UNITED STATES
SECURITIES AND EXCHANGE COMISSION
WASHINGTON, D.C.20549
FORM 8-K
CURRENT REPORT
Pursuant to Sectionm13 or 15(d) of The Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported) July 30, 2004.
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Health Discovery Corporation
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(Exact name of registrant as specified in its charter)
Texas 333-62216 74--3002154
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(State or other jurisdiction (Commission (IRS Employer of incorporation)
File Number) Identification No.)
1116 S. Old Temple Road Lorena, Texas 76655
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 512-583-4500
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(Former name or former address, if changed since last report)
Item 2. Acquisition or Disposition of Assets.
On July 30, 2004 we purchased for $2,004,786.00 cash, rights to a
portfolio of 71 patents and pending patent applications that include patents on
the use of Support Vector Machines (a data driven mathematical program which
uses "Machine Learning" to find otherwise hidden relationships in data) and
other machine learning tools useful for diagnostic and drug discovery. The
Support Vector Machine has been successfully used for cancer gene selection,
breast cancer diagnosis, leukemia classification, genomic analysis proteomic
research and drug discovery. The patents for the Support Vector Machine also
cover applications in a wide variety of research endeavors unrelated to drug
discovery.
The rights in the patents and pending patent applications were
acquired from unrelated third parties. The consideration paid for the rights was
determined through negotiations between the parties. The consideration will be
paid over time, with the initial payment of $175,394 expected to be made by
December 31, 2004, and equal installments made every four months until a total
of $876,968 has been paid to the sellers. The remaining consideration is
represented by convertible notes in an aggregate amount of $1,127,817.00. The
convertible notes mature on July 28, 2009, and may be converted at the election
of the noteholders until that time into shares of our common stock at $.17per
share. Any such shares will not be registered under either federal or state
securities laws and must be held for at least one year from the time they are
issued. In addition, the noteholders have been further limited to not sell more
than 10% of such holder's shares in any calendar quarter after the minimum
holding period has expired. The convertible notes bear interest at a rate of
3.16%. The source of the cash consideration to be used to make the initial
payments on the notes was a private placement of our stock that was completed on
July 31, 2004.
The acquisition of the patent portfolio brings together with the
pioneers of the Support Vector Machine, Dr. Stephen Barnhill, our Chairman and
CEO, and three members of our Scientific Advisory Board, Professor Dr. Vladmir
Vapnik, Dr. Isabelle Guyon and Dr. Berhard Schoelkopf, the pioneer patents they
created to protect this discovery tool. Professor Vapnik was recently awarded
the Humboldt Prize for developing Statistical Learning Theory, the cornerstone
behind the original Support Vector Machine. Dr. Guyon was the co-inventor with
Professor Vapnik on the original support Vector Machine patent. Dr. Schoelkopf,
who is Director of the Max Plank Institute for Biological Cybernetics in
Tubingen, Germany, won the annual dissertation prize of the German Association
for Computer Science or his work on Support Vector Learning.
The portfolio includes six issued patents with Dr. Barnhill listed as
the inventor. They are:
U.S. Pat. No. 6,760,715: Enhancing biological knowledge discovery
using multiple support vector machines.
U.S. Pat. No. 6,714,925: System for identifying patterns in
biological data using a distributed network.
U.S. Pat. No. 6,658,395: Enhancing knowledge discovery from multiple
data sets using multiple support vector machines.
U.S. Pat. No. 6,427,141: Enhancing knowledge discovery using multiple
support vector machines.
U.S. Pat. No. 6,157,921: Enhancing knowledge discovery using support
vector machines in a distributed network environment.
U.S. Pat. No. 6,128,608: Enhancing knowledge discovery using multiple
support vector machines.
Item 4. Changes in Registrant's Certifying Accountant
On August 2, 2004, we retained Porter Keadle Moore LLP as our
certifying accountants to replace Darielk & Butler CPA. The determination to
change certifying accountants was made by our Board of Directors. This
determination was made because the former certifying accountants are located in
San Antonio, Texas, and our principal activities are now located in Savannah,
Georgia.
The former certifying accountant's reports on our financial
statements for the past two years contained no adverse opinion or disclaimer of
opinion and were not modified as to uncertainty, audit scope or accounting
principles.
We have had no disagreements with our former certifying accountants
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure.
Item 5. Other Events and Regulation FD Disclosure.
On July 31, 2004 we completed the sale to qualified individual
investors of $1,521,000.00 of units comprised of restricted common stock and
warrants to acquire restricted common stock. Under the terms of the sale, the
company issued 15,210,000 restricted common shares which represents
approximately 19% of the total shares outstanding. In addition, each purchaser
of common shares was granted a warrant to acquire an equal number of restricted
common shares at a fixed price of $0.35 per share until February 2007. This
could result in the issuance of up to 15,210,000 additional restricted common
shares upon exercise. Neither the shares sold pursuant to the private placement
nor the shares issuable upon the exercise of the warrants will be registered
under either federal or state securities laws and must be held for at least one
year from the time they are issued.
SIGNATURES
In accordance with the requirement of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Health Discovery Corporation
Registrant
Date: August 9, 2004 /s/ David Cooper
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Printed Name David Cooper
Title President
Date: August 9, 2004 /s/ Robert S. Braswell IV
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Printed Name Robert S. Braswell IV
Title Secretary