-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P+javiaLlvdoN5ysJBpjnjBOe3D7ix3MHP6Ftgl8CeotFbMROHL0rG9QIpGcg/tG 5e85EDlxuYWOWH+r74ZyuQ== /in/edgar/work/0000897101-00-001081/0000897101-00-001081.txt : 20001114 0000897101-00-001081.hdr.sgml : 20001114 ACCESSION NUMBER: 0000897101-00-001081 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPECTRASCIENCE INC CENTRAL INDEX KEY: 0000727672 STANDARD INDUSTRIAL CLASSIFICATION: [3845 ] IRS NUMBER: 411448837 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-13092 FILM NUMBER: 760051 BUSINESS ADDRESS: STREET 1: 3650 ANNAPOLIS LANE STREET 2: STE 101 CITY: MINNEAPOLIS STATE: MN ZIP: 55447-5434 BUSINESS PHONE: 6125099999 MAIL ADDRESS: STREET 1: 3650 ANNAPOLIS LANE STREET 2: STE 101 CITY: MINNETONKA STATE: MN ZIP: 55447-5434 FORMER COMPANY: FORMER CONFORMED NAME: GV MEDICAL INC DATE OF NAME CHANGE: 19920703 10QSB 1 0001.txt U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended SEPTEMBER 30, 2000 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to ______________ Commission file number 0-13092 SPECTRASCIENCE, INC. (Exact name of small business issuer as specified in its charter) MINNESOTA 41-1448837 (State or other jurisdiction (I.R.S. Employer Identification Number) of incorporation or organization) 14405 21ST AVENUE N, SUITE 111 MINNEAPOLIS, MINNESOTA 55447 (Address of principal executive offices) (763) 745-4120 (Issuer's telephone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES __X__ NO _____ The number of shares of the Registrant's common stock, par value $.25 per share, outstanding on November 8, 2000 was 6,804,227. Transitional Small Business Disclosure Format (Check one): Yes _____ No __X__ Page 1 SPECTRASCIENCE, INC. FORM 10-QSB SEPTEMBER 30, 2000 INDEX
PAGE NO. Part I -- Financial Information.......................................................3 ITEM 1. Financial Statements................................................3 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations...........................................6 Part II Other Information............................................................8 ITEM 1. Legal Proceedings...................................................8 ITEM 2. Changes in Securities...............................................8 ITEM 3. Defaults Upon Senior Securities.....................................8 ITEM 4. Submission of Matters to a Vote of Security Holders.................8 ITEM 5. Other Information...................................................8 ITEM 6. Exhibits and Reports on Form 8-K....................................9 Signatures .........................................................................10 Exhibit 27: Financial Data Schedule.................................................11
PART I -- FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS SPECTRASCIENCE, INC. FORM 10-QSB BALANCE SHEETS September 30, December 31, 2000 1999(1) ------------ ------------ (UNAUDITED) (AUDITED) ASSETS Current assets: Cash and cash equivalents $ 3,415,330 $ 4,362,120 Inventories 158,629 143,660 Other current assets 61,816 128,578 ------------ ------------ Total current assets 3,635,775 4,634,358 Net property and equipment 267,929 293,746 ------------ ------------ TOTAL ASSETS 3,903,704 $ 4,928,104 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 130,704 $ 216,203 Note payable to related party -- 600,005 Accrued compensation and taxes 193,870 162,457 Accrued expenses 53,446 90,158 Accrued clinical research fees 65,399 47,399 ------------ ------------ Total current liabilities 443,419 1,116,222 Long-term portion of lease commitment 4,566 45,660 SHAREHOLDERS' EQUITY Common stock, $.25 par value: Authorized shares--17,000,000 Issued and outstanding shares-- 6,781,821 on September 30, 2000 and 6,420,705 shares on December 31, 1999 1,695,455 1,605,176 Additional paid-in capital 52,198,447 50,892,249 Accumulated deficit (50,438,183) (48,731,203) ------------ ------------ TOTAL SHAREHOLDERS' EQUITY 3,455,719 3,766,222 ------------ ------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 3,903,704 $ 4,928,104 ============ ============ (1) THE BALANCE SHEET ON DECEMBER 31, 1999 HAS BEEN DERIVED FROM THE AUDITED FINANCIAL STATEMENTS AT THAT DATE BUT DOES NOT INCLUDE ALL OF THE INFORMATION AND FOOTNOTES REQUIRED BY GENERALLY ACCEPTED ACCOUNTING PRINCIPLES FOR COMPLETE FINANCIAL STATEMENTS. SEE NOTES TO FINANCIAL STATEMENTS. SPECTRASCIENCE, INC. FORM 10-QSB STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 -------------------------------------- -------------------------------------- 2000 1999 2000 1999 ---- ---- ---- ---- Revenue $ - $ - $ - $ - Cost of products sold - - - - ----------------- ----------------- ----------------- ----------------- Gross profit - - - - Operating expenses Research and development 365,130 322,665 1,101,135 866,112 Selling, general and administrative 238,561 260,339 767,585 760,689 ----------------- ----------------- ----------------- ----------------- Total operating expenses 603,691 583,004 1,868,720 1,626,801 Interest and other income (expense) 54,114 15,322 161,740 54,436 ----------------- ----------------- ----------------- ----------------- Net loss $(549,577) $(567,682) $(1,706,980) $(1,572,365) ================= ================= ================= ================= Net loss per share $ (0.08) $ (0.11) $ (0.26) $ (0.30) Weighted average common shares outstanding 6,835,808 5,296,720 6,522,224 5,168,604
SEE NOTES TO FINANCIAL STATEMENTS. SPECTRASCIENCE, INC. FORM 10-QSB STATEMENTS OF CASH FLOW (UNAUDITED) NINE MONTHS ENDED SEPTEMBER 30 -------------------------- 2000 1999 ---- ---- OPERATING ACTIVITIES Net loss $(1,706,980) $(1,572,365) Adjustments to reconcile net loss to cash used in operating activities: Depreciation 50,571 41,654 Changes in operating assets and liabilities: Decrease in accounts receivable -- -- Increase in inventories (14,969) (4,314) Decrease in other current assets 66,762 8,959 Decrease in current liabilities (672,802) (105,238) ----------- ----------- Net cash used in operating activities (2,277,418) (1,631,304) INVESTING ACTIVITIES Purchase of property and equipment (24,754) (18,357) Decrease in long term commitment (41,094) -- ----------- ----------- Net cash used in investing activities (65,848) (18,357) FINANCING ACTIVITIES Proceeds from issuance of common stock 1,396,476 2,179,814 ----------- ----------- Net cash provided by financing activities 1,396,476 2,179,814 ----------- ----------- Net increase (decrease) in cash and cash equivalents (946,790) 530,153 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 4,362,120 301,970 ----------- ----------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,415,330 $ 832,123 =========== =========== SEE NOTES TO FINANCIAL STATEMENTS. SPECTRASCIENCE, INC. FORM 10-QSB SEPTEMBER 30, 2000 SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Certain statements in this Form 10-QSB constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words or phrases such as "may," "expects," "will continue," "is anticipated," "management believes," "estimate," "projects," "hope" or similar expressions or the negatives thereof identify forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical, currently anticipated or projected results. We caution you not to place undue reliance on forward-looking statements. Please refer to Exhibit 99 of the Company's Annual Report on Form 10-KSB for the year ended December 31, 1999, for certain important cautionary factors, risks and uncertainties related to forward-looking statements. NOTES TO FINANCIAL STATEMENTS NOTE A BASIS OF PRESENTATION The accompanying unaudited financial statements of SPECTRASCIENCE, Inc. have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine month period ended September 30, 2000 are not necessarily indicative of the results that may be expected for the year ended December 31, 2000. These statements should be read in conjunction with the financial statements and related notes which are included in SPECTRASCIENCE's Annual Report on Form 10-KSB for the year ended December 31, 1999. NOTE B NET LOSS PER SHARE Net loss per share is computed using the weighted average number of common shares outstanding during the period. Common equivalent shares from stock options and warrants are excluded from the computation as their effect is anti-dilutive. In February 1997, the Financial Accounting Standards Board (FASB) issued FASB Statement No. 128, "EARNINGS PER SHARE" (the "Statement"). The Statement replaces the presentation of primary earnings per share (EPS) with basic EPS and also requires dual presentation of basic and diluted EPS for entities with complex capital structures. The Statement was effective for the fiscal year ending December 31, 1998. For the quarter ended September 30, 2000, there is no difference between basic earnings per share under Statement No. 128 and primary net loss per share as reported. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (a) BUSINESS SPECTRASCIENCE, Inc. develops and manufactures proprietary, Laser Induced Fluorescence spectrophotometry systems capable of determining whether tissue is normal, potentially cancerous or cancerous without removing tissue from the body. The "Virtual Biopsy(TM) System," our first fully developed product to incorporate our proprietary Laser Induced Fluorescence technology, is pending final FDA approval and clearance to market for use during colorectal cancer screening. We believe our technology represents an enabling platform that can be expanded to develop multiple applications that may be used to distinguish normal vs. diseased tissues in other regions of the body. In addition to the colon, we have begun clinical studies utilizing our Laser Induced Fluorescence technology for the detection of cancer in the esophagus. SPECTRASCIENCE's corporate offices are located at 14405 21st Avenue N, Suite 111, Minneapolis, Minnesota 55447. The Company's telephone number is (763) 745-4120, its fax number is (763) 745-4126, and its e-mail address is SPSI@SPECTRASCIENCE.COM. SPECTRASCIENCE also has a web-site that can be accessed at HTTP://WWW.SPECTRASCIENCE.COM. The Company's common stock is traded on the Over-The-Counter Bulletin Board under the symbol SPSI. (b) RESULTS OF OPERATIONS SPECTRASCIENCE recorded no revenue for the three and nine month periods ended September 30, 2000 and September 30, 1999, and had no cost of products sold or gross profit for the same periods. Research and development expenses for the three and nine month periods ended September 30, 2000 were $365,130 and $1,101,135, respectively, an increase of 13.2% and 27.1% respectively, compared to the same periods in 1999. During the quarter our engineers were focused on developing the next generation Virtual Biopsy(TM) System, value engineering, and development of a Barrett's Esophagus product. We had increased design engineering expenses related to these activities. We also had increased legal expenses related to intellectual property and patent filings, and increased rent and utilities expenses due to the occupation of a larger facility. For the nine month period we had increased salary expense, increased consulting and design engineering expenses related to product development, increased legal expenses related to intellectual property, and increased facilities expenses. These increases were partially offset by lower research and development contract expenses. Selling, general and administrative expenses for the three month period ended September 30, 2000 were $238,561, an 8.4% decrease, and for the nine month period ended September 30, 2000 were $767,585, a 0.9% increase, compared to the same periods in 1999. The third quarter decrease was due, primarily, to lower consulting and legal expenses. This decrease however was partially offset due to increased salary, convention and travel expenses. For the nine month period we had increased salary, convention, travel and seminar expenses, a majority of which were due to increased marketing and sales activities and research. Decreased consulting and legal expenses for the nine month period offset most of the increased expenses. Interest and other income for the three and nine month periods ended September 30, 2000 were $54,114 and $161,740, respectively, a substantial increase compared to the same periods in 1999. The increase was primarily due to higher balances in cash and cash equivalents. Even though operating expenses for the three month period ended September 30, 2000 increased to $603,691, compared to $583,004 for the same period last year, the increase in interest income for the period ended September 30, 2000, resulted in a 3.2% decrease in the net loss for the three month period. The increase of $107,304 in interest income for the nine month period ended September 30, 2000 compared to the same period last year offset just less than half of the $241,919 increase in operating expenses for the same period, resulting in a net loss increase of 8.6%. The net loss per share for the three and nine month periods ended September 30, 2000 was $0.08 and $0.26 compared to $0.11 and $0.30 for the same periods in 1999. The lower net losses per share for the current periods are due to additional outstanding shares of capital stock in the current periods as compared to the same periods in 1999. (c) LIQUIDITY AND SOURCES OF CAPITAL Cash and cash equivalents on September 30, 2000 were $3,415,330, compared to $4,362,120 on December 31, 1999. The decrease in the cash position from December 31, 1999 to September 30, 2000 was primarily due to the net loss incurred during the nine month period ended September 30, 2000. SPECTRASCIENCE's working capital on September 30, 2000 was $3,192,356, compared to $3,518,136 on December 31, 1999. The decrease in working capital was primarily due to a reduction in the cash position. Net cash used in operating activities for the nine months ended September 30, 2000 was $2,277,418, a $646,114 increase compared to the same period in 1999, which was primarily due to the conversion of a convertible demand note, and to a lesser extent, the higher net loss for period. Net cash used in investing activities for the nine months ended September 30, 2000 was $65,848, a $47,491 increase compared to the same period in 1999, and was primarily due to a reduction of a long-term commitment and the purchase of additional capital equipment. Net cash provided by financing activities for the nine month period ended September 30, 2000 was $1,396,476, a $783,338 decrease compared to the same period in 1999, which was primarily due to a private placement of our common stock during March 1999 with no comparable financing in 2000. Management believes that the amount of cash and cash equivalents is adequate to fund operations at least through June 2001. Management believes additional cash will be required to fund continued operations and manufacturing ramp up. The amount and timing of any future financing will be impacted by FDA product approval and market conditions, as well as other factors. PART II -- OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Not applicable. ITEM 2. CHANGES IN SECURITIES Not applicable. ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. ITEM 5. OTHER INFORMATION (a) EQUITY TRANSACTIONS During September and October 2000, SPECTRASCIENCE received $48,813 from the exercise of stock options to purchase 10,000 shares of common stock at $4.0063 per share and 3,500 shares of common stock at $2.50 per share. SPECTRASCIENCE also received $132,030 from the exercise of warrants to purchase 15,000 shares of common stock at $5.50 per share and 9,906 shares of common stock at $5.00 per share. (b) BOARD OF DIRECTORS SPECTRASCIENCE added two individuals, Terrence W. Glarner and Delwin K. Ohrt, MD, to its Board of Directors in September 2000. Mr. Glarner brings business experience and a financial background to the Board. Dr. Ohrt brings a medical managed care background, with product reimbursement and technology assessment experience to the Board. (c) PRODUCT APPROVAL STATUS As of the date of this filing, SPECTRASCIENCE is awaiting final FDA approval and clearance to market for its Virtual Biopsy(TM) System for use during colorectal cancer screening. Management continues to believe the Virtual Biopsy(TM) System will receive approval and, if approved, the Company will next focus on conducting outcome based clinical studies, both in the United States and Europe. These outcome based clinicals are intended to: o gain opinion leader confidence and support for the purpose of obtaining market acceptance of a new technology; o to prove the clinical utility and cost effectiveness of our Virtual Biopsy(TM) System; and o to collect the data necessary to obtain reimbursement codes for a new technology. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K EXHIBIT 27: Financial Data Schedule pursuant to Article 5 of Regulation S-X. FORM 8-K: No reports on Form 8-K were filed by SPECTRASCIENCE during the quarter covered by this report. SPECTRASCIENCE, INC. FORM 10-QSB SEPTEMBER 30, 2000 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SPECTRASCIENCE, INC. -------------------------------------------- (Registrant) NOVEMBER 13, 2000 /S/ CHESTER E. SIEVERT, JR. - ------------------------------ -------------------------------------------- Date CHESTER E. SIEVERT, JR. Chairman, Chief Executive Officer, and President (Principal Executive Officer, Principal Financial and Accounting Officer) EX-27 2 0002.txt FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS SUBMITTED IN THIS QUARTERLY REPORT ON FORM 10-QSB FOR THE QUARTER ENDED SEPTEMBER 30, 2000, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS DEC-31-2000 SEP-30-2000 3,415,330 0 0 0 158,629 3,635,775 885,274 617,345 3,903,704 443,419 0 1,695,455 0 0 3,455,719 3,903,704 0 0 0 0 603,691 0 (54,114) (549,577) 0 0 0 0 0 (549,577) (0.08) 0
-----END PRIVACY-ENHANCED MESSAGE-----