News Release dated August 29, 2001 was disseminated through Canada
Stockwatch and Market News.
Item 4. Summary of Material Change
--------------------------
The Issuer reports consolidated second quarter results for the
period ending June 30, 2001.
Item 5. Full Description of Material Change
-----------------------------------
The Issuer reports consolidated second quarter results for the
period ending June 30, 2001.
The consolidated financial statements of the Issuer at the end of
the second quarter include the financial results of B.C. Research
Inc. Total revenue of $1,802,368 resulted from B.C. Research
operations during the quarter, which was not sold until after the
end of the quarter. Research and development expenses for the six
months ended June 30, 2001 were $4,081,546 as compared to $4,497,100
during the six months ended June 30, 2000.
Page 2
IMMUNE NETWORK LTD.
Amalgamated under the Company Act of British Columbia
(a development stage enterprise)
(unaudited - prepared by management)
(expressed in Canadian Dollars)
CONSOLIDATED BALANCE SHEETS
---------------------------
As at June 30 As at December 31
---------------------------------------------------
2001 2000
$ $
ASSETS
--------------------------------------------------------------------------------
Current
Cash and cash equivalents 465,858 2,578,731
Short-term investment 55,712 5,000
Restricted investments 75,000 75,000
Accounts receivable 1,153,625 1,063,543
Unbilled revenue 242,371 210,555
Note receivable 750,000 -
Investment tax credit and taxes recoverable - 94,077
Government grants receivable - 10,000
Deposits and prepaid expenses 192,374 262,906
--------------------------------------------------------------------------------
2,934,940 4,299,812
--------------------------------------------------------------------------------
Loan receivable from an officer - -
Capital assets 1,744,198 1,774,140
Intellectual properties 283,238 407,724
Long-term investments 7,865,429 8,857,877
Other assets 3,714,758 3,868,158
Goodwill 5,127,513 5,408,143
--------------------------------------------------------------------------------
21,670,076 24,615,854
================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities 3,647,228 1,259,980
Unearned revenue 214,323 177,531
Current portion of long-term debt 1,617,882 513,553
Current portion of obligations under capital leases 133,283 128,018
Current Income Tax payable 213,000 -
--------------------------------------------------------------------------------
5,825,716 2,079,082
Loan payable to shareholder - -
Obligations under capital leases 181,202 240,605
Long-term liability 455,600 1,133,296
Future income taxes 3,109,000 3,109,000
Deferred dilution gain 786,669 877,439
Minority interest in subsidiaries 3,835,983 4,148,683
--------------------------------------------------------------------------------
14,194,170 11,588,105
--------------------------------------------------------------------------------
Shareholders' equity
Preferred shares 7,532,021 7,532,021
Common shares 17,887,253 17,790,272
Special warrants - 75,000
Contributed surplus 57,589 57,589
Dividends (38,484) -
Deficit (17,962,473) (12,427,133)
--------------------------------------------------------------------------------
7,475,906 13,027,749
--------------------------------------------------------------------------------
21,670,076 24,615,854
================================================================================
On behalf of the Board:
/s/ Allen I. Bain /s/ Mike Muzylowski
Allen I. Bain, Director Mike Muzylowski, Director
Page 3
IMMUNE NETWORK LTD.
(a development stage enterprise)
(unaudited - prepared by management)
(expressed in Canadian Dollars)
CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT
-------------------------------------------
Current fiscal year to Preceding fiscal year
date Current interim period to date Preceding interim period
June 30 June 30 June 30 June 30
------------------------------------------------- -------------------------------------------------
2001 2001 2000 2000
$ $ $ $
------------------------------------------------- ------------------------------------------------
REVENUE
Contract revenue $ 2,877,393 $ 1,487,325 $ - $ -
Direct costs on contract revenue (1,715,645) (886,920) - -
--------------------------------------------------------------------------------- ------------------------------------------------
Gross margin 1,161,748 600,405 - -
Rental revenue 640,620 333,285 - -
--------------------------------------------------------------------------------- ------------------------------------------------
1,802,368 933,690 - -
--------------------------------------------------------------------------------- ------------------------------------------------
EXPENSES
Research and development 4,081,546 2,108,079 4,497,100 4,124,064
General and administrative 2,335,992 1,256,739 523,790 290,123
Amortization 672,668 322,029 79,812 46,300
Loss on writedown of intellectual
properties 94,682 94,682 - -
--------------------------------------------------------------------------------- ------------------------------------------------
7,184,888 3,781,529 5,100,702 4,460,487
--------------------------------------------------------------------------------- ------------------------------------------------
Loss before undernoted items 5,382,520 2,847,839 5,100,702 4,460,487
-
Interest and other income (35,076) (12,080) (107,246) (79,197)
Capital gain (11,675) (11,675) - -
Interest on long-term liability 105,593 44,842 - -
Interest on capital leases 19,016 8,404 - -
Gain on disposal of Azure (936,663) (891,279) - -
Dilution gain amortization (90,770) (90,770) - -
Equity in loss of significantly
influenced companies 1,182,096 579,405 - -
--------------------------------------------------------------------------------- ------------------------------------------------
232,521 (373,153) (107,246) (79,197)
================================================================================= ================================================
Loss before income taxes and
minority Interest 5,615,041 2,474,686 4,993,456 4,381,290
Income taxes- Current 233,000 233,000 - -
Income taxes- Future - - - -
--------------------------------------------------------------------------------- ------------------------------------------------
Loss before minority interest 5,848,041 2,707,686 4,993,456 4,381,290
Minority interest in loss from
subsidiaries (312,701) (31,012) - -
--------------------------------------------------------------------------------- ------------------------------------------------
Net loss for the period 5,535,340 2,676,674 4,993,456 4,381,290
Deficit, beginning of period 12,427,133 15,285,799 3,485,360 4,097,526
-
--------------------------------------------------------------------------------- ------------------------------------------------
Deficit, end of period $ 17,962,473 $ 17,962,473 $ 8,478,816 $ 8,478,816
================================================================================= ================================================
Loss per common share 0.09 0.04 0.17 0.15
--------------------------------------------------------------------------------- ------------------------------------------------
Weighted average number of
outstanding shares 63,321,405 63,321,405 30,041,831 30,041,831
--------------------------------------------------------------------------------- ------------------------------------------------
Page 4
IMMUNE NETWORK LTD.
(a development stage enterprise)
(unaudited - prepared by management)
(expressed in Canadian Dollars)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Current fiscal year to Preceding fiscal year
date Current interim period to date Preceding interim period
June 30 June 30 June 30 June 30
------------------------------------------------- ------------------------------------------------
2001 2001 2000 2000
$ $ $ $
------------------------------------------------- ------------------------------------------------
OPERATING ACTIVITIES
Loss for the period $ (5,535,340) $ (2,676,674) $ (4,993,456) $ (4,381,290)
Items not involving cash
Amortization 672,668 332,229 79,812 46,300
Amortization of deferred
charges 19,076 8,876 2,580 2,580
Minority interest in loss
from subsidiary (312,700) (31,007) - -
Dilution gain amortization (90,770) (45,386) - -
Equity in loss from
significantly influenced
companies 1,182,096 579,405 - -
Gain on Disposal of shares
in Azure Dynamics (936,663) (936,663) - -
Loss on writedown of
intellectual properties 94,682 94,682 - -
Long term liability for
clinical research 409,133 348,379 1,502,002 1,502,002
------------------------------------------------- ------------------------------------------------
(4,497,818) (2,326,159) (3,409,062) (2,830,408)
Accounts receivable (88,679) (69,806) (255,474) (222,238)
Unbilled revenue (31,816) (20,758) - -
Government grants receivable 10,000 7,500 (7,604) (7,688)
Investment tax credit and
taxes recoverable 94,077 94,112 - -
Deposits and prepaid expenses 90,532 70,480 (100,232) (8,597)
Accounts payable and accrued
liabilities 2,347,170 1,833,003 144,639 (79,242)
Taxes payable 213,000 213,000 - -
Receivable on sale of shares (750,000) (750,000) - -
Unearned revenue 36,792 (63,168) - -
------------------------------------------------- ------------------------------------------------
Cash used in operating activities (2,576,741) (1,011,795) (3,627,733) (3,148,173)
------------------------------------------------- ------------------------------------------------
FINANCING ACTIVITIES
Proceeds from
share subscription received - - - -
special warrants (75,000) (75,000) 7,962,890 (137,853)
Proceeds from issuance of
common shares 96,981 75,000 874,985 442,800
Repayment (advance) of loan
from (to) officer - - - -
Payment on obligations under
capital leases (65,453) (32,308) (1,389) (1,389)
Repayment (advance) of loan
from (to) officer - - 32,213 12,113
Dividend on common shares (38,484) (38,484) - -
------------------------------------------------- ------------------------------------------------
Cash provided by financing
activities (81,956) (70,792) 8,868,699 315,671
------------------------------------------------- ------------------------------------------------
Page 5
Current fiscal year to Preceding fiscal year
date Current interim period to date Preceding interim period
June 30 June 30 June 30 June 30
------------------------------------------------- -------------------------------------------------
2001 2001 2000 2000
$ $ $ $
------------------------------------------------- ------------------------------------------------
INVESTING ACTIVITIES
Purchase of intellectual
properties (8,712) (8,712) (209,064) (169,764)
Process from disposition
of Azure 1,037,500 1,037,500 - -
Purchase of capital assets (140,364) (70,885) (63,922) (37,480)
Purchase of investments (291,888) 8,152 (24,995) (10,709)
Purchase of short term
investment (50,712) 5,538 (25,000) 1,578,352
Purchase of convertible loan - - (74,241) (74,241)
------------------------------------------------- ------------------------------------------------
Cash used in investing
activities 545,824 971,593 (397,222) 1,286,158
------------------------------------------------- ------------------------------------------------
Increase (decrease) in cash
and cash equivalents (2,112,873) (110,994) 4,843,744 (1,546,344)
------------------------------------------------- ------------------------------------------------
Cash and cash equivalents,
beginning of period 2,578,731 576,852 117,058 6,507,146
------------------------------------------------- ------------------------------------------------
Cash and cash equivalents,
end of period $ 465,858 $ 465,858 $ 4,960,802 $ 4,960,802
================================================================================= ================================================
Second quarter research expenditures demonstrated the Issuer's
continued commitment to the Alzheimer disease research program. The
DAD2000 Phase II trial is fully enrolled at 201 patients and is
proceeding on schedule.
Item 6. Reliance on Section 85(2) of the Act
------------------------------------
If the report is being filed on a confidential basis in reliance on
Section 85(2) of the Act, state the reasons for that reliance.
Not applicable
Item 7. Omitted Information
-------------------
Not applicable
Item 8. Senior Officers
---------------
Allen Bain, President and Chief Executive Officer
Telephone: (604) 222-5541
Item 9. Statement of Senior Officer
---------------------------
The foregoing accurately discloses the material change referred to
herein.
DATED at Vancouver, British Columbia, the 7th day of September, 2001.
IMMUNE NETWORK LTD.
Per: /s/ Allen Bain
_______________________________
Allen Bain
Page 6
President and Chief Executive Officer
FOR IMMEDIATE RELEASE
IMMUNE SOFTWARE SUBSIDIARY SIGNS CONTRACT WITH YMCA
---------------------------------------------------
VANCOUVER, CANADA, September 17, 2001 - Immune Network Ltd. (OTCBB: IMMKF; CDNX:
IMM) announced today the successful signing of a one year agreement with the
Family YMCA Prince George, British Columbia by its subsidiary FITaccess
Technologies Inc. (http://www.fitaccess.com).FITaccess is a 50% owned subsidiary
of Immune Network Ltd. engaging in the development of online interactive
software systems initially targeted at the health and fitness industry with
multiple and far reaching applications to possibly include medical, nutritional
and clinical interactive management solutions.
The agreement with Family YMCA of Prince George requires FITaccess to provide a
comprehensive one-year subscription to the proprietary FITaccess Remote Training
system. This Remote Training system combines motivating, personalized fitness
programs and regular interaction between a client and trainer with the speed and
effectiveness of a computer based application.
"By providing Remote Training to a world class organization such as the YMCA,
FITaccess establishes itself as an emerging player in providing technology
solutions for the health and fitness industry." said Russell King, President and
CEO of FITaccess Technologies. "We are pleased to be working with an industry
leader such as the YMCA in an effort to provide new methods for clients to
establish and maintain a healthy lifestyle."
The Family YMCA in Prince George, BC is the first YMCA in the world to implement
the FITaccess Remote Training technology which allows fitness staff to provide
personalized fitness services to every member of their YMCA. This increased
interaction between the Family YMCA members and its fitness staff increases
retention by providing members with the personal attention known to achieve
results. YMCA in Canada is recognizing the need to use a technology to provide
personalized fitness services to every member.
"The Family YMCA of Prince George believes that the FITaccess Remote Training
system will provide us with an ability to maintain a stronger relationship with
our members." said Colin Reid, Executive Director of the Family YMCA of Prince
George, "We feel that Remote Training provides a simple, cost-effective and
efficient system for promoting the maintenance of a healthy lifestyle."
Immune Network Ltd. is pleased with the development of its software subsidiary
which has recently achieved success through signed contracts with other major
health and fitness organizations in Canada.
On behalf of the Board of Directors
Allen Bain, Ph.D., CEO
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995:
This news release contains forward looking statements that are not historical
facts and are subject to risks and uncertainties which could cause actual
results to differ materially from those set forth in or implied herein. These
risks are described in detail in the company's Securities and Exchange
Commission filings.
-30-
Company Contact:
Investor Relations
Immune Network Ltd.
3650 Wesbrook Mall, Vancouver, BC
Canada V6S 2L2
Tel (604) 222-5541
Fax (604) 222-5542
Toll Free (877) 644-5541 Ext: 466
Internet http://www.immunenetwork.com
----------------------------
Email info@immunenetwork.com
----------------------
THE CANADIAN VENTURE EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT
RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THE CONTENT OF THIS NEWS RELEASE
BC FORM 53-901F
SECURITIES ACT
MATERIAL CHANGE REPORT UNDER SECTION 85(1) OF THE SECURITIES ACT
Item 1. Reporting Issuer
----------------
Immune Network Ltd. (the "Issuer")
3650 Wesbrook Mall
Vancouver, BC V6S 2L2
Item 2. Date of Material Change
-----------------------
September 17, 2001
Item 3. Press Release
-------------
News Release dated September 17, 2001 was disseminated through
Canada Stockwatch and Market News.
Item 4. Summary of Material Change
--------------------------
The Issuer reports that its 50% owned subsidiary, FITaccess
Technologies Inc., has entered into a one year agreement with the
Family YMCA in Prince George, British Columbia, to provide a
comprehensive one-year subscription to the proprietary FITaccess
Remote Training system.
Item 5. Full Description of Material Change
-----------------------------------
The Issuer reports that its 50% owned subsidiary, FITaccess
Technologies Inc. ("FITaccess"), has entered into a one year
agreement with the Family YMCA in Prince George, British Columbia,
to provide a comprehensive one-year subscription to the proprietary
FITaccess Remote Training system.
FITaccess is a 50% owned subsidiary of the Issuer engaging in the
development of online interactive software systems initially
targeted at the health and fitness industry with multiple and far
reaching applications to possibly include medical, nutritional and
clinical interactive management solutions.
The Remote Training system combines motivating, personalized fitness
programs and regular interaction between a client and trainer with
the speed and effectiveness of a computer based application.
Page 2
The Family YMCA in Prince George, B.C. is the first YMCA to
implement the FITaccess Remote Training technology which allows
fitness staff to provide personalized fitness services to every
member of their YMCA. It is anticipated that the increased
interaction between the Family YMCA members and its fitness staff
will increase retention by providing members with the personal
attention known to achieve results.
Item 6. Reliance on Section 85(2) of the Act
------------------------------------
If the report is being filed on a confidential basis in reliance on
Section 85(2) of the Act, state the reasons for that reliance.
Not applicable
Item 7. Omitted Information
-------------------
Not applicable
Item 8. Senior Officers
---------------
Allen Bain, President and Chief Executive Officer
Telephone: (604) 222-5541
Item 9. Statement of Senior Officer
---------------------------
The foregoing accurately discloses the material change referred to
herein.
DATED at Vancouver, British Columbia, the 17th day of September, 2001.
IMMUNE NETWORK LTD.
Per: /s/ Allen Bain
_______________________________
Allen Bain
President and Chief Executive Officer
FOR IMMEDIATE RELEASE
IMMUNE NETWORK SIGNS LETTER OF INTENT FOR CDT LICENSE
-----------------------------------------------------
VANCOUVER, CANADA, September 19, 2001 - Immune Network Ltd. (OTC: IMMKF; CDNX:
IMM) signed a letter of intent today with Nutraceutix, Inc.
(http://www.nutraceutix.com ; OTC: NUTX.OB) to co-develop novel formulations for
--------------------------
several existing gerontology drugs. According to the letter of intent,
Nutraceutix will commence a development program for certain pharmaceuticals
selected by Immune Network.
Immune Network has elected to employ the CDT Controlled Delivery Technology as
an optimum technology for drug delivery of certain specific drugs and drug
combinations to be used in treating Alzheimer disease and other
neurodegenerative diseases. The CDT technology was invented by Dr Reza Fassihi
in the pharmaceutical laboratories of Temple University (Philadelphia) and has
been licensed exclusively to Nutraceutix. Using patented CDT technology,
monolithic tablets for oral administration can be designed having several
advantages over conventional sustained-release tablets.
Immune Network and Nutraceutix will commence the formulation development program
immediately. Initial work will be carried out at Temple University in
conjunction with Nutraceutix, followed by technology transfer to a development
partner for scale-up and cGMP manufacturing.
Nutraceutix is a leading provider of proven formulation technologies for both
prescription and non-prescription healthcare products. The CDT TM technology is
-----
currently utilized in several marketed products. Nutraceutix will be presenting
three abstracts regarding unique product formulations at the 2001 American
Association of Pharmaceutical Scientists (AAPS) Annual Meeting, October 21-25,
2001 in Denver.
Immune Network is a "biotech merchant developer" that acquires, adds value, and
divests drug discovery projects. Immune Network's focus is Alzheimer disease and
the company also has holdings and interests in a number of other projects.
On behalf of the Board of Directors
Allen Bain, Ph.D., CEO
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
-----------------------------------------------------------------------------
1995:
-----
This news release contains forward looking statements that are not historical
facts and are subject to risks and uncertainties which could cause actual
results to differ materially from those set forth in or implied herein. These
risks are described in detail in the company's Securities and Exchange
Commission filings.
-30-
Company Contact:
Investor Relations
Immune Network Ltd.
3650 Wesbrook Mall, Vancouver, BC, Canada V6S 2L2
Tel. (604) 222-5541
Toll Free 1-877-644-5541 Ext. 466
Fax. (604) 222-5542
Internet http://www.immunenetwork.com
----------------------------
Email info@immunenetwork.com
THE CANADIAN VENTURE EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT
RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THE CONTENT OF THIS NEWS RELEASE
BC FORM 53-901F
SECURITIES ACT
MATERIAL CHANGE REPORT UNDER SECTION 85(1) OF THE SECURITIES ACT
Item 1. Reporting Issuer
----------------
Immune Network Ltd. (the "Issuer")
3650 Wesbrook Mall
Vancouver, BC V6S 2L2
Item 2. Date of Material Change
-----------------------
September 19, 2001
Item 3. Press Release
-------------
News Release dated September 19, 2001 was disseminated through
Canada Stockwatch and Market News.
Item 4. Summary of Material Change
--------------------------
The Issuer reports that it has signed a letter of intent with
Nutraceutix, Inc. to co-develop novel formulations for several
existing gerontology drugs.
Item 5. Full Description of Material Change
-----------------------------------
The Issuer reports that it has signed a letter of intent with
Nutraceutix, Inc. to co-develop novel formulations for several
existing gerontology drugs. Nutraceutix, Inc. will commence a
development program for certain pharmaceuticals selected by the
Issuer.
The Issuer has elected to employ the CDT controlled delivery
technology as an optimum technology for drug delivery of certain
specific drugs and drug combinations to be used in treating
Alzheimer disease and other neurodegenerative diseases. The CDT
technology was invented by Dr. Reza Fassihi in the pharmaceutical
laboratories of Temple University, Philadelphia and has been
licensed exclusively to Nutraceutix, Inc. Using patented CDT
technology, monolithic tablets for oral administration can be
designed having several advantages over conventional sustained-
release tablets. The Issuer and Nutraceutix, Inc. will commence the
formulation development program immediately. Initial work will be
carried out at Temple University in conjunction with Nutraceutix,
Inc. followed by technology transfer to a development partner for
scale-up and cGMP manufacturing.
Page 2
Nutraceutix, Inc. is a leading provider of proven formulation
technologies for both prescription and non-prescription healthcare
products. The CDT TM technology is currently utilized in several
marketed products.
Item 6. Reliance on Section 85(2) of the Act
------------------------------------
If the report is being filed on a confidential basis in reliance on
Section 85(2) of the Act, state the reasons for that reliance.
Not applicable
Item 7. Omitted Information
-------------------
Not applicable
Item 8. Senior Officers
---------------
Allen Bain, President and Chief Executive Officer
Telephone: (604) 222-5541
Item 9. Statement of Senior Officer
---------------------------
The foregoing accurately discloses the material change referred to
herein.
DATED at Vancouver, British Columbia, the 19th day of September, 2001.
IMMUNE NETWORK LTD.
Per: /s/ Allen Bain
_______________________________
Allen Bain
President and Chief Executive Officer