As filed with the Securities and Exchange Commission on January 17, 2001
Registration No. 333-52296
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
AMENDMENT NO. 1 TO
FORM SB-2/A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
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STEROIDOGENESIS INHIBITORS INTERNATIONAL, INC.
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(D/B/A SAMARITAN PHARMACEUTICALS)
(Name of small business issuer in its charter)
NEVADA 2834 88-0384042
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(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification Number)
incorporation or
organization)
101 Convention Center Drive, Suite 310
Las Vegas, Nevada 89109
702-735-7001
(Address and telephone number of principal executive offices and
principal place of business)
Dr. Janet Greeson, Chief Executive Officer
101 Convention Center Drive, Suite 310
Las Vegas, Nevada 89109
702-735-7001
(Name, address and telephone number of agent for service)
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Approximate date of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.
----------------
Approximate date of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.
--------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.[ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.[ ]
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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Proposed Proposed
maximum maximum
Title of each offering aggregate Amount of
class of Shares Amount to be price per offering registration
to be Registered registered share(1) price(1) fee
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Common Stock, 6,500,000 Shares $0.61(4) $3,965,000 $1050.00(6)(7)
$.001 par of Common Stock
value (1)(2)(3)
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Common Stock, 5,325,000 Shares
$.001 par of Common Stock(1) $0.86(5) $4,579,500 $1,209(7)
value
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11,825,000 Shares
of Common Stock
Totals (1)(2)(3) $8,544,500 $2,259
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(1) Includes 11,500,000 shares issuable in connection with a Common Stock
Purchase Agreement with Fusion Capital Fund II, LLC. See "The Fusion
Transaction" and "Selling Shareholders."
(2) Includes 25,000 shares previously issued to J.G. Capital, Inc. See "
Selling Shareholders."
(3) Includes 300,000 shares issuable under warrants previously issued by the
Company. See "Selling Shareholders."
(4) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) using the average of the closing bid price and the
closing ask price reported by the Nasdaq OTC Bulletin Board for the
Company's common stock as of December 15, 2001.
(5) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) using the average of the closing bid price and the
closing ask price reported by the Nasdaq OTC Bulletin Board for the
Company's common stock as of January 12, 2001.
(6) $1,050 of the fee was previously paid on December 19, 2000.
(7) Calculated by multiplying the aggregate offering amount by .000264.
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The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY CHANGE. A REGISTRATION
STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION
STATEMENT IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES
AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION
WHERE THE OFFER OR SALE IS NOT PERMITTED.
Subject to Completion, Dated January 17, 2001.
PROSPECTUS
STEROIDOGENESIS INHIBITORS INTERNATIONAL, INC.
(Doing business as: SAMARITAN PHARMACEUTICALS)
Up to 11,825,000 Shares of Common Stock
This prospectus relates to the sale by certain of our shareholders of a
total of 11,825,000 shares of our common stock, consisting of the following:
11,500,000 shares, which we currently estimate is the maximum number of
shares that will be issuable pursuant to a $20,000,000 common stock
purchase agreement entered into with Fusion Capital Fund II, LLC ("Fusion
Capital"). If more than 11,500,000 shares are purchasable by Fusion Capital
under the common stock purchase agreement, we have the right, and presently
intend, to terminate the common stock purchase agreement without any
payment to or liability to Fusion Capital. See "The Fusion Transaction" and
"Selling Shareholders."
25,000 shares previously issued to J.G. Capital, Inc., 100,000 shares
issuable under warrants issued by us to Josephberg Gross & Co., Inc.,
100,000 shares issuable under warrants issued by us to Alliance Financial,
LLC, 50,000 shares issuable under warrants issued by us to Generation
Capital Associates, and 50,000 shares issuable under warrants issued by us
to Douglas Bessert. See "Selling Shareholders."
We will not receive any proceeds from the sale of any of shares offered by this
propsectus. However, we may receive up to $20,000,000 in proceeds under our
agreement with Fusion Capital and we may receive proceeds from the exercise of
the warrants. Our common stock is quoted on the Nasdaq Bulletin Board under the
symbol "SPHC." On January 12, 2001, the last reported sales price of our common
stock was $.84 per share.
The selling shareholders may sell their shares in one or more transactions on
the Nasdaq Bulletin Board or on any exchange on which our common stock may be
listed. They may also sell in privately negotiated transactions or otherwise, or
a combination of such methods of sale, at market prices prevailing at the time
of sale or prices related to such prevailing market prices or at negotiated
prices. The selling shareholders may sell the shares to or through
broker-dealers, and such broker-dealers may receive compensation from the
selling shareholders and/or purchasers of the shares for whom they may act as
agent (which compensation may be in excess of customary commissions). The
selling shareholders (other than Fusion Capital) and any participating
broker-dealers may be deemed to be "underwriters" as defined in the Securities
Act of 1933, as amended (the "Securities Act"). Fusion Capital is deemed to be
an "underwriter" within the meaning of the Securities Act of 1933. We cannot
estimate at the present time the amount of commissions or discounts, if any,
that will be paid by the selling shareholders on account of their sales of the
shares from time to time. We will indemnify the selling shareholders against
certain liabilities, including certain liabilities under the Securities Act. See
"Plan of Distribution."
Please see "Risk Factors" beginning on page 3 for a discussion of certain
factors you should consider in connection with any decision to purchase shares
in this offering.
You should only rely on the information incorporated by reference or provided in
this prospectus or any supplement. We have not authorized anyone else to provide
you with different information. The common stock is not being offered in any
state where the offer is not permitted. You should not assume that the
information in this prospectus or any supplement is accurate as of any date
other than the date on the front of those documents.
Neither the U.S. Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of the prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is ________, 2001.
<PAGE>
TABLE OF CONTENTS
Page
Number
FORWARD-LOOKING STATEMENTS............................................. 3
SUMMARY FINANCIAL DATA................................................. 3
RISK FACTORS........................................................... 3
PRICE RANGE OF OUR COMMON STOCK........................................ 8
USE OF PROCEEDS........................................................ 8
THE FUSION TRANSACTION................................................. 9
PLAN OF OPERATION...................................................... 11
BUSINESS............................................................... 12
MANAGEMENT............................................................. 22
PRINICIPAL SHAREHOLDERS................................................ 25
SELLING SHAREHOLDERS................................................... 26
CERTAIN TRANSACTIONS................................................... 27
DESCRIPTION OF SECURITIES.............................................. 28
PLAN OF DISTRIBUTION................................................... 29
LEGAL MATTERS.......................................................... 30
EXPERTS................................................................ 30
WHERE YOU CAN FIND MORE INFORMATION.................................... 30
INDEX TO FINANCIAL STATEMENTS.......................................... F-1
Page 2
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<TABLE>
<CAPTION>
FORWARD LOOKING STATEMENTS
--------------------------
Some of the information in this prospectus contains forward-looking
statements within the meaning of the federal securities laws. These statements
include, among others, business development plans, strategies, expectations
regarding competition and market acceptance of our products and services.
Forward-looking statements typically are identified by use of terms like "may,"
"will," "expect," "anticipate," "estimate" and similar words, although some
forward-looking statements are expressed differently. You should be aware that
our actual results could differ materially from those contained in the
forward-looking statements due to a number of factors, including our substantial
operating losses, availability of capital resources, ability to compete
effectively, economic conditions, unanticipated difficulties in development of
products and services, ability to gain market acceptance and market share,
ability to manage growth, dependence on third party content providers and
dependence on our key personnel. You should also consider carefully the risks
described in this prospectus or detailed from time to time in our filings with
the Securities and Exchange Commission. See "Risk Factors" and "Plan of
Operation."
SUMMARY FINANCIAL DATA
----------------------
The following summary of our financial information has been derived
from our financial statements that are included in this prospectus. The
information for the nine months ended September 30, 2000 is derived from our
unaudited financial statements. The information for the years ended December 31,
1999 and 1998 is derived from our audited financial statements. See "Financial
Statements" and " Plan of Operation".
September 30, 2000 December 31, 1999 December 31, 1998
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<S> <C> <C> <C>
Balance Sheet
Current Assets 50,449 13,184 13,584
Net Fixed Assets 24,159 30,168 18,501
Total Assets 241,629 201,978 175,301
Current Liabilities 946,149 465,498 98,905
Total Shareholders
Equity (954,520) (513,520) (173,604)
(Deficit) (Deficit) (Deficit)
Statement of Operations
Revenues - 50,000 -
Gross Profit (6,568,838) (1,671,255) (1,009,972)
Loss from Operations (6,568,838) (1,671,255) (1,009,972)
Other Income (Expense) - - -
Loss before income tax (6,568,838) (1,671,255) (1,009,972)
Benefit from income tax - - -
Net Loss (6,568,838) (1,671,255) (1,009,972)
</TABLE>
RISK FACTORS
------------
The securities offered hereby are highly speculative. You should purchase
them only if you can afford to lose your entire investment in us. You should
carefully consider the following risk factors, as well as all other information
set forth elsewhere in this prospectus. As used in this prospectus, the terms
"we," "us," "our," "the Company" and "Steroidogenesis" mean Steroidogenesis
Inhibitors International, Inc. (D/B/A Samaritan Pharmaceuticals) (unless the
context indicates a different meaning) and the term "common stock" means
Steroidogenesis Inhibitors International, Inc.'s common stock, $.001 par value
per share.
We have only a limited operating history with our current business model.
We were incorporated in March, 1996. We therefore have only a limited
operating history under our current business plan for you to evaluate our
business. No independent market studies have been conducted concerning the
extent to which our drug will be accepted. You must consider the risks, expenses
and uncertainties that a research stage company like ours faces. These risks
include our ability to successfully: complete the drug approval process as to
Anticort; recognize sales and revenues, while currently there are none; meet our
working capital needs; and otherwise become a profitable company. If we are
unsuccessful in addressing these risks, our business, financial condition and
results of operations will be materially and adversely affected.
Page 3
<PAGE>
We have a history of operating losses, accumulated deficits and limited funds.
We have a history of operating losses and expect to continue to incur
operating losses for the foreseeable future as we continue to invest in our
plans. Our current financial resources are limited and will be utilized for
execution and expansion of our business plan. Our ability to execute our plans
will depend on our ability to obtain additional financing and achieve a
profitable level of operations. There can be no assurance that such financing
will be obtained. Nor can we give any assurance that we will generate
substantial revenues or that our business operations will prove to be
profitable. Our operations are subject to all of the risks inherent in
completion of drug research studies and then successful sale of the drug to the
market. Our likelihood of success must be considered in light of our limited
financial resources and the problems, expenses, difficulties, complications and
delays frequently encountered in connection with establishing a new business
including, without limitation, market acceptance of our products, regulatory
requirements, unanticipated expenses and competition. We don't know if our
business will be successful.
We need additional financing for growth.
We may not be able to obtain additional capital or generate sufficient
revenues to fund our plans. The growth of our business will require investment
on a continuing basis to finance capital expenditures and related expenses for
drug studies, labor, consultants, equipment, licenses and related agreements,
marketing and other expenses. Our future capital requirements will depend upon a
number of factors, many of which are not within our control, including research
costs, working capital costs, marketing expenses, and competitive conditions.
Although we have recently signed agreements for additional capital, we regularly
pursue additional financing sources, but we may not be able to raise such
capital or such capital may not be sufficient.
We may lose our primary funding source if Dr. Janet Greeson does not continue in
Management.
We are anticipating that our agreement with Fusion Capital will result in
Fusion Capital being our primary funding source for the foreseeable future. To
maintain continuity in Management and its dealings with the Company, both points
indicated by Fusion Capital to be important to it, Fusion Capital included a
provision in the agreement that an event of default will occur if Janet Greeson,
a principal officer of the Company who also helped facilitate the relationship
with Fusion Capital, is not both (x) a member of the Company's Board of
Directors, and (y) Chief Executive Officer or President of the Company. No
assurance exists that she will remain with the Company, and if she does not, for
any reason, we may lose the benefit of the Fusion agreement, which may result in
a material adverse consequence to the Company due to the loss of funding.
Government regulation affects our business.
The U.S. Federal Food and Drug Administration ("FDA") regulates
pharmaceutical products, including testing and distribution, as may the various
states on one or more issues, such as prescriptions. Due to the regulated nature
of the pharmaceutical industry, our operations may be adversely impacted by the
adoption of new, or changes to, existing laws or regulations or the
interpretations thereof.
We are dependent on research and testing results.
As most pharmaceutical companies, our current product Anticort(TM), and any
future drug product, will depend, to a great but not exclusive extent, upon the
successful completion of necessary research and testing. Such pursuits are
costly and time consuming and may prove unsuccessful at any point. As part of
this, the Company must successfully obtain FDA approval of its products,
something never guaranteed. Failure to successfully complete any research or
testing, or failure to obtain FDA approvals, may not only have an material
adverse affect on the particular drug plan but also the Company.
Page 4
<PAGE>
We must establish and maintain our trade name.
We must establish our name, primarily through successful marketing, as an
accepted company supplying at least one, and hopefully more pharmaceutical
products, and maintain such trade name or brand awareness. For us to be
successful in establishing our brand, the pharmaceutical market, including
consumers and distributors, must perceive us as offering quality, safe,
cost-effective products. Our business could be materially adversely affected if
our marketing efforts are not productive, or if we cannot create and maintain
our trade name or brand awareness.
Our financial results may fluctuate significantly.
Our operating results, including on a quarterly basis, may fluctuate
significantly in the future as a result of a variety of factors, some of which
are outside our control. These factors include: the demand for our drugs as
currently contemplated and as developed or marketed in the future; our expense
for research, development and as we pursue our plans; the timing and amount of
advertising and license revenues; the amount and timing of capital expenditures
and other costs related to operations; the introduction of new products by us or
our competitors; pricing changes in the industry; new government regulations
that affect pharmaceutical companies and healthcare programs that purchase and
dispense drugs; general economic conditions; and possible seasonality, price and
cost factors affecting the sale of drugs. Due to all of these and possibly other
factors, our operating results may fall below market expectations. If this
happens, the trading price of our common stock would likely decline, perhaps
significantly.
We face intense competition.
The market for anti cortisol pharmaceutical products is relatively new,
while the pharmaceutical industry is generally considered to be intensely
competitive and rapidly changing. The indications we hope our drug and future
drugs are intended to apply to, like HIV, are a focus of highly competitive
large pharmaceutical companies with much greater resources, market recognition
and distribution than the Company, now and for the foreseeable future. We expect
that competition will continue to intensify. We expect competition in our
market, currently targeted as helping persons with what we believe are high
cortisol related diseases, to increase significantly as new and existing
companies enter the market or expand their product lines into the market. These
potential competitors are likely to enjoy substantial competitive advantages,
including: greater financial, technical and marketing resources that can be
devoted to the development, promotion and sale of their products; relatively
easy access to capital; longer operating histories; greater name recognition;
and larger distribution and customer bases. There can be no assurances that we
will be successful in competing. Any pricing pressures, reduced margins or
inability to obtain market share or even loss of market share resulting from our
failure to compete effectively would materially adversely affect our business,
financial condition and operating results.
Revenues derived from ventures may not generate cash flows.
We expect to derive a portion of our revenues from potential strategic,
license agreements, and joint venture or partnership or research funding
agreements. These agreements, if any, may not generate cash flow.
We will suffer if we are unable to hire and retain key personnel in high demand.
We depend on the services of our senior management. Our success is largely
dependent on our ability to hire highly qualified managerial personnel both
knowledgeable about pharmaceutical products and the operations of a public
company. These individuals are in high demand and we may not be able to attract
the staff we need. In addition, the loss of the services of any of our senior
management could have a material adverse effect on our business, financial
condition and operating results.
Our ventures may strain our managerial, operational and financial resources and
may be disruptive to our business.
We are trying to establish ventures with complementary businesses for
the utilization of technologies, services and products and intend to continue
these efforts in the future; however, we may be unable to integrate or implement
these joint ventures or alliances effectively. Difficulties in this process
could disrupt our ongoing business, distract our management and employees,
increase our expenses and otherwise adversely affect our business.
Page 5
<PAGE>
Financing for ventures may not be available.
We do not know if we will be able to identify any future joint or other
ventures, acquisitions or alliances or if we will be able to successfully
finance these transactions. To finance these transactions, it may be necessary
for us to raise additional funds through public or private financings, which may
not be available on acceptable terms, if at all. A failure to identify or
finance future transactions may impair our growth.
We face potential liability claims from the offering of our Products.
While we intend to offer drug products that are safe and effective, after
necessary testing, we face the risk that claims may be made against us for
losses or damages, perceived or real, which could adversely affect our business.
Although we do not carry general liability insurance, and intend to once sales
commence, our insurance may not cover potential claims of this type or may not
be adequate to cover all costs incurred in defense of potential claims or to
indemnify us for all liability that may be imposed. Any costs or imposition of
liability that is not covered by insurancer in excess of insurance coverage
could have a material adverse effect on our business, financial condition and
operating results.
We depend on others beyond our control.
Like many businesses, we currently depend on others beyond our control, as
well as those we engage or contract with in the future. Consultants, research
testing organizations, distributors, and licensees, for example, may act or fail
to act in a way that directly or indirectly damages our business. Our success
depends significantly on our ability to create and maintain our relationships.
Some of our agreements may be short-term and non-exclusive. These factors could
be materially adverse to our business.
Our stock price is subject to market volatility.
The stock market experiences volatility that affects the market prices of
equity securities of pharmaceutical companies generally. This volatility
includes rapid and significant decreases or increases in the trading prices of
certain companies that do not bear any reasonable relationship to operating
performance of such companies. These fluctuations may materially affect the
trading price of our common stock. In the past, following periods of volatility
in the market price for a company's securities, shareholders have often
instituted securities class action litigation. Litigation could result with
substantial costs and the diversion of management's attention and resources,
which could have a material adverse effect on our business, financial condition
and results of operations.
Our stock price is highly volatile and could drop unexpectedly.
The average daily trading volume for our common stock fluctuates
significantly and as a result of this and other factors, the price at which our
common stock trades is highly volatile and may fluctuate substantially for the
foreseeable future. As a result, investors in our common stock may experience a
decrease in the value of their common stock regardless of our operating
performance or prospects.
Our present Management has the voting power to control our affairs.
As of the date of this prospectus, our officers and directors own
approximately 19.41% of our outstanding common stock. Consequently, these
individuals are in a position to influence the election of a majority of our
Directors and to exercise control over our affairs generally.
Future sales of common stock could depress the price of our common stock.
Future sales of substantial amounts of common stock pursuant to Rule 144
under the Securities Act of 1933 or otherwise by certain shareholders could have
a material adverse impact on the market price for the common stock at the time.
There are presently approximately 14,500,000 outstanding shares of our common
stock held by Management and other shareholders which are deemed "restricted
securities" as defined by Rule 144 under the Securities Act. Under certain
circumstances, these shares may be sold without registration pursuant to the
provisions of rule 144. In general, under rule 144, a person (or persons whose
shares are aggregated) who has satisfied a one-year holding period may, under
certain circumstances, sell within any three-month period a number of restricted
securities which does not exceed the greater of one (1%) percent of the shares
outstanding or the average weekly trading volume during the four calendar weeks
preceding the notice of sale required by rule 144. In addition, rule 144
permits, under certain circumstances, the sale of restricted securities without
any quantity limitations by a person who is not an affiliate of ours and has
satisfied a two-year holding period. Any sales of shares by shareholders
pursuant to rule 144 may have a depressive effect on the price of our common
stock.
Page 6
<PAGE>
Even if our stock price decreases, we may elect to cause purchases of our common
stock to be made under the stock purchase agreement, causing more shares to be
outstanding and resulting in substantial dilution.
The purchase price for the common stock to be issued to Fusion Capital as
the selling shareholder under the stock purchase agreement will fluctuate based
on the closing price of our common stock. See "The Fusion Capital
Transaction--purchase of shares under the common stock purchase agreement" for a
detailed description of the purchase price and the relation of the purchase
price to the percentage of the outstanding shares of our common stock issuable
to Fusion Capital pursuant to the common stock purchase agreement.
All shares registered in this offering will be freely tradable. We expect
that shares registered in this offering will be sold over a period of up to 50
months from the date of this prospectus, subject to a six -month extension by
the Company. The sale of a substantial number of shares of our common stock
under this offering, or anticipation of such sales could make it more difficult
for us to sell equity or equity related securities in the future at a time and
price we deem appropriate. If Fusion Capital purchased the full amount of shares
purchasable under the first tranche of the stock purchase agreement on the date
of this prospectus, the purchase price would have been $1.00 per share and
Fusion Capital would have been able to purchase shares of our common stock.
Assuming Fusion Capital's purchase under the first tranche of the purchase
agreement of a total of 10,000,000 shares of common stock on the date of this
prospectus, these shares if issued, along with the 1,054,945 shares already
issued as a commitment fee and considering the outstanding shares of the
Company, would represent 29% of our outstanding common stock as of December 15,
2000. This would result in significant dilution to the ownership interests of
other holders of our common stock. Such dilution could be more significant if
the trading price of our common stock is lower than the current trading price of
our stock at the time Fusion Capital purchases shares of our common stock under
the stock purchase agreement, as a lower trading price would cause more shares
of our common stock to be issuable to Fusion Capital. Assuming a change in the
trading price, up or down, of our common stock to $.75, and a corresponding
decrease in the purchase price under the common stock purchase agreement,
10,000,000 shares of common stock would be issuable to Fusion Capital under the
first tranche of the common stock purchase agreement. This would represent more
than 55% of our currently outstanding common stock. Although we have the right
to suspend Fusion Capital's purchases under the stock purchase agreement, if our
stock price is below $1.00, we may still elect to require fusion capital
purchase shares under the stock purchase agreement. If our trading price is at
least $5.00 for over 30 days, we can require fusion capital to purchase the
available additional shares up to the entire aggregate of the $20,000,000
facility. The purchase under the common stock purchase agreement of a
significant percentage of our outstanding stock may result in substantial
dilution to the ownership interests of other holders of our common stock.
The common stock purchase agreement could lead to downward pressure on our stock
price.
Either actual dilution caused by sales of our common stock to Fusion
Capital or the perception of such dilution by holders of our common stock could
cause holders to elect to sell the shares of common stock held by them, which
could cause the trading price of our common stock to decrease. Furthermore, a
perception that sales of our common stock to Fusion Capital may lead to downward
pressure on the trading price of our common stock could provide an incentive for
selling which could also adversely affect the trading price of our common stock.
We are involved in suits that may result in adverse rulings to the Company.
The Company, and its directors, is involved in various suits with a former
director and others. While the Company, upon advice of more than one attorney,
believe these will eventually be resolved in favor of the Company, and the
Company has already been successful on certain claims, as in any litigation,
orders of the respective courts, or final determinations, may have a materially
adverse affect on us. See, "Legal Proceedings."
Page 7
<PAGE>
The sale of the shares registered in this offering could cause our stock price
to decline.
All shares registered in this offering will be freely tradable. It is
anticipated that shares registered in this offering will be sold over a period
of up to 50 months from the date of this prospectus, subject to a six -month
extension by the Company. As we are required under law, we will need to file
post-effective amendments to the registration statement to which this prospectus
is made a part, to maintain a current prospectus. We may require Fusion Capital,
as the selling shareholder, to purchase a significant amount of common stock at
one time. The sale of a significant amount of shares registered in this offering
at any given time could cause the trading price of our common stock to decline.
PRICE RANGE OF OUR COMMON STOCK
-------------------------------
Our common stock is traded on the Nasdaq OTC Bulletin Board under the
symbol SPHC. The following bid quotations have been reported since January 1,
1998, when the common stock was first priced for trading on the OTC electronic
bulletin board. To the extent that the Company is unable to determine a bid
price on a quarterly date, the prices below are determined on the closest date
available to the Company:
Bid Prices
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Period High Low
------ ---- ---
Quarter Ended March 31, 1998 5.125 2.500
Quarter Ended June 30, 1998 6.250 4.000
Quarter Ended September 30, 1998 4.625 1.250
Quarter Ended December 31, 1998 2.750 0.375
Quarter Ended March 31, 1999 2.500 0.375
Quarter Ended June 30, 1999 2.5625 0.4375
Quarter Ended September 30, 1999 1.970 0.4375
Quarter Ended December 31, 1999 0.875 0.3125
Quarter Ended March 31, 2000 4.687 0.375
Quarter Ended June 30, 2000 3.000 1.125
Quarter Ended September 30, 2000 2.000 1.062
Quarter Ended December 31, 2000 1.375 0.435
Such quotations reflect inter-dealer prices, without retail mark-up,
markdown or commission. Such quotes are not necessarily representative of actual
transactions or of the value of the Company's securities, and are in all
likelihood not based upon any recognized criteria of securities valuation as
used in the investment banking community.
USE OF PROCEEDS
---------------
We will not receive any proceeds from the sale of securities being offered
by this prospectus. We are registering the shares for sale to provide the
selling shareholders with freely tradable securities, but the registration of
these shares does not necessarily mean that any of these shares will be offered
or sold by the selling shareholders. However, we may receive up to $20,000,000
in proceeds under our agreement with Fusion Capital and we may receive proceeds
from the exercise of the warrants. Such proceeds will be used for working
capital and other corporate purposes. See, "The Fusion Transaction," and
"Selling Shareholders."
We have not declared any dividends on our common stock in the past two
fiscal years and do not contemplate paying cash dividends for the foreseeable
future, but instead will retain any earnings to fund our growth and research and
testing. Any decision to pay cash dividends on our common stock in the future
will depend on our ability to generate earnings, our need for capital, our
overall financial condition and such other factors as our Board of Directors
deems relevant.
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THE FUSION TRANSACTION
----------------------
General
On November 2, 2000, we entered into a stock purchase agreement with Fusion
Capital Fund II, LLC. On January 3, 2001, we entered into a the first amendment
to the stock purchase agreement with Fusion Capital. Under the agreement as
amended, Fusion Capital has agreed to purchase up to $20 million of our common
stock over a 50 month period from the date of this prospectus, which period may
be extended an additional three months at the Company's discretion. The selling
price of the shares will be equal to the lesser of (1) $20.00 or (2) a price
based upon the future performance of the common stock without any fixed discount
to the market price.
Subject to the limits on purchase and the termination rights described
below during each month, Fusion Capital shall purchase up to $400,000 of the
Company's common stock. The obligation of Fusion Capital to purchase each month
is subject to customary conditions, all of which are outside the control of
Fusion Capital as well as the Company's right to suspend purchases described
below.
Purchase of Shares Under the Common Stock Purchase Agreement
Under the stock purchase agreement, Fusion Capital will purchase shares of
our common stock by purchasing from time to time a specified dollar amount of
our common stock. Subject to the limits on purchase and the termination rights
described below, each month during the 50-month term, with a six-month
extension, if any, Fusion Capital will purchase $400,000 of our common stock at
the applicable selling price. This amount may be increased or decreased by us.
The selling price per share is equal to the lowest of:
- the lowest sale price of our common stock on the day of
submission of a purchase notice by Fusion Capital; or
- the average of the three lowest closing sale prices of our
common stock during the 15 trading days prior to the date of
submission of a purchase notice by Fusion Capital; or
- $20.00
The selling price will be adjusted for any reorganization,
recapitalization, non-cash dividend, stock split or other similar transaction
occurring during the 15 trading days in which the closing sale price is used to
compute the purchase price. Notwithstanding the foregoing, Fusion Capital may
not purchase shares of common stock under the stock purchase agreement if Fusion
Capital or its affiliates would beneficially own more than 4.99% of our then
aggregate outstanding common stock immediately after the proposed purchase.
Our Right to Prevent Purchases
If the closing sale price of our common stock is below $20.00, and we have
paid all advances by Fusion under the agreement as amended, we have the
unconditional right to suspend purchases until the earlier of (1) our revocation
of such suspension and (2) such time as the sale price of our common stock is
above $20.00. To the extent we need to use the cash proceeds of the sales of
common stock under the stock purchase agreement for working capital or other
business purposes, we do not intend to restrict purchases under the stock
purchase agreement.
Our Right to Mandatory Purchases
If the closing sales price of our common stock on each of the five trading
days immediately prior to the first trading day of any monthly period is at
least $5.00, we have the right to require that Fusion Capital purchase all or a
portion of the remaining amount of the stock purchase agreement during the next
two monthly periods. We may revoke, in our sole discretion, our written request
with respect to any purchases in excess of the amount that Fusion Capital is
otherwise obligated to purchase.
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Our Termination Rights
If we have paid all advances by Fusion under the agreement as amended, and
the closing sale price of our common stock is below $20.00 for any 10
consecutive trading days, then we may elect to terminate the stock purchase
agreement without any liability or payment to Fusion Capital.
Effect of Performance of The Stock Purchase Agreement On Our Company and Our
Shareholders
All shares registered in this offering will be freely tradable. It is
anticipated that shares registered in this offering will be sold over a period
of up to 50 months from the date of this prospectus, subject to a six-month
extension by the Company. The sale of a significant amount of shares registered
in this offering at any given time could cause the trading price of our common
stock to decline and to be highly volatile. Fusion Capital may ultimately
purchase all of the shares of common stock issuable under the stock purchase
agreement, and it may sell all of the shares of common stock it acquires upon
purchase. Therefore, the purchases under the stock purchase agreement may result
in substantial dilution to the interests of other holders of our common stock.
However, we have the right to block purchases of the stock purchase agreement
and to require termination of the stock purchase agreement in some cases.
No Short-selling or Hedging by Fusion Capital
Fusion Capital has agreed that neither it nor any of its affiliates will
engage in any direct or indirect short-selling or hedging of our common stock
during any time prior to the termination of the stock purchase agreement.
Events of Default
Generally, Fusion Capital may terminate the stock purchase agreement
without any liability or payment to the Company upon the occurrence of certain
events of defaults, including:
- if for any reason issued shares offered by this prospectus
cannot be sold pursuant to this prospectus for a period of 10 consecutive
trading days or for more than an aggregate of 30 trading days in any
365-day period;
- suspension by the Nasdaq Bulletin Board of our common stock from
trading for a period of 10 consecutive trading days or for more than an
aggregate of 30 trading days in any 365-day period;
- our failure to satisfy any the criteria for continue listing of
our Principal Exchange (as defined in the agreement) for a period of 10
consecutive trading days or for more than an aggregate of 30 trading days
in any 365-day period;
- notice from us or our transfer agent to the effect that either
of us intends not to comply with a proper request for purchase under the
stock purchase agreement of shares of common stock; (2) our failure to
confirm to the transfer agent Fusion Capital's purchase notice or (3) the
failure of the transfer agent to issue shares of our common stock upon
delivery of a purchase notice;
- any material breach of the representations or warranties or
covenants contained in the stock purchase agreement or any related
agreements which has or which could have a material adverse affect on the
Company subject to a cure period of 10 trading days;
- a default of any payment obligation of the Company in excess
of $1,000,000
- any participation in insolvency or bankruptcy proceedings by or
against our Company,
- Janet Greeson is not both (x) a member of the Company's Board of
Directors, and (y) Chief Executive Officer or President of the Company; or
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Additional Shares Issued to Fusion Capital
Under the terms of the stock purchase agreement, Fusion Capital received
1,054,945 shares of our common stock. Unless an event of default occurs, these
shares must be held by Fusion Capital until the stock purchase agreement has
been terminated.
No Variable Priced Financings
Until the termination of the stock purchase agreement, we have agreed not
to issue, or enter into any agreement with respect to the issuance of, any
variable priced equity or variable priced equity like securities unless we have
obtained Fusion Capital's prior written consent.
Holdings of Fusion Capital Upon Termination of The Offering
Because Fusion Capital may sell all, some or none of the common stock
offered by this prospectus, no estimate can be given as to the amount of common
stock that will be held by Fusion Capital upon termination of the offering.
PLAN OF OPERATION
-----------------
The following discussion and analysis should be read in conjunction with
the financial statements appearing elsewhere in this report.
Plan of Operations
In October 1997, the Company acquired approximately eighty-six percent (86%) of
the outstanding shares of S. I., Inc. which is a subsidiary of the Company.
Since the acquisition of its controlling interest in S. I., Inc., the Company
has focused its operations on developing its proprietary drug, Anticort(TM). To
develop Anticort the Company has been engaged in research and clinical studies.
The Company remains a development stage Company with immaterial revenues and
substantial general and administrative expenses, including expenses related to
its clinical studies programs. The Company's cash has been provided from its
fund-raising activities, all of which have been conducted on a private basis (as
to fund raising, the Company has received capital in private placements of
restricted stock to persons known by Management and believed to be accredited
investors.) 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.
The Company plans to complete its clinical studies, particularly the study
authorized by the FDA, and, eventually, assuming the success of those studies,
to market it's Anticort product directly or through licensing agreements with
third parties.
While the Company is in the FDA clinical trial phase it has not generated any
revenues to meet capital needs, it has been successful in obtaining capital
infusions in private transactions from existing shareholders or persons familiar
with management. These sporadic private placements are only to persons who are,
in management's opinion, accredited investors, willing to assume the risk of
loss of their entire investment, and management hopes that these subscriptions
will continue. the Company is seeking an underwriter to underwrite a public
offering of securities, and has sporadic discussions with interested parties in
New York, primarily, in the hope that one will be engaged. However, except for
an agreement to sell shares to Fusion Capital Fund II, LLC. ("Fusion Capital"),
discussed below, no commitment exists for continued investments, or for any
underwriting. the Company has thus far been able to meet its capital needs, and
believes that extensive discussions and certain agreements with various
potential sources of funding may eventually reach necessary funding and
agreements. The Board of Directors has directed the officers to file an SEC form
SB-2 registration statement in the near future to, with conformity with
applicable laws and regulations, 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. 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 capital needed for operations.
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The Company needs to complete various research and development steps as part of
its plans. These steps include the completion of phase l and start and
completion of Phase ll clinical trials as to its Anticort product. These steps
also include the application and obtaining of FDA final approval, and
development of a complete product manufacturing and marketing plan or plans.
On November 2, 2000, the Company entered into a common stock purchase agreement
with Fusion Capital Fund II, LLC a Chicago based institutional investor, which
was amended January 3. 2001, 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. These
funds will be used to further develop the proprietary drug Anticort(TM), through
FDA clinical trials and for acquisitions, alliances and other corporate
opportunities. More specifically, fusion capital has agreed to purchase from the
Company up to $20 million of the common stock over a 50-month period, subject to
a six-month extension by the Company. After the U.S. Securities & Exchange
Commission has declared effective a registration statement, each month STGI has
the right to sell to fusion capital $400,000 of its common stock 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 $20 million in the aggregate. The Company has the right to
control the timing and the amount of stock sold to Fusion Capital. SPHC also has
the right to terminate the agreement at any time without any additional cost.
Other terms and conditions apply.
Management does not believe that the Company will develop any material revenues
until the Company completes a clinical study which demonstrates the efficacy of
Anticort for significant medical purposes and the Company subsequently
manufactures and markets Anticort directly, or with a joint venture marketing or
manufacturing company, or pursuant to one or more licensing agreements. An
exception maybe that the Company could, with no guarantee, recognize revenues as
part of plans, under way, to expand the focus of the Company beyond just
Anticort.
Management estimates the Company's operating expenses to be a minimum of
$125,000 and a maximum of $150,000 per month, depending upon the Company's
payments to outside research and other consultants. the Company is also
dependent upon the proceeds of financing from the sale of its securities to fund
its clinical studies, particularly the clinical study planned with the aids
research alliance in California. the Company's contract with the Aids Research
Alliance requires it to pay $650,000 for the clinical study. the Company paid
$324,122.50 of the $650,000 contract amount, through March 15, 2000, and since
then has paid approximately (un-audited) $150,000 through November 1, 2000.
The Company has incurred research development stage losses since inception.
These losses consist primarily of research and related expenditures, marketing
costs, and consulting, and administrative overhead and expenses, incurred while
the Company seeks to complete development of its product, which includes studies
and obtaining FDA final approval. No significant revenues have been earned by
the Company, or cash flow from operations, to help pay these operating needs.
These losses were $1,671,255 and $1,009,972 during the years ending 1999 and
1998, respectively. The increase in the loss during 1999 was primarily the
result of increased expenditures for research and development, consultants for
business, public relations, and financial strategies, and legal expense.
BUSINESS
--------
History and Development of the Company
The Company was originally incorporated in the State of Nevada on March 26,
1996. On October 21, 1997, we entered into an agreement to acquire up to 100%
but no less than 86% of the issued and outstanding shares of Steroidogenesis
Inhibitors, Inc., a Nevada corporation ("SI, Inc."). In connection with the
agreement, the Company issued an additional 4,497,000 restricted shares to
affect a share exchange with the shareholders of SI, Inc. and acquired 88.51% of
the common stock of SI, Inc.
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The Company changed its name to Steroidogenesis Inhibitors International
("SII") on November 6, 1997, and control of the Company changed as the result of
the reorganization, issuance of shares and the appointment of new officers and
directors of the Company. On January 3, 2001 the Company selected the name
"Samaritan Pharmaceuticals" under which to conduct its business. The Company
then focused its plan of operations on the business of developing a new class of
pharmaceuticals described below.
We are focused on being a biopharmaceutical scientific incubator developing
therapeutic drugs primarily for the treatment of high cortisol related diseases.
The Company's lead proprietary drug Anticort(TM) is the subject of FDA
Phase1B/2A clinical trial for indications in HIV. The Company is also exploring
the efficacy of Anticort(TM) as an effective treatment for other high cortisol
related diseases such as Alzheimer's, Parkinson's, and Cancer. Our hope, with no
guarantee of success, is to "incubate" pharmaceutical drugs both proprietary, as
we develop them, and non-proprietary, being those we acquire by purchase,
license, research arrangements, or other means. Other than our agreement,
subject to litigation, with a licensee, "Althacem Pharma," there are no
agreements with third parties for the license of our drug, or for the provision
to us, by license or otherwise, their drugs, and there is no guarantee that we
will reach successful agreements with third parties in the future. See, "Legal
Proceedings."
Readers are cautioned that there is no guarantee of the Company
successfully obtaining the necessary governmental approvals for Anticort(TM)
discussed below.
The Company is a researcher and developer of pharmaceuticals for the
treatment of conditions and diseases where, in the opinion of the Company and
without clinical support, elevated levels of the stress hormone cortisol play a
significant role in the immune system. The Company has developed a drug
Anticort, based upon a high dose of a stabilized and complex form of procaine
hydrochloride ("HCL"). Patients suffering from AIDS, HIV and other serious
diseases such as Alzheimer's, Parkinson's and Cushing's have increased levels of
cortisol, a powerful immuno-suppressive hormone. Management hopes that Anticort
may be shown to return levels of cortisol to normal when tested in clinical
research settings. Initially, the Company is focused on the application of
Anticort to benefit people with AIDS. While not a cure for AIDS, the Company
believes that Anticort, if clinically proven, may help people with AIDS. The
Company plans to manufacture Anticort itself and market it through one or more
licensees, wholesalers and pharmacies.
Cortisol, sometimes dubbed the stress hormone, is manufactured by the
adrenal gland. The adrenal gland is located above the human kidney gland and is
popularly known to help individuals cope with the stress of everyday life,
especially in cases of elevated stress like in situations involving fear,
danger, or overwork. The gland supplies energy factors, such as glucose (a form
of sugar), also with the commonly known "adrenaline" and other factors. However,
when manufactured in large amounts as a result of continuous stress and/or
inherited genetic conditions, such as depression, and allergies, cortisol works
against the body, than for the body, in the opinion of Management, without
clinically proven support.
Anti-cortisol or Steroidogenesis drugs, subject to clinical studies, which
we hope will conclusively confirm their efficacy or value, and approval of the
U.S. Food and Drug Administration ("FDA") for human use, are pharmaceutical
compounds intended to prevent or counteract the effects of elevated cortisol by
reducing cortisol in the human body, our belief without clinical support.
Our Company is seeking to complete the development, including clinical
testing and obtaining FDA approval, of our own anti-cortisol or Steroidogenesis
drug called Anticort.
Readers are cautioned that there is no guarantee of the Company
successfully obtaining the necessary governmental approvals for Anticort(TM).
Background of Anti Cortisols
It is essential to understand the foundational component upon which the
Company's products and technologies are based: a hormone called cortisol.
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Cortisol is a hormone manufactured by the cortex, the outer layer of the
adrenal gland, located on top of the kidneys. In order to manufacture cortisol
the adrenal gland requires as a material the exogenous cholesterol, i.e.,
provided by outside foods. Such cholesterol is needed for cortisol production.
Cortisol is a vital hormone which helps the human body cope with stress.
When needed, the body responds by increasing the levels of adrenaline and other
hormones in the blood, and by mobilizing large amounts of glucose and other
anti-stress factors to provide the energy and zest needed in conditions that
require instant action (i.e., fight or flight). Once the stressful situation is
over, the level of cortisol returns to normal. But, if the stressful situation
is continuous over an extended period of time, or is relatively permanent as in
a stressful job, the level of cortisol remains elevated and does not return to
normal. It is under these conditions that cortisol, a necessary and vital
hormone during times of crises, may be harmful to the body. The foregoing is our
opinion, and is not clinically proven.
The Product
Anticort is a drug, based upon procaine hydrochloride ("HCl"), subject to
clinical proof and governmental approvals, developed in capsule form, to
hopefully lower cortisol. HCl is better known as a local anesthetic used to numb
small portions of skin. Procaine is believed, in our opinion without clinical
proof, to lower cortisol, previously elevated. It is this aspect of procaine vs.
cortisol, that attracted our attention, and our decision to test it clinically;
i.e. as an anticortisol in the treatment of diseases associated with elevated
levels of cortisol. We, of course, hope to prove our opinion through clinical
trials.
While Management believes, pending future, if any, clinical proof, that
Anticort may help with high cortisol diseases, such as AIDS, and, later subject
to clinical studies, viral hepatitis B and C, aging and Alzheimer's, for reasons
of strategy, the Company is focusing its initial attention on AIDS. Note that
there is no clinical proof that the foregoing diseases are due to high cortisol.
Readers are cautioned that there is no guarantee of the Company successfully
obtaining the necessary governmental approvals for Anticort(TM).
Anticort remains subject to substantial clinical trials, and related
requirements, including those imposed by the United States Food and Drug
Administration, and the Company cannot provide any assurance that these tests
will ultimately be proven successful or that the Company's Anticort(TM) product
will be commercially marketable.
Beliefs, Claims
Management believes there is an association of elevated cortisol with certain
diseases. There are no clinical reports or studies that support this. However,
the common wisdom was that elevated cortisol follows the diseases, i.e. elevated
cortisol is often a result of these diseases and, as such, there was little
interest in dealing or researching this result. This leads us to the natural
conclusion, which is our hope to prove through clinical trials, that if
anticortisol/Steroidogenesis inhibitor drugs were to be utilized by persons
having such diseases, the application should be capable of inducing
statistically significant or beneficial results. (No clinical support exists.)
Clinical Trials
A decision was made to prepare and submit an Investigation New Drug Application
(IND) to the FDA, requesting approval to clinically test Anticort(TM) in an HIV+
population, with CD4 cells over 300, viral load of more than 10,000 copies and
under anti-HIV medication.
This IND application was reviewed and modified, with the oversight of comments
and consideration of the requirements of the FDA, many times over a period of
one year, and ultimately received FDA approval to commence clinical studies of
the type Phase I dose related, to be followed by Phase II double blind studies.
This first Phase IIb/IIa study, carried out under the approval of the FDA (FDA
IND#52,663) is in progress right now at the AIDS Research Alliance, an
independent testing organization, in Los Angeles. The purpose of the study, in
summary, is to administer increased doses of Anticort(TM) to see if a) there are
any side effects, and b) to ascertain if any improvements would be noticed as
one or more levels of Anticort(TM) are used. The study is under way, and there
are no results to report either way at this time.
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Government authorities in the United States and other countries extensively
regulate the research, development, testing, manufacture, promotion, marketing
and distribution of drug products. Drugs are subject to rigorous regulations by
the FDA in the Untied States and similar regulatory bodies in other countries.
The steps ordinarily required before a new drug may be marketed in the United
States, which are similar to steps required in most other countries, include,
and may not be limited to:
- preclinical laboratory tests, preclinical studies in animals and
formulation studies and the submission to the FDA of an investigational new drug
(IND) application for a new drug or antibiotic (this has been accomplished by
the Company, as noted above--IND application) ;
- adequate and well-controlled clinical trials to establish the safety and
efficacy of the drug for each indication;
- the submission of a new drug application to the FDA; and
- FDA review and approval of the new drug application prior to any
commercial sale or shipment of the drug.
Preclinical tests include laboratory evaluation of product chemistry toxicity
and formulation, as well as animal studies. The results of Preclinical tests are
submitted to the FDA as part of an investigation new drug application. A 30-day
waiting period after the filing of each investigation new drug application is
required prior to the commencement of clinical test in humans. At any time
during this 30-day period or at any time thereafter, including as it may apply
to the Company, the FDA may halt proposed or ongoing clinical rails until the
FDA authorizes trials under specified terms. The investigational new drug
application process may be extremely costly and substantially delay development
of our product. Moreover, positive results of Preclinical tests will not
necessarily indicate positive results in clinical trials.
Clinical trials to support new drug applications are typically conducted in
three sequential phases, but the phases may overlap.
-During Phase I - the initial introduction to the drug into healthy human
subjects or patients. The drug is tested to assess body metabolism, reactions
and safety, including side effects associated with increasing doses.
-Phase II usually involves studies in limited patient populations to:
- assess the efficacy of the drug in specific, targeted indications;
- assess dosage tolerance and optimal dosage; and
- identify possible adverse effect and safety risks.
- Phase III: if a compound is found to be potentially effective and to have an
acceptable safety profile in Phase II evaluations, Phase III, also called
pivotal studies, or advanced clinical trails, are undertaken to further
demonstrate clinical efficacy and to further test for safety within an expanded
patient population at geographically dispersed clinical study sites.
After successful completion of the required clinical testing, generally a new
drug application is prepared for filing, in which case the original application
must be resubmitted with the additional clinical information. Once the
submission has been accepted for filing, the FDA has 180 day to review the
application and respond to the applicant. The review process is often
significantly extended by FDA requests for additional information or
clarification. The FDA may refer the new drug application to an appropriate
advisory committee for review, evaluation and recommendation as to whether the
application should be approved, but the FDA is not bound by the recommendation
of an advisory committee.
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If FDA evaluations of the new drug application and the manufacturing facilities
are favorable, the FDA may issue either an approval letter or an approvable
letter. An approvable letter will usually contain a number of conditions that
must be met in order to secure final approval of the new drug application and
authorization of commercial marketing of the drug for certain indications. The
FDA may refuse to approve the new drug application or issue a no approval
letter, outlining the deficiencies in the submission and often requiring
additional testing or information.
The duration of the Phase I, for the US clinical trial of Anticort, may be about
six months, since only one dosage would be used, one at a time, in sequential
order, but the industry recognizes this may take more time, but there is no
guarantee of how long it will take or whether it will be successful.
In the case of Anticort, the Phase II study consists of double blind clinical
testing, using the dose of drug that looked the most promising in the Phase I b.
Double blind studies mean that the drug would be administered under a code
number known only by the monitor of the study, by which patients would receive a
capsule containing either the active drug or a placebo, i.e., an inactive
ingredient (for example, sugar, oatmeal, etc) identical in color with the
original product. The duration of the phase II, double blind, where the product
is used in one or two groups of 40 patients (twenty on the active ingredient and
twenty on placebo) would take about 12 to 14 months.
The phase II double blind studies would be followed by phase III pivotal
studies, where the drug would be administrated, still on double blind basis, to
200-3000 patients.
Only after these studies, if successful, an NDA (New Drug Application) would be
submitted to the FDA requiring the issuance of an approval or approvable letter.
In the case of AIDS, the situation is different since it deals with a killer
disease, for which help is needed as soon as possible. As such if a drug shows
promises of being effective it might be put on a fast track status with
subsequent conditional or compassionate approval. Approval if granted, would
take less time and without going to the extensive Phase III. In certain cases,
where a drug is showing outstanding statistical and clinical results, approval
might be granted after only one clinical study, with the obligation to continue
with additional studies, even after approval.
In the case of Anticort we do not know or foresee future events, as such there
is no guarantee that the drug would be successful when used in HIV positives
individuals or the duration of clinical studies needed, or that "fast track"
status will apply. We may fail.
Also, in 1998, an Investigational New Drug Application was submitted to the
Comisa de Medicamente (the Country of Romania counterpart to the U.S. FDA),
which included U.S. documentation and protocols, to carry out a clinical study
with a child dosage or version of Anticort(TM), in the treatment of five groups
(four on Anticort(TM) and one on placebo) of children with HIV+. After receiving
the approval to proceed, this study was started, and was in an advanced stage at
the University of Craiova, Dept. of Pediatric Infectious Diseases, Romania., (no
reportable scientifically acceptable results, either way, are yet available),
but due to recent changes in FDA acceptance of clinical data with (by) foreign
countries, the Company has been advised by counsel to reconsider proceeding with
trials in Romania. A final decision has not been reached in this regard.
Readers are cautioned that there is no guarantee of the Company successfully
obtaining the necessary governmental approvals for Anticort.
Steps to Commercial Viability, Expenses, and Timeframe
The interest of the Company is to finalize the development of acommercially
viable product. This requires certain steps to be taken. Some of these steps can
be anticipated, others may be necessary as we proceed. No assurance can be given
that we will be successful in undertaking any or all the necessary steps. The
steps taken by the Company and which must be taken are, for the most part,
focused upon, hopefully, obtaining final FDA approval of ANTICORT, and are
believed to be substantially the same as ones taken by other pharmaceutical
companies in trying to secure approval for drugs.
The Company, in collaboration with the AIDS Research Alliance (abbreviated as
"Alliance" sometimes in this document) in Los Angeles, started the assiduous
task of developing a protocol, which by itself represented more than one year's
work, due to the changing aspects of AIDS therapy. A protocol is a game plan
whereby a pharmaceutical company, like our Company, and a testing organization,
like the Alliance, agree on what test should be done, what results will be
considered significant or important enough to look for, and the timing and other
points of the testing.
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Readers are cautioned that there is no guarantee of the Company successfully
obtaining the necessary governmental approvals for Anticort.
In the normal course of events, and assuming that the results are as favorable
as we believe they will be, we should expect to go to the FDA around August
2000, to ask for "fast track" approval. The FDA would normally have 90 days to
respond, by either approving the product, something we think could be advocated
given the threat of the rapid extension of AIDS in the world; or the FDA might
request additional studies. It should be added that another clause in FDA
regulations states that if only one study shows remarkable results, then the FDA
might consider the study to put it on "fast track" and eventually approve it. We
hope there may be at least one remarkable result, and that the FDA will allows
us, with no guarantee, to proceed on a fast track.
As noted above, under the above "Clinical Trials," the FDA may designate a
product application on "fast track" approval. If a drug is "fast track," then
the FDA puts the application at the top of its approval committee schedule list.
This provides for a rapid turn around for the administration part of the FDA
approval process, and could, approximately, save from 6 to 18 months (in
Management's opinion based on its own knowledge of the matter and without
independent confirmation) in the approval process. If the Company's application
is not designated for "fast track" approval, then it will have to follow the
normal approval process summarized above under "Clinical Trials."
Research and Development
We estimate we spent, on research and development, including payments towards
clinical studies, approximately $50,648 and $145,291 during the fiscal years
ended December 31, 1998 and 1997, respectively, and approximately $376,591 for
the year ended December 31, 1999.
Our expenditures, unaudited, to December 1999, approximate $3,000,000 on
ANTICORT by our Company, including subsidiary, relate mostly to working capital,
and the additional research on ANTICORT, attendance at International AIDS
Conferences, helping to participate in and the organizing of the two
International Conferences on Cortisol/Anticortisol, expenses incurred over a
year with the AIDS Research Alliance in Los Angeles, trips, documentation and
submission of the Investigational New Drug Application in Romania, and other
research related expenses.
It is of interest to note that it is our belief, from our knowledge of the
industry, that the rule of thumb for a pharmaceutical corporation to reach the
Phase I status is approximately $10,000,000, and so we believe we are doing well
to try and streamline our expenditures.
Regarding future expenses, leading to where we would apply for final FDA
approval, should the research studies present results that are favorable, are
estimated by the Company, with the advice of consultants like CATO Research
Ltd., a specialized organization located in Durham, North Carolina, to be
approximately $10,000,000. ("CATO" is a contract research organization, with
offices in Washington D.C., North Carolina, and elsewhere, that assists
pharmaceutical and biotechnology companies design, and execute development
strategies as to products.). If we reach this point, and this is expended,
additional money will be necessary for sales and marketing, manufacturing,
working capital and other similar cost; again, once we are, hopefully, in
production and selling the product. This may mean millions more will be needed
by the Company, and it is difficult to estimate the figure at this date.
We hope that the clinical studies, and namely Phase I and II, will be completed
early 2001. By early 2001, approximately February 2001, we hope to submit to the
FDA for their review and consideration of final FDA approval, with final
approval by late 2001. Our best guess, without any guarantee, is that product
manufacturing and sale on a commercial basis may start some time after this
approval process. We are, however, open to potential licensing and or alliances
by our Company of the product for other countries, and success in this endeavor,
with no assurance, could result in license and similar revenues sooner.
Page 17
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Readers are cautioned that there is no guarantee of the Company successfully
obtaining the necessary governmental approvals for Anticort(TM).
We hope to meet the capital needs to undertake the steps through, primarily
private funding, and later public registered financing, if possible.
Patents and Trademarks
In 1997, in exchange for $108,968, Cortisol Medical Research, Inc., an
anticortisol research and development company founded by a former Director
(Alfred T. Sapse) of the Company and others, assigned all patents pending or to
be filed relating to Anticort(R) to SI, Inc., the Company's subsidiary. The
Company has filed an application for, and was issued, a U.S. Trademark for the
name "Anticort(TM)" on July 28, 1998. The trademark number, issued by the U.S.
Patent and Trademark Office, is 2,176,048. The former Director has also filed an
application for a United States patent for "Composition of Anti-HIV Drugs and
Anti-Cortisol Compounds and Method for Decreasing the Side Effects of Anti-HIV
Drugs in a Human," and has assigned his rights in this application to the
Company. The second patent application relates to the use of Anticort(TM) by
individuals infected with HIV in order to decrease the side effects of anti-HIV
drug therapy. Among the protections which the Company believes would be
available to it upon the filing of patent applications and issuance of
appropriate patents would be a patent relating to the method of manufacturing
the Company's Anticort(TM) product, which method the Company believes is
currently protected as a trade secret. The Company may also prepare and file
applications for additional patents, although neither he nor the Company can
anticipate when such applications, if any, may be filed or whether the Company
will be granted any additional protection for its intellectual property in the
United States or in other countries. While these patents are pending, the
Company cannot estimate when these will be issued, or rejected. Also, a suit has
been filed against the former Director and others as to the issue of
misrepresentations and other claims by the Company in relation to the transfer
of rights to Anticort in exchange for shares. See, "Legal Proceedings."
While Management believe that the Company has protected certain of its
intellectual property rights, and upon the filing of additional patent
applications may further strengthen the protection of its intellectual property,
the Company cannot assure any existing or prospective owner of its securities
that such protections will be a safeguard in all circumstances against the
duplication of the Company's product. The Company cannot provide any assurance
that any patents which may be issued will not be challenged, invalidated or
circumvented, or that any rights granted to the Company under those patents will
provide proprietary protection or competitive advantages to the Company. Also,
the Company has relied, and will continue to rely, on trade secrets to protect
its technology, especially where patent protection has not been applied for or
may not be appropriate or obtainable. The Company has tried to protect its
technology and processes in part by confidentiality agreements with its
employees, consultants and certain contractors. However, these agreements could
be breached or, in any event, the Company's trade secrets could otherwise become
known or independently discovered by competitors, as to which the Company may
have no intellectual property protection.
Markets for Anticort(TM)
Readers are cautioned that there is no guarantee of the Company successfully
obtaining the necessary governmental approvals for Anticort(TM).
Initially the Company will focus on the use of Anticort(TM) in HIV+
patients. It was recently estimated that 33.8 million people worldwide are
infected with HIV, 16.3 million dead already, 5.3 new cases in 1999 alone, and
16,000 newly infected people every day. As funds become available to the Company
to continue research and development of the anti-cortisol formulation, the
Company will begin to direct its attention to Alzheimer's, Parkinson's, Cancer
and depression diseases. This focus will require the successful completion of
clinical studies.
Readers are cautioned that there is no guarantee of the Company successfully
obtaining the necessary governmental approvals for Anticort(TM).
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Competition
The Company anticipates facing competition in the HIV and AIDS markets,
including by companies testing drugs to increase immune resistance
(immuno-modulators) of these patients. Among the competitors are companies that
are researching gamma interferon (Genentech) and Interleukin 2 (IL-2 Chiron)
both in San Francisco and the GMSCF (granulocyte macrophage colony stimulating
factor) by Immunex, in Seattle.
The Company may also face competition from companies that are directing
their AIDS research towards attacking the virus, with a number of leading
pharmaceutical companies actively engaged in research and development of
protease inhibitors and other anti-HIV agents in the fight against HIV and AIDS,
with at least 12 products of this type present on the market.
The pharmaceutical industry is highly competitive, with numerous large and
small companies performing research and development. While the Company realizes
it may be competing with companies that have greater resources, it is confident
that, if and when its Anticort(TM) product receives FDA approval, it can
effectively market its products and maintain a competitive position.
On-Going Clinical Studies
Readers are cautioned that there is no guarantee of the Company successfully
obtaining the necessary governmental approvals for Anticort(TM).
Aids Research Alliance Clinical Project. On November 18, 1996, the Company
submitted an Investigational New Drug Application ("IND") to the FDA titled:
A PHASE II RANDOMIZED PLACEBO CONTROLLED DOUBLE BLIND STUDY WITH ANTICORT(R)
(BRAND NAME OF PROCAINE HYDROCHLORIDE) IN HIV POSITIVES.TREATMENT-NAIVE,
ASYMPTOMATIC INDIVIDUALS, WITH CD4 COUNTS BETWEEN 200 AND 500 CELLS/MMP AND
VIRAL LOADS OF MORE THAN 10,000 COPIES.
The FDA granted the Company IND# 52,663, and based upon documentation received,
approved commencement of clinical studies. The Company believes this is
significant. The significance of the FDA granting IND# 52,663 and allowing the
clinical study to commence is a recognition that our documentation has merit, in
the sense that there are no red flags to potential side effects of the product.
Still, the pending studies are still needed to document not only the safety of
the product, but also its efficiency. While exact figures are not known, our
knowledge of the industry leads us to estimate that a majority or more of the
applications filed with the FDA by other applicants are rejected. We believe the
FDA allowing us to proceed is an important milestone in the development of the
product, and is one we have successfully achieved. This, however, should not be
interpreted that we have final FDA approval. During 1997, due to changing rules
issued by the FDA, regarding the use of naive (untreated) versus treated HIV+
patients, and following extensive conferences with FDA representatives, the
Company was advised to modify its initial protocol into a Phase Ib/IIa study, by
which the phase Ib would consist in a dose related study, i.e., to see which
concentration of Anticort(R) would be most effective, if any, and devoid or
minimal side effects, followed by the double blind study (Phase IIa). The
purpose of this study in HIV positive patients under anti-HIV therapy is to
stimulate or bring back to life an immune system severely damaged by cortisol.
As it has become known recently, while the level of HIV under anti-HIV therapy
drops below detectable levels, the immune system very often does not respond to
the therapy. In that event, the patient becomes predisposed to a new virus
proliferation and to the appearance of opportunistic or infectious diseases and
cancers of the Kaposi sarcoma type, as well as others. The Company had selected
the AIDS Research Alliance of Los Angeles to conduct its clinical studies at a
cost of approximately $660,000. A protocol for a clinical study with Anticort(R)
along these lines was finalized, submitted to the FDA, and approved without any
changes. As of July 1, 1999, the AIDS Research Alliance has completed patient
selection and received the necessary supply of Anticort(R) for the study. As of
January 2000, the AIDS Research Alliance has completed the first step of the
study (i.e. the first dose of ANTICORT(TM)) and is enrolling patients for the
second step, (second dose). Currently approximately $475,000 has been paid to
the AIDS Research Alliance. If the Company cannot continue to pay the Alliance
as the study progresses, or delays in paying, the Alliance may cease or
terminate its work, with a failure to continue the study bringing the Company to
a standstill and material adverse effect to the Company.
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Canadian Study. The Company has entered into a license with Altachem
Pharmaceuticals, a Canadian company formerly called Steroidogenesis Inhibitors
Canada, Inc. ("Altachem") as exclusive licensee of Anticort in Canada. (See
"Licensing Agreements," below.) Altachem has informed the Company that the
Canadian Health Protection Branch ("HPB"), which is the Canadian equivalent of
the FDA, has granted an approval which will permit a clinical using Anticort(R)
following the same protocol that the Company is using in the United States. The
purpose of the Canadian study is to support and extend the results of the
domestic study and eventually to lead to the approval of Anticort(R) in Canada.
The Company is currently involved in litigation with Altachem, as disclosed
under the Section titled "Legal Proceedings" below. Since the Company is,
nevertheless, pursuing its own studies, Management's opinion is that the loss of
the Canadian study will not have a material impact on the Company or its plans.
Romanian Study. A clinical study using Anticort(TM) Infacaps, the junior
version of adult Anticort(R), was in progress in Romania following approval in
October 1998 by the Romanian equivalent of the FDA (the Comisia de Medicamente).
This study, carried out in five groups of HIV- positive children, (four groups
on variable doses and one on a placebo), was intended to boost the immune system
of children damaged by HIV and elevated levels of cortisol but has not been
completed. Due to recent changes in FDA acceptance of clinical data with (by)
foreign countries, the Company has been advised to reconsider proceeding with
trials in Romania. A final decision has not been reached in this regard. The
Company is in the process of reviewing the issue of the Romanian study, the
viability of current plans, recommendations, and issues involving the status of
the Romanian project.
Outside the United States, the Company ability to market its product will also
be contingent upon receiving marketing authorizations from the appropriate
regulatory authorities. The foreign regulatory approval process, in summary, may
often include all or many of the risks and issues associated with FDA approval
set forth above. The requirements governing the conduct of clinical trials and
marketing authorizations vary widely from country to country.
Marketing Strategy
At the present time, the Company plans to manufacture Anticort(TM) itself
and market it through licensees, wholesalers and pharmacies. Variables that will
impact the pricing structure include demand, cost, competitors and strategic
objectives. The Company intends to eventually generate sales of the Anticort(TM)
product by setting a compelling price point and by developing, with the help of
our consultants, a marketing strategy to create end user demand for the product.
The Company intends to price its Anticort(TM) product at a relatively low,
affordable level as part of this strategy, which is under development and we
hope to complete prior to, hopefully, final FDA approval.
The Company is limited in the final formulation and execution of its
marketing strategies to not only conform to the condition of the Company,
including its resources, at appropriate points in the future, but also to
regulatory provisions of the FDA as to marketing and sale. When the Company has
it product in late stages of the FDA process, the Company plans to hire a
marketing firm, or consultant, that specializes in the pharmaceutical industry,
relating to marketing and sales, and the Company intends to then finalize its
marketing and sales plans.
Licensing Agreements
In February 1996 SI, Inc., our Subsidiary, entered into a licensing
agreement with Altachem. The agreement grants Altachem exclusive rights to
manufacture, use, distribute and sell Anticort in Canada for $300,000, which has
been paid to SI, Inc. Altachem also has the right to acquire licensing rights in
certain other British Commonwealth countries on payment of licensing fees. The
term of the agreement is ten years, commencing when the Canadian government
grants all approvals necessary for the sale of the licensed products in Canada.
It is believed that the Agreement is terminated, and the parties are in
litigation. See the section herein, "Legal Proceedings."
In order to increase distribution and market share, the Company intends to
enter other licensing agreements for its products. The Company anticipates that
the principal elements of any licensing agreement would be the following:
-Definition of the territory and cash advance at the signing of the contract.
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-The licensee will finance all the work, research and other matters needed to
secure their own regulatory agency approval for Anticort(R). Conversely, some of
the licensing countries might elect to wait until the Company receives FDA
approval in the United States. In this event, the Company would subsequently
send them the United States eventual approval plus the necessary documentation
so the licensees would be able to secure their own approval without the time and
money required for their own testing.
-Royalties representing a minimum guaranteed dollar amount, subject to annual
increases.
The Company is presently in negotiation with foreign representatives to
license Anticort in other countries. The Company is seeking additional licensing
agreements and joint ventures with entities interested in AIDS and/or viral
hepatitis B drugs, with a view to having Anticort tested and approved in other
countries.
The Company also engaged, at the end of 1998, a consultant, for 200,000
shares, to help with services in connection with advising the Company on
business strategies, identifying new business opportunities & licenses,
including identifying other companies involved in pharmaceutical development as
potential partners or targets for acquisition.
Employees
The Company has five full-time employees.
Description of Property
The Company's executive offices are currently located at 101 Convention
Center Drive, Suite 310, Las Vegas, Nevada 89109. The 1,100 square foot office
space is rented at a price of $2,650 per month. The Company does not have any
laboratory or research facilities.
Legal Proceedings
On November 4, 1999 the Company filed suit in Nevada, District Court, Clark
County, Case No. A410592, against Altachempharma, Ltd. of Alberta, Canada,
formerly known as Steroidogenesis Inhibitors Canada, Inc. and Steroidogenesis
Inhibitors Canada, Inc. (the "Defendants") seeking a declaratory judgment,
damages and other relief as determined by the Court in relation to a dispute
with the Defendants. Steroidogenesis Inhibitors Canada, Inc. ("SI Canada"), is
the licensee for the Canadian territory as to the ANTICORT(TM) product, and
Altachempharma, Ltd. is believed to be the parent, the Company claimed that the
Defendants have interfered with the arrangements which were made with Pashua
Partners, L.P. ("Pashua"), an entity affiliated with Mr. Wollen, which intended
to provide funding and other benefits to the Company. While the Company was in
the course of finalizing arrangements with Pashua, the Defendants took the
position that they were entitled under the License Agreement to step into the
shoes of Pashua as to the pending transaction, even though they were a mere
licensee for one Territory. We suffered damages in that this dispute caused the
financial backers to terminate the anticipated $10 million funding and increased
the risk for future financing considering the Company had to start from ground
zero to obtain financing and all the time factors that go with it. The Nevada
suit was later dismissed on grounds that the Defendant, from Canada, could not
be subjected to the suit in Nevada. On or about January, 2000, a suit was filed
in the Queens Bench in Calgary Canada by the Defendant against the Company
seeking to enforce the Defendant's position above, and the Company retained
counsel in Canada to represent and assist the Company. The Company believes that
the Agreement with SI Canada providing it with a license as to Canada is
terminated due to the actions of the licensee in breach of contract. The Company
is asserting the claims from the Nevada suit in the Canadian proceeding.
We are involved in suits with a former Director. We do not believe these suits
have a material affect on us, though they are time consuming and involve the
typical disadvantages of litigation, such as legal costs and negative
perceptions, though we believe suits are more prevalent for companies these
days. A suit, filed earlier this year though its legality and timing is in
question by the Company, continues in the District Court, Clark County, Nevada,
which suit was instituted by the former Director, Alfred T. Sapse. The
allegations and positions of the parties in the suit, including that of the
Company and its Directors, which have been included in the suit, are numerous
and subject to additions, and changes in amendments, pleadings, motions, and
hearings, and involve claims that the Board should not have compensated persons,
including the officers and Board members, with shares of stock, the Company
should not be allowed to sell shares of stock, the Company should hold an annual
shareholders meeting to appoint Directors, that the former Director does not
have sufficient shares in the Company to bring one or more of the claims, that
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<PAGE>
the purported addition of alleged shareholders into the suit by the former
Director, in various numbers depending upon what date the tally is made, is not
legally valid, and other points. A total of 3,000,000 shares issued by the Board
is at issue, such shares being "restricted securities" subject to SEC Rule 144,
and until the disposition of the suit, these shareholders cannot sell or
transfer such shares. While various rulings have been issued, the Board will not
issue additional shares to itself until the matter is resolved upon advice of
litigation counsel to the Company, which also represents the Board, in
compliance with a court order that the Board not do so. In a suit by the former
Director bringing claims of defamation, also in Clark County, Nevada, the Court
ruled in favor of the Company on a summary judgment motion, against the former
Director. In another suit by the Company, also in Clark County, Nevada, against
the former Director, Cortisol Medical Research, Inc., allegedly owned by the
former Director, and others, the Company is seeking to set aside shares of stock
previously issued to one or more of such persons, among the positions being that
the rights transferred into the Company as to the Anticort drug are not what was
represented to the Company and so the shares should be cancelled. In a suit to
obtain a restraining order on the shares of stock relating to the former
Director, instituted by the Company in Texas, which is the state where our
transfer agent in located. The Court issued a Temporary Restraining Order in
favor of the Company on November 13, 2000, and, after deliberations by the
parties including the former Director, the Court again, on December 15, 2000,
issued a Temporary Injunction Order in favor of the Company against the former
Director maintaining the restraining order. The Company believes it will be
successful, for it and Management, in all suits involving the former Director.
The foregoing is a summary of the current suits. The Company intends to
vigorously pursue and defend these suits upon advice of counsel.
MANAGEMENT
----------
The following table sets forth the Directors and executive officers of the
Company, their ages, and all offices and positions with the Company. Officers
and other employees serve at the will of the Board of Directors.
Term Served As Positions
Name of Director Age Director Since With Company
----------------- --- -------------- ------------
Dr. Janet Greeson 57 Oct. 1997 Director, C.E.O.,
Secretary
Albert Wollen 54 Feb. 2000 Director, President
Eugene Boyle 35 June 2000 Director, Chief Financial Officer,
Chief Operating Officer
Welter Holden 68 Oct. 1997 Director
Paul Burkett 77 Oct. 1997 Director
Cynthia Thompson 40 March 1999 Director
H. Thomas Winn 60 March 1999 Director
Janet Greeson, Ph.D., has been a Director, Secretary and Executive Vice
President, since October 31, 1997, and President from June, 2000, until October
30, 2000, and October 30, 2000 she was appointed Chief Executive Officer. She
holds a doctorate in Psychology from Columbia-Pacific University, and, Masters
of Arts degree from Rollins College, Dr. Greeson is an entrepreneur who has
grown numerous start up companies into successful operations. In the early
1990's she sold her National Psychiatric Treatment Programs to Columbia/HCA.
Since she joined the Company she has managed and undertaken the process of
appropriate filings with the SEC, including the quarterly, annual statements,
Form 10SB filing, successfully undertaken, to have the Company become a
"reporting company" and satisfy the related NASD requirement that the Company be
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<PAGE>
reporting to trade on the Bulletin Board (to help accomplish this, among other
things, she coordinated all the interactions with Management, the attorney,
auditor, and Edgar filings companies). Also, the Company received an IND from
the Federal Drug Administration for clinical testing under FDA Phase IB/IIA
status for a drug that, in the opinion of Management, holds promise to help
combat HIV/AIDS. She had coordinated the appropriate filings with the FDA to
accomplish this. In addition, she had a successful primary bid for Nevada's U.S.
Congressional seat in 1994. After surprisingly winning the primary utilizing
zero advertising dollars, she went on to campaign and was endorsed as the
Democratic Nominee for the State of Nevada, even though she did not win the seat
(it was thought due to a lack of time). She also serves on the Advisory Board of
Directors of Maxheal Inc., a company pursuing the sale of various
pharmacological products and sits on the Board of Restaurant Connections
International, Inc., a company with approximately 13 Pizza Hut licensed
locations in Brazil.
Albert Wollen has been a Director, and the Chief Executive Officer, of the
Company, since February 14, 2000, and became President on October 30, 2000. He
has pursued the formation and development or acquisition of technology,
biotechnology and similar businesses in the U.S. for the past five years. From
1985 to February 1993, he was an executive with Ladenburg Thalmann & Co., an
investment banking and brokerage firm, located in New York, serving as Syndicate
Manager, Executive Vice President, Director of Capital Markets, and a Director.
From approximately April, 1995, he was Chairman of the Board of Telecom
Technologies, Inc., Pamona, California, and participated in the sale of the
Company to AVT Corporation, a publicly trading company (NAS:AVTC), until
January, 1996. From approximately February, 1995, to December, 1999, he was one
of four co-founders and Managing Directors of Raintree Capital, L.L.C., a
limited liability company which founded a company called First America
Automotive, devoted to the sale of new automobiles of various manufacturers.
From May of 1998 until September of 1999, he was a Director and the Executive
Vice President of Automotive Realty Trust of America, a private real estate
investment trust. From November, 1998, he has been the President and owner of a
consulting company called Windermere Capital, L.L.C., which provides general
business consulting. From November, 1999, he has been a Director of Mission
Capital Partners, L.L.C., a company in the consolidation and merger and
acquisition business.
Eugene Boyle, MBA, currently pursuing a law degree, serves as the Chief
Financial Officer, Chief Operation Officer, and a Director of the Company since
June 16, 2000. Mr. Boyle studied at Norte Dame University, and also obtained a
degree in Computer Engineering and Applied Mathematics from Tulane University in
1987. He is a Veteran and served as a Lieutenant in the U.S. Navy as a Damage
Control Officer on a U.S. Naval Frigates during the Gulf War. He then obtained a
Masters of Business Administration (MBA) from Babson College, in 1993. He is
currently in his second year of Law School at Concord University, Los Angeles,
CA and is a pursuing studies as a chartered financial analyst and a certified
financial planner designation. Mr. Boyle has held management, board positions
and served as a consultant with several companies, helping companies with
business plans relating to bridge financing, private placements, and SEC filings
since 1995. Previously, Mr. Boyle was employed by Columbia/HCA (COL: NYSE) as
Chief Operations Officer for the Southeast region and helped accomplish numerous
mergers and acquisitions for different hospitals (during his tenure, he was
responsible for reducing operational expenses by hundreds of thousands of
dollars in the first few months). Mr. Boyle also has passed the series 7 and
series 63 exams, securities brokerage registered representative, though he is
not a practicing representative.
Welter "Budd" Holden has been a Director, since October 31, 1997. For the past
five years, Mr. Holden, who acts as an independent consultant, has advised
various projects in, primarily, Hollywood and Los Angeles, California, as to
architectural and interior design. Mr. Holden is a graduate of the Pratt
Institute in Brooklyn, New York, where he received a degree in architectural and
interior design. He was an art director for the first colorized live television
variety shows broadcast by NBC in the 1950's and 1960's. He has assisted the
Company in recruiting and networking patients for clinical trails. He is the
coordinator or liaison to the Board as serving under a newly formed
Business/Scientific Advisory Board, in formation.
Paul J. Burkett, has been a Director, since October 31, 1997. Mr. Burkett has
been involved in the mining industry for over forty years. His business over the
past five years has concentrated on independent mining and real estate ventures.
From 1986 to the present, he remains a Director on the Board of Aaminex Capital
Corporation, Houston Texas, which is a company that owns inactive mining
properties in Nevada and shares of stock in Nevada Gold and Casinos, Inc. From
approximately July, 1993 to the present, he has been a Vice President and a
Director of Nevada Gold and Casinos, a public company, a part owner of a gaming
casino in Colorado. From March, 1998, to the present, he has been the President
of Goldfield Resources, a wholly owned subsidiary of Nevada Gold and Casinos.
Goldfield Resources owns approximately 500 non-active mining claims.
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Cynthia C. Thompson, has been a Director, since March 31, 1999. Ms. Thompson is
the Chief Executive Officer and founder, since May, 1998, of United States
Service Company, a nationwide service company serving food and beverage original
equipment manufacturers and food service vendors. In May, 1998 Ms. Thompson
founded and has been President, of Intuitive Solutions International, Inc., a
Houston, Texas, firm engaged in capital formation and operations management
consulting. Ms. Thompson has also participated in providing debt and equity
financing to Nevada Gold & Casinos, Inc., of whom Messrs. Winn and Burkett are
directors. From approximately May, 1987 to May, 1993, Ms. Thompson was
representative at E.F. Hutton/Shearson Lehman Brothers, Austin Texas, a
brokerage firm, in the Regional Institutional Group department assisting with
bank and institutional accounts. From May, 1993, to May, 1994, she was a
corporate accounts representative with Oppenheimer & Company, Inc., a brkerage
firm. From May, 1994, to May, 1998, she was the Director, Corporate Finance
department, of D.E. Frey & Company, Inc., a brokerage firm.
H. Thomas Winn, has served as a Director, since March 31, 1999. Mr. Winn has
served as the Chairman, Chief Executive Officer, President and a Director of
Nevada Gold & Casinos, Inc., a public gaming and real estate development firm,
since January 1994. He has also served as Chairman and President of Aaminex
Capital Corporation, a consulting and venture capital firm since 1983.
No Director or executive officer of the Company has any family relationship with
any other director or executive officer of the Company, except that Mr. Boyle is
the son of Dr. Greeson.
Directors serve until the next annual meeting of shareholders or until their
successors are elected and qualified. Officers serve at the discretion of the
Board of Directors.
The Company is formed, by determination of the Board of Directors, an Audit
Committee, and a Compensation Committee, and has also formed a
Business/Scientific Advisory Board, with all of these under completion as to who
will be appointed, policies and meeting schedules, with, however, Director
Holden to act as initial Chair of the Business/Scientific Advisory Board.
Executive Compensation
The following tables and notes present for the two years ended December 31,
1999, the compensation paid by the Company to the Chief Executive Officer and to
the Company's most-highly compensated executive officers, other than the Chief
Executive Officer, who were serving at December 31, 1999.
Summary Compensation Table
Long-Term Compensation
Awards Payouts
-------------------------- ---------------
Restricted Securities
Name and Stock Underlying All Other
Principal Position Year Salary($) Award(s)($) Options/SARs(#) Compensation($)
(a) (b) (c) (f) (g) (i)
--------------------------------------------------------------------------------
Alfred T. Sapse 1999 $60,000 $ 5,000(1) -- --
1998 $12,000 -- -- --
Dr. Janet Greeson 1999 $60,000 -- -- --
1998 $55,000 $500,000(2) -- --
Tom Kubota 1999 $-0- $ 5,000(1) -- --
1998 $-0- -- -- --
1997 $-0- $437,500(3) -- --
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-------
(1) The value of the restricted stock award has been determined by multiplying
the shares awarded by the average of the high and low bid price, on March
31, 1999 of $1.43, less a discount considering the restriction.
(2) The value of the restricted stock award has been determined by multiplying
the shares awarded by $2.50 which is the closing bid price of the Company's
common stock on the available date closest to the award in April 1998.
(3) The value of the restricted stock award has been determined by multiplying
the shares awarded by $.4375 which is the sole closing bid price available
to the Company for its common stock in calendar year 1997.
(4) The restricted shares are held by Nanko Investments, Inc., a company owned
and controlled by Mr. Kubota.
As of the year ended December 31, 1999, the number and value of the
aggregate restricted stockholdings of the persons named in this table, including
shares held by them indirectly, was as follows:
Name Shares Value
---- ------ -----
Alfred T. Sapse 3,700,000 $1,619,012
Tom Kubota 1,300,000 $ 568,750
Janet Greeson 773,000 $ 338,187
Note: Mr. Sapse, and Mr. Kubota are no longer members of Management.
The value of the restricted shares has been determined on the basis of the
closing bid price of $.4375 for the Company's shares of Common Stock on December
31, 1999.
Dividends will be paid on any shares of restricted stock awarded to any of
the named officers or their affiliates.
PRINCIPAL SHAREHOLDERS
----------------------
The following table sets forth information regarding beneficial ownership
of our common stock as of December 15, 2000 by all persons known by us to own
beneficially 5% or more of the outstanding shares of our common stock, each
director, and all executive officers and Directors as a group:
Name and Address of Number of Shares Percentage
Beneficial Owner of Beneficially Owned Ownership of Class(1)
----------------------- --------------------- ---------------------
Welter Holden(2)(3)(6)(8) 200,000 .8%
205 Bradford Street
Provincetown, MA 02657
Dr. Janet Greeson(2)(6)(8) 1,200,000 4.8%
8058 Pinnacle Peak Ave.
Las Vegas, NV 89113
Paul Burkett(2)(3)(6)(8) 301,500 1.2%
4518 Whitset
Studio City, CA 91604
Cynthia Thompson(2)(3)(5)(6)(8) 234,000 .9%
3040 Post Oak Blvd. #695
Houston, Texas 77056
H. Thomas Winn(2)(3)(6)(8) 140,000 .6%
3040 Post Oak Blvd. #675
Houston, Texas 77056
Page 25
<PAGE>
Cortisol Medical Research(4) 1,555,400 6.2%
2915 W. Charleston #7
Las Vegas, NV 89102
Albert "Bert" Wollen (2)(6)(7)(8) 1,200,000 4.8%
Windermere Capital
5847 San Felipe, S. 310
Houston TX 77057
Eugene Boyle (2)(6)(8) 1,819,250 7.0%
101 Convention Center Drive #310
Las Vegas, Nevada, 89109
All officers and Directors 5,094,750 20.0%
as a group (7) persons (2)(6)
---------
(1) Calculated on the basis of 26,235,593 shares of Common Stock issued and
outstanding and percentages are rounded and so are approximates.
(2) Officer and/or Director.
(3) The Director owns less than one percent.
(4) Includes 1,555,400 shares held by Cortisol Medical Research, Inc., subject
to dispute by the Company. See, "Legal Proceedings."
(5) 25,000 shares are held by Intuitive Solutions International, Inc., which
Ms. Thompson controls, and 10,000 are held in her name.
(6) Includes, in accordance with Rule 13d-3, shares an officer or Director may
be deemed the beneficial owner, except note: Mr. Boyle is a son of Dr.
Greeson, and they each disclaim beneficial ownership of each other's
shares.
(7) Includes 200,000 shares held by Windermere Capital, L.L.C., a company he
owns and controls.
(8) Includes shares issued to the Directors and that are the subject of a suit.
See, " Legal Proceedings."
SELLING SHAREHOLDERS
--------------------
Certain of our shareholders are offering a total of 10,000,000 shares of
common stock pursuant to this prospectus, consisting of the following:
a. up to 9,775,000 shares, which we currently estimate is the maximum number of
shares that are purchasable pursuant to a $20,000,000stock purchase agreement
entered into with Fusion Capital Fund II, LLC. ("Fusion Capital") and 1,054,945
shares which we already issued to Fusion Capital as a commitment fee (see "The
Fusion Transaction)";
b. 25,000 shares of issued and outstanding common stock in the name of J.G.
Capital, Inc. (see "Selling Shareholders") ;
c. 100,000 shares, underlying warrants, to J.G. Capital, Inc., and another
100,000 shares, underlying warrants, to Alliance Financial, LLC., which 200,000
shares total are to be issued, in connection with various agreements with
Josephberg Gross & Co., Inc. and Alliance Financial, LLC., upon exercise of
warrants by such firms;
d. 50,000 shares issuable under Warrants to Generation Capital Associates, an
Atlanta, GA, firm ("Generation Capital"); and
e. a total of 50,000 shares issuable under Warrants to Douglas Bessert.
The following table sets forth certain information with respect to the ownership
of our common stock by selling shareholders as of December 15, 2000. Unless
otherwise indicated, none of the selling shareholders has or had position,
office or their material relationship with us within the past three years.
Page 26
<PAGE>
OWNERSHIP OF SHARES OWNERSHIP OF SHARES
OF COMMON STOCK OF COMMON STOCK
PRIOR TO OFFERING(1) AFTER OFFERING(2)
---------------------- --------------------
SELLING SHAREHOLDER SHARES PERCENTAGE SHARES PERCENTAGE
------------------- --------- ---------- -------- ----------
Fusion Capital Fund II, LLC (2) 1,054,945 4.2% -- --
222 Merchandise Mart Plaza,
Suite 9-112
Chicago, IL 60654
J.G. Capital, Inc.(3) 25,000 .1% -- --
633 Third Avenue
New York, NY 10017
Alliance Financial, LLC (3) -- -- -- --
310 Little Elk Creek Ave.
Snowmass, Colorado 81654
Generation Capital Associates -- -- -- --
333 Sandy Springs Circle
Suite 230
Atlanta, GA 30328
Douglas Bessert -- -- -- --
-------
(1) Does not include shares of common stock issuable upon the exercise of
warrants, 100,000 each, to Alliance and Josephberg, and 50,000 each to
Generation Capital and Douglas Bessert, but does include 1,054,945 shares
already issued to Fusion Capital, and 25, 000 shares already issued to
Josephberg.
(2) Given the agreement with Fusion Capital provides various terms as to the
number of the issuance of the shares, we cannot readily estimate what will be
the ownership of each of the selling shareholders after the offering, but
believe it may includes 1,054,945 shares issued to Fusion Capital as a
commitment fee in connection with the execution of the common stock purchase
agreement and an estimated 9,775,000 shares which are purchasable under the
common stock purchase agreement. The common stock purchase agreement provides
that Fusion Capital may not beneficially own in excess of 9.9% of our
outstanding common stock. See "The Fusion Transaction."
(3) Assumes that all shares are sold pursuant to this offering and that no other
shares of common stock are acquired or disposed of by the selling shareholders
prior to the termination of this offering. Because the selling shareholders may
sell all, some or none of their shares or may acquire or dispose of other shares
of common stock, no reliable estimate can be made of the aggregate number of
shares that will be sold pursuant to this offering or the number or percentage
of shares of common stock that each selling shareholder will own upon completion
of this offering.
CERTAIN TRANSACTIONS
--------------------
The following transactions are believed by Management to be on terms as
fair to the Company as those the Company could have obtained from unrelated
third parties and arms-length negotiations.
In April 1999 the Company issued 1,000,000 shares each to Mr. Alfred T.
Sapse, a former Director, and Dr. Greeson or their nominees in consideration of
their services to the Company. Also at that time, the Company issued 100,000
shares to each of the directors other than Mr. Sapse and Dr. Greeson in
consideration of their service as directors of the Company.
The Company paid Renee, Inc., whose President, Renee Sapse, is Sapse's
wife, $24,000 in 1998 and $12,000 in 1999 for office space and maintenance of
Sapse's auxiliary office.
Page 27
<PAGE>
The Subsidiary, Steroidogenesis Inhibitors, Inc., acquired, for 5,100,000
shares, the ANTICORT technology rights from an entity controlled by the
President of the Company, and also by agreeing to pay an additional $250,000 in
the event of an offering (Private or IPO) of $5,000,000 or more, and licensing
rights on a sliding scale.
Subsequently, the Subsidiary, Steroidogenesis Inhibitors, Inc., in exchange
for foregoing a debt of $108,968, by the President to the Subsidiary, secured
the cancellation of the $250,000 committed in the event of an offering and the
cancellation of licensing rights mentioned above.
Mid 1999, before Mr. Wollen became an officer of the Company, his company,
Windermere Capital, L.L.C., advanced, on behalf of Pashua Partners, a company
which was under negotiations for a funding of the Company, the sum of $50,000 as
an initial payment of a $500,000 intended loan to the Company. The loan was not,
including terms, finalized since the funding transaction was not completed due
to matters relating to certain litigation. See, Legal Proceedings." The Company
and Mr. Wollen, have finalized the arrangement for the repayment of this
advance, by Mr. Wollen having cancelled the debt in exchange for 200,000 shares
of common stock, in restricted form with reference to SEC Rule 144.
DESCRIPTION OF SECURITIES
-------------------------
General
The transfer agent and registrar for our Company is Securities Transfer Corp.,
Dallas, Texas.
Common Stock
The issued and outstanding shares of common stock are fully paid and
non-assessable. Holders of common stock are entitled to one vote for each share
held of record on all matters submitted to a vote of stockholders and may not
cumulate their votes for the election of directors. Shares of common stock are
not redeemable, do not have any conversion or preemptive rights and are not
subject to further calls or assessments once fully paid.
Holders of common stock will be entitled to share pro rata in such
dividends and other distributions as may be declared from time to time by the
Board of Directors out of funds legally available therefore. Upon our
liquidation or dissolution, holders of shares of common stock will be entitled
to share proportionally in all assets available for distribution to such
holders.
Shares Eligible for Future Resale
---------------------------------
Future sales of substantial amounts of common stock pursuant to Rule 144
under the Securities Act of 1933 or otherwise by certain shareholders could have
a material adverse impact on the market price for the common stock at the time.
There are presently approximately 26,235,593 outstanding shares of our common
stock held by Management and other shareholders which are deemed "restricted
securities" as defined by Rule 144 under the Securities Act. Under certain
circumstances, these shares may be sold without registration pursuant to the
provisions of Rule 144. In general, under Rule 144, a person (or persons whose
shares are aggregated) who has satisfied a one-year holding period may, under
certain circumstances, sell within any three-month period a number of restricted
securities which does not exceed the greater of one (1%) percent of the shares
outstanding or the average weekly trading volume during the four calendar weeks
preceding the notice of sale required by Rule 144. In addition, Rule 144
permits, under certain circumstances, the sale of restricted securities without
any quantity limitations by a person who is not an affiliate of ours and has
satisfied a two-year holding period. Any sales of shares by shareholders
pursuant to Rule 144 may have a depressive effect on the price of our common
stock. See, "Legal Proceedings," as to shares included in the ownership of
Management that are the subject of a dispute.
No prediction can be made as to the effect, if any, that sales of shares or
the availability of shares for sale as described above will have on the market
prices of the common stock prevailing from time to time. Nevertheless, the
possibility that substantial amounts of common stock may be sold in the public
market may adversely affect prevailing prices for the common stock and could
impair our ability to raise capital in the future through the sale of equity
securities. See "Risk Factors -- Future sales of common stock could depress the
price of our common stock."
Page 28
<PAGE>
PLAN OF DISTRIBUTION
--------------------
The common stock offered by this prospectus is being offered by the selling
shareholders, Fusion Capital Fund II, LLC., J.G. Capital, Inc. and Alliance
Financial, LLC., upon exercise of warrants by such firms. See "Selling
Shareholders." The common stock may be sold or distributed from time to time by
the selling shareholders, or by donees or transferees of, or other successors in
interests to, the selling shareholders, directly to one or more purchasers or
through brokers, dealers or underwriters who may act solely as agents or may
acquire such common stock as principals, at market prices prevailing at the time
of sale, at prices related to such prevailing market prices, at negotiated
prices, or at fixed prices, which may be changed. The sale of the common stock
offered by this prospectus may be effected in one or more of the following
methods:
ordinary brokers' transactions;
transactions involving cross or block trades or otherwise on the
Nasdaq Bulletin Board;
purchases by brokers, dealers or underwriters as principal and resale
by such purchasers for their own accounts pursuant to this prospectus;
"at the market" to or through market makers or into an existing market
for the common stock;
in other ways not involving market makers or established trading
markets, including direct sales to purchasers or sales effected
through agents;
in privately negotiated transactions; or
any combination of the foregoing.
In order to comply with the securities laws of certain states, if applicable,
the shares may be sold only through registered or licensed brokers or dealers.
In addition, in certain states, the shares may not be sold unless they have been
registered or qualified for sale in such state or an exemption from such
registration or qualification requirement is available and complied with.
Brokers, dealers, underwriters or agents participating in the distribution
of the shares as agents may receive compensation in the form of commissions,
discounts or concessions from the selling shareholder and/or purchasers of the
common stock for whom such broker-dealers may act as agent, or to whom they may
sell as principal, or both. The compensation paid to a particular broker-dealer
may be less than or in excess of customary commissions.
The selling shareholder Fusion Capital is an "underwriter" within the
meaning of the Securities Act of 1933, as amended, and Josephberg Gross & Co.,
Inc. and Alliance Financial, LLC., upon exercise of warrants by such firms and
sales in connection with this offering, may also be deemed underwriters. Any
broker-dealers who act in connection with the sale of the shares hereunder may
be deemed to be "underwriters" within the meaning of the Securities Act, and any
commissions they receive and proceeds of any sale of the shares may be deemed to
be underwriting discounts and commissions under the Securities Act.
Neither we nor the selling shareholders can presently estimate the amount
of compensation that any agent will receive. We know of no existing arrangements
between any selling shareholder, any other shareholder, broker, dealer,
underwriter or agent relating to the sale or distribution of the shares. At a
time particular offer of shares is made, a prospectus supplement, if required,
will be distributed that will set forth the names of any agents, underwriters or
dealers and any compensation from the selling shareholder and any other required
information.
We will pay all of the expenses incident to the registration, offering and
sale of the shares to the public other than commissions or discounts of
underwriters, broker-dealers or agents. The Company has also agreed to indemnify
Fusion Capital as the selling shareholder and related persons of Fusion Capital
against specified liabilities, including liabilities under the Securities Act.
Page 29
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company,
we have been advised that in the opinion of the SEC such indemnification is
against public policy as expressed in the Securities Act and is therefore,
unenforceable.
FUSION CAPITAL AND ITS AFFILIATES HAVE AGREED NOT TO ENGAGE IN ANY DIRECT OR
INDIRECT SHORT SELLING OR HEDGING OF OUR COMMON STOCK DURING THE TERM OF THE
COMMON STOCK PURCHASE AGREEMENT.
We have advised the selling shareholders that while they are engaged in a
distribution of the shares included in this prospectus it is required to comply
with Regulation M promulgated under the Securities Exchange Act of 1934, as
amended. With certain exceptions, Regulation M precludes the selling
shareholders, any affiliated purchasers, and any broker-dealer or other person
who participates in such distribution from bidding for or purchasing, or
attempting to induce any person to bid for or purchase any security which is the
subject of the distribution until the entire distribution is complete.
Regulation M also prohibits any bids or purchases made in order to stabilize the
price of a security in connection with the distribution of that security. All of
the foregoing may affect the marketability of the shares offered hereby this
prospectus.
LEGAL MATTERS
-------------
Law Offices of Richard Rossi, P.A., will give an opinion for us regarding
the stock offered in this prospectus.
EXPERTS
-------
Tabor and Company, P.C., independent certified public accountants, have
audited our consolidated financial statements at December 31, 1999 and 1998 and
for the two years then ended as set forth in their included report. We have
included our consolidated financial statements in the registration statement, in
reliance on their report given their authority as an expert in accounting and
auditing.
WHERE YOU CAN FIND MORE INFORMATION
-----------------------------------
We have filed a registration statement on Form SB-2 with the Securities and
Exchange Commission in connection with this offering. This prospectus does not
contain all of the information set forth in the registration statement, as
permitted by the Rules and Regulations of the Securities and Exchange
Commission. Whenever reference is made in this prospectus to any contract or
other document of ours, the reference may not be complete and you should refer
to the exhibits that are part of the registration statement for a copy of the
contract or document.
We also file annual, quarterly and current reports and other information
with the Securities and Exchange Commission. You may read and copy any report or
document we file, and the registration statement, including the exhibits, may be
inspected at the Securities and Exchange Commission's public reference room
located at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the
Securities and Exchange Commission at 1-800-SEC-0330 for further information on
the public reference rooms. Our Securities and Exchange Commission filings are
also available to the public from the SEC's website at: http://www.sec.gov.
Page 30
<PAGE>
INDEX TO FINANCIAL STATEMENTS
STEROIDOGENESIS INHIBITORS INTERNATIONAL, INC.
(D/B/A Samaritan Pharmaceuticals)
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
Independent Auditor's Report. F-2
Consolidated Balance Sheet as of December 31,
1999 and 1998. F-3
Consolidated Statements of Operations for the period
from Inception (September 5, 1994) to December 31,
1999 (Unaudited) and the Years Ended December
31, 1999 and 1998. F-4
Consolidated Statements of Stockholders' Equity (Deficit)
for the period from Inception (September 5, 1994) to
December 31, 1999 (Unaudited) and for the Years Ended
December 31, 1999 and 1998. F-5
Consolidated Statements of Cash Flows for the period
from Inception (September 5, 1994) to December 31,
1999 (Unaudited) and for the Years Ended December
31, 1999 and 1998. F-6
Notes to Financial Statements. F-7
Unaudited Consolidated Balance Sheet as of September 30, 2000. F-12
Unaudited Consolidated Statements of Operations for the period
from Inception (September 5, 1994) to September 30, 2000,
and for the Nine Months and Three Months Ended September
30, 2000 and 1999. F-13
Unaudited Consolidated Statements of Stockholders' Deficit
for the period from Inception (September 5, 1994) to
September 30, 2000. F-14
Unaudited Consolidated Statements of Cash Flows for
the period from Inception (September 5, 1994) to
September 30, 2000 and for the Nine Months Ended
September 30, 2000 and 1999. F-15
Notes to Unaudited Consolidated Financial Statements. F-16
Page F-1
<PAGE>
REPORT OF INDEPENDENT AUDITOR'S
To the Board of Directors
Steroidogenesis Inhibitors International, Inc.
We have audited the accompanying consolidated balance sheets of Steroidogenesis
Inhibitors International, Inc. (a development stage company), and subsidiary as
of December 31, 1999 and 1998, and the related consolidated statements of
operations, stockholders' equity (deficit), and cash flows for the years ended
December 31, 1999 and 1998. All information included in these financial
statements is the representation of the owners of the Company. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit proves a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Steroidogenesis
Inhibitors International, Inc. and subsidiary as of December 31, 1999 and 1998,
and the results of its operations, and its cash flows the years ended December
31, 1999 and 1998, in comformity with generally accepted accounting principles.
The accompanying, cumulative statements of operations, stockholders' equity
(deficit) and cash flows regarding the period from inception (September 5, 1994)
through December 31, 1999, include activity prior to our engagement as auditors
upon which we have not performed procedures. Therefore, we do not express an
opinion on them.
/s/ Tabor and Company, P.C.
Tabor and Company, P.C.
Decatur, Georgia
March 06, 2000
Page F-2
<PAGE>
<TABLE>
<CAPTION>
STEROIDOGENESIS INHIBITORS INTERNATIONAL, INC.
(D/B/A Samaritan Pharmaceuticals)
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
ASSETS
December 31,
--------------------------
1999 1998
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 1,706 $ 494
Note receivable-related party 11,478 13,090
TOTAL CURRENT ASSETS ----------- -----------
13,184 13,584
----------- -----------
PROPERTY AND EQUIPMENT, net 30,168 18,501
OTHER ASSETS:
Patent registration costs 55,547 35,418
Purchased technology rights, net of accumulated
amortization of $23,610 and $12,713 for 1999 and
1998, respectively 85,359 96,256
Other 17,720 11,542
----------- -----------
TOTAL OTHER ASSETS 158,626 143,216
----------- -----------
$ 201,978 $ 175,301
=========== ===========
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 283,498 $ 68,905
Short-term borrowing 50,000 30,000
Short-term borrowings, related parties 132,000 --
----------- -----------
TOTAL CURRENT LIABILITIES 465,498 98,905
----------- -----------
DEFERRED REVENUE 250,000 250,000
SHAREHOLDERS' DEFECIT:
Common stock, 25,000,000 share authorized at .001 par,
15,443,909 and 10,004,212 issued and outstanding, respectively 15,444 10,005
Common stock reserved to complete recapitalization 111 124
Paid in capital in excess of par, net of offering costs 5,284,603 3,958,690
Accumulated deficit (5,813,678) (4,142,423)
----------- -----------
TOTAL SHAREHOLDERS' DEFECIT: (513,520) (173,604)
----------- -----------
$ 201,978 $ 175,301
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
Page F-3
<PAGE>
<TABLE>
<CAPTION>
STEROIDOGENESIS INHIBITORS INTERNATIONAL, INC.
(D/B/A Samaritan Pharmaceuticals)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
September 5,
1994
(Inception) to For the Year Ended December 31,
December 31, -------------------------------
1999 1999 1998
----------- ----------- -----------
(Unaudited)
<S> <C> <C> <C>
REVENUES: $ 50,000 $ 50,000 $ --
----------- ----------- -----------
EXPENSES:
General and administrative 5,150,699 1,309,874 943,258
Research and testing 657,601 379,491 50,648
Interest 13,945 13,945 --
Depreciation and amortization 41,433 17,945 16,066
----------- ----------- -----------
5,863,678 1,721,255 1,009,972
----------- ----------- -----------
NET LOSS (5,813,678) (1,671,255) (1,009,972)
Weighted average number of
shares outstanding 8,031,458 13,391,109 9,407,694
----------- ----------- -----------
Earnings per share , basic and diluted $ (0.72) $ (0.12) $ (0.11)
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
Page F-4
<PAGE>
<TABLE>
<CAPTION>
STEROIDOGENESIS INHIBITORS INTERNATIONS, INC.
(D/B/A Samaritan Pharmaceuticals)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
Shares
Number Par Value Reserved Paid in
of Common for Capital in
Shares Stock Conversion Excess of Par Warrants
----------- ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Inception at September 5, 1994
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 1,503,000 150 -- 46,545 --
Shares of parent redeemed, par value $.0001 (8,509,236) (851) -- 851 --
Shares of public subsidiary issued, par value $.001 7,689,690 7,690 820 (8,510) --
Loss, development stage, 1997 -- -- -- -- --
----------- ----------- ----------- ----------- -----------
December 31, 1997 7,689,690 7,690 820 2,474,430 5,000
Additional 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 400,000 400 -- 349,600 --
Loss, development stage, 1998 -- -- -- -- --
----------- ----------- ----------- ----------- -----------
December 31, 1998 10,004,212 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 3,569,250 3,569 -- 462,113 --
Shares issued pursuant to convertible debentures:
Detachable warrants issued -- -- -- -- 152,125
Detachable warrants exercised 100,000 100 -- 148,900 (149,000)
Debentures converted to stock 1,682,447 1,682 -- 640,438 --
Loss, development stage, 1999 -- -- -- -- --
----------- ----------- ----------- ----------- -----------
December 31, 1999 15,443,909 $ 15,444 $ 111 $ 5,276,478 $ 8,125
----------- ----------- ----------- ----------- -----------
Total
Paid in Total
Capital in Accumulated Shareholders'
Excess of Par Deficit Equity
------------- ----------- -----------
Inception at September 5, 1994
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 46,545 -- 46,695
Shares of parent redeemed, par value $.0001 851 -- --
Shares of public subsidiary issued, par value $.001 (8,510) -- --
Loss, development stage, 1997 -- (979,635) (979,635)
----------- ----------- -----------
December 31, 1997 2,479,430 (3,132,478) (644,538)
Additional conversion of parent's shares -- -- --
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 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
Shares issued in cancellation of debt -- -- --
Shares issued to public, net of offering costs 29,970 -- 30,000
Shares issued as compensation 41,367 -- 41,412
Shares issued pursuant to convertible debentures: 462,113 -- 465,682
Detachable warrants issued
Detachable warrants exercised 152,125 -- 152,125
Debentures converted to stock (100) -- --
Loss, development stage, 1999 640,438 -- 642,120
-- (1,671,255) (1,671,255)
----------- ----------- -----------
December 31, 1999 $ 5,284,603 $(5,813,678) $ (513,520)
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements
Page F-5
<PAGE>
<TABLE>
<CAPTION>
STEROIDOGENESIS INHIBITORS INTERNATIONAL, INC.
(D/B/A Samaritan Pharmaceuticals)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
September 5,
1994
(Inception) to For the Year Ended December 31,
December 31, -------------------------------
1999 1999 1998
----------- ----------- -----------
(Unaudited)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(5,813,678) $(1,671,255) $(1,009,945)
Adjustments to reconcile net loss
net cash used in operating activities:
Depreciation and amortization 40,504 17,945 16,066
Expenses paid through issuance of stock 2,291,182 479,627 350,000
(Increase) decrease in assets:
Notes receivable-related party (11,478) 1,412 (13,090)
Other assets (17,525) (6,313) (11,407)
Increase (decrease) in liabilities:
Accounts payable 283,498 214,793 (31,526)
Deferred revenue 250,000 -- --
----------- ----------- -----------
NET CASH USED IN OPERATING ACTIVITIES (2,977,497) (963,791) (699,902)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchased technology rights (108,969) -- --
Purchase of property and equipment (47,062) (18,580) (15,706)
Patent registration costs (55,547) (20,129) (8,492)
----------- ----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (211,578) (38,709) (24,198)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from warrants 157,125 152,125
Proceeds from debentures, net of discounts 642,120 628,175
Proceeds from stock offering, net of costs 1,654,536 41,412 605,879
Short-term loan proceeds 737,000 182,000 30,000
----------- ----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 3,190,781 1,003,712 635,879
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH 1,706 1,212 (88,221)
CASH, beginning of period -- 494 88,715
----------- ----------- -----------
CASH, end of period $ 1,706 $ 1,706 $ 494
=========== =========== ===========
NON-CASH FINANCING & INVESTING ACTIVITIES:
Purchase of net, non-cash assets of subsidiary
for stock $ 195 $ -- $ --
=========== =========== ===========
Short-term debt retired through issuance
of stock $ 555,000 $ 30,000 525,000
=========== =========== ===========
Debentures converted through stock issuance $ 642,120 $ 642,120 --
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
Page F-6
<PAGE>
STEROIDOGENESIS INHIBITORS INTERNATIONAL, INC.
(D/B/A Samaritan Pharmaceuticals)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
1. Summary of Accounting Policies:
a. The Company:
Steroidogenesis Inhibitors International, Inc. (D/B/A Samaritan Pharmaceuticals)
(the Company), was incorporated as Steroidogenesis Inhibitors, Inc., in Nevada
in September, 1994. The Company was organized to engage in securing the patent
for and 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. The product was
developed for the treatment of diseases related to deficiencies in the immune
system.
In October, 1997, the Company acquired WEBX Media, Inc. (the Subsidiary), a
non-operating public shell through an exchange of stock. Subsequent to the
acquisition, the Company changed its name to Steroidogenesis Inhibitors
International, Inc. On January 3, 2001, the Company selected the name "Samaritan
Pharmaceuticals" under which to conduct its business.
The accompanying financial statements have been prepared on the basis that it is
a going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Company has
incurred a loss since inception of $5,813,678. As such, the financial statements
reflect recurring losses, working capital deficiencies, negative cash flows from
operating activities, and adverse key financial ratios.The Company is dependent
upon outside capital to continue in existence and to achieve profitable
operations.
Management's plans for dealing with the adverse effects of the conditions cited
above is to raise working capital through equity financing arrangements.
Subsequent to December 31, 1999, the Company entered into a committment with an
investment banker through which up to $2,000,000 will be advanced,
collateralized by restricted registered stock. Under the agreement, the advances
are converted periodically through the issuance of stock at a discounted market
price. Through such, the Company had received advances of $425,000 through March
6, 2000. Furthermore, Management notes that many expenditures can be deferred
until funds are available to continue development. While such a strategy would
not be preferred due to a competitive market, Management is willing to pursue it
if necessary.
b. Basis of Consolidation:
The accompanying financial statements include the accounts of the Company and
its subsidiary. All intercompany balances and transactions have been eliminated
in consolidation.
The acquisition of the Subsidiary occurred October 21, 1997. In accordance with
generally accepted accounting principles, the results of the Subsidiary's
operations 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 $7,045 and $5,100 for the years ended December 31,
1999 and 1998, respectively.
Page F-7
<PAGE>
STEROIDOGENESIS INHIBITORS INTERNATIONAL, INC.
(D/B/A Samaritan Pharmaceuticals)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
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 straightline method over the estimated useful life of the technology.
Amortization of purchased technology was approximately $10,900 for the years
ended December 31, 1999 and 1998, respectively.
e. Earnings per share
The Company calculates earnings per share in accordance with SFAS 128. At
December 31, 1998, there were no dilutive warrants or options outstanding. At
December 31, 1999, there were 50,000 detachable warrants with a cashless
exercise feature in which the number of shares to be issued depended upon the
trading price of the stock on the date of exercise. These options were converted
subsequent to the balance sheet for approximately 38,800 shares. Because the
Company has had development stage losses, the effect of including these
securites in the calculation of earnings per share would be to reduce the loss
per share rendering the cashless exercise feature as non-dilutive.
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 of Subsidiary:
On October 21, 1997, the Company acquired 100% of the outstanding stock of WEBX
Media, Inc., through a reorganization agreement. Under the agreement,
theprincipal shareholders of the Company exchanged their stock on a share for
share basis for the stock of the Subsidiary. At the time of the acquisition,
theSubsidiary was non-operating public shell with no significant assets. The
Company then converted such shares into shares of the Subsidiary for the purpose
of becoming a public company.
The Company exchanged 1,503,000 shares pursuant to the acquisition. Of these
shares, 1,000,000 were issued for services pertaining to the acquisition. See
note 8, Related Party Transactions, and note 7 a.& b., Stock Transactions. The
balance of the shares were issued to the shareholders of the Subsidiary.
The Company has accounted for this transaction as a capital transaction; a
retirement of the Company shares and issuance of Subsidiary shares. Because the
Subsidiary shares have stated par value of $.001 compared to Company shares at
$.0001, the exchange resulted in a reclassification from 'additional paid in
capital' to 'par value', as reflected in the Statements of Stockholders' Equity
(Deficit).
At the acquisition date, approximately 88% (6,186,000 of 7,006,236 shares) of
the Company stock held prior to the acquisition was converted. The Company
reserved additional Subsidiary shares to convert the balance of the remaining
Company shareholders as they were located. During 1998 and 1999, an additional
10% of the shareholders of record at the acquisition date had converted their
shares.
Page F-8
<PAGE>
STEROIDOGENESIS INHIBITORS INTERNATIONAL, INC.
(D/B/A Samaritan Pharmaceuticals)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
3. Short-term borrowing:
At December 31, 1999, the Company had an amount due to an entity for $50,000
which accrues interest at 8% per year. The entity has agreed to retire the
amount in exchange for stock.
Also, at December 31, 1999, the Company had amounts due from two entities
totalling $132,000. These loans are unsecured, due on demand, and do not accrue
interest. One of the loans is from an entity in which an officer of the Company
has a majority interest. The other loan is from an entity owned by a family
member of the officer. These entities have agreed to retire these amounts
through the issuance of stock.
The Company had a short-term borrowing without interest at December 31, 1998,
for $30,000. The liability was satisfied by issuing 30,000 shares of common
stock subsequent to the balance sheet date.
4. Deferred revenue:
The Subsidiary 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. Pursuant to the agreement, the Company has agreed
to provide assistance in securing such approval. The revenue will be recognized
as expenses are incurred in providing such assistance. Pursuant to an amendment
to the licensing agreement, during 1999, the Company received $50,000 when
SI-Canada became a public company. The Company is currently involved in
litigation with this entity. See Note 10.
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. Accrued at December 31, 1999, and paid in early January was $64,825.
The Company made office space rental payments of approximately $16,000 during
1998, pursuant to an agreement expiring during 1999. During 1999, the Company
entered into a three-year lease for office space calling for payments of
$22,270, $32,080, $33,032, and $11,116, for 1999 through 2002, respectively.
Rent paid during 1999 was $22,942.
6. Income taxes:
Both the Company and its Subsidiary 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.
Page F-9
<PAGE>
STEROIDOGENESIS INHIBITORS INTERNATIONAL, INC.
(D/B/A Samaritan Pharmaceuticals)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
7. Stock transactions:
a. Stock warrants and options:
The Company had outstanding stock options at December 31, 1998 & 1999.
A summary of the status of the Company's outstanding warrants and options at
December 31, 1999 and 1998, and changes during the years ended on those dates is
presented below:
Weighted Average
Average Contractual
Shares Price Life
---------- ------ --------
Outstanding & exercisable at 12/31/97 100,000 $ 3.50 06/30/00
Granted during the year ended 12/31/98 1,218,500 5.00 12/31/99
---------- ------ --------
Outstanding & exercisable at 12/31/98 1,318,500 4.88 01/15/00
Granted during the year ended 12/31/99 150,000 .32 03/15/04
Exercised during 12/31/99 (100,000) .01 02/14/04
Expired at 12/31/99 (1,218,500) 5.00 12/31/99
---------- ------ --------
Outstanding & exercisable at 12/31/99 150,000 $ 2.65 09/30/01
========== ====== ========
The 1,218,500 options granted during the year ending December 31, 1998, were
pursuant to a 506 offering. This included the 525,000 shares of stock issued in
satisfaction of the short-term debt at December 31, 1997.
During the year ended December 31, 1999, 150,000 detachable warrants were issued
with convertible debentures. The warrants were valued at the difference between
the exercise price at the trading price of the stock on the date the warrants
were issued. Of the warrants issued, 100,000 were exercised during 1999. The
remaining warrants had a cashless exercise featurewhich adjusted the amount of
shares to be issued for the trading price of the stock on the date exercised. In
full satisfaction of those outstanding detachable warrants, 38,807 shares were
issued in February, 2000.
b. Stock as compensation:
The Company issues stock as compensation for services and supplies, valuing such
issues premised upon the fair market value of the stock or the services,
whichever is more clearly determinable.
During 1998, the Company issued 400,000 shares for services rendered by
non-employees.
During 1999, the Company issued 3,569,250 shares of stock as compensation,
valuing such issuances at $465,682.
An additional 100,000 shares were issued in January for services incurred and
accrued during 1999.
c. Stock option plan
The Company has a stock option plan under which 2,500,000 shares are reserved.
At December 31, 1999, no options have been granted pursuant to the plan.
Page F-10
<PAGE>
STEROIDOGENESIS INHIBITORS INTERNATIONAL, INC.
(D/B/A Samaritan Pharmaceuticals)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
8. Related party transactions:
The Subsidiary purchased the technology rights (Note 1.d.2) from an entity
controlled by the 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 president of the Company. Also, during 1999 & 1998, consulting fees
of $24,000 were paid to an entity owned by a family member of a director. At
December 31, 1999, a director of the Company has been advanced $11,478. It is
scheduled to be repaid during the year ending December 31, 2000.
Directors of the Company received stock as compensation for consulting services
during 1999 and 1998 which was valued at $161,150 and $300,000, respectively.
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, or in the alternative, damages
of $100 million. A default judgment exists in Canada but the Company's
attorneyis certain that the Company will be successful in setting aside that
claim due to questionable service of the initial notice.
The Company will vigorously defend against the suit and is confident regarding
the outcome. The Company is counter-suing seeing termination of the agreement
and damages of $15 million.
Page F-11
<PAGE>
STEROIDOGENESIS INHIBITORS INTERNATIONAL, INC.
(D/B/A Samaritan Pharmaceuticals)
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
SEPTEMBER 30, 2000
ASSETS
CURRENT ASSETS:
Cash $ 32,927
Note receivable-related party 17,522
------------
TOTAL CURRENT ASSETS 50,449
------------
PROPERTY AND EQUIPMENT 24,159
------------
OTHER ASSETS:
Patent registration costs 74,114
Purchased technology rights, net of accumulated
amortization of $31,782 77,187
Deposits 15,720
------------
TOTAL OTHER ASSETS 167,021
------------
$ 241,629
============
LIABILITIES & STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable $ 119,799
Accrued expenses, directors & officers 704,000
Due to related parties 122,350
------------
TOTAL CURRENT LIABILITIES 946,149
DEFERRED REVENUE 250,000
------------
STOCKHOLDERS' DEFICIT:
Common stock, 25,000,000 share authorized at $.001
par value, 23,107,962 issued and outstanding 23,108
Additional paid in capital 11,404,888
Accumulated deficit (12,382,516)
------------
TOTAL STOCKHOLDERS' DEFICIT (954,520)
------------
$ 241,629
============
See accompanying notes to the consolidated financial statements
Page F-12
<PAGE>
<TABLE>
<CAPTION>
STEROIDOGENESIS INHIBITORS INTERNATIONAL, INC.
(D/B/A Samaritan Pharmaceuticals)
(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, 2000
From For the Nine For the Three
Inception Months Ended Months Ended
(09/05/94) September 30, September 30,
To --------------------------- ---------------------------
09/30/00 2000 1999 2000 1999
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
REVENUES: $ 50,000 $ -- $ 50,000 $ -- $ --
------------ ------------ ------------ ------------ ------------
EXPENSES:
Research & development 1,543,304 885,703 244,988 253,934 8,411
Interest 16,045 2,100 13,471 -- 6,723
General & administrative 10,817,553 5,666,854 1,189,703 3,617,927 275,536
Depreciation and amortization 55,614 14,181 12,165 4,727 4,055
------------ ------------ ------------ ------------ ------------
12,432,516 6,568,838 1,460,327 3,876,588 294,725
------------ ------------ ------------ ------------ ------------
Net loss $(12,382,516) $ (6,568,838) $ (1,410,327) $ (3,876,588) $ (294,725)
============ ============ ============ ============ ============
Earnings per share:
Basic & diluted $ (1.35) $ (0.38) $ (0.11) $ (0.20) $ (0.02)
============ ============ ============ ============ ============
Weighted average number of shares outstanding:
Basic & diluted 9,197,149 17,486,505 12,830,726 19,442,095 15,093,417
</TABLE>
See accompanying notes to the consolidated financial statements.
Page F-13
<PAGE>
<TABLE>
<CAPTION>
STEROIDOGENESIS INHIBITORS INTERNATIONS, INC.
(D/B/A Samaritan Pharmaceuticals)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(UNAUDITED)
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 -- $ -- $ -- $ -- $ --
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 1,503,000 150 -- 46,545 --
Recapitalization
Shares of parent redeemed, par value $.0001 (8,509,236) (851) -- 851 --
Shares of public subsidiary issued, par value $.0001 7,689,690 7,690 820 (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, net of offering costs 693,500 694 -- 605,185 --
Shares issued in cancellation of debt 525,000 525 -- 524,475 --
Shares issued as compensation 400,000 400 -- 349,600 --
Loss, development stage, 1998 -- -- -- -- --
------------ ------------ ------------ ------------ ------------
December 31, 1998 10,004,212 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 for cash, net of offering costs 45,000 45 -- 41,367 --
Shares issued as compensation 3,569,250 3,569 -- 462,113 --
Shares issued pursuant to convertible debentures: -- -- -- -- --
Detachable warrants issued -- -- -- -- 152,125
Detachable warrants exercised 100,000 100 -- 148,900 (149,000)
Debentures converted to stock 1,682,447 1,682 -- 640,438 --
Loss, development stage, 1999 -- -- -- -- --
------------ ------------ ------------ ------------ ------------
December 31, 1999 15,443,909 15,444 111 5,276,478 8,125
Conversion of parent's shares 128,954 129 (111) (18) --
Shares issued for cash, net of offering costs 953,292 953 -- 511,493 --
Shares issued in cancellation of debt 675,000 675 -- 492,975 --
Shares issued as compensation 5,868,000 5,868 -- 5,115,874 --
Warrants converted 38,807 39 -- 3,086 (3,125)
Warrants expired -- -- -- 5,000 (5,000)
Loss, development stage, September 30, 2000 -- -- -- -- --
------------ ------------ ------------ ------------ ------------
September 30, 2000 $ 23,107,962 $ 23,108 $ -- $ 11,404,888 $ --
============ ============ ============ ============ ============
Total Total
Paid in Retained Shareholders'
Capital Earnings Equity
------------ ------------ ------------
Inception at September 5, 1994 $ -- $ -- $ --
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 46,545 -- 46,695
Recapitalization
Shares of parent redeemed, par value $.0001 851 -- --
Shares of public subsidiary issued, (8,510) -- --
par value $.0001
Loss, development stage, 1997 -- (979,635) (979,635)
------------ ------------ ------------
December 31, 1997 2,479,430 (3,132,478) (644,538)
Conversion of parent's shares -- -- --
Shares issued for cash, net of offering costs 605,185 -- 605,879
Shares issued in cancellation of debt 524,475 -- 525,000
Shares issued as compensation 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 -- -- --
Shares issued in cancellation of debt 29,970 -- 30,000
Shares issued for cash, net of offering costs 41,367 -- 41,412
Shares issued as compensation 462,113 -- 465,682
Shares issued pursuant to convertible debentures: -- -- --
Detachable warrants issued 152,125 -- 152,125
Detachable warrants exercised (100) -- --
Debentures converted to stock 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) -- --
Shares issued for cash, net of offering costs 511,493 -- 512,446
Shares issued in cancellation of debt 492,975 -- 493,650
Shares issued as compensation 5,115,874 -- 5,121,742
Warrants converted (39) -- --
Warrants expired -- -- --
Loss, development stage, September 30, 2000 -- (6,568,838) (6,568,838)
------------ ------------ ------------
September 30, 2000 $ 11,404,888 $(12,382,516) $ (954,520)
============ ============ ============
</TABLE>
See accompanying notes to the consolidated financial statements.
Page F-14
<PAGE>
<TABLE>
<CAPTION>
STEROIDOGENESIS INHIBITORS INTERNATIONAL, INC.
(D/B/A Samaritan Pharmaceuticals)
(A Development Stage Company)
CONSOLIDATED, STATEMENTS OF CASH FLOWS
(UNAUDITED)
From For the Nine Months
Inception Ended September 30,
(09/05/94) ----------------------------
CASH FLOWS FROM OPERATING ACTIVITIES: to 09/30/00 2000 1999
------------ ------------ ------------
<S> <C> <C> <C>
Net loss $(12,382,516) $ (6,568,838) $ (1,410,327)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 54,685 14,181 12,120
Expenses paid through issuance of stock 7,412,924 5,121,742 465,682
(Increase) decrease in assets:
Notes receivable-related party (17,522) (6,043) 9,992
Prepaids & other current assets (15,720) 2,000 (23,427)
Increase (decrease) in liabilities:
Deferred revenue 250,000 -- --
Due to related parties 122,350 9,100 --
Accounts payable & accrued expenses 823,994 540,200 69,006
------------ ------------ ------------
Net cash used in operating activities (3,751,805) (887,658) (876,954)
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of technology (108,969) -- --
Purchase of furniture and equipment (47,062) -- (1,092)
Patent registration costs (note 1.d.1)) (74,114) (18,567) (5,248)
------------ ------------ ------------
Net cash used in investing activities (230,145) (18,567) (6,340)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from warrants 157,125 -- 152,125
Proceeds from debentures 642,120 -- 642,120
Proceeds from stock offering 2,166,982 512,446 41,412
Short-term loan proceeds 1,048,650 425,000 50,000
------------ ------------ ------------
Net cash provided by financing activities 4,014,877 937,446 885,657
------------ ------------ ------------
CHANGE IN CASH 32,927 31,221 2,363
CASH AT BEGINNING OF PERIOD -- 1,706 494
------------ ------------ ------------
CASH AT END OF PERIOD $ 32,927 $ 32,927 $ 2,857
============ ============ ============
NON-CASH FINANCING & INVESTING ACTIVITIES:
Purchase of net, non-cash assets of subsidiary
for stock $ 195 $ -- $ --
Short-term debt retired through issuance
of stock $ 1,048,650 $ 493,750 $ 30,000
Income taxes and interest paid with cash -- -- --
</TABLE>
See accompanying notes to the consolidated financial statements.
Page F-15
<PAGE>
STEROIDOGENESIS INHIBITORS INTERNATIONAL, INC.
(D/B/A Samaritan Pharmaceuticals)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
BASIS OF PRESENTATION:
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial statements and with the instructions to Form 10-QSB and Article 10 of
Regulation S-X. Accordingly, they do not include all the information and
disclosures required for annual financial statements. These financial statements
should be read in conjunction with the consolidated financial statements and
related footnotes for the year ended December 31, 1999, included in the Form
10-KSB for the year then ended.
In the opinion of the Company's management, all adjustments (consisting of
normal recurring accruals) necessary to present fairly the Company's financial
position as of September 30, 2000, and the results of operations and cash flows
for the nine-month period ending September 30, 2000 and 1999 have been included.
The results of operations for the three-month period ended September 30, 2000
are not necessarily indicative of the results to be expected for the full year.
For further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's Form 10-KSB as filed with the
Securities and Exchange Commission for the year ended December 31, 1999.
Management notes that stock was issued as followed during the three months ended
September 30, 2000:
No. of shares Issued Pursuant To Price/valuation
------------- ------------------ ---------------
2,085,000 Compensation for services rendered $ 2,116,936
3,000,000 Board of directors/services 2,663,100
200,000 Retire loan 50,000
493,292 Sale of restricted stock 402,030
---------- -----------
5,778,292 $ 5,232,066
---------- -----------
Management notes that the Company was involved in litigation at September 30,
2000. See "Business - Legal Proceedings."
Page F-16
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
STEROIDOGENESIS INHIBITORS INTERNATIONAL, INC.
(D/B/A Samaritan Pharmaceuticals)
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The statutes, charter provisions, bylaws, contracts or other arrangements
under which controlling persons, directors or officers of the registrant are
insured or indemnified in any manner against any liability which they may incur
in such capacity are as follows:
(a) Section 78.7502 of the Nevada Business Corporation Act, as may be
amended or replaced, provides that each corporation shall have the following
powers:
1. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
except an action by or in the right of the corporation, by reason of the fact
that he is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses, including attorneys' fees, judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with the action, suit or proceeding if he acted in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interest of the corporation, and, with respect to any criminal action or
proceeding had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, does not, or
itself create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and that, with respect to any criminal action or
proceeding, he had reasonable cause to believe that his conduct was unlawful.
2. A corporation may indemnify any person who was or is a party or is
threatened to be made party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses, including amounts paid in
settlement and attorneys' fees actually and reasonably incurred by him in
connection with the defense or settlement of the action or suit if he acted in
good faith and in a manner which he reasonably believed to be in or not opposed
to the best interests of the corporation. Indemnification may not be made for
any claim, issue or matter as to which such a person has been adjudged by a
court of competent jurisdiction, after exhaustion of all appeals therefrom, to
be liable to the corporation or for amounts paid in settlement to the
corporation, unless and only to the extent that the court in which the action or
suit was brought or other court of competent jurisdiction, determines upon
application that in view of all the circumstances of the case, the person is
fairly and reasonably entitled to indemnity for such expenses as the court deems
proper.
3. To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections 1 and 2, or in defense of
any claim, issue or matter therein, he must be indemnified by the corporation
against expenses, including attorneys' fees, actually and reasonably incurred by
him in connection with the defense.
4. Any indemnification under subsections 1 and 2, unless ordered by a
court or advanced pursuant to subsection 5, must be made by the corporation only
as authorized in the specific case upon a determination that indemnification of
the director, officer, employee or agents is proper in the circumstances. The
determination must be made:
(a) By the stockholders;
PART II -- Page 1
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(b) By the board of directors by majority vote of a quorum
consisting of directors who were not parties to the act, suit or proceeding;
(c) If a majority vote of a quorum consisting of directors who were
not parties to the act, suit or proceeding so orders, by independent legal
counsel, in a written opinion; or
(d) If a quorum consisting of two directors were not parties to the
act, suit or proceeding cannot be obtained, by independent legal counsel in a
written opinion.
5. The certificate or articles of incorporation, the bylaws or an
agreement made by the corporation may provide, as may be amended from time to
time, that the expenses of officers and directors incurred in defending a civil
or criminal action, suit or proceeding must be paid by the corporation as they
are incurred and in advance of the final disposition of the action, suit or
proceeding, upon receipt of an undertaking by or on behalf of the director or
officer to repay the amount if it is ultimately determined by a court of
competent jurisdiction that he is not entitled to be indemnified by the
corporation. The provisions of this subsection do not affect any rights to
advancement of expenses to which corporate personnel other than directors or
officers may be entitled under any contract or otherwise by law.
6. The indemnification and advancement of expenses authorized in or
ordered by a court pursuant to this section:
(a) Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under the certificate
or articles of incorporation or any bylaw, agreement, vote of stockholders of
disinterested directors or otherwise, for either an action in his official
capacity or an action in another capacity while holding his office, except that
indemnification, unless ordered by a court pursuant to subsection 2 or for the
advancement of expenses made pursuant to subsection 5, may not be made to or on
behalf of any director or officer if a final adjudication establishes that his
acts or omissions involved intentional misconduct, fraud or a knowing violation
of the law and was material to the cause of action.
(b) Continues for a person who has ceased to be a director officer,
employee or agent and inures to the benefit of the heirs, executors and
administrators of such a person.
7. The registrant's articles of incorporation limit liability of its
officers and directors to the full extent permitted by the Nevada Business
Corporation Act.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The Company estimates that its expenses in connection with this
Registration Statement will be as follows:
SEC registration fee.......................... $ 2,259
Legal fees and expenses....................... $25,000
Accounting fees and expenses................ $12,000
Miscellaneous................................. $ 3,000
-------
Total......................................... $42,259
=======
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
On October 21, 1997, the Company exchanged 4,497,000 restricted shares of
the Company for 4,497,000 shares of Steroidogenesis Inhibitors, Inc., a Nevada
corporation ("SI, Inc."), held by SI, Inc., shareholders. The Company relied
upon Section 4(2) of the Securities Act of 1933, as amended (the "Securities
Act"), to effect the transaction.
On February 27, 1998, the Company commenced a private offering of its
common stock and warrants at a price of $1.00 per unit. The Company sold
1,218,500 units, each consisting of one share of common stock and a warrant to
purchase one share of the Company's common stock at a price of $5.00 expiring
December 1999. There were no underwriting discounts or commissions paid. The
Company relied upon Section 4(2) of the Securities Exchange Act and Rule 506 to
effect the sales.
PART II -- Page 2
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In December, 1998, and January 1999, the Company issued a total of 200,000
shares of Common Stock to a consultant to secure consulting services. The shares
were sold pursuant to Section 3(b) of the Securities Act of 1933 and Regulation
D, Rule 504.
On February 26, 1999, the Company issued 90,000 shares to Harvey
Productions, Inc., for television production services performed for the Company.
These securities were issued pursuant to Section 3(b) of the Securities Exchange
Act of 1934, as amended ("Securities Exchange Act") and Regulation D, Rule 504.
On April 30, 1999, the Company issued 50,000 shares to Performance
Strategies for service pursuant to public relations. The shares were issued
under Section 4(2) of the Securities Act and subject to Rule 144 restricted
legend.
On January 1, 1999, and July 1, 1999, the Company issued 100,000 shares of
common stock each date to Performance Strategies, Inc., and independent
contractor helping with public relations, with 100,000 shares pending issuance
for January, 2000. (An initial payment of 25,000 shares was made by the Company
in July, 1998, at the start of the relationship.) The shares were issued under
Section 4(2) of the Securities Act and subject to Rule 144 restricted legend.
On March 3, 1999, the Company sold $400,000 of 2% convertible debentures
and a warrant to purchase 100,000 shares of common stock at an exercise of $.01
per share at any time from issuance through March 2, 2002, to GEM Singapore Ltd.
pursuant to Section 3(b) of the Securities Exchange Act and Regulation D, Rule
504. Subsequent to the issuance of the convertible debentures, and warrants, GEM
converted both the debentures and the warrants into 750,087 shares of common
stock.
On March 31, 1999, the Company issued to Generation Capital Associates
426,666 shares of common stock and a cashless warrant to purchase 50,000 shares
of common stock for a period of five years at a price of $200,000. These shares
and warrants were issued pursuant to Section 3(b) of the Securities Act of 1933
and Regulation D, Rule 504. The Warrant has been terminated. On August 27, 1999,
the Company sold $220,000 of 8% convertible debentures at an effective
conversion price of $.36 per share, to BVH Holding, L.L.C., pursuant to Section
3(b) of the Securities Exchange Act and Regulation D, Rule 504. Subsequently,
these were converted into a total of 605,694 shares of common stock.
From June, 2000, to November 15, 2000, the Company has issued a total of
943,315 restricted shares for a total of $674,629 to Stein Morgan International
Ltd., Kuala Lumpur, Malaysia pursuant to Section 4(2) of the Securities Act and
subject to Rule 144 restricted legend.
The Company has issued, in November, 2000, 1,054,945 shares to Fusion
Capital and 25,000 shares to Josephberg, and 50,000 shares to Douglas Bessert,
pursuant to Section 4(2) of the Securities Act and subject to Rule 144
restricted legend, with the agreement that they be included in this registration
statement. See, "Selling Shareholders."
All investors above are represented to the Company to be accredited
investors under Regulation D.
The Company issued 300,000 shares to directors for services in 1998 and
3,223,000 shares for 1999 through December 31, 1999 to officers and directors
pursuant to Section 4(2) of the Securities Act and subject to Rule 144
restricted legend.
In summary, by determination of the Board in June, 2000, a total of
3,250,000 shares were issued to the Board of Directors, officers and the law
firm for the Company for services, pursuant to Section 4(2) of the Securities
Act and subject to Rule 144 restricted legend. These shares are subject to a
dispute. See, "Legal Proceedings."
PART II -- Page 3
<PAGE>
ITEM 27. EXHIBITS.
Exhibit No. Description
----------- -----------
2 Agreement and Plan of Reorganization*
3.1 Articles of Incorporation, as amended*
3.2 By-Laws*
4.1 Form of common stock certificate*
4.2 1997 Stock Option Plan*
5 Form of Opinion re: Legality of Law Offices of Richard Rossi,
P.A.
10.1 License Agreement between Cortisol Medical Research, Inc., and
Steroidogenesis Inhibitors, Inc., dated September 6, 1994*
10.2 Exclusive Licensing Agreement between Steroidogenesis
Inhibitors, Inc., and Steroidogenesis Inhibitors Canada, dated
February 10, 1996*
10.3 Consulting Agreement between Performance Strategies, Inc., and
the Company dated July 15, 1998*
10.4 Consulting Agreement between The Augustine Equity Fund and the
Company dated December 17, 1999*
10.5 Agreement between AIDS Research Alliance Agreement and the
Company dated March 5, 1999*
10.6 Assignment between Alfred T. Sapse, M.D., and Steroidogenesis
Inhibitors International dated July 15, 1999*
10.7 Assignment between Steroidogenesis Inhibitors, Inc., and the
Company dated July 15, 1999*
10.8 Common Stock Purchase Agreement between Company and Fusion
Capital Fund II, LLC., dated as of November 2, 2000**
10.9 Form of Registration Rights Agreement between Company and
Fusion Capital Fund II, LLC**
10.10 First Amendment to Common Stock Purchase Agreement Amendment
between Company 10.10 Fusion Capital Fund II, LLC dated as of
January 3, 2001
21 List of Subsidiaries**
23.1 Consent of Experts and Counsel -- Consent of Counsel (included
in Exhibit 5)
23.2 Consent of Experts and Counsel -- Consent of Accountant
27 Financial Data Schedule**
---------------------------
* Incorporated by reference to the Company's SEC Form 10-SB filing, including
any amendments, on file with the Commission.
** Previously filed.
PART II -- Page 4
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ITEM 28. UNDERTAKINGS
RULE 415 OFFERING. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement to: (i) include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii)
reflect in the prospectus any facts or events which, individually or together,
represent a fundamental change in the information set forth in the Registration
Statement; and (iii) include any additional or changed material information in
the plan of distribution.
(2) For determining liability under the Securities Act of 1933, each
post-effective amendment that contains a form of prospectus shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
Offering.
Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended (the "Act"), may be permitted to directors, officers or persons
controlling the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
PART II -- Page 5
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing this Registration Statement Form SB-2 and
authorizes this Registration Statement to be signed on its behalf by the
undersigned, in the City of Las Vegas, in the State of Nevada on January 17,
2001.
STEROIDOGENESIS INHIBITORS INTERNATIONAL, INC.
By: /s/ Albert "Bert" Wollen
------------------------
Albert "Bert" Wollen, President
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated below.
SIGNATURE TITLE DATE
(Capacity)
/s/ Albert "Bert" Wollen President, Director January 17, 2001
------------------------ (Principal Executive Officer,
Albert "Bert" Wollen and Director)
/s/ Dr. Janet Greeson C.E.O., Director January 17, 2001
------------------------ (Principal Executive Officer
Dr. Janet Greeson and Director)
/s/ Eugene Boyle Chief Financial Officer, January 17, 2001
------------------------ Treasurer, Director
Eugene Boyle (Principal Financial and
Accounting Officer, and
Director)
/s/ Welter Holden Director January 17, 2001
------------------------
Welter Holden
PART II -- Page 6
