UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
Form 10-QSB
(Mark One)
_X_ QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal quarter ended March 31, 2002
Or
TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____to______
Commission file number 0-26775
-------------
Samaritan Pharmaceuticals Inc.
(Name of small business issuer in its charter)
Nevada 88-0380402
(State or other jurisdiction of (I.R.S.Employer Identification No.)
Incorporation or organization)
101 Convention Center Drive, Suite 310, Las Vegas, Nevada 89109
(Address of Principal Executive Offices) (Zip Code)
(702) 735-7001
Issuer's telephone number
N/A
(Former name, former address and former fiscal year, if changed since last
report)
The company had 43,873,604 shares issued and outstanding of the Common Stock
issued as of March 31, 2002.
Transitional Small Business Disclosure Format (Check one): Yes___ No X
SAMARITAN PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
March 31, 2002
TABLE OF CONTENTS
Consolidated, Interim Balance Sheet as of
March 31, 2002 (Unaudited) 3
Consolidated Interim Statements of Operations for the
period from Inception (September 5, 1994)
to March 31, 2002, and for the Three Months Ended
March 31, 2002 and 2001 (Unaudited). 4
Consolidated Interim Statements of Stockholders' Equity
(Deficit) for the period from Inception (September 5, 1994)
to March 31, 2002 (Unaudited). 5
Consolidated Interim Statements of Cash Flows for the period
from Inception (September 5, 1994) to March 31, 2002 and
for the Three Months Ended March 31, 2002 and 2001
(Unaudited). 6
Notes to Interim Financial Statements. 7
Item 2. Management's Discussion and Analysis of Plan of Operations 8-12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13-14
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
SAMARITAN PHARMACEUTICALS, INC.
(FORMERLY STEROIDOGENESIS INHIBITORS INTERNATIONAL, INC.)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED, BALANCE SHEET
(UNAUDITED)
March 31, 2002
ASSETS
CURRENT ASSETS:
Cash $ 210,675
Prepaid expense 4,333
------------------
TOTAL CURRENT ASSETS 215,008
------------------
PROPERTY AND EQUIPMENT 27,434
OTHER ASSETS:
Offering costs 2,284
Patent registration costs 219,085
Purchased technology rights 60,843
Deposits 15,720
------------------
TOTAL CURRENT LIABILITIES 297,932
------------------
TOTAL ASSETS $ 540,374
==================
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable $ 400,857
Accrued expenses 706,630
Common stock to be issued 28,000
Short-term borrowings 265,251
------------------
TOTAL CURRENT LIABILITIES 1,400,738
------------------
DEFERRED REVENUE 250,000
------------------
STOCKHOLDERS' DEFICIT:
Common stock, 100,000,000 shares authorized at $.001
par value, 43,873,604 issued and outstanding 43,874
Additional paid-in capital 13,656,812
Deferred compensation (371,277)
Accumulated deficit (14,439,773)
------------------
TOTAL STOCKHOLDERS' DEFICIT (1,110,364)
------------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 540,374
==================
See accompanying notes to the consolidated, interim financial statements
(unaudited).
-3-
SAMARITAN PHARMACEUTICALS, INC.
(FORMERLY STEROIDOGENESIS INHIBITORS INTERNATIONAL, INC.)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED, INTERIM STATEMENTS OF OPERATIONS
(UNAUDITED)
FROM INCEPTION (SEPTEMBER 5, 1994), AND FOR THE FOR THREE MONTHS
ENDED MARCH 31, 2002 AND 2001
From For the Three Months
Inception Ended
September 5, 1994 March 31,
To ----------------------------------
March 31, 2002 2001 2000
------------------ --------------- ----------------
REVENUES: $ 50,000 $ - $ -
------------------ --------------- ----------------
EXPENSES:
Research and development 2,965,107 161,014 128,883
Interest, net 29,734 6,369 -
General and administrative 10,927,226 406,569 536,300
Depreciation and amortization 705,486 129,029 5,270
------------------ --------------- ----------------
14,627,553 702,981 670,453
------------------ --------------- ----------------
INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM (14,577,553) (702,981) (670,453)
Extraordinary item 137,780 - -
------------------ --------------- ----------------
NET INCOME (LOSS) $ (14,439,773) $ (702,981) $ (670,453)
================== =============== ================
Loss per share-basic & diluted:
Before extraordinary item $ (1.16) $ (0.02) $ (0.03)
Extraordinary item 0.01 - -
------------------ --------------- ----------------
Loss per share $ (1.15) $ (0.02) $ (0.03)
================== =============== ================
Weighted average number of shares outstanding:
Basic and diluted 12,577,795 40,527,334 21,788,521
================== =============== ================
See accompanying notes to the consolidated, interim financial statements
(unaudited)
-4-
SAMARITAN PHARMACEUTICALS, INC.
(FORMERLY STEROIDOGENESIS INHIBITORS INTERNATIONS, INC.)
(A DEVELOPMENT STATE COMPANY)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
FROM INCEPTION (SEPTEMBER 5, 1994) TO DECEMBER 31, 2001
Number Par Value Reserved Additional Total
of Common for Paid in Deferred Accumulated Shareholders'
Shares Stock Conversion Capital Warrants Compensation Deficit Deficit
----------- -------- ---------- ---------- ----------- ------------ ----------- -----------
Inception at September 5, 1994 - $ - $ - $ - $ - $ - $ - $ -
Shares issued for cash, net of
offering costs 6,085,386 609 - 635,481 - - - 636,090
Warrants issued for cash - - - - 5,000 - - 5,000
Shares issued as compensation
for services 714,500 71 - 1,428,929 - - - 1,429,000
Net loss - - - - - - (2,152,843) (2,152,843)
----------- -------- ---------- ---------- ----------- ------------ ----------- -----------
December 31, 1996 6,799,886 680 - 2,064,410 5,000 - (2,152,843) (82,753)
Issuance of stock, prior to
acquisition 206,350 21 - 371,134 - - - 371,155
Acquisition of subsidiary for
stock 1,503,000 150 - 46,545 - - - 46,695
Shares of parent redeemed,
par value $.001 (8,509,236) (851) - 851 - - - -
Shares of public subsidiary
issued, par value $.001 7,689,690 7,690 820 (8,510) - - - -
Net loss - - - - - - (979,635) (979,635)
----------- -------- ---------- ---------- ----------- ------------ ----------- -----------
December 31, 1997 7,689,690 7,690 820 2,474,430 5,000 - (3,132,478) (644,538)
Conversion of parent's shares 696,022 696 (696) - - - - -
Shares issued for cash, net of
offering costs 693,500 694 - 605,185 - - - 605,879
Shares issued in cancellation
of debt 525,000 525 - 524,475 - - - 525,000
Shares issued as compensation 400,000 400 - 349,600 - - - 350,000
Net loss - - - - - - (1,009,945) (1,009,945)
----------- -------- ---------- ---------- ----------- ------------ ----------- -----------
December 31, 1998 10,004,212 10,005 124 3,953,690 5,000 - (4,142,423) (173,604)
Conversion of parent's shares 13,000 13 (13) - - - - -
Shares issued in cancellation
of debt 30,000 30 - 29,970 - - - 30,000
Shares issued for cash, net
of offering costs 45,000 45 - 41,367 - - - 41,412
Shares issued as compensation 3,569,250 3,569 - 462,113 - - - 465,682
Detachable warrants issued - - - - 152,125 - - 152,125
Detachable warrants exercised 100,000 100 - 148,900 (149,000) - - -
Debentures converted to stock 1,682,447 1,682 - 640,438 - - - 642,120
Net loss - - - - - - (1,671,255) (1,671,255)
----------- -------- ---------- ---------- ----------- ------------ ----------- -----------
December 31, 1999 15,443,909 15,444 111 5,276,478 8,125 - (5,813,678) (513,520)
5A
Conversion of parent's shares 128,954 129 (111) (18) - - - -
Shares issued for cash, net
of offering costs 1,575,192 1,575 - 858,460 - - - 860,035
Shares issued in cancellation
of debt 875,000 875 - 660,919 - - - 661,794
Shares issued in cancellation
of accounts payable 100,000 100 - 31,165 - - - 31,265
Shares issued as compensation 3,372,945 3,373 - 2,555,094 - (759,560) - 1,798,907
Warrants exercised 38,807 39 - 3,086 (3,125) - - -
Warrants expired - - - 5,000 (5,000) - - -
Net loss - - - - - - (3,843,308) (3,843,308)
----------- -------- ---------- ---------- ----------- ------------ ----------- -----------
December 31, 2000 21,534,807 21,535 - 9,390,184 - (759,560) (9,656,986) (1,004,827)
Shares issued for cash, net
of offering costs 6,497,088 6,497 - 1,257,758 - - - 1,264,255
Shares issued as compensation 9,162,197 9,162 - 1,558,599 - (230,512) - 1,337,249
Shares issued on previously
purchased shares 342,607 342 - 188,208 - - - 188,550
Shares issued in cancellation
of accounts payable 200,000 200 - 68,880 - - - 69,080
Amortization of deferred
compensation - - - - - 495,036 - 495,036
Stock options issued for services - - - 439,544 - - - 439,544
Net loss - - - - - - (4,079,806) (4,079,806)
----------- -------- ---------- ---------- ----------- ------------ ----------- -----------
December 31, 2001 37,736,699 $ 37,736 $ - $12,903,173 $ - $ (495,036) $ (13,736,79) $(1,290,919)
----------- -------- ---------- ---------- ----------- ------------ ----------- -----------
Shares issued for cash, net
of offering costs 3,160,000 3,160 - 311,339 - - - 314,499
Shares issued as compensation 420,483 421 - 65,132 - - - 65,553
Shares issued on previously
purchased shares 50,000 50 - 4,950 - - - 5,000
Shares issued in cancellation
of accounts payable 1,036,422 1,037 - 160,539 - - - 161,576
Amortization of deferred
compensation - - - - - 123,759 - 123,759
Shares issued in cancellation of
debt 1,470,000 1,470 - 211,679 - - - 213,149
Net loss - - - - - - (702,981) (702,981)
----------- -------- ---------- ---------- ----------- ------------ ----------- -----------
March 31, 2002 43,873,604 $ 43,874 $ - $13,656,812 $ - $ (371,277)$(14,439,773) $(1,110,364)
=========== ======== ========== ========== =========== ============ =========== ===========
See accompanying notes to the consolidated, interim financial statements
(unaudited).
-5-
SAMARITAN PHARMACEUTICALS, INC.
(FORMERLY STEROIDOGENESIS INHIBITORS INTERNATIONAL, INC.)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FROM INCEPTION (SEPTEMBER 5, 1994) AND FOR THE THREE MONTHS
ENDED MARCH 31, 2002 AND 2001
From For the Three Months
Inception Ended
September 5, 1994 March 31,
To ----------------------------------
March 31, 2002 2001 2000
------------------ --------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (14,439,773) $ (702,981) $ (670,453)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 704,556 129,028 5,270
Expenses paid through issuance of stock 5,492,891 65,553 62,752
Stock options issued for service 439,544 - -
(Increase) decrease in assets:
Notes receivable-related party - - -
Prepaids and other current assets (19,858) 13,667 -
Increase (decrease) in liabilities:
Deferred revenue 250,000 - -
Accounts payable and accrued expenses 1,424,201 (89,959) 81,137
--------------------- ---------------- ----------------
NET CASH USED IN OPERATING ACTIVITIES (6,148,439) (584,692) (521,294)
--------------------- ---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of technology (108,969) - -
Purchase of furniture and equipment (65,069) - -
Patent registration costs (219,085) (14,000) -
--------------------- ---------------- ----------------
NET CASH USED IN INVESTING ACTIVITIES (393,123) (14,000) -
--------------------- ---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from warrants 157,125 - -
Proceeds from debentures 642,120 - -
Proceeds from stock sales 4,093,326 314,500 229,587
Common stock to be issued 221,550 28,000 148,587
Offering costs (2,284) - (1,234)
Short-term borrowings repayments (50,000) (50,000) -
Short-term borrowings 1,690,400 212,500 -
--------------------- ---------------- ----------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 6,752,237 505,000 376,940
--------------------- ---------------- ----------------
CHANGE IN CASH 210,675 (93,692) (144,354)
CASH AT BEGINNING OF PERIOD - 304,367 187,853
--------------------- ---------------- ----------------
CASH AT END OF PERIOD $ 210,675 $ 210,675 $ 43,499
===================== ================ ================
NON-CASH FINANCING & INVESTING ACTIVITIES:
Purchase of net, non-cash assets of subsidiary
for stock $ 195 $ - $ -
Short-term debt retired through issuance
of stock $ 2,103,328 $ 374,725 $ 566,100
Issuance of common stock, previously subscribed $ 0 $ 5,000 $ -
See accompanying notes to the consolidated, interim financial statements
(unaudited)
-6-
SAMARITAN PHARMACEUTICALS
Notes to Interim, Consolidated Financial Statements
BASIS OF PRESENTATION:
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial statements and with the instructions to Form 10-QSB and Article 10 of
Regulation S-X. Accordingly, they do not include all the information and
disclosures required for annual financial statements. These financial statements
should be read in conjunction with the consolidated financial statements and
related footnotes for the year ended December 31, 2001, included in the Form
10-KSB for the year then ended.
In the opinion of the Company's management, all adjustments (consisting of
normal recurring accruals) necessary to present fairly the Company's financial
position as of March 31, 2002, and the results of operations and cash flows for
the three-month period ending March 31, 2002 and 2001 have been included.
The results of operations for the three-month period ended March 31, 2002 are
not necessarily indicative of the results to be expected for the full year. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's Form 10-KSB as filed with the
Securities and Exchange Commission for the year ended December 31, 2001.
Management notes that stock was issued as follows during the three months ended
March 31, 2002:
No. of shares Issued Pursuant To Price/valuation
420,483 Compensation for services rendered $ 65,553
50,000 Subscriptions due at December 31, 2001 5,000
1,470,000 Sale of common stock 213,149
1,036,422 In settlement of accounts payable 161,576
3,160,000 Sale of restricted stock 314,499
--------- -------------
6,136,905 $ 759,777
--------- -------------
Management notes that the Company was involved in litigation at March 31, 2002.
Please see Part II- Other Information, Item 1, Legal Proceedings.
7
This quarter report contains forward-looking statements. These statements relate
to future events or Samaritan Pharmaceutical's future financial performance. In
some cases, you can identify forward-looking statements by terminology such as
"may," "will," "should," "expect," "plan," "intend," "anticipates," "believes,"
"estimates," "predicts," "potential," or "continue," the negative of these terms
or other comparable terminology. These statements are only predictions. Actual
events or results may differ materially. In evaluating these statements, you
should specifically consider various factors, including the risks outline in
"Risk Factors." These Factors may cause Samaritan Pharmaceuticals, Inc. actual
results, to differ materially from any forward-looking statement.
Although Samaritan Pharmaceuticals, Inc. believes that the expectations
reflected in the forward-looking statements are reasonable, Samaritan
Pharmaceuticals, Inc. cannot guarantee future results, events, levels of
activity, performance, or achievements. Moreover, neither Samaritan
Pharmaceuticals, Inc. nor any other person assumes responsibility for the
accuracy and completeness of these forward-looking statements. Samaritan
Pharmaceuticals, Inc. does not assume any obligation to update any of the
forward-looking statements after the date of this report to conform such
statements to actual results or to changes in Samaritan's expectations.
PART I
Item 1. Financial Statements.
Item 2. Management's Discussion and Analysis or Plan of Operation
The following discussion and analysis should be read in conjunction with the
Financial Statements appearing elsewhere in this Registration Statement and in
conjunction with the discussion responsive thereto under the caption
"Management's Discussion and Analysis or Plan of Operation" in our Form 10-KSB
filed April 26, 2002. The company undertakes no duty to update forward-looking
statements.
Plan of Operations
We are a research and development biopharmaceutical company. Since our
inception, we have focused our resources primarily on research and development.
To date, none of our proprietary products have reached a commercial stage and
hence, we do not have, nor do we anticipate in the near future, revenue. We will
continue to have significant general and administrative expenses, including
expenses related to clinical studies, our collaboration with Georgetown
University, and patent prosecution.
We have funded our operations through a series of private placements and through
our agreement with Fusion Capital. The Company believes potential private
placements, the agreement with Fusion Capital, and an eventual registered public
offering, if successful, will assist the Company in meetings it's cash needs,but
there is no guarantee.
Except for an agreement to sell shares to Fusion Capital Fund II, LLC. ("Fusion
Capital"), discussed below, no commitment exists for continued investments, or
for any underwriting. The company has thus far been able to meet its capital
needs, and believes that extensive discussions and certain agreements with
various potential sources of funding may eventually reach necessary funding
agreements. The Board of Directors directed the officers to file a Form SB-2
registration statement, offer registered securities to the market and/or as part
of agreements with shareholders and others to allow them, as selling
shareholders, to sell their shares, once received, in a registered offering, as
in the case of Fusion Capital. The officers complied and the SEC declared such
registration statement effective. Given the Company has been able to
substantially meet its cash needs during the past 12 months, and management's
estimation of what may occur in the months ahead, the company believes it will
be able to continue to find avenues to obtain the capital needed for operations.
8
On November 13, 2000, we entered into a common stock purchase agreement with
Fusion Capital Fund II, LLC, a Chicago-based institutional investor, whereby
Fusion Capital agreed, subject to contract terms, to buy $20 million of the
Company's common stock. The aggregate equity investment committed to the Company
by Fusion Capital is $20 million dollars. These funds will be used to further
develop its technology, from preclinical through FDA clinical trials and for
possible acquisitions, and other corporate opportunities. More specifically,
Fusion Capital has agreed to purchase up to $20 million dollars of common stock
over a 50-month period, subject to a three-month extension by the Company. The
U.S. Securities & Exchange Commission declared the registration statement
effective, which gave the Company the right to sell to Fusion Capital $400,000
of its common stock, on a monthly basis, at a price based upon the market price
of the common stock on the date of each sale without any fixed discount to the
market price. At the Company's sole option, Fusion Capital can be required to
purchase lesser or greater amounts of common stock each month up to what is the
remainder of the $20 million dollars, in the aggregate. The Company has the
right to control the timing and the amount of stock sold to Fusion Capital. SPHC
also has the right to terminate the agreement at any time without any additional
cost. Other terms and conditions apply.
Summary of Research and Development
We have a series of therapeutic projects either in "discovery", "product
development", "preclinical trials", or "clinical development"; and we utilize
these formal stages of product progression to track progress, performance,
competition, and cost for each project. Our programs primarily are aimed at
satisfying defined medical needs in the areas of Alzheimer's, Cancer, infectious
diseases, Neurology and tissue engineering, and are based on an intellectual
property position that, we believe, is both broad and strong. Several of our
development programs involve ex vivo technologies in which patients' tissues are
manipulated outside the body and, as such, may be less costly to investigate and
quicker to develop than in vivo agents. We expect to apply for and receive
regulatory approval from the U.S. FDA to use certain of our technologies to
initiate human trials that may commence in the future.
During the fiscal year ended December 31, 2001, we concentrated our efforts on
Samaritan Research Laboratories, our collaboration with Georgetown University,
setting up the operations towards increasing efficiencies and streamlining
structure. We have the benefit of a strong portfolio of opportunities, each of
which must compete for resources and priority status.
9
A key currency in the biotechnology and pharmaceutical market is patents and
strong intellectual property. A central activity for us has been, and continues
to be, the acquisition, development and maintenance of intellectual property
positions directly in support of defined product development opportunities. We
continue to expend significant funds and efforts on licenses and patent
protection. In addition, we are continually examining our intellectual property
positions in relation to competitive activities and our ability to operate and
defend our positions in relation to products. We believe that this is a key
value element for our development.
The process of developing therapeutic products requires significant discovery
research, product development as well as pre-clinical and clinical testing of
those products in order to gain regulatory approval. These activities are
expected to result in continuing cash outflows. Furthermore we do not expect to
generate any meaningful product revenues from our biopharmaceutical programs
unless we partner a technology receiving up-front payments and milestone royalty
payments and/or until a clinical candidate completes its clinical trials,
obtains regulatory approval for commercialization and is successfully marketed.
The risks of developing therapeutic products extend beyond technical and
clinical development and, in particular, involves intellectual property rights,
the need for substantial additional capital, competitive and medical economic
factors, which are continually changing. Any one or more of these factors could
cause us to fail to develop any commercially successful products.
We are seeking additional equity funding. If additional funds are raised through
the issuance of equity or convertible debt securities, the percentage ownership
of our stockholders will be reduced and our stockholders may experience dilution
of their interest in us.
Samaritan Pharmaceuticals will continue to seek additional, non-dilutive funding
from grants and other similar sources. Although to date, Samaritan
Pharmaceuticals has not been granted any monies from such funding sources. As a
small, newcomer to the biotech industry and as part of the several thousand
companies that constitute the public biotech industry, we are not well known. We
have initiated efforts to improve the awareness and understanding of our
company. We believe, despite the external market conditions, we will be able to
successfully accomplish this goal in the long run.
A. Drug Candidates
Drug Candidates Indication Syn & Bio Toxic Mech Metab In Vivo IND
Pur Test Test Tests Sub
------------------- -------------------------- -------- ------- --------- -------- --------- --------- ------
SP-10 HIV, Alzheimer's xxxx xxxx xxxx
SP-02 to SP-50 HIV, Alzheimer's IP
SP-222 Alzheimer's, xxxx xxxx xxxx IP
Neurodegeneration
SP-222b Stem Cell Therapy xxxx xxxx xxxx IP
SP-222c Cancer xxxx xxxx xxxx IP
SP-223 to SP-230 Alzheimer's, IP
Neurodegeneration
SP-1000 High Cholesterol xxxx xxxx
SP-5000 Cancer xxxx IP
*IP = In Progress
10
Anticort(TM)
The company also has a drug, Anticort(TM), for the indication of HIV that
completed a Phase II clinical trial. The company is awaiting the results from
the AIDS Research Alliance, Los Angeles, CA, to evaluate and determine the next
course of action. The company hopes that the results are strong enough to
warrant continued action. In evaluating the company's statements about
Anticort(TM), you should specifically consider various factors, including the
risks outlined in "Risk Factors" in our Form 10-KSB filed April 26, 2002.
B. Animal Testing Models for Alzheimer's
Samaritan is conducting research and development of animal models for Acute
Alzheimer' and Chronic Alzheimer'. We are currently doing in-vitro validation
and in-vivo testing with animal models. The models, if successful, will allow
efficacy testing for new therapies.
C. Diagnostics
One of the major problems with the diagnosis and treatment of diseases is the
inability of clinicians to determine the onset of disease. Samaritan is
conducting research and development of diagnostic kits whereby the onset of
diseases can be detected. Our diagnostics may also require FDA approval before
we can market them to the public but the following is a chart of our progress to
date.
Test In Vitro Testing Human Testing Human Testing
(Small Test Group) (Large Sample Size)
-------------------------- ---------------------- ---------------------- ----------------------
Breast Cancer XXXX XXXX In Progress
Alzheimer's / Amyloidoisis XXXX XXXX In Progress
Alzheimer's Generation II In Progress
Alzheimer's Generation III XXXX XXXX In Progress
The Company has incurred research development stage losses since its inception.
These losses consist primarily of research and related expenditures, marketing
costs, consulting, and administrative overhead and expenses, incurred while the
Company seeks to complete development of its products, which includes clinical
human trials to obtain FDA final approval. No significant revenues have been
earned by the Company, or cash flow from operations, to help pay these operating
needs.
11
RISK FACTORS
The response to this item is incorporated by reference from the discussion
responsive thereto under the caption "Risk Factors" in our Form 10-KSB filed
April 26, 2002.
FORWARD-LOOKING STATEMENTS
This report and other oral and written statements made by us to the public
contains forward-looking statements within the meaning of the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995. Such
statements are based upon management's current expectations that are subject to
a number of factors and uncertainties that could cause actual results to differ
materially from those described in our forward-looking statements. Such
statements address the following subjects: our need for and ability to obtain
additional capital, including from the sale of equity and/or from federal or
other grant sources; our expected future losses; the sufficiency of cash and
cash equivalents; our ability to generate revenues; our ability to develop
commercially successful products, including our ability to obtain FDA approval
to initiate further studies of our potential products and our technologies; the
high cost and uncertainty of the research and development of pharmaceutical
products; the unpredictability of the duration and results of the U.S. Food and
Drug Administration's review of new drug applications; the possible impairment
of our existing, and the inability to obtain new, intellectual property rights
and the cost of protecting such rights as well as the cost of obtaining rights
from third parties when needed on acceptable terms; our ability to enter into
successful partnering relationships with respect to the development and/or
commercialization of our product candidates; our dependence on third parties to
research, develop, manufacture and commercialize and sell any products
developed; our ability to improve awareness and understanding of our company,
our technology and our business objectives; whether our predictions about market
size and market acceptability of our products will prove true; and our
understandings and predictions regarding the utility of our potential products
and our technology.
Statements in this report expressing our expectations and beliefs regarding our
future results or performance are forward-looking statements that involve a
number of substantial risks and uncertainties. When used in this Form 10-KSB,
the words "anticipate," "believe," "estimate," "expect," "intend," may be,"
"seek," "plan," "focus," and "potential" and similar expressions as they relate
to the Company or its management are intended to identify such forward-looking
statements. Our actual future results may differ significantly from those stated
in any forward-looking statements.
As a result of the foregoing and other factors, we may experience material
fluctuations in future operating results on a quarterly or annual basis which
could materially and adversely affect our business, financial condition,
operating results and stock price. We are not under any duty to update any of
the forward-looking statements in this report to conform these statements to
actual results, unless required by law. For further information, refer to the
more specific risks and uncertainties discussed above and throughout this
report.
12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The response to this item is incorporated by reference from the discussion
responsive thereto under the caption "Legal Proceedings" in our Form 10-KSB
filed April 26, 2002.
Item 2. Changes in Securities.
Securities, unregistered, were sold by the Company in the first quarter of the
fiscal year covered by the Report under an exemption from registration. The
title of these securities was the Common Stock of the Company. They were sold
for cash, unless otherwise noted in this section, they were sold in private
transactions to persons believed to be of a class of private investors, acting
on their own, comprised of "accredited investors" (as such term is defined in
Regulation D of the U.S. Securities and Exchange Commission or "SEC") and a
limited number of non-accredited investors. All investors, to the best knowledge
of the Company, are not affiliated with the Company, and purchased the shares
with apparent investment intent. The Company relied upon, among other possible
exemptions, Section 4(2) of the Securities Act of 1933, as amended. It's
reliance on said exemption was based upon the fact that no public solicitation
was used by the Company in the offer or sale, and that the securities were
legend shares, along with a notation at the respective transfer agent,
restricting the shares from sale or transfer as is customary with reference to
Rule 144 of the SEC.
The following information identifies the date, and amount of shares sold during
the first quarter:
Date Name of Class Amount of Shares Total Offering Price
----------------------------- -------------------------- -------------------------- -------------------------
January - March, 2001 December & 2002 3,210,000 $321,000
2002 Common Stock
Private Placement
January - March, Negotiated Debt 635,555 $103,241
2002 (3rd party Vendors
converted to shares in
lieu of cash)
February 25, 2002 Samaritan 821,350 $123,888
Pharmaceuticals
Executive Benefit Plan
13
The SEC declared effective the Company's registration statement on Form SB-2,
Commission Registration No. 333-52296, on December 20, 2000 (as amended and
supplemented from time to time, "Registration Statement"). Under the
Registration Statement, certain selling shareholders may sell shares of Common
Stock, which is the title of the class of securities registered, acquired from
the Company. The Company does not receive any proceeds from the sale of
securities being offered by the selling shareholders under the Registration
Statement. The Company registered the shares for sale to provide the selling
shareholders with freely tradable securities, but the registration of the shares
does not necessarily mean that any of the shares will be offered or sold by the
selling shareholders. However, we may receive payments under agreements relating
to the shares and may receive proceeds from the exercise of warrants. Such
proceeds are intended for use as to working capital and other corporate
purposes. The offering under the Registration Statement has not terminated. The
Registration Statement registered a total of 11,825,000 shares for a total
anticipated offering price, subject to conditions, of $20,000,000. The amount of
shares sold by the selling shareholder during this quarter is believed to be
1,470,000 for aggregate proceeds of $213,149. The Company received, under its
agreements as noted above, proceeds of $213,149 and incurred, in connection with
the registration, estimated expenses of $6,000 for legal, printing, and related
offering expenses, with net proceeds to the Company of approximately $213,149
used primarily for working capital, legal fees and for payments to Georgetown
University (again not from the sale of the securities under the Registration
Statement, but from agreements with the selling shareholders).
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) REPORTS ON FORM 8-K
14
Samaritan Pharmaceuticals did not file any Current Reports on Form 8-K during
the first quarter of fiscal 2002.
(b) EXHIBITS
Listed below are all exhibits filed as part of this report. Some exhibits are
filed by the Registrant with the Securities and Exchange Commission pursuant to
Rule 12b-32 under the Securities Exchange Act of 1934, as amended.
Exhibits
No. Description
----------------------------------------------------------------------
2.1 Agreement and Plan of Reorganization*
3.1 Articles of Incorporation, as amended*
3.2 By-Laws (adopted March, 2001)
4.1 Form of common stock certificate*
4.2 1997 Stock Option Plan*
4.3 2001 Stock Option Plan
10.1 License Agreement between Cortisol Medical Research, Inc., and
Steroidogenesis Inhibitors, Inc., dated September 6, 1994*
10.2 Exclusive Licensing Agreement between Steroidogenesis Inhibitors, Inc., and
Steroidogenesis Inhibitors Canada, dated February 10, 1996*
10.5 Agreement between AIDS Research Alliance Agreement and the Company dated
March 5, 1999*
10.6 Assignment between Alfred T. Sapse, M.D., and
Steroidogenesis Inhibitors International dated July 15, 1999*
10.7 Assignment between Steroidogenesis Inhibitors, Inc., and the Company dated
July 15, 1999*
10.8 Common Stock Purchase Agreement between Company and Fusion Capital Fund II,
LLC, dated November 2, 2000**
10.9 Form of Registration Rights Agreement between Company and Fusion Capital
Fund II, LLC.**
21 List of Subsidiaries**
* Incorporated by reference to the Company's SEC Form 10-SB filing, including
any amendments, on file with the Commission. * * Incorporated by reference to
the Company's SEC Form SB-2 filing, including any amendments, on file with the
Commission.
15
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SAMARITAN PHARMACEUTICAL, INC
Dated: May 15, 2002 By: /s/ Eugene Boyle
---------------------------------
Eugene Boyle
Chief Financial Officer
16