6-K 1 form6k.txt 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

~~Annual~~Current ~~Compensation~~fiscal ~~Long~~year ~~Term~~to ~~Compensation~~Preceding fiscal year date Current interim period to date Preceding interim period June 30 June 30 June 30 June 30 ------------------------------------------------- ------------------------------------------------- ~~Awards~~2001 ~~Payouts~~2001 2000 2000 $ $ $ $ ------------------------------------------------- ~~All~~------------------------------------------------ ~~Name~~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 ~~Financial~~development ~~Other~~4,081,546 ~~Securities~~2,108,079 ~~Restricted~~4,497,100 ~~Other~~4,124,064 ~~Principal~~General ~~Year~~and ~~Annual~~administrative ~~Under~~2,335,992 ~~Shares~~1,256,739 or523,790 ~~LTIP~~290,123 ~~Compen~~Amortization 672,668 322,029 79,812 46,300 Loss on writedown of intellectual properties 94,682 94,682 - ~~Position~~- ~~Ended~~--------------------------------------------------------------------------------- ~~Salary~~------------------------------------------------ ~~Bonus~~7,184,888 ~~Compen~~3,781,529 5,100,702 4,460,487 --------------------------------------------------------------------------------- ~~Options/~~------------------------------------------------ ~~Restricted~~Loss ~~Payouts~~before ~~sation~~undernoted items 5,382,520 2,847,839 5,100,702 4,460,487 - Interest and other income (135,076) ($12,080) ($107,246) ~~sation~~(79,197) ~~SARs~~Capital ~~Share~~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) ~~Units~~- - Dilution gain amortization ($90,770) (90,770) - - Equity in loss of significantly influenced companies 1,182,096 579,405 - - --------------------------------------------------------------------------------- ------------------------------------------------ ~~Allen~~232,521 I.(373,153) ~~Bain~~(107,246) ~~Dec~~(79,197) 31================================================================================= ================================================ Loss before income taxes and minority Interest 5,615,041 ~~2000~~2,474,686 ~~$120~~4,~~000~~993,456 ~~Nil~~4,381,290 ~~Nil~~Income ~~480~~taxes- Current 233,000 ~~Nil~~233,000 ~~Nil~~- ~~$367~~- Income taxes- Future - - - - --------------------------------------------------------------------------------- ------------------------------------------------- Loss before minority interest 5,~~120~~848,041 ~~President~~2,707,686 &4,993,456 ~~C.E.O.~~4,381,290 ~~Dec~~Minority interest in loss from subsidiaries (312,701) (31,012) ~~1999~~- $- 73--------------------------------------------------------------------------------- ------------------------------------------------- Net loss for the period 5,~~000~~535,340 ~~Nil~~2,676,674 ~~Nil~~4,993,456 ~~500~~4,~~000~~381,290 ~~Nil~~Deficit, ~~Nil~~beginning ~~Nil~~of ~~Dec~~period 3112,427,133 ~~1998~~15,285,799 ~~N/A~~3,485,360 ~~N/A~~4,097,526 ~~N/A~~- ~~N/A~~--------------------------------------------------------------------------------- ~~N/A~~------------------------------------------------- ~~N/A~~Deficit, ~~N/A~~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 $ $ $ $ ------------------------------------------------- ~~Market~~------------------------------------------------ ~~Value~~OPERATING %ACTIVITIES ofLoss ~~Total~~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 ~~Securities~~deferred ~~Securities~~charges ~~Options/SARs~~19,076 ~~Exercise~~8,876 ~~Underlying~~2,580 ~~Under~~2,580 ~~Granted~~Minority tointerest orin ~~Options/SARs~~loss ~~Expiration~~from ~~Name~~subsidiary ~~Options/SARs~~(312,700) ~~Employees~~(31,007) - - Dilution gain amortization (90,770) (45,386) - - Equity in ~~Base~~loss ~~Price~~from significantly influenced companies 1,182,096 579,405 - - Gain on ~~the~~Disposal ~~Date~~of ~~Date~~shares ~~Granted~~in ~~Financial~~Azure Dynamics (~~$/Security~~936,663) (936,663) - - Loss on writedown of ~~Grant~~intellectual properties 94,682 94,682 - - Long term liability for clinical research 409,133 348,379 1,502,002 1,502,002 ------------------------------------------------- ------------------------------------------------ (#4,497,818) ~~Year~~(2,326,159) (~~$/Security~~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) - - ------------------------------------------------- ------------------------------------------------ ~~Allen~~Cash I.used ~~Bain~~in ~~380~~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) 33(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~~.20~~,389) $(1~~.18~~,389) ~~April~~Repayment 19(advance) of loan from (to) officer - - 32,213 ~~2005~~12,113 ~~100~~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) 91,578,352 %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 $~~0.40~~ 465,858 $~~0.42~~ ~~January~~465,858 24$ 4,960,802 ~~2005~~$ 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

----------------------------------------------------------------------------------------------------------- ~~Name Options to purchase Date of Grant Exercise Expiration Shares Price Date Granted (#) ($/Security)~~ --------------------~~---------------------------------------------------------------------------------------~~ ~~Directors~~Date ~~and~~of ~~Senior~~Type ~~Officers(1)~~of ~~805,000~~Type ~~April~~of ~~20,~~Number ~~2000~~Price ~~$1.20~~Total Type of Commission Issue Security Issue Proceeds Consideration Paid =============================================================================================================================== April 19- 25 Common shares Special Warrant 400,000 ~~2005~~0.15 ~~840~~60,000 ~~January~~Cash NIL Converted April - 25, ~~2000~~Common $shares Special Warrant 100,000 0.4015 ~~January 24~~15,000 ~~2005~~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 ~~Value~~Exercise ofStock ~~Unexercised~~Options ~~Unexercised~~Price ~~in-the-~~Number ~~Securities~~of ~~Aggregate~~Stock ~~Options/SARs~~Price ~~Money~~Outstanding ~~Name~~$ ~~Acquired~~Expiry ~~Value~~Date atOptions ~~FY-End~~Exercisable ~~(#)~~$ ~~Options~~=================================================================================================== /70,000 ~~SARs~~0.15 at21-May-04 on70,000 ~~Exercise~~0.15 ~~Realized(1)~~50,000 ~~Exercisable/~~0.15 FY20-~~End~~May-03 ~~($)~~50,000 ~~Exercisable/~~0.15 ~~(#)~~80,500 ~~($)~~0.23 ~~Unexercisable(3) Unexercisable(2)&(3)~~ 09-Jun-~~---------------------------------------------------------------------------------------------~~04 ~~Allen~~80,500 I0.23 ~~Bain 430~~70,000 ~~$367,120~~0.23 25-Jul-04 70,000~~/Exercisable~~ $70.23 681,~~700/Exercisable~~500 ~~Nil~~0.40 ~~Nil~~24-Jan-05 ~~380~~731,500 0.40 1,020,000~~/Exercisable~~ ~~Nil~~1.20 ~~Nil~~20-Apr-05 ~~Nil~~1,020,000 ~~100~~1.20 1,485,000~~/Exercisable~~ ~~Nil~~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 $ $ $ $ ------------------------------------------------- ~~Name~~------------------------------------------------ ~~and~~REVENUE ~~Residence~~Contract ofrevenue ~~Proposed~~$ ~~Date~~2,877,393 ~~Elected~~$ ~~Number~~1,487,325 of$ ~~Directors~~- ~~and~~$ ~~Present~~- ~~Offices~~Direct ~~Held~~costs oron ~~Appointed~~contract ~~Principal~~revenue ~~Occupation~~(1,715,645) ~~Shares~~(886,920) - - --------------------------------------------------------------------------------- ------------------------------------------------ ~~Allen~~Gross I.margin ~~Bain~~1,161,748 ~~May~~600,405 21- - Rental revenue 640,620 ~~1999~~333,285 ~~President~~- - --------------------------------------------------------------------------------- ------------------------------------------------ 1,802,368 933,690 - - --------------------------------------------------------------------------------- ------------------------------------------------ EXPENSES Research and ~~Chief~~development ~~Executive~~4,081,546 ~~Vancouver~~2,108,079 BC4,497,100 ~~Canada~~4,124,064 ~~Officer~~General ofand ~~the~~administrative ~~Company;~~2,335,992 ~~Chief~~1,256,739 ~~President~~523,790 ~~Chief~~290,123 ~~Executive~~Amortization ~~Officer~~672,668 ~~Executive~~322,029 ~~Officer~~79,812 46,300 Loss on writedown of ~~B.C.~~intellectual ~~Research~~properties 594,~~152~~682 94,~~3551~~682 ~~(1)~~- &- ~~Director~~--------------------------------------------------------------------------------- ~~Inc.~~------------------------------------------------ 7,184,888 3,781,529 5,100,702 4,460,487 --------------------------------------------------------------------------------- ------------------------------------------------ ~~Robert~~Loss J.before ~~Gayton~~undernoted ~~May~~items 315,382,520 ~~1994~~2,847,839 ~~Chartered~~5,100,702 ~~Accountant;~~4,460,487 ~~self~~-~~employed~~ ~~West~~Interest ~~Vancouver~~and other income (35,076) BC(12,080) ~~Canada~~(107,246) ~~consultant~~(79,197) toCapital again ~~number~~(11,675) of(11,675) ~~Vancouver~~- ~~Director~~- ~~based~~Interest ~~companies;~~on ~~Vice~~long-~~President~~term liability 105,593 ~~Finance~~44,842 - - Interest on capital leases 19,016 8,404 - - Gain on disposal of ~~Western~~Azure ~~Copper~~(936,663) ~~Holdings~~(891,279) ~~Ltd.~~- ~~141~~- Dilution gain amortization (90,~~334~~770) (90,770) - - Equity in loss of significantly influenced companies 1,182,096 579,405 - - --------------------------------------------------------------------------------- ------------------------------------------------ Oh232,521 ~~Kim~~(373,153) ~~Sun~~(107,246) ~~January 25~~(79,197) ~~2000~~================================================================================= ~~Group~~================================================ ~~Executive~~Loss ~~Director~~before ofincome ~~the~~taxes ~~Kuala~~and ~~Lumpur~~minority Interest 5,615,041 ~~Malaysia~~2,474,686 ~~Chemical~~4,993,456 ~~Company~~4,381,290 ofIncome ~~Malaysia~~taxes- Current 233,000 1233,~~963,999~~000 ~~Director~~- ~~Berhad~~- Income taxes- Future - - - - --------------------------------------------------------------------------------- ------------------------------------------------- Loss before minority interest 5,848,041 2,707,686 4,993,456 4,381,290 Minority interest in loss from

IMMUNE NETWORK LTD. (a development stage enterprise) (unaudited - prepared by management) (expressed in Canadian Dollars) CONSOLIDATED STATEMENTS OF CASH FLOWS

~~From~~Current ~~Inception~~fiscal ~~(February~~year ~~25,~~to ~~1991)~~Preceding fiscal year date Current interim period to ~~December~~date ~~31,~~Preceding ~~2000~~interim ~~1999~~period ~~1998~~June ~~2000~~30 $June $30 $June $30 June 30 ------------------------------------------------- ------------------------------------------------~~----------------------~~ ~~OPERATING~~2001 ~~ACTIVITIES~~2001 ~~Loss~~2000 ~~for~~2000 ~~the~~$ ~~period~~$ ~~(8,961,703)~~$ ~~(815,984)~~$ ~~(201,671) (12,427,133) Items not involving cash Amortization 627,590 40,851 10,795 770,534 Amortization of deferred charges 13,635~~ - - ~~13,635 Dilution gain amortization (30,257)~~ - - ~~(30,257) Future income taxes recovery (841,000)~~ - - ~~(841,000) Minority interest in loss from subsidiary (70,709)~~ - - ~~(70,709) Equity in loss from significantly influenced companies 588,595~~ - - ~~588,595 Writedown of long~~-~~term investments 120,156~~ - - ~~120,156 Long~~-~~term liability for clinical research 1,600,149~~ - - ~~1,600,149 Stock based compensation 57,589~~ - - ~~57,589 Loss on writedown of intellectual properties~~ - - - ~~88,760 Loss on disposition of capital assets~~ - - ~~4,673 3,417 Loss on disposition of intellectual properties~~ - - - ~~38,965~~ ----------------------- ------------------------------------------------~~------------------------------------------------~~ OPERATING ACTIVITIES Loss for the period $ (65,~~895~~535,~~955~~340) $ (~~775~~2,~~133~~676,674) $ (~~186~~4,~~203~~993,456) $ (104,~~087~~381,~~299~~290) ~~Net~~Items ~~change~~not ininvolving ~~non-~~cash ~~working~~Amortization ~~capital~~672,668 ~~[note~~332,229 ~~23]~~79,812 ~~(107~~46,~~629)~~300 26Amortization of deferred charges 19,~~848~~076 568,~~607~~876 ~~(30~~2,~~579)~~580 ~~-----------------------------------------------------------------------------------------------------------------------~~2,580 ~~Cash~~Minority ~~used~~interest in ~~operating~~loss ~~activities~~from ~~(7,003,584)~~subsidiary (~~748~~312,~~285~~700) (~~129~~31,~~596~~007) ~~(10,117,878)~~- -~~----------------------------------------------------------------------------------------------------------------------~~ ~~FINANCING~~Dilution ~~ACTIVITIES~~gain ~~Proceeds~~amortization ~~from~~(90,770) ~~Shareholder~~(45,386) ~~loan~~ - - ~~50,000~~Equity ~~50,000~~in ~~Share~~loss ~~subscriptions~~from ~~received~~significantly -influenced ~~9,000~~companies 451,~~000 54~~182,~~000~~096 ~~Special warrants 318~~579,~~000~~405 - - ~~318,000~~Gain ~~Proceeds~~on ~~from~~Disposal ~~issuance~~ of ~~common~~ shares ~~9,332,265~~in ~~1,049,575~~Azure ~~110,000~~Dynamics ~~13,094,630 Loan to officer -~~ (55936,~~000~~663) - (55936,~~000~~663) ~~Repayment~~- ~~of a loan to officer 32,213 22,787~~ - ~~55,000~~Loss ~~Payments~~ on ~~obligations~~writedown ~~under~~of ~~capital~~intellectual ~~leases~~properties ~~(45~~94,~~645)~~682 94,682 - - ~~(45,645)~~Long ~~-----------------------------------------------------------------------------------------------------------------------~~term ~~Cash~~liability ~~provided~~for byclinical ~~financing~~research ~~activities~~409,133 9348,~~636,833~~379 1,~~026~~502,~~362~~002 ~~205~~1,~~000 13~~502,~~470,985~~002 ------------------------------------------------- ------------------------------------------------~~----------------------~~ ~~INVESTING ACTIVITIES Purchase of intellectual properties~~ (~~337~~4,~~654~~497,818) (652,~~348~~326,159) (133,~~951~~409,062) (~~850~~2,~~667~~830,408) ~~Purchase~~Accounts ofreceivable ~~capital~~(88,679) ~~assets~~ (~~312~~69,~~996~~806) (92255,~~767~~474) - (~~444~~222,~~533~~238) ~~Proceeds~~Unbilled ~~from~~revenue ~~disposal~~(31,816) of(20,758) ~~capital~~- ~~and~~- ~~intellectual~~Government ~~properties~~grants -receivable -10,000 7,~~618~~500 ~~31,618 Purchase of long-term investments~~ (~~415~~7,~~710~~604) (297,~~896~~688) -Investment ~~(370,606)~~tax ~~Purchase~~credit ofand ~~restricted~~taxes ~~investments~~recoverable ~~(75~~94,~~000)~~077 94,112 - - ~~(75,000)~~Deposits ~~Purchase~~and ofprepaid ~~short-term~~expenses ~~investment~~90,532 -70,480 (50100,~~000~~232) - (508,~~000~~597) ~~Redemption~~Accounts ofpayable ~~short-term~~and ~~investments~~accrued 50liabilities 2,~~000~~347,170 -1,833,003 -144,639 50(79,~~000~~242) ~~Cash~~Taxes ~~acquired~~payable on213,000 ~~business~~213,000 ~~combination~~- ~~net~~- ofReceivable ~~costs~~on sale of ~~acquisition~~shares ~~[note~~(750,000) ~~5] 919~~(750,~~784~~000) - - ~~934~~Unearned revenue 36,~~812~~792 (63,168) - - ------------------------------------------------- ------------------------------------------------~~--------------------~~ Cash (used in) ~~provided~~operating ~~by investing~~ activities (~~171~~2,576,741) (~~238~~1,011,795) (63,~~333~~627,733) (~~774~~3,~~376~~148,173) ------------------------------------------------- ------------------------------------------------~~----------------------~~ ~~Increase~~FINANCING ~~(decrease)~~ACTIVITIES inProceeds ~~cash~~from ~~and~~share ~~cash~~subscription ~~equivalents~~received ~~2,461,673~~- ~~40,066~~- ~~69,071 2,578,731 Cash and cash equivalents, beginning of period 117,058 76,992 7,921~~ - -~~----------------------------------------------------------------------------------------------------------------------~~ ~~Cash~~special ~~and~~warrants ~~cash equivalents~~(75,000) ~~end of period 2~~(75,~~578,731~~000) ~~117~~7,~~058 76~~962,~~992~~890 2(137,~~578,731~~853) ~~=======================================================================================================================~~Proceeds ~~Supplementary~~from ~~cash~~issuance ~~flow~~of ~~information~~common ~~Interest~~shares ~~paid~~96,981 2175,~~582~~000 ~~- - 21~~874,~~582~~985 ~~=======================================================================================================================~~442,800

~~From~~Current ~~Inception~~fiscal ~~(February~~year ~~25, 1991)~~ to ~~December~~Preceding ~~31,~~fiscal ~~2000~~year ~~1999~~date ~~1998~~Current ~~2000~~interim $period $to $date $Preceding ~~-----------------------------------------------------------------------------------------------------------------------~~interim ~~REVENUE~~period ~~Contract~~June ~~revenue~~30 ~~1,867,339~~June -30 -June ~~1,867,339~~30 ~~Direct~~June ~~costs~~30 ~~on contract revenue(note 19) (1,028,541)~~ - - ~~(1,028,541)~~ ----------------------------------------------- ------------------------------------------------~~------------------------~~ ~~Gross~~2001 ~~margin~~2001 ~~838,798~~2000 -2000 -$ ~~838,798~~$ ~~Rental~~$ ~~revenue~~$ ~~459,366~~ - - ~~459,366~~ -----------------------------------------------~~------------------------------------------------------------------------~~ ~~1,298,164~~ - - ~~1,298,164~~ ----------------------------------------------~~-------------------------------------------------------------------------~~ ~~EXPENSES~~Repayment ~~Research~~(advance) ~~and~~of ~~development~~loan ~~7,186,541~~from ~~420,195~~(to) ~~20,260~~officer ~~8,587,166~~- ~~Loss on disposition of intellectual properties~~ - - - ~~38,965~~Payment ~~General~~on ~~and~~obligations ~~administrative~~under 2capital leases (65,~~766,856~~453) ~~368~~(32,~~974~~308) ~~166~~(1,~~855~~389) 4(1,~~612,320~~389) ~~Loss~~Repayment on(advance) ~~writedown~~ of ~~long-term~~loan ~~investments~~from ~~[note~~(to) ~~11]~~officer ~~120,156~~ - - ~~120~~32,~~156~~213 ~~Amortization 627~~12,~~590~~113 ~~40,851~~Dividend ~~10,795 770,534 Loss~~ on ~~writedown~~common ofshares ~~intellectual~~(38,484) ~~properties - - - 88~~(38,~~760~~484) ~~Loss on disposition of capital assets~~ - - ~~4,673 3,417~~ ------------------------------------------------- ------------------------------------------------~~----------------------~~ ~~10,701,143~~Cash ~~830~~provided by financing activities (81,~~020~~956) ~~202~~(70,~~583~~792) 148,~~221~~868,~~318~~699 315,671 ------------------------------------------------- ------------------------------------------------~~----------------------~~ ~~Loss~~INVESTING ~~before~~ACTIVITIES ~~the~~Purchase ~~undernoted~~of ~~items~~intellectual ~~9,402,979~~properties ~~830,020 202,583 12,923,154 Interest income [note 20]~~ (~~251~~8,~~182~~712) (148,~~036~~712) (~~912~~209,064) (~~305~~169,~~927~~764) ~~Interest~~Process ~~expense~~from ondisposition ~~long-term~~of ~~liability~~Azure ~~146~~1,~~649~~037,500 1,037,500 - - ~~146,649~~Purchase ~~Interest~~of ~~expense on~~ capital ~~leases~~assets 16(140,~~628~~364) -(70,885) -(63,922) 16(37,~~628~~480) ~~Dilution~~Purchase ~~gain~~of ~~amortization~~investments (30291,~~257~~888) -8,152 -(24,995) (3010,~~257~~709) ~~Equity~~Purchase inof ~~loss~~short ofterm ~~significantly~~investment ~~influenced~~(50,712) ~~companies~~5,538 ~~588~~(25,~~595~~000) 1,578,352 Purchase of convertible loan - - ~~588~~(74,~~595~~241) (74,241) ------------------------------------------------- ------------------------------------------------~~----------------------~~ ~~Loss~~Cash ~~before~~used ~~income~~in ~~taxes~~investing ~~and~~activities ~~minority interest 9~~545,~~873,412~~824 ~~815~~971,~~984~~593 ~~201,671 13,338,842 Future income tax recovery~~ (~~note 19) (841~~397,~~000~~222) ~~- - (841~~1,~~000)~~286,158 ------------------------------------------------- ------------------------------------------------~~----------------------~~ ~~Net~~Increase ~~loss~~(decrease) ~~before~~in ~~minority~~cash ~~interest~~and ~~9,032,412~~cash ~~815,984~~equivalents ~~201~~(2,~~671 12~~112,~~497,842~~873) ~~Minority interest in loss from subsidiary~~ (70110,~~709~~994) -4,843,744 - (701,~~709~~546,344) ------------------------------------------------- ------------------------------------------------~~----------------------~~ ~~Net~~Cash ~~loss~~and ~~for~~cash ~~the period 8~~equivalents,~~961,703~~ ~~815,984 201,671 12,427,133 Deficit accumulated during development stage,~~ beginning of period 32,~~465~~578,~~430~~731 2576,~~649~~852 117,~~446~~058 26,~~447~~507,~~775~~146 - ------------------------------------------------ ------------------------------------------------~~-----------------------~~ ~~Deficit~~Cash ~~accumulated~~and ~~during~~cash ~~development stage~~equivalents, end of period ~~12,427,133~~$ 3465,858 $ 465,~~430~~858 2$ 4,~~649~~960,~~446~~802 12$ 4,~~427~~960,~~133~~802 =================================================================================~~======================================~~ ~~Loss per common share 0.21 0.03 0.01 -~~ ======================================================================================================================= Weighted average number of outstanding shares 42,882,698 24,253,222 20,137,118 - =======================================================================================================================

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

~~From~~Current ~~Inception~~fiscal ~~(February~~year ~~25,~~to ~~1991)~~Preceding fiscal year date Current interim period to ~~December~~date ~~31,~~Preceding ~~2000~~interim ~~1999~~period ~~1998~~June ~~2000~~30 $June $30 $June $30 June 30 ------------------------------------------------- ------------------------------------------------- 2001 2001 2000 2000 $ $ $ $ --------------------- ~~OPERATING ACTIVITIES Loss for the period (8,961,703) (815,984) (201,671) (12,427,133) Items not involving cash Amortization 627,590 40,851 10,795 770,534 Amortization of deferred charges 13,635~~ - - ~~13,635 Dilution gain amortization (30,257)~~ - - ~~(30,257) Future income taxes recovery (841,000)~~ - - ~~(841,000) Minority interest in loss from subsidiary (70,709)~~ - - ~~(70,709) Equity in loss from significantly influenced companies 588,595~~ - - ~~588,595 Writedown of long~~-~~term investments 120,156~~ - ---------------- ~~120,156 Long~~-~~term~~----------------------------------------------- ~~liability~~REVENUE ~~for~~Contract ~~clinical~~revenue ~~research~~$ 12,~~600~~877,~~149~~393 -$ - 1,~~600~~487,~~149~~325 ~~Stock~~$ ~~based~~- ~~compensation~~$ ~~57,589~~ - -Direct ~~57,589~~costs ~~Loss~~ on ~~writedown~~contract ofrevenue ~~intellectual~~(1,715,645) ~~properties~~(886,920) - - - ~~88,760 Loss on disposition of capital assets~~ - - ~~4,673 3,417 Loss on disposition of intellectual properties~~ - - - ~~38,965~~ --------------------------------------------------------------------------- ------------------------------------------------ ~~(6,895,955)~~Gross ~~(775,133)~~margin ~~(186~~1,~~203)~~161,748 ~~(10~~600,~~087,299)~~405 ~~Net~~- ~~change in non~~-~~cash~~ ~~working~~Rental ~~capital~~revenue ~~[note 23] (107~~640,~~629)~~620 26333,~~848~~285 ~~56,607~~- ~~(30,579)~~- --------------------------------------------------------------------------------- ------------------------------------------------ ~~Cash used in operating activities (7~~1,~~003~~802,~~584)~~368 ~~(748~~933,~~285)~~690 ~~(129,596)~~- ~~(10,117,878)~~- --------------------------------------------------------------------------------- -------------------------------------- ~~FINANCING ACTIVITIES Proceeds from Shareholder loan~~ - --------- ~~50,000~~EXPENSES ~~50,000~~Research ~~Share~~and ~~subscriptions~~development ~~received - 9~~4,~~000 45~~081,~~000~~546 542,~~000~~108,079 ~~Special warrants 318~~4,~~000~~497,100 ~~- - 318~~4,~~000~~124,064 ~~Proceeds~~General ~~from~~and ~~issuance~~administrative ~~of common shares 9~~2,~~332~~335,~~265~~992 1,~~049~~256,~~575~~739 ~~110~~523,~~000~~790 13290,~~094,630~~123 ~~Loan~~Amortization ~~to officer - (55~~672,~~000)~~668 ~~- (55~~322,~~000)~~029 ~~Repayment of a loan to officer 32~~79,~~213~~812 2246,~~787~~300 -Loss ~~55,000 Payments~~ on ~~obligations~~writedown ~~under~~of ~~capital~~intellectual ~~leases~~properties ~~(45~~94,~~645)~~682 94,682 - - ~~(45,645)~~ --------------------------------------------------------------------------------- ------------------------------------------------ ~~Cash provided by financing activities 9~~7,~~636~~184,~~833~~888 13,~~026~~781,~~362~~529 ~~205~~5,~~000~~100,702 134,~~470~~460,~~985~~487 --------------------------------------------------------------------------------- ------------------------------------------------ ~~INVESTING~~Loss ~~ACTIVITIES~~before ~~Purchase~~undernoted ofitems ~~intellectual~~5,382,520 ~~properties~~2,847,839 5,100,702 4,460,487 - Interest and other income (~~337~~35,~~654~~076) (6512,~~348~~080) (13107,~~951~~246) (~~850~~79,~~667~~197) ~~Purchase~~Capital ofgain ~~capital assets~~ (~~312~~11,~~996~~675) (9211,~~767~~675) - ~~(444~~- Interest on long-term liability 105,~~533)~~593 ~~Proceeds~~44,842 ~~from~~- ~~disposal~~- ofInterest on capital ~~and~~leases ~~intellectual~~19,016 ~~properties~~8,404 - - ~~7,618~~Gain ~~31,618~~on ~~Purchase~~disposal of ~~long-term~~Azure ~~investments~~ (~~415~~936,~~710~~663) (29891,~~896~~279) - ~~(370,606)~~- ~~Purchase~~Dilution ofgain ~~restricted~~amortization ~~investments~~(90,770) (7590,~~000~~770) - - ~~(75,000)~~Equity ~~Purchase~~in loss of ~~short~~significantly influenced companies 1,182,096 579,405 -~~term~~ ~~investment~~- --------------------------------------------------------------------------------- ------------------------------------------------ 232,521 (50373,~~000~~153) -(107,246) (5079,~~000~~197) ~~Redemption~~================================================================================= of================================================ ~~short-term~~Loss ~~investments~~before ~~50,000~~income -taxes -and 50minority Interest 5,~~000~~615,041 ~~Cash~~2,474,686 ~~acquired~~4,993,456 on4,381,290 ~~business~~Income ~~combination~~taxes- ~~net~~Current of233,000 ~~costs~~233,000 of- ~~acquisition~~- ~~[note~~Income 5]taxes- ~~919,784~~Future - - ~~934,812~~- - --------------------------------------------------------------------------------- ------------------------------------------------ ~~Cash~~Loss ~~(used~~before ~~in)~~minority ~~provided~~interest by5,848,041 ~~investing~~2,707,686 ~~activities (171~~4,~~576)~~993,456 ~~(238~~4,~~011)~~381,290 Minority interest in loss from subsidiaries (6312,~~333~~701) (~~774~~31,~~376~~012) - - --------------------------------------------------------------------------------- ------------------------------------------------ ~~Increase~~Net ~~(decrease)~~loss infor ~~cash~~the ~~and~~period ~~cash~~5,535,340 ~~equivalents~~ 2,~~461~~676,~~673~~674 404,~~066 69~~993,~~071~~456 24,~~578~~381,~~731~~290 ~~Cash and cash equivalents~~Deficit, beginning of period ~~117~~12,~~058~~427,133 7615,~~992~~285,799 73,~~921~~485,360 4,097,526 - --------------------------------------------------------------------------------- ------------------------------------------------ ~~Cash and cash equivalents~~Deficit, end of period 2$ 17,~~578~~962,~~731~~473 ~~117~~$ 17,~~058~~962,473 76$ 8,~~992~~478,816 2$ 8,~~578~~478,~~731~~816 ================================================================================= ================================================ ~~Supplementary~~Loss ~~cash~~per ~~flow~~common ~~information~~share ~~Interest~~0.09 ~~paid~~0.04 ~~21,582~~0.17 0.15 --------------------------------------------------------------------------------- ------------------------------------------------ 21Weighted average number of outstanding shares 63,~~582~~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 $ $ $ $ ------------------------------------------------- ~~Date~~------------------------------------------------ ofOPERATING ~~Type~~ACTIVITIES ofLoss ~~Type~~for ofthe ~~Number~~period ~~Price~~$ ~~Total~~(5,535,340) ~~Type~~$ (2,676,674) $ (4,993,456) $ (4,381,290) Items not involving cash Amortization 672,668 332,229 79,812 46,300 Amortization of ~~Commission~~deferred ~~Issue~~charges ~~Security~~19,076 ~~Issue~~8,876 ~~Proceeds~~2,580 ~~Consideration~~2,580 ~~Paid~~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) --- 19-~~Feb~~ ~~Common~~Government ~~shares~~grants ~~Warrants~~receivable 6610,000 7,500 ~~0.18~~(7,604) 11(7,~~970~~688) ~~Cash~~Investment ~~NIL~~tax 12credit and taxes recoverable 94,077 94,112 -~~Feb~~ ~~Common~~- ~~shares~~Deposits ~~Warrants~~and 36prepaid expenses 90,~~725~~532 ~~0.18~~70,480 6(100,~~611~~232) ~~Cash~~(8,597) ~~NIL~~Accounts payable and accrued liabilities 2,347,170 1,833,003 144,639 (79,242) Taxes payable 213,000 213,000 -~~Mar~~ ~~Common~~- Receivable on sale of shares ~~Warrants~~(750,000) 20(750,000) ~~0.17~~- 3- Unearned revenue 36,~~400~~792 ~~Cash~~(63,168) ~~NIL~~- - ------------------------------------------------- ------------------------------------------------ Cash used in operating activities (2,576,741) (1,011,795) (3,627,733) (3,148,173) ------------------------------------------------- ~~Total~~------------------------------------------------ ~~123~~FINANCING ACTIVITIES Proceeds from share subscription received - - - - special warrants (75,~~225~~000) 21(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

~~Name~~Current offiscal ~~Optionee~~year ~~No.~~to ofPreceding ~~Options~~fiscal ~~Exercise~~year ~~Price~~date ~~Grant~~Current ~~Date~~interim ~~Expiry~~period ~~Date~~to date Preceding interim period June 30 June 30 June 30 June 30 ------------------------------------------------- ------------------------------------------------- ~~Allen~~2001 ~~Bain~~2001 ~~990,000~~2000 ~~0.25~~2000 2$ $ $ $ -~~Jan~~-01----------------------------------------------- 1-~~Jan~~-06---------------------------------------------- ~~Danny~~INVESTING ~~Lowe~~ACTIVITIES ~~50,000~~Purchase ~~0.25~~of ~~2-Jan-01~~intellectual ~~1-Jan-06~~properties ~~David~~(8,712) ~~Goold~~(8,712) 80(209,~~000~~064) ~~0.25~~(169,764) ~~2-Jan-01~~Process ~~1-Jan-06~~from ~~Donald~~disposition ~~Rix~~of ~~100~~Azure 1,~~000~~037,500 ~~0.25~~1,037,500 2-~~Jan-01~~ 1-~~Jan-06~~ ~~John~~Purchase ~~Barnard~~of ~~25,000~~capital ~~0.25~~assets ~~2-Jan-01~~(140,364) ~~1-Jan-06~~(70,885) ~~Mario~~(63,922) ~~Kasapi 20~~(37,~~000~~480) ~~0.25~~Purchase ~~2-Jan-01~~of ~~1-Jan-06~~investments ~~Mark~~(291,888) ~~Glusing~~8,152 50(24,~~000~~995) ~~0.30~~(10,709) ~~5-Mar-01~~Purchase ~~4-Mar-02~~of ~~Markham~~short ~~Moore~~term investment (50,~~000~~712) 0.5,538 (25,000) ~~2-Jan-01~~ 1~~-Jan-06~~,578,352 OhPurchase ~~Kim~~of ~~Sun~~convertible ~~100,000~~loan ~~0.25 2~~-~~Jan-01~~ 1-~~Jan-06~~ ~~Robert~~(74,241) ~~Gayton 100~~(74,~~000~~241) ~~0.25 2~~-~~Jan~~-01----------------------------------------------- 1-~~Jan~~-06---------------------------------------------- ~~Ronald~~Cash ~~Paton~~used ~~50,000~~in ~~0.25~~investing ~~2-Jan-01~~activities ~~1-Jan-06~~545,824 ~~Employees~~971,593 ~~190~~(397,~~000~~222) ~~0.25~~1,286,158 2-~~Jan~~-01----------------------------------------------- 1-~~Jan~~-06---------------------------------------------- ~~Employees~~Increase 50(decrease) in cash and cash equivalents (2,~~000~~112,873) ~~0.30~~(110,994) 4,843,744 (1,546,344) -~~Mar~~-~~01 4~~-~~Mar~~-02 --------------------------------------------- ------------------------------------------------ ~~Total~~Cash 1and cash equivalents,~~855~~ beginning of period 2,~~000~~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

---------------------------------------------------------------------------------------------- Section of Act/Rules Total and if applicable, Full Name and Residential Number of Price Per Purchase Date of Discretionary Address of Purchaser Securities Share Price Order, Blanket Purchased (Canadian $) (Canadian $) Order Number or BC Instrument Number ---------------------------------------------------------------------------------------------- Gladys Chan 200,000 0.10 Nil Section 74(2)(9) 12 - 8300 Jones Road of the Act Richmond, BC V6Y 1L6 ---------------------------------------------------------------------------------------------- Korey Gendron 100,000 0.10 Nil Section 74(2)(9) 304 - 3673 11th Avenue of the Act Vancouver, BC V6R 2K4 ---------------------------------------------------------------------------------------------- Mark Glusing 400,000 0.10 Nil Section 74(2)(9) 206 - 2335 York Avenue of the Act Vancouver, BC V6K 1C8 ---------------------------------------------------------------------------------------------- Mario Kasapi 100,000 0.10 Nil Section 74(2)(9) 14062 20A Avenue of the Act Surrey, BC V4A 9S3 ---------------------------------------------------------------------------------------------- Markham Moore 225,000 0.10 Nil Section 74(2)(9) 2808 West 35th Avenue of the Act Vancouver, BC V6S 2L2 ---------------------------------------------------------------------------------------------- Ruan Muller 100,000 0.10 Nil Section 74(2)(9) 4463 West 14th Avenue of the Act Vancouver, BC V6E 2Y2 ---------------------------------------------------------------------------------------------- Jesse Raffa 100,000 0.10 Nil Section 74(2)(9) 6335 Thunderbird Crescent of the Act Vancouver, BC V6T 2G9 ---------------------------------------------------------------------------------------------- Julia Ridley 25,000 0.10 Nil Section 74(2)(9) 830 West 64th Avenue of the Act Vancouver, BC V6P 2L4 ---------------------------------------------------------------------------------------------- Max Ruessmann 25,000 0.10 Nil Section 74(2)(9) 3025 West 44th Avenue of the Act Vancouver, BC V6N 3K5 ---------------------------------------------------------------------------------------------- Matt Sadler 300,000 0.10 Nil Section 74(2)(9) 4539 West 7th Avenue of the Act Vancouver, BC V6R 1X2 ---------------------------------------------------------------------------------------------- Talieh Shahrokhi 150,000 0.10 Nil Section 74(2)(9) 2814 West 11th Avenue of the Act Vancouver, BC V6K 2M1 ---------------------------------------------------------------------------------------------- Nab Uddin 50,000 0.10 Nil Section 74(2)(9) 1 Mapleview Place of the Act North Bay, ON P1C 1C6 ---------------------------------------------------------------------------------------------- Michelle Wong 25,000 0.10 Nil Section 74(2)(9) 2229 Sorrento Drive of the Act Coquitlam, BC V3K 6P3 ----------------------------------------------------------------------------------------------

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