U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
|X| QUARTERLY REPORT PUSUANT SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2000
TRANSITION REPORT PURSUANT SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from____to ____
Commission File Number 0-26775
STEROIDOGENESIS INHIBITORS INTERNATIONAL, INC.
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
NEVADA 88-0384037
-------------------------------- --------------
(State or other jurisdiction of (IRS. Employer
incorporation or organization) Identification No.)
101 Convention Center Dr. Suite 310 89109
----------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: 702-735-7001
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes |X| No |_|
The number of shares of Common Stock outstanding as at August 11, 2000 was:
23,563,224
Transitional Small Business Disclosure Format (check one): Yes |_| No |X|
<PAGE>
STEROIDOGENESIS INHIBITORS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
June 30, 2000 & 1999
TABLE OF CONTENTS
Page
------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated, Interim Balance Sheets as of June 30, 2000,
& 1999 (Unaudited). 3
Consolidated Interim Statements of Operations for
the period from Inception (September 5, 1994)
to June 30, 2000, and the Six Months Ended
June 30, 2000 & 1999 (Unaudited). 4
Consolidated Interim Statements of Stockholders' Equity
(Deficit) for the period from Inception
(September 5, 1994) to June 30, 2000 (Unaudited). 5
Consolidated Interim Statements of Cash Flows for
the period from Inception (September 5, 1994)
to June 30, 2000 and for the Six Months Ended
June 30, 2000 & 1999 (Unaudited). 6
Notes to Interim Financial Statements. 7 - 12
Item 2. Managements's Discussion and Analysis or Plan of Operation 13
<PAGE>
<TABLE>
<CAPTION>
STEROIDOGENESIS INHIBITORS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED, INTERIM BALANCE SHEETS
(UNAUDITED)
JUNE 30, 2000 & 1999
ASSETS 2000 1999
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 38,265 $ 1,346
Note receivable-related party (note 8) 0 11,098
----------- -----------
38,265 12,444
----------- -----------
FIXED ASSETS:
Furniture & fixtures, at cost 47,062 30,308
Accumulated depreciation (20,900) (13,347)
----------- -----------
26,162 16,961
----------- -----------
OTHER ASSETS:
Patent registration costs 59,252 35,418
Purchased technology rights, net of accumulated
amortization of $29,058 & $ 18,161 (notes 1&2) 79,911 90,808
Deposits 15,720 15,720
Other 0 11,513
----------- -----------
154,883 153,459
----------- -----------
TOTAL ASSETS $ 219,310 $ 182,864
=========== ===========
LIABILITIES
CURRENT LIABILITIES:
Accounts payable $ 689,975 $ 64,464
Accrued expenses, directors & officers 1,262,000
Short term borrowing 218,531
Due to related parties 0
----------- -----------
2,170,506 64,464
LONG-TERM LIABILITIES
Deferred revenue (note 4) 250,000 250,000
----------- -----------
2,420,506 314,464
----------- -----------
COMMITMENTS (note 5)
SHAREHOLDERS' EQUITY:
Common stock, 25,000,000 share authorized at .001 par,
17,924,022 issued and outstanding (note 7) 17,924 14,838
Common stock reserved for conversion of parent's stock 0 111
Paid in capital in excess of par, net of offering costs 6,286,809 5,111,476
Accumulated deficit
(8,505,929) (5,258,025)
----------- -----------
(2,201,196) (131,600)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 219,310 $ 182,864
=========== ===========
</TABLE>
See accompanying notes to the consolidated, interim financial statements
(unaudited)
-3-
<PAGE>
<TABLE>
<CAPTION>
STEROIDOGENESIS INHIBITORS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED, INTERIM STATEMENTS OF OPERATIONS
(UNAUDITED)
FROM INCEPTION (SEPTEMBER 5, 1994) AND FOR THE SIX MONTHS ENDED
JUNE 30,2000 & 1999
From
09/05/94
To
06/30/00 2000 1999
------------ ------------ ------------
<S> <C> <C> <C>
REVENUES: $ 50,000 $ 0 $ 50,000
------------ ------------ ------------
EXPENSES:
Research & development 1,289,370 631,769 236,577
Interest 16,045 2,100 6,748
General & administrative 7,199,627 2,048,928 914,167
Depreciation and amortization 50,887 9,454 8,110
------------ ------------ ------------
8,555,929 2,692,251 1,165,602
------------ ------------ ------------
Net loss $ (8,505,929) $ (2,692,251) $ (1,115,602)
============ ============ ============
Earnings per share:
Basic $ 0 $ 0 $ (0.09)
============ ============ ============
Diluted $ 0 $ 0 $ (0.09)
============ ============ ============
Weighted average number of shares outstanding:
Basic 11,757,179
Diluted 11,773,846
</TABLE>
See accompanying notes to the consolidated, interim financial statements
(unaudited)
-4-
<PAGE>
<TABLE>
<CAPTION>
STEROIDOGENESIS INHIBITORS INTERNATIONS, INC.
(A DEVELOPMENT STATE COMPANY)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(UNAUDITED)
FROM INCEPTION (SEPTEMBER 5, 1994) TO JUNE 30, 2000
Shares
Number Par Value Reserved
of Common for Paid in
Shares Stock Conversion Capital Warrants
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Inception at September 5, 1994 0 $ $ $ $
Shares issued for cash, net of offering costs 6,085,386 609 635,481
Warrants issued for cash 5,000
Shares issued as compensation for services 714,500 71 1,428,929
Loss, from inception through 12/31/96
----------- ----------- ----------- ----------- -----------
December 31, 1996 6,799,886 680 2,064,410 5,000
Issuance of stock, prior to acquisition 206,350 21 371,134
Acquisition of subsidiary for stock (note 2) 1,503,000 150 46,545
Recapitalization (note 2)
Shares of parent redeemed, par value $.0001 (8,509,236) (851) 851
Shares of public subsidiary issued, par value $.001 7,689,690 7690 820 (8,510)
Loss, development stage, 1997
----------- ----------- ----------- ----------- -----------
December 31, 1997 7,689,690 7,690 820 2,474,430 5,000
Conversion of parent's shares 696,022 696 (696)
Shares issued for cash to public, net of offering costs 693,500 694 605,185
Shares issued in cancellation of debt 525,000 525 524,475
Shares issued as compensation (note 7) 400,000 400 349,600
Loss, development stage, 1998
----------- ----------- ----------- ----------- -----------
December 31, 1998 10,005 124 3,953,690 5,000
Conversion of parent's shares 13,000 13 (13)
Shares issued in cancellation of debt 30,000 30 29,970
Shares issued to public, net of offering costs 45,000 45 41,367
Shares issued as compensation (note 7) 3,569,250 3,569 462,113
Shares issued pursuant to convertible debentures:
Detachable warrants issued (note 7) 152,125
Detachable warrants exercised (note 7) 100,000 100 148,900
Debentures converted to stock (note 7) 1,682,447 1,682 640,438
Loss, development stage, 1999
----------- ----------- ----------- ----------- -----------
December 31, 1999 15,444 111 5,276,478 8,125
Conversion of parent's shares 128,954 129 (111) (18)
Shares issued for cash to public, net of offering costs 460,000 460 113,931
Shares issued in cancellation of debt 1,069,352 1,069 547,409
Shares issued as compensation (note 7) 783,000 783 340,923
Warrants converted 38,807 39 3,086 (3,125)
Warrants expired 5,000 (5,000)
Loss, development stage, June 30, 2000
----------- ----------- ----------- ----------- -----------
June 30, 2000 $ 17,924 $ 0 $ 6,286,809 $ 0
=========== =========== =========== =========== ===========
Total Total
Paid in Retained Shareholders'
Capital Earnings Equity
----------- ----------- -----------
Inception at September 5, 1994 $ $ $ 0
Shares issued for cash, net of offering costs 635,481 636,090
Warrants issued for cash 5,000 5,000
Shares issued as compensation for services 1,428,929 1,429,000
Loss, from inception through 12/31/96 (2,152,843) (2,152,843)
----------- ----------- -----------
December 31, 1996 2,069,410 (2,152,843) (82,753)
Issuance of stock, prior to acquisition 371,134 371,155
Acquisition of subsidiary for stock (note 2) 46,545 46,695
Recapitalization (note 2)
Shares of parent redeemed, par value $.0001 851 0
Shares of public subsidiary issued, par value $.001 (8,510) 0
Loss, development stage, 1997 (979,635) (979,635)
----------- ----------- -----------
December 31, 1997 2,479,430 (3,132,478) (644,538)
Conversion of parent's shares 0
Shares issued for cash to public, net of offering costs 605,185 605,879
Shares issued in cancellation of debt 524,475 525,000
Shares issued as compensation (note 7) 349,600 350,000
Loss, development stage, 1998 (1,009,945) (1,009,945)
----------- ----------- -----------
December 31, 1998 3,958,690 (4,142,423) (173,604)
Conversion of parent's shares 0 0
Shares issued in cancellation of debt 29,970 30,000
Shares issued to public, net of offering costs 41,367 41,412
Shares issued as compensation (note 7) 462,113 465,682
Shares issued pursuant to convertible debentures: 0
Detachable warrants issued (note 7) 152,125 152,125
Detachable warrants exercised (note 7) (100) 0
Debentures converted to stock (note 7) 640,438 642,120
Loss, development stage, 1999 (1,671,255) (1,671,255)
----------- ----------- -----------
December 31, 1999 5,284,603 (5,813,678) (513,520)
Conversion of parent's shares (18) 0
Shares issued for cash to public, net of offering costs 113,931 114,391
Shares issued in cancellation of debt 547,409 548,478
Shares issued as compensation (note 7) 340,923 341,706
Warrants converted (39) 0
Warrants expired 0 0
Loss, development stage, June 30, 2000 (2,692,251) (2,692,251)
----------- ----------- -----------
June 30, 2000 $ 6,286,809 $(8,505,929) $(2,201,196)
=========== =========== ===========
</TABLE>
See accompanying notes to the consolidated, interim financial statements
(unaudited)
-5-
<PAGE>
<TABLE>
<CAPTION>
STEROIDOGENESIS INHIBITORS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED, INTERIM STATEMENTS OF CASH FLOWS
(UNAUDITED)
FROM INCEPTION (SEPTEMBER 5, 1994) AND FOR THE SIX MONTHS ENDED
JUNE 30, 2000 & 1999
Inception
to 06/30/00 2000 1999
----------- ----------- -----------
<S> <C> <C> <C>
NET CASH USED BY OPERATING ACTIVITIES:
Net loss $(8,505,929) $(2,692,251) $(1,115,602)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 50,887 9,454 8,110
Expenses paid through issuance of stock 2,678,098 341,706 503,695
(Increase) decrease in assets:
Notes receivable (17,522) (6,043) 1,792
Prepaids & other current assets (15,720) 2,000 (15,720)
Increase (decrease) in liabilities:
Deferred revenue 250,000
Accounts payable & accrued expenses 1,920,610 1,668,376 (4,243)
----------- ----------- -----------
(3,639,576) (676,758) (621,968)
----------- ----------- -----------
NET CASH USED BY INVESTING ACTIVITIES:
Purchase of technology (108,969)
Purchase of furniture and equipment (47,796) (1,092)
Patent registration costs (note 1.d.1)) (59,252) (3,705)
----------- ----------- -----------
(216,017) (3,705) (1,092)
----------- ----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES:
Proceeds from warrants 152,125 152,125
Proceeds from debentures 628,175 430,375
Proceeds from stock offering, net of costs 1,773,927 114,391 41,412
Short-term loan proceeds 1,339,631 602,631
----------- ----------- -----------
3,893,858 717,022 623,912
----------- ----------- -----------
CHANGE IN CASH 38,265 36,559 852
CASH AT BEGINNING OF PERIOD 0 1,706 494
----------- ----------- -----------
CASH AT END OF PERIOD $ 38,265 $ 38,265 $ 1,346
=========== =========== ===========
NON-CASH FINANCING & INVESTING ACTIVITIES:
Purchase of net, non-cash assets of subsidiary
for stock $ 195 $ 0 $ 0
Short-term debt retired through issuance
of stock $ 1,121,100 $ 566,100 $ 30,000
Income taxes and interest paid with cash 0 0 0
</TABLE>
See accompanying notes to the consolidated, interim financial statements
(unaudited)
-6-
<PAGE>
STEROIDOGENESIS INHIBITORS INTERNATIONAL, INC.
Notes to interim financial statements
1. Summary of Accounting Policies:
a. The Company:
In October, 1997, WEBX Media, Inc., a non-operating public shell, entered into
an exchange of stock with the owners of Steroidogenesis Inhibitors, Inc. (SI), a
company incorporated in Nevada in September, 1994. Subsequent to the
transaction, WEBX Media, Inc., changed its name to Steroidogenesis Inhibitors
International, Inc.(STGI). Technically, SI is a subsidiary of STGI. For
accounting purposes, however, because STGI was a non-operating shell, SI is
treated as the parent of STGI. Therefore, the financial statements include the
activity of SI from inception. See also Note 2.
The Company is engaged in securing the patent for a the licensing of a drug
called ANTICORT, a trademarked, proprietary drug. The product was developed by
Cortisol Medical Research, Inc., the majority shareholder from whom the Company
purchased the rights. Anticort was developed for the treatment of disorder and
ailments related to cortisol diseases.
Adjustments and disclosures have been made so that the interim financial
statements are not misleading.
b. Basis of Consolidation:
The accompanying financial statements include the accounts of STGI and SI. All
intercompany balances and transactions have been eliminated in consolidation.
7
<PAGE>
STEROIDOGENESIS INHIBITORS INTERNATIONAL, INC.
Notes to interim financial statements
The stock exchange occurred October 21, 1997. In accordance with generally
accepted accounting principles, the results of WEBX Media, Inc., through the
acquisition date are not included in the consolidated operating statements.
c. Plant, Property, and Equipment:
Fixed assets purchased are recorded at cost. Depreciation is provided using the
straight line method over the estimated useful lives of the assets. Depreciation
expense was approximately $4,006 and $2,632 for the six months ended June 30,
2000 and 1999, respectively.
d. Intangibles:
1) Legal fees associated with registering Anticort, and derivative patents are
recorded at cost. Amortization, once the patent is approved, will be calculated
using the straight-line method, over the estimated useful lives of the patents.
2) Purchased technology rights are recorded at cost and are being amortized
using the straight line method over the estimated useful life of the technology.
Amortization of purchased technology was approximately $5,449 for the six months
ended June 30, 2000 and 1999, respectively.
e. Earnings per share:
The Company calculates earnings per share in accordance with SFAS 128. At June
30, 2000, there were no securities which were potentially dilutive. However, the
Company issued nearly 800,000 shares subsequent to June 30, 2000, in
satisfaction of short term debt and as compensation for services rendered.
f. Use of Estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.
2. Reverse Acquisition:
On October 21, 1997, SI secured WEBX Media through a reorganization agreement.
Under the agreement, the principal shareholders of the SI exchanged their stock
on a share for share basis for the stock of WEBX. At the time of the
acquisition, WEBX was non-operating public shell with no significant assets.
8
<PAGE>
STEROIDOGENESIS INHIBITORS INTERNATIONAL, INC.
Notes to interim financial statements
The Company has accounted for this transaction as a capital transaction; a
retirement of SI shares and issuance of STGI shares (formerly WEBX). Because
STGI shares have stated par value of $.001 compared to SI shares at $.0001, the
exchange resulted in a reclassification from 'additional paid in capital' to
'par value'.
At the transaction date, approximately 88% of SI's shareholders exchanged SI
stock for STGI stock. The Company reserved additional STGI shares to convert the
balance of the remaining SI shareholders as they were located. At June 30, 2000,
all such shares had been converted.
3. Convertible debentures, detachable warrants, and debt:
At June 30,2000, the Company had an amount due of $50,000. The loan is due
August, 2001, with interest at 8%. Management intends to retire this amount
through issuance of stock.
Also at June 30, 2000, the Company had a non-interest bearing, short-term
borrowing of $168,531, retired during July, 2000 through the issuance of
approximately 750,000 shares.
During the six months ended June 30, 1999, the Company raised capital
approximating $582,500 through convertible debentureswith detachable warrants.
The Company allocated the proceeds between the debentures and the warrants
premised upon the difference in the exercise price and the trading price of the
stock at the date the warrants were issued. The debentures were converted by
June 30, 1999, through the issuance of approximately 1.1 million shares of
common stock. Of the 150,000 warrants issued, 100,000 were converted by June 30,
1999.
4. Deferred revenue:
SI received $250,000 from Steroidogenesis Inhibitors Canada, Inc., ( SI- Canada)
for a licensing agreement prior to the acquisition date. The licensing agreement
has a duration of ten years beginning with the date the drug is approved for use
in Canada.
During the six months ended June 30, 1999, the Company earned $50,000 pursuant
to an agreement which called for a payment of $50,000 once SI-Canada became a
public company.
5. Commitments and Contingencies:
The Company has contracted with the Aids Research Alliance to perform clinical
testing required pursuant to the Company's efforts to secure FDA approval for
Anticort. Approximately $227,000 of the $650,000 contract was paid during March
1999. By June 30, 2000, an additional $97,000 had been paid.
9
<PAGE>
STEROIDOGENESIS INHIBITORS INTERNATIONAL, INC.
Notes to interim financial statements
6. Income taxes:
Both STGI and SI have incurred substantial tax losses since inception.
Realization of the tax benefits of such are dependent upon future taxable income
within the period of time permitted by the tax code (20 years from the year of
loss). Because future earnings are uncertain, the future benefits of
carryforward losses have not been accrued.
7. Stock transactions:
a. Stock warrants and options:
The Company had outstanding stock options at June 30, 2000 and 1999.
A summary of the status of the Company's outstanding warrants and options at
June 30, 2000 and 1999, and changes during the six months ended on those dates
is presented below:
Weighted
Weighted Average
Average Contractual
Shares Price Life
--------- --------- ---------
Outstanding & exercisable at
December 31, 1998 1,318,500 4.89 01/15/00
Granted during the six months
ended 3/31/99 150,000 .32 02/15/04
Exercised during the six months
ended 6/30/99 ( 100,000) .01 02/01/04
---------
Outstanding & exercisable at 06/30/99 1,368,500 $ 4.74 01/15/00
=========
10
<PAGE>
STEROIDOGENESIS INHIBITORS INTERNATIONAL, INC.
Notes to interim financial statements
During the six months ended June 30, 1999, 100,000 options were issued and
exercised. The options were issued with convertible debentures and allocated a
value of $149,000.The options' exercise price was $.01/share. At the date of
grant, shares were trading for approximately $1.50/share.
Weighted
Weighted Average
Average Contractual
Shares Price Life
-------- -------- -----------
Outstanding & exercisable at
December 31, 1999 150,000 2.65 09/30/01
Expired during the six months
ended June 30, 2000 (100,000) 3.50 06/30/00
Exercised during the six months
ended 6/30/00 (see below) (50,000) .94 04/01/04
--------
Outstanding & exercisable at 03/31/00 0
========
The 50,000 detachable warrants exercised during the six months ended June 30,
2000, were issued with convertible debentures in April, 1999. The debentures
were subsequently converted. The warrants were allocated a value of
approximately $3,125. At the date of issue, shares were trading for
approximately $1.00/share. The exercise price is $.9375/share. However, the
warrant contains a cashless exercise feature which adjusted the number of shares
to be issued dependent upon the market share of the stock. The Company issued
38,807 shares during the six months ended June 30, 2000, in full satisfaction of
the 50,000 warrants pursuant to the cashless exercise feature.
b. Stock as compensation:
The Company issues stock for services, valuing such issues premised upon the
fair market value of the stock or the services, whichever is more clearly
determinable.
During the six months ended June 30, 2000, the Company issued 783,000 shares as
compensation, valuing such services at $341,706. The Company intends to issue
3,450,000 additional shares in the third quarter to directors and counsel in
satisfaction of accrued compensation..
During the six months ended June 30, 1999, the Company issued 3,569,250 shares
as compensation valuing such compensation in aggregate at $496,947. Of these
shares 3,223,000 shares were issued to directors. These shares have limitations
restricting trade.
11
<PAGE>
STEROIDOGENESIS INHIBITORS INTERNATIONAL, INC.
Notes to interim financial statements
c. Stock option plan
The Company has a stock option plan under which 2,500,000 shares are reserved.
At June 30, 2000, no options have been granted pursuant to the plan.
8. Related party transactions:
Accrued expenses consists of consulting fees and compensation due to directors
and officers of the Company.
SI purchased the technology rights (Note 1.d.2) from an entity controlled by the
former president of the Company for $108,968. SI-Canada, subsequent to securing
the licensing agreement with the Company (Note 4), issued 300,000 share to the
former president of the Company. Also, during the six months ended June 30, 1999
, consulting fees of $12,000 were paid to an entity owned by a family member of
a former director.
9. Risks and uncertainties:
Marketability of the product is dependent, among other things, upon securing
additional capital to successfully complete the clinical testing of the product,
securing FDA approval, and procurement of viable patents.
10. Litigation:
SII-Canada, to whom certain licensing rights were sold as described in Note 4,
is suing STGI claiming default under a provision of the licensing agreement
pertaining to licensing rights outside of Canada. SII-Canada contends they are
entitled to worldwide rights of the technology when they forfeited any rights to
commonwealth countries by making a counter offer, or in the alternative, damages
of $100 million. A default judgement exists in Canada but the Company's attorney
is certain that the Company will be successful in setting aside that claim due
to questionable service of the initial notice and a defense.
The Company will vigorously defend against the suit and is confident regarding
the outcome. The Company has countersued seeking termination of the agreement
and damages of $15 million.
12
<PAGE>
Item 2. Managements's Discussion and Analysis or Plan of Operation
The "Company" or "Registrant" continues to pursue research and development of
its products, with no revenues and working capital being generated primarily
from private placements of its securities.
PART II-OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits Index - FORM 10-QSB. None.
b. Reports on Form 8-K. No Reports were filed for the quarter covered by this
report
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.
STEROIDOGENESIS INHIBITORS INTERNATIONAL, INC.
(Registrant)
By: /s/ Albert Wollen,
- -----------------------------
C.E.O.
(principal executive officer)
Date: August 14, 2000
-13-
