UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
Form 10-QSB/A
Amendment #1
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2002
Or
TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____to______
Commissions file number 000-26775
-------------
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
The company had fifty-two million, seven hundred eight thousand, two
hundred thirty-three shares issued and outstanding of the Common Stock issued as
of June 30, 2002.
Transitional Small Business Disclosure Format (Check one): Yes___ No X
SAMARITAN PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
June 30, 2002
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheet as of June 30, 2002 3
Consolidated Statements of Operations for the
period from Inception (September 5, 1994)
to June 30, 2002, and for the Six Months Ended
June 30, 2002 and 2001 4
Consolidated Statements of Stockholders' Equity
(Deficit) for the period from Inception (September 5, 1994)
to June 30, 2002 5-6
Consolidated Statements of Cash Flows for the period
from Inception (September 5, 1994) to June 30, 2002 and
for the Six Months Ended June 30, 2002 and 2001 7
Notes to Consolidated Financial Statements 8-9
Item 2. Management's Discussion and Analysis of Plan of Operations 9-11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 11-12
Item 2. Changes in Securities 12-13
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
PART I - FINANCIAL INFORMATION
Item 1. Financial Statement
The information in this report for the three months ended June 30, 2002 and 2001
is unaudited but includes all adjustments (consisting only of normal recurring
accruals, unless otherwise indicated) which Samaritan Pharmaceuticals Inc.
("Samaritan" or the "Company") considers necessary for a fair presentation of
the results of operations for those periods.
The condensed consolidated financial statements should be read in conjunction
with the Company's financial statements and the notes thereto contained in the
Company's Annual Report on Form 10-K for the year ended December 31, 2001.
Interim results are not necessarily indicative of results for the full fiscal
year.
SAMARITAN PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
June 30, 2002
ASSETS
CURRENT ASSETS:
Cash $ 213,130
Subscriptions receivable 43,921
Prepaid expense 4,648
-------------------
TOTAL CURRENT ASSETS 261,699
-------------------
PROPERTY AND EQUIPMENT 24,887
OTHER ASSETS:
Offering costs 2,284
Patent registration costs 220,785
Purchased technology rights 58,119
Deposits 15,720
-------------------
TOTAL CURRENT LIABILITIES 296,908
-------------------
TOTAL ASSETS $ 583,494
===================
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable $ 328,600
Accrued expenses 343,130
Common stock to be issued 121,000
Short-term borrowings 170,789
-------------------
TOTAL CURRENT LIABILITIES 963,519
-------------------
DEFERRED REVENUE 250,000
-------------------
STOCKHOLDERS' DEFICIT:
Common stock, 100,000,000 share authorized at $.001
par value, 52,708,233 issued and outstanding 52,708
Additional paid-in capital 14,694,753
Deferred compensation (247,518)
Accumulated deficit (15,129,968)
-------------------
TOTAL STOCKHOLDERS' DEFICIT (630,025)
-------------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 583,494
===================
See accompanying notes to the consolidated interim financial statements.
(Unaudited)
-3-
SAMARITAN PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FROM INCEPTION (SEPTEMBER 5, 1994), AND FOR THE FOR THE SIX MONTHS
AND THREE MONTHS ENDED JUNE 30, 2002 AND 2001
From For the Six For the Three
Inception Months Ended Months Ended
(September 5, 1994) June 30, June 30,
To --------------------------- --------------------------
June 30, 2002 2002 2001 2002 2001
------------------- ------------ ------------ ----------- ------------
REVENUES: $ 50,000 $ - $ - $ - $ -
------------------- ------------ ------------ ----------- ------------
EXPENSES:
Research and development 3,133,293 329,199 135,781 168,186 6,898
Interest 35,105 11,740 - 5,371 -
General and administrative 11,438,594 1,041,697 1,154,482 511,369 618,182
Depreciation and amortization 710,756 10,540 10,540 5,270 5,270
------------------ ------------ ------------ ----------- ------------
15,317,748 1,393,176 1,300,803 690,196 630,350
------------------- ------------ ------------ ----------- ------------
INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM (15,267,748) (1,393,176) (1,300,803) (690,196) (630,350)
Extraordinary item 137,780 - - - -
------------------- ------------ ------------ ----------- ------------
NET INCOME (LOSS) $ (15,129,968) $ (1,393,176) $ (1,300,803) $ (690,196) $ (630,350)
=================== ============ ============ =========== ============
Loss per share, basic & diluted:
Before extraordinary item $ (1.12) $ (0.03) $ (0.06) $ (0.02) $ (0.03)
Extraordinary item, per share 0.01 - - - -
------------------- ------------ ------------ ----------- ------------
Basic and diluted $ (1.11) $ (0.03) $ (0.06) $ (0.02) $ (0.03)
=================== ============ ============ =========== ============
Weighted average number of
shares outstanding:
Basic and diluted 13,611,598 42,748,802 22,516,379 44,970,271 23,244,237
=================== ============ ============ =========== ============
See accompanying notes to the consolidated interim financial statements.
(Unaudited)
-4-
SAMARITAN PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
FROM INCEPTION (SEPTEMBER 5, 1994) TO JUNE 30, 2002
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)
See accompanying notes to the consolidated, interim financial statements.
(Unaudited)
-5-
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) $(13,736,792) $(1,290,919)
Shares issued for cash, net
of offering costs 7,705,000 7,705 - 754,300 - - - 762,305
Shares issued as compensation 1,070,483 1,070 - 159,582 - - - 160,652
Shares issued on previously
purchased shares 50,000 50 - 4,950 - - - 5,000
Shares issued in cancellation
of accounts payable 3,866,051 3,867 - 539,709 - - - 543,576
Amortization of deferred
compensation - - - - - 247,518 - 247,518
Shares issued in cancellation of
debt 2,280,000 2,280 - 332,739 - - - 335,019
Net loss - - - - - - (1,393,176) (1,393,176)
----------- -------- ---------- ---------- ----------- ------------ ----------- -----------
June 30, 2002 52,708,233 $ 52,708 $ - $14,694,753 $ - $ (247,518)$ (14,439,773) $(1,110,364)
=========== ======== ========== ========== =========== ============ =========== ===========
See accompanying notes to the consolidated, interim financial statements.
(Unaudited)
-6-
SAMARITAN PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FROM INCEPTION (SEPTEMBER 5, 1994) AND FOR THE SIX MONTHS
ENDED JUNE 30, 2002 AND 2001
From For the Six Months
Inception Ended
(September 5, 1994) June 30,
To -----------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES: June 30, 2002 2002 2001
------------- ----- -----
Net loss $ (15,129,968) $ (1,393,176) $ (1,300,803)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 833,586 258,058 10,540
Expenses paid through issuance of stock 5,587,990 160,652 298,126
Stock options issued for services 439,544
(Increase) decrease in assets: - - -
Prepaids and other current assets (20,173) 13,352 (67,180)
Increase (decrease) in liabilities:
Deferred revenue 250,000 - -
Accounts payable and accrued expenses 1,370,445 (143,715) 350,247
----------------- ----------------- ----------------
NET CASH USED IN OPERATING ACTIVITIES (6,668,576) (1,104,829) (709,070)
----------------- ----------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of technology (108,969) - -
Purchase of furniture and equipment (65,069) - -
Patent registration costs (220,785) (15,700) -
---------------- ----------------- ----------------
NET CASH USED IN INVESTING ACTIVITIES (394,823) (15,700) -
---------------- ----------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from warrants 157,125 - -
Proceeds from debentures 642,120 - -
Proceeds from stock sales 4,541,131 762,305 460,271
Common stock to be issued 314,550 121,000 217,400.00
Offering costs (2,284) - (1,234.00)
Short-term loan repayments (66,513) (66,513)
Short-term loan proceeds 1,690,400 212,500 -
---------------- ----------------- ----------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 7,276,529 1,029,292 676,437
---------------- ----------------- ----------------
CHANGE IN CASH 213,130 (91,237) (32,633)
CASH AT BEGINNING OF PERIOD - 304,367 187,853
------------- ----------------- ----------------
CASH AT END OF PERIOD $ 213,130 $ 213,130 $ 155,220
============= ================= ================
NON-CASH FINANCING & INVESTING ACTIVITIES:
Purchase of net, non-cash assets of subsidiary
for stock $ 195 $ - $ -
Short-term debt retired through issuance
of stock $ 2,225,198 $ 335,019 $ -
Issuance of common stock, previously subscribed $ 5,000 $ 5,000 $ 188,550
See accompanying notes to the consolidated interim financial statements.
(Unaudited)
-7-
Samaritan Pharmaceuticals, Inc.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2002
1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United States
of America for interim financial information and pursuant to the rules and
regulations of the Securities and Exchange Commission. Accordingly, these
financial statements do not include all of the information and footnotes
required by accounting principles generally accepted in the United States of
America for complete financial statements.
The interim unaudited consolidated financial statements contained herein
includes, in management's opinion, all adjustments (consisting of normal
recurring adjustments) necessary for a fair presentation of the company's
financial position, results of operations, and cash flows for the periods
presented.
The results of operations for the interim period shown on this report are not
necessarily indicative of results for a full year. These financial statements
should be read in conjunction with the Company's consolidated financial
statements and notes for the year ended December 31, 2001 included in the
Company's Annual Report on Form 10-K.
2. Net Loss Per Share
Basic and diluted net loss per share available to common stockholders has been
calculated by dividing net loss by the weighted average number of common shares
outstanding during the period. All potential common shares have been excluded
from the calculation of weighted average common shares outstanding since their
inclusion would be anti-dilutive.
Stock options and warrants to purchase shares of common stock were outstanding
at June 30, 2002, but were not included in the computation of diluted net loss
per common share because they were anti-dilutive. The exercise of options and
warrants outstanding as of June 30, 2002, could generate proceeds to the Company
and could potentially dilute earnings per share in the future.
-8-
3. Stockholders' Equity
During the three months ended June 30, 2002, management notes the following
shares were issued.
No. of shares Issued Pursuant To Price/valuation
810,000 Sale of Registered Common Stock $ 121,870
3,479,629 In settlement of accounts payable $ 477,100
4,545,000 Restricted Stock Private Placements $ 454,500
------------ ---------------
8,834,629 $ 1,053,470
4. Legal Proceedings
Management notes that the Company was involved in litigation as of June 30,
2002. Please see Part II- Other Information, Item 1, Legal Proceedings.
5. Forward-Looking Statements
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" in our Form 10-KSB filed April 26, 2002.
Although Samaritan Pharmaceuticals, Inc. believes 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.
Item 2. Management's Discussion and Analysis or Plan of Operation
The section entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in Samaritan Pharmaceutical's 2001 Form
10KSB filed April 26, 2002 is hereby incorporated herein by reference.
Anticort(TM) for HIV
--------------------
The most advanced of Samaritan's pipeline is Anticort(TM) has promising, early,
"first blush data", from its HIV Phase II Anticort(TM) clinical trial.
Therefore, a detailed analysis of data is being conducted to submit to peer
review journals, present at a medical conference, file for additional patent
protections with other indications, and prepare for our FDA submissions. We
expect the FDA to request at least a couple of Phase III human trials to confirm
safety and the lack of side effects. Since the data appears promising, we hope
to achieve a licensing deal with a Pharma partner. We have a signed CDA with a
major pharmaceutical, for Anticort(TM).
-9-
New Transgenic Alzheimer's Rat Model
------------------------------------
We are finalizing the engineering of our "transgenic rat model" which could be
used by major Pharma to test their Alzheimer's drugs. A transgenic rat is being
engineered to develop Alzheimer's; very similar to the way Alzheimer's is
developed in humans. This would enable scientists to advance their understanding
of the disease and test drug candidates for safety and efficacy, thereby, saving
research time and money.
Breast Cancer Diagnostic
-------------------------
A clear advantage of our breast cancer diagnostic is in its ability to
expeditiously predict the aggressiveness of a breast cancer tumor and its
ability to spread when time is critical. Today, the current breast cancer
diagnostic used by surgeons takes possibly two weeks longer than our diagnostic
to attain a similar diagnosis, and research indicates our diagnostic has a much
higher accuracy rate.
Alzheimer's Diagnostic
----------------------
A simple blood test is the clear advantage of our Alzheimer's diagnostic rather
then a brain scan. Early diagnosis, before the onset of symptoms and
debilitation could, with treatment, lengthen the progression of Alzheimer's.
Samaritan Pharmaceuticals Inc. announced that it has identified a small molecule
drug that induces human neuron differentiation from precursor cells -- that is,
they transform cells from embryonic early-stage development, to an adult state.
Stem cells, cells that give rise to a lineage of cells, are immature precursors
that can become neurons; they exist in both embryonic and adult brain cells.
Using a model of human embryonal carcinoma stem cells, the Georgetown/Samaritan
Research team screened a number of small molecules for their ability to induce
neuronal differentiation. One of the molecules discovered reduced levels in
Alzheimer's brain biopsies compared to age-matched controls, was found to induce
neuronal differentiation as seen by the formation of networks of axon bundles
and the expression of markers specific to adult human differentiated neurons.
This molecule was found to be devoid of tumorigenic activity -- that is, capable
of causing tumors, in contrast to other previously reported inducers of neuronal
differentiation.
The Georgetown team, funded by a collaborative agreement by Samaritan
Pharmaceuticals, is now proceeding to test this molecule in animal models.
Although this molecule is early in its development, if this Alzheimer's
discovery becomes a successful drug, it could give incredible, long-sought-after
hope for patients who suffer with Alzheimer's and related diseases. The diseases
or conditions that could be positively impacted by this discovery include:
neurogenetic defects, spinal cord injury, spinal motor atrophy, stroke,
multi-infarct dementia, amyotrophic lateral sclerosis and diseases where
"neuronal regeneration" may be the treatment of choice for neurodegenerative
disorders, such as Alzheimer's.
Samaritan Pharmaceuticals Inc. and Georgetown University,
announced that Dr. Vassili Papadopoulos, Samaritan's Chief Scientific Officer,
recently presented finding that "elevated levels of cholesterol play an even
greater role in the development of Alzheimer's," to the Endocrine Society. An
elevated Cholesterol/Alzheimer's Link found by researchers at Georgetown
University Medical Center uncovered a strong link between elevated blood
cholesterol levels and the development of Alzheimer's disease. APP, a protein
found in several major organs including the brain and heart, is present in all
people. Its normal function in the body is unknown, but in people with
Alzheimer's, it is processed abnormally and converted to another protein called
beta-amyloid. When fragments of this protein break off, they become entangled,
leading to the plaques that are one of the characteristic structural
abnormalities found in the brains of people suffering from Alzheimer's. "High
cholesterol levels also increase the rate at which the amyloid beta form(s) the
tangles that kill brain cells," researchers said. They also found that high
cholesterol increases the production of another protein, called APOE, which
mainly is responsible for flushing cholesterol out of the cell. Too much APOE
results in the accumulation of free cholesterol, which is toxic to human nerve
cells. This Cholesterol discovery is related to a patent licensed by Samaritan
Pharmaceuticals from Georgetown University.
-10-
The Company has incurred research and development stage losses since its
inception. These losses consist primarily of research and related expenditures,
marketing costs, consulting, administrative overhead and expenses, incurred
while the Company seeks to complete development of its products, which includes
clinical human trials to obtain FDA approval for Anticort(TM). No significant
revenues have been earned by the Company, or cash flow from operations, to help
pay these operating needs.
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.
On June 19, 2002, a District Court Judge decreed, that a Derivative Action
Plaintiff was defrauded by Alfred Sapse, the initiator of lawsuit No. A420721 in
the District Court Clark County, Nevada, Sapse included the plaintiff's name,
unbeknownst to the plaintiff, in a lawsuit against Samaritan Pharmaceuticals.
Samaritan, as a defendant was victorious and awarded monies. This June 19, 2002
court order goes on to say that a verification signed by the plaintiff was
fraudulently presented to him as simply a confirmation of stock ownership, and
the plaintiff had no knowledge that Alfred Sapse had filed a lawsuit on the
plaintiffs' behalf against Samaritan Pharmaceuticals. Based upon the foregoing,
the court ordered, adjudged, and decreed that the plaintiff was defrauded by
Alfred Sapse by his involuntary inclusion of this plaintiff in the derivative
action lawsuit, and that Samaritan could release the plaintiff from any
obligations of the November 18, 2001, Order and Judgment against Sapse and all
the Plaintiffs in the lawsuit. The November 18, 2001 order stated that the
derivative action plaintiffs pay Samaritan Pharmaceuticals a $100,000 cash bond
which was posted by Alfred Sapse plus other monies.
On June 20, 2002, based on the evidence recently provided for in a lawsuit filed
by Samaritan on October 3, 2000 against Alfred T. Sapse and Cortisol Medical
Research, a letter was sent from the attorney for Steroidogenesis Inhibitors,
Inc. (S.I.), a subsidiary of Samaritan Pharmaceuticals, Inc., to Steroidogenesis
Inhibitors Canada, Inc. (S.I. Canada). The letter was sent to the address stated
in the contract between S.I. and S.I. Canada. The purpose of the letter was to
inform S.I. Canada that the Anticort(TM)license granted to S.I. Canada was not a
valid conveyance. According to a judgment entered by a United States court of
competent jurisdiction, the Company believes Alfred Sapse and Cortisol Medical
Research didn't own the technology it purported to license to S.I. and S.I.
Canada since Alfred Sapse had previously assigned all Anticort rights including
improvements to Spectrum Pharmaceuticals in May 1990. Therefore, the grant of
any license under the Agreement dated July 7, 1997 between S.I. Canada and S.I.
is ineffective and void. S.I.'s attorney also strongly suggested that S.I.
Canada discontinue conducting any business to the extent it in involves
Anticort.
-11-
The attorneys for S.I. have based this belief in part to the following:
On May 22, 1990, Alfred Sapse the inventor of Anticort(TM)(U.S Patent Numbers
5,064,858 and 4,956,391) assigned all patent rights with improvements on the
discovery, via an agreement to Spectrum Pharmaceuticals. (See Exhibit 10.3)
On May 14, 1999, Spectrum Pharmaceuticals Corporation assigned Anitcort(TM)(U.S.
Patent Numbers 5,064,858 and 4,956,391) to Linda Johnson with improvements on
stated patents. (See Exhibit 10.2)
On September 10, 2000 the Company purchased Anticort(TM) (U.S. Patent Numbers
5,064,858 and 4,956,391). (See Exhibit 10.1) The patent rights transferred to
Samaritan Pharmaceuticals include the assignment rights as set forth in the
"Assignment of Inventions" (Exhibit 10.2) issued to Linda Johnson which included
improvements on Anticort(TM).
On October 3, 2000, the company filed a lawsuit against Alfred Sapse, Cortisol
Medical Research, Inc. and Renee Sapse seeking to recover 5,100,000 shares which
were issued based upon Alfred Sapse's false representations of ownership of the
Anticort(TM) technology. In addition and based on recent evidence, the Company
now strongly believes Sapse and Cortisol Medical Research knowingly granted an
exclusive worldwide license to Anticort(TM) technology and all know-how related
to the use of Anticort(TM), knowing the rights were assigned previously in May
1990 to Spectrum Pharmaceuticals. (See Exhibit 10.3)
The section entitled "Legal Proceeding" in Samaritan Pharmaceutical's 2001 Form
10KSB filed April 26, 2002 is hereby incorporated herein by reference.
Item 2. Changes in Securities.
Securities, unregistered, were sold by the Company in the second 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, and 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:
-12-
Date Name of Class Amount of Shares Total Offering
April-June Restricted Stock 4,545,000 $ 454,500
2002 Private Placements
April-June Settlement of Accounts 3,479,629 $ 477,100
2002 Payable
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
810,000 for aggregate proceeds of $121,870. The Company received, under its
agreements as noted above, proceeds of $121,870 and incurred, in connection with
the registration, estimated expenses of $3,000 for legal, printing, and related
offering expenses, with net proceeds to the Company of approximately $118,870
used primarily for working capital, legal fees and for payments to Georgetown
University.
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Item 6. Exhibits and Reports on Form 8-K.
(a) REPORTS ON FORM 8-K
Samaritan Pharmaceuticals did not file any on Form 8-K during the quarter for
which this report is filed.
(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 (1)
3.1 Articles of Incorporation, as amended and restated *
3.2 By-Laws, as amended and restated (3)
4.1 Form of common stock certificate (1)
4.2 1997 Stock Option Plan (1)
4.3 2001 Stock Option Plan (4)
10.1 Assignment between Linda Johnson and the Company dated
September 6, 2000. *
10.2 Assignment between Linda Johnson and Spectrum Pharmaceuticals
Corporation dated May 14, 1999. *
10.3 Agreement containing the assignment of U.S. Patent Application
07/233,247 with improvements dated May 22, 1990. *
10.4 Agreement between AIDS Research Alliance Agreement and the Company
dated March 5, 1999 (1)
10.5 Common Stock Purchase Agreement between Company and Fusion Capital
Fund II, LLC, dated November 2, 2000 (2)
10.6 Form of Registration Rights Agreement between Company and Fusion
Capital Fund II, LLC. (2)
10.7 Agreement between Samaritan Pharmaceuticals, Inc. and Doug Bessert + *
10.8 Agreement between Samaritan Pharmaceuticals, Inc. and Eugene Boyle + *
10.9 Agreement between Samaritan Pharmaceuticals, Inc and Janet Greeson + *
10.10 Samaritan Pharmaceuticals, Inc.'s Rabbi Trust + *
21.0 List of Subsidiaries (1)
* Filed herewith.
+ Management contract or compensatory plan or arrangement.
(1) Filed as an exhibit to Form 10-SB, including any amendments, on July 21,
1999 and incorporated herein by reference.
(2) Filed as an exhibit Form SB-2, including any amendments, on
(3) Filed as an exhibit to Form 10KSB, including any amendments, on
April 3, 2001 and incorporated herein by reference.
(4) Filed as an exhibit to DEF 14 A, including any amendments, on April 3, 2001
and incorporated herein by reference
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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 PHARMACEUTICALS, INC
Dated: August 14, 2002 By: /s/ Janet Greeson, Ph.D.
----------------------------------
Janet Greeson, Ph.D.
President, C.E.O., Chairman
Dated: August 14, 2002 By: /s/ Eugene Boyle
----------------------------------
Eugene Boyle
CFO, COO, Director
Dated: August 14, 2002 By: /s/ Doug Bessert
----------------------------------
Doug Bessert
Executive Vice President, Director
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