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 September 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 60,755,960 shares issued and outstanding of the Common Stock
issued as of September 30, 2002.
Transitional Small Business Disclosure Format (Check one): Yes___ No X
SAMARITAN PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheet as of September 30, 2002 2
Consolidated Statements of Operations for the period
from Inception (September 5, 1994) to September 30, 2002,
and for the Nine Months Ended September 30, 2002 and 2001 3
Consolidated Statements of Stockholders' Equity (Deficit) for
the period from Inception (September 5, 1994) to
September 30, 2002 4-5
Consolidated Statements of Cash Flows for the period from
Inception (September 5, 1994) to September 30, 2002 and
for the Nine Months Ended September 30, 2002 and 2001 6
Notes to Interim Financial Statements 7
Item 2. Management's Discussion and Analysis of Plan of Operations 8-11
Item 3. Controls and Procedures 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 12
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
PART I --- FINANCIAL INFORMATION
SAMARITAN PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED, BALANCE SHEET
(UNAUDITED)
SEPTEMBER 30, 2002
ASSETS
CURRENT ASSETS:
Cash $ 419,064
Prepaid expense 9,261
-------------------
TOTAL CURRENT ASSETS 428,325
-------------------
PROPERTY AND EQUIPMENT 22,341
OTHER ASSETS:
Offering costs 2,284
Patent registration costs 220,785
Purchased technology rights 55,395
Deposits 15,720
-------------------
TOTAL CURRENT LIABILITIES 294,184
-------------------
TOTAL ASSETS $ 744,850
===================
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable $ 279,383
Accrued expenses 542,755
Common stock to be issued 88,000
Short-term borrowings 353,641
-------------------
TOTAL CURRENT LIABILITIES 1,263,779
-------------------
DEFERRED REVENUE 250,000
-------------------
STOCKHOLDERS' DEFICIT:
Common stock, 100,000,000 share authorized at $.001
par value, 60,137,408 issued and outstanding 60,137
Additional paid-in capital 15,579,150
Deferred compensation (123,759)
Accumulated deficit (16,284,457)
-------------------
TOTAL STOCKHOLDERS' DEFICIT (768,929)
-------------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 744,850
===================
See accompanying notes to the consolidated, interim financial statements
(unaudited).
-2-
SAMARITAN PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FROM INCEPTION (SEPTEMBER 5, 1994), AND FOR THE FOR THE NINE MONTHS
AND THREE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
From For the Nine For the Three
Inception Months Ended Months Ended
(September 5, 1994) September 30, September 30,
To --------------------------- --------------------------
September 30, 2002 2002 2001 2002 2001
------------------- ------------ ------------ ----------- ------------
REVENUES: $ 50,000 $ - $ - $ - $ -
------------------- ------------ ------------ ----------- ------------
EXPENSES:
Research and development 3,335,467 531,374 258,567 202,175 122,786
Interest 39,779 16,414 - 4,674 -
General and administrative 12,133,447 1,612,790 1,608,139 818,610 453,657
Depreciation and amortization 963,544 387,087 15,810 129,029 5,270
------------------ ------------ ------------ ----------- ------------
16,472,237 2,547,665 1,882,516 1,154,488 581,713
------------------- ------------ ------------ ----------- ------------
INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM (16,422,237) (2,547,665) (1,882,516) (1,154,488) (581,713)
Extraordinary item 137,780 - - - -
------------------- ------------ ------------ ----------- ------------
NET INCOME (LOSS) $ (16,284,457) $ (2,547,665) $ (1,882,516) $ (1,154,488) $ (581,713)
=================== ============ ============ =========== ============
Loss per share, basic & diluted:
Before extraordinary item $ (1.10) $ (0.05) $ (0.08) $ (0.02) $ (0.02)
Extraordinary item, per share 0.01 - - - -
------------------- ------------ ------------ ----------- ------------
Basic and diluted $ (1.09) $ (0.05) $ (0.08) $ (0.02) $ (0.02)
=================== ============ ============ =========== ============
Weighted average number of
shares outstanding:
Basic and diluted 14,901,537 46,939,076 23,587,973 55,355,003 25,731,161
=================== ============ ============ =========== ============
See accompanying notes to the consolidated interim financial statements.
(Unaudited)
-3-
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)
-4-
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 11,025,000 11,025 - 1,083,281 - - - 1,094,306
Shares issued as compensation 4,289,658 4,290 - 586,417 - - - 590,707
Shares issued on previously
purchased shares 50,000 50 - 4,950 - - - 5,000
Shares issued in cancellation
of accounts payable 3,866,051 3,866 - 539,709 - - - 543,575
Amortization of deferred
compensation - - - - - 371,277 - 371,277
Shares issued in cancellation of
debt 3,170,000 3,170 - 461,620 - - - 464,790
Net loss - - - - - - (2,547,665) (2,547,665)
----------- -------- ---------- ---------- ----------- ------------ ----------- -----------
September 30, 2002 60,137,408 $ 60,137 $ - $15,579,150 $ - $ (123,759)$ (16,284,457) $ (768,929)
=========== ======== ========== ========== =========== ============ =========== ===========
See accompanying notes to the consolidated, interim financial statements.
(Unaudited)
-5-
SAMARITAN PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FROM INCEPTION (SEPTEMBER 5, 1994) AND FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 2002 AND 2001
From For the Nine Months
Inception Ended
(September 5, 1994) September 30,
To -----------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES: September 30, 2002 2002 2001
------------- ----- -----
Net loss $ (16,284,457) $ (2,547,665) $ (1,882,516)
Adjustments to reconcile net loss to net cash used in
operating activities: - - -
Depreciation and amortization 962,615 387,087 15,810
Expenses paid through issuance of stock 6,018,045 590,707 498,841
Stock options issued for services 439,544 - -
(Increase) decrease in assets: - - -
Prepaids and other current assets (24,786) 8,739 (67,180)
Increase (decrease) in liabilities:
Deferred revenue 250,000 - -
Accounts payable and accrued expenses 1,520,851 6,691 315,232
--------------------- ---------------- ----------------
NET CASH USED IN OPERATING ACTIVITIES (7,118,188) (1,554,441) (1,119,813)
--------------------- ---------------- ----------------
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 4,873,132 1,094,306 687,596
Common stock to be issued 281,550 88,000 294,423
Offering costs (2,284) - (1,234)
Short-term loan repayments (91,141) (91,141) -
Short-term loan proceeds 2,071,573 593,673 -
--------------------- ---------------- ----------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 7,932,075 1,684,838 980,785
--------------------- ---------------- ----------------
CHANGE IN CASH 419,064 114,697 (139,028)
CASH AT BEGINNING OF PERIOD - 304,367 187,853
--------------------- ---------------- ----------------
CASH AT END OF PERIOD $ 419,064 $ 419,064 $ 48,825
===================== ================ ================
NON-CASH FINANCING & INVESTING ACTIVITIES:
Purchase of net, non-cash assets of subsidiary
for stock $ 195 $ - $ -
Short-term debt retired through issuance
of stock $ 2,898,544 $ 1,008,365 $ -
Issuance of common stock, previously subscribed $ 5,000 $ 5,000 $ 416,101
See accompanying notes to the consolidated, interim financial statements
(unaudited).
-6-
Samaritan Pharmaceuticals, Inc.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
(Unaudited)
September 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-KSB.
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 September 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 September 30, 2002, could generate proceeds to
the Company and could potentially dilute earnings per share in the future.
7
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 primarily focused our resources 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 revenue in the near future. 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 its 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 its extensive discussions with various potential sources of
funding may eventually lead to 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.
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. The
Company 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
Our research programs primarily are aimed at satisfying defined medical needs in
the areas of Alzheimer's, Cancer, Cardiovascular, Infectious Diseases, and
Neurology 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 to the U.S. FDA for and receive IND status
(Investigational New Drug) for certain technologies to initiate human trials
that may commence in the future. During the quarter ended September 30, 2002, we
concentrated our efforts on Samaritan Research Laboratories, our research
collaboration with Georgetown University, setting up the operations, increasing
efficiencies, and streamlining structure. We have an impressive portfolio of
technology/opportunities, each of which must compete for resources and priority
status.
A key currency in the biotechnology and pharmaceutical market is patents,
intellectual property. Our central intellectual property activity has been, and
continues to be, the acquisition of patents, development and patent maintenance,
directly in support of our product development. We continue to expend
significant funds and efforts on licensed technology 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
patent positions in relation to products. We believe that this is a key value
element for our continued development.
8
The process of developing therapeutic drugs requires significant research and
product development, as well as, pre-clinical testing and clinical human trials
in order to gain FDA 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. In particular, it involves intellectual property rights, the need
for substantial capital, competitive and medical economic factors, all of 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. Samaritan Pharmaceuticals will also seek additional, non-dilutive
funding via 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.
Press Release Highlights
On August 8, 2002 Samaritan Pharmaceuticals Inc., Samaritan Research Labs and
Georgetown University, announced that Anticort(R) for HIV, the most mature part
of its pipeline, has promising, early, "first blush" data from its FDA Phase II
clinical trial. Dr. Greeson, Chairman, CEO and President of Samaritan, stated,
"We are currently conducting a detailed analysis of data to submit to peer
review journals, present at medical conferences, possibly file for additional
patent protections, and prepare for an extensive submission of data to the FDA.
It is a lengthy process but we do have the wheels in motion. We expect the FDA
to request at least a couple of Phase III human trials to confirm safety and the
lack of side effects. So, in our opinion, the future for Anticort(R) looks
pretty promising."
On September 5, 2002 Samaritan Pharmaceuticals Inc., Samaritan Research Labs and
Georgetown University, announced its Breast Cancer Diagnostic (BC-Aggress
Analysis) has enabled Samaritan to be ranked as a key player for advances in
breast cancer marker development. Medtech Insight publishes select analyses of
technologies, products, and competitors poised to alter the practice of medicine
and penetrate, make obsolete, or even create new markets.
http://www.medtechinsight.com/ReportA400.html Dr. Janet Greeson, Chairman,
President and CEO stated, "We are extremely pleased to have captured the
attention of Medtech Insight. Our breast cancer detection research tells us that
BC Aggress might allow for a much faster prognosis, where time is critical; and
almost a doubling of the current accuracy rate, allowing physicians to feel more
confident about their recommendations for treatment with their patients."
On October 16, 2002 Samaritan Pharmaceuticals Inc, Samaritan Research Labs and
Georgetown University, announced its intention to showcase the importance and
uniqueness of its technology to major pharmaceutical companies around the world
for out-licensing opportunities. Dr. Janet Greeson, Chairman, President and CEO
stated, "We have transitioned some of our technology to products and believe
they are on the road to advancing the practice of medicine. We have concluded
that partnering is the right way to go, to accelerate our technology to their
next milestones. We have signed CDA's, that is confidentiality agreements, with
quite a few pharmaceutical companies; but the process of partnering technology,
takes up to, and sometimes over, a year to complete the due diligence process.
Over time, each one of these technologies will add substantial value to
Samaritan if out-licensed and/or if approved."
9
Highlights of the main products or technologies closest to out-licensing or
commercialization:
(1) An HIV Drug with promising Phase II results.
--------------------------------------------
Early data suggest no serious side effects and (CD4) immune system
improvement. The analysis of data is presently being prepared for FDA
submission.
(2) A Pharmacological (rat) model for Alzheimer's disease.
------------------------------------------------------
Four weeks treatment of a rat results in its loss of memory and
Alzheimer's disease-like brain pathology. This model is ideal for
pharmaceutical companies and scientists to screen their Alzheimer's
drugs for prevention, stabilization of the disease and cures for
Alzheimer's disease.
(3) Alzheimer's disease compounds - that offer protection against
------------------------------
beta-amyloid neurotoxicity, a condition associated with Alzheimer's
disease.
(4) A Peptide therapeutic that binds cholesterol - it can be used to
-----------------------------------------------
clean the blood of excessive cholesterol in acute high
cholesterol conditions.
(5) An Alzheimer's Diagnostic kit - a simple blood test that identifies
-----------------------------
specific circulating brain steroids that have been oxidized in the
brains of Alzheimer's patients.
(6) A Breast Cancer Theranostic kit - this biopsy predicts the
-------------------------------
aggressiveness of a breast cancer tumor which allows a physician, in
a timely manner, to recommend the best and possibly the least
invasive treatment for a patient.
Drug Candidate Pipeline
Drug Candidates Indication Syn & Bio Toxic Mech Metab In Vivo IND
Pur Test Test Test
SP-10 HIV, Alzheimer's (AD) xxxx xxxx xxxx IP
SP-02-50 HIV, AD xxxx xxxx xxxx
SP-222 AD, Neurodegeneration xxxx xxxx xxxx xxxx IP
SP-222b Stem Cell Therapy xxxx xxxx xxxx xxxx IP
SP-222c Cancer xxxx xxxx xxxx xxxx IP
SP-223-230 AD, Neurodegeneration xxxx xxxx IP
SP-1000 High Cholesterol xxxx xxxx
SP-5000 Cancer xxxx IP
*IP = In Progress
Diagnostic/Theranostic Pipeline
Diagnostic Test In Vitro Human Testing Human Testing
Testing (Small Sample) (Large Sample)
Breast Cancer XXXX XXXX In Progress
Alzheimer's/Amyloidoisis XXXX XXXX In Progress
Alzheimer's Generation II XXXX
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.
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.
10
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-QSB, 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.
CRITICAL ACCOUNTING POLICIES
A summary of significant accounting policies is included in Note 2 to
the audited financial statements included in the Company's annual report on Form
10-KSB for the year ended December 31, 2001. Management believes the application
of these policies on a consistent basis enables the Company to provide reliable
and useful information about the Company's operating results and financial
conditions.
Item 3. Controls and Procedures
(a) Under the supervision and with the participation of our management,
including our principal executive officer and principal financial officer, we
conducted an evaluation of our disclosure controls and procedures, as such term
is defined under Rule 13a-14(c) promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), within 90 days of the filing date of this
report. Based on their evaluation, our principal executive officer and principal
accounting officer concluded that Samaritan's disclosure controls and procedures
are effective.
(b) There have been no significant changes (including corrective actions with
regard to significant deficiencies or material weaknesses) in our internal
controls or in other factors that could significantly affect these controls
subsequent to the date of the evaluation referenced in paragraph (a) above.
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 and our Form 10-QSB file August 14, 2002.
11
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, 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
July-September Common Stock 2,160,000 $216,000
2002 Private Placement
2002
July-September Common Stock 1,160,000 $116,000
2002 Private Placement
2002 (To be Issued)
July-September Compensation for 211,518 $211,518
2002 services rendered
July-September Options Exercised 3,007,657 $408,903
2002
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
890,000 for aggregate proceeds of $129,777. The Company received, under its
agreements as noted above, proceeds of $129,777 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 $126,777
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).
12
Item 6. Exhibits and Reports on Form 8-K.
(a) Reports on Form 8-K.
Samaritan Pharmaceuticals filed two Current Reports on Form 8-K during the third
quarter of fiscal 2002.
1) Certification of Janet Greeson, Chief Executive Officer, Pursuant
to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and Certification of Eugene Boyle, Chief
Financial Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 2) Change
in registrant's certifying accounting firm.
(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 (5)
3.2 By-Laws (3)
4.1 Form of common stock certificate (1)
4.2 1997 Stock Option Plan (1)
4.3 2001 Stock Option Plan (4)
5.1 Form of Opinion re: Legality of Law Offices of Richard Rossi, P.A.
10.1 Assignment between Linda Johnson and the Company dated
September 6, 2000. (5)
10.2 Assignment between Linda Johnson and Spectrum Pharmaceuticals
Corporation dated May 14, 1999. (5)
10.3 Agreement containing the assignment of U.S. Patent Application
07/233,247 with improvements dated May 22, 1990. (5)
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 First Amendment to Common Stock Purchase Agreement Amendment between
Company and Fusion Capital Fund II, LLC dated as of January 3, 2001 (2)
10.8 Agreement between Samaritan Pharmaceuticals, Inc. and Doug Bessert (5)
10.9 Agreement between Samaritan Pharmaceuticals, Inc. and Eugene Boyle (5)
10.1 Agreement between Samaritan Pharmaceuticals, Inc and Janet Greeson (5)
16.1 Letter on change in certifying accountant (6)
21.0 List of Subsidiaries (1)
(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 December 19, 2000, and incorporated herein by
reference. (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 (5) Filed as an exhibit to 10-QSB, including any amendments, on August
14, 2002 and incorporated herein by reference. (6) Filed as an exhibit to Form
8-K, on September 27, 2002 and incorporated herein by reference
13
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: 14 November, 2002 By: /s/ Eugene Boyle
------------------------
Eugene Boyle,
CFO
14
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Janet Greeson CEO, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Samaritan
Pharmaceuticals, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability
to record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated
in this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: 14 November 2002 /s/ Janet Greeson C.E.O
Janet Greeson C.E.O
15
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Eugene Boyle CFO, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Samaritan
Pharmaceuticals, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of registrant's board of directors (or persons performing
the equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
Date: 14 November 2002 /s/ Eugene Boyle CFO
Eugene Boyle CFO
16
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Doug Bessert, Vice President, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Samaritan
Pharmaceuticals, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated
in this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: 14 November 2002 /s/ Doug Bessert
Doug Bessert VP
17