-----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, PVBoLTK0CvAO4kuVsS2dVxp6uLfeJGTW91+xQRbxm6j3GxvGVayquFQVSndVPLUs W6x5gE13qmYrY1W1WX8XLA== 0000897101-95-000412.txt : 19951119 0000897101-95-000412.hdr.sgml : 19951119 ACCESSION NUMBER: 0000897101-95-000412 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPECTRASCIENCE INC CENTRAL INDEX KEY: 0000727672 STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841] IRS NUMBER: 411448837 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-13092 FILM NUMBER: 95590006 BUSINESS ADDRESS: STREET 1: 5909 BAKER ROAD SUITE 580 CITY: MINNEAPOLIS STATE: MN ZIP: 55345 BUSINESS PHONE: 612-931-9000 MAIL ADDRESS: STREET 2: 5909 BAKER RD, STE 580 CITY: MINNETONKA STATE: MN ZIP: 55345 FORMER COMPANY: FORMER CONFORMED NAME: GV MEDICAL INC DATE OF NAME CHANGE: 19920703 10QSB 1 U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB [X] Quarterly Report under section 13 or 15(d) of the Securities Exchange Act of 1934 For the period ended SEPTEMBER 30, 1995 or [ ] Transition report under section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition period from __________ to __________ Commission file number O-13092 SPECTRASCIENCE, INC. (Exact name of small business issuer as specified in its charter) MINNESOTA 41-1448837 (State or other jurisdiction of (I.R.S. Employer Identification Number) incorporation or organization) 5909 BAKER ROAD, SUITE 580 MINNEAPOLIS, MINNESOTA 55345 (Address of principal executive offices) (Zip Code) (612) 931-9000 (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 There were 2,923,348 shares outstanding of the issuer's $.25 par value common stock, as of November 13, 1995. This Form 10-QSB consists of 9 pages (including exhibits).
BALANCE SHEETS (UNAUDITED) SPECTRASCIENCE, INC. ASSETS SEPTEMBER 30, DECEMBER 31, 1995 1994 CURRENT ASSETS Cash and short-term investments $773,756 $58,298 Accounts receivable - net 170,834 781 Inventory 201,511 200,468 Other current assets 93,625 78,245 Total current assets 1,239,726 337,792 EQUIPMENT 574,862 973,781 Less accumulated depreciation (507,434) (870,328) 67,428 103,453 OTHER ASSETS --- 37,444 $1,307,154 $478,689 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES Accounts payable $86,317 $139,890 Accrued compensation & taxes 42,430 29,337 Accrued expenses 75,317 122,836 Deferred income --- 26,000 Notes payable --- 300,000 Total current liabilities 204,064 618,063 STOCKHOLDERS' EQUITY (DEFICIT) Convertible preferred stock, $1.00 par value -- authorized 20,000,000 shares; shares issued and outstanding -- September 30, 1995 -- 675,000 675,000 December 31, 1994 -- none --- Common stock, $.25 par value -- authorized 4,000,000 shares; shares issued and outstanding -- September 30, 1995 -- 2,873,348 December 31, 1994 -- 2,785,348 718,337 696,337 Additional paid-in capital 40,262,157 38,765,897 Accumulated deficit (40,552,404) (39,601,608) Total stockholders' equity (deficit) 1,103,090 (139,374) $1,307,154 $478,689
See accompanying notes to the financial statements
STATEMENTS OF OPERATIONS SPECTRASCIENCE, INC. THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 1995 1994 1995 1994 Net Sales $18,563 $-0- $184,652 $-0- Costs and Expenses: Cost of products sold $16,768 $-0- $124,913 $-0- Research and development $240,095 $155,270 $559,706 $705,412 Selling, general and administrative $154,969 $113,609 $452,298 $570,878 Interest and other (income) expense ($7,134) $9,458 ($1,468) ($61,895) $404,698 $278,337 $1,135,449 $1,214,395 Net income (loss) ($386,135) ($278,337) ($950,797) ($1,214,395) Net income (loss) per share ($0.13) ($0.10) ($0.33) ($0.44) Weighted average common shares outstanding 2,873,348 2,750,348 2,841,553 2,750,348
See accompanying notes to the financial statements
STATEMENTS OF CASH FLOW (UNAUDITED) SPECTRASCIENCE, INC. NINE MONTHS ENDED SEPTEMBER 30 1995 1994 OPERATING ACTIVITIES Net profit (loss) ($950,797) ($1,214,395) Adjustments to reconcile net cash used in operating activities: Depreciation 37,828 41,632 Recognition of deferred income (26,000) --- Non-cash interest expense 3,260 --- Disposal of other assets 37,444 --- Gain on sale of equipment (300) (18,232) Changes in operating assets and liabilities: (Increase) decrease in accounts receivable (170,053) 28,197 (Increase) in inventories (1,043) --- (Increase) decrease in other current assets (15,380) 23,411 (Decrease) in current liabilities (87,999) (61,451) Net cash used in operating activities (1,173,040) (1,200,838) INVESTING ACTIVITIES Purchase of fixed assets (1,802) (16,401) Proceeds from sale of fixed assets 300 46,339 Net cash used in investing activities (1,502) 29,938 FINANCING ACTIVITIES Proceeds from issuance of notes payable 225,000 300,000 Proceeds from issuance of common stock 225,000 --- Net proceeds from issuance of convertible preferred stock 1,440,000 --- Net cash provided by financing activities 1,890,000 300,000 Net increase (decrease) in cash and short term investments 715,458 (870,900) CASH AND SHORT-TERM INVESTMENTS AT BEGINNING OF PERIOD 58,298 1,250,686 CASH AND SHORT-TERM INVESTMENTS AT END OF PERIOD $773,756 $379,786 SUPPLEMENTAL DISCLOSURE: $525,000 of notes payable were converted into stockholders' equity in the first quarter of 1995
See accompanying notes to the financial statements NOTES TO FINANCIAL STATEMENTS SpectraScience, Inc. NOTE A - BASIS OF PRESENTATION The financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and rule 10-01 of Regulation S-X. 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, which consist of normal recurring items, considered necessary for a fair presentation of results have been included. For further information refer to the financial statements and notes thereto included in the Company's Annual Report on Form 10-KSB for the year ended December 31, 1994. ITEM 2. Management's Discussion and Analysis Financial Conditions and Results of Operations The Company is a publicly-held company headquartered in Minnetonka, Minnesota. From its inception on May 4, 1983 until mid 1993, the Company, then named GV Medical, Inc., was engaged in the laser angioplasty business. In May, 1993, the Company's name was changed to SpectraScience, Inc. to reflect the Company's new focus on design, development, manufacturing and marketing of laser enhanced spectroscopic diagnostic systems for the detection of atherosclerosis, thrombus and normal healthy tissue; and also pre-cancerous and cancerous tissues in various areas of the body. The Company has 8 full-time employees. Its executive offices are located at 5909 Baker Road, Suite 580, Minnetonka, Minnesota 55345. Its telephone number is (612) 931-9000 and its fax number is (612) 933-9090. Results of Operations
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 1995 1994 1995 1994 Revenue $18,563 $-0- $184,652 $-0- % Change 100% 100% Cost of products sold $16,768 $-0- $124,913 $-0- % Change 100% 100%
The Company recorded revenues of $18,563 for the quarter ended September 30, 1995, compared to $0 for the quarter ended September 30, 1994. Revenues in the current year reflect the first international sales of the Company's Spectroscopic Guidwire(TM) Systems and disposable products. Cost of products sold during the second quarters of 1995 and 1994, were $16,768 and $0, respectively. As a result, the Company reported a Gross Profit of $1,795 for the quarter ended September 30, 1995 and $0 for the quarter ended September 30, 1994.
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 1995 1994 1995 1994 Research/development $240,095 $155,270 $559,706 $705,412 % Change 54.63% -20.66% Selling, General and $154,969 $113,609 $452,298 $570,878 Administrative % Change 36.41% -20.77% Operating Expenses $395,064 $268,879 $1,012,004 $1,276,290 % Change 46.93% -20.71%
Research and Development Expenses in the quarter ended September 30, 1995 of $240,095 represent an increase of 55% from those expenses incurred in the quarter ended September 30, 1994. This increase is due to a clinical research contract signed between the Company and Massachusetts General Hospital, located at Fruit Street, Boston, MA 02114, which calls for the payment of certain costs to the hospital. Research and Development Expenses for the nine months ended September 30, 1995 of $599,706 represent a decrease of 21% from those expenses incurred in the same nine months in 1994. The decrease in the nine months ended September 30, 1995 is primarily due to the Company incurring lower salary expenses, in the development of the Spectroscopic Guidewire(TM) System, compared to the prior year. Selling, General and Administrative expenses of $154,969 for the quarter ended September 30, 1995 increased 36% from those expenses incurred in the quarter ended September 30, 1994 primarily due to expenses associated with the annual shareholders meeting held on June 29, 1995 and an increase in consultant expenses. Selling, General and Administrative expenses for the nine months ended September 30, 1995 of $452,298 declined 21% from those expenses incurred in the nine months ended September 30, 1994. The decrease for the nine months ended September 30, 1995 occurred in salary and travel expenses as a result of a decrease in the number of employees in 1995 compared to 1994.
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 1995 1994 1995 1994 Interest and other (income) ($7,134) $9,458 ($1,468) ($61,895) expense % Change -175.43% -97.63%
Interest and other income of $7,134 were 175% higher in the quarter ended September 30, 1995 than in the quarter ended September 30, 1994. This is the result of higher interest income on a larger cash balance which was achieved through a private placement closed on June 29, 1995, and the conversion of $300,000 Notes Payable to Preferred Stock. Interest and other income of $1,468 for the nine months ended September 30, 1995 were 98% lower than in 1994. The reduction in the nine months ended September 30,1995 is due to lower interest income and fewer gains on the sale of assets in 1995 compared to 1994.
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 1995 1994 1995 1994 Net Profit (Loss) ($386,135) ($278,337) ($950,797) ($1,214,395) % Change 38.73% -21.71%
As a result of all the above factors, the Company reported a net loss for the quarter ended September 30, 1995, of $386,135, which is a 39% increase from the $278,337 loss reported for the quarter ended September 30, 1994. This is primarily due to higher research and development expenses associated with clinical studies. Nine-month losses for 1995 are 22% lower than 1994, primarily due to lower employment expenses in 1994 and revenue recognized in 1995. Liquidity and Capital Resources Cash and short-term investments increased from $58,298 at December 31, 1994 to $613,611 at June 30, 1995 and $773,756 at September 30, 1995. The increase is attributable to the receipt of the remaining funds receivable from the private placement offering of the Company's Convertible Preferred Stock completed on June 29, 1995. The Company intends to apply the net proceeds of the private placement to accelerate product development, to finalize its IDE clinical studies required to obtain FDA approval in the United States, to conduct its clinical feasibility studies targeting additional medical applications of its spectroscopic technology, to expand the scope of its international and future domestic sales and marketing activities and for general corporate purposes, including working capital. Management believes the Company has sufficient resources to satisfy its minimum cash requirements through March 31, 1996. However, the Company will seek to raise additional funds to satisfy the longer-term requirements of the Company's business plan and for other prudent business reasons. 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 Not Applicable ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) EXHIBITS ON THIS FORM 10-QSB Exhibit 27 - Financial Data Schedule (for SEC use only) b) REPORTS ON FORM 8-K No reports on Form 8-K were filed by the Company during the quarter covered by this report. SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: NOVEMBER 13, 1995 SPECTRASCIENCE, INC. (Registrant) /s/ Brian T. McMahon BRIAN T. MCMAHON President and Chief Executive Officer (Principal Executive Officer) EX-27 2
5 9-MOS DEC-31-1995 SEP-30-1995 773,756 0 170,834 0 295,136 1,239,726 574,862 507,434 1,307,154 204,064 0 718,337 0 675,000 (290,247) 1,307,154 18,563 18,563 16,768 16,768 395,064 0 (7,134) (386,135) 0 0 0 0 0 (386,135) (0.13) 0
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