UNITED
      STATES
                SECURITIES
      AND EXCHANGE COMMISSION
                Washington,
      D.C. 20549
                Form
      10-K
  (X)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT of
1934
  For the fiscal year ended
      December 31, 2008 or( ) TRANSITION REPORT PURSUANT TO
      SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF
      1934
 For
the transition period from _____to_____
 Commission
file number 0-26775
 Samaritan
      Pharmaceuticals, Inc.
                (Exact
      name of registrant as specified in its
  charter)
 
 Nevada
              
              88-0431538(State or other jurisdiction
      of

                  Incorporation or
      organization)
              
              (I.R.S.
      Employer
                Identification
      No.)
 
 2877 Paradise
      Road, Suite 801, Las Vegas, Nevada 89109

                  (Address of Principal Executive
      Offices)(Zip
      Code)
  (702)
735-7001
 Issuer's telephone
number   Securities to be registered Pursuant to
Section 12(b) of the Act: None
  Securities
Registered Pursuant to Section 12(g) of the Exchange Act: Common Stock, $0.001
par value per share (Title of class)
 
 Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.  Yes |_| No |X|
 
 Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes |X| No|_|
 
 Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes |X| No |_|
  Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |_|
  Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one): Large accelerated filer |_| Accelerated filer |_| Non-accelerated filer
|_| Smaller reporting company |X|
  
  Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of Act). Yes |_| No |X|
  The
aggregate market value of Common Stock held by non-affiliates as of June 30, 2008 was
$8,361,844. All executive officers and directors of the registrant have
been deemed, solely for the purpose of the foregoing calculation, to be
"affiliates" of the registrant.
  The
Company had 36,390,265 common shares issued and outstanding as of May 25,
2009.
  DOCUMENTS
INCORPORATED BY REFERENCE:
  None.
  FORWARD
LOOKING STATEMENTS
 This
document and the documents incorporated by reference herein contain
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Also, our Company management may make
forward-looking statements orally or in writing to investors, analysts, the
media and others. Forward-looking statements express our expectations or
predictions of future events or results. They are not guarantees and are subject
to many risks and uncertainties. There are a number of factors that could cause
actual events or results to be significantly different from those described in
the forward-looking statements. Forward-looking statements might include one or
more of the following:
  ·
              anticipated
      results of financing activities;
 ·
              anticipated
      clinical trial timelines or
results;
 ·
              anticipated
      research and product development
results;
 ·
              projected
      regulatory timelines;
 ·
              descriptions
      of plans or objectives of management for future operations, products or
      services;
 ·
              anticipated
      agreements with marketing partners;
 ·
              forecasts
      of future economic performance; and
 ·
              descriptions
      or assumptions underlying or relating to any of the above
      items.
  Forward-looking
statements can be identified by the fact that they do not relate strictly to
historical or current facts or events. They use words such as “anticipate”,
“estimate”, “expect”, “project”, “intend”, “opportunity”, “plan”, “potential”,
“believe” or words of similar meaning. They may also use words such as “will”,
“would”, “should”, “could” or “may.”
  We
obtained the market data and industry information contained in this Annual
Report on Form 10-K from internal surveys, estimates, reports and studies, as
appropriate, as well as from market research, publicly available information and
industry publications. Although we believe our internal surveys, estimates,
reports, studies and market research, as well as industry publications are
reliable, we have not independently verified such information, and as such, we
do not make any representation as to its accuracy.
  Although
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. Moreover, neither we nor any other person assumes
responsibility for the accuracy and completeness of such statements. We do not
intend to update any of the forward-looking statements after the date of this
report to conform such statements to actual results except as required by law.
Given these uncertainties, you should not place undue reliance on these
forward-looking statements, which speak only as of the date of this report. You
should carefully consider that information before you make an investment
decision. You should review carefully the risks and uncertainties identified in
this report. This annual report will not be updated as a result of new
information or future events.
  
 Table of
Contents
 PagePart
      IItem
      1.
              Business
              
              1Item
      1A.
              Risk
      Factors
              
              5Item
      1B.
              Unresolved
      Staff Comments
              
              15Item
      2.
              Properties
              
              15Item
      3.
              Legal
      Proceedings
              
              15Item
      4.
              Submission
      of Matters to a Vote of Security
    Holders
              
              15Part
      IIItem
      5.
              Market
      For Registrant's Common Equity, Related Stockholder Mattersand
      Issuer's Purchases of Equity Securities
              
              16Item
      6.
              Selected
      Financial Data
              
              17Item
      7.
              Management's
      Discussion and Analysis of Financial Condition andResults of
      Operations
              
              17Item
      7A.
              Quantitative
      and Qualitative Disclosures about Market
      Risk
              
              32Item
      8.
              Financial
      Statements and Supplementary Data
              
              32Item
      9.
              Changes
      in and Disagreements with Accountants on Accounting andFinancial
      DisclosureItem
      9A (T).
              Controls
      and Procedures
              
              32Item
      9B.
              Other
      Information
              
              33Part
      IIIItem
      10.
              Directors,
      Executive Officers and Corporate
      Governance
              
              33Item
      11.
              Executive
      Compensation
              
              38Item
      12.
              Security
      Ownership of Certain Beneficial Owners and Management and
      Related Stockholder Matters
              
              47Item
      13.
              Certain
      Relationships and Related Transactions, and Director
      Independence
              
              48Item
      14.
              Principal
      Accounting Fees and Services
              
              49Part
      IVItem
      15.
              Exhibits,
      Financial Statement Schedules
              
              51Signatures
              
              55
  
  PART I
  ITEM
1. BUSINESS
  Samaritan
Pharmaceuticals, Inc. (including the subsidiaries, referred to as Samaritan, the
"Company", "its", "we", and "our"), formed in September 1994, is an
entrepreneurial biopharmaceutical company, focused on commercializing innovative
therapeutic products to relieve the suffering of patients with Alzheimer's
disease; cancer; cardiovascular disease, HIV, and Hepatitis C; as well as,
commercializing its acquired marketing and sales rights, to sell marketed
revenue-generating products, in Greece, and/or various Eastern European
countries.
  Samaritan
has partnered its oral entry inhibitor HIV drug SP-01A, a drug that has
demonstrated safety and efficacy, in Phase II clinical trials, with Pharmaplaz,
Ireland to advance to Phase III clinical trials. In addition, Samaritan aims to
commercialize three (3) market drug candidates with late-stage preclinical
development programs. Samaritan is evaluating the use of Caprospinol, SP-233 in
Alzheimer's disease patients; the use of SP-1000 with acute coronary disease
patients; and the use of SP-30 as an "oral treatment" for Hepatitis C
patients.
  During
2008, we significantly reduced our ongoing expenses due to the inability of the
Company to raise funds on favorable terms.  Additionally in 2008,
Samaritan signed a worldwide exclusive agreement with Taconic Farms to
commercialize "The Samaritan Alzheimer's Rat Model."  The "forgetful"
rat model is a research tool used by scientists to study the effectiveness of
their new drugs to treat Alzheimer's disease.
  In 2009,
we are seeking to raise additional funds. We are currently operating the Company
in a manner that we believe maximizes the value of our business for our
creditors and stockholders by focusing on marketing and sales in our
territories, as well as continuing our research programs and looking for
additional ways to reduce our operating expenses. If we are unable to resolve
our situation to raise sufficient additional funds, we would be required to
further reduce operating expenses, by, among other things, curtailing
significantly or delaying or eliminating part or all of our development programs
or scaling back our commercial operations.
  For
further discussion of our business and operations, please see the section
entitled, Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.
  Patents,
Licenses and Proprietary Rights
 
 The
products and product candidates currently being developed or considered for
development by Samaritan are in the area of biotechnology, an area in which
there are extensive patent filings. We rely on patent protection against use of
our proprietary products and technologies by competitors. The patent positions
of biotechnology firms generally are highly uncertain and involve complex legal
and factual questions. To date, no consistent policy has emerged regarding the
breadth of claims allowed in biotechnology patents. We own or in-license patents
related to our products or product candidates and own or in-license additional
applications for patents that are currently pending. In general, when we
in-license intellectual property from various third parties, we are required to
pay royalties to the parties on product sales.
  Our
marketed products, AMPHOCIL(R), CAPHOSOL(R), COLLATAMP(R), ERWINASE(R),
KIDROLASE(R), MEPIVAMOL(R), METHADONE(R), MORPHINE SULPHATE(R), NALOXONE(R),
NALTREXONE(R), ORAMORPH(R), PETHIDINE(R), and RAPYDAN(R) are covered by
trademark and patents by their respective owners.
  Trademark
protection continues in some countries for as long as the mark is used and, in
other countries, for as long as it is registered. Registrations generally are
for fixed, but renewable, terms.
  1
  The
protection of our unpatented confidential and proprietary information and
materials is important to us. To protect our trade secrets, materials and other
confidential information, we generally require our employees, consultants,
scientific advisors, and parties to collaboration and licensing agreements to
execute confidentiality agreements upon the commencement of employment, the
consulting relationship, or the collaboration or licensing arrangement with us.
However, others could either develop independently the same or similar
information or obtain access to our information.  Our trademarks for
our marketed products are not included in the table below, since they are
trademarked by our partners.
  PATENT SUMMARY
      TABLE
              
              TRADEMARK
      SUMMARY TABLEItem
              
              Issued
              
              Pending
              
              Total
              
              Item
              
              Issued
              
              Pending
              
              TotalUS
      Patents
              
              13
              
              25
              
              38
              
              US
      Trademarks
              
              3
              
              0
              
              3Foreign
      Patents
              
              33
              
              71
              
              104
              
              Foreign
      Trademarks
              
              1
              
              0
              
              1Total
              
              46
              
              90
              
              142
              
              Total
              
              4
              
              0
              
              4
 
 Manufacturing
 
 The
Company has no commercial–scale manufacturing facilities for our products. For
our products that we are developing, we plan to establish relationships with
third-party suppliers to manufacture sufficient quantities of our product
candidates to undertake clinical trials and to manufacture sufficient quantities
of any products that are approved for commercial sale. If we are unable to
contract for large-scale manufacturing with third parties on acceptable terms
for our future products and are unable to develop manufacturing capabilities
internally, our ability to conduct large-scale clinical trials and to meet
customer demand for commercial products would be adversely affected. For our
products that we have commercial sales for, we purchase the product from our
respective partner.
 
 Government
Regulation
 
 Our
pharmaceutical products are subject to extensive government regulation in the
United States. If we distribute our products abroad, these products will also be
subject to extensive foreign government regulation. In the United States, the
FDA regulates pharmaceutical products. FDA regulations govern the testing,
manufacturing, advertising, promotion, labeling, sale and distribution of our
products.
  In
general, the FDA approval process for drugs includes, without
limitation:
  •
preclinical studies;
  •
submission of an Investigational New Drug Application, or IND, for clinical
trials;
  •
adequate and well-controlled human clinical trials to establish the safety and
efficacy of the product;
  •
submission of an NDA to obtain marketing approval;
  • review
of the NDA; and
  •
inspection of the facilities used in the manufacturing of the drug to assess
compliance with the FDA’s current Good Manufacturing Practice, or cGMP,
regulations.
  The NDA
must include comprehensive and complete descriptions of the preclinical testing,
clinical trials, and the chemical, manufacturing and control requirements of a
drug that enable the FDA to determine the drug’s safety and efficacy. An NDA
must be submitted by Samaritan, and filed and approved by the FDA before any of
our drugs can be marketed commercially in the United States.
  The FDA
testing and approval process requires substantial time, effort and money. We
cannot assure that any approval will ever be granted.
  2
  Preclinical
studies include laboratory evaluation of the product, as well as animal studies
to assess the potential safety and effectiveness of the product. These studies
must be performed according to good laboratory practices. The results of the
preclinical studies, together with manufacturing information and analytical
data, are submitted to the FDA as part of the IND.
  Clinical
trials may begin 30 days after the IND is received, unless the FDA raises
concerns or questions about the conduct of the clinical trials. If concerns or
questions are raised, the IND sponsor and the FDA must resolve any outstanding
concerns before clinical trials can proceed.
  We cannot
assure that submission of an IND will result in authorization to commence
clinical trials. Nor can we assure that if clinical trials are approved, that
data will result in marketing approval. Clinical trials involve the
administration of the product that is the subject of the trial to volunteers or
patients under the supervision of a qualified principal investigator. Each
clinical trial must be reviewed and approved by an independent institutional
review board at each institution at which the study will be conducted. The
institutional review board will consider, among other things, ethical factors,
safety of human subjects and the possible liability of the institution. Also,
clinical trials must be performed according to good clinical practices. Good
clinical practices are enumerated in FDA regulations and guidance
documents.
  Clinical
trials typically are conducted in three sequential phases: Phases I, II and III,
with Phase IV studies conducted after approval. Drugs for which Phase IV studies
are required include those approved under accelerated approval regulations. The
four phases may overlap. In Phase I clinical trials, the drug is usually tested
on a small number of healthy volunteers to determine:
  ·
              safety;
 ·
              any
      adverse effects;
 ·
              proper
      dosage;
 ·
              absorption;
 ·
              metabolism;
 ·
              distribution;
 ·
              excretion;
      and
 ·
              other
      drug effects.
  In Phase
II clinical trials, the drug is usually tested on a limited number of subjects
(generally up to several hundred subjects) to preliminarily evaluate the
efficacy of the drug for specific, targeted indications, determine dosage
tolerance and optimal dosage, and identify possible adverse effects and safety
risks.
  In Phase
III clinical trials, the drug is usually tested on a larger number of subjects
(up to several thousand), in an expanded patient population and at multiple
clinical sites. The FDA may require that we suspend clinical trials at any time
on various grounds, including if the FDA makes a finding that the subjects are
being exposed to an unacceptable health risk.
  In Phase
IV clinical trials or other post-approval commitments, additional studies and
patient follow-up are conducted to gain experience from the treatment of
patients in the intended therapeutic indication. Additional studies and
follow-up are also conducted to document a clinical benefit where drugs are
approved under accelerated approval regulations and based on surrogate
endpoints. In clinical trials, surrogate endpoints are alternative measurements
of the symptoms of a disease or condition that are substituted for measurements
of observable clinical symptoms. Failure to promptly conduct Phase IV clinical
trials and follow-up could result in expedited withdrawal of products approved
under accelerated approval regulations.
  The
facilities, procedures, and operations of our contract manufacturers must be
determined to be adequate by the FDA before product approval. Manufacturing
facilities are subject to inspections by the FDA for compliance with cGMP,
licensing specifications, and other FDA regulations before and after an NDA has
been approved. Foreign manufacturing facilities are also subject to periodic FDA
inspections or inspections by foreign regulatory authorities. Among other
things, the FDA may withhold approval of NDAs or other product applications of a
facility if deficiencies are found at the facility. Vendors that supply us
finished products or components used to manufacture, package and label products
are subject to similar regulation and periodic inspections.
  3
  Following
such inspections, the FDA may issue notices on Form 483 and Warning Letters that
could cause the Company to modify certain activities identified during the
inspection. A Form 483 notice is generally issued at the conclusion of an FDA
inspection and lists conditions the FDA investigators believe may violate cGMP
or other FDA regulations. FDA guidelines specify that a Warning Letter be issued
only for violations of “regulatory significance” for which the failure to
adequately and promptly achieve correction may be expected to result in an
enforcement action.
 
 In
addition, the FDA imposes a number of complex regulatory requirements on
entities that advertise and promote pharmaceuticals, including, but not limited
to, standards and regulations for direct-to-consumer advertising, off-label
promotion, industry-sponsored scientific and educational activities, and
promotional activities involving the Internet.
 
 Failure
to comply with FDA and other governmental regulations can result in fines,
unanticipated compliance expenditures, recall or seizure of products, total or
partial suspension of production and/or distribution, suspension of the FDA’s
review of NDAs, injunctions and criminal prosecution. Any of these actions could
have a material adverse effect on us.
  For
marketing outside the United States, we also are subject to foreign regulatory
requirements governing human clinical trials and marketing approval for
pharmaceutical products. The requirements governing the conduct of clinical
trials, product approval, pricing and reimbursement vary widely from country to
country. Whether or not FDA approval has been obtained, approval of a product by
the comparable regulatory authorities of foreign countries must be obtained
before manufacturing or marketing the product in those countries. The approval
process varies from country to country and the time required for such approvals
may differ substantially from that required for FDA approval. We cannot assure
you that clinical trials conducted in one country will be accepted by other
countries or that approval in one country will result in approval in any other
country. For clinical trials conducted outside the United States, the clinical
stages are generally comparable to the phases of clinical development
established by the FDA.
  In the
United States, physicians, hospitals and other healthcare providers that
purchase pharmaceutical products generally rely on third-party payers,
principally private health insurance plans, Medicare and, to a lesser extent,
Medicaid, to reimburse all or part of the cost of the product and procedure for
which the product is being used. Even if a product is approved for marketing by
the FDA, there is no assurance that third-party payers will cover the cost of
the product and related medical procedures. Although they are not required to do
so, private health insurers often follow the Medicare program’s lead when
determining whether or not to reimburse for a drug. To support our applications
for reimbursement coverage with Medicare and other major third-party payers, we
intend to use data from clinical trials. The lack of satisfactory reimbursement
for our drug products would limit their widespread use and lower potential
product revenues.
  Reimbursement
systems in international markets vary significantly by country and, within some
countries, by region. Reimbursement approvals must be obtained on a
country-by-country basis. In many foreign markets, including markets in which we
anticipate selling our products, the pricing of prescription pharmaceuticals is
subject to government pricing control. In these markets, once marketing approval
is received, pricing negotiations could take another six to twelve months or
longer. As in the United States, the lack of satisfactory reimbursement or
inadequate government pricing of our products would limit their widespread use
and lower potential product revenues.
  Federal,
state and local laws of general applicability, such as laws regulating working
conditions, also govern us. In addition, we are subject to various federal,
state and local environmental protection laws and regulations, including those
governing the discharge of material into the environment. We do not expect the
costs of complying with such environmental provisions to have a material effect
on our earnings, cash requirements or competitive position in the foreseeable
future.
  4
 
 Competition
 
 The
biotechnology and pharmaceutical industries are characterized by rapidly
evolving technology and intense competition. Our competitors include
pharmaceutical, chemical and biotechnology companies, many of which have
financial, technical and marketing resources significantly greater than ours. In
addition, many specialized biotechnology companies have formed collaborations
with large, established companies to support research, development and
commercialization of products that may be competitive with ours. Academic
institutions, governmental agencies and other public and private research
organizations are also conducting research activities and seeking patent
protection and may commercialize products on their own or through collaboration
arrangements. We expect
our products to compete primarily on the basis of product efficacy, safety,
patient convenience, reliability and patent position. In addition, the first
product to reach the market in a therapeutic or preventive area is often at a
significant competitive advantage relative to later entrants to the market. Our
competitive position will also depend on our ability to attract and retain
qualified scientific and other personnel, develop effective proprietary
products, implement product and marketing plans, obtain patent protection and
secure adequate capital resources.
 
 Seasonality
  Our
business is generally not seasonal, however, sales and earnings in our third
quarter are usually flat to down sequentially primarily because there are a
large number of holidays and vacations during the quarter in Europe. Our fourth
quarter sales and earnings are often the highest in the fiscal year compared to
the other three quarters, primarily because many of our customers tend to spend
budgeted money before their own fiscal year’s end.
  Employees
 
 As of
December 31, 2008, we have eight (8) employees.  Additionally,
Samaritan has eight (8) research professionals (including five (5) Ph.D. level
research scientists) who work under the Research Collaboration with The Research
Institute of McGill University Health Centre.
  A
significant number of our management and professional employees have had
experience with pharmaceutical, biotechnology or medical product companies.
While we have been successful in attracting skilled and experienced scientific
personnel, there can be no assurance that we will be able to attract or retain
the necessary qualified employees and/or consultants in the future. None of our
employees are covered by collective bargaining agreements and we consider
relations with our employees to be good.
  Available
Information
 
 Our
website address is www.samaritanpharma.com. The contents of our website are not
part of this annual report. We make available on our website our annual reports
on Form 10-K, our quarterly reports on Form 10-Q, any current reports on Form
8-K and any amendments to those reports as soon as reasonably practicable after
this material is electronically filed with or furnished to the U.S. Securities
and Exchange Commission, or SEC. In addition, we provide paper copies of our
filings free of charge upon request.
 
 ITEM
1A.   RISK FACTORS
 
 You
should carefully consider the risks described below before purchasing our Common
Stock. Our most significant risks and uncertainties are described below;
however, they are not the only risks we face. If any of the following risks
actually occur, our business, financial condition, or results of operations
could be materially adversely affected, the trading of our Common Stock could
decline, and you may lose all or part of your investment therein. You should
acquire shares of our Common Stock only if you can afford to lose your entire
investment.
  5
 
 RISKS
ASSOCIATED WITH OUR BUSINESS
  The
Current Credit and Financial Market Conditions May Exacerbate Certain Risks
Affecting Our Business.
 
 Increased
concerns about credit markets, consumer confidence, economic conditions,
volatile corporate profits and reduced capital spending could negatively impact
demand for our products. We may experience in the future, reduced demand for our
products because of the uncertainty in the general economic environment in which
our customers and we operate. The current tightening of credit in financial
markets may adversely affect the ability of our customers and suppliers to
obtain financing, which could result in a decrease in, or deferrals or
cancellations of, the sale of our products. If global economic and market
conditions, or economic conditions in the United States, remain uncertain or
persist, spread, or deteriorate further, we may experience a material adverse
effect on our business, operating results and financial condition. Unstable
economic, political and social conditions make it difficult for our customers,
our suppliers and us to accurately forecast and plan future business activities.
If such conditions persist, our business, financial condition and results of
operations could suffer. We cannot project the extent of the impact of the
economic environment specific to our industry.
 
 Our
Quarterly Revenues Will Likely Be Affected By Various Factors, Including The
Timing Of Purchases By Customers and The Seasonal Nature Of Purchasing in
Europe.
 
 Our
quarterly revenues will likely be affected by various factors, including the
seasonal nature of purchasing in Europe. Our revenues may vary from quarter to
quarter due to a number of factors, including new product introductions,
expiration of distribution agreements, the release of grant and budget funding,
future acquisitions and our substantial sales to European customers, who in
summer months often defer purchases. In particular, delays or reduction in
purchase orders from the pharmaceutical and biotechnology industries could have
a material adverse effect on us and could adversely affect our stock
price.
 
 The
Failure Of Any Banking Institution In Which We Deposit Our Funds Or The Failure
Of Such Banking Institution To Provide Services In The Current Economic
Environment Could Have A Material Adverse Effect On Our Results Of Operations,
Financial Condition Or Access To Borrowings.
 
 The
capital and credit markets have been experiencing extreme volatility and
disruption. In recent months, the volatility and disruption have reached
unprecedented levels. In some cases, the markets have exerted downward pressure
on stock prices and credit capacity for certain issuers, as well as pressured
the solvency of some financial institutions. Some of these financial
institutions, including banks, have had difficulty performing regular services
and in some cases have failed or otherwise been largely taken over by
governments. We deposit our cash and cash equivalents with a number of financial
institutions around the world. Should some or all of these financial
institutions fail or otherwise be unable to timely perform requested services,
we would likely have a limited ability to quickly access our cash deposited with
such institutions. If we are unable to quickly access such funds, we may need to
increase our use of our existing credit lines or access more expensive credit,
if available. If we are unable to access some or all of our cash on deposit,
either temporarily or permanently, or if we access existing or additional credit
or are unable to access additional credit, it could have a negative impact on
our operations, including our reported net income, or our financial position, or
both.
 
 We
May Not Realize The Expected Benefits From Acquisitions Due To Difficulties
Integrating The Businesses, Operations And Product Lines.
 
 Our
ability to achieve the benefits of acquisitions depends in part on the
integration and leveraging of technology, operations, sales and marketing
channels and personnel. The integration process is a complex, time-consuming and
expensive process and may disrupt our business if not completed in a timely and
efficient manner.
  We may
have difficulty successfully integrating the acquired businesses, the domestic
and foreign operations or the product lines, and as a result, we may not realize
any of the anticipated benefits of the acquisitions. Additionally, we cannot
assure that our growth rate will equal the growth rates that have been
experienced by us and the acquired companies, respectively, operating as
separate companies in the past.
  6
 
 Attractive
Acquisition Opportunities May Not Be Available To Us In The Future.
 
 We will
consider the acquisition of other businesses. However, we may not have the
opportunity to make suitable acquisitions on favorable terms in the future,
which could negatively impact the growth of our business. In order to pursue
such opportunities, we may require significant additional financing, which may
not be available to us on favorable terms, if at all. The availability of such
financing is limited by the recent tightening of the global credit markets. We
expect that our competitors, many of which have significantly greater resources
than we do, will compete with us to acquire compatible businesses. This
competition could increase prices for acquisitions that we would likely
pursue.
 
 If
Our Goodwill Or Intangible Assets Become Impaired, We May Be Required To Record
A Significant Charge To Earnings.
 
 Under
accounting principles generally accepted in the United States, we review our
intangible assets for impairment when events or changes in circumstances
indicate the carrying value may not be recoverable. Goodwill is required to be
tested for impairment at least annually. Factors that may be considered a change
in circumstances indicating that the carrying value of our goodwill or other
intangible assets may not be recoverable include declines in our stock price and
market capitalization or future cash flows projections. We may be required to
record a significant charge to earnings in our financial statements during the
period in which any impairment of our goodwill or other intangible assets is
determined.
 
 Currency
Exchange Rate Fluctuations May Have A Negative Impact On Our Reported
Earnings.
 
 We
conduct business in functional currencies other than the U.S. dollar, which is
our reporting currency. As a result, currency fluctuations among the U.S. dollar
and the currencies in which we do business have caused and will continue to
cause foreign currency transaction gains and losses. Currently, we attempt to
manage foreign currency risk through the matching of assets and liabilities. In
the future, we may undertake to manage foreign currency risk through additional
hedging methods. We recognize foreign currency gains or losses arising from our
operations in the period incurred. We cannot guarantee that we will be
successful in managing foreign currency risk or in predicting the effects of
exchange rate fluctuations upon our future operating results because of the
number of currencies involved, the variability of currency exposure and the
potential volatility of currency exchange rates.
 
 We
Have A Limited Operating History With Significant Losses And Expect Losses To
Continue In The Near Future
 
 We have
yet to establish any history of profitable operations. We have incurred annual
operating losses of $6,267,169 and $3,025,998 during the years ended December
31, 2008 and 2007 respectively. As a result, at December 31, 2008, we had an
accumulated deficit since exiting development stage at December 31, 2007 of
$6,267,169 and an accumulated development stage deficit of $44,335,140. To
date, our revenues have not been sufficient to sustain our operations. Our
profitability will require the successful commercialization of one or more drugs
for our territories in Eastern Europe as well as the out-licensing of our
internal development programs in Alzheimer's, cancer, cardiovascular disease,
and infectious diseases.  The Company has in-licensed products to
be marketed and distributed in our Eastern Europe territories. No assurances can
be given when this will occur or when we will become profitable.
  We
Will Need Additional Capital In The Future, But Our Access To Such Capital Is
Uncertain.  Failure To Access Such Capital May Cause Us To Cease
Operations.
  Our
current resources are insufficient to fund all of our planned development and
commercialization efforts. As of December 31, 2008, we have a working capital
deficiency of $5,588,759 and we had cash, and cash equivalents, of
approximately $105,641. On March 28, 2007, Samaritan and Pharmaplaz, a private
Irish Healthcare company and a shareholder of Samaritan, signed an agreement
(the "Pharmaplaz Agreement") to commercialize SP-01A. Under the terms of the
agreement, Pharmaplaz is required to pay Samaritan $10 million upfront. To date,
under the Pharmaplaz Agreement, the amount of funds received from Pharmaplaz is
$2.15 million; $1.4 million and $750,000 were received during the first and
fourth quarter of 2007 respectively. On May 15, 2007, the CEO of Pharmaplaz,
Michael Macken, signed a personal guarantee and on May 21, 2007 a stock pledge
agreement for 943,291 (split-adjusted) shares of Samaritan Pharmaceuticals to
guarantee the balance of the $7.85 million. On May 15, 2007, the amount of
shares pledged was worth $1,300,742. On December 31, 2008, the last reported
market sale price of our Common Stock was $0.07 and the value of the stock
pledge was $66,030. As a result of Pharmaplaz's failure to timely pay the
remaining balance of 7.85 million, Pharmaplaz is not in compliance with the
terms of the Pharmaplaz Agreement. No payments were received in
2008.  During the year 2008, the Company reserved a $3,451,742 note
receivable to doubt about collection of the note.  Samaritan
recognizes Pharmaplaz’s intention is to pay the remaining balance and its
failure is due to an economic slowdown in Ireland. Samaritan will continue to
work with Pharmaplaz to collect the past due remaining balance.
  7
  At our
current level of expenditures and profits from our sales in Eastern Europe, our
cash resources are not adequate to meet our requirements into 2009. Our capital
needs will depend on many factors, including our research and development
activities, the scope and timing of our clinical trial programs, the timing of
regulatory approval for our products under development and the successful
commercialization of our products. Our needs may also depend on the magnitude
and scope of these activities, the progress and the level of success in our
clinical trials, the costs of preparing, filing, prosecuting, maintaining and
enforcing patent claims and other intellectual property rights, competing
technological and market developments, changes in or terminations of
collaboration and existing licensing arrangements, the establishment of new
collaboration and licensing arrangements and the cost of manufacturing scale-up
and development of marketing activities, if undertaken by us. We do not have
committed external sources of funding. If adequate funds are not available, we
may be required to:
  ·
              delay,
      reduce the scope of, or eliminate one or more of our research and
      development programs;
 ·
              obtain funds through arrangements
      with collaboration partners or others that may require us to relinquish
      rights to technologies, product candidates
      or products that we would otherwise seek to retain in order to develop
      or commercialize
      them ourselves;
 ·
              license rights to technologies,
      product candidates or products on terms that are less favorable to us than
      might otherwise
      be available; or
  We intend
to actively seek new financing from time to time to provide financial support
for our activities. If we raise additional funds by issuing additional stock,
further dilution to our stockholders may result, and new investors could have
rights superior to existing stockholders. If funding is insufficient at any time
in the future, we may be unable to develop or commercialize our products, take
advantage of business opportunities or respond to competitive pressures, which
could have a material adverse effect on our business.
  Our
Independent Registered Public Accounting Firm Has Issued An Unqualified Opinion
With An Explanatory Paragraph, To The Effect That There Is Substantial Doubt
About Our Ability To Continue As A Going Concern.
  The
Company’s independent registered public accounting firm has issued an
unqualified opinion with an explanatory paragraph, to the effect that there is
substantial doubt about the Company’s ability to continue as a going concern.
This unqualified opinion with an explanatory paragraph could have a material
adverse effect on the business, financial condition, results of operations and
cash flows of the Company.
  The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company has generated minimal revenues and experienced an
aggregate accumulated deficit of $50,602,309 through December 31, 2008,
comprised of both development stage losses and the 2008 post-development loss.
For the year ended December 31, 2008 and 2007, the Company incurred net losses
of $6,267,169 and $3,025,998, respectively and used cash flows from operations
of $204,557 and $1,347,122, respectively. As of December 31, 2008, the Company
had a working capital deficiency of $5,588,759.  These matters raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are described in Note 2. The
accompanying financial statements do not include any adjustments relating to the
recoverability and classification of asset carrying amounts or the amount and
classification of liabilities that might result should the Company be unable to
continue as a going concern.
  8
  We have
no committed sources of capital and do not know whether additional financing
will be available when needed on terms that are acceptable, if at all. Our
current lack of resources is exacerbated by our inability to date to collect the
remaining balance from Pharmaplaz. The addition of this going concern statement
from our independent registered public accounting firm may discourage some
investors from purchasing our Common Stock or providing alternative capital
financing. The failure to satisfy our capital requirements will adversely affect
our business, financial condition, results of operations and
prospects.
  Unless we
raise additional funds, either through the sale of equity securities or one or
more collaborative arrangements, we will need to reduce our research and
development and significantly reduce our workforce and our operating expenses.
If we do not take these actions, we will not have sufficient funds to continue
operations. Even if we take these actions, they may be insufficient,
particularly if our costs are higher than projected or unforeseen expenses
arise. Reducing our research and development or significantly reducing our
workforce or operating expenses will adversely affect our business and
prospects.
  If
We Do Not Receive And Maintain Regulatory Approvals For Our Products Or Product
Candidates, We Will Not Be Able To Commercialize Our Products, Which Would
Substantially Impair Our Ability To Generate Revenues And Materially Harm Our
Business And Financial Condition.
  Approval
from the FDA is necessary to manufacture and market pharmaceutical products in
the United States. The regulatory approval process is extensive, time-consuming
and costly, and the FDA may not approve additional product candidates, or the
timing of any such approval may not be appropriate for our product launch
schedule and other business priorities, which are subject to
change.
  Clinical
testing of pharmaceutical products is also a long, expensive and uncertain
process. Even if initial results of preclinical studies or clinical trial
results are positive, we may obtain different results in later stages of drug
development, including failure to show desired safety and efficacy. The clinical
trials of any of our product candidates could be unsuccessful, which would
prevent us from obtaining regulatory approval and commercializing the
product.
  FDA
approval of our products can be delayed, limited or not granted for many
reasons, including, among others:
  ·
              FDA
      officials may not find a product candidate safe or effective to merit an
      approval;
 ·
              FDA officials may not find that
      the data from preclinical testing and clinical trials justifies approval,
      or they may
      require additional studies that would make it commercially unattractive to
      continue pursuit of
approval;
 ·
              the FDA might not approve the
      processes or facilities of our contract manufacturers or raw
      material suppliers
      or our manufacturing processes or
  facilities;
 ·
              the
      FDA may change its approval policies or adopt new regulations;
      and
 ·
              the FDA may approve a product
      candidate for indications that are narrow or under conditions that place
      our product
      at a competitive disadvantage, which may limit our sales and marketing
      activities or otherwise adversely impact the commercial
      potential of a product.
  If the
FDA does not approve our product candidates in a timely fashion on commercially
viable terms or we terminate development of any of our product candidates due to
difficulties or delays encountered in clinical testing and the regulatory
approval process, it will have a material adverse impact on our
business.
  If
Our Products Do Not Gain Market Acceptance, Our Business Will Suffer Because We
Might Not Be Able To Fund Future Operations.
  A number
of factors may affect the market acceptance of our products or any other
products we develop or acquire, including, among others:
  ·
              the
      price of our products relative to other therapies for the same or similar
      treatments;
 ·
              the
      perception by patients, physicians and other members of the
      health;
 ·
              care
      community of the safety and effectiveness of our products for their
      prescribed treatments;
 ·
              the availability of satisfactory
      levels, or at all, of third party reimbursement for our products and
      related treatments;
 ·
              our
      ability to fund our sales and marketing efforts;
  and
 ·
              the
      effectiveness of our sales and marketing
  efforts.
  9
  In
addition, our ability to market and promote our products is restricted to the
labels approved by the FDA. If the approved labels are restrictive, our sales
and marketing efforts and market acceptance and the commercial potential of our
products may be negatively affected.
  If our
products do not gain market acceptance, we may not be able to fund future
operations, including the development or acquisition of new product candidates
and/or our sales and marketing efforts for our approved products, which would
cause our business to suffer.
  The
Company's License Agreements May Be Terminated In The Event Of A Breach; The
Company Is In Breach Of The Collaboration Agreement
 
 The
license agreements pursuant to which the Company has licensed its core
technologies for its potential drug products permit the licensors to terminate
such agreements under certain circumstances, such as the failure by the licensee
to use its reasonable best efforts to commercialize the subject drug or the
occurrence of any uncured material breach by the licensee. The license
agreements also provide that the licensor is primarily responsible for obtaining
patent protection for the licensed technology, and the licensee is required to
reimburse the licensor for costs it incurs in performing these activities. The
license agreements also require the payment of specified royalties. Any
inability or failure to observe these terms or pay these costs or royalties may
result in the termination of the applicable license agreement in certain cases.
The termination of any license agreement could force us to curtail our business
operations. As of April 11, 2008, Samaritan Pharmaceuticals and Samaritan
Therapeutics' payment to McGill University is in arrears, which may permit
our collaborator to terminate the research and development agreement. The
termination of any license agreement could force us to curtail our business
operations.
  Protecting
Our Proprietary Rights is Difficult and Costly Which Could Have Material Adverse
Effect On Our Business
 
 The
patent positions of pharmaceutical companies can be highly uncertain and involve
complex legal and factual questions. The license agreements also provide that
the licensor is primarily responsible for obtaining patent protection for the
licensed technology, and the licensee is required to reimburse the licensor for
costs it incurs in performing these activities. Accordingly, we cannot predict
the breadth of claims allowed in these companies' patents or whether the Company
may infringe or be infringing on these claims. Patent disputes are common and
could preclude the commercialization of our products. Patent litigation is
costly in its own right and could subject us to significant liabilities to third
parties. In addition, an adverse decision could force us to either obtain
third-party licenses at a material cost or cease using the technology or product
in dispute.
 
 The
Company's Success Will Be Dependent Upon The Licenses And Proprietary Rights It
Receives From Other Parties, And On Any Patents It May
Obtain.  Failure To Obtain Such Rights Could Have A Material Adverse
Affect On Our Business.
 
 Our
success will depend in large part on the ability of the Company and its
licensors to (a) maintain license and patent protection with respect to their
drug products, (b) defend patents and licenses once obtained, (c) maintain trade
secrets, (d) operate without infringing upon the patents and proprietary rights
of others and (e) obtain appropriate licenses to patents or proprietary rights
held by third parties if infringement should otherwise occur, both in the United
States and in foreign countries. We have obtained licenses to patents and other
proprietary rights from Georgetown University and George Washington
University.
 
 The
patent positions of pharmaceutical companies, including those of the Company,
are uncertain and involve complex legal and factual questions. There is no
guarantee the Company or its licensors have or will develop or obtain the rights
to products or processes that are patentable, that patents will issue from any
of the pending applications or that claims allowed will be sufficient to protect
the technology licensed to the Company. In addition, we cannot be certain that
any patents issued to or licensed by the Company will not be challenged,
invalidated, infringed or circumvented, or that the rights granted thereunder
will provide competitive advantages to the Company.
  10
 
 Litigation,
which could result in substantial cost, may also be necessary to enforce any
patents to which the Company has rights, or to determine the scope, validity and
unenforceability of other parties' proprietary rights, which may affect the
rights of the Company. U.S. patents carry a presumption of validity and
generally can be invalidated only through clear and convincing evidence. There
can be no assurance that our licensed patents would be held valid by a court or
administrative body or an alleged infringer would be found to be infringing. The
mere uncertainty resulting from the institution and continuation of any
technology-related litigation or interference proceeding could have an adverse
material effect on the Company pending resolution of the disputed
matters.
  We may
also rely on unpatented trade secrets and expertise to maintain a competitive
position, which we seek to protect, in part, by confidentiality agreements with
employees, consultants and others. There can be no assurance these agreements
will not be breached or terminated, that we will have adequate remedies for any
breach or that trade secrets will not otherwise become known or be independently
discovered by competitors.
  We
Are Faced With Intense Competition And Industry Changes, Which May Make It More
Difficult For Us To Achieve Significant Market Penetration, Which Could
Adversely Affect Our Business.
  The
pharmaceutical and biotech industry generally is characterized by rapid
technological change, changing customer needs, and frequent new product
introductions. If our competitors' existing products or new products are more
effective than or considered superior to our products, the commercial
opportunity for our products will be reduced or eliminated. We face intense
competition from companies in our marketplace as well as companies offering
other treatment options. Many of our potential competitors are significantly
larger than we are and have greater financial, technical, research, marketing,
sales, distribution and other resources than we do. We believe there will be
intense price competition for products developed in our markets. Our competitors
may develop or market technologies and products that are more effective or
commercially attractive than any that we are developing or marketing. Our
competitors may obtain regulatory approval, and introduce and commercialize
products before we do. These developments could force us to curtail or cease our
business operations. Even if we are able to compete successfully, we may not be
able to do so in a profitable manner.
  If
We Are Unable To Continue Product Development, Our Business Will Suffer, Which
Could Adversely Affect Our Business.
  Our
success depends on our ability to develop our products. We currently do not have
sufficient funds to continue the development of our products.  In
addition, we may experience difficulties that could delay or prevent the
successful development and commercialization of these products. Our products in
development may not prove safe and effective in clinical trials. Clinical trials
may identify significant technical or other obstacles that must be overcome
before obtaining necessary regulatory or reimbursement approvals. In addition,
our competitors may succeed in developing commercially viable products that
render our products obsolete or less attractive. Failure to successfully develop
and commercialize new products and enhancements would likely have a significant
negative effect on our financial prospects.
  There
Is No Assurance That Our Products Will Have Market Acceptance, Which Could
Adversely Affect Our Business.
 
 The
success of the Company will depend in substantial part on the extent to which a
drug product, once approved, achieves market acceptance. The degree of market
acceptance will depend upon a number of factors, including (a) the receipt and
scope of regulatory approvals, (b) the establishment and demonstration in the
medical community of the safety and efficacy of a drug product, (c) the
product's potential advantages over existing treatment methods and (d)
reimbursement policies of government and third party payers. We cannot predict
or guarantee physicians, patients, healthcare insurers, maintenance
organizations, or the medical community in general, will accept or utilize any
drug product of the Company. If our products do not develop market acceptance,
we will be forced to curtail or cease our business operations.
  11
 
 There
Is Uncertainty Relating To Third-Party Reimbursement, Which Is Critical To
Market Acceptance Of Our Products And The Viability Of Our
Business.
 
 International
market acceptance of our products may depend, in part, upon the availability of
reimbursement within prevailing health care payment systems. Reimbursement and
health care payment systems in international markets vary significantly by
country, and include both government sponsored health care and private
insurance. We may not obtain international reimbursement approvals in a timely
manner, if at all. Our failure to receive international reimbursement approvals
may negatively impact market acceptance of our products in the international
markets in which those approvals are sought and could force us to curtail or
cease our business operations.
 
 From time
to time significant attention has been focused on reforming the health care
system in the United States and other countries. Any changes in Medicare,
Medicaid or third-party medical expense reimbursement, which may arise from
health care reform, may have a material adverse effect on reimbursement for our
products or procedures in which our products are used and may reduce the price
we are able to charge for our products. In addition, changes to the health care
system may also affect the commercial acceptance of products we are currently
developing and products we may develop in the future.
 
 If
We Are Unable To Protect Our Intellectual Property, We May Not Be Able To
Operate Our Business Profitably, Which Could Have An Adverse Affect On Our
Business.
 
 Our
success will depend to a significant degree on our ability to secure and protect
intellectual property rights and to enforce patent and trademark protections
relating to our technology which we license. From time to time, litigation may
be advisable to protect our intellectual property position. However, these legal
means afford only limited protection and may not adequately protect our rights
or permit us to gain or keep any competitive advantage. Any litigation in this
regard could be costly, and it is possible that we will not have sufficient
resources to fully pursue litigation or to protect our intellectual property
rights. It could result in the rejection or invalidation of our existing and
future patents. Any adverse outcome in litigation relating to the validity of
our patents, or any failure to pursue litigation or otherwise to protect our
patent position, could force us to curtail or cease our business operations.
Also, even if we prevail in litigation, the litigation would be costly in terms
of management distraction as well as in terms of money. In addition,
confidentiality agreements with our employees, consultants, customers, and key
vendors may not prevent the unauthorized disclosure or use of our intellectual
property. It is possible that these agreements could be breached or that they
might not be enforceable in every instance, and that we might not have adequate
remedies for any such breach. Enforcement of these agreements may be costly and
time consuming. Furthermore, the laws of foreign countries may not protect our
intellectual property rights to the same extent as the laws of the United
States.
 
 If
We Are Unable To Operate Our Business Without Infringing Upon The Intellectual
Property Rights Of Others, We May Not Be Able To Operate Our Business
Profitably.
 
 Our
success depends on our ability to operate without infringing upon the
proprietary rights of others. We endeavor to follow developments in our field,
and we do believe that we have freedom to operate with respect to our core
technologies. To the extent that planned or potential products would infringe
patents or other intellectual property rights held by third parties, we would
need licenses under such patents or other intellectual property rights to
continue development and marketing of our products protected by those third
party patents or other intellectual property rights. Any required licenses may
not be available on acceptable terms, if at all. If we do not obtain such
licenses, we may need to design around other parties’ patents or we may not be
able to proceed with the development, manufacture or sale of our
products.
 
 We
Maintain No General Liability Insurance Policy
  Our
business exposes us to potential product liability claims that are inherent in
the testing, production, marketing, and sale of pharmaceuticals products. We
maintain no commercial general liability policy and do not maintain insurance in
the amounts or scope sufficient to provide us with adequate coverage. A claim
would have to be paid out of cash reserves, which could have a material adverse
effect on our business, financial condition, results of operations and cash
flows and force us to curtail or cease our operations. In addition, any product
liability claim likely would harm our reputation in the industry and our ability
to develop and market products in the future.
 12
 Insurance
Coverage Is Increasingly More Difficult To Obtain or Maintain
  Obtaining insurance for
our business, property and products is increasingly more costly and narrower in
scope, and requires the Company to assume more risk in the future. If we are
subject to third party claims or suffer a loss or damage, we will be required to
bear that risk. Furthermore, any first-or-third-party claims made against the
Company may impact our ability to obtain or maintain insurance coverage at
reasonable costs or at all in the future.
  Our
Success Will Depend On Our Ability To Attract And Retain Key
Personnel.  The Failure To Retain Key Personnel Could Adversely Affect
Our Business.
 
 In order
to execute our business plan, we need to attract, retain and motivate a
significant number of highly qualified managerial, technical, financial and
sales personnel. If we fail to attract and retain skilled scientific and
marketing personnel, our research and development and sales and marketing
efforts will be hindered. Our future success depends to a significant degree
upon the continued services of key management personnel, including Dr. Janet
Greeson, our Chief Executive Officer, President and Chairman of the Board of
Directors, and Dr. Vassilios Papadopoulos, Chief Scientist of the Science of
Technology Advisory Committee and our key consultant.   As of
December 31, 2008, the Company has accrued compensation for Dr. Janet
Greeson of $1,234,455.  We do not maintain key man insurance on
either of these individuals. The loss of their services could delay our product
development programs and our research and development efforts at the Research
Centre of McGill University. In addition, the loss of Dr. Greeson is grounds for
our Research Collaboration with the Research Centre of McGill University Health
Centre to terminate. In addition, competition for qualified employees among
companies in the biotechnology and biopharmaceutical industry is intense and we
cannot be assured that we would be able to recruit qualified personnel on
commercially acceptable terms, or at all, to replace them.
 
 We
Are Dependent On Third Parties For A Significant Portion Of Our Bulk Supply And
The Formulation, Fill And Finish Of Our Product Candidates, The Loss Of Which
May Adversely Affect Our Business.
 
 We
currently produce a substantial portion of clinical product candidates' supply
at our collaborative partner's Ireland manufacturing facility. However, we also
depend on third parties for a significant portion of our product candidates'
bulk supply as well as for some of the formulation, fill and finish of product
candidates that we manufacture. Pharmaplaz is our third-party contract
manufacturer of product candidates' bulk drug; accordingly, our clinical supply
of product candidates is currently significantly dependent on Pharmaplaz's
production schedule for product candidates. We would be unable to produce
product candidates in sufficient quantities to substantially offset shortages in
Pharmaplaz's scheduled production if Pharmaplaz or other third-party contract
manufacturers used for the formulation, fill and finish of product candidates
bulk drug were to cease or interrupt production or services or otherwise fail to
supply materials, products or services to us for any reason, including due to
labor shortages or disputes, regulatory requirements or action or contamination
of product lots or product recalls. We cannot guarantee that an alternative
third-party contract manufacturer would be available on a timely basis or at
all. This in turn could materially reduce our ability to satisfy demand for
product candidates, which could materially and adversely affect our operating
results.
 
 Our Corporate Compliance Program
Cannot Guarantee That We Are In Compliance With All Potentially Applicable U.S.
Federal And State Regulations And All Potentially Applicable Foreign
Regulations.
 
 The
development, manufacturing, distribution, pricing, sales, marketing and
reimbursement of our products, together with our general operations, is subject
to extensive federal and state regulation in the United States and to extensive
regulation in foreign countries. While we have developed and instituted a
corporate compliance program based on what we believe to be current best
practices, we cannot assure you that we or our employees are or will be in
compliance with all potentially applicable U.S. federal and state regulations
and/or laws or all potentially applicable foreign regulations and/or laws. If we
fail to comply with any of these regulations and/or laws a range of actions
could result, including, but not limited to, the termination of clinical trials,
the failure to approve a product candidate, restrictions on our products or
manufacturing processes, including withdrawal of our products from the market,
significant fines, exclusion from government healthcare programs or other
sanctions or litigation.
  13
  RISKS
ASSOCIATED WITH AN INVESTMENT IN OUR COMMON STOCK
  Our
Stock Is Currently Listed On The OTC Pink Sheets Which Limits The Trading Of Our
Stock
 
 Our
Common Stock currently trades on the OTC Pink Sheets which is generally
considered to be a less efficient market than markets such as NASDAQ or other
national exchanges.  This may cause difficulty in obtaining future
financing, which could have an adverse affect on our business. Broker-dealers
who sell stock on the OTC market must provide purchasers of these stocks with a
standardized risk-disclosure document prepared by the SEC. This document
provides information about our Common Stock and the nature and level of risks
involved in investing in the OTC market. A broker must also give a purchaser,
orally or in writing, bid and offer quotations and information regarding broker
and salesperson compensation, make a written determination that our Common Stock
is a suitable investment for the purchaser, and obtain the purchaser's written
agreement to the purchase. Broker-dealers must also provide customers that hold
OTC stock in their accounts with such broker-dealer a monthly statement
containing price and market information relating to the OTC stock. If an OTC
stock is sold in violation of the OTC stock rules, purchasers may be able to
cancel their purchase and get their money back. If applicable, the OTC stock
rules may make it difficult for investors to sell their shares of our Common
Stock. Because of the rules and restrictions applicable to an OTC market stock,
there is less trading in OTC stocks and the market price of our Common Stock may
be adversely affected. Also, many brokers choose not to participate in OTC stock
transactions. Accordingly, purchasers may not always be able to resell shares of
our Common Stock publicly at times and prices that they feel are
appropriate.
 
 A
Sale Of A Substantial Number Of Shares Of Our Common Stock May Cause The Price
Of Our Common Stock To Decline, Which May Cause Difficulty In Obtaining Future
Financing.
 
 If our
stockholders sell substantial amounts of our Common Stock in the public market,
the market price of our Common Stock could fall. These sales also may make it
more difficult for us to sell equity or equity-related securities in the future
at a time and price that we deem reasonable or appropriate. Several of our
shareholders hold restricted Common Stock that may be eligible for sale pursuant
to Rule 144 under the Securities Act of 1933. Sales of our Common Stock by
certain present stockholders under Rule 144 may, in the future, have a
depressive effect on the market price of our securities. In addition, the sale
of shares by officers and directors and other affiliated shareholders may also
have a depressive effect on the market for our securities.
 
 Because
We Do Not Intend To Pay Dividends, You May Benefit From An Investment In Our
Common Stock Only If It Appreciates In Value.
 
 We have
paid no cash dividends on any of our Common Stock to date, and we currently
intend to retain our future earnings, if any, to fund the development and growth
of our business. As a result, we do not expect to pay any cash dividends in the
foreseeable future. The success of your investment in our Common Stock will
likely depend entirely upon any future appreciation. There is no guarantee that
our Common Stock will appreciate in value or even maintain the price at which
you purchased your shares.
 
 The
Market Price Of Our Common Stock Is Highly Volatile.
 
 The
market price of our Common Stock has been and is expected to continue to be
highly volatile. Various factors, including announcements of technological
innovations by us or other companies, regulatory matters, new or existing
products or procedures, concerns about our financial position, operating
results, litigation, government regulation, developments or disputes relating to
agreements, patents or proprietary rights may have a significant impact on the
market price of our Common Stock. If our operating results are below the
expectations of securities analysts or investors, the market price of our Common
Stock may fall abruptly and significantly.
  Future
sales of our Common Stock, including shares issued upon the exercise of
outstanding options and warrants or hedging or other derivative transactions
with respect to our Common Stock, could have a significant negative effect on
the market price of our Common Stock. These sales also might make it more
difficult for us to sell equity securities or equity-related securities in the
future at a time and price that we would deem appropriate.
  14
  We may
enter into registration rights agreements in connection with certain financings
pursuant to which we agreed to register for resale by the investors the shares
of Common Stock issued. Sales of these shares could have a material adverse
effect on the market price of our shares of Common Stock.
  Under
Provisions Of The Company's Articles Of Incorporation, Bylaws And Nevada Law,
The Company's Management May Be Able To Block Or Impede A Change In
Control
 
 The issuance of blank check
preferred stock, where the Board of Directors can designate rights or
preferences, may make it more difficult for a third party to acquire, or may
discourage a third party from acquiring, a majority of our voting stock. These
and other provisions in our Articles of Incorporation (restated as last amended
November 1, 2007) and in our Bylaws (restated as last amended March 20,
2008), as well as certain provisions of Nevada law, could delay or impede the
removal of incumbent directors and could make it more difficult to effect a
merger, tender offer or proxy contest involving a change of control of the
Company, even if such events could be beneficial to the interest of the
shareholders as a whole. Such provisions could limit the price that certain
investors might be willing to pay in the future for our Common
Stock.
 
 Officers
and Directors Liabilities Are Limited Under Nevada Law
 
 Pursuant
to the Company's Articles of Incorporation (restated as last amended November 1,
2007) and Bylaws (restated as last amended March 20, 2008), and as authorized
under applicable Nevada law, Directors are not liable for monetary damages for
breach of fiduciary duty, except in connection with a breach of the duty of
loyalty for (a) acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (b) for dividend
payments or stock repurchases illegal under applicable Nevada law or (c) any
transaction in which a Director has derived an improper personal benefit. The
Company's Articles of Incorporation (restated as last amended November 1, 2007)
and Bylaws (restated as last amended March 20, 2008) provide that the
Company must indemnify its officers and Directors to the fullest extent
permitted by applicable Nevada law for all expenses incurred in the settlement
of any actions against such persons in connection with their having served as
officers or Directors.
  ITEM 1B.
      UNRESOLVED STAFF COMMENTS.None.ITEM 2.
      PROPERTIES
  The
Company's executive offices are currently located at 2877 Paradise Road, Suite
801, Las Vegas, Nevada 89109. The Company has a 2,500 square foot office space
which is rented at a base rent of $4,500.00 per month. In addition, pursuant to
a research collaboration, the Research Institute of the McGill University Health
Centre provides office and laboratory space at the Samaritan Research
Laboratories.
  ITEM
3. LEGAL PROCEEDINGS
  We are,
from time to time, involved in various legal proceedings in the ordinary course
of our business. While it is impossible to predict accurately or to determine
the eventual outcome of these matters, the Company believes the outcome of these
proceedings will not have an adverse material effect on the financial statements
of the Company. Other than routine litigation incidental to our business, there
are no legal proceedings or actions pending at this time.
  ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  None.
  15
  PART
      II
  ITEM
5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES.
  The
Company's Common Stock is traded on the Over the Counter Pink Sheets under the
symbol "SPHC.PK". The following table sets forth the range of high and low bid
prices for our Common Stock for each quarter within the last two (2) fiscal
years. Such quotes reflect inter-dealer prices without retail mark-up, mark-down
or commission and may not represent actual transactions. The quotations may be
rounded for presentation.
  FISCAL YEAR
      ENDEDDecember 31,
      2008
              
              
              December 31,
      2007High
              
              
              Low
              
              
              High
              
              
              LowFirst
      Quarter
              
              $
              0.45
              
              
              $
              0.21
              
              
              $
              0.38
              
              
              $
              0.17Second
      Quarter
              
              $
              0.39
              
              
              $
              0.25
              
              
              $
              0.31
              
              
              $
              0.16Third
      Quarter
              
              $
              0.40
              
              
              $
              0.14
              
              
              $
              1.35
              
              
              $
              0.16Fourth
      Quarter
              
              $
              0.35
              
              
              $
              0.06
              
              
              $
              0.84
              
              
              $
              0.25
  Dividends
  We have
not paid any dividends on our Common Stock and do not anticipate paying any cash
dividends in the near future. We intend to retain any earnings to finance the
growth of the business. We make no assurances we will ever pay cash dividends.
Whether we pay any cash dividends in the future will depend on the Company's
financial condition, results of operations and other factors the Board of
Directors will consider.
  Recent
Sales of Unregistered Securities
  The
following discussion sets forth securities sold by the Company in the last three
(3) fiscal years. These securities were shares of Common Stock of the Company.
They were sold for cash and, unless otherwise noted, sold in private
transactions to persons believed to be of a class of accredited investors not
affiliated with the Company unless otherwise noted and purchasing the shares
with investment intent, and the Company relied upon, among other possible
exemptions, Section 4(2) of the Securities Act of 1933, as amended. The
Company's reliance on said exemption was based upon the fact no public
solicitation was used by the Company in the offer or sale, and the securities
were legend shares, along with a notation at the respective transfer agent,
restricting the shares from sale or transfer as is customary with reference to
Rule 144 of the SEC.
  During
the fiscal year ending December 31, 2008, the Company exchanged 5,695,450 shares
of Common Stock for $6,553,044 for services and cash.  During the
fiscal year ending December 31, 2007, the Company exchanged 4,384,353 shares of
Common Stock for $3,178,072 for services and cash, which includes $231,500 that
was actually received during 2006 and recorded as common stock to be issued at
12/31/2006. The Company had no exercise of stock options during
2008.
 
 Issuer
Purchase of Equity Securities
 
 We did
not make any purchases of our Common Stock during the three months ended
December 31, 2008, which is the fourth quarter of our fiscal year.
  16
 
 Holders
 
 As of
April 14, 2009, there were approximately 932 holders of record of our Common
Stock. This number was determined from records maintained by our transfer agent
and does not include beneficial owners of our securities whose securities are
held in the names of various dealers and/or clearing agencies.
 
 The
following graph sets forth the cumulative total stockholder return (assuming
reinvestment of dividends) to the Company's stockholders during the five-year
period ended December 31, 2008, as well as an overall stock market index (AMEX
Market Index) and the Company's peer group index (AMEX Biotech
Index):
  COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG SAMARITAN PHARMACEUTICALS, NASDAQ MARKET INDEX AND NASDAQ BIOTECH INDEX
(1)
  [The
following information was depicted as a line chart in the printed
material]
  Company/Index
              
              Base
      Period12/31/2003
              
              
              12/31/2004
              
              
              12/31/2005
              
              
              12/31/2006
              
              
              12/31/2007
              
              
              12/31/2008SPHC
              
              
              100
              
              
              $
              264.86
              
              
              $
              108.11
              
              
              $
              56.76
              
              
              $
              14.86
              
              
              $
              3.15Nasdaq Biotech
      Index
              
              
              100
              
              
              $
              106.13
              
              
              $
              109.14
              
              
              $
              110.25
              
              
              $
              115.30
              
              
              $
              89.37Nasdaq Composite
      Index
              
              
              100
              
              
              $
              108.59
              
              
              
              110.08
              
              
              $
              120.56
              
              
              $
              132.39
              
              
              $
              78.72
  1)
Assumes $100 Invested On December 31, 2003, Assumes Dividend Reinvested, Fiscal
Year Ending December 31, 2008.
  The
information under "Performance Graph" is not deemed filed with the Securities
and Exchange Commission and is not be incorporated by reference in any filing of
Samaritan under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, whether made before or after the date of this
10-K and irrespective of any general incorporation language in those
filings.
  ITEM
6. SELECTED FINANCIAL DATA
  The
information called for by this Item is not applicable to us because we are a
small reporting company.
  ITEM
7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
  Samaritan
Pharmaceuticals, Inc. (including the subsidiaries, referred to as Samaritan, the
"Company", "its", "we", and "our"), formed in September 1994, is an
entrepreneurial biopharmaceutical company, focused on commercializing innovative
therapeutic products to relieve the suffering of patients with Alzheimer's
disease; cancer; cardiovascular disease, HIV, and Hepatitis C; as well as,
commercializing its acquired marketing and sales rights, to sell marketed
revenue-generating products, in Greece, and/or various Eastern European
countries.
 
 Samaritan
has partnered its oral entry inhibitor HIV drug SP-01A, a drug that has
demonstrated safety and efficacy, in Phase II clinical trials, with Pharmaplaz,
Ireland to advance to Phase III clinical trials. In addition, Samaritan aims to
commercialize three (3) market drug candidates with late-stage preclinical
development programs. Samaritan is evaluating the use of Caprospinol, SP-233 in
Alzheimer's disease patients; the use of SP-1000 with acute coronary disease
patients; and the use of SP-30 as an "oral treatment" for Hepatitis C
patients.
 
 During
2008, we significantly reduced our ongoing expenses due to the inability of the
Company to raise funds on favorable terms.  Additionally in 2008,
Samaritan signed a worldwide exclusive agreement with Taconic Farms to
commercialize "The Samaritan Alzheimer's Rat Model."  The "forgetful"
rat model is a research tool used by scientists to study the effectiveness of
their new drugs to treat Alzheimer's disease.
  17
  In 2009,
we are seeking to raise additional funds. We are currently operating the Company
in a manner that we believe maximizes the value of our business for our
creditors and stockholders by focusing on marketing and sales in our
territories, as well as continuing our research programs and looking for
additional ways to reduce our operating expenses. If we are unable to resolve
our situation to raise sufficient additional funds, we would be required to
further reduce operating expenses, by, among other things, curtailing
significantly or delaying or eliminating part or all of our development programs
or scaling back our commercial operations.
  Commercialization
Business Model
  Our
commercialization business model is focused dually on, the partnering of our
promising innovative products to pharmaceutical companies; and the acquisition
of the marketing and sales rights to revenue-generating marketed products for
sales in Greece and Eastern Europe. This model allows Samaritan to focus on our
core competencies in drug discovery and drug development. Our commercialization
business model is entirely focused on achieving growth and maximizing value for
the benefit of our investors.
 
 Marketed
Products
  Samaritan
has collaborative relationships with other pharmaceutical companies to
commercialize branded approved prescription products in selected niche
territories, such as, in Greece, Albania, Bosnia, Bulgaria, Croatia, Cyprus,
Czech Republic, Egypt, FYROM, Hungary, Montenegro, Poland, Romania, Serbia,
Slovakia, Slovenia, Syria and Turkey. We use our expertise to register approved
drugs with regulatory agencies in the country we have acquired the rights for;
and then, upon regulatory approval, we distribute, market and sell these
products. We have in-licensed the rights to sell specialty pharmaceutical
products, Amphocil from Three Rivers Pharmaceuticals, Infasurf from Ony, Inc,
Caphosol, Collatamp, Erwinase, Kidrolase, and the Rapydan pain patch from EUSA,
Mepivamol, Methadone, Morphine Sulphate, Naloxone, Naltrexone, Oramorph and
Pethidine from Molteni Farmaceutici and Abioklad from Abiogen Pharma. Our
efforts are focused on specialist physicians in private practice or at hospitals
and major medical centers in our territories. Below is a description of our
in-licensed products.
  ABIOKLAD(R)
  ABIOKLAD(R)
(Disodium Clodronate) is a bisphosphonate that binds to calcium and inhibits
osteoclastic bone resorption, crystal formation and dissolution, resulting in a
reduction of bone turnover.
  ABIOKLAD(R)
is indicated for the control of malignancy-associated hypercalcemia (high levels
of calcium in blood), the inhibition of osteolysis (degeneration of bone tissue)
resulting malignant tumors and the decrease of bone pain.
  Samaritan
signed an exclusive distribution deal for Greece, Cyprus, and Turkey with
Abiogen Pharmaceuticals on March 14, 2008.
  Samaritan
Pharmaceuticals is preparing marketing applications for ABIOKLAD (R) with
regulatory authorities in Greece and Cyprus to gain country marketing
authorization drug approval.
  AMPHOCIL(R)
  AMPHOCIL(R)
is a lipid form of amphotericin B indicated for the treatment of invasive
aspergillosis, a life threatening systemic fungal infection. AMPHOCIL(R) is
indicated for the treatment of severe systemic and/or deep mycoses in cases
where toxicity or renal failure precludes the use of conventional amphotericin B
in effective doses, and in cases where prior systemic antifungal therapy has
failed. Fungal infections successfully treated with AMPHOCIL(R) include
disseminated candidiasis and aspergillosis. AMPHOCIL(R) has been used
successfully in severely neutropenic patients.
  AMPHOCIL(R)
is an approved FDA prescription product owned by Three Rivers Pharmaceuticals,
Inc. and marketed by Three Rivers Pharmaceuticals, Inc. in the US. Samaritan
signed an exclusive distribution deal for Greece and Cyprus with Three Rivers on
December 14, 2005. Three Rivers added the territory of Ireland to Samaritan's
existing exclusive licensing agreement to market Amphocil in Greece and Cyprus
in October 2007.
  Samaritan
markets AMPHOCIL(R) in Greece.
  18
  CAPHOSOL(R)
 
 CAPHOSOL(R)
is a topical oral agent, is a U.S. patented, prescription medical device that
lubricates the mucosa and helps maintain the integrity of the oral cavity
through its mineralizing potential. The distinguishing feature of CAPHOSOL(R) is
its high concentrations of calcium and phosphate ions, which are hypothesized to
exert their beneficial effects by diffusing into intracellular spaces in the
epithelium and permeating the mucosal lesion in mucositis. Calcium ions play a
crucial role in several aspects of the inflammatory process, the blood clotting
cascade, and tissue repair and phosphate ions may be a valuable supplemental
source of phosphates for damaged mucosal surfaces.
 
 Samaritan
has acquired the exclusive rights from EUSA for CAPHOSOL(R) and is negotiating
an addendum to the original distribution agreement to include Caphosol(R) for
marketing and distribution in Greece and Cyprus. Caphosol(R) is an approved FDA
prescription product and is owned by EUSA Pharma and marketed by EUSA Pharma in
the U.S.
  COLLATAMP(R)
  COLLATAMP(R)is a lyophilized
collagen sponge impregnated with the aminoglycoside antibiotic gentamicin.
Collatamp(R) is approved for the treatment and prevention of post-surgical
infection.
  On June
1, 2008, Samaritan signed an exclusive agreement with EUSA for the marketing and
distribution of the product Collatamp(R) in Greece and Cyprus. Collatamp(R) is
an approved FDA prescription product and is owned by EUSA Pharma and marketed by
EUSA Pharma in the U.S.
  Samaritan
is marketing Collatamp(R) in Greece and has a pending marketing application with
regulatory authorities in Cyprus to gain country marketing authorization drug
approval.
  ELAPRASE(R)
  ELAPRASE(R)
is a human enzyme replacement therapy for the treatment of Hunter syndrome, also
known as Mucopolysaccharidosis II (MPS II). Hunter syndrome is a rare,
life-threatening genetic condition that results from the absence or insufficient
levels of the lysosomal enzyme iduronate-2-sulfatase. Without this enzyme,
cellular waste products accumulate in tissues and organs, which then begin to
malfunction.
  ELAPRASE(R)
was granted marketing authorization for the long-term treatment of patients with
Hunter's disease by the European Commission in January 2007. ELAPRASE(R) is the
first, and only, enzyme replacement therapy for Hunter's disease patients and
was launched in the U.S. in July 2006.
  On
December 19, 2007, the Company received pricing approval for ELAPRASE from the
Greek Ministry of Development. On March 1, 2007, Samaritan signed an exclusive
licensing agreement with Shire Human Genetic Therapies (SHPGY.O) to market and
sell Elaprase in Greece and Cyprus.
  The year
2008 was the last year that Samaritan marketed Elaprase.
  ERWINASE(R)
  ERWINASE(R)
is indicated for the treatment of Acute Lymphoblastic Leukemia (ALL). Asparagine
is an amino acid that is essential for cell growth; it is produced by most
cells, but not all blood cells. Mutated (cancer) cells in ALL rely on asparagine
circulating in the blood for growth. L-sparaginase is an enzyme that lowers
circulating asparagine levels in the blood thereby depriving the mutated blood
cells of asparagine and inhibiting their growth.
  On March
10, 2008, Samaritan signed an exclusive agreement with EUSA for the marketing
and distribution of the product Erwinase(R) in Greece and Cyprus. Erwinase(R) is
an approved FDA prescription product and is owned by EUSA Pharma and marketed by
EUSA Pharma, in the U.S.
  Samaritan
is marketing Erwinase(R) in Greece and has a pending marketing application with
regulatory authorities in Cyprus to gain country marketing authorization drug
approval.
  19
  INFASURF(R)
  INFASURF(R)
treats and prevents Respiratory Distress Syndrome (RDS). This syndrome occurs
when infants lack surfactant, a natural substance normally produced in the body,
which is necessary for lungs to function normally. INFASURF(R) is used
exclusively in hospitals with a neonatal intensive care unit (NICU) and is
administered by neonatologists, neonatal nurses, neonatal nurse practitioners
and respiratory therapists.
  On
January 16, 2007, Samaritan signed an exclusive agreement with Siraeo, Ltd for
the marketing and distribution of the product INFASURF(R) in Turkey, Serbia,
Bosnia, Macedonia, Albania, Egypt and Syria. INFASURF(R) is an approved FDA
prescription product owned by ONY, Inc. and marketed by Forest Laboratories in
the U.S.
  Samaritan
utilizes the US FDA approved regulatory file in preparing marketing applications
for INFASURF(R) with regulatory authorities in Turkey, Serbia, Bosnia,
F.Y.R.O.M., Albania, Egypt and Syria to gain country marketing authorization
drug approval.
  KIDROLASE(R)
  KIDROLASE(R)
is indicated in the treatment of Acute Lymphoblastic Leukemia. Asparagine is an
amino acid that is essential for cell growth; it is produced by most cells, but
not all blood cells. Mutated (cancer) cells in ALL rely on asparagine
circulating in the blood for growth. L-Asparaginase is an enzyme that lowers
circulating asparagine levels in the blood thereby depriving the mutated blood
cells of asparagine and inhibiting their growth.
  On March
10, 2008, Samaritan signed an exclusive agreement with EUSA for the marketing
and distribution of the product Kidrolase(R) in Greece and Cyprus. Kidrolase(R)
is an approved FDA prescription product and is owned by EUSA Pharma and marketed
by EUSA Pharma, in the U.S.
  Samaritan
utilizes the US FDA approved regulatory file in preparing marketing applications
for Kidrolase(R) with regulatory authorities in Greece and Cyprus to gain
country marketing authorization drug approval.
  MEPIVAMOL(R)
  MEPIVAMOL(R)
(Mepivacaine) is an effective and reliable local anesthetic of intermediate
duration and low systemic toxicity. It is widely used for regional anesthetic
procedures such as IVRA, infiltration, epidural blockade, plexus and peripheral
nerve blockade. MEPIVAMOL(R) is approved by the Italian Ministry of Health (The
equivalent to the US FDA) and is owned by Molteni Farmaceutici, Inc. and
marketed by Molteni Farmaceutici, Inc. in Italy.
  On
January 1, 2007, Samaritan entered into an exclusive licensing agreement with
Molteni Farmaceutici for the marketing and distribution of MEPIVAMOL(R) in the
countries of Greece and Cyprus.
  Samaritan
utilizes the Italian Ministry of Health approved regulatory file in preparing
marketing applications for MEPIVAMOL(R) with regulatory authorities in Greece
and Cyprus to gain country marketing authorization drug approval.
  METHADONE
HCL(R)
  METHADONE
HCL(R) is an opiate agonist. METHADONE HCL(R) prevents heroin or morphine from
interacting with receptors for natural painkillers called endorphins, blocking
the effects of the addictive drugs and reducing the physical cravings. METHADONE
HCL(R) is approved by the Italian Ministry of Health and is owned by Molteni
Pharmaceuticals, Inc. and marketed by Molteni Farmaceutici, Inc. in
Italy.
  20
  On
January 1, 2007, Samaritan entered into an exclusive licensing agreement with
Molteni Farmaceutici for the marketing and distribution of METHADONE HCL(R) in
the countries of Greece and Cyprus.
  METHADONE
HCL(R) can only be sold in Greece and Cyprus via a centralized government
tender. Samaritan has a tender application prepared for the next announcement by
Greek authorities to accept price bids for this product.
  MORPHINE
SULPHATE(R)
  MORPHINE
SULPHATE(R) (Injectable Formulation) relieves moderate to severe pain by binding
to brain receptors. Morphine Sulphate may be used to control the pain following
surgery, child birth, and other procedures. It may also be used to treat the
pain associated with cancer, heart attacks, sickle cell disease and other
medical conditions.
  On
January 1, 2007, Samaritan entered into an exclusive licensing agreement with
Molteni Farmaceutici for the marketing and distribution of MORPHINE SULPHATE(R)
in the countries of Greece and Cyprus.
  MORPHINE
SULPHATE(R) can only be sold in Greece and Cyprus via a centralized government
tender. During the first quarter of 2008, Samaritan received its first tender
purchase order of Morphine Sulfate from the Institute of Pharmaceutical Research
and Technology (IFET). Samaritan has prepared a tender application for the next
request by Greek authorities for applications.
  NALOXONE
MOLTENI(R)
  NALOXONE
MOLTENI(R) is an opioid antagonist which reverses the effects of opioid
overdose, for example heroin and morphine overdose. Specifically, Naloxone is
used in opioid overdoses for countering life-threatening depression of the
central nervous system and respiratory system.
  On
January 1, 2007, Samaritan entered into an exclusive licensing agreement with
Molteni Farmaceutici for the marketing and distribution of NALOXONE MOLTENI(R)
in the countries of Greece and Cyprus.
  NALOXONE(R)
will be sold and distributed by Samaritan on a named patient basis until the
pricing and the reimbursement of NALOXONE(R) is established in Greece and
Cyprus, with the relevant regulatory authorities.
  NALTREXONE
MOLTENI(R)
  NALTREXONE
MOLTENI(R) is an opioid antagonist which is used to help people who have a
narcotic or alcohol addiction stay drug free. NALTREXONE MOLTENI(R) is used
after the patient has stopped taking drugs or alcohol. It works by blocking the
effects of narcotics or by decreasing the craving for alcohol.
  NALTREXONE
MOLTENI(R) is approved by the Italian Ministry of Health and is owned by Molteni
Farmaceutici, Inc. and marketed by Molteni Farmaceutici, Inc. in
Italy.
  On
January 1, 2007, Samaritan entered into an exclusive licensing agreement with
Molteni Farmaceutici for the marketing and distribution of NALTREXONE MOLTENI(R)
in the countries of Greece and Cyprus.
  Samaritan
utilizes the Italian Ministry of Health approved regulatory file in preparing
marketing applications for NALTREXONE MOLTENI(R) with regulatory authorities in
Greece and Cyprus to gain country marketing authorization drug
approval.
  ORAMORPH(R)
  ORAMORPH(R)
is morphine sulphate in an oral solution and is used for managing moderate to
severe chronic pain for more than a few days. It works by dulling the pain
perception center in the brain. ORAMORPH(R) is approved by the Italian Ministry
of Health and is marketed by Molteni in Italy.
  ORAMORPH(R)
is approved by the Italian Ministry of Health and is owned by Molteni
Farmaceutici, Inc. and marketed by Molteni Farmaceutici, Inc. in
Italy.
  21
  On
January 1, 2007, Samaritan entered into an exclusive licensing agreement with
Molteni Farmaceutici for the marketing and distribution of ORAMORPH(R) in the
countries of Greece and Cyprus.
  Oramorph
has a Greek marketing authorization. Oramorph can only be sold in Greece via a
centralized government tender. Samaritan has a tender application prepared for
the next announcement by Greek authorities to accept price bids for this
product.
  PETHIDINE(R)
  PETHIDINE(R)
is indicated for the treatment of moderate to severe pain, and may be prescribed
as a preoperative medication, support of anesthesia, and obstetric
analgesia.
  On
January 1, 2007, Samaritan entered into an exclusive licensing agreement with
Molteni Farmaceutici for the marketing and distribution of PETHIDINE(R) in the
countries of Greece and Cyprus.
  Pethidine®
can only be sold in Greece and Cyprus via a centralized government tender.
Samaritan has a tender application prepared for the next announcement by Greek
authorities to accept price bids for this product.
  RAPYDAN(R)
  RAPYDAN(R)
is indicated for local dermal analgesia on intact skin, and consists of a thin,
uniform, local anesthetic formulation with an integrated, oxygen-activated
heating component that is intended to enhance the delivery of the local
anesthetic. The drug formulation is a eutectic mixture of lidocaine 70 mg and
tetracaine 70 mg. Rapydan(R) is indicated to provide local dermal analgesia for
superficial venous access and superficial dermatological procedures such as
excision, electrodessication and shave biopsy of skin lesions.
  On August
3, 2007, Samaritan signed an exclusive agreement with EUSA for the marketing and
distribution of the product Rapydan(R) in Greece and Cyprus. As of October 2008,
EUSA no longer markets and distributes the product
Rapydan(R).  Rapydan(R) is an approved FDA prescription product under
the name SYNERA(R) and is owned by ZARS Pharmaceuticals, Inc. and marketed by
Endo Pharmaceuticals, Inc. in the US.
  Samaritan
markets Rapydan(R) in Greece. The Company has a pending marketing application
with regulatory authorities in Cyprus to gain country marketing authorization
drug approval.
  REPLAGAL(R)
  REPLAGAL(R)
is a long-term enzyme replacement therapy used to treat patients with a
confirmed diagnosis of Fabry Disease. Fabry Disease is caused by a deficiency of
an enzyme, alpha-galactosidase A (also called ceramidetrihexosidase), involved
in the breakdown of fats.
  Replagal(R)
will be sold and distributed by Samaritan on a named patient basis until the
pricing and the reimbursement of Replagal(R) is established in Greece and
Cyprus, with the relevant regulatory authorities.
  On April
13, 2007, Samaritan signed an exclusive licensing agreement with Shire
Pharmaceuticals for the marketing and sale of Replagal(R) in Greece and
Cyprus.
  The year
2008 was the last year that Samaritan marketed Replagal.
  Sales
and Marketing
  We
in-license products that focus on targeting healthcare providers, managed
healthcare organizations, specialty distribution companies, government
purchasers, and payers.
  22
 
 Product
Candidates
  A
significant portion of our operating expenses are related to the research and
development of investigational-stage product candidates. Research and
development expenses for the years ended December 31, 2008 and 2007 were
$1,634,304 and $1,983,194 respectively.  We limited the research and
development of our product candidates due to the lack of financing for the
Company.
 
 We
currently focus our research and development efforts in the therapeutic areas of
Alzheimer's, cancer, cardiovascular and infectious diseases. Any of our programs
in these disease areas could become more significant to us in the future, but
there can be no assurance that any program in development or investigation will
generate viable marketable products. As such, we continually evaluate all
product candidates and may, from time to time, discontinue the development of
any given program and focus our attention and resources elsewhere. We may choose
to address new opportunities for future growth in a number of ways including,
but not limited to, internal discovery and development of new products, out
licensing and in-licensing of products and technologies, and/or acquisition of
companies with products and/or technologies. Any of these activities may require
substantial research and development efforts and expenditure of significant
amounts of capital. The following summarizes our current product candidate
programs with relevant out-licensing deals that the Company has
completed.
 
 Alzheimer's
disease
 
 SP-233
  Caprospinol
(SP-233) is a novel Alzheimer's drug candidate that Samaritan believes has the
potential to clear beta-amyloid plaque from the brain; a problem that most
researchers today believe is the cause of Alzheimer's. Samaritan filed an IND
application for Caprospinol on October 30, 2006 and was subsequently granted an
IND number by the FDA. The Company believes that Caprospinol could be a
significant breakthrough in the treatment of Alzheimer's, and plans to provide
the information requested by the FDA in order to continue moving our Caprospinol
development program forward.  Additionally, the Company has submitted
annual reports to the FDA to keep the IND active.
  Cardiovascular
 
 SP-1000
  SP-1000
is a fast-acting peptide that can be used to clean the blood of excessive
cholesterol in acute high cholesterol conditions. SP-1000 plays a role in
transformation and binding of LDL cholesterol and raising HDL, the good
cholesterol, with immediate results.
  To this
end, Samaritan's collaborating scientists developed SP-1000 to be a potential
hypocholesterolemic agent that acts through a new and novel mechanism of action
that is quite distinct to the mechanism of action mediating the effects of
statins.
  The
effectiveness of SP-1000 peptide treatment has been demonstrated in two
validated hypercholesterolemia animal models, a genetically engineered mouse
model mimicking familial hypercholesterolemia, and in diet-induced
hypercholesterolemia guinea pigs.
  Based on
the study results, Samaritan collaborative scientists believe that the SP-1000
peptide could have the following pharmacological activities:
  o SP-1000
peptide will not interfere with cholesterol metabolism and
disposition;
  o SP-1000
peptide will increase HDL while decreasing serum free cholesterol and total bile
cholesterol;
 
 o SP-1000
peptide will be effective in removing atheromas and preventing plaque
formation;
  o SP-1000
peptide will protect against high cholesterol-induced neurological, cardiac and
muscular suffering, and gross liver morphology.
  23
  Taken
together, these data on classic animal models of familial and dietary
hypercholesterolemia show that SP-1000 is an interesting new and novel lipid
lowering drug with a strong patent position that represents a competitive
advantage over currently available therapeutic options.
  The
Company is seeking a partnership to further develop SP-1000.
 
 Infectious
Diseases
  SP-01A
  SP-01A is
an HIV oral entry inhibitor drug. In order for viruses to reproduce, they must
infect or hi-jack a cell, and use it to make new viruses. Just as your body is
constantly making new skin cells, or new blood cells, each cell often makes new
proteins in order to stay alive and to reproduce itself. Viruses hide their own
DNA in the DNA of the cell, and then, when the cell tries to make new proteins,
it accidentally makes new viruses as well. HIV mostly infects cells in the
immune system.
  Clinical
studies to date suggest that SP-01A prevents HIV from entering cells by
inhibiting HIV-1 viral replication through a novel mechanism that is unique to
any antiviral drug SP-01A reduces intracellular cholesterol and corticosteroid
biosynthesis, which causes the inability of lipid rafts in the cellular membrane
to organize, ultimately preventing fusion of an HIV receptor and both the CCR5
and CXCR4 cellular receptors.
  On May
20, 2008, Samaritan announced that it was awarded US patent No: US 7,354,906 B2,
entitled "Composition of Anti-HIV drugs and Anti-Cortisol compounds and Methods
for Decreasing the Side Effects of Anti-HIV drugs in Humans" by the Director of
the United States Patent and Trademark Office.  Additionally,
Samaritan has licensed SP-01A to Pharmaplaz.
 
 SP-30
 
 SP-30 has
demonstrated promise in preclinical studies as an antiviral therapeutic in the
treatment of Hepatitis C (HCV) as well as a therapeutic adjuvant in the
treatment of HIV. SP-30 offers several distinctive competitive advantages as a
potential oral adjuvant therapeutic in the treatment of HCV infected
individuals. SP-30 is uniquely different from other inhibitors of viral
replication in that it appears to condition the cell. This unique multiple
target mechanism of action provides several advantages.
  1. In HCV
infected individuals, SP-30 uses its unique mechanism to build a fence around
the cell and prevent viral entry. Consequently, HCV is unable to replicate or
mutate and is eventually eradicated by the immune system.
  2.
Because SP-30's targets belong to the host cell and not to the virus itself,
SP-30 may not be susceptible to the development of resistance.
  3. SP-30
does not appear to be contraindicated with any other currently approved ARV or
HCV treatments.
  Therefore,
based on its favorable in-vitro inhibition data, Samaritan is developing a Phase
I clinical study protocol for SP-30 as a potential oral adjuvant therapeutic in
the treatment of HCV infected individuals. Additionally, the Company is
seeking a partnership to further develop SP-30.
  Endocrinology
  SP-6300
  SP-6300
is a new and novel approach for the treatment of Cushing's syndrome, also known
as exogenous hypercortisolism. Cushing's syndrome affects adults 20 to 50 with
an estimated 10 to 15 of every million people affected each year.
Hypercortisolism occurs when the body's tissues are exposed to excessive levels
of cortisol for long periods of time.
  24
  Many
people suffer the symptoms of exogenous hypercortisolism because they take
glucocorticoid hormones such as prednisone, dexamethasone (Decadron) and
methylprednisolone (Medrol), for asthma, rheumatoid arthritis, lupus and other
inflammatory diseases or for immunosuppression after transplantation. People can
also develop exogenous hypercortisolism from injectable corticosteroids – for
example, repeated injections for joint pain, bursitis and back
pain.
  The
Company has an active IND to test SP-6300 in humans.  Additionally,
the Company is seeking a partnership to further develop SP-6300.
 
 SP-6310
 
 In
analyzing the data from clinical study SII-101 and preclinical studies,
Samaritan Pharmaceuticals learned that SP-6310 (procaine hydrochloride), given
orally, may be a potential therapy for the normalization of both low and high
urinary cortisol levels in HIV-infected patients.
  Samaritan
Pharmaceuticals has an active IND (Investigational New Drug) application for
SP-6310 in the treatment of HIV-infected patients with abnormal cortisol
levels.
  Non
Drug Products
  Alzheimer's
Diagnostic Blood Test
  Our
Alzheimer's diagnostic is a simple blood test which can be used as an
alternative or supplement to spinal taps or expensive MRIs currently used by
competitors.
  Breast
Cancer Diagnostic
  Our
non-invasive blood test could be the first diagnostic tool to predict if a
breast tumor is cancerous, with the added possibility to detect one single
aggressive cancer cell out of a million blood cells. This tool could also be
used as a monitoring tool to measure the success of chemotherapy, radiation and
other drug treatments for aggressive cancer and ultimately allow patients to
avoid the high costs and negative effects of unnecessary
chemotherapy.
 
 Collaborations,
Alliances, and Investments
 
 The
Research Institute of McGill University Health Centre and Samaritan
Therapeutics
  On July
1, 2007, Samaritan executed research collaboration (the "Research
Collaboration") with the Research Institute of McGill University Health Centre
and Samaritan Therapeutics over a ten-year period through 2017 to discover and
develop new compounds. The budget is for $1,000,000 paid over four (4) quarterly
payments of $250,000, is unallocated, and covers the general research and
development effort. Under the Research Collaboration, the Company receives
worldwide exclusive rights, excluding Canada, to any novel therapeutic agents or
diagnostic technologies that may result from the Research Collaboration.
Samaritan Therapeutics receives exclusive rights to the Canadian market to any
novel therapeutic agents or diagnostic technologies that may result from the
Research Collaboration. Samaritan Pharmaceuticals and Samaritan Therapeutics’
payment to McGill University is in arrears, which may permit our
collaborator to terminate the research and development agreement. The
termination of the research and development agreement could force the Company to
curtail new discoveries to be added to its current pipeline of innovative drugs.
  25
  Under the
Research Collaboration, Samaritan receives worldwide exclusive rights to any
novel therapeutic agents or diagnostic technologies that may result from the
Research Collaboration. Dr. Vassilios Papadopoulos, Dr. Janet Greeson and Dr.
Wolfgang Renz lead our team of eight (8) research professionals (including five
(5) Ph.D. level research scientists) who have expertise in the fields of
endocrinology, pharmacology, cell biology, organic and steroid chemistry, and
computer modeling. We are not obligated to pay the Research Collaboration any
milestone payments. Our collaborators are entitled to receive royalties based on
our revenue from product sales and sublicenses, if any. Samaritan
Pharmaceuticals and Samaritan Therapeutics have both assumed responsibility, at
their own individual expense, for the process of seeking any regulatory
approvals for and conducting clinical trials with respect to any licensed
product or application of the licensed technology. Samaritan controls and has
the financial responsibility for the prosecution and maintenance in respect to
any patent rights related to the licensed technology.
  Pharmaplaz,
LTD
  Samaritan
and Pharmaplaz, a private Irish Healthcare company and a shareholder of
Samaritan, have an agreement (the "Pharmaplaz Agreement") to commercialize
SP-01A. Under the terms of the agreement, Pharmaplaz is required to pay
Samaritan $10 million upfront. To date, under the Pharmaplaz Agreement,
Samaritan has received $2.15 million, with a balance of $7.85 million
remaining.
  During
the year 2008, the Company reserved a $3,451,742 note receivable to doubt about
collection of the note.  As a result of Pharmaplaz's failure to timely
pay the remaining balance, Pharmaplaz is not in compliance with the terms of the
Pharmaplaz Agreement. Samaritan recognizes Pharmaplaz’s intention is to pay the
remaining balance and its failure is due to an economic slowdown in Ireland.
Samaritan will continue to work with Pharmaplaz to collect the past due
remaining balance.
  Pharmaplaz
will be responsible for clinical development, clinical trial costs and
manufacturing. Upon successful commercialization, Samaritan and Pharmaplaz will
co-market SP-01A and will share 50-50, in its revenue royalty stream. Samaritan
is responsible for all patent expenses, including filing, prosecution, and
enforcement expenses.
  Pharmaplaz
is a fully integrated pharmaceutical company located in Athlone, Ireland.
Pharmaplaz develops patented pharmaceutical technologies and products, and has
expertise in initial research, process development, clinical trials, regulatory
submissions and product manufacturing. Pharmaplaz, in addition, offers
facilities for the development of products and processes in life sciences, and
can also provide additional support with government grant aid and regulatory
affairs.
 
 Taconic
Farms, Inc.
  Taconic
Farms, Inc. (“Taconic”) was founded in 1952 as a family-owned business in New
York's Hudson River Valley. Since then, the company has become one of the
largest laboratory rodent providers in the world with a reputation for
consistently producing high quality, well-defined rats and mice. Taconic's
expertise in the custom design and generation of genetically modified mice,
mouse and rat breeding, barrier systems, genetics and animal health supports
researchers focused on drug development using in vivo models. Taconic has six
breeding facilities and three service laboratories in the USA and Europe, a
staff of over 1,000, and a commitment to technological innovation.
  On
October 1, 2008, Samaritan Pharmaceuticals announced that it has signed a
worldwide exclusive agreement with Taconic Farms, Hudson, New York, to
commercialize "The Samaritan Alzheimer's Rat Model."  The "forgetful"
rat model is a research tool used by scientists to study the effectiveness of
their new drugs to treat Alzheimer's disease.
 
 Three
Rivers Pharmaceuticals(R)
  On
December 12, 2005, Samaritan signed a ten-year (with five-year automatic
renewals) exclusive licensing agreement with Three Rivers Pharmaceuticals, Inc.
for the marketing of Amphocil, a prescription drug in Greece; authorization is
pending for Cyprus and Ireland.
  Established
in 2000, Three Rivers Pharmaceuticals(R) devotes its efforts and resources to
developing, manufacturing, and marketing pharmaceutical therapies which are
indicated for diseases/medical conditions requiring specialized treatment. Three
Rivers Pharmaceuticals markets prescription drugs in both the U.S. and
internationally, in the therapeutic categories of antiviral and antifungal
agents.
  26
  Three
Rivers has continued to expand its product line into the branded market with the
acquisition of AMPHOTEC/AMPHOCIL(R) in May of 2005. This product is currently
being marketed in over 40 countries worldwide.
  Molteni
Farmaceutici
  On
January 1, 2007, Samaritan executed a four-year (with two-year automatic
renewals) exclusive licensing agreement with Molteni Farmaceutici for the
marketing of Mepivamol, Methadone, Morphine Sulphate, Naloxone, Naltrexone, and
Oramorph in Greece and Cyprus.
  Molteni
is rich in history with over a century of experience beginning with the opening
of its manufacturing facility at the Molteni Pharmacy Laboratory located in the
historic center of Florence, Italy. The strategic therapeutic areas on which
Molteni makes an effort for trading new alliances are concentrated on Analgesia,
Anesthesia and Drug Addition Therapy.
  Siraeo,
Ltd.
  On
December 28, 2006, Samaritan signed a ten-year (with three-year automatic
renewals) exclusive licensing agreement with Siraeo, Ltd for the marketing of
Infasurf in Turkey, Serbia, Bosnia, Macedonia, Albania, Egypt and Syria.
Infasurf is an approved FDA prescription product owned by Ony, Inc. and marketed
by Forest Laboratories in the US.
  As of
April 6, 2009, Siraeo has sent a termination letter stating that unless
Samaritan Ireland brings the alleged amount in arrears current, then the
agreement is terminated.  Samaritan Ireland and Siraeo remain in dispute
over the termination and the process of this Agreement, as Samaritan Ireland
maintains it has certain rights under the agreement.  No accrual for any
alleged monies has been made as of December 31, 2008, as it is managements’
position that there are no monies due to Siraeo under the
Agreement.
  EUSA
Pharma
  On August
3, 2007, Samaritan signed a five-year (with annual renewals) exclusive agreement
with EUSA for the marketing and distribution of the product RAPYDAN(R) in
Greece and Cyprus. Rapydan(R) is an approved FDA prescription product under the
name SYNERA(R) and is owned by ZARS Pharmaceuticals, Inc. and marketed by Endo
Pharmaceuticals, Inc. in the US.
  On March
10, 2008, Samaritan signed an amendment to the above agreement with EUSA for the
marketing and distribution of the products ERWINASE(R) and KIDROLASE(R) in
Greece and Cyprus. Erwinase(R) and Kidrolase(R) are approved FDA prescription
products and are owned by EUSA Pharma and marketed by EUSA Pharma in the
U.S.
  On June
1, 2008, Samaritan signed an amendment to the above agreement with EUSA for the
marketing and distribution of the product COLLATAMP(R) in Greece and
Cyprus.  Collatamp(R) is an approved FDA prescription product owned by
EUSA Pharma and marketed by EUSA Pharma in the U.S.
 
 Samaritan
has acquired the exclusive rights from EUSA for CAPHOSOL(R) and is negotiating
an addendum to the original distribution agreement to include Caphosol(R) for
marketing and distribution in Greece and Cyprus. Caphosol(R) is an approved FDA
prescription product and is owned by EUSA Pharma and marketed by EUSA Pharma in
the U.S.
  EUSA
Pharma is a specialty pharma company with a strong and growing portfolio of
specialty hospital medicines which has been built through the acquisition of
Talisker Pharmaceuticals in July 2006 and OPI in March 2007. Its primary
marketed products are Erwinase(R), Kidrolase(R), Fomepizole(R), and Xenazine(R).
In addition, it has an active development pipeline including candidates in
rheumatoid arthritis and Alzheimer’s disease, schizophrenia and Lambert Eaton
Syndrome.
  27
 
 Abiogen
Pharma
  On March
14, 2008, Samaritan signed a five-year (with two-year automatic renewals)
exclusive agreement with Abiogen for the marketing and distribution of the
product ABIOKLAD (R) in Greece, Cyprus and Turkey.
  Abiogen
Pharma is a private Italian pharmaceutical company, founded in Pisa in 1997,
involved in R&D, manufacturing and marketing. Abiogen has a prestigious
R&D pipeline, has demonstrated significant skills in innovative compound
development and is now broadening into the biotechnological field. Abiogen’s
research on the osteo-articular metabolism led to the marketing of four
bisphosphonates and established Abiogen Pharma as a unique world-wide
company.
  Plan and
Results of Operations
  We have
used the proceeds from private placements of our Common Stock, primarily to
expand our preclinical and clinical efforts, as well as for general working
capital. At this time, we are beginning to commit additional resources to the
development of SP-233, as well as for the development of our other
drugs.
  On July
5, 2007, the Company's Board of Directors affected a one-for-six reverse stock
split of its common stock. The financial statements presented herein have been
restated to reflect the reverse stock split as if it had occurred at the
beginning of each period presented. All share and per share information included
in these consolidated financial statements has been adjusted to reflect this
reverse stock split.
  At
December 31, 2008, we had an accumulated deficit since exiting development stage
at December 31, 2007 of $6,267,169 and an accumulated development stage deficit
of $44,335,140. We expect losses to continue for the near future, and such
losses will likely increase as human clinical trials are undertaken in the
United States. Future profitability will be dependent upon our ability to
complete the development of our pharmaceutical products, obtain necessary
regulatory approvals and effectively market such products. In addition, future
profitability will require the Company to establish agreements with other
parties for clinical testing, manufacturing, commercialization, and sale of our
products.
  Liquidity
and Capital Resources
  The
following table sets forth our consolidated net cash provided by (used in)
operating, investing and financing activities for each of the years in the
two-year period ending December 31:
  2008
              
              
              2007Cash provided by (used
      in):Operating
      activities
              
              $
              (204,557
              )
              
              $
              (1,347,122
              )Investing
      activities
              
              $
              (203,373
              )
              
              $
              (456,130
              )Financing
      activities
              
              $
              226,000
              
              
              $
              1,348,748
  As of
December 31, 2008, the Company's cash position was $105,641. We are continuing
efforts to raise additional capital and to execute our research and development
plans. Even if we are successful in raising sufficient money to carry out these
plans, additional clinical development is necessary to bring our products to
market, which will require a significant amount of additional
capital.
  On March
28, 2007, Samaritan and Pharmaplaz, a private Irish Healthcare company and a
shareholder of Samaritan, signed an agreement (the "Pharmaplaz Agreement") to
commercialize SP-01A. Under the terms of the agreement, Pharmaplaz is required
to pay Samaritan $10 million upfront. To date, under the Pharmaplaz Agreement,
the amount of funds received from Pharmaplaz is $2.15 million; $1.4 million and
$750,000 were received during the first and fourth quarter of 2007 respectively.
On May 15, 2007, the CEO of Pharmaplaz, Michael Macken, signed a personal
guarantee and on May 21, 2007 a stock pledge agreement for 943,291
(split-adjusted) shares of Samaritan Pharmaceuticals to guarantee the balance of
the $7.85 million. On May 15, 2007, the amount of shares pledged was worth
$1,300,742. On December 31, 2008, the last reported market sale price of our
Common Stock was $0.07 and the value of the stock pledge was $66,030.  As a
result of Pharmaplaz's failure to timely pay the remaining balance of 7.85
million, Pharmaplaz is not in compliance with the terms of the Pharmaplaz
Agreement. No funds were received in 2008.
  28
  Pharmaplaz,
a shareholder, will pay for and be responsible for future research and
development to bring the technology to market. Samaritan has no remaining
obligations or performance for future research and development. The $10,000,000
payment is non-refundable. Upon request, Samaritan might occasionally advise
Pharmaplaz regarding SP-01A, in relationship to Principal Investigators with
applications for NIH grants, or other grant applications to advance SP-01A, at
Pharmaplaz's cost. Samaritan and Pharmaplaz will split 50/50 of all revenues
stemming from SP-01A.
  Cash used
in operating activities during the twelve month (12) period ending December 31,
2008 was $(204,557), as compared to $(1,347,122) for the twelve (12) month
period ending December 31, 2007. This decrease is primarily attributable to the
inception of licensing and product revenue as represented by receivables and a
reduction in research activity.
  Cash used
in investing activities was $(203,373) for the twelve (12) month period ending
December 31, 2008, as compared to $(456,130) for the twelve (12) month period
ending December 31, 2007. Cash used for both years is primarily attributable to
investments and patent registration costs.  Activity from 2006
reflects proceeds from the liquidation of certificates of deposit offset by
investing activity such as the purchase of equipment and patent registration
costs. Activity from 2007 reflects the continuing investment in patent
registration costs. There were no CDs liquidated during 2007.
  Cash
provided by financing activities was $226,000 for the twelve (12) month period
ending December 31, 2008, as compared to was $1,348,748 for the twelve (12)
month period ending December 31, 2007, a decrease of $1,122,748,
or eighty-three percent (83%). During 2008, the Company did not draw from
its equity financing source, as compared to 2007, when the Company drew
$480,000.   Additionally, cash raised from private placements
declined from approximately $570,000 during 2007 to $20,000 in private
placements during 2008.
  Current
assets as of December 31, 2008 were $3,229,827 as compared to $2,232,040 as of
December 31, 2007. This increase of $997,787, or forty-five percent (45%), is
primarily attributable to recording receivables from the overseas product sales.
Current liabilities as of December 31, 2008 were $8,818,586 as compared to
$2,526,211 as of December 31, 2007, an increase of $6,292,375 or two hundred
forty-five percent (249%). Such increase is the result of product costs relating
to the overseas product sales, officer compensation, and loans from shareholders
and officers. As of December 31, 2008, the Company had a working capital
deficiency of $5,588,759.
  We will
continue to have significant general and administrative expenses, including
expenses related to clinical studies, our research collaboration with
universities and patent registration costs. We will require substantial
additional funds to sustain our operations and to grow our business. The amount
will depend, among other things, on (a) the rate of progress and cost of our
research and product development programs and clinical trial activities; (b) the
cost of preparing, filing, prosecuting, maintaining and enforcing patent claims
and other intellectual property rights; and (c) the cost of developing
manufacturing and marketing capabilities, if we decide to undertake those
activities. The clinical development of a therapeutic product is a very
expensive and lengthy process which may be expected to utilize $5 to $20 million
over a three (3) to six (6) year development cycle. We will also need to obtain
additional funds to develop our therapeutic products and our future access to
capital is uncertain. The allocation of limited resources is an ongoing issue
for us as we move from research activities into the more costly clinical
investigations required to bring therapeutic products to market. We also expect
to generate revenues from our marketed products in the near future, and our
business model has changed from a development model to a licensing and
development model. For more information on the change in business model, please
see "Commercialization Business Model" section.
  29
  The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company has generated minimal revenues and experienced an
accumulated deficit of $50,602,309 through December 31, 2008. For the year ended
December 31, 2008 and 2007, the Company incurred net losses of $6,267,169 and
$3,025,998, respectively and had a net cash used in operating activities of
$(204,557) and $(1,347,122), respectively. These matters raise substantial doubt
about the Company's ability to continue as a going concern. Management's plans
in regard to these matters are described in note 2. The accompanying financial
statements do not include any adjustments relating to the recoverability and
classification of asset carrying amounts or the amount and classification of
liabilities that might result should the Company be unable to continue as a
going concern.
  Our
current resources are insufficient to fund all of our planned development and
commercialization efforts. As of December 31, 2008, we have a working capital
deficiency of 5,588,759 and we had cash and cash equivalents of approximately
$105,641. We have out-licensed our SP-01A and in-licensed the rights to
sell Amphocil from Three Rivers Pharmaceuticals, Infasurf from Ony, Inc,
Mepivamol, Methadone, Morphine Sulphate, Naloxone, Naltrexone, Oramorph, and
Pethidine from Molteni Pharmaceuticals, Caphosol, Collatamp, Erwinase,
Kidrolase, and Rapydan from EUSA Pharma and Abioklad from Abiogen Pharma to meet
our cash needs. We intend to continue to explore avenues to obtain additional
capital through private placements, if we are unable to obtain additional
financing, we might be required to delay, scale back or eliminate selected
research and product development programs or clinical trials, or be required to
license third parties to commercialize products or technologies that we would
otherwise undertake ourselves, or cease certain operations all together. Any of
these options might have a material adverse effect upon the Company. If we raise
additional funds by issuing equity securities, dilution to stockholders may
result, and new investors could have rights superior to existing holders of
shares. Should the financing we require to sustain our working capital needs be
unavailable or prohibitively expensive when we require it, the consequences
would have a material adverse effect on our business, operating results,
financial condition and prospects.
  As of the
year ended December 31, 2008, the Company had borrowed an aggregate of $506,000
on a short-term basis pursuant to the terms of promissory notes from the Company
and in favor of a related party lender (the "Notes"). Proceeds from each of the
loans funded the Company's continuing operating expenses, ongoing expenses,
legal and accounting fees, as well as for working capital and other
contingencies. Under the terms of the Notes issued by the Company to the lender,
the Company is required to: (i) pay interest at a rate of 16% per annum and ii)
100% warrant coverage. The principal and interest due on the Notes are due on
demand. The Notes will be repaid from proceeds of any subsequent financing
arrangement to which the Company becomes a party or from the cash flow from the
Company's operations. The prior notes of $300,000 that the Company borrowed in
2007 were renegotiated to match the terms of notes issued during the first
quarter of 2008. The Notes will be repaid from proceeds of any subsequent
financing arrangement to which the Company becomes a party or from the cash flow
from the Company's operations.
  Results
of Operations For The Twelve (12) Months Ending December 31, 2008 As Compared To
The Twelve (12) Months Ending December 31, 2007
  During
the years ending December 31, 2008 and 2007, we had sales revenue of $4,187,469
and $4,687,945 respectively.  During the year December 31, 2007, we
incurred research expenditures pursuant to grants we received from the U.S.
Department of Health and Human Services. We recognized grant revenue of
$205,000, the extent of such qualifying expenditures for 2007.
  We
incurred research and development expenses of $1,634,304 for the year ended
December 31, 2008, as compared to of $1,983,194 for the year ended December 31,
2007. This decrease of $348,890, or eighteen percent (18%), was primarily
attributable to (a) entering into the latter stage of our Phase IIb HIV clinical
trial, (b) decreased expenses incurred to development of SP-01A, and (c) less
work during this time period to complete the chemistry, manufacturing and
controls (CMC) section of New Drug Application for the FDA. Subject to available
funding, we expect that research and development expenditures relating to drug
discovery and development will increase in 2009 and into subsequent years due to
FDA clinical trials which include the continuation and expansion of clinical
trials (i) our Alzheimer's drug program, (ii) the initiation of trials for other
potential indications and (iii) additional study expenditures for potential
pharmaceutical candidates. Research and development expenses may fluctuate from
period to period depending upon the stage of certain projects and the level of
preclinical testing and clinical trial-related activities.
  30
  General
and administrative expenses decreased to $3,784,615 for the year ended December
31, 2008, as compared to $4,285,872 for the year ended December 31, 2007. This
decrease of $501,257 or fourteen percent (12%) was primarily attributable
to curtailment of activity in the United States as a result of our lack of
liquidity.
  Depreciation
and amortization amounted to $162,819 for the year ended December 31, 2008, as
compared to $184,967 for the year ended December 31, 2007. This decrease of
$22,148 or twelve percent (12%) was primarily attributable to
expiration of depreciation on laboratory equipment.
  Net
interest (income) expense amounted to $96,125 and $(13,897) for the years ending
December 31, 2008 and 2007, respectively. The credit balance in the interest
expense account is due to offsetting interest earned from holding our cash in
notes receivable and certificates of deposits. During 2008 and 2007, the Company
received loans in order to continue to operate. Interest expense reflects both
interest accruals related to such loans and factoring interest on the European
accounts receivable.
  Comprehensive
income is due to the payment in foreign currency of operations that occur in
Ireland and Greece. The amount of the gain or loss is a function of the relative
strength of the American dollar to the Euro. At December 31, 2008, the
balance of the foreign currency translation loss was $103,356.
  We had a
net loss of $6,267,169 for the year ended December 31, 2008, as compared to
$3,025,998 for the year ended December 31, 2007. The loss per share for the
yearly periods was $0.20 and $0.11 per share, respectively, for 2008 and
2007 per share. The increased loss of $3,241,171 reflects the stages of the
Company’s maturing technology rights as the Company markets both licensing and
product and because , the Company reserved  the note receivable from
Pharmaplaz and  reserved  a portion of the
Company’s  account receivable  resulting from  our
sales in Greece.
  Results
of Operations For The Twelve (12) Months Ending December 31, 2007 As Compared To
The Twelve (12) Months Ending December 31, 2006
  During
the years ending December 31, 2007 and 2006, we incurred research expenditures
pursuant to grants we received from the U.S. Department of Health and Human
Services. We recognized grant revenue of $205,000 and $32,379, the extent of
such qualifying expenditures for 2007 and 2006, respectively.
  We
incurred research and development expenses of $1,983,194 for the year ended
December 31, 2007, as compared to of $4,667,053 for the year ended December 31,
2006. This decrease of $2,683,859, or fifty-eight percent (58%), was primarily
attributable to (a) entering into the latter stage of our Phase IIb HIV clinical
trial, (b) decreased expenses incurred to development of SP-01A, and (c) less
work during this time period to complete the chemistry, manufacturing and
controls (CMC) section of New Drug Application for the FDA. Research and
development expenses may fluctuate from period to period depending upon the
stage of certain projects and the level of preclinical testing and clinical
trial-related activities.
  General
and administrative expenses increased to $4,285,872 for the year ended December
31, 2007, as compared to $2,812,934 for the year ended December 31, 2006. This
increase of $1,472,938 or fifty-two percent (52%) was primarily attributable to
increases in compensation and hiring of new employees to implement our strategy
in Eastern Europe.
  Depreciation
and amortization amounted to $184,967 for the year ended December 31, 2007, as
compared to $156,933 for the year ended December 31, 2006. This increase of
$28,034 or eighteen percent (18%) was primarily attributable to
increased amortization of patent registration costs and technology rights for
the year ended December 31, 2007.
  31
  Net
interest (income) expense amounted to $(13,897) and $(31,795) for the years
ending December 31, 2007 and 2006, respectively. The credit balance in the
interest expense account is due to offsetting interest earned from holding our
cash in notes receivable and certificates of deposits. During 2007, the Company
received a loan of $300,000. Therefore, interest expense accrued pertaining to
the loan offset interest earned on the note receivable.
  Other
comprehensive income (loss) is comprised of two components. The Company invests
in marketable securities to earn a return on cash not needed in the short-term.
Temporary, unrealized gains and losses are recorded to reflect changes in the
market value of the temporary investments as they occur. There were no
marketable securities owned during 2007.  During 2006, there was a
realized loss of $3,160 on the liquidation of the CD. The other component of
comprehensive income is due to the payment in foreign currency of operations
that occur in Ireland and Greece. The amount of the gain or loss is a function
of the relative strength of the American dollar to the Euro. At December 31,
2007, the balance of the foreign currency translation gain was
$60,525.
  We had a net loss of
$3,025,998 for the year ended December 31, 2007, as compared to $7,572,746 for
the year ended December 31, 2006. The loss per share for the yearly periods was
$0.11 and $0.29 per share, respectively, for 2007 and 2006 per share. The
decreased loss of $4,546,748 reflects the stages of the Company’s maturing
technology rights as the Company markets both licensing and
product.
  ITEM
7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
  We do not
engage in trading market-risk sensitive instruments and do not purchase hedging
instruments or other than trading instruments that are likely to expose us to
market risk, whether interest rate, foreign currency exchange, commodity price
or equity price risk. As of the year ended December 31, 2008, the Company had
borrowed an aggregate of $506,000 on a short-term basis pursuant to the terms of
promissory notes from the Company and in favor of each of the individual lenders
(the "Notes"). Proceeds from each of the loans funded the Company's continuing
operating expenses, ongoing expenses, legal and accounting fees, as well as for
working capital and other contingencies. Under the terms of the Notes issued by
the Company to each lender, the Company is required to: (i) pay interest to each
Lender at a rate of 16% per annum and ii) 100% warrant coverage. The principal
and interest due on the Notes are due on demand. The Notes will be repaid from
proceeds of any subsequent financing arrangement to which the Company becomes a
party or from the cash flow from the Company's operations. The prior notes of
$300,000 that the Company borrowed in 2007 were renegotiated to match the terms
of notes issued during the first quarter of 2008. Currently, the Company is not
in compliance with the terms of the Notes, since the Company is in arrears on
its interest payments.  We have not entered into any forward or future
contracts, and have purchased no options and entered into no swaps. We have no
credit lines or other borrowing facilities, and do not view ourselves as subject
to interest rate fluctuation risk at the present time.
  ITEM
8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  Samaritan
Pharmaceuticals, Inc. financial statements, schedules and supplementary data,
appear in a separate section of this report beginning with page
F-1.
  ITEM
9A(T). CONTROLS AND PROCEDURES
  (a)
Evaluation of Disclosure Controls and Procedures
  As
required by Rule 13a-15(e) under the Securities Exchange Act of 1934, as of the
end of the period covered by this Annual Report, we carried out an evaluation,
under the supervision and with the participation of our Chief Executive Officer
and our Chief Financial Officer, of the effectiveness of our disclosure controls
and procedures as of December 31, 2008. Our management has concluded, based on
their evaluation, that as of the end of the period covered by this report, our
disclosure controls and procedures were effective.
  (b)
Management’s Annual Report on Internal Control Over Financial
Reporting
  The
management of Samaritan Pharmaceuticals is responsible for establishing and
maintaining adequate internal control over financial reporting as such term is
defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of
1934, as amended. The Company’s internal control over financial reporting is
designed to provide reasonable assurance, based on an appropriate cost-benefit
analysis, regarding the reliability of our financial reporting and the
preparation of financial statements for external purposes in accordance with
U.S. generally accepted accounting principles. The Company’s internal control
over financial reporting includes those policies and procedures that: (i)
pertain to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of the assets of the Company;
(ii) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with U.S. generally
accepted accounting principles, and that receipts and expenditures of the
Company are being made only in accordance with authorizations of management and
directors of the Company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition
of the Company’s assets that could have a material effect on the financial
statements.
  32
  Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Therefore, even those systems determined to be
effective can provide only reasonable assurance with respect to financial
statement preparation and presentation. Also, projections of any evaluation of
effectiveness to future periods are subject to risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
  Our
management assessed the effectiveness of our internal control over financial
reporting as of December 31, 2008. In making this assessment, our management
used the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission (“COSO”) in Internal Control-Integrated Framework. Our
management has concluded that, as of December 31, 2008, our internal control
over financial reporting is effective based on these criteria. This report does
not include an attestation report of our registered public accounting firm
regarding internal control over financial reporting. Management’s report was not
subject to attestation by our registered public accounting firm pursuant to
temporary rules of the SEC that permit us to provide only management’s report in
this annual report.
  (c)
Changes in Internal Control Over Financial Reporting
  There was
no change in our internal control over financial reporting that occurred during
the fourth quarter of 2008 that has materially affected, or is reasonably likely
to materially affect, our internal control over financial
reporting.
  ITEM
9B. OTHER INFORMATION
  None.
  PART
      III
  ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
 
 The
following table sets forth the name, age and position of our executive officers,
directors, key employees and key consultants as of the date hereof:
  Name
              
              Age
              
              Served
      Since
              
              Position(s)
      with CompanyDr. Janet R. Greeson
      (3)
              
              66
              
              10/19/1997
              
              CEO, President and Chairman
      of the BoardMr. Eugene J. Boyle
      (4)
              
              43
              
              05/20/2000
              
              CFO, COO and
      DirectorDr. Thomas
      Lang
              
              57
              
              06/20/2004
              
              Chief Drug Development
      OfficerMr.
      Yannis Kalantzakis
              
              44
              
              11/01/2008
              
              Managing
      Director, Samaritan EuropeMs. Kristi C.
      Eads
              
              39
              
              11/20/2000
              
              VP Business Development,
      Corporate Sec.Mr. George
      Weaver
              
              44
              
              07/20/2003
              
              Regulatory Affairs
      OfficerMs. Dianne
      Thompson
              
              46
              
              10/01/2006
              
              ComptrollerMr.
      Barrie Fuller
              
              60
              
              07/05/2005
              
              VP
      Business DevelopmentMr. Jacinto L. Ayala
      (1)(3)(6)(7)
              
              56
              
              12/05/2007
              
              DirectorMr. Robert W. Crane
      (1)(2)(4)(7)
              
              65
              
              12/05/2007
              
              DirectorMr. Julio L. Garcia
      (5)
              
              51
              
              08/14/2007
              
              DirectorMr. Welter “Budd” Holden
      (1)(3)
              
              77
              
              10/19/1997
              
              DirectorDr. Laurent Lecanu
      (5)
              
              40
              
              06/10/2005
              
              DirectorMs. Cynthia C. Thompson
      (2)(4)(6)(7)
              
              49
              
              03/19/1999
              
              DirectorMr. H. Thomas Winn
      (2)(5)(6)
              
              69
              
              03/19/1999
              
              DirectorDr. Vassilios
      Papadopoulos
              
              48
              
              03/20/2001
              
              Chief Scientist and Key
      Consultant
  (1)
              Member
      of the Nominating Committee.(2)
              Member
      of the Internal Control Committee.(3)
              Class
      I Director, term expires 2010.(4)
              Class
      II Director, new term expires 2009.(5)
              Class
      III Director, term expires 2011.(6)
              Member
      of the Audit and Finance Committee.(7)
              Member
      of the Compensation and Governance
Committee.
  33
  Dr. Janet
R. Greeson. Dr. Greeson has served as the Company's CEO, President and Chairman
of the Board since October 30, 2000 and has led the bold initiative that
transformed Samaritan from a "one drug" Company to an innovative "Drug
Development Pipeline" Biopharmaceutical Company. Dr. Greeson is a successful
healthcare professional with over two (2) decades of corporate experience
focused on emerging growth situations, leadership development, and mergers and
acquisitions. Dr. Greeson has worked with Samaritan for ten (10) years, and has
served as CEO for the past five (5) years. Dr. Greeson is a co-inventor of
eighteen (18) patent applications, and presently has nine "peer reviewed"
journal publications. She also currently fulfills her altruistic energies with
the Samaritan Innovative Science Foundation. Dr. Greeson holds a BA, from
Florida Technological University in 1978; an MA from Rollins College in 1979;
and a Ph.D. from Columbia Pacific University in 1987.
  Mr.
Eugene J. Boyle. Eugene Boyle has served as Chief Financial Officer, Chief
Operations Officer, and a Director of Samaritan Pharmaceuticals since June 16,
2000. Mr. Boyle received a BSE in Computer Engineering and Applied Mathematics
from Tulane University, served in the US Navy as a Lt. during the Gulf War and
then went on to get his MBA from Babson College and JD from Concord University.
Mr. Boyle is a registered patent agent and admitted to practice before the
United States Patent and Trademark Office (USPTO) in all matters relating to
patents. He also served on Nevada Gold & Casino's (AMEX:UWN) Advisory Board
from 1999 to 2003.
  Dr.
Thomas Lang. Dr. Lang has served as the Chief Drug Development Officer for
Samaritan since 2004. From the years 2003 to 2004, Dr. Lang was an FDA
consultant to various companies. He was also the former Vice Chairman and
President of Serono Inc., the U.S. Company of Serono, S.A. Dr. Lang holds
technical degrees in Chemistry and Pharmacy, an MBA degree, a Ph.D. degree and
is a registered pharmacist in the State of New Jersey.
  Dr.
Christos Dakas, D.Pharm., Ph.D.  Dr. Christos Dakas, joined Samaritan
in June 2005 to oversee European operations, including Samaritan Pharmaceuticals
Ireland. Dr. Dakas served as an executive with Arriani Pharmaceuticals for the
two years prior to joining Samaritan and had a successful career in various
other executive positions with Gerolymatos, and Genesis Pharma. A
pharmaceutical chemist by training with a number of published papers, he holds
degrees from the University of Toronto, Kings College of University of London,
and the University of Wales in Cardiff.  In December 2008, Dr. Dakas
resigned his position with Samaritan for personal reasons.
 
 Mr.
Yannis Kalantzakis.  Yannis Kalantzakis joined Samaritan in June 2008
and in December 2008 became Managing Director of Samaritan Europe, succeeding
Dr. Dakas.  Prior to joining Samaritan, Mr. Kalantzakis had a
successful career in various executive positions with Abbott Diagnostics in
Greece from December 1989-September 1992; Armour Pharmaceuticals from October
1992-July 1995, Brahms Diagnostika GmbH from August 1995-December 1997, and
Fresenius Kabi AG in Germany from January 1998-July 2004 before heading the
operations of Fresenius Kabi Hellas S.A. in Greece as Managing Director. Mr.
Kalantzakis was then employed by the Minister of Health from August 2004 to May
2006 to manage and direct the Health Care Region of Crete, including 9 public
hospitals, 14 health care centers, 9 welfare institutions and 121 GP
offices.  From May 2006 to June 2008, Mr. Kalantzakis held various
consulting positions where he established two small companies for home care
nursing services and consulting services for health care management and has a
number of published papers, political interviews and scientific congress'
presentations.  Mr. Kalantzakis holds a degree in Biology from the
University of Athens, School of Science in 1989.
  Ms.
Kristi C. Eads. Kristi Eads, J.D., Vice President of Business Development,
joined Samaritan Pharmaceuticals in 2000, and has functioned as Vice President
of Samaritan since January of 2004. Ms. Eads works with Samaritan's business
development team to optimize Samaritan's licensing and partnering opportunities
by executing business development initiatives and assisting with strategic
planning. Ms. Eads obtained her juris doctorate from Concord University and has
a bachelor of arts from the University of Oregon.
  Mr.
George Weaver. Mr. Weaver has served as the Regulatory Affairs Officer for
Samaritan since 2003. Mr. Weaver majored in chemistry and minored in business
economics at UCLA. After working as an environmental toxicology consultant for
two (2) years, Mr. Weaver earned a Bachelor's of Science in Environmental
Engineering and assumed an appointed position as Chair of Industry Waste
Classification and Toxicology Focus Group under the California Department of
Toxic Substances Control Regulatory Structure Update.
  34
  Ms.
Dianne Thompson. Ms. Thompson is the Comptroller of Samaritan Pharmaceuticals
and the Senior V.P. of Public Affairs & Development for the Samaritan
Innovative Science Foundation (SISF). For the two years prior to joining SISF in
June 2005, Ms. Thompson was a financial consultant to various companies. Ms.
Thompson received her BS in Business Administration and Economics from Notre
Dame de Namur University, Belmont, California, and her MBA from Pepperdine
University, Malibu, California. Ms. Thompson founded her own business management
consulting company in 1998 and has had a vast array of clients in both the
for-profit and nonprofit sectors.
  Mr.
Barrie Fuller.  Vice President of Business Development, joined
Samaritan Pharmaceuticals in 2005, and has functioned as Vice President of
Samaritan since March of 2008. Mr. Fuller works as part of Samaritan's business
development team to increase the Company’s opportunities for licensing and
partnering deals and as a direct liaison with the Company’s
shareholders.   Prior to joining Samaritan, Mr. Fuller worked for
MGM Grand properties as an engineer within the Bellagio Hotel & Casino
property for seven years.
  Mr.
Jacinto L. Ayala. Mr. Ayala has served as a director since December 2007. He is
the Chairman of the Nomination Committee and serves on the Audit Committee and
the Compensation Committee. Mr. Ayala has more than thirty years of health care
experience as an accomplished executive of managed care companies and hospitals
with clinical trial experience. He has held the position of Executive Vice
President and Chief Administrative Officer of Palm Springs General Hospital
since 2005 and served as Senior Vice President and COO of the Saint Agnes
Medical Center. Mr. Ayala received a BA in Sociology and his MBA from Fordham
University. He completed his Public Health Administration Residency at
Misericordia Hospital Medical Center in Bronx, NY.
  Mr.
Robert W. Crane. Mr. Crane has served as a director since December 2007 and is a
member of the Compensation Committee, Internal Control Committee and the
Nomination Committee. Mr. Crane is the founder of Retirement Planning
Consultants, Inc., a strategic planning advisory services company to help people
and companies protect their financial assets. Mr. Crane has held executive
positions in the insurance industry since 1973 and has attained several
prestigious designations in the area including Chartered Life Underwriter (CLU),
Chartered Financial Consultant (ChFC), Chartered Advisor for Senior Living
(CASL).
  Dr. Julio
L. Garcia. Dr. Garcia has served as a director since October 2007. He is a
member of the Science and Technology Committee. Dr. Garcia is Board Certified in
Plastic Surgery by the American Board of Plastic Surgeons and the American Board
of Facial Plastic and Reconstructive Surgery. He is a Fellow of the American
College of Surgeons and also a member of the American Society of Plastic
Surgeons, American Academy of Cosmetic Surgery, the American Society of
Aesthetic Surgery and the American Society for Laser Medicine and Surgery. For
over 19 years, Dr. Garcia has provided aesthetic surgical support to Las Vegas
valley residents. He received his Doctor of Medicine from the University of
Illinois at Chicago, College of Medicine in 1983 and a Bachelor of Arts,
Biology/Art History from the University of Evanston in Illinois in
1979.
  Mr.
Welter "Budd" Holden. Mr. Holden is a co-founder, has served as a director since
1997, is a member of the Nominating and Corporate Governance Committee. Mr.
Holden has assisted the Company in recruiting and networking patients for
clinical trials. He is a well-known designer who has consulted with the rich and
famous throughout his whole life. He is a renowned networker and has presented
Samaritan to many of his past clients and venture capital groups, including
principals of pharmaceutical companies. Mr. Holden is the Chairman of our
Business Advisory Board and acts as liaison to the "Samaritan Innovative Science
Foundation". He received his B.A. in architectural and interior design from the
Pratt Institute in New York, New York.
  Dr.
Laurent Lecanu. Dr. Lecanu has served as a director since June 10, 2005. He
serves on the Nominating and Corporate Governance and Science and Technology
committees of Samaritan. Dr. Lecanu received his D.Pharm. in pharmaceutical
chemistry and his Ph.D. in neuropharmacology from the School of Pharmaceutical
and Biological Sciences at University of Paris (V), Paris, France. Dr. Lecanu is
also a former Intern of Paris Hospitals, France, where he demonstrated
excellence in the management and performance of clinical trials for new
medications.
  35
  Ms. Cynthia C. Thompson. Cynthia C. Thompson has been a director
since March 31, 1999. She is the Chairman of the Compensation Committee and the
Internal Control Committee, and serves on the Audit Committee. Ms. Thompson
founded Quest Entertainment, Inc., a gaming technology company, in August of
2003 and serves as the Chairman of the Board and is the President/Chief
Executive Officer. Since 1998, she has served as President/CEO of Intuitive
Solutions International, Inc., a consulting firm offering corporate support
services, including financing and financial structures, strategic planning and
partnering, marketing and investor relations.
  Mr. H.
Thomas Winn. Mr. Winn has served as a Director since 1999 and is the Chairman of
the Audit Committee and serves on the Internal Control Committee. Mr. Winn is
founder and former Chairman of Nevada Gold & Casinos, Inc. (AMEX:UWN). Since
1983, he has served as President of Aaminex Capital Corporation, a financial
consulting and venture capital firm. Mr. Winn has formed numerous investment
limited partnerships and capital formation ventures ranging from mining
projects, renewable energy, commercial real estate and motion
pictures.
  Dr.
Vassilios Papadopoulos, D.Pharm., Ph.D. Dr. Papadopoulos served as a director
from 2001 through June 2005 and currently serves as the Principal Investigator
for the collaboration with McGill University and Samaritan Therapeutics. For the
five (5) years prior to joining McGill University, Dr. Papadopoulos was a
professor at Georgetown University and served as Principal Investigator for the
collaboration with Georgetown University. Dr. Papadopoulos has over twenty (20)
years of experience and over one hundred forty (140) peer review article
publications in the Biopharmaceutical field and numerous patents in the field of
steroid biosynthesis, Alzheimer's disease and cancer. Dr. Papadopoulos has been
appointed as the new Director of the Research Institute of the McGill University
Health Centre in Montreal, Canada. Dr. Papadopoulos will assume his new role
officially on July 1, 2007.
  Relationships
Among Directors or Executive Officers
  Dr.
Greeson and Mr. Boyle are mother and son.  Mr. Fuller is the
son-in-law of Dr. Greeson.
  Compliance
with Section 16(a) of the Exchange Act
 
 Section
16(a) of the Exchange Act requires our officers and directors, and persons who
own more than ten percent of a registered class of equity securities, to file
reports with the Securities and Exchange Commission reflecting their initial
position of ownership on Form 3 and changes in ownership on Form 4 or Form 5.
Based solely on a review of the copies of such Forms received by us, we believe
that, during the fiscal year ended December 31, 2008, all of our officers,
directors and ten percent stockholders complied with all applicable Section
16(a) filing requirements on a timely basis.
 
 Standards
of Business Conduct and Ethics
 
 The Board
has adopted Standards of Business Conduct and Ethics that are applicable to all
employees and directors, including our Chief Executive Officer, Chief Financial
Officer, other executive officers and senior financial personnel. A copy of our
Standards of Business Conduct and Ethics is available on our website at
www.samaritanpharma.com. Information on our website is not incorporated by
reference. We intend to post any waiver of, or material changes to, these
Standards, if any, to our website within four business days of such
event.
 
 The Board
of Directors and Committees
 
 The Board
held in person meetings, conference calls or unanimous consents thirty-four (34)
times during the fiscal year ended December 31, 2008, of which thirty-three (33)
were unanimous actions adopted by the Board. Every director attended more than
seventy eight (78%) percent of the total number of meetings of the Board. The
Company has formed, by determination of the Board, an Audit Committee, with Mr.
H. Thomas Winn as Chairman, who is an independent director and a financial
expert as used in Item 7(d)(3)(iv) of Schedule 14A (240.14a -101 of this
chapter) under the Exchange Act. The Audit Committee held four (4) meetings
during the fiscal year ended December 31, 2008. The Compensation Committee, with
Independent Director Ms. Cynthia C. Thompson as Chairman, held four (4) meetings
during the fiscal year ended December 31, 2008. The Nomination Committee, with
Independent Director Jacinto L. Ayala as Chairman, held one (1) meeting during
the fiscal year ended December 31, 2008.
  Class I directors shall serve until the 2010 annual meeting, Class
II directors shall serve until the 2009 annual meeting and Class III directors
shall serve until the 2011 annual meeting. Each director elected shall serve
until his successor is elected and duly qualified.
  36
  Committees
of the Board of Directors
 
 The Board
of Directors has established four committees: an Audit Committee, a Compensation
Committee, a Nominating and Corporate Governance Committee, and Internal Control
Committee. Each of these committees has two or more members who serve at the
discretion of the Board of Directors. The Audit Committee has a written charter
approved by the Board of Directors and can be found under the "Investor
Relations" section of our website at www.samaritanpharma.com. The members of the
committees are identified in the paragraphs that follow.
  Audit
Committee. Thomas Winn (Chairman), Cynthia Thompson and Jacinto L. Ayala
currently serve on the Audit Committee. The Company has a standing Audit
Committee established in accordance with rules under the Exchange Act.
Consistent with SEC rules regarding auditor independence, the Audit Committee
has responsibility for appointing, setting compensation, and overseeing the work
of the independent registered public accounting firm. In recognition of this
responsibility, the Audit Committee has established a policy to pre-approve all
audit and permissible non-audit services provided by the independent registered
public accounting firm. Mr. H. Thomas Winn as Chairman is an independent
director and a financial expert as used in Item 7(d)(3)(iv) of Schedule 14 A
(240.14a -101 of this chapter) under the Exchange Act.
  Compensation
Committee. Cynthia Thompson (Chairman), Jacinto L. Ayala, and Robert Crane
currently serve on the Compensation Committee. The Compensation Committee
administers our executive compensation program. Each member of the Committee is
a non-employee and an independent director. The Compensation Committee is
responsible for establishing salaries and administering the incentive programs
for our Chief Executive Officer and other executive officers. The Compensation
Committee has designed the Company's compensation program based on the
philosophy that all of our executives are important to our success, with our
executive officers setting the direction of our business and having overall
responsibility for our results. As with other pharmaceutical companies, we
operate in a highly competitive and difficult economic environment. Accordingly,
the Compensation Committee has structured the Company's compensation to
accomplish several goals: (a) to attract and retain very talented individuals,
(b) to reward creativity in maximizing business opportunities and (c) to enhance
stockholder value by achieving our short-term and long-term business
objectives.
  Nominating
and Corporate Governance Committee. Jacinto L. Ayala (Chairman), Welter “Budd”
Holden, and Robert Crane currently serve on the Nominating Committee. The
nominating committee is responsible for overseeing corporate governance matters,
reviewing possible candidates for Board membership and recommending nominees for
election. The Committee is also responsible for evaluating the function and
performance of the Board and overseeing the process for performance evaluation
of the Committees of the Board. Additionally, the Committee reviews the
Company's management succession plans and executive resources. The Nominating
Committee believes members of the Board must possess certain basic personal and
professional qualities in order to properly discharge their fiduciary duties to
stockholders, provide effective oversight of the management of the Company and
monitor the Company's adherence to principles of sound corporate governance.
Board nominations must be selected by the Nomination Committee, which is
comprised solely of independent directors. Although there are formal procedures
for you to nominate persons to serve as directors, the Board will consider
recommendations from you, which should be addressed to Samaritan
Pharmaceuticals, Inc., 101 Convention Center Drive, Suite 310, Las Vegas, Nevada
89109. Our officers are elected by our Board and serve until the earlier of
their resignation or removal, or until their successors have been duly elected
and qualified.
  Internal
Control Committee. Cynthia Thompson (Chairman), Thomas Winn, and Robert Crane
currently serve on the Internal Control Committee. The Internal Control
Committee assists the Board of Directors with 1) periodic review of the internal
control system; 2) assessment the internal control system effective functioning;
3) ensuring that the Company’s risks are adequately identified and managed; and
4) evaluating whether the accounting policies applied are adequate and
consistent for the purposes of the consolidated financial
statements.
  37
 ITEM
11. EXECUTIVE COMPENSATION
  Compensation
Discussion and Analysis
 Overview.
The Compensation Committee administers our executive compensation program. Each
member of the Compensation Committee is a non-employee and an independent
director. The Compensation Committee is responsible for establishing salaries,
administering the incentive programs, and determining the total compensation for
our Chief Executive Officer and other executive officers. The Compensation
Committee seeks to achieve the following goals with the Company's executive
compensation programs: to attract, motivate and retain key executives and to
reward executives for value creation. The Compensation Committee seeks to foster
a performance-oriented environment by tying a significant portion of each
executive's cash and equity compensation to the achievement of performance
targets that are important to the Company and its stockholders. The Company's
executive compensation program has three principal elements: base salary, cash
bonuses and equity incentives under the Amended Samaritan Pharmaceuticals, Inc.
2001 Stock Incentive Plan and Samaritan Pharmaceuticals, Inc. 2005 Stock
Incentive Plan.
  We
conducted an annual benchmark review of the aggregate level of our executive
compensation, as well as the mix of elements used to compensate our executive
officers. This review is based on a survey of executive compensation, "BioWorld
Executive Compensation Report", conducted by an independent third party, Thomson
BioWorld.
  Compensation
Philosophy. The Compensation Committee has designed the Company's compensation
program based on the philosophy that all of our executives are important to our
success, with our executive officers setting the direction of our business and
having overall responsibility for our results. As with other pharmaceutical
companies, we operate in a highly competitive and difficult economic
environment. Accordingly, the Compensation Committee has structured the
Company's compensation to accomplish several goals: (a) to attract and retain
very talented individuals, (b) to reward creativity in maximizing business
opportunities and (c) to enhance stockholder value by achieving our short-term
and long-term business objectives.
  Elements
of Compensation
  Executive
compensation consists of the following elements:
  Base
Salary. The Compensation Committee considers peer data as well as individual
performance when approving base salaries for executive officers. The
Compensation Committee evaluates individual performance based on the achievement
of corporate or divisional operating goals and subjective criteria, as well as
the Chief Executive Officer's evaluation of the other executive officers. No
specific weight is assigned to any particular factor. The Company is currently
negotiating new agreements with the Dr. Janet Greeson, Mr. Eugene Boyle and Dr.
Thomas Lang.  Each executive has agreed to work under the prior terms
of the agreement until new employment agreements are negotiated at arm's length
with the Compensation Committee.  The prior employment agreements
provide for a minimum annual base salary. In setting base salaries, the Board
has considered (a) the contributions made by each executive to our Company, (b)
compensation paid by peer companies to their executive officers and (c) outside
compensation reports. In 2008, all executive officers received salary increases
of approximately five percent (5%) reflecting competitive trends, general
economic conditions as well as a number of factors relating to the particular
individual, including the performance of the individual executive, and level of
experience, ability and knowledge of the job.
  Bonuses.
The Compensation Committee has the authority to award discretionary bonuses to
our executive officers. The incentive bonuses are intended to compensate
officers for achieving financial and operational goals and for achieving
individual annual performance objectives. These objectives vary depending on the
individual executive, but relate generally to strategic factors such as a)
initial signing of an employment agreement; b) upon acceptance of filing of a
new drug application by the FDA; c) the FDA approval to move from one phase to
the next phase in the FDA application process; d) pharmaceutical sales goals
achieved e) completion of an in-licensing contract; f) completion of an
out-licensing contract; and g) increases in market capitalization. The
Compensation Committee did not make any cash bonuses to the executive officers
in 2008.
  38
  Long-Term Incentive Program. We believe that long-term performance
is achieved through an ownership culture that encourages such performance by our
executive officers through the use of stock and stock-based awards. Our stock
compensation plans have been established to provide certain of our employees,
including our executive officers, with incentives to help align those employees'
interests with the interests of stockholders. The compensation committee
believes that the use of stock and stock-based awards offers the best approach
to achieving our compensation goals. We have not adopted stock ownership
guidelines and our stock compensation plans have provided the principal method
for our executive officers to acquire equity or equity-linked interests in our
Company. We believe that the annual aggregate value of these awards should be
set near competitive median levels for comparable companies. However, due to the
early stage of our business, we expect to provide a greater portion of total
compensation to our executives through our stock compensation plans than through
cash-based compensation. The Compensation Committee makes stock awards to
executive officers and this type of award may occur in future years, based on
the Compensation Committee's assessment of the Company's needs and objectives,
which are as follows.
  Stock
Options. Our Compensation Committee is the administrator of the stock option
plan. Stock option grants are made at the commencement of employment and,
occasionally, following a significant change in job responsibilities or to meet
other special retention or performance objectives. The Plans are designed to (a)
reward executives for achieving long-term financial performance goals over a
three (3) year to ten (10) year period, (b) provide retention incentives for
executives and (c) tie a significant portion of an executive's total
compensation to our long-term performance. Periodic stock option grants are made
at the discretion of the Compensation Committee to eligible employee and, in
appropriate circumstances, the Compensation Committee considers the
recommendations of members of management, such as Dr. Janet Greeson, our Chief
Executive Officer, and Eugene Boyle, Chief Financial Officer. In 2006, certain
named executive officers were awarded stock options in the amounts indicated in
the sections entitled "Summary Compensation Table" and "Grants of Plan Based
Awards". The short and long-term compensation program includes stock options
granted under the Amended Samaritan Pharmaceuticals, Inc. 2001 Stock Incentive
Plan and the Samaritan Pharmaceuticals, Inc. 2005 Stock Incentive Plan
(together, the "Plans") as well as non-qualified stock options. Stock options
for our executive officers, key employees and key consultants are part of our
incentive program and link the enhancement of shareholder value directly to
their total compensation. The Compensation Committee determines the number of
stock options granted based upon several factors: (a) level of responsibility,
(b) expected contribution towards our performance and (c) total compensation
strategy for mix of base salary, short-term incentives and long-term
incentives.
  Our Plans
authorize us to grant options to purchase shares of common stock to our
employees, directors and consultants. Stock options granted by us typically have
an exercise price equal to the fair market value of our Common Stock on the day
of grant, and typically vest twenty-five percent (25%) over a particular period,
and generally expire between three and ten years after the date of grant.
Incentive stock options also include certain other terms necessary to assure
compliance with the Internal Revenue Code of 1986, as amended.
  Stock
Appreciation Rights. Our Amended Samaritan Pharmaceuticals, Inc. 2001 Stock
Incentive Plan and the Samaritan Pharmaceuticals, Inc. 2005 Stock Incentive Plan
authorizes us to grant stock appreciation rights, or SARs. A SAR represents a
right to receive the appreciation in value, if any, of our Common Stock over the
base value of the SAR. The base value of each SAR equals the value of our Common
Stock on the date the SAR is granted. Upon surrender of each SAR, unless we
elect to deliver common stock, we will pay an amount in cash equal to the value
of our Common Stock on the date of delivery over the base price of the SAR. SARs
typically vest based upon continued employment on a pro-rata basis over a
four-year period, and generally expire ten years after the date of grant. Our
Compensation Committee is the administrator of our stock appreciation rights
plan. To date, no SARs have been awarded to any of our executive
officers.
  Restricted
Stock Grants. Our Compensation Committee has and may in the future elect to make
grants of restricted stock to our executive officers.
  Other
Compensation. The amounts shown in the Summary Compensation Table under the
heading "Other Compensation" represent the value of Company matching
contributions to the executive officers' 401(k) accounts and the taxable value
of certain life insurance benefits. Executive officers did not receive any other
perquisites or other personal benefits or property.
  39
  Chief
Executive Officer Compensation. The Compensation Committee uses the same factors
in determining the compensation of the Chief Executive Officer as it does for
the executive officers. The Chief Executive Officer's base salary for Fiscal
2008 was $531,884, and as of December 31, 2008, the Chief Executive Officer has
accrued compensation of $1,234,455 which could be converted into restricted
shares, at the executive's option. The Chief Executive Officer received other
compensation as indicated in the Summary Compensation Table.
  The Compensation Committee is mindful of the potential impact upon
the Company of Section 162(m) of the Code, which provides that compensation in
excess of $1,000,000 paid to the President and CEO or to any of the other four
most highly compensated executive officers of a public company will not be
deductible for federal income tax purposes unless such compensation satisfies
one of the enumerated exceptions set forth in Section 162(m) of the Code. The
Compensation Committee has reviewed our compensation plans and programs with
regard to the deduction limitation set forth in Section 162(m) of the Code.
Based on this review, the Compensation Committee anticipates that the annual
bonus, long term incentive plan bonus and gain, if any, recognized by our
President and CEO and named executive officers upon the exercise of stock
options or SARS meet the requirements for deductibility under Section 162(m) of
the Code.
  Compensation
Committee Report
  The
Compensation Committee of the Board is composed of three (3) independent
directors. The Compensation Committee does not have a written charter. The
Compensation Committee is responsible for overseeing the Company's compensation
process on behalf of the Board. The members of the Compensation Committee
consist of independent directors Ms. Cynthia C. Thompson, Chairman, Mr. Jacinto
L. Ayala, and Mr. Robert Crane.
   The
Compensation Committee has reviewed and discussed this Compensation Discussion
& Analysis (CD&A) with management. Based on the review and discussions,
the Compensation Committee recommended to the Board that the CD&A be
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2008, for filing with the SEC and as applicable, the Company's proxy or
information statement.
  The
foregoing report is provided by the following directors, who constitute the
Compensation Committee:
  The
Compensation Committee:
  Ms.
      Cynthia C. Thompson (Chairman)
                Mr.
      Jacinto L. Ayala
                Mr.
      Robert Cran
  Summary
Compensation Table
 
 Name
      And Principal Position
              Year
              
              Salary
                $
              
              
              Bonus
                $
              
              
              Stock
      Awards$
                (6)
              
              
              Option
                Awards
                $
              
              
              Non-Equity
                Incentive
                Plan
                Compen-
                sation
              
              
              Change
      In Pension Value and
                Non
                qualified
      Deferred Compen-sation Earnings
                $
              
              
              All
      Other Compen
                sation
                $(8),
      (9)
              
              
              Total
                $Dr.
      Janet R. Greeson
              2008
              
              
              531,884
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              14,387
              
              
              
              546,271CEO,
      President and
              2007
              
              
              506,556
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              93,025
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              16,773
              
              
              
              616,354Chairman
      of the Board (1), (2),(5)
              2006
              
              
              482,434
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              10,799
              
              
              
              493,233Mr.
      Eugene J. Boyle
              2008
              
              
              354,589
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              14,317
              
              
              
              368,906CFO
      and COO (1), (3),(5)
              2007
              
              
              337,704
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              69,769
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              16,633
              
              
              
              424,1062006
              
              
              321,622
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              9,213
              
              
              
              330,835Dr.
      Thomas Lang
              2008
              
              
              357,417
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              17,367
              
              
              
              374,784Chief
      Drug Development
              2007
              
              
              340,397
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              22,733
              
              
              
              363,130Officer
      (4)
              2006
              
              
              324,188
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              15,190
              
              
              
              339,378Dr.
      Christos Dakas (11)
              2008
              
              
              207,754
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              18,201
              
              
              
              225,955Managing
      Director - Samaritan
              2007
              
              
              197,861
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              62,213
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              18,201
              
              
              
              278,2752006
              
              
              136,075
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              16,611
              
              
              
              152,686Mr.
      George Weaver(1)
              2008
              
              
              142,967
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              9,791
              
              
              
              152,758Regulatory
      Affairs
              2007
              
              
              136,159
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              27,908
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              16,882
              
              
              
              180,9492006
              
              
              129,675
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              10,428
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              8,386
              
              
              
              148,489
  40
 1)  The following executives have accrued compensation as of
December 31, 2008, Dr. Janet Greeson, $1,234,455, Eugene Boyle, $735,352, George
Weaver, $172,665 and Dr. Thomas Lang, $291,058. Each executive has the option to
convert their respective accrued compensation into restricted shares. In 2006,
George Weaver exercised his option and the Board of Directors approved the
conversion of $90,000 into restricted shares.
 
 2) The
Company and Dr. Greeson have entered into an employment agreement, a copy of
which is attached as Exhibit 10.9 to the Company's Quarterly Report on Form
10-QSB as filed with the SEC on August 14, 2002. The agreement filed on August
14, 2002 expired as of December 31, 2005.
 
 3)  The
Company and Mr. Boyle have entered into an employment agreement, a copy of which
is attached as Exhibit 10.8 to the Company's Quarterly Report on Form 10-QSB as
filed with the SEC on August 14, 2002. The agreement filed on August 14, 2002
expired as of December 31, 2005.
 
 4)  On
June 1, 2004, the Company entered into an employment agreement with Dr. Thomas
Lang pursuant to which Dr. Lang shall serve as the Company's Chief Drug
Development Officer for a term of four (4) years. Dr. Lang is entitled to a base
salary of $300,000 per year which may be paid in stock pursuant to a formula as
set forth in the agreement. Dr. Lang is entitled to receive bonus payments of
$50,000 for each Investigational New Drug Applications "granted" by the FDA. Dr.
Lang received a one-time signing bonus of 100,000 options to purchase our Common
Stock at $1.00 per share, such options to expire after three (3) years. Dr. Lang
is entitled to moving expenses up to $30,000. Dr. Lang shall receive a grant of
1,200,000 options, one-quarter (1/4) of which shall vest each year. The price of
the options shall be $1.08 with a term of ten (10) years. Upon termination of
the employment agreement, such 1,200,000 options (vested and non-vested) shall
expire within thirty (30) days thereafter. Dr. Lang shall have the opportunity
to participate in all of the Company's qualified defined benefit and defined
contribution retirement plans (subject to eligibility requirements in such
plans), three (3) weeks paid vacation and paid holidays observed by the Company.
The agreement between the Company and Dr. Thomas Lang has expired.
 
 5) 
During calendar year 2008, Dr. Janet Greeson and Eugene Boyle withdrew
restricted shares for an aggregate value of $70,599 and $55,583 respectively
from the Samaritan Deferred Compensation Plan which was contributed to the Plan
prior to the year 2005.  During calendar year 2007, Dr. Janet Greeson
and Eugene Boyle withdrew restricted shares for an aggregate value of $280,000
and $70,000 respectively from the Samaritan Deferred Compensation Plan which was
contributed to the Plan prior to the year 2005.
 
 6)  On
December 14, 2007, the Company issued the following restricted shares into the
Samaritan Pharmaceuticals Benefit Plan for the following executives: Dr. Janet
Greeson, 1,424,694; Eugene Boyle, 474,895; Christos Dakas, 78,456; and George
Weaver, 74,765.
 
 7)  The
amounts shown in this column cover amounts for the payment of medical and dental
insurance, short and long term disability insurance, Medicare/Social Security
taxes, car allowances, life insurance premiums, life annuity premiums and
accidental death and dismemberment insurance for the benefit of the particular
employee, and the employers matching contribution to the particular employees
401(k).
 
 8)  We
adopted a tax-qualified employee savings and retirement plan, or 401(k) plan,
covering our full-time employees located in the United States. The 401(k) plan
is intended to qualify under Section 401(k) of the Internal Revenue Code of
1986, as amended (the "Code"), so that contributions to the 401(k) plan by
employees, and the investment earnings thereon, are not taxable to employees
until withdrawn from the 401(k) plan. Under the 401(k) plan, employees may elect
to reduce their current compensation up to the statutorily prescribed annual
limit and have the amount of such contribution contributed to the 401(k) plan.
The 401(k) plan does permit additional matching contributions to the 401(k) plan
by us on behalf of participants in the 401(k).
 
 9)  If
an officer or director made a loan to the Company and received options and
interest, the amounts resulting from that loan were excluded from the above
calculations.  Please see Note 3S - Summary Of Significant Accounting
Policies regarding the compensation for loans made to the Company.
 
 10)  Dr.
Christos Dakas left the company in the fourth quarter of 2008.
  41
 
 Grants of
Plan-Based Awards
 
 There
were no options granted to purchase shares of our Common Stock under the Option
Plan to the executive officers in exchange for services in their capacity as an
executive or director.  The following table shows the number of
options granted and the exercise price per share.
  All
      OtherOptionAwards:Number
      of
              
              
              
              Grant
      DateSecurities
              
              
              
              Fair
      ValueUnderlying
              
              Exercise or
      Base
              
              Of Stock
      &Grant
              
              Options
              
              Price of
      Option
              
              Option
      AwardsName
              
              Date
              
              (#)
              
              ($/Share)
              
              ($)Dr. Janet R. Greeson
      (1)
              
              -
              
              -0-
              
              -0-
              
              -0-
  (1)  If
an officer or director made a loan to the Company and received options and
interest, the amounts resulting from that loan were excluded from the above
calculations.  Please see Note 3S - Summary of Significant Accounting
Policies regarding the compensation for loans made to the
Company.
  The
Compensation Committee determines the number of stock options granted based upon
several factors: (a) level of responsibility, (b) expected contribution towards
our performance and (c) total compensation strategy for mix of base salary,
short-term incentives and long-term incentives.
  Narrative
Disclosure to Summary Compensation Table
  In order
to conserve cash, the Named Executive Officers and certain other key employees
may convert their salaries into restricted shares of the Company.
  Material
Terms of Employment Contracts of Named Executive Officers
  We do not
have employment agreements with Dr. Janet Greeson, Mr. Eugene Boyle, Dr. Thomas
Lang and Mr. George Weaver, however, each executive has agreed to work under the
prior employment agreement until a new employment agreement can be negotiated
with the Compensation Committee. Under the prior employment agreements, each
executive works for a base salary, with a minimum five (5%) annual increase for
subsequent years. Each executive also received our standard employee life,
disability, long-term care (after five years of service), health insurance
benefits, and car allowances. Each executive may also be entitled to receive
additional compensation for achieving the following events:
  (i)
              upon
      consummation of a transaction with a pharmaceutical company expected to
      result in equity investment, a royalty revenue, or other substantial
      benefit as our Board may determine;(ii)
              upon
      approval by the Food and Drug Administration of each new investigational
      new drug application filed by us for commencement of human
      trials;(iii)
              upon
      approval by the FDA of each new drug application filed by us for any
      drug,; and(iv)
              upon
      achievement of goals specified by our Board as determined in the third
      quarter of each fiscal year, based on performance relative to their
      individual work as an executive manager and/or scientist and based on
      reference to objective criteria such as the market price of our stock or
      meeting budgets approved by the
Board.
  42
  If an
executive’s employment terminates other than “for cause” or within twelve months
after a change of control of Samaritan Pharmaceuticals, he or she is entitled
to, among other things, severance payments of four (4) months for every year of
service based on his or her salary as of termination, and any payment calculated
by reference to prior bonus payments, continuation of or comparable health plan
benefits for themselves for four months for every year of service, and immediate
vesting of any unvested stock options.
  Each
executive has also signed an agreement that requires the executive to assign
inventions and other intellectual property to Samaritan Pharmaceuticals which
they conceive or reduce to practice during employment and for such period as the
Company pays severance, contains protective provisions concerning confidential
information, non-competition and non-solicitation of employees, and provides for
indemnification of each executive.
  Outstanding
Equity Awards at Fiscal Year-End
  The
following table sets forth information with respect to the unexercised options
to purchase shares of our Common Stock granted under the Option Plan to the
executive officers named in the Summary Compensation Table and held by them at
December 31, 2008.
   Name
              
              Number
      of
                Securities
                Underlying
                Unexercised
                Options
                #
      Exercisable
              
              Number
      of
                Securities
                Underlying
                Unexercised
                Options
      #
                Unexercisable
              
              Number
      of
                Securities
                Underlying
                Unexercised
                Option
      Exercise
                Price
              
              Option
                Expiration
      DateJanet
      Greeson(1)
              
              255,369
              
              -0-
              
              3.48
              
              12/31/2011255,369
              
              -0-
              
              3.48
              
              01/02/2012296,614
              
              -0-
              
              3.48
              
              04/25/2012430,373
              
              -0-
              
              3.48
              
              01/15/2013467,892
              
              -0-
              
              2.04
              
              01/02/2014241,035
              
              -0-
              
              3.48
              
              01/02/2014250,000
              
              -0-
              
              .49
              
              12/14/2017Eugene
      Boyle
              
              127,685
              
              -0-
              
              3.48
              
              12/31/2011127,684
              
              -0-
              
              3.48
              
              01/02/201274,154
              
              -0-
              
              3.48
              
              04/25/2012215,187
              
              -0-
              
              3.48
              
              01/15/2013265,015
              
              -0-
              
              2.04
              
              01/02/201489,450
              
              -0-
              
              3.48
              
              01/02/2014440,182
              
              -0-
              
              5.58
              
              01/05/2015187,500
              
              -0-
              
              .49
              
              12/14/2017Thomas
      Lang
              
              200,000
              
              -0-
              
              6.48
              
              06/01/2014Christos
      Dakas
              
              75,000
              
              -0-
              
              .49
              
              12/14/201775,000
              
              -0-
              
              .50
              
              12/19/2017George
      Weaver
              
              8,334
              
              -0-
              
              2.04
              
              01/02/201410,000
              
              -0-
              
              1.50
              
              12/15/201175,000
              
              -0-
              
              .49
              
              12/14/2017
 
 (1) If an
officer or director made a loan to the Company and received options and
interest, the amounts resulting from that loan were excluded from the above
calculations.  Please see Note 3S - Summary of Significant Accounting
Policies regarding the compensation for loans made to the Company.
  43
  Option Exercises and Stock Vested
  The
following table sets forth information with respect to the option exercises and
stock vested as of December 31, 2008:
  Option
      Awards
              
              
              Stock
      AwardsNumber
      of
                Shares
      Acquired
                On
      Exercise #
              
              
              Value
      Realized
                On
      Exercise
                $
              
              
              Number
      of
                Shares
      Acquired
                On
      Vesting #
              
              
              Value
      Realized
                On
      VestingJanet
      Greeson
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-Eugene
      Boyle
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-Thomas
      Lang
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-Christos
      Dakas
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-George
      Weaver
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
  Pension
Benefits
  None of
our named executives participate in or have account balances in qualified or
non-qualified defined benefit plans sponsored by us. The Compensation Committee,
which is solely comprised of "outside directors" as defined for purposes of
Section 162(m) of the Code, may elect to adopt qualified or non-qualified
defined benefit plans if the Compensation Committee determines that doing so is
in our best interests.
  Nonqualified
Defined Contribution and Other Nonqualified Deferred Compensation
Plans
  The
Company has established "Rabbi Trust" agreements for the benefit of select
management and highly-compensated employees and has appointed a trustee that is
a non-director and officer providing for the payment out of the assets of the
Rabbi Trust agreements accrued under the Company's various employment agreements
and other employment arrangements as the Company may specify from time to time.
The Rabbi Trust agreements would become irrevocable upon a change of control of
Samaritan. The Company may make contributions to the Rabbi Trust agreements from
time to time, and additional funding may be required upon a change of control.
To the extent funded, the Rabbi Trust agreements are to be used, subject to
their terms and to the claims of the Company's general creditors in specified
circumstances, to make payments under the terms of the benefit plans, employment
agreements and other employment arrangements as the Company may specify from
time to time. To date, only restricted shares have been deferred into the
nonqualified deferred compensation plan, thus the plan will be settled in
restricted shares.
   Name
              
              Executive

                Contributions
      in
                Last
      FY $
              
              
              Registrant

                Contributions
      in
                Last
      FY $
              
              
              Aggregate

                Earnings
      in
                Last
      FY $
              
              
              Aggregate

                Withdrawals/
                Distributions
                (2)
      $
              
              
              Aggregate

                Balance
      at
                Last
      FYE
                (2)
      (3) $Janet Greeson
      (1)
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              164,731
              
              
              
              115,104Eugene Boyle
      (1)
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              129,693
              
              
              
              84,153Thomas Lang
      (1)
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-Christos Dakas
      (1)
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              3,922George Weaver
      (1)
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              11,239
 
 1)
              As
      of December 31, 2008, the Company has issued 5,288,476 shares into the
      Rabbi Trust with the following credit allocation: Dr. Janet Greeson
      2,302,070; Mr. Eugene J. Boyle 1,683,065; Mr. Christos Dakas 78,456; Mr.
      George Weaver 224,785; Ms.  Kristi Eads 50,625; Ms. Dianne
      Thompson 21,376; Mr. Barrie Fuller 11,250; Mr. Jacinto L. Ayala 67,500;
      Mr. Robert W. Crane 52,500; Dr. Julio Garcia 37,500; Mr. Welter “Budd”
      Holden 126,373; Dr. Erasto R. C. Saldi 40,834; Ms. Cynthia C. Thompson
      191,667; Mr. H. Thomas Winn 150,834 and Dr. Vassilios Papadopoulos
      249,641.2)
              If
      applicable, the calculations take into account a thirty percent discount
      to the market price if there is a restriction to the
  stock.3)
              The
      $0.07 price per share of the Company's securities is the closing market
      price as of December 31, 2008.
  44
  Change of Control Plan
  On May
30, 2006 the Board approved and adopted the Change in Control Severance Plan for
Certain Covered Executives and Employees of Samaritan Pharmaceuticals (the
"Change in Control Plan"), effective May 30, 2006. The Change in Control Plan is
intended to help avoid the loss and distraction of certain key employees of the
Company in the event of a change in control. The Plan has an initial term of
three (3) years with automatic three-year extensions, unless terminated by the
Board at least six (6) months prior to the end of the then current
term.
  The Chief
Executive Officer, Chief Financial Officer, Chief Operating Officer, Senior Vice
Presidents, Vice Presidents, and Directors are eligible to participate in the
Change in Control Plan, and the Board may designate other employees of the
Company as Plan participants. The Company shall pay or cause to be paid to the
participant a cash severance calculated based on a multiplier of four (4) months
of base salary for every year of service up to maximum in of either twenty four
(24) months or thirty six (36) months depending on the participants job title or
job category. The severance amount equals the applicable multiplier times the
sum of (A) the participant's highest annual rate of base salary as reported on
the participant's W-2 for employee or on the participant's 1099 for directors
within the thirty six (36) month period immediately preceding the Effective Date
of the change in control and (B) the participant's maximum annual target bonus
in effect upon the date of the change in control under the Company's bonus plan
or the Participant's actual earned commission incentive for the last two
quarters, which will be annualized, prior to the change in control, not to
exceed the target at 100% of achievement as defined in the Company's Sales
Incentive Plan in effect upon the date of the change in control.
  The
Change in Control Plan provides that, if, within three years following a "change
in control" (as defined in the Change in Control Plan), a participant's
employment is terminated by the Company without "cause" (as defined in the Plan)
or by the participant for "good reason" (as defined in the Change in Control
Plan), the participant is eligible for severance benefits equal to a multiple of
the sum of the participant's base salary and the higher of the participant's
target bonus opportunity during the year in which the change in control occurs
or his or her target bonus opportunity following the change in control. Each
participant will also receive his or her salary through the date of termination,
a pro rata target bonus payment for the year in which the termination occurs, a
pro rata long-term incentive payment to the extent provided in the Company's
Long Term Incentive Plan, and any earned but unpaid long-term incentive payments
or annual bonuses. In the event that a participant becomes subject to an excise
tax under section 280G of the Internal Revenue Code of 1986, as amended, the
participant will generally be entitled to receive an additional amount such that
the participant is placed in the same after-tax position as if no excise tax had
been imposed. The Change in Control Plan may be amended by the Board at any
time, except that no amendment that adversely affects the rights or potential
rights of a participant will be effective in the event that a change in control
occurs within three (3) year of such amendment.
  In the
event the named executive officers were terminated without "cause" or they
terminated their employment for "good reason" following a change of control, the
named executive officers would receive the following severance payments (based
on current salary rates, the average bonuses of the named executive officers for
the last three fiscal years as the highest bonus and additional retirement
benefits). Assuming the employment of our executive officers were to be
terminated without cause (whether through constructive termination or otherwise)
on December 31, 2008, the following individuals would be entitled to payments in
the amounts set forth: Dr. Janet Greeson, $1,595,652; Eugene Boyle, $709,178;
Dr. Thomas Lang, $478,939; and George Weaver, $260,200. The foregoing does not
include any amounts that would be payable under the "gross-up" provisions of the
change of control employment agreements, or any amounts attributable to the
accelerated vesting of equity awards upon a change of control.
  45
  Director
Compensation Table
  The
following director compensation table sets forth the total annual compensation
paid or accrued by the Company to or for the account of each member of the Board
of the Company except the Chief Executive Officer, Dr. Janet Greeson, and Chief
Financial Officer, Mr. Eugene Boyle, who receive no additional compensation in
their individual capacity as Board members:
  Name
      (1)
              
              Fees
                Earned
      or
                Paid
      in
                Cash
                $
              
              
              Stock
                Awards
                $
              
              
              Option
                Awards
                $
              
              
              Non-Equity
                Incentive
      Plan
                Compensation
                $
              
              
              Change
      In

                Pension
      Value
                And
      Nonqualified
                Deferred
                Compensation
                Earnings
              
              
              All
      Other
                Compensation
                $
              
              
              Total$Jacinto L.
      Ayala
              
              
              -0-
              
              
              
              5,400
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              5,400Robert
      Crane
              
              
              -0-
              
              
              
              4,200
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              4,200Julio
      Garcia
              
              
              -0-
              
              
              
              3,000
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              3,000Welter "Budd"
      Holden
              
              
              -0-
              
              
              
              3,200
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              3,200Laurent
      Lecanu
              
              
              7,500
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              7,500Cynthia
      Thompson
              
              
              -0-
              
              
              
              14,000
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              14,000Thomas
      Winn
              
              
              -0-
              
              
              
              11,000
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              11,000
 
 (1)
      Excludes Dr. Janet Greeson and Mr. Eugene Boyle, who are employees of the
      Company.Discussion
      of Director Compensation
                
                Directors
      who are employees of the Company do not receive additional compensation
      for serving as directors. Each director who is not an employee of the
      Company receives a grant of shares of our Common Stock, annually as
      compensation for his or her services as a member of the Board of
      Directors. Non-employee directors receive no additional fee for meetings
      of the Board of Directors attended in person by such director or for each
      telephone meeting in which such director participates. Non-employee
      directors who serve on a committee of the Board receive a grant
      of shares of our Common Stock, annually as compensation for his or
      her services as a member of such committee. Chairmen of the committees
      receive a grant of shares of our Common Stock annually as
      compensation for his or her services as a chairman of such committee. All
      directors of the Company are reimbursed for out-of-pocket expenses
      incurred in attending meetings of the Board or committees thereof, and for
      other expenses incurred in their capacities as directors of the
      Company.
  46
  ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDERS MATTERS.
 Equity Compensation Plan
      InformationNumber
      OfSecurities
      To
              
              
              WeightedBe
      Issued Upon
              
              
              AverageExercise
      Of
              
              
              Exercise
      PriceOutstanding
              
              
              Of
      Outstanding
              
              
              Number
      OfOptions,
      Warrants
              
              
              Options,
      Warrants
              
              
              SecuritiesRemaining
      ForName
      Of Plan
              
              And
      Rights
              
              
              And
      Rights
              
              
              Future
      IssuanceEquity compensation plans
      approved by security holders (1) (2)
              
              
              7,070,853
              
              
              $
              2.38
              
              
              
              1,976,713Equity compensation plans not
      approved by security holders (3)
              
              
              5,288,476
              
              
              $
              .07
              
              
              
              N/ATotal
              
              
              12,359,329
              
              
              
              
              
              
              
              1,976,713
  1) The
Amended Samaritan Pharmaceuticals, Inc. 2001 Stock Incentive Plan was filed as
Exhibit 4.2 to the Company's Quarterly Report on Form 10-QSB, as filed with the
SEC on August 16, 2004.
  2) The
Samaritan Pharmaceuticals, Inc. 2005 Stock Incentive Plan was filed with the SEC
on Schedule 14A as filed with the SEC on April 29, 2005.
  3) Samaritan has entered into "Rabbi Trust" agreements to fund
deferred compensation benefits, with an institutional trustee providing for the
payment out of the assets of the trusts of benefits accrued under our various
benefit plans, employment agreements and other employment arrangements as the
Company specifies from time to time. To the extent not already irrevocable, the
trusts would become irrevocable upon a change of control of Samaritan. The
Company may contribute to the trusts from time to time, and additional funding
could be required upon a change of control. The Rabbi Trust agreements are
subject to their terms and to the claims of our general creditors in specified
circumstances, to make payments under the terms of the benefit plans, employment
agreements and other employment arrangements from time to times specified by the
Company.
  Beneficial
ownership is determined in accordance with the rules of the SEC. Except as
indicated by footnote, to our knowledge, the persons named in the table below
have sole voting and investment power with respect to all shares of common stock
shown as beneficially owned by them. Options to purchase shares of the our
Common Stock that are exercisable within sixty (60) days of April 14, 2009 are
deemed to be beneficially owned by the person holding such options for the
purpose of computing ownership of such person, but are not treated as
outstanding for the purpose of computing the ownership of any other person.
Applicable percentage of beneficial ownership is based on 36,390,265 shares of
common stock outstanding as of May 26, 2009.
  The
following table sets forth information we know with respect to the beneficial
ownership of our Common Stock as of April 14, 2009, for each person or group of
affiliated persons, whom we know to beneficially own more than 5% of our Common
Stock. The table also sets forth such information for our directors and
executive officers, individually and as a group. The address for each listed
stockholder is: c/o Samaritan Pharmaceuticals, Inc., 2877 Paradise Road, Suite
801, Las Vegas, Nevada 89109.
  47
  Percentage
      ofTotal
      Number
              
              
              Totalof
              
              
              Number
      ofNumber
      of
              
              
              Number
      of
              
              
              Options
      and
              
              
              SharesShares
              
              
              Options
              
              
              Shares
              
              
              and
      OptionsBeneficially
              
              
              Beneficially
              
              
              Beneficially
              
              
              BeneficiallyBeneficial
      Owner
              
              Owned
              
              
              Owned
              
              
              Owned
      (1)
              
              
              OwnedDr. Janet R.
      Greeson
              
              
              3,562,630
              
              
              
              3,511,819
              
              
              
              7,074,449
              
              
              
              19.4%Mr. Eugene J.
      Boyle
              
              
              2,032,727
              
              
              
              1,646,857
              
              
              
              3,679,584
              
              
              
              10.1%Dr. Thomas
      Lang
              
              
              413,097
              
              
              
              200,000
              
              
              
              613,097
              
              
              
              *Ms. Kristi C.
      Eads
              
              
              175,360
              
              
              
              174,394
              
              
              
              349,754
              
              
              
              *Mr. George
      Weaver
              
              
              251,465
              
              
              
              93,334
              
              
              
              344,799
              
              
              
              *Dr. Laurent
      Lecanu
              
              
              8,334
              
              
              
              13,334
              
              
              
              21,668
              
              
              
              *Mr. Welter “Budd”
      Holden
              
              
              479,192
              
              
              
              13,334
              
              
              
              492,526
              
              
              
              *Mr. H. Thomas
      Winn
              
              
              154,167
              
              
              
              13,334
              
              
              
              167,501
              
              
              
              *Ms. Cynthia C.
      Thompson
              
              
              298,926
              
              
              
              20,000
              
              
              
              318,926
              
              
              
              *All Executive
      officers and directorsas
      a group (eleven persons)
              
              
              7,375,898
              
              
              
              5,686,406
              
              
              
              13,062,304
              
              
              
              35.9%Dr. Vassilios Papadopoulos
      (2)
              
              
              266,667
              
              
              
              333,336
              
              
              
              600,003
              
              
              
              **Less than one percent
      (1%)
  1) If an
officer or director had previously elected to exercise options or deferred
compensation through a program that involves the crediting of deferred shares of
our Common Stock held pursuant to the Trust under Samaritan Pharmaceuticals,
Inc. Executive Benefit Plan (the "Rabbi Trust") for distribution to the
executive after termination of employment, the shares were excluded from the
above calculation. As of December 31, 2008, the Company has issued 5,288,476
shares into the Rabbi Trust with the following credit allocation: Dr. Janet
Greeson 2,302,070; Mr. Eugene J. Boyle 1,683,065; Mr. Christos Dakas 78,456; Mr.
George Weaver 224,785; Ms.  Kristi Eads 50,625; Ms. Dianne Thompson
21,376; Mr. Barrie Fuller 11,250; Mr. Jacinto L. Ayala 67,500; Mr. Robert W.
Crane 52,500; Dr. Julio Garcia 37,500; Mr. Welter “Budd” Holden 126,373; Dr.
Erasto R. C. Saldi 40,834; Ms. Cynthia C. Thompson 191,667; Mr. H. Thomas Winn
150,834 and Dr. Vassilios Papadopoulos 249,641.
  2) Dr.
Vassilios Papadopoulos is a key consultant for the Company and a former officer
and director.
  ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE
  We have
entered into indemnity agreements with all directors, and officers and certain
employees, which provide, among other things, that we will indemnify such
officer or director, under the circumstances and to the extent provided for in
the agreements, for expenses, damages, judgments, fines and settlements he or
she may be required to pay in actions or proceedings which he or she is or may
be made a party to by reason of his or her position as a director, officer or
other agent of the Company, and otherwise to the full extent permitted under
Nevada law and our bylaws. The Company filed a form of the agreement as Exhibit
10.17 to the Company's Quarterly Report on Form 10-Q as filed with the SEC on
August 14, 2006.
  Policies
and Procedures for Approval of Related Person Transactions
  Our
policy and procedures with respect to any related person transaction between the
Company and any related person requiring disclosure under Item 404(a) of
Regulation S-K under the Securities Exchange Act of 1934, is that such
transaction is consummated only if the Audit Committee approves or ratifies such
transaction; the disinterested members of the Board of Directors approves or
ratifies such transaction; or the transaction involves compensation approved or
ratified by the Compensation Committee.
  48
  Director
Independence
  The
Company's Board of Directors contains the following members: Dr. Janet Greeson,
Mr. Eugene Boyle, Mr. Thomas H. Winn, Ms. Cynthia Thompson, Mr. Welter "Budd"
Holden, Dr. Julio Garcia, Mr. Jacinto L. Ayala, Mr. Robert Crane and Dr. Lecanu
Laurent. The OTC Pink Sheets does not have rules regarding director
independence. The following directors are considered "independent" as defined
under the rules of the NASDAQ Stock Market: Mr. Thomas H. Winn, Ms. Cynthia
Thompson, Mr. Welter "Budd" Holden, Dr. Julio Garcia, Mr. Jacinto L. Ayala, Mr.
Robert Crane and Dr. Lecanu Laurent.
  Please
see Note 12 – Related Party Transactions regarding the certain relationships and
related party transactions during 2008.
  ITEM
14. PRINCIPAL ACCOUNTING FEES AND SERVICES
  Audit and
Non-Audit Fees
  The
following table presents fees for professional audit services rendered by SHERB
& CO., LLP for the audit of the Company's annual financial statements for
the fiscal years ended December 31, 2008 and December 31, 2007, and fees billed
for other services rendered by SHERB & CO LLP during those
periods:
  2008
              
              
              2007Audit
      fee:
              
              $
              52,500
              
              
              $
              45,000Audit-related
      fees:
              
              $
              19,500
              
              
              $
              15,000Tax
      fees:
              
              $
              -
              
              
              $
              -Other:
              
              $
              9,000
              
              
              $
              8,610Total:
              
              $
              81,000
              
              
              $
              68,610
  Audit
fees consisted principally of audit work performed on the consolidated financial
statements and internal control over financial reporting, as well as work
generally only the independent registered public accounting firm can reasonably
be expected to provide, such as statutory audits. The Company generally does not
engage SHERB & CO LLP, for other services, other than Edgar
services.
  Policy on
Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of
Independent Registered Public Accounting Firm
  Consistent with SEC rules regarding auditor independence, the Audit
Committee has responsibility for appointing, setting compensation and overseeing
the work of the independent registered public accounting firm. In recognition of
this responsibility, the Audit Committee has established a policy to pre-approve
all audit and permissible non-audit services provided by the independent
registered public accounting firm.
  Prior to
engagement of the independent registered public accounting firm for the next
year's audit, management will submit a list of services and related fees
expected to be rendered during that year within each of categories of services
to the Audit Committee for approval.
  Audit
services include audit work performed on the financial statements and internal
control over financial reporting, as well as work that generally only the
independent registered public accounting firm can reasonably be expected to
provide, including comfort letters, statutory audits and discussions surrounding
the proper application of financial accounting and/or reporting
standards.
  Audit-Related
services are for assurance and related services that are traditionally performed
by the independent registered public accounting firm, including due diligence
related to mergers and acquisitions, employee benefit plan audits, and special
procedures required to meet certain regulatory requirements.
  Tax
services include all services, except those services specifically related to the
audit of the financial statements, performed by the independent registered
public accounting firm's tax personnel, including tax analysis; assisting with
coordination of execution of tax-related activities, primarily in the area of
corporate development; supporting other tax-related regulatory requirements; and
tax compliance and reporting.
  49
  All other
services are those services not captured in the audit, audit-related or tax
categories.
  The
Company generally does not request such services from the independent registered
public accounting firm. Prior to engagement, the Audit Committee pre-approves
independent public accounting firm services within each category and the fees
for each category are budgeted. The Audit Committee requires the independent
registered public accounting firm and management to report actual fees versus
the budget periodically throughout the year by category of service. During the
year, circumstances may arise when it may become necessary to engage the
independent registered public accounting firm for additional services not
contemplated in the original pre-approval categories. In those instances, the
Audit Committee requires specific pre-approval before engaging the independent
registered public accounting firm.
  The Audit
Committee may delegate pre-approval authority to one (1) or more of its members.
The member to whom such authority is delegated must report, for informational
purposes only, any pre-approval decisions to the Audit Committee at its next
scheduled meeting.
  Audit
Committee Report
  The Audit
Committee of the Board is composed of three (3) independent directors. The Audit
Committee operates under a written charter adopted by the Board and attached as
Exhibit A to the proxy statement filed with the SEC on April 3,
2001.
  The Audit
Committee is responsible for overseeing the Company's financial reporting
process on behalf of the Board. The members of the Audit Committee consist of
independent directors Mr. H. Thomas Winn, Ms. Cynthia C. Thompson and Mr.
Jacinto L. Ayala. Each year, the Audit Committee recommends to the Board,
subject to stockholder ratification, the selection of the Company's independent
auditors.
  Management
is responsible for the Company's financial statements and the financial
reporting process, including internal controls. The independent auditors are
responsible for performing an independent audit of the Company's consolidated
financial statements in accordance with generally accepted auditing standards
and for issuing a report thereon. The Audit Committee's responsibility is to
monitor and oversee these processes.
  In this
context, the Audit Committee has met and held discussions with management and
SHERB & CO., LLP. Management represented to the Committee that the Company's
consolidated financial statements were prepared in accordance with generally
accepted accounting principles, and the Audit Committee has reviewed and
discussed the consolidated financial statements with management and the
independent auditors. The Audit Committee discussed with SHERB & CO., LLP
the matters required to be discussed by Statement on Auditing Standards No.
61(Communication with Audit Committees). These matters included a discussion of
SHERB & CO., LLP's judgments about the quality (not just the acceptability)
of the Company's accounting principles as applied to financial
reporting.
  SHERB & CO., LLP also provided the Audit Committee with the
written disclosures and letter required by Independence Standards Board Standard
No. 1(Independence Discussions with Audit Committees), and the Audit Committee
discussed with SHERB & CO., LLP that firm's independence. The Audit
Committee further considered whether the provision by SHERB & CO., LLP of
the non-audit services described elsewhere in this proxy statement is compatible
with maintaining the auditors' independence.
  Based
upon the Audit Committee's discussion with management and the independent
auditors and the Audit Committee's review of the representation of management
and the disclosures by the independent auditors to the Audit Committee, the
Audit Committee recommended to the Board that the Company's audited consolidated
financial statements be included in the Company's Annual Report on Form 10-K for
the year ended December 31, 2008, for filing with the SEC. The Audit Committee
and the Board have also recommended the selection of SHERB & CO., LLP as the
Company's independent auditors for 2009, subject to stockholder
ratification.
  50
  The Audit
Committee Report does not constitute soliciting material, and shall not be
deemed to be filed or incorporated by reference into any other Company filing
under the Securities Act of 1933, as amended, or the Exchange Act, except to the
extent that the Company specifically incorporates the Audit Committee Report by
reference therein.
  The Audit
Committee:
  Mr.
      H. Thomas Winn (Chairman)
                Ms.
      Cynthia C. Thompson
                Mr.
      Jacinto L. Ayala
 
 PART
      IV
  ITEM
15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
  Listed
below are all exhibits filed as part of this Annual Report on Form 10-K. Some
exhibits are filed by the Company with the SEC pursuant to Rule 12b-32 under the
Securities Exchange Act of 1934, as amended.
  EXHIBIT
      NO.
                  
                  DESCRIPTION
                  
                  LOCATION3.1
                  
                  Articles of Incorporation,
      restated as last
                  
                  Incorporated by reference to
      Exhibit 3.1 to theamended November 1,
      2007
                  
                  Company's Current Quarterly
      Report on Form 10-QSB as filed with the U.S.
      Securities and ExchangeCommission on November 11,
      2007.3.2
                  
                  Bylaws, restated as last amended
      March 20,
                  
                  Incorporated
      by reference to Exhibit 3.2 to the2008
                  
                  Company's
      Form 10-K as filed with the U.SSecurities
      and Exchange Commission on April 14,20084.1
                  
                  Form of Common Stock
      Certificate
                  
                  Incorporated by reference to
      Exhibit 4.1 to theCompany's Current Report Form
      10-SB12G as filedwith the U.S. Securities and
      Exchange Commission onJuly 21,
      19994.2
                  
                  Amended Samaritan
      Pharmaceuticals, Inc.
                  
                  Incorporated by reference to
      Exhibit 4.2 to the2001 Stock Option
      Plan
                  
                  Company's Quarterly Report on
      Form 10-QSB as filedwith the U.S. Securities and
      Exchange Commission onAugust 16,
      20044.3
                  
                  Samaritan Pharmaceuticals, Inc.
      2005 Stock
                  
                  Incorporated by reference to
      Schedule 14-AOption
      Plan
                  
                  Information Statement as filed
      with the U.S. Securitiesand Exchange Commission on April
      29, 2005 andapproved by the shareholders on
      June 10, 200510.1
                  
                  Research, Development
      and
                  
                  Incorporated by reference to
      Exhibit 10.1 to theCommercialization Collaboration
      Agreement
                  
                  Company's Form 10-K as filed with
      the U.S.for SP-01A dated March 28, 2007
      by and
                  
                  Securities and
      Exchangebetween Pharmaplaz and the
      Company.
                  
                  Commission on April 13,
      2007.10.2
                  
                  Common Stock Purchase
      Agreement
                  
                  Incorporated by reference to
      Exhibit 10.1 to the(Purchase Agreement I), dated
      April 22, 2003,
                  
                  Company's Current Report on Form
      8-K as filed withby and between the Company and
      Fusion
                  
                  the U.S. Securities and Exchange
      Commission onCapital Fund II,
      LLC
                  
                  April 25,
      200310.3
                  
                  Registration Rights Agreement,
      dated April
                  
                  Incorporated by reference to
      Exhibit 10.2 to the22, 2003, by and between the
      Company and
                  
                  Company's Current Report on Form
      8-K as filed withFusion Capital Fund II,
      LLC
                  
                  the U.S. Securities and Exchange
      Commission onApril 25,
      2003
   51
  10.4
              
              Employment Agreement, dated as of
      January
              
              Incorporated by reference to
      Exhibit 10.6 to the1, 2001, by and between
      Samaritan
              
              Company's Quarterly Report on
      Form 10-QSB as filedPharmaceuticals, Inc. and Mr.
      Thomas Lang.
              
              with the U.S. Securities and
      Exchange Commission onAugust 16,
      200410.5
              
              Form of Trust Under
      Samaritan
              
              Incorporated by reference to
      Exhibit 10.10 to thePharmaceuticals, Inc. Deferred
      Compensation
              
              Company's Quarterly Report on
      Form 10-QSB as filedPlan
              
              with the U.S. Securities and
      Exchange Commission onAugust 14,
      200210.6
              
              Master Clinical Trial and Full
      Scale
              
              Incorporated by reference to
      Exhibit 10.10 to theManufacturing Agreement, dated
      October 5,
              
              Company's Quarterly Report on
      Form 10-QSB as filed2004, by and between the Company
      and
              
              with the U.S. Securities and
      Exchange Commission onPharmaplaz,
      LTD
              
              November 15,
      200410.7
              
              Common Stock Purchase
      Agreement
              
              Incorporated by reference to
      Exhibit 10.11 to the(Purchase Agreement II), dated
      May 12, 2005,
              
              Company's Quarterly Report on
      Form 10-QSB as filedby and between the Company and
      Fusion
              
              with the U.S. Securities and
      Exchange Commission onCapital Fund II,
      LLC
              
              May 13,
      200510.8
              
              Amendment to Common Stock
      Purchase
              
              Incorporated by reference to
      Exhibit 10.12 to theAgreement, dated December 19,
      2005, by and
              
              Company's Registration Statement
      on Form SB-2 asbetween the Company and Fusion
      Capital
              
              filed with the U.S. Securities
      and ExchangeFund II,
      LLC
              
              Commission on December 15,
      200510.9
              
              Registration Rights Agreement,
      dated May 12,
              
              Incorporated by reference to
      Exhibit 10.12 to the2005, by and between the Company
      and
              
              Company's Quarterly Report on
      Form 10-QSB as filedFusion Capital Fund II,
      LLC
              
              with the U.S. Securities and
      Exchange Commission onMay 13,
      200510.10
              
              Norbrook Supply
      Agreement
              
              Incorporated by reference to
      Exhibit 1 to theCompany's Current Report on Form
      8-K as filed withthe U.S. Securities and Exchange
      Commission onSeptember 27,
      200510.11
              
              Research Collaboration and
      Licensing
              
              Incorporated by reference to
      Exhibit 10.10 to theAgreement, dated June 8, 2001, by
      and
              
              Company's Registration Statement
      on Form SB-2 asbetween Georgetown University
      and
              
              filed with the U.S. Securities
      and ExchangeSamaritan Pharmaceuticals,
      Inc.
              
              Commission on July 30,
      200310.12
              
              Change in Control Severance Plan
      for Certain
              
              Incorporated by reference to
      Exhibit 10.16 to theCovered Executives and Employees
      of
              
              Company's Quarterly Report on
      Form 10-Q as filedSamaritan Pharmaceuticals,
      Inc.
              
              with the U.S. Securities and
      Exchange Commission onAugust 14,
      2006.10.13
              
              Samaritan Pharmaceuticals,
      Inc.'s
              
              Incorporated by reference to
      Exhibit 10.17 to theDirector/Officer's
      Indemnification Agreement
              
              Company's Quarterly Report on
      Form 10-Q as filedwith the U.S. Securities and
      Exchange Commission onAugust 14,
      2006.10.14
              
              Stock Purchase Agreement among
      Samaritan
              
              Incorporated by reference to
      Exhibit 10.18 to thePharmaceuticals, Metastatin
      Pharmaceuticals,
              
              Company's Quarterly Report on
      Form 10-Q as filedand the shareholders of
      Metastatin
              
              with the U.S. Securities and
      Exchange Commission onPharmaceuticals.
              
              November 14,
      2006.
  52
  10.15
              
              Samaritan Pharmaceuticals, Inc.’s
      In-
              
              Incorporated by reference to
      Exhibit 10.15 to theLicensing Agreement with Three
      Rivers
              
              Company's Form 10-Q as filed with
      the U.S.Pharmaceuticals.
              
              Securities and Exchange
      Commission on May 21,2007.10.16
              
              Samaritan Pharmaceuticals, Inc.’s
      In-
              
              Incorporated by reference to
      Exhibit 10.16 to theLicensing Agreement with
      Molteni
              
              Company's Form 10-Q as filed with
      the U.S.Pharmaceuticals.
              
              Securities and Exchange
      Commission on May 21,2007.10.17
              
              Pharmaplaz Research, Development
      and
              
              Incorporated by reference to
      Exhibit 10.17 to theCommercialization Collaboration
      Agreement
              
              Company's Quarterly Report on
      Form 8-K as filedwith SEC on March 28,
      2007.10.18
              
              Pharmaplaz Research, Development
      and
              
              Incorporated by reference to
      Exhibit 10.18 to theCommercialization Collaboration
      Agreement
              
              Company's Quarterly Report on
      Form 10-Q as filedSupplement
              
              with the U.S. Securities and
      Exchange Commissionon May 21,
      2007.10.19
              
              Research Collaboration and
      Licensing
              
              Incorporated by reference to
      Exhibit 99.2 to theAgreement by and between The
      Research
              
              Company’s Current Report on Form
      8-K as filed withCentre at McGill University,
      Samaritan
              
              the U.S. Securities and Exchange
      Commission onTherapeutics, Inc., and
      Samaritan
              
              July 25,
      2007.Pharmaceuticals,
      Inc.
 
 10.20
              
              Cooperative Lock Up Agreement
      between
              
              Incorporated by reference to
      Exhibit 99.2 to theSamaritan Pharmaceuticals, inc.
      and Doug
              
              Company’s Current Report on Form
      8-K as filed withBessert and KD1,
      Inc.
              
              the U.S. Securities and Exchange
      Commission onJune 12,
    2007.10.21
              
              Samaritan Pharmaceuticals, Inc.’s
      In-
              
              Incorporated by reference to
      Exhibit 10.21 to theLicensing Agreement with EUSA
      Pharma
              
              Company's Form 10-K as filed with
      the U.S.Securities and Exchange
      Commission on April 14,2008.10.22
              
              Samaritan Pharmaceuticals, Inc.’s
      In-
              
              Incorporated by reference to
      Exhibit 10.22 to theLicensing Agreement with Abiogen
      Pharma
              
              Company's Form 10-K as filed with
      the U.S.Securities and Exchange
      Commission on April 14,2008.
  53
 10.23
              
              Samaritan
      Pharmaceuticals, Inc.’s In-Licensing
              
              Incorporated by reference to
      Exhibit 10.23 to theAgreement
      with Siraeo, Ltd.
              
              Company's Form 10-K as filed with
      the U.S.Securities and Exchange
      Commission on April 14,2008.14.1
              
              The Samaritan Pharmaceuticals,
      Inc. Code of
              
              Incorporated by reference to
      Exhibit 14.1 to theConduct
              
              Company's Form 10-KSB as filed
      with the U.S.Securities and Exchange
      Commission on April 15,200321
              
              List of
      Subsidiaries
              
              Incorporated by reference to
      Exhibit 21 to theCompany's Quarterly Report on
      Form 10-QSB as filedwith the U.S. Securities and
      Exchange Commission onAugust 15,
      200523.1
              
              Consent of Independent Registered
      Public
              
              Incorporated by reference to
      Exhibit 23.1 to theAccounting
      Firm
              
              Company's Registration Statement
      on Form SB-2 asfiled with the U.S. Securities
      and ExchangeCommission on December 15,
      200531.1
              
              Certification of Chief Executive
      Officer re:
              
              Provided
      herewithSection
      30231.2
              
              Certification of Chief Financial
      Officer re:
              
              Provided
      herewithSection
      30232.1
              
              Certification of Chief Executive
      Officer re:
              
              Provided
      herewithSection
      90632.2
              
              Certification of Chief Financial
      Officer re:
              
              Provided
      herewithSection
      906
  54
  SIGNATURES
  In
accordance with Section 13 or 15 (d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
 SAMARITAN
PHARMACEUTICALS, INC
  Dated:
      June 17, 2009
                  
                  
                  /s/
      Janet Greeson, Ph.D.Janet
      Greeson, Ph.D.
                    President,
      Chief Executive Officer,
      Chairman
 Dated:
      June 17, 2009
                    
                    
                    /s/
      Eugene BoyleEugene
      Boyle
                      Chief
      Financial Officer,
                        Director
 Dated:
      June 17, 2009
                      
                      
                      /s/
      H. Thomas WinnH.
      Thomas Winn
                        Director
 Dated:
      June 17, 2009
                          
                          
                          /s/
      Cynthia C. ThompsonCynthia
      C. Thompson
                            Director
 Dated:
      June 17, 2009
                          
                          
                          /s/
      Welter “Budd” HoldenWelter
      “Budd” Holden
                            Director
  Dated:
      June 17, 2009
                          
                          
                          /s/ Jacinto
      L. AyalaJacinto
      L. Ayala
                              Director
 Dated:
      June 17, 2009
                    
                    
                    /s/
      Robert CraneRobert
      Crane
                      Director
 Dated:
      June 17, 2009
                      
                      
                      /s/ Julio
      GarciaJulio
      Garcia
                          DirectorTitle
 Dated:
      June 17, 2009
                        
                        
                        /s/
      Laurent LecanuLaurent
      Lecanu
                          Director
  55
 SAMARITAN PHARMACEUTICALS, INC.INDEXPAGE
      NUMBERREPORT OF INDEPENDENT REGISTERED
      PUBLIC ACCOUNTING FIRM
              
              F-1CONSOLIDATED FINANCIAL
      STATEMENTS:Balance
      Sheet
              
              F-2Statements of Operations and
      Comprehensive Income
              
              F-3Statements of Shareholders'
      Equity (Deficit)
              
              F-4Statements of Cash
      Flows
              
              F-5Notes to Financial
      Statements
              
              F-6-F-23
  56
  REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
  Board of
Directors and Stockholders Samaritan Pharmaceuticals, Inc.
  We have
audited the accompanying consolidated balance sheets of Samaritan
Pharmaceuticals, Inc. as of December 31, 2008 and 2007 and the related
consolidated statements of operations and comprehensive income, shareholders'
equity and cash flows for the years ending December 31, 2008 and
2007.
  We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly we express no such opinion. 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 audits provide a
reasonable basis for our opinion.
  In our
opinion, the consolidated financial statements referred to above present fairly,
the consolidated financial position of Samaritan Pharmaceuticals, Inc. as of
December 31, 2008 and 2007 and the consolidated results of its operations and
its cash flows for the years ending December 31, 2008, 2007 and 2006 and for the
period from January 1, 2000 through December 31, 2008. The period beginning
January 1, 1997 through December 31, 1999 was audited by the predecessor
accounting firm, in conformity with accounting principles generally accepted in
the United States of America.
  The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in note 2 to the financial
statements, the Company has generated minimal revenues and experienced an
accumulated deficit of $50,602,309 through December 31, 2008. For the year ended
December 31, 2008 and 2007, the Company incurred net losses of $6,267,169 and
$3,025,998, respectively and used cash flows from operations of $(204,557) and
$(1,347,122), respectively. These matters raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regard
to these matters are described in note 2. The accompanying financial statements
do not include any adjustments relating to the recoverability and classification
of asset carrying amounts or the amount and classification of liabilities that
might result should the Company be unable to continue as a going
concern.
   /s/
      Sherb & Co., LLPNew
      York, New York
                    June
      8, 2009
                
                
                Sherb
      & Co., LLP
                    Certified
      Public Accountants
  F-1
  
  SAMARITAN
      PHARMACEUTICALS, INC.CONSOLIDATED
      BALANCE SHEETSDecember 31,2008
                
                
                2007ASSETSCURRENT
      ASSETS:Cash
      and cash equivalents
                
                
                $
                105,641
                
                
                $
                287,571Inventories
      pharmaceutical products
                
                
                
                487,073
                
                
                
                56,358Receivable
      from license collaboration
                
                
                
                66,030
                
                
                
                311,286Receivable
      from overseas product sales, net of allowance
                
                
                
                2,322,202
                
                
                
                827,115Note
      receivable
                
                
                
                -
                
                
                
                250,000Interest
      receivable
                
                
                
                -
                
                
                
                101,096Refundable
      tax credit
                
                
                
                235,938
                
                
                
                250,000Prepaid
      expenses
                
                
                
                12,943
                
                
                
                148,614TOTAL
      CURRENT ASSETS
                
                
                
                3,229,827
                
                
                
                2,232,040PROPERTY
      AND EQUIPMENT
                
                
                
                15,686
                
                
                
                55,919OTHER
      ASSETS:Patent
      registration costs
                
                
                
                1,515,714
                
                
                
                1,411,383Purchased  technology
      rights
                
                
                
                282,079
                
                
                
                226,628Deposits
                
                
                
                -
                
                
                
                2,779TOTAL
      OTHER ASSETS
                
                
                
                1,797,793
                
                
                
                1,640,790$
                5,043,306
                
                
                $
                3,928,749LIABILITIES
      AND SHAREHOLDERS' EQUITYCURRENT
      LIABILITIES:Accounts
      payable and accrued expenses
                
                
                $
                5,645,100
                
                
                $
                1,041,922Accrued
      officers' salaries
                
                
                
                2,667,486
                
                
                
                1,184,289Loan
      from officer/shareholder
                
                
                
                506,000
                
                
                
                300,000TOTAL
      CURRENT LIABILITIES
                
                
                
                8,818,586
                
                
                
                2,526,211SHAREHOLDERS'  EQUITY
      (DEFICIT):Preferred stock, 5,000,000 shares authorized at $.001 par
      value,-0-
      issued and outstanding at December 31, 2008 and 2007
                
                
                -
                
                
                
                -Common
      stock, 250,000,000 shares authorized at $.001par
      value,  36,190,266 and  30,494,816 issued
      andoutstanding
      at December 31, 2008 and 2007, respectively
                
                
                36,190
                
                
                
                30,495Additional
      paid-in capital
                
                
                
                47,083,918
                
                
                
                45,896,906Treasury
      stock
                
                
                
                (250,248
                )
                
                
                (250,248
                )Accumulated
      other comprehensive loss
                
                
                
                (42,831
                )
                
                
                60,525Accumulated
      deficit after development stage
                
                
                
                (6,267,169
                )
                
                
                -Accumulated
      deficit during development stage
                
                
                
                (44,335,140
                )
                
                
                (44,335,140
                )TOTAL
      SHAREHOLDERS' EQUITY (DEFICIT)
                
                
                
                (3,775,280
                )
                
                
                1,402,538$
                5,043,306
                
                
                $
                3,928,749
 See
accompanying notes to the consolidated financial statements.
  F-2
  SAMARITAN
      PHARMACEUTICALS, INC.CONSOLIDATED
      STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOMEFor
      the Years Ended December 31,2008
              
              
              2007REVENUES:Pharmaceutical
      sales
              
              $
              4,187,469
              
              
              $
              1,031,203Licensing
      rights
              
              
              -
              
              
              
              3,451,742Government
      research grants
              
              
              -
              
              
              
              205,000$
              4,187,469
              
              
              $
              4,687,945EXPENSES:Cost
      of goods sold
              
              
              2,342,704
              
              
              
              533,351Research
      and development
              
              
              1,634,304
              
              
              
              1,983,194Interest,
      net
              
              
              96,125
              
              
              
              (13,897
              )General
      and administrative
              
              
              3,784,615
              
              
              
              4,285,872Depreciation
      and amortization
              
              
              162,819
              
              
              
              184,967Refundable
      tax credit, Canada
              
              
              -
              
              
              
              (250,000
              )Bad
      debt reserve
              
              
              2,434,071
              
              
              
              990,45610,454,638
              
              
              
              7,713,943NET
      LOSS
              
              
              (6,267,169
              )
              
              
              (3,025,998
              )Other
      Comprehensive Income (Loss):Foreign
      translation adjustment
              
              
              (103,356
              )
              
              
              3,924Total
      Comprehensive Loss
              
              $
              (6,370,525
              )
              
              $
              (3,022,074
              )Loss
      per share, basic and diluted
              
              $
              (0.20
              )
              
              $
              (0.11
              )Weighted
      average number of shares outstanding:Basic
      and diluted
              
              
              31,879,502
              
              
              
              27,375,233


See
accompanying notes to the consolidated financial statements


F-3




SAMARITAN
      PHARMACEUTICALS, INC.CONSOLIDATED
      STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)FOR
      THE YEARS ENDED DECEMBER 31, 2008 AND 2007Number
                  ofShares
              
              
              ParValue
                  CommonStock
              
              
              Additional
                  Paid
      inCapital
              
              
              Common
      Stock
                  To
      BeIssued
              
              
              Accum-
                  ulated
                  Compre-
                  hensiveIncome
              
              
              TreasuryShares
              
              
              After
                  Develop-
                  ment
                  Stage
                  Accum-
                  ulatedDeficit
              
              
              Develop-
                  ment
                  Stage
                  Accum-
                  ulatedDeficit
              
              
              Total
                  Share
                  holders'Quity
      (Deficit)December
      31, 2006
              
              
              26,108,785
              
              
              $
              26,109
              
              
              $
              42,225,080
              
              
              $
              231,502
              
              
              $
              56,601
              
              
              $
              (250,248
              )
              
              $
              
              
              
              $
              (41,309,142
              )
              
              $
              979,902Common
      stock to be issued
              
              
              -
              
              
              
              
              
              
              
              
              
              
              
              568,748
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              568,748Shares
      issued for cash, net of offering costs
              
              
              889,167
              
              
              
              889
              
              
              
              799,361
              
              
              
              (800,250
              )
              
              
              
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Shares
      issued in cancellation of accounts payable
              
              
              491,625
              
              
              
              492
              
              
              
              797,069
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              797,562Shares
      issued in connection with equity financing
              
              
              320,000
              
              
              
              320
              
              
              
              479,680
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              480,000Shares
      issued as compensation, expensed
              
              
              2,683,561
              
              
              
              2,684
              
              
              
              1,097,577
              
              
              
              
              
              
              
              
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              1,100,261Stock
      options issued for services
              
              
              -
              
              
              
              -
              
              
              
              498,139
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              498,139Other
      comprehensive income (loss)
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              3,924
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              3,924Fractional
      shares rounded up in conversion
              
              
              1,679
              
              
              
              1
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (3,025,998
              )
              
              
              (3,025,998
              )-December
      31, 2007
              
              
              30,494,817
              
              
              
              30,495
              
              
              
              45,896,906
              
              
              
              -
              
              
              
              60,525
              
              
              
              (250,248
              )
              
              
              -
              
              
              
              (44,335,140
              )
              
              
              1,402,538Shares
      issued for cash, net of offering costs
              
              
              80,000
              
              
              
              80
              
              
              
              19,920
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              20,000Shares
      issued in cancellation of accounts payable
              
              
              100,000
              
              
              
              100
              
              
              
              49,900
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              50,000Shares
      issued as compensation, expensed
              
              
              5,515,450
              
              
              
              5,515
              
              
              
              782,079
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              787,594Stock
      options issued pursuant to short-term debt
              
              
              -
              
              
              
              -
              
              
              
              295,383
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              295,383Stock
      options issued for services
              
              
              -
              
              
              
              -
              
              
              
              39,730
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              39,730Other
      comprehensive income (loss)
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (103,356
              )
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (103,356
              )Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (6,267,169
              )
              
              
              -
              
              
              
              (6,267,169
              )-December
      31, 2008
              
              
              36,190,267
              
              
              $
              36,190
              
              
              $
              47,083,918
              
              
              $
              -
              
              
              $
              (42,831
              )
              
              $
              (250,248
              )
              
              $
              (6,267,169
              )
              
              $
              (44,335,140
              )
              
              $
              (3,775,280
              )


See
accompanying notes to the consolidated financial statements.


F-4




SAMARITAN
      PHARMACEUTICALS, INC.CONSOLIDATED
      STATEMENTS OF CASH FLOWSFor the Years Ended December
      31,CASH
      FLOWS FROM OPERATING ACTIVITIES:
              
              2008
              
              
              2007Net
      loss
              
              $
              (6,267,169
              )
              
              $
              (3,025,998
              )Adjustments
      to reconcile net loss to net cash used inoperating
      activities:Depreciation
      and amortization
              
              
              162,819
              
              
              
              184,967Stock
      based compensation
              
              
              787,594
              
              
              
              1,100,261Stock
      options issued
              
              
              335,113
              
              
              
              498,139Foreign
      currency (loss) gain
              
              
              (103,356
              )
              
              
              3,924(Increase)
      decrease in assets:Inventories
              
              
              (430,715
              )
              
              
              (56,358
              )Accounts
      receivable
              
              
              (1,495,087
              )
              
              
              (1,138,401
              )License
      collaberation receivable and notereceivable
      reserved
              
              
              495,256
              
              
              
              -Interest
      receivable and prepaids
              
              
              236,767
              
              
              
              (167,864
              )Refundable
      tax credit
              
              
              14,062
              
              
              
              (250,000
              )Deposits
              
              
              2,779
              
              
              
              -Increase
      (decrease) in liabilities:Accounts
      payable and accrued expenses
              
              
              6,057,380
              
              
              
              1,504,208NET
      CASH USED IN OPERATING ACTIVITIES
              
              
              (204,557
              )
              
              
              (1,347,122
              )CASH
      FLOWS FROM INVESTING ACTIVITIES:Purchase
      of furniture and equipment
              
              
              -
              
              
              
              (6,626
              )Patent
      registration costs
              
              
              (203,373
              )
              
              
              (449,504
              )NET
      CASH USED IN INVESTING ACTIVITIES
              
              
              (203,373
              )
              
              
              (456,130
              )CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from stock issued for cash
              
              
              20,000
              
              
              
              568,748Proceeds
      from equity financing
              
              
              -
              
              
              
              480,000Short-term
      loan proceeds
              
              
              206,000
              
              
              
              300,000NET
      CASH PROVIDED BY FINANCING ACTIVITIES
              
              
              226,000
              
              
              
              1,348,748NET
      DECREASE IN CASH
              
              
              (181,930
              )
              
              
              (454,503
              )CASH
      AND CASH EQUIVALENTS AT BEGINNING OF YEAR
              
              
              287,571
              
              
              
              742,075CASH
      AND CASH EQUIVALENTS  AT END OF YEAR
              
              $
              105,641
              
              
              $
              287,572SUPPLEMENTAL
      DISCLOSURE OF
      CASH FLOW INFORMATION:Cash
      paid for:Interest
              
              $
              -
              
              
              $
              -Income
      taxes
              
              $
              -
              
              
              $
              -NON-CASH
      FINANCING AND INVESTING ACTIVITIES:Purchase
      of technology rights for accounts payable
              
              $
              78,995
              
              
              $
              -Stock/options
      as compensation for services
              
              $
              1,122,707
              
              
              $
              1,100,261Stock
      issued in cancellation of accounts payable
              
              $
              50,000
              
              
              $
              797,561




See
accompanying notes to the consolidated financial statements


F-5
 SAMARITAN
      PHARMACEUTICALS, INC.NOTES TO
      CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED
      DECEMBER 31, 2008 AND
2007
   NOTE
1 - ORGANIZATION AND NATURE OF BUSINESS
  Samaritan
Pharmaceuticals, Inc. (including the subsidiaries, referred to as “Samaritan”,
the "Company", "its", "we", and "our"), formed in September 1994, is an
entrepreneurial biopharmaceutical company, focused on commercializing innovative
therapeutic products to relieve the suffering of patients with Alzheimer's
disease; cancer; cardiovascular disease, HIV, and Hepatitis C; as well as,
commercializing its acquired marketing and sales rights, to sell marketed
revenue-generating products, in Greece, and/or various Eastern European
countries.
 
 Commercialization
Business Model
  The
company’s commercialization business model is focused dually on, the partnering
of promising innovative products to pharmaceutical companies; and the
acquisition of the marketing and sales rights to revenue-generating marketed
products for sales in Greece and Eastern Europe . This model allows Samaritan to
focus on its core competencies drug discovery and drug development.
 
 NOTE
2 – GOING CONCERN
  The
accompanying consolidated financial statements are prepared assuming the Company
will continue as a going concern. At December 31, 2008, the Company had an
accumulated deficit of $50,602,309, and $44,335,140 for the years ended December
31, 2008 and 2007, incurred net losses of $6,267,169 and $3,025,998,
respectively and had a net cash used in operating activities of $(204,557) and
$(1,347,122), respectively.
  Management's
plans with regard to these matters include the following:
  1.
              Obtaining
      additional capital through the sale of common stock to existing and new
      shareholders;2.
              Marketing
      of pharmaceutical products in Eastern Europe;3.
              Continue
      its efforts to attempt to collect payment due to the Company from
      Pharmaplaz;4.
              Continue
      its efforts to out-license the Company’s
  technologies.
  Accordingly,
management is of the opinion that aggressive marketing combined with additional
capital will result in improved operations and cash flow for 2009 and
beyond. However, there can be no assurance that management will be successful in
obtaining additional funding or in attaining profitable operations.
  NOTE
3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  A.
Basis of Consolidation
  The
accompanying financial statements include the accounts of the Company and its
wholly owned subsidiaries. All intercompany balances and transactions have been
eliminated in consolidation.
  F-6
 SAMARITAN
      PHARMACEUTICALS, INC.NOTES TO
      CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED
      DECEMBER 31, 2008 AND
2007
 B.
Revenue recognition
  The
Company recognizes revenue in accordance with SEC Staff Accounting Bulletin SAB
104, Topic 13, "Revenue Recognition" and Emerging Issues Task Force No. 00-21,
or EITF 00-21, "Accounting for Revenue Arrangements with Multiple Deliverables."
Generally, the Company will not recognize revenue or establish a receivable
related to payments that are due greater than twelve months from the balance
sheet date. In all cases, revenue is only recognized after all of the following
four basic criteria of revenue recognition are met:
  o
              Persuasive
      evidence of an arrangement exists;o
              The
      fee is fixed or determinable;o
              Collection
      is probable; ando
              Delivery
      of technology or intellectual property rights has occurred or services
      have been rendered.
 
 Product
Sales. Samaritan Pharmaceuticals currently sells Amphocil, Collatamp, Erwinase,
Morphine, and Rapydan in Greece. Product sales are recognized when delivery of
the products has occurred, title has passed to the customer, the selling price
is fixed or determinable, collectability is reasonably assured and the Company
has no further obligations. The Company records allowances for product returns,
rebates and wholesaler charge backs, wholesaler discounts, and prescription
vouchers at the time of sale and reports product sales net of such allowances.
The Company must make significant judgments in determining these allowances. We
periodically evaluate the need to maintain allowances for doubtful accounts for
estimated losses resulting from the inability of our customers to make required
payments. When making this evaluation, we made judgments about the
creditworthiness of customers based on ongoing credit evaluations and the aging
profile of customer accounts receivable and assess current economic trends that
might impact the level of credit losses in the future.
 
 License
Revenue. The Company's license revenues are generated through an agreement with
a strategic partner. Nonrefundable, up-front license fees and milestone payments
with standalone value that are not dependent on any future performance by us
under the arrangements are recognized as revenue upon the earlier of when
payments are received or collections is assured, but are deferred if we have
continuing performance obligations. If we have continuing involvement through
contractual obligations under such agreement, such up-front fees are deferred
and recognized over the period for which we continue to have a performance
obligation, unless all of the following criteria exist: (1) the delivered
item(s) have standalone value to the customer, (2) there is objective and
reliable evidence of the fair value of the undelivered item(s). We also make
estimates and judgments when determining whether the collectibility of license
fees receivable from licensees is reasonably assured. We assess the
collectibility of accrued license fees based on a number of factors and if it is
determined that collection is not reasonably assured, the fee is recognized when
collectibility becomes reasonably assured, assuming all other revenue
recognition criteria have been met.
 
 On March
28, 2007, Samaritan and Pharmaplaz, a private Irish Healthcare company and a
shareholder of Samaritan, signed an agreement (the "Pharmaplaz Agreement") to
commercialize SP-01A. During the year 2008, the Company reserved a $3,451,742
note receivable to doubt about collection of the note.  As a result of
Pharmaplaz's failure to timely pay the remaining balance, Pharmaplaz is not in
compliance with the terms of the Pharmaplaz Agreement. No payments were received
in 2008.  Samaritan recognizes Pharmaplaz’s intention is to pay the
remaining balance and its failure is due to an economic slowdown in Ireland.
Samaritan will continue to work with Pharmaplaz to collect the past due
remaining balance.
  Pharmaplaz,
a shareholder, will pay for and be responsible for future research and
development to bring the technology to market. Samaritan has no remaining
obligations or performance for future research and development. The $10,000,000
payment is non-refundable. Upon request, Samaritan might occasionally advise
Pharmaplaz regarding SP-01A, in relationship to Principal Investigators with
applications for NIH grants, or other grant applications to advance SP-01A, at
Pharmaplaz's cost. Samaritan and Pharmaplaz will split 50/50 of all revenues
stemming from SP-01A.
  F-7
 SAMARITAN
      PHARMACEUTICALS, INC.NOTES TO
      CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED
      DECEMBER 31, 2008 AND
2007
 Government
Research Grant Revenue. The Company recognizes revenues from federal government
research grants during the period in which the related expenditures
  C.
Cash Equivalents
  The
Company considers all highly liquid temporary cash investments with an original
maturity of three months or less to be cash equivalents.  The Company
maintains its cash in bank accounts at high credit quality financial
institutions. The balances at times may exceed federally insured
limits.
  D.
Inventories
  The
Company's inventories consist primarily of pharmaceutical products for
distribution in its licensed territories. The Company values inventories at the
lower of cost or fair market value. The Company determines the cost of
inventories using the average cost method. The Company analyzes its inventory
levels quarterly and writes down inventories that have become obsolete,
inventories that have a cost basis in excess of its expected net realizable
value and inventories quantities in excess of expected requirements. Expired
inventories are disposed of and the related costs are written off and recognized
as additional cost of sales.
  E.  Financing
Arrangement
 
 During
the year ended December 31, 2008, Samaritan Pharmaceuticals Europe, and ABC
Factors entered into a “Factoring Agreement”.  The factoring
arrangements continue to provide Samaritan Pharmaceuticals Europe with a maximum
credit facility of 400,000 euros.
 
 Under the
Factoring Agreement, Samaritan Pharmaceuticals Europe submits accounts
receivable to be purchased by ABC Factors, and ABC Factors pays Samaritan
Pharmaceuticals Europe up to 90% of the aggregate net face value of accounts
receivable purchased, less applicable fees charged by ABC Factors and a 10%
reserve withheld by ABC Factors to serve as security in the event that ABC
Factors receives less than full payment for accounts purchased due to returns,
allowances, deductions, disputes or chargebacks. All accounts submitted for
purchase must be approved by ABC Factors.  ABC Factors also charges
Samaritan Pharmaceuticals Europe interest on amounts advanced to Samaritan
Pharmaceuticals Europe under the Factoring Agreement at a rate of 2.00% above
the prime rate of interest and ABC Factors receives a factoring administration
fee equal to 0.7% of the gross invoice amount of each account
submitted.
 
 F. Concentration of Credit Risks
 
 Financial
instruments which potentially subject the Company to concentration of credit
risk consist primarily of trade receivables. In the normal course of business,
the Company provides credit terms to its customers that are customary for the
local customs in the territory. The Company also invests its excess cash
principally in marketable securities from a diversified portfolio of
institutions with strong credit ratings and in U.S. government and agency bills
and notes, and by policy, limits the amount of credit exposure at any one
institution. These investments are generally not collateralized and primarily
mature within one year. The Company has not realized any losses from such
investments. At December 31, 2008, the Company had no excess cash invested in
marketable securities and had approximately $105,641 in bank deposits, which are
insured in the United States up to $250,000 at December 31, 2008.
  The
Company has present activities in Europe and Canada. As with all types of
international business operations, currency fluctuations, exchange controls,
restrictions on foreign investment, changes to tax regimes, political action and
political instability could impair the value of the Company's
investments.
  G.  Significant
Customers
  The
Company's largest customer accounted for approximately 27% of its revenues
during 2008.  There is one other customer that accounted for 10% of
the Company’s revenues during 2008.    These same two
customers and one other customer accounted for approximately 18%, 10% and 12%
respectively of the gross accounts receivable balance at December 31,
2008.  No other customers accounted for more than 10% of its revenues
or more than 10% of its net accounts receivable.
  F-8
 SAMARITAN
      PHARMACEUTICALS, INC.NOTES TO
      CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED
      DECEMBER 31, 2008 AND
2007
 H.  Significant
Vendors
  The
Company's largest vendor accounted for approximately 60% of its costs of goods
sold during 2008.  This same customer and two other customers
accounted for approximately 61%, 20% and 15% respectively of the gross accounts
payable balance at December 31, 2008.  No other customers accounted
for more than 10% of its net accounts payable.  As of December 31,
2008, the Company no longer sells products from its largest vendor.
  I.  Allowance
for Doubtful Accounts
 
 The
Company distributes its products through third-party distributors and resellers
and directly to certain healthcare facilities.  The Company generally
does not require collateral from its customers; however, the Company will
require collateral in certain instances to limit credit risk. In addition, when
possible the Company does attempt to limit credit risk on trade receivables with
credit insurance for certain customers Europe and Canada  and by
arranging with third-party financing companies to provide flooring arrangements
and other loan and lease programs to the Company's direct customers. These
credit-financing arrangements are directly between the third-party financing
company and Samaritan, and in some instances, the end customer.
 
 The
allowance for doubtful accounts is based on management's assessment of the
collectability of specific customer accounts and includes consideration of the
credit worthiness and financial condition of those specific customers. The
Company records an allowance to reduce the specific receivables to the amount
that it reasonably believes to be collectible. The Company also records an
allowance for all other trade receivables based on multiple factors, including
historical experience with bad debts, the general economic environment, the
financial condition of the Company's distribution channels, and the aging of
such receivables. If there is a deterioration of a major customer's financial
condition, if the Company becomes aware of additional information related to the
credit-worthiness of a major customer, or if future actual default rates on
trade receivables in general differ from those currently anticipated, the
Company may have to adjust its allowance for doubtful accounts, which would
affect earnings in the period the adjustments are made. These allowances for
doubtful accounts are also determined based on historical activity, for which
some of our vendors we have no previous history.  Payment arrangements
of our customers with third parties, such as the government of Greece, have
delayed payments to Samaritan.   Activity in the allowance for
doubtful accounts for the year ended December 31, 2008 is
$1,722,659.
  J.
Shipping and Handling Costs
  Shipping
and handling costs are reflected in cost of goods sold.
  K.
Property and Equipment
  Property
and equipment are recorded at cost. Depreciation is provided using the straight
line method over the estimated useful lives of the assets.
  L.
Intangibles
 
 Legal
fees associated with filing patents are recorded at cost and amortized over 17
years. The Company currently own or in-license patents related to products or
product candidates and own or in-license additional applications for patents
that are currently pending. In general, when the Company in-licenses
intellectual property from various third parties, it is required to pay
royalties to the parties on product sales. The Company reviews patent costs for
impairment by comparing the carrying value of the patents with the fair value.
The Company believes it will recover the full amount of the patent costs based
on forecasts of sales of the products related to the patents. Patent
registration costs are amortized over seventeen (17) years once approved. Patent
amortization expense was $99,042 and $80,912 during the years ended December 31,
2008 and 2007, respectively.
  F-9
 SAMARITAN
      PHARMACEUTICALS, INC.NOTES TO
      CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED
      DECEMBER 31, 2008 AND
2007
 Purchased
technology rights are recorded at cost and are being amortized using the
straight line method over the estimated useful life of the technology.
Amortization expense was $23,544 for the year ending December 31, 2008, and
$25,720 for the year ended December 31, 2007. Projected amortization expense
associated with these technology rights in the future is $24,585 for 2009
through 2013. Certain U.S. patents may be eligible for patent term
extensions under the Hatch-Waxman Act may be available to Samaritan for the lost
opportunity to market and sell the invention during the regulatory review
process.
  M.   Earnings
(loss) per share
 
 The
Company reports loss per common share in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings Per Share." The Company has
7,070,853, and 5,435,611 options outstanding at December 31, 2008 and 2007,
respectively, which have not been included, because the effect would be
anti-dilutive thereby decreasing the net loss per common share.
 
 N.  Use
of Estimates
 
 The
preparation of financial statements in conformity with U.S. generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
  O.
Income Taxes
  Pursuant
to Statement of Financial Accounting Standards No. 109 (`SFAS 109') Accounting
for Income Taxes', the Company accounts for income taxes under the liability
method. Under the liability method, a deferred tax asset or liability is
determined based upon the tax effect of the differences between the financial
statement and tax basis of assets and liabilities as measured by the enacted
rates, which will be in effect when these differences reverse.
  P.
Research and Development Costs
 
 Research
and development costs are expensed when incurred.
 
 Q.
Investment in Joint Venture
 
 The
Company and Samaritan Therapeutics, Canada, has signed a Research Collaboration
and Licensing Agreement with The Research Institute of McGill University Health
Centre (RI-MUHC) in Montreal, Canada, to advance its promising pipeline into
clinical trial status and develop new innovative drug candidates. The Company is
currently in breach of its obligations under this Agreement.  Once
drug candidates, derived from the collaborative research, are
clinically-validated and deemed to hold promise, Samaritan Therapeutics will,
subject to available financing, continue to develop the drug candidate in
Canada, while Samaritan Pharmaceuticals will focus on the drug candidate's
process through regulatory agencies and its commercialization throughout the
rest of the world. The current budget is for $1,000,000 paid over four (4)
quarterly payments of $250,000, is unallocated, and covers the general research
and development effort. Going forward, this budget may increase or decrease
depending upon changes in future research and development and other
factors.
  Since the
Company does not own greater than 50% of Samaritan Therapeutics, Canada, it
evaluated, the Company’s ownership / control of Samaritan Therapeutics, Canada,
under FIN 46(R) "Consolidation
of Variable Interest Entities"requires companies to determine whether
they hold interests in a variable interest entity ("VIE") and, if so, to
consolidate any VIEs for which they are the primary beneficiary.
  As of
December 31, 2008, Samaritan was a forty-five percent (45%) investor of the
above mentioned company. The amount of monies to date is insufficient to permit
the entity to finance its activities without further additional financial
support and the characteristics of Samaritan’s investment have controlling
financial interest attributes. This is considered to be a variable interest per
the provisions of FIN 46(R), and therefore has been consolidated into the
Company’s December 31, 2008 financial statements.
  F-10
 SAMARITAN
      PHARMACEUTICALS, INC.NOTES TO
      CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED
      DECEMBER 31, 2008 AND
2007
 R.
Impairment of Long-Lived Assets
  The
Company reviews long-lived assets and certain identifiable assets related to
those on a quarterly basis for impairment whenever circumstances and situations
change such that there is an indication that the carrying amounts may not be
recovered. At December 31, 2008, the Company does not believe that any
impairment has occurred.
  S.
Fair Value of Financial Instruments
  Statement
of Financial Accounting Standard No. 107 Disclosures about Fair Value of
Financial Instruments ("SFAS 107") requires the disclosure of fair value
information about financial instruments whether or not recognized on the balance
sheet, for which it is practicable to estimate the value. Where quoted market
prices are not readily available, fair values are based on quoted market prices
of comparable instruments. The carrying amount of cash, accounts payable and
accrued expenses approximates fair value because of the short maturity of those
instruments.
  T.
Foreign Currency Translation
  The
functional currency of our foreign subsidiaries is generally their local
currency. All assets and liabilities of our foreign subsidiaries are translated
at exchange rates in effect at year-end. Income and expenses are translated at
rates which approximate those in effect on the transaction dates. The resulting
translation adjustment is recorded as a separate component of shareholders’
equity in accumulated other comprehensive income in the consolidated balance
sheets. Gains and losses resulting from foreign currency transactions are
included in net income (loss).
  Certain
debt between the Company and a foreign subsidiary does not require repayment in
the foreseeable future and accordingly the Company treats this intercompany debt
as a long-term investment rather than as debt. The Company records the effects
of the exchange rate fluctuations on this intercompany debt as a currency
translation adjustment in accumulated other comprehensive income in
stockholders’ equity.
 
 U.
Stock Based Compensation
  The
Company adopted SFAS No. 123R, “Share Based Payments.” SFAS No. 123R requires
companies to expense the value of employee stock options and similar awards and
applies to all outstanding and vested stock-based awards.
  In
computing the impact, the fair value of each option is estimated on the date of
grant based on the Black-Scholes options-pricing model utilizing certain
assumptions for a risk free interest rate; volatility; and expected remaining
lives of the awards. The assumptions used in calculating the fair value of
share-based payment awards represent management’s best estimates, but these
estimates involve inherent uncertainties and the application of management
judgment. As a result, if factors change and the Company uses different
assumptions, the Company’s stock-based compensation expense could be materially
different in the future. In addition, the Company is required to estimate the
expected forfeiture rate and only recognize expense for those shares expected to
vest. In estimating the Company’s forfeiture rate, the Company analyzed its
historical forfeiture rate, the remaining lives of unvested options, and the
amount of vested options as a percentage of total options outstanding. If the
Company’s actual forfeiture rate is materially different from its estimate, or
if the Company reevaluates the forfeiture rate in the future, the stock-based
compensation expense could be significantly different from what we have recorded
in the current period.  The impact of applying SFAS No. 123R
approximated $335,113 and $498,139 in additional compensation for the years
ended December 31, 2008 and 2007, respectively. Such amount is included in
general and administrative and research and development expenses on the
statement of operations.
  F-11
 SAMARITAN
      PHARMACEUTICALS, INC.NOTES TO
      CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED
      DECEMBER 31, 2008 AND
2007
 V.
Prepaid Expenses and Other Assets
  Total
prepaid expenses are $12,943 and $148,614 for the years ended December 31, 2008
and the year ended December 31, 2007, respectively; consist of payments made in
preparation of a preclinical research project, consulting prepayments and other
miscellaneous prepayments.
 
 W. Accrued
Expenses and Other Current Liabilities
  Accrued
Expenses and Other Current Liabilities consist of the unpaid portion of payroll
and employee benefits and interest accrued.
 
 X.
Notes Receivable
  During
the year 2008, the Company reserved a $250,000 note receivable and the accrued
interest associated with it due to doubt about collection of the
note.
 
 Y.  New
Accounting Pronouncements
 
 SFAS No.
159
  In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities — including an amendment of FAS 115 (“SFAS No.
159”). SFAS No. 159 allows companies to choose, at specified election dates, to
measure eligible financial assets and liabilities at fair value that are not
otherwise required to be measured at fair value. Unrealized gains and losses
shall be reported on items for which the fair value option has been elected in
earnings at each subsequent reporting date. SFAS No. 159 also establishes
presentation and disclosure requirements. SFAS No. 159 is effective for fiscal
years beginning after November 15, 2007 and will be applied prospectively. The
Company is currently evaluating the impact of adopting SFAS No. 159 on our
consolidated financial position, results of operations and cash
flows.
  FASB Statement Number 141
(revised 2007)
  In
December 2007, the FASB issued FASB Statement No. 141 (revised 2007), Business
Combinations. This Statement replaces FASB Statement No. 141, Business
Combinations. This Statement retains the fundamental requirements in Statement
141 that the acquisition method of accounting (which Statement 141 called the
purchase method) be used for all business combinations and for an acquirer to be
identified for each business combination. This Statement defines the acquirer as
the entity that obtains control of one or more businesses in the business
combination and establishes the acquisition date as the date that the acquirer
achieves control. This Statement’s scope is broader than that of Statement 141,
which applied only to business combinations in which control was obtained by
transferring consideration. By applying the same method of accounting—the
acquisition method—to all transactions and other events in which one entity
obtains control over one or more other businesses, this Statement improves the
comparability of the information about business combinations provided in
financial reports.
  This
Statement requires an acquirer to recognize the assets acquired, the liabilities
assumed, and any noncontrolling interest in the acquiree at the acquisition
date, measured at their fair values as of that date, with limited exceptions
specified in the Statement. That replaces Statement 141’s cost-allocation
process, which required the cost of an acquisition to be allocated to the
individual assets acquired and liabilities assumed based on their estimated fair
values.
  F-12
 SAMARITAN
      PHARMACEUTICALS, INC.NOTES TO
      CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED
      DECEMBER 31, 2008 AND
2007
 This
Statement applies to all transactions or other events in which an entity (the
acquirer) obtains control of one or more businesses (the acquirer), including
those sometimes referred to as “true mergers” or “mergers of equals” and
combinations achieved without the transfer of consideration, for example, by
contract alone or through the lapse of minority veto rights. This Statement
applies to all business entities, including mutual entities that previously used
the pooling-of-interests method of accounting for some business combinations. It
does not apply to: (a) The formation of a joint venture, (b) The acquisition of
an asset or a group of assets that does not constitute a business, (c) A
combination between entities or businesses under common control, (d) A
combination between not-for-profit organizations or the acquisition of a
for-profit business by a not-for-profit organization.
  This
Statement applies prospectively to business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008. An entity may not apply it
before that date. Management believes this Statement will have no impact on the
financial statements of the Company once adopted.
  FASB Statement Number
160
  In
December 2007, the FASB issued FASB Statement No. 160 - Noncontrolling Interests
in Consolidated Financial Statements – an amendment of ARB No. 51. This
Statement applies to all entities that prepare consolidated financial
statements, except not-for-profit organizations, but will affect only those
entities that have an outstanding noncontrolling interest in one or more
subsidiaries or that deconsolidate a subsidiary. Not-for-profit organizations
should continue to apply the guidance in Accounting Research Bulletin No. 51,
Consolidated Financial Statements, before the amendments made by this Statement,
and any other applicable standards, until the Board issues interpretative
guidance.
  This
Statement amends ARB 51 to establish accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an
ownership interest in the consolidated entity that should be reported as equity
in the consolidated financial statements. Before this Statement was issued,
limited guidance existed for reporting noncontrolling interests. As a result,
considerable diversity in practice existed. So-called minority interests were
reported in the consolidated statement of financial position as liabilities or
in the mezzanine section between liabilities and equity. This Statement improves
comparability by eliminating that diversity.
  A
noncontrolling interest, sometimes called a minority interest, is the portion of
equity in a subsidiary not attributable, directly or indirectly, to a parent.
The objective of this Statement is to improve the relevance, comparability, and
transparency of the financial information that a reporting entity provides in
its consolidated financial statements by establishing accounting and reporting
standards that require: (a) The ownership interests in subsidiaries held by
parties other than the parent be clearly identified, labeled, and presented in
the consolidated statement of financial position within equity, but separate
from the parent’s equity, (b) The amount of consolidated net income attributable
to the parent and to the noncontrolling interest be clearly identified and
presented on the face of the consolidated statement of income, (c) Changes in a
parent’s ownership interest while the parent retains its controlling financial
interest in its subsidiary be accounted for consistently. A parent’s ownership
interest in a subsidiary changes if the parent purchases additional ownership
interests in its subsidiary or if the parent sells some of its ownership
interests in its subsidiary. It also changes if the subsidiary reacquires some
of its ownership interests or the subsidiary issues additional ownership
interests. All of those transactions are economically similar, and this
Statement requires that they be accounted for similarly, as equity transactions,
(d) When a subsidiary is deconsolidated, any retained noncontrolling equity
investment in the former subsidiary be initially measured at fair value. The
gain or loss on the deconsolidation of the subsidiary is measured using the fair
value of any noncontrolling equity investment rather than the carrying amount of
that retained investment, (e) Entities provide sufficient disclosures that
clearly identify and distinguish between the interests of the parent and the
interests of the noncontrolling owners.
  This
Statement is effective for fiscal years, and interim periods within those fiscal
years, beginning on or after December 15, 2008 (that is, January 1, 2009, for
entities with calendar year-ends). Earlier adoption is prohibited. This
Statement shall be applied prospectively as of the beginning of the fiscal year
in which this Statement is initially applied, except for the presentation and
disclosure requirements. The presentation and disclosure requirements shall be
applied retrospectively for all periods presented. Management believes this
Statement will have no impact on the financial statements of the Company once
adopted.
  FASB 161 - Disclosures about
Derivative Instruments and Hedging Activities
  In March
2008, the FASB issued FASB Statement No. 161, which amends and expands the
disclosure requirements of FASB Statement No. 133 with the intent to provide
users of financial statements with an enhanced understanding of; how and why an
entity uses derivative instruments, how the derivative instruments and the
related hedged items are accounted for and how the related hedged items affect
an entity’s financial position, performance and cash flows. This Statement is
effective for financial statements for fiscal years and interim periods
beginning after November 15, 2008. Management believes this Statement will have
no impact on the financial statements of the Company once adopted.
  F-13
 SAMARITAN
      PHARMACEUTICALS, INC.NOTES TO
      CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED
      DECEMBER 31, 2008 AND
2007
 FASB 162 - The Hierarchy of
Generally Accepted Accounting Principles
  In May
2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted
Accounting Principles. The new standard is intended to improve
financial reporting by identifying a consistent framework, or hierarchy, for
selecting accounting principles to be used in preparing financial statements
that are presented in conformity with U.S. generally accepted accounting
principles, or GAAP, for non-governmental entities. The Company is currently
evaluating the effects, if any, that SFAS No. 162 may have on our financial
reporting.
  NOTE
4 - SEGMENT REPORTING BY GEOGRAPHIC AREA
  Financial
instruments, which potentially subject the Company to concentrations of credit
risks, consist principally of cash and cash equivalents. The Company maintains
cash and cash equivalents with high-credit, quality financial institutions. At
December 31, 2008 and 2007 cash balances held at financial institutions were not
in excess of Federal insured limits.
  The
Company sells its products to various customers primarily in Europe and the USA.
The Company performs ongoing credit evaluations on its customers and generally
does not require collateral. Export sales are usually made under letter of
credit agreements. The Company does not establish reserves for expected credit
losses and such losses, in the aggregate, have not exceeded management's
expectations.
  The
Company’s licensing rights revenue and pharmaceutical sales which began during
2007 occurred in Europe. Grant revenue reported since inception is from the
United States. The following summarizes identifiable assets by geographic
area:
  Year
      Ended December 31,2008
              
              
              2007United
      States
              
              $
              1,815,736
              
              
              $
              2,297,858Europe
              
              $
              2,991,632
              
              
              $
              1,377,932Canada
              
              $
              235,938
              
              
              $
              252,959$
              5,043,306
              
              
              $
              3,928,749
 
 NOTE
5- PROPERTY AND EQUIPMENT
 
 Property and equipment, at cost, consist of the following as of
December 31:
  EstimatedUsefulLife
              
              
              2008
              
              
              2007Furniture
      and
              
              
              3-7
              
              
              $
              141,873
              
              
              $
              141,873FixturesSoftware
              
              
              3
              
              
              
              11,137
              
              
              
              11,137Lab
      Equipment
              
              
              3
              
              
              
              197,279
              
              
              
              197,279350,289
              
              
              
              350,289Less:Accumulated
      Depreciation
              
              
              
              
              
              
              (334,603
              )
              
              
              (294,370
              )Total
              
              
              
              
              
              $
              15,686
              
              
              $
              55,919
  F-14
 SAMARITAN
      PHARMACEUTICALS, INC.NOTES TO
      CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED
      DECEMBER 31, 2008 AND
2007
 Depreciation
expense for the years ended December 31, 2008, and 2007 was $40,233, and
$78,334, respectively.
  NOTE
6 - SHAREHOLDERS' EQUITY
  The
Company has 250 million common shares authorized and a class of 5 million shares
of preferred stock authorized. There are no outstanding preferred stock shares
at December 31, 2008.
  A. Stock Option
Plans.
  The short
and long-term compensation program includes stock options granted under Stock
Incentive Plans as well as non-qualified stock options. The Company currently
has two stock option plans: The 2005 Stock Option Plan, approved by the
shareholders on June 10, 2005 as an additional plan to the Company's 2001 Stock
Plan; and the 2001 Stock Option Plan, approved by the shareholders on April 24,
2001. Both option plans are designed to reward executives for achieving
long-term financial performance goals over a three-year to ten-year period,
provide retention incentives for executives, and tie a significant portion of an
executive's total compensation to long-term performance. Stock options for
executive officers and key associates are part of the incentive program and link
the enhancement of shareholder value directly to their total
compensation.
  Shares
available under the 2005 Plan: On a calendar year basis, Awards under the Plan
may be made for a maximum of ten percent (10%) of the total shares of Common
Stock outstanding on a fully diluted basis (without taking into account
outstanding Awards at the end of the prior calendar year), less Awards
outstanding at the end of the prior calendar year. Notwithstanding this limit,
not more than three percent (3%) of the total shares of within the plan may be
subject to ISO Awards during the term of the Plan, and not more than seven
percent (7%) of the total shares within the plan may be subject to Awards in a
form other than options and SARs. No director, officer, or employee may be
granted options with respect to the total awards available under the plan to
more than half of the awards within the Plan, nor more than 5,000,000 shares per
fiscal year, subject to a limit of 2,500,000 shares per fiscal year for
individuals first hired that year. The number of shares subject to these limits
will be adjusted in the event of certain changes in the capitalization of the
Company.
  Shares
Available under the 2001 Plan: The number of awards that may be granted under
the 2001 Plan in each calendar year will not exceed twenty percent (20%) of (i)
the total shares of common stock outstanding on a fully diluted basis, without
taking into account awards outstanding under the 2001 Plan that are exercisable
for or convertible into common stock or that are unvested stock awards (referred
to as 'outstanding awards'), at the close of business on the last day of the
preceding calendar year, less (ii) the number of shares subject to 'outstanding
awards' at the close of business on that date.
  F-15
 SAMARITAN
      PHARMACEUTICALS, INC.NOTES TO
      CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED
      DECEMBER 31, 2008 AND
2007
 The
following table summarizes the Company's stock options outstanding at December
31, 2008, 2007and 2006:
  Weightedaverage
              
              
              AggregateExercise
              
              
              IntrinsicShares
              
              
              price
              
              
              valueOutstanding
      and exercisable at December 31, 2006
              
              
              4,286,444
              
              
              
              3.36
              
              
              
              -0-Granted
              
              
              1,178,335
              
              
              
              0.59Exercised
              
              
              (0
              )Expired
              
              
              (29,168
              )
              
              
              (3.89
              )
              
              
              -0-Outstanding and exercisable at
      December 31, 2007
              
              
              5,435,611
              
              
              
              3.06
              
              
              
              -0-Granted
              
              
              1,706,077
              
              
              
              .31Exercised
              
              
              (0
              )Expired
              
              
              (70,835
              )
              
              
              (4.06
              )Outstanding and exercisable at
      December 31, 2008
              
              
              7,070,853
              
              
              $
              2.38
              
              
              
              -0-
  F-16
 SAMARITAN
      PHARMACEUTICALS, INC.NOTES TO
      CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED
      DECEMBER 31, 2008 AND
2007
 Information,
at date of issuance, regarding options for the year ended December 31,
2008:
  Weighted
              
              
              WeightedAverage
              
              
              AverageExercise
              
              
              Fair
      ValueShares
              
              
              Price
      $
              
              
              Price
      $Exercise price exceeds market
      price
              
              
              1,706,077
              
              
              
              .31
              
              
              
              -0-Exercise price equals market
      price
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-Exercise price is less than
      market price
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
  The
Company adopted SFAS No. 123R, “Share Based Payments.” SFAS No. 123R
requires companies to expense the value of employee stock options and similar
awards and applies to all outstanding and vested stock-based
awards.
  In
computing the impact, the fair value of each option is estimated on the date of
grant based on the Black-Scholes options-pricing model utilizing certain
assumptions for a risk free interest rate; volatility; and expected remaining
lives of the awards. The assumptions used in calculating the fair value of
share-based payment awards represent management’s best estimates, but these
estimates involve inherent uncertainties and the application of management
judgment. As a result, if factors change and the Company uses different
assumptions, the Company’s stock-based compensation expense could be materially
different in the future. In addition, the Company is required to estimate the
expected forfeiture rate and only recognize expense for those shares expected to
vest. In estimating the Company’s forfeiture rate, the Company analyzed its
historical forfeiture rate, the remaining lives of unvested options, and the
amount of vested options as a percentage of total options outstanding. If the
Company’s actual forfeiture rate is materially different from its estimate, or
if the Company reevaluates the forfeiture rate in the future, the stock-based
compensation expense could be significantly different from what we have recorded
in the current period. The impact of applying SFAS No. 123R approximated
$335,113 and $498,139 in additional compensation expense during the years ended
December 31, 2008 and 2007, respectively.  Such amount is included in
general and administrative expenses on the statement of operations.
  The
Company utilizes the Black-Scholes option-pricing model to calculate the fair
value of each individual issuance of options with the following assumptions used
for grants during the years ended December 31, 2008 and 2007. The per-share
weighted average fair value of stock options granted during 2008, 2007 and 2006
was $.20 and $.46 respectively, on the date of grant using the Black
Scholes pricing model and the following assumptions for the years ended December
31:
  2008
                
                
                2007Expected dividend
      yield
                
                0%
                
                
                0%Risk-free interest
      rate
                
                1.8-2.88%
                
                
                3.13-4.93%Annualized
      volatility
                
                NA
                
                
                NAAverage quarterly volatility for
      applicable quarters
                
                NA
                
                
                NAVolatility
      calculated by grant date
                
                126%-165%
                
                
                86%-104%
  F-17
  SAMARITAN
      PHARMACEUTICALS, INC.NOTES TO
      CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED
      DECEMBER 31, 2008 AND
2007
   Calendar
      Year 2008Options
      Outstanding
                  
                  
                  Options
      ExercisableExercise
                    Prices
                  
                  
                  Number
                    Outstanding
                  
                  
                  Weighted
      Avg
                    Contractual
                    Life
      (Months)
                  
                  
                  Weighted-
                    Average
                    Exercise
      Price
                  
                  
                  Number
                    Exercisable
                  
                  
                  Weighted
                    Average
                    Exercise
      Price$
                  .15-0.99
                  
                  
                  
                  2,851,494
                  
                  
                  
                  43
                  
                  
                  $
                  0.41
                  
                  
                  
                  2,851,494
                  
                  
                  $
                  0.41$
                  1.00
      -1.99
                  
                  
                  
                  85,837
                  
                  
                  
                  67
                  
                  
                  $
                  1.65
                  
                  
                  
                  85,837
                  
                  
                  $
                  1.65$
                  2.00-2.99
                  
                  
                  
                  872,080
                  
                  
                  
                  57
                  
                  
                  $
                  2.12
                  
                  
                  
                  872,080
                  
                  
                  $
                  2.12Above
      3.00
                  
                  
                  
                  3,261,442
                  
                  
                  
                  47
                  
                  
                  $
                  4.20
                  
                  
                  
                  3,261,442
                  
                  
                  $
                  4.20
 The
Company issues stock as compensation for services valuing such issues premised
upon the fair market value of the stock.
  During
the year ended December 31, 2008, 5,515,450 shares of our Common Stock were
issued as compensation. During the year ended December 31, 2007, 2,683,561
shares of our Common Stock were issued as compensation. Shares issued during
2007 were valued at an aggregate of $1,109,261 (at $.41 per share), representing
the fair value of the shares issued. The issuances were recorded as non-cash
compensation expense.
  During
the year ended December 31, 2008, the Company did not issue any shares in
connection with the Common Stock Purchase Agreement II with Fusion
Capital.   During the year ended December 31, 2007, the Company
issued 320,000 shares in connection with the Common Stock Purchase Agreement II
with Fusion Capital (Note 13).
  B.
Private Placement
  During
the year ended December 31, 2008, the Company, through one (1) private
placement, issued 100,000 shares of our Common Stock for
$20,000.  During the year ended December 31, 2007, the Company through
one (1) private placement, issued 889,167 shares of our Common Stock for
$800,250.
  NOTE
7 – LOANS PAYABLE
 
 As of
December 31, 2008, the Company had borrowed from related parties an aggregate of
$506,000 (the "Notes"), all of which was loaned by related parties as described
in Note 13. Proceeds from each of the loans funded the Company's continuing
operating expenses, ongoing expenses, legal and accounting fees, as well as for
working capital and other contingencies. Under the terms of the Notes issued by
the Company to the lender, the Company is required to: (i) pay interest to the
lender at a rate of 16% per annum and ii) 100% warrant coverage. The principal
and interest due on the Notes are due on demand. The Notes will be repaid from
proceeds of any subsequent financing arrangement to which the Company becomes a
party or from the cash flow from the Company's operations. The Board of
Directors approved that the prior year 2007 notes of $300,000, which paid
interest to the lender at a rate of prime rate plus 4% per annum, be changed to
match the terms of notes issued during the first quarter of 2008. The Notes will
be repaid from proceeds of any subsequent financing arrangement to which the
Company becomes a party or from the cash flow from the Company's
operations.
  F-18
 SAMARITAN
      PHARMACEUTICALS, INC.NOTES TO
      CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED
      DECEMBER 31, 2008 AND
2007
 The
following options were issued as a result of the loans:
 
 Loan #
              
              Loan
      Date
              
              
              Loan
      Amount $
              
              
              
              Interest
      Due $
                As of
                12/31/08
              
              
              
              Number
      of Secutities Underlying Options #
              
              
              
              Exercise
      or Base Price of Option $/share1
              
              7/16/2007
              
              
              250,000
              
              
              
              59,053
              
              
              
              757,576
              
              
              
              .332
              
              9/18/2007
              
              
              50,000
              
              
              
              10,470
              
              
              
              151,515
              
              
              
              .333
              
              2/25/2008
              
              
              50,000
              
              
              
              7.010
              
              
              
              151,515
              
              
              
              .334
              
              3/17/2008
              
              
              29,500
              
              
              
              3,798
              
              
              
              89,384
              
              
              
              .335
              
              3/20/2008
              
              
              50,000
              
              
              
              6,569
              
              
              
              151,515
              
              
              
              .336
              
              7/24/2008
              
              
              30,000
              
              
              
              2,154
              
              
              
              120,000
              
              
              
              .257
              
              8/4/2008
              
              
              15,000
              
              
              
              1,002
              
              
              
              60,000
              
              
              
              .258
              
              9/11/2008
              
              
              11,000
              
              
              
              544
              
              
              
              57,895
              
              
              
              .199
              
              10/6/2008
              
              
              5,000
              
              
              
              190.68
              
              
              
              33,333
              
              
              
              .1510
              
              10/6/2008
              
              
              3,500
              
              
              
              133.48
              
              
              
              23,333
              
              
              
              .1511
              
              10/15/2008
              
              
              2,000
              
              
              
              68.38
              
              
              
              13,333
              
              
              
              .1512
              
              10/28/2008
              
              
              10,000
              
              
              
              285
              
              
              
              66,667
              
              
              
              .15Total
              
              
              
              
              506,000
              
              
              
              84,274.55
              
              
              
              1,676,066
 
 
 NOTE
8 – INCOME TAXES
 
 The
Company operates primarily in the United States and through a wholly-owned
subsidiary in Greece.  A reconciliation of the expected statutory US
Federal income tax rate of 35% to the effective rate is as follows:
  Year
      Ended December 312007
                    
                    
                    2008Expected
      income tax (benefit)
                    
                    
                    (1,015,000
                    )
                    
                    
                    (2,154,000
                    )State
      tax (benefit), net of Federal effect
                    
                    
                    (145,000
                    )
                    
                    
                    (308,000
                    )Permanent
      differences (primarily stock based compensation
                    
                    
                    450,000
                    
                    
                    
                    321,000US
      statutory rate in excess of Greek rate
                    
                    
                    -
                    
                    
                    
                    84,000Increase
      in valuation allowance
                    
                    
                    710,000
                    
                    
                    
                    2,057,000-0-
                    
                    
                    
                    -0-
 
 The
schedule of the Company’s deferred tax assets is as follows:
  Year
      Ended December 312007
                        
                        
                        2008Net
      operating losses
                        
                        
                        11,348,000
                        
                        
                        
                        12,511,000Stock
      option expense
                        
                        
                        864,000
                        
                        
                        
                        880,000Bad
      debt allowance
                        
                        
                        -
                        
                        
                        
                        285,000Accrued
      officer compensation
                        
                        
                        474,000
                        
                        
                        
                        1,067,00012,686,000
                        
                        
                        
                        14,743,000Valuation
      allowance
                        
                        
                        (12,686,000
                        )
                        
                        
                        (14,743,000
                        )Net
      deferred tax assets
                        
                        
                        -0-
                        
                        
                        
                        -0-
 The
Company has established valuation allowances equal to the full amounts of the
deferred tax assets, as the realization of these benefits is not
assured.
  F-19
 SAMARITAN
      PHARMACEUTICALS, INC.NOTES TO
      CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED
      DECEMBER 31, 2008 AND
2007
 The
Company has net operating losses in the United States of approximately
$30,646,000.  These losses expire at various dates through 2028, and
the utilization of these losses is subject to the change of ownership rules of
Section 382 of the Internal Revenue Code.
 
 In
addition, the Company’s subsidiary has net operating  losses in Greece
of approximately $584,000, and these losses expire at various
dates.
 
 NOTE
9 - COMMITMENTS AND CONTINGENCIES
 
 A. At the
beginning of the third quarter 2007, the Company executed a research
collaboration (the "Research Collaboration") with The Research Institute of
McGill University Health Centre and Samaritan Therapeutics over a ten-year
period through 2017. Samaritan Therapeutics is a 50% owned subsidiary of the
Company. The budget is for $1,000,000 paid over four (4) quarterly payments of
$250,000, is unallocated, and covers the general research and development
effort. Under the Research Collaboration, the Company receives worldwide
exclusive rights, excluding Canada, to any novel therapeutic agents or
diagnostic technologies that may result from the Research Collaboration.
Samaritan Therapeutics receives exclusive rights to the Canadian market to any
novel therapeutic agents or diagnostic technologies that may result from the
Research Collaboration. Samaritan Pharmaceuticals and Samaritan Therapeutics’
payment to McGill University is in arrears, which may permit our
collaborator to terminate the research and development agreement. The
termination of the research and development agreement could force the Company to
curtail new discoveries to be added to its current pipeline of innovative
drugs.
 
 B. The
Company has no written employment agreement with the Dr. Janet Greeson and Mr.
Eugene Boyle. Dr. Thomas Lang and Dr. Christos Dakas each have employment
agreements negotiated at arm's length with the Compensation Committee, and each
such agreement provides for a minimum annual base salary. In setting base
salaries, the Board has considered (a) the contributions made by each executive
to our Company, (b) compensation paid by peer companies to their executive
officers and (c) outside compensation reports. Each year, all executive officers
receive salary increases of approximately 5% reflecting competitive trends,
general economic conditions as well as a number of factors relating to the
particular individual, including the performance of the individual executive,
and level of experience, ability and knowledge of the job. The Compensation
Committee also has the authority to award discretionary bonuses to our executive
officers. The incentive bonuses are intended to compensate officers for
achieving financial and operational goals and for achieving individual annual
performance objectives. These objectives vary depending on the individual
executive, but relate generally to strategic factors such as 1) initial signing
of an employment agreement; 2) upon acceptance of filing of a new drug
application by the FDA; 3) the FDA approval to move from one phase to the next
phase in the FDA application process; 4) pharmaceutical sales goals achieved 5)
completion of an in-licensing contract; 6) completion of an out-licensing
contract; and 7) increases in market capitalization.
  C. The
Company has terminated its Research Collaboration and Licensing Agreement “the
Agreement” with Georgetown University “Georgetown” effective with the
principal investigator becoming employed with another institution in July 2007.
The Company and Georgetown remain in dispute over the termination process of
this Agreement, as Georgetown has alleged additional monies due under the
Agreement. The Company disputes any additional monies due. No accrual for any
alleged additional monies has been made as of December 31, 2008, as it is
managements’ position that there are no additional monies due to Georgetown
under the Agreement.
  NOTE
10 - RESEARCH AND DEVELOPMENT COSTS
  For
December 31, 2008 and 2007, research and development expenses were $1,634,304
and $1,983,194 respectively.  Research and development costs
consist of the costs associated with our research activities, as well as the
costs associated with our drug discovery efforts, conducting preclinical studies
and clinical trials, manufacturing development efforts and activities related to
regulatory filings. Our research and development expenses consist
of:
  -external
research and development expenses incurred under agreements with third-party
contract research organizations and investigative sites, third-party
manufacturing organizations and consultants;
  F-20
 SAMARITAN
      PHARMACEUTICALS, INC.NOTES TO
      CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED
      DECEMBER 31, 2008 AND
2007
 -employee-related
expenses, which include salaries and benefits for the personnel involved in our
drug discovery and development activities.
 
 We use
our employees across multiple research projects, including our drug development
programs. We track direct expenses related to our clinical programs on a per
project basis. Accordingly, we allocate internal employee-related, as well as
third-party costs, to each clinical program. We do not allocate expenses related
to preclinical programs.
  The
following table summarizes our principal product development programs, including
the related stages of development for each product candidate in development and
the research and development expenses allocated to each clinical product
candidate. The information in the column labeled "Estimated Completion of
Current Trial" is our estimate of the timing of completion of the current
clinical trial or trials for the particular product candidate. The actual timing
of completion could differ materially from the estimates provided in the
table.
  Product
      Candidate
                
                Phase
      of
                  Indication
                
                Estimated

                      Completion
      of
                      Current
                      Development
                
                Trial
                
                2008
                
                
                2007Clinical
      DevelopmentSP-01A**
                
                HIV
                
                Phase
      2
                
                2006
                
                $
                -0-
                
                
                $
                740,872Research
      and preclinical
                
                
                
                
                
                
                
                $
                1,634,304
                
                
                $
                1,242,322$
                1,634,304
                
                
                $
                1,983,194




**On
March 28, 2007, Samaritan entered into an agreement in which Pharmaplaz will
bear the expense of the development of SP-01A going forward.




The Company and Samaritan Therapeutics, Canada, have signed a
Research Collaboration and Licensing Agreement with The Research Institute of
McGill University Health Centre (RI-MUHC) in Montreal, Canada, to advance its
promising pipeline into clinical trial status and develop new innovative drug
candidates. Once drug candidates, derived from the collaborative research, are
clinically-validated and deemed to hold promise, Samaritan Therapeutics intends
to continue to develop the drug candidate in Canada, while Samaritan
Pharmaceuticals will focus on the drug candidate's process through regulatory
agencies and its commercialization throughout the rest of the world. The current
budget is for $1,000,000 paid over four (4) quarterly payments of $250,000, is
unallocated, and covers the general research and development effort. As of April
1, 2009, Samaritan Pharmaceuticals and Samaritan Therapeutics’ payment to
McGill University is $1,250,000 in arrears, which may permit our
collaborator to terminate the research and development agreement. The
termination of the research and development agreement could force the Company to
curtail new discoveries to be added to its current pipeline of innovative drugs.
Going forward, this budget may increase or decrease depending upon changes in
future research and development and other factors. This collaboration is also
entitled to participate in the SR&ED Program, which gives the parties cash
refunds and/or tax credits for their expenditures on eligible research and
development work done in Canada.




The
successful development of our product candidates is highly uncertain. At this
time, we cannot reasonably estimate or know the nature, timing and estimated
costs of the efforts that will be necessary to complete the remainder of the
development of, or the period, if any, in which material net cash inflows may
commence from, SP-01A or any of our preclinical product candidates. This is due
to the numerous risks and uncertainties associated with developing drugs,
including the uncertainty of:




-the
scope, rate of progress and expense of our clinical trials and other research
and development activities;




F-21


SAMARITAN
      PHARMACEUTICALS, INC.NOTES TO
      CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED
      DECEMBER 31, 2008 AND
2007


-the
potential benefits of our product candidates over other therapies;




-our
ability to market, commercialize and achieve market acceptance for any of our
product candidates that we are developing or may develop in the
future;




-future
clinical trial results;




-the
terms and timing of regulatory approvals; and




-the
expense of filing, prosecuting, defending and enforcing any patent claims and
other intellectual property rights.




A change
in the outcome of any of these variables with respect to the development of a
product candidate could mean a significant change in the costs and timing
associated with the development of that product candidate. For example, if the
FDA or other regulatory authority were to require us to conduct clinical trials
beyond those which we currently anticipate will be required for the completion
of clinical development of a product candidate or if we experience significant
delays in enrollment in any of our clinical trials, we could be required to
expend significant additional financial resources and time on the completion of
clinical development.





NOTE
11 - LITIGATION




Samaritan,
from time to time, is involved in various legal proceedings in the ordinary
course of its business.




NOTE
12 - RELATED PARTY TRANSACTIONS




Beginning
October 1, 2008, the Company leases office space at fair market value from
NextGen LifeSciences, Inc., under a month to month agreement that calls for
payment of $4,500 per month.





In the
ordinary course of business, we entered into transactions with Clay County
Holdings (“CCH”). These transactions include loans made to and from CCH. In the
past, CCH had made a loan to Samaritan, which Samaritan paid off in 2003. During
2004, Samaritan created a note receivable with CCH for $250,000 which amount
bears interest at a rate of twelve percent (12%) per annum. The note receivable
is secured by pledge of common stock in Samaritan owned by CCH. A Director of
the Company, H. Thomas Winn, is the father in law of the president of CCH, but
is not a shareholder of CCH.




The Board of Directors consists of the following members: Dr. Janet
Greeson, Chairman, Jacinto L. Ayala, Eugene Boyle, Robert Crane, Dr. Julio
Garcia, Welter “Budd” Holden, Dr. Laurent Lecanu, Cynthia Thompson, and H.
Thomas Winn. The Company has formed, by determination of the Board, an Audit
Committee, with Mr. H. Thomas Winn as Chairman, who is an independent director
and a financial expert; the Compensation Committee, with Independent Director
Ms. Cynthia C. Thompson as Chairman; the Nomination Committee, with Independent
Director, Jacinto L. Ayala as Chairman. The Company has two (2) members of the
Board that are related, Dr. Janet Greeson and Eugene Boyle, who are mother and
son.





NextGen
LifeSciences, Inc. is a company wholly owned by the Chief Executive Officer and
Chairman of the Board of Samaritan Pharmaceuticals. NextGen LifeSciences agreed
to loan the Company $250,000, $50,000, $50,000, $15,000, $11,000, 5,000, 3,500,
2,000 and $10,000 on July 16, 2007, September 18, 2007, January 9, 2008, August
4, 2008, September 11, 2008, October 6, 2008, October 6, 2008, October 15, 2008
and October 28, 2008 respectively for an aggregate of $396,500 on a short-term
basis pursuant to the terms of promissory notes from the Company and in favor of
the lender. On February 25, 2008, Marian West, a shareholder of the Company,
agreed to loan the Company $50,000.  On March 17, 2008, Kristi Eads, a
shareholder and officer of the Company, agreed to loan the Company
$29,500.  On July 14, 2008, KLB Consulting, a shareholder of the
Company, agreed to loan the Company $30,000.  Proceeds from each of
the loans funded the Company's continuing operating expenses, ongoing expenses,
legal and accounting fees, as well as for working capital and other
contingencies. Under the terms of the Notes issued by the Company to the lender,
the Company will: (i) pay interest to the lender at 16% interest annually and
100% warrant coverage. The principal and interest due on the Notes are due on
demand. The Notes will be repaid from proceeds of any subsequent financing
arrangement to which the Company becomes a party or from the cash flow from the
Company's operations.  Also, beginning October 1, 2008, the Company
leased office space at fair market value from NextGen LifeSciences, Inc., under
a month to month agreement that calls for payment of $4,500/month.




During
2008, the Company issued restricted stock for the following executives under
their respective wholly-owned companies: NextGen LifeSciences, Inc. (Dr.
Janet Greeson), 1,815,646; Evergreen LifeSciences, Inc. (Eugene Boyle),
1,085,512; Strategic Development Consulting, LLC (Dr. Thomas Lang), 395,239; and
Wildflower, Inc. (George Weaver), 251,465.




F-22


SAMARITAN
      PHARMACEUTICALS, INC.NOTES TO
      CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED
      DECEMBER 31, 2008 AND
2007


NOTE
13 - FUSION TRANSACTION




On May
12, 2005, The Company entered into the Purchase Agreement II with Fusion
Capital, pursuant to which Fusion Capital agreed to purchase our Common Stock
from time to time, at our option, up to an aggregate amount of $40,000,000 over
fifty (50) months commencing December 29, 2005, which is the date the SEC
declared effective our Registration Statement on Form SB-2 (Commission
Registration No. 051267250). Samaritan filed a post effective amendment on Form
S-1 to the above Registration Statement (Commission Registration No. 07556090)
on January 9, 2007, which was declared effective on February 6, 2007. As of
December 31, 2007, the Company has decided to close the Registration Statement
(Commission Registration No. 07556090) and will not register additional shares
of Common Stock under the Purchase Agreement II with Fusion
Capital.




NOTE
14 - 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.




NOTE 15 - SUBSEQUENT EVENTS




On
January 28, 2009 and April 2, 2009, NextGen LifeSciences (a related party)
loaned the Company on a short term basis an additional $10,000 and $5,000
respectively.






F-23