SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported): November 27, 2001
DISEASE SCIENCES, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 0-27865 13-2640916
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
20283 State Road 7, Boca Raton, Florida 33498
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(Address of executive offices and Zip Code)
Registrant's telephone number, including area code: (561)487-3655
Not Applicable
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(Former name or former address, if changed since last report)
Item 2. Acquisition or Disposition of Assets.
On November 27, 2001 we acquired 9,050,833 shares of the common stock
of HealthSpan Sciences, Inc., a privately-held California corporation
("HealthSpan") in exchange for 4,000,000 shares of our common stock in a private
transaction exempt from registration under the Securities Act of 1933 in
reliance on Section 4(2) of that act. The shares which we acquired in HealthSpan
represented approximately 51% of the currently issued and outstanding capital
stock. Granite Financial Group, Inc., a broker/dealer which had previously been
engaged by HealthSpan to act as its financial advisor, received 200,000 of the
shares of our common stock issued to HealthSpan as compensation for its services
to HealthSpan. From time to time Granite Financial Group, Inc. has provided
investment advisory services to us.
The Stock Purchase Agreement grants us certain anti-dilution protection
for two years following the closing, and we have agreed to vote our shares of
HealthSpan common stock in favor of current management under certain
circumstances until such time as HealthSpan shall undertake an underwritten
public offering or consummate a sale of all or substantially all of its assets.
Bryant Villeponteau, Ph.D., our Chief Scientific Officer and a member
of our board of directors, is an officer, director and principal shareholder of
HealthSpan.
A copy of the Stock Purchase Agreement is attached hereto as Exhibit
10.1 The foregoing description is qualified in its entirety by reference to the
full text of such exhibit.
Item 5. Other Events
In October 2001 we entered into a Research and Development Agreement
with HealthSpan covering the development of antioxidant drugs for multiple
degenerative diseases. Under the terms of the 24 month agreement, we have agreed
to provide,
(i) upon approval by us of the research expenses, $50,000 of
initial operating funds to begin the drug discovery effort,
(ii) $5,000 per month in administrative funds to be used for
salaries and other administrative costs,
(iii) funds necessary for the payment of legal fees (subject to our
approval) for the drug development effort,
(iv) funds for the preclinical drug discovery program, subject to
our pre-approval, which are estimated to be $225,000. These funds are contingent
on the continued viability of the drug discovery program, and we have the right
to delay or halt the funding if all drug analogs fail certain testing, or under
certain other terms as described in the Research and Development Agreement, and
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(v) if HealthSpan obtains an IND (which is an investigational new drug
application for a new biological product that is used in a clinical
investigation) from the U.S. Food and Drug Administration within 24 months for
testing of the drug analog in a Phase I clinical trial for a particular
indication, we will provide the funds necessary to complete the clinical trials
which are estimated at $250,000 to $300,000.
Following the completion of the research and development program, we
will be entitled to the drug rights for prion-related diseases and HealthSpan
will retain all rights for other degenerative disease indications.
The Research and Development Agreement provides that it can be
terminated by the mutual consent of the parties, or by us for cause on 30 days
prior notice if a mutually agreed upon group of scientific experts review the
research and development program and determine that none of the potential
analogs are likely to be approved for clinical testing by the Food and Drug
Administration. If the Research and Development Agreement is terminated under
any of these circumstances, HealthSpan will return 3,800,000 shares of our
common stock it received in the aforedescribed Stock Purchase Agreement to us
and the parties will have no further obligations to each other.
We may also terminate the Research and Development Agreement without
cause on 30 days notice to HealthSpan, in which event we will retain a number of
shares of HealthSpan's common stock which is the sum of 9,050,883 divided by the
number of months remaining in the 24 month term of the agreement, and we will
return to HealthSpan the remaining shares which we received in the Stock
Purchase Agreement. Contemporaneously, HealthSpan we will retain a number of
shares of our common stock which is the sum of 3,800,000 divided by the number
of months remaining in the 24 month term of the agreement, and it will return to
us the remaining shares which it received in the Stock Purchase Agreement less
the 200,000 shares paid to Granite Financial Group, Inc. described above. If the
agreement is terminated under these provisions, the anti-dilution provisions of
the Stock Purchase Agreement are terminated.
Finally, HealthSpan can terminate the agreement for cause if we fail to
provide the funding described above or under certain other circumstances as
described in the Research and Development Agreement. If HealthSpan terminates
the agreement for cause, each company will return a proportionate number of
shares of the other company's common stock acquired in the Stock Purchase
Agreement according to the aforedescribed formula, and the anti-dilution
provisions of the Stock Purchase Agreement will be terminated.
A copy of the Research and Development Agreement is attached hereto as
10.2. The foregoing description is qualified in its entirety by reference to the
full text of such exhibit.
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Item 7. Financial Statements and Exhibits
(a) Financial statements of business acquired.
The audited financial statements of HealthSpan for the years ended
December 31, 2000 and 1999 will be filed not later than January 26, 2002 under
an amendment to this filing pursuant to the requirements of this Form.
(b) Proforma financial information.
The unaudited proforma financial statements for the year ended January
31, 2001 will be filed not later than January 26, 2002 under an amendment to
this filing pursuant to the requirements of this Form.
(c) Exhibits
Exhibit No. Description
10.1 Form of Stock Purchase Agreement
10.2 Research and Development Agreement
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Disease Sciences, Inc.
Date: November 29, 2001 By: /s/ Wayne Goldstein
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Wayne Goldstein, M.D., President
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