10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2014

Commission file number 0-13092

SPECTRASCIENCE, INC.

(Exact name of registrant

as specified in its charter)

Minnesota	41-1448837
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

11568 Sorrento Valley Rd., Suite 11

San Diego, California 92121

(Address of principal executive offices, including zip code)

(858) 847-0200

(Registrant's telephone number, including area code)

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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registration was required to submit and post such files). YES  x    NO ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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 the Exchange Act).

YES ¨ NO x

The number of shares of the registrant’s common stock, par value $0.01 per share, outstanding on November 12, 2014 was 173,701,088.

SPECTRASCIENCE, INC.

FORM 10-Q

For the Nine Months Ended September 30, 2014

TABLE OF CONTENTS

PART I	FINANCIAL INFORMATION:
Item 1.	Financial Statements (Unaudited)	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	24
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.	Defaults Upon Senior Securities	25
Item 4.	Mine Safety Disclosures	25
Item 5.	Other Information	25
Item 6.	Exhibits	26
SIGNATURES		27

2

PART I     FINANCIAL INFORMATION:

Item 1. Financial Statements

SpectraScience, Inc. and Subsidiary

Condensed Consolidated Balance Sheets

	September 30,			December 31,
	2014			2013
	(Unaudited)			(Audited)
ASSETS
Current assets:
Cash	$	43,641		$	236,597
Accounts receivable, net		-			60,000
Inventory		316,680			247,433
Deferred debt issuance costs		109,849			82,227
Prepaid expenses and other current assets		201,819			174,852
Total current assets		671,989			801,109
Fixed assets, net		5,441			15,917
Patents, net		1,389,255			1,513,340
	$	2,066,685		$	2,330,366
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$	786,091		$	1,009,018
Note payable to an affiliate		-			30,000
Convertible debt, net of discounts of $696,824 as of September 30, 2014 and
$644,518 as of December 31, 2013		3,946,854			2,307,111
Derivative liability		1,082,557			1,104,423
Accrued expenses		695,345			431,045
Total current liabilities		6,510,847			4,881,597
COMMITMENTS AND CONTINGENCIES
Stockholders' deficit
Series A Convertible Preferred Stock, $.01 par value;
0 shares authorized, issued and outstanding as of September 30, 2014 and
December 31, 2013		-			-
Series B Convertible Preferred Stock, $.01 par value;
2,585,000 shares authorized, issued and outstanding as of September 30, 2014 and
December 31, 2013; liquidation value of $517,000 plus accumulated and
unpaid dividends of $106,931 as of September 30, 2014 and December 31, 2013		25,850			25,850
Series C Convertible Preferred Stock, $.01 par value;
1,000,000 shares authorized; 500,000 shares issued and outstanding as of
September 30, 2014 and December 31, 2013; liquidation value of $100,000 as of
September 30, 2014 and December 31, 2013		5,000			5,000
Common stock, $.01 par value;
746,415,000 shares authorized; 173,701,088 and 166,712,054 shares issued
and outstanding as of September 30, 2014 and December 31, 2013		1,737,011			1,667,120
Additional paid in capital		38,625,792			37,126,602
Accumulated deficit		(44,837,815	)		(41,375,803	)
Total stockholders' deficit		(4,444,162	)		(2,551,231	)
	$	2,066,685		$	2,330,366

See accompanying summary of accounting polices and notes to unaudited condensed consolidated financial statements.

3

SpectraScience, Inc. and Subsidiary

 Condensed Consolidated Statements of Operation

(Unaudited)

	Three Months Ended						Nine  Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Revenue	$	-		$	60,000		$	-		$	180,000
Cost of revenue		-			36,756			(6,000	)		110,269
Gross profit		-			23,244			6,000			69,731
Operating expenses:
Research and development		138,806			59,176			673,173			440,086
General and administrative		280,000			375,200			1,092,689			1,527,780
Sales and marketing		114,178			33,285			344,529			200,355
		532,984			467,661			2,110,391			2,168,221
Loss from operations		(532,984	)		(444,417	)		(2,104,391	)		(2,098,490	)
Other income (expense)
Interest expense		(131,846	)		(79,260	)		(347,587	)		(202,352	)
Change in fair value of derivative and
warrant liabilities		1,883,289			1,156,215			(168,471	)		1,073,017
Amortization of derivative and warrant
liabilities discount		(396,853	)		(308,484	)		(850,691	)		(1,328,849	)
Amortization of deferred debt issuance
costs and original issue discount		(85,034	)		(141,840	)		(197,608	)		(532,912	)
Gain (loss) on extinguishment of debt		227,259			-			227,259			(16,989	)
Other income (expense), net		(5,343	)		(4,848	)		(20,523	)		(3,085	)
		1,491,472			621,783			(1,357,621	)		(1,011,170	)
Net income (loss) before income taxes		958,488			177,366			(3,462,012	)		(3,109,660	)
Provision for income taxex		-			-			-			-
Net income (loss)	$	958,488		$	177,366		$	(3,462,012	)	$	(3,109,660	)

See accompanying summary of accounting polices and notes to unaudited condensed consolidated financial statements.

4

SpectraScience, Inc. and Subsidiary

Condensed Consolidated Statement of Shareholders' Deficit

For the nine months ended September 30, 2014

(unaudited)

													Additional		Accumulated			Total
	Series B Preferred Stock				Series C Preferred Stock				Common Stock				Paid-In		Deficit			Shareholders'
	Shares		Amount		Shares		Amount		Shares		Amount		Capital					Deficit
Balance December 31, 2013		2,585,000	$	25,850		500,000	$	5,000		166,712,054	$	1,667,120	$	37,126,602	$	(41,375,803	)	$	(2,551,231	)
Non cash issuance of stock options		-		-		-		-		-		-		349,143		-			349,143
Common stock issued for cash on option exercise		-		-		-		-		931,200		9,312		9,312		-			18,624
Common stock issued for debt offering costs		-		-		-		-		1,000,000		10,000		40,000		-			50,000
Conversion of convertible debt		-		-		-		-		5,057,834		50,579		202,313		-			252,892
Warrant valuation on issuance of convertible debt		-		-		-		-		-		-		897,712		-			897,712
Warrant valuation on issuance of short term debt		-		-		-		-		-		-		710		-			710
Net loss		-		-		-		-		-		-		-		(3,462,012	)		(3,462,012	)
Balance September 30, 2014		2,585,000	$	25,850		500,000	$	5,000		173,701,088	$	1,737,011	$	38,625,792	$	(44,837,815	)	$	(4,444,162	)

See accompanying summary of accounting polices and notes to unaudited condensed consolidated financial statements.

5

SpectraScience, Inc. and Subsidiary

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended September 30,
	2014			2013
Operating activities:
Net loss	$	(3,462,012	)	$	(3,109,660	)
Adjustments to reconcile net loss
to cash used in operating activities:
Provision for uncollectable accounts receivable		-			4,281
Amortization and depreciation		140,836			179,308
Non-cash issuance of stock options		349,143			287,338
Non-cash interest on issuance of warrant		710			-
Amortization of derivative and warrant liabilities discount		850,691			1,328,849
Amortization of deferred debt issuance costs and original issue discount		197,608			532,912
Change in fair value of derivative and warrant liabilities		168,471			(1,073,017	)
(Gain) loss on extinguishment of debt		(227,259	)		16,989
Fair market value of common stock issued for debt offering costs		50,000			244,500
Changes in assets and liabilities:
Accounts receivable		60,000			(34,281	)
Inventory		(69,247	)		81,435
Prepaid expenses and other current assets		(26,966	)		(32,301	)
Accounts payable		(222,927	)		144,156
Accrued expenses		317,271			350,248
Net cash used in operating activities		(1,873,681	)		(1,079,243	)
Investing activities:
Purchases of fixed assets		(6,275	)		(1,600	)
Net cash used in investing activities		(6,275	)		(1,600	)
Financing activities:
Proceeds from issuance of convertible notes payable		1,856,376			1,372,000
Proceeds from issuance of note payable to affiliate		-			45,000
Payments against note payable to affiliate		(30,000	)		-
Proceeds from exercise of stock options		18,624			9,375
Debt issuance costs		(158,000	)		(197,239	)
Net cash provided by financing activities		1,687,000			1,229,136
Net increase (decrease) in cash		(192,956	)		148,293
Cash, beginning of year		236,597			90,192
Cash, end of period	$	43,641		$	238,485
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest	$	-		$	5,539
Income taxes	$	-		$	-
Non Cash Investing and Financing Activities:
Conversion of convertible notes to common stock	$	236,842		$	263,158
Conversion of interest due on convertible notes to common stock	$	52,972		$	33,988
Exchange of interest due on convertible notes to new notes	$	-		$	25,259
Conversion of preferred stock to common stock	$	-		$	5,000
Warrant valuation on isuance of convertible debentures	$	897,712		$	-
Elimination of derivative liabilities on conversion	$	190,337		$	-

See accompanying summary of accounting polices and notes to unaudited condensed consolidated financial statements.

6

SpectraScience, Inc.

Notes to Unaudited Condensed Financial Statements

1.     Nature of Business and Basis of Presentation

Description of Business

SpectraScience, Inc. was incorporated in the State of Minnesota on May 4, 1983 as GV Medical, Inc. In October 1992, GV Medical discontinued its prior business, refocused its development efforts and changed its name to SpectraScience, Inc. The “Company,” hereinafter, refers to SpectraScience, Inc. and its wholly owned subsidiaries Luma Imaging Corporation (“LUMA”), Spectra Science International, Inc. (“International”) and SpectraScience (UK) Limited (“SpectraUK”). Since 1996, the Company has focused primarily on developing the WavSTAT Optical Biopsy System (the “WavSTAT System”). 

The Company has developed and received the European CE mark approval to market a proprietary, minimally invasive technology that optically illuminates tissue in real-time to distinguish between normal, pre-cancerous or cancerous cells without the need to remove the subject cell tissue from the body to make such determinations. The WavSTAT System operates by using cool, safe laser light to optically illuminate and analyze tissue, enabling the physician to make an instant diagnosis during endoscopy when screening for cancer, and if warranted, to begin immediate treatment during the same procedure. Beginning in December 2011, the WavSTAT 4 version of the product began to be sold in the European Union for colon cancer detection. In June 2012, the Company entered into a distribution agreement with PENTAX Europe, GmbH, for the sale of its systems internationally.

On November 6, 2007, the Company acquired the assets of LUMA in an equity transaction accounted for as an acquisition of assets and now operates LUMA as a wholly-owned subsidiary of the Company. LUMA had acquired the assets from a predecessor company that had developed, and received FDA approval for, a non-invasive diagnostic imaging system that can detect cervical cancer precursors and which utilizes an underlying technology that is similar to that of the WavSTAT System. The addition of the LUMA technology to the Company’s existing WavSTAT System technology provides the Company with a broad suite of fluorescence-based intellectual property and know-how. During the fiscal year ended December 31, 2010, the Company wrote off the remaining fair value of the LUMA inventory in order to focus on the continued development and marketing of the WavSTAT System. The Company retained the intellectual property of LUMA for use in the development of future generations of the WavSTAT System.

The transaction was accounted for as an acquisition of assets that included intellectual property, inventory and equipment. The intellectual property consisted of a total of 34 issued U.S. patents and 28 additional patent applications.

Basis of Presentation

The accompanying unaudited financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q as they are prescribed for smaller reporting companies. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to make the financial statements not misleading have been included. Operating results for the three and nine month periods ended September 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014. These statements should be read in conjunction with the financial statements and related notes, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.

7

SpectraScience, Inc.

Notes to Unaudited Condensed Financial Statements (continued)

Going Concern

Historically, the Company’s sources of cash have come from the issuance and sales of equity securities and convertible debentures. The Company’s historical cash outflows have been primarily used for operating activities including research, development, administrative and sales activities. Fluctuations in the Company’s working capital due to timing differences of its cash receipts and cash disbursements also impact its cash flow. The Company expects to incur significant additional operating losses through at least the end of 2014, as it completes proof-of-concept trials, conducts outcome-based clinical studies and increases sales and marketing efforts to commercialize the WavSTAT4 Systems in Europe. If the Company does not receive sufficient funding, there is substantial doubt that the Company will be able to continue as a going concern. The Company may incur unknown expenses or may not be able to meet its revenue forecast, and one or more of these circumstances would require the Company to seek additional capital. The Company may not be able to obtain equity capital or debt funding on terms that are acceptable. Even if the Company receives additional funding, such proceeds may not be sufficient to allow the Company to sustain operations until it becomes profitable and begins to generate positive cash flows from operations.

As of September 30, 2014, the Company had a working capital deficit of $5,838,858 and cash of $43,641, compared to a working capital deficit of $4,080,488 and cash of $236,597 as of December 31, 2013. In December 2011, the Company entered into an Engagement Agreement with Laidlaw & Company (UK) Ltd., which Engagement Agreement was amended in July 2012. Under the Engagement Agreement, Laidlaw agreed to assist the Company in raising up to $20.0 million in capital over a two year period from the date of the Engagement Agreement. Subsequent to September 30, 2013, the Company has engaged other agents to assist the Company with raising capital and has commenced raising capital on its own. During the nine months ended September 30, 2014, The Company raised $1,856,376, net of transaction costs of $158,000, under these agreements. However, if the Company does not receive additional funds in a timely manner, the Company could be in jeopardy as a going concern. The Company may not be able to find alternative capital or raise capital or debt on terms that are acceptable. Management believes that if the events defined in the Engagement Agreements occur as expected, or if the Company is otherwise able to raise a similar level of funds, such proceeds will be sufficient to allow the Company to sustain operations until it attains profitability and positive cash flows from operations. However, the Company may incur unknown expenses or may not be able to meet its revenue expectations requiring it to seek additional capital. In such event, the Company may not be able to find capital or raise capital or debt on terms that are acceptable.

The holders of Convertible Debentures control the conversion of the Convertible Debentures and certain of the Convertible Debentures were not converted at their maturity constituting a potential default on the matured, but unconverted, Convertible Debentures. In the event of such default, principal, accrued interest and other related costs are immediately due and payable in cash. As of September 30, 2014, Convertible Debentures with a face value of $1,624,211 held by 32 individual investors are in default. None of these investors have served notice of default on the Convertible Debentures held by them.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustments relating to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

8

SpectraScience, Inc.

Notes to Unaudited Condensed Financial Statements (continued)

2.     Summary of Significant Accounting Policies

Revenue recognition

The Company recognizes revenues when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable and collectability is reasonably assured. Revenue from the sale of the Company’s products is generally recognized when title and risk of loss transfers to the customer, the terms of which are generally free on board shipping point. The Company

uses customer purchase orders to determine the existence of an arrangement. The Company uses shipping documents and third-party proof of delivery to verify that title has transferred. The Company assesses whether the price is fixed or determinable based upon the terms of the agreement associated with the transaction. To determine whether collection is probable, the Company assesses a number of factors, including past transaction history with the customer and the creditworthiness of the customer.

Consolidation

The accompanying consolidated financial statements include the accounts of SpectraScience, Inc. and its wholly-owned subsidiaries LUMA, International and Spectra UK. All significant intercompany balances and transactions have been eliminated in consolidation.

Risks and Uncertainties

The Company operates in an industry that is subject to intense competition, government regulation and rapid technological change. The Company's operations are subject to significant risk and uncertainties, including financial, operational, technological, regulatory and other risks associated with a short history of product sales, including the potential risk of business failure.

Use of Estimates

The Company prepares its consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, which requires management to make estimates and assumptions that affect the amounts reported in the financial statements and disclosures made in the accompanying notes to the financial statements. Significant estimates made by management include, among others, realization of long-lived assets including intangible assets, assumptions used to value stock options, assumptions used to value the common stock issued and assumptions related to the determination of the fair value of the derivative components associated with the Company’s Convertible Debentures. Actual results could differ from those estimates.

Inventory Valuation

The Company states its inventory at the lower of cost or market value, determined on a specific cost basis. The Company provides inventory allowances when conditions indicate that the selling price could be less than cost due to obsolescence and reductions in estimated future demand. The Company balances the need to maintain strategic inventory levels with the risk of obsolescence due to changing technology and customer demand levels. Unfavorable changes in market conditions may result in a need for additional inventory reserves that could adversely impact the Company’s gross margins. Conversely, favorable changes in demand could result in higher gross margins when the Company sells products.

Valuation of Long-lived Assets

The Company’s long-lived assets consist of property and equipment and intangible assets. Equipment is carried at cost and is depreciated over the estimated useful lives of the assets, which are generally two to three years, and leasehold improvements are amortized over the lesser of the lease term or the estimated useful lives of the improvements. The straight-line method is used for depreciation and amortization. Intangible assets consist of patents, which are amortized using the straight-line method over the estimated useful lives of the patents. The Company does not capitalize external legal costs and filing fees associated with obtaining patents on its new discoveries. Acquired intellectual property is recorded at cost and is amortized over its estimated useful life. The Company believes the useful lives assigned to these assets are

reasonable. The Company assesses the recoverability of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. These computations utilize judgments and assumptions inherent in management’s estimate of future cash flows to determine recoverability of these assets. If management’s assumptions about these assets were to change as a result of events or circumstances, the Company may be required to record an impairment loss.  

9

SpectraScience, Inc.

Notes to Unaudited Condensed Financial Statements (continued)

Stock-Based Compensation

The Company accounts for stock-based compensation under the provisions of FASB ASC Topic 718, Compensation—Stock Compensation   (“ASC 718”), which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. The Company adopted ASC 718 on January 1, 2006. The Company estimates the fair value of stock-based awards on the date of grant using the Black-Scholes-Merton option-pricing model (the “Black-Scholes Model”). The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method. The Company estimates forfeitures at the time of grant and revises its estimate in subsequent periods if actual forfeitures differ from those estimates.

The Company accounts for stock-based compensation awards to non-employees in accordance with FASB ASC Topic 505-50, Equity-Based Payments to Non-Employees (“ASC 505-50”). Under ASC 505-50, the Company determines the fair value of the warrants or stock-based compensation awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.

All issuances of stock options or other equity instruments to employees and non-employees as the consideration for goods or services received by the Company are accounted for based on the fair value of the equity instruments issued. Any stock options issued to non-employees are recorded in expense and additional paid-in capital in shareholders’ equity over the applicable service periods using variable accounting through the vesting dates based on the fair value of the options at the end of each reporting period.

As of September 30, 2014, the Company had one stock-based employee compensation plan under which it makes grants, the 2011 Equity Incentive Plan (the “EIP”). The EIP provides for the grant of incentive stock options (“ISOs”), nonqualified stock options (“NQSOs”) and restricted stock awards to full-time employees (who may also be directors) and NQSOs and restricted stock awards to non-employee directors, consultants, customers, vendors or providers of services. The exercise price of any ISO may not be less than the fair market value of the common stock on the date of grant and the term shall not exceed ten years. The amount reserved under the 2011 EIP is 37,000,000 shares of common stock.  At September 30, 2014, the Company had options outstanding exercisable into up to 35,168,800 shares of stock under the EIP and the Company’s prior Amended 2001 Stock Plan of which up to 13,780,397 shares were exercisable. Awards under the Company’s EIP generally vest over four years.

10

SpectraScience, Inc.

Notes to Unaudited Condensed Financial Statements (continued)

The fair value of options granted are estimated at the date of grant using a Black-Scholes Model which includes several variables including expected life, risk free interest rate, expected stock price volatility, stock option exercise patterns and expected dividend yield. The Company also must estimate forfeitures for employee stock options. Management used the following weighted average assumptions to value stock options granted during the three and nine month periods ended September 30, 2014 and 2013:

	Three months ended September 30,		Nine months ended September 30,
	2014	2013	2014			2013
Expected term of options	None	None		5 years		None
Exercise price	None	None	$	0.02		None
Expected volatility	None	None		187	%	None
Expected dividends	None	None		None		None
Risk-free interest rate	None	None		1.64	%	None
Forfeitures	None	None		None		None

Earnings (Loss) Per Share

Basic loss per share is computed by dividing loss available to common shareholders by the weighted-average number of common shares outstanding. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Common equivalent shares are excluded from the computation if their effect is anti-dilutive.

For the periods ended September 30, 2014 and 2013, the following common equivalent shares were excluded from the computation of loss per share since their effects are anti-dilutive.

	September 30,		September 30,
	2014		2013
Preferred Stock		3,085,000		3,085,000
Convertible debentures		94,767,062		39,111,869
Options		35,168,800		19,491,667
Warrants		109,942,469		77,127,289
Total		242,963,331		138,815,825

11

SpectraScience, Inc.

Notes to Unaudited Condensed Financial Statements (continued)

The following table sets forth the computation of basic and diluted loss per share for the three and nine month periods ended September 30, 2014 and 2013:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014			2013
Numerator:
Net income (loss) for basic earnings per share	$	958,488	$	177,366	$	(3,462,012	)	$	(3,109,660	)
Net income (loss) for diluted earnings per share	$	958,488	$	177,366	$	(3,462,012	)	$	(3,109,660	)
Denominator:
Weighted average basic shares outstanding		171,996,818		161,854,734		169,070,461			158,736,987
Denominator for diluted earnings per share-
Adjusted weighted average shares		186,965,778		161,854,734		169,070,461			158,736,987
Loss per share
Basic	$	0.01	$	0.00	$	(0.02	)	$	(0.02	)
Diluted	$	0.01	$	0.00	$	(0.02	)	$	(0.02	)

Inventory

Inventory consisted of the following at September 30, 2014 and December 31, 2013:

	September 30,		December 31,
	2014		2013
Raw materials	$	270,345	$	201,098
Finished goods		46,335		46,335
		316,680		247,433
Reserve for obsolescence		-		-
	$	316,680	$	247,433

3. Liabilities

Note Payable to an Affiliate

In September 2013, the Company issued a nine month unsecured note with a face value of $45,000 and 500,000 restricted shares of common stock to an affiliate of the Company in exchange for $54,325 in cash. The imputed annual rate of interest was calculated to be 18.4% and was repaid in nine equal monthly installments. Of the 500,000 shares issued, 312,500 shares were issued for debt issuance costs in an amount of $15,625 which was amortized as interest expense over the life of the note and 187,500 shares were issued for cash in an amount of $9,375.

12

SpectraScience, Inc.

Notes to Unaudited Condensed Financial Statements (continued)

Convertible Debentures

As of September 30, 2014, the Company has issued and outstanding Convertible Debentures (“Debentures”) with original terms of six months to one year, an interest rate ranging from 10-20% per year and an original issue discount ranging from 5% to 10% which, at the option of the holder, may convert into common stock at an initial conversion price ranging from $0.045 to$0.099 per share. The Debentures were issued with detachable five year cashless Holders Warrants that allow the holders to purchase one share of stock for each two shares available under the converted Debentures at an exercise price ranging from $0.0745 to $0.1287 per share. In addition, the Company issued five year cashless Agent Warrants equal to 10% of the total number of shares issuable under the Debentures and Holders Warrants at an exercise price ranging from $0.0745 to $0.1287 per share. For debentures issued through September 30, 2013, at the option of the Debenture holder, the terms of the Debentures and Holders Warrants are subject to an exchange feature in the event that the Company issues securities with terms more favorable than those of the then outstanding Debentures and Holders Warrants. Debentures issued subsequent to September 30, 2013 do not contain such an exchange clause.

As of September 30, 2014 and December 31, 2013, the balances of the Debentures are as follows:

	September 30,			December 31,
	2014			2013
Balance at beginning of period	$	2,951,629		$	1,129,473
Issuance of debentures for cash		1,856,376			2,122,000
Original issue discount		72,515			111,685
Debentures surrendered in exchange transactions		-			(564,213	)
Debentures issued in exchange transactions		-			626,368
Debentures converted to common stock		(236,842	)		(473,684	)
Convertible debt		4,643,678			2,951,629
Less unamortized costs of financing		696,824			644,518
Convertible debt, net of unamortized costs	$	3,946,854		$	2,307,111
Convertible debt in default	$	1,624,211		$	1,324,212

Derivative Liability

Since the Company issued Convertible Debentures which included Holders Warrants, Agent Warrants and a conversion option that includes a possible exchange feature in the event of a future financing on terms more favorable than those of the existing warrants and debentures, this results in the warrants and conversion feature of the debentures being recorded as a liability and measured at fair value. The Company measures these warrants and conversion feature using a combination of Black-Scholes option valuation models and Binomial Lattice option valuation models using similar assumptions to those described under “Stock-Based Compensation.” The time period over which the Company will be required to evaluate the fair value of the warrants is approximately five years and the time period over which the Company will be required to evaluate the fair value of the conversion feature is the lesser of six to twelve months or conversion.

The assumptions used in determining fair value represent management’s best estimates, but these estimates involve inherent uncertainties and the application of management’s judgment. As a result, if factors change, including changes in the market value of the Company’s common stock, managements’ assessment of the probability of a more favorably priced future financing or significant fluctuations in the volatility of the trading market for the Company’s common stock, the Company’s fair value estimates could be materially different in the future.

13

SpectraScience, Inc.

Notes to Unaudited Condensed Financial Statements (continued)

The Company computes the fair value of the derivative liability at each reporting period and the change in the fair value is recorded as non-cash expense or non-cash income. The key component in the value of the derivative liability is the Company’s stock price, which is subject to significant fluctuation and is not under its control. The resulting effect on net loss is therefore subject to significant fluctuation and will continue to be so until the Company’s Debentures, which the convertible feature is associated with, are converted into common stock or paid in full with cash. Assuming all other fair value inputs remain constant, the Company will record non-cash expense when its stock price increases and non-cash income when its stock price decreases.

As of September 30, 2014 and December 31, 2013, the balances of the Derivative Liability are as follows:

				Conversion
	Warrants			Feature			Total
Balance at December 31, 2012	$	1,730,044		$	605,516		$	2,335,560
Liability on issuance of debt and warrants		762,111			929,156			1,691,267
Change in fair value at year end		(1,688,671	)		(1,233,733	)		(2,922,404	)
Balance at December 31, 2013		803,484			300,939			1,104,423
Liability on issuance of debt and warrants		-			-			-
Elimination of liability on conversion		-			(190,337	)		(190,337	)
Change in fair value at period end		(36,710	)		205,181			168,471
Balance at September 30, 2014	$	766,774		$	315,783		$	1,082,557

Debentures issued subsequent to September 30, 2013 did not contain an exchange provision and were accounted for using the equity method of valuing the note and warrant. For the nine months ended September 30, 2014, $897,712 was recorded as additional paid-in capital.

4. Shareholders’ Deficit

Common Stock

In February 2014, an affiliate of the Company exercised a portion of his stock options into 931,200 shares of restricted common stock at an exercise price of $0.02 for proceeds to the Company of $18,624.

In March 2014, the Company issued 310,000 shares of restricted common stock to one consultant at a price of $0.05 per share related to the issuance of convertible debentures.

In June 2014, the Company issued 690,000 shares of restricted common stock to one consultant at a price of $0.05 per share related to the issuance of convertible debentures.

During the nine months ended September 30, 2014, holders of Convertible Debentures with a face value of $236,842 converted their debentures into 4,133,369 shares of restricted common stock. In addition, associated with these debentures, the Company paid $52,972 in accrued interest by issuing 924,465 shares of restricted common stock

Warrants

During the three and nine months ended September 30, 2014, in conjunction with the sale of Convertible Debentures, the Company issued five year common stock purchase warrants to acquire up to 4,222,530 and 22,012,675 shares to holders of the Debentures and as compensation to Agents. These warrants have an exercise price of $0.09 per share.

14

SpectraScience, Inc.

Notes to Unaudited Condensed Financial Statements (continued)

The balance of all warrants outstanding as of September 30, 2014 is as follows:

			Weighted
			Average
			Exercise
Warrants	Shares		Price
Outstanding at January 1, 2014		87,929,794	$	0.15
Granted		22,012,675	$	0.09
Exchanged cancelled		-	$	-
Exchanged issued		-	$	-
Cancelled		-	$	-
Exercised		-	$	-
Outstanding at September 30, 2014		109,942,469	$	0.13
Exercisable at September 30, 2014		109,942,469	$	0.13

Stock Options

Options outstanding as of September 30, 2014 are as follows:

	Outstanding Options
				Weighted Average		Weighted Average		Aggregate
				Exercise Price		Remaining Contractual		Intrinsic
	Shares			Per Share		Term (years)		Value (1)
Outstanding at January 1, 2014		15,075,000		$	0.14		6.94
Granted		35,550,000		$	0.02		-
Cancelled		(14,525,000	)	$	0.14		-
Exercised		(931,200	)	$	0.02		-
Outstanding at September 30, 2014		35,168,800		$	0.02		9.21	$	-
Exercisable at September 30, 2014		13,780,397		$	0.03		9.11	$	-
Weighted average fair value of options
granted during the period		35,550,000		$	0.02

(1) These amounts represent the excess, if any, between the exercise price and $0.02, the closing market price of the Company’s common stock on September 30, 2014 as quoted on the Over-the-Counter Bulletin Board under the symbol “SCIE”.

In January 2014, the Company’s Board of Directors authorized the issuance of stock options exercisable into up to 35,550,000 shares of common stock at an exercise price of $0.02 per share to a group of employees, directors and consultants in exchange for the cancelation of stock options exercisable into up to 14,225,000 shares of common stock with average exercise prices of $0.14 per share held by the same group.

15

SpectraScience, Inc.

Notes to Unaudited Condensed Financial Statements (continued)

There was one option exercised for 931,200 shares during the nine month period ended September 30, 2014. At September 30, 2014, total unrecognized estimated employee compensation cost related to non-vested stock options granted prior to that date is $538,067, which we expect to be recognized over the next four years.

5. Fair Value Measurements

Accounting guidance on fair value measurements and disclosures defines fair value, establishes a framework for measuring the fair value of assets and liabilities using a hierarchy system, and defines

required disclosures. It clarifies that fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity transacts business.

The Company's balance sheet contains derivative and warrant liabilities that are recorded at fair value on a recurring basis. The three-level valuation hierarchy for disclosure of fair value is as follows:

Level 1: uses quoted market prices in active markets for identical assets or liabilities.

Level 2: uses observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3: uses unobservable inputs that are not corroborated by market data.

The fair value of the Company’s recorded derivative and warrant liabilities is determined based on unobservable inputs that are not corroborated by market data, which require a Level 3 classification. A Binomial Lattice option valuation model was used to determine the fair value with similar assumptions to those described under “Stock-Based Compensation”. The Company records derivative and warrant liabilities on the condensed consolidated balance sheets at fair value with changes in fair value recorded in the condensed consolidated statements of operation.

The following table presents the balances of liabilities measured at fair value on a recurring basis by level as of September 30, 2014:

	Fair Value Measurements Using
	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
As of September 30, 2014
Derivative liability	$	-	$	-	$	315,783	$	315,783
Warrant liability		-		-		766,774		766,774
Total	$	-	$	-	$	1,082,557	$	1,082,557

16

SpectraScience, Inc.

Notes to Unaudited Condensed Financial Statements (continued)

The following table presents changes in the liabilities with significant unobservable inputs (Level 3) for the nine months ended September 30, 2014:

	Warrant			Derivative			Total
	Liability			Liability			Liability
Balance December 31, 2013	$	803,484		$	300,939		$	1,104,423
Liability on issuance of debt and warrants		-			-			-
Change in estimated fair value (1)		(36,710	)		205,181			168,471
Elimination of liability on conversion		-			(190,337	)		(190,337	)
Balance September 30, 2014	$	766,774		$	315,783		$	1,082,557

(1) Included in the Condensed Statements of Operation on the line “Change in fair value of derivative and warrant liabilities.”

Management used the following inputs to value the Derivative and Warrant Liabilities for the nine months ended September 30, 2014:

	Derivative Liability	Warrant Liability
Expected term	6 months - 1 year	5 years
Exercise price	$0.045 - $0.099	$0.075 - $0.1287
Expected volatility	232% to 242%	189% to 193%
Expected dividends	None	None
Risk-free interest rate	0.10% to 0.13%	1.62% to 1.78%
Forfeitures	None	None

In computing the fair value of the derivative and warrant liability at September 30, 2014 for instruments under the Binomial Lattice option-pricing model, management estimated a 60% probability of a down round financing event at a price of $0.036 and a 18% to 75% probability that existing note holders with exchange privileges would exchange their existing debentures and warrants for new debentures and warrants.

6. Contingencies

None

7. Subsequent Events

Convertible Debentures and Warrants

During October and November 2014, the Company sold $427,778 of Unsecured Convertible Debentures (the “Debentures”) to accredited investors for aggregate consideration of $400,000. The Debentures mature in twelve months, carry a fixed conversion price of $.045, an annual interest rate of 10% and are convertible into 8,947,368 shares of common stock at maturity. The Company received net cash proceeds of approximately $368,000 after payment of fees and expenses of $32,000. In addition, the Company issued the holders of the Debentures detachable five-year warrants to purchase 4,473,684 additional shares of common stock at an exercise price of $0.090 per share.

Subsequent events have been evaluated through the date financial statements are filed with the Securities and Exchange Commission.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This quarterly report on Form 10-Q (the “Report”) contains forward-looking statements that are not related to historical results, including, without limitation, statements regarding our business strategy and objectives, our anticipated duration of periods of net loss, our near term operating goals, our expectations regarding the market for our products, the introduction of our products in new international markets and our beliefs with respect to opportunities and industry conditions in those markets, our beliefs about our products, product development, acquisition or licensing of complementary technologies and expectations with respect to our products’ performance and acceptance, the results of and our intentions with respect to our distribution agreement with PENTAX Europe GmbH, our beliefs about the strengths of our intellectual property portfolio, our regulatory goals and developments, anticipated clinical trials and research, our agreements with Laidlaw and other agents and their effect on our future capital resources and future financial position, our expectations with respect to stock option expense recognition, our future cash needs, the sufficiency of our working capital and our operating losses for the remainder of the current fiscal year. Although we believe that the assumptions on which these forward-looking statements are based are reasonable, there can be no assurance that such assumptions will prove to be accurate and actual results could differ materially from those discussed in the forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause or contribute to such differences, including, but not limited to, changes in law or regulatory policies, unanticipated competition from other similar businesses, adverse outcomes from litigation, unexpected employee departures or disruptions, adverse market and general economic factors and other factors described in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2013. Such forward-looking statements are qualified in their entirety by the cautions and risk factors set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

Business

SpectraScience, Inc. (the “Company,” “SpectraScience,” “we,” “our,” or “us”) develops and manufactures innovative Laser Induced Fluorescence spectrophotometry systems capable of determining whether tissue is normal, pre-cancerous or cancerous without removing tissue from the body. The WavSTAT Optical Biopsy System (the “WavSTAT System”) is SpectraScience's first product to incorporate its proprietary fluorescence technology for clinical use. The WavSTAT System carries the CE mark designation which allows for the sale and marketing in the European Union for the diagnosis of cancer. We are developing light-based diagnostics for additional indications including inflammatory bowel disease and esophageal cancer. Once these additional applications are developed we plan to self-certify for CE mark approval for sale in the European Union and then file an application with the FDA seeking permission to begin marketing for that indication for use in the United States. We believe we have a strong intellectual property portfolio that will allow us to continue to expand our WavSTAT cancer diagnosis platform to address the diagnosis of multiple cancers, utilize additional proprietary bio-photonic techniques to improve the WavSTAT’s overall diagnostic performance and ultimately allow for the detection of cancer and pre-cancer over a relatively large area of examined tissue.

Our principal executive offices are located at 11568 Sorrento Valley Rd., Suite 11, San Diego, CA 92121. We can be reached by telephone at (858) 847-0200; by fax at (858) 847-0880; or by email at info@spectrascience.com. We have a Web site at http://www.spectrascience.com. The information contained on our Web site shall not be deemed to be a part of this Report.

Plan of Operation

During the three and nine month periods ended September 30, 2014, SpectraScience carried forward on the improvements made to the WavSTAT4 in fiscal 2011 and continued working with PENTAX Europe, GmbH (“PENTAX”), for distribution of its products in Europe, the Middle East and Africa.

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Over the next 12 months, SpectraScience intends to:

· Market and sell the WavSTAT4 Optical Biopsy System colon cancer diagnostic application through PENTAX in the European Union;

· Conduct country-specific evaluation trials to demonstrate the effectiveness and cost benefit of the WavSTAT4 Optical Biopsy System in each relevant European jurisdiction;

· Coordinate the creation and publication of scientific papers and presentations related to the country-specific evaluation trials to support widespread education and adoption of the WavSTAT4 ;

· Pursue the introduction of the WavSTAT4 colon cancer application in other international markets, in particular Saudi Arabia, Russia and India;

· Begin meeting with the FDA towards the preparation and submission of a Supplemental PMA filing with the FDA for the WavSTAT4 and plan for additional clinical trials to support eventual approval for sale in the United States;

· Begin the design and planning for the next generation of multi-modal fluorescence and broadband spectroscopy systems at our facility in San Diego, California; and

· Continue to expand and refine our intellectual property portfolio.

Results of Operations

Comparison of the Three Months Ended September 30, 2014 and 2013

	Three Months Ended September 30,						Favorable
	2014			2013			(Unfavorable)			%
Revenue	$	-		$	60,000		$	(60,000	)		NM
Cost of revenue		-			36,756			36,756			NM
Gross profit		-			23,244			(23,244	)		NM
Operating expenses:
Research and development		138,806			59,176			(79,630	)		134.6	%
General and administrative		280,000			375,200			95,200			25.4	%
Sales and marketing		114,178			33,285			(80,893	)		243.0	%
		532,984			467,661			(65,323	)		-14.0	%
Loss from operations		(532,984	)		(444,417	)		(88,567	)		-19.9	%
Other income		1,491,472			621,783			869,689			139.9	%
Net income	$	958,488		$	177,366		$	781,122			440.4	%

Revenues

There was no revenue during the three months ended September 30, 2014 compared to revenue of $60,000 for the three months ended September 30, 2013, when two WaveSTAT4 systems were shipped. We anticipate that revenue will increase as a result of our distribution agreement with PENTAX and continuing direct sales efforts in certain locations once sufficient information has been accumulated from our MORDIS trials in Europe.

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Cost of Revenue

There was no cost of revenue for the quarter ended September 30, 2014 compared to $36,756 for the quarter ended September 30, 2013, when two WaveSTAT4 systems were shipped. We anticipate that cost of revenue will increase in proportion to revenue as a result of our distribution agreement with PENTAX and continuing direct sales efforts in certain locations once sufficient information has been accumulated from our MORDIS trials in Europe.

Research and Development Expenses

Research and development expenses increased by $79,630, 134.6%, to $138,806 for the quarter ended September 30, 2014 from $59,176 for the quarter ended September 30, 2013. This increase was due to an increase in payroll over the previous year’s quarter of approximately $67,000 when activity was reduced awaiting funding coupled with an increase in clinical studies of approximately $7,000. We anticipate that clinical costs will increase as we proceed with our introduction of the WaveSTAT4 in Europe.

General and Administrative Expenses

General and administrative expenses decreased by $95,200, 25.4%, to $280,000 for the quarter ended September 30, 2014 from $375,200 for the quarter ended September 30, 2013. The primary reasons for the decrease was a decrease during the current quarter compared to the same quarter of the previous year as follows: stock option expense of $63,000 and compensation expense of $27,000. We anticipate that general and administrative expenses will increase as we increase our activity in Europe.

Sales and Marketing Expenses

Sales and marketing expenses increased by $80,893, 243.0%, to $114,178 for the quarter ended September 30, 2014 from $33,285 for the quarter ended September 30, 2013. The primary reason for the increase was an increase in payroll costs of $64,000 and an increase in stock option expense of $22,000. We anticipate that sales and marketing expenses will increase as we increase our activity in Europe.

Other Income (Expense)

Other income (expense) for the quarter ended September 30, 2014 was income of $1,491,472 compared to income of $621,783 for the quarter ended September 30, 2013. This change was due primarily to a gain on the extinguishment of convertible debentures for approximately $227,000 coupled with the change in valuation of our derivative liabilities. We anticipate continued large fluctuations in other income (expense) as a result of quarterly re-evaluating these obligations.

20

Comparison of the Nine months Ended September 30, 2014 and 2013

	Nine Months Ended September 30,						Favorable
	2014			2013			(Unfavorable)			%
Revenue	$	-		$	180,000		$	(180,000	)		NM
Cost of revenue		(6,000	)		110,269			116,269			NM
Gross profit		6,000			69,731			(63,731	)		NM
Operating expenses:
Research and development		673,173			440,086			(233,087	)		53.0	%
General and administrative		1,092,689			1,527,780			435,091			28.5	%
Sales and marketing		344,529			200,355			(144,174	)		72.0	%
		2,110,391			2,168,221			57,830			2.7	%
Loss from operations		(2,104,391	)		(2,098,490	)		(5,901	)		-0.3	%
Other income (expense)		(1,357,621	)		(1,011,170	)		(346,451	)		34.3	%
Net loss	$	(3,462,012	)	$	(3,109,660	)	$	(352,352	)		11.3	%

Revenues

There was no revenue during the nine months ended September 30, 2014 compared to revenue of $180,000 for the nine months ended September 30, 2013, when six WaveSTAT4 systems were shipped. We anticipate that revenue will increase as a result of our distribution agreement with PENTAX and continuing direct sales efforts in certain locations once sufficient information has been accumulated from our MORDIS trials in Europe.

Cost of Revenue

There was a reduction in the cost of revenue of $6,000 for the nine months ended September 30, 2014, as a result of a reduction in warranty expense as two previously shipped WaveSTAT4 systems came off of warranty compared to cost of revenue of $110,269 for the nine months ended September 30, 2013, when six WaveSTAT4 systems were shipped. We anticipate that cost of revenue will increase in proportion to revenue as a result of our distribution agreement with PENTAX and continuing direct sales efforts in certain locations once sufficient information has been accumulated from our MORDIS trials in Europe.

Research and Development Expenses

Research and development expenses increased by $233,087, 53.0%, to $673,173 for the nine months ended September 30, 2014 from $440,086 for the nine months ended September 30, 2013. This increase was primarily due to continuing clinical studies being conducted in the European Union of approximately $126,000 coupled with an increase in payroll expense of $96,000. We anticipate that clinical costs will increase as we proceed with our introduction of the WaveSTAT4 in Europe.

21

General and Administrative Expenses

General and administrative expenses decreased by $435,091. 28.5%, to $1,092,689 for the nine months ended September 30, 2014 from $1,527,780 for the nine months ended September 30, 2013. The primary reasons for the decrease was a decrease during the current nine months compared to the same nine months of the previous year as follows: consulting expenses related to financings- $185,000, professional fees expense - $87,000, compensation expense- $130,000 and investor relations expense - $23,000. We anticipate that general and administrative expenses will increase as we increase our activity in Europe.

Sales and Marketing Expenses

Sales and marketing expenses increased by $144,174, 72.0%, to $344,529 for the nine months ended September 30, 2014 from $200,355 for the nine months ended September 30, 2013. The primary reason for the increase was an increase in costs related to establishing a presence in the UK of approximately $48,000, payroll expense of $26,000, a $50,000 increase in stock option expense and a $20,000 increase in travel related costs. We anticipate that sales and marketing expenses will increase as we increase our activity in Europe.

Other Income (Expense)

Other income (expense) for the nine months ended September 30, 2014 was expense of $1,357,621 compared to expense of $1,011,170 for the nine months ended September 30, 2013. This change was due primarily to a gain on the extinguishment of convertible debentures for approximately $244,000 coupled with the change in valuation of our derivative liabilities. We anticipate continued large fluctuations in other income (expense) as a result of quarterly re-evaluating these obligations.

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Liquidity and Capital Resources

	As of						Increase
	September 30, 2014			December 31, 2013			(Decrease)
Working Capital
Current assets	$	671,989		$	801,109		$	(129,120	)
Current liabilities		6,510,847			4,881,597			1,629,250
Working capital deficit	$	(5,838,858	)	$	(4,080,488	)	$	1,758,370
Long-term debt	$	-		$	-		$	-
Stockholders' deficit	$	(4,444,162	)	$	(2,551,231	)	$	1,892,931

	Nine Months Ended September 30,						Increase
	2014			2013			(Decrease)
Statements of Cash Flows Select Information
Net cash provided (used) by:
Operating activities	$	(1,873,681	)	$	(1,079,243	)	$	794,438
Investing activities	$	(6,275	)	$	(1,600	)	$	4,675
Financing activities	$	1,687,000		$	1,229,136		$	457,864

	As of				Increase
	September 30, 2014		December 31, 2013		(Decrease)
Balance Sheet Select Information
Cash	$	43,641	$	236,597	$	(192,956	)
Accounts receivable	$	-	$	60,000	$	(60,000	)
Inventory	$	316,680	$	247,433	$	69,247
Accounts payable and accrued expenses	$	1,481,436	$	1,440,063	$	41,373

Historically, the Company’s sources of cash have come from the issuance and sales of equity securities and convertible debentures. The Company’s historical cash outflows have been primarily used for operating activities including research, development, administrative and sales activities. Fluctuations in the Company’s working capital due to timing differences of its cash receipts and cash disbursements also impact its cash flow. The Company expects to incur significant additional operating losses through at least the end of 2014, as it completes proof-of-concept trials, conducts outcome-based clinical studies and increases sales and marketing efforts to commercialize the WavSTAT4 Systems in Europe. If the Company does not receive sufficient funding, there is substantial doubt that the Company will be able to continue as a going concern. The Company may incur unknown expenses or may not be able to meet its revenue forecast, and one or more of these circumstances would require the Company to seek additional capital. The Company may not be able to obtain equity capital or debt funding on terms that are acceptable. Even if the Company receives additional funding, such proceeds may not be sufficient to allow the Company to sustain operations until it becomes profitable and begins to generate positive cash flows from operations.

23

As of September 30, 2014, the Company had a working capital deficit of $5,838,858 and cash of $43,641, compared to a working capital deficit of $4,080,488 and cash of $236,597 as of December 31, 2013. In December 2011, the Company entered into an Engagement Agreement with Laidlaw & Company (UK) Ltd., which Engagement Agreement was amended in July 2012. Under the Engagement Agreement, Laidlaw agreed to assist the Company in raising up to $20.0 million in capital over a two year period from the date of the Engagement Agreement. Subsequent to September 30, 2013, the Company has engaged other agents to assist the Company with raising capital and has commenced raising capital on its own. During the nine months ended September 30, 2014, The Company raised $1,856,376, net of transaction costs of $158,000, under these agreements. However, if the Company does not receive additional funds in a timely manner, the Company could be in jeopardy as a going concern. The Company may not be able to find alternative capital or raise capital or debt on terms that are acceptable. Management believes that if the events defined in the Engagement Agreements occur as expected, or if the Company is otherwise able to raise a similar level of funds, such proceeds will be sufficient to allow the Company to sustain operations until it attains profitability and positive cash flows from operations. However, the Company may incur unknown expenses or may not be able to meet its revenue expectations requiring it to seek additional capital. In such event, the Company may not be able to find capital or raise capital or debt on terms that are acceptable.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not required

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the end of the period covered by this Report (the “Evaluation Date”).  Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of the Evaluation Date.

Changes in Internal Financial Controls

There was no change in the Company’s internal control over financial reporting that occurred during the Company’s most recently completed quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II OTHER INFORMATION

Item 1. Legal Proceedings

None

Item 1A. Risk Factors

There have been no material changes in our risk factors from those disclosed in Part I, Item 1A, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

24

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the quarter ended September 30, 2014 we issued the following equity securities: 

			Number of
	Date of		Common Shares		Source of
Common Stock	Issuance		Issued		Payment		Amount
		7/31/2014		5,057,834		Convertible Debetnures	$	289,814

Common Stock Purchase Warrants	Date of
Issued With Convertible Debentures	Issuance		Number of Shares		Exercise Price		Expiration Date
		8/16/2014		25,000	$	0.0900		8/16/2019
		9/3/2014		555,556	$	0.0900		9/3/2019
		9/5/2014		555,556	$	0.0900		9/5/2019
		9/12/2014		3,086,418	$	0.0900		9/12/2019

With respect to the above equity securities issuances, the Company relied on exemptions provided by Sections 4(a)(2) and 3(a)9 of the Securities Act of 1933, as amended (the “Securities Act”). No advertising or general solicitation was employed in offering the securities. The securities were issued to a limited number of persons all of whom were accredited investors as that term is defined in Rule 501 of Regulation D under the Securities Act. All were capable of analyzing the merits and risks of their investment, acknowledged in writing that they were acquiring the securities for investment and not with a view toward distribution or resale, and understood the speculative nature of their investment. All securities issued contained a restrictive legend prohibiting transfer of the shares except in accordance with federal securities laws.

Item 3. Defaults Upon Senior Securities

As of November 12, 2014 there are 5% Original Issue Discount Unsecured Convertible Debentures with a face value of $1,624,211 held by 32 individual Holders in default. As a result, the outstanding principal amount of these Debentures, plus accrued but unpaid interest, liquidated damages and other amounts owing shall become immediately due and payable in cash at the election of the Holders. As of November 12, 2014, none of the Holders of these Debentures have elected to provide notice of default.

Item 4. Mine Safety Disclosures

None

Item 5. Other Information

None

25

Item 6. Exhibits

31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of  2002.

32.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101* Financial statements from the quarterly report on Form 10-Q of the Company for the quarter ended September 30, 2014, formatted in XBRL; (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statement of Shareholders’ Equity, (iv) the Consolidated Statements of Cash Flows, and (v) the Notes to the Consolidated Financial Statements.

* Furnished herewith

26

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)
Date: November 12, 2014		/s/ Michael P. Oliver
		Michael P. Oliver
		President and Chief Executive Officer
		(Principal executive officer)
Date: November 12, 2014		/s/ Lowell W. Giffhorn
		Lowell W. Giffhorn
		Chief Financial Officer
		(Principal financial officer and principal accounting officer)

27

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

18 U.S.C. §1350, AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael P. Oliver, certify that:

1. I have reviewed this quarterly report on Form 10-Q of SpectraScience, Inc.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Michael P. Oliver

Name:  Michael P. Oliver

Title:   Chief Executive Officer

Date:     November 12, 2014

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

18 U.S.C. §1350, AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Lowell W. Giffhorn, certify that:

1. I have reviewed this quarterly report on Form 10-Q of SpectraScience, Inc.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Lowell W. Giffhorn

Name:  Lowell W. Giffhorn

Title:   Chief Financial Officer

Date:    November 12, 2014

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of SpectraScience, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael P. Oliver, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.   The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.   The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Michael P. Oliver

Michael P. Oliver

Chief Executive Officer

Date: November 12, 2014

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of SpectraScience, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Lowell W. Giffhorn, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.   The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.   The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Lowell W. Giffhorn

Lowell W. Giffhorn

Chief Financial Officer

Date: November 12, 2014

XML

Changes in Liabilities with Significant Unobservable Inputs (Level 3) (Detail) (USD $)	9 Months Ended		12 Months Ended
	Sep. 30, 2014		Dec. 31, 2013
Fair Value Assets Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Beginning Balance	$ 1,104,423		$ 2,335,560
Liability on issuance of debt and warrants	0		1,691,267
Change in estimated fair value	168,471	[1]	(2,922,404)
Elimination of liability on conversion	(190,337)
Ending Balance	1,082,557		1,104,423
Warrant Liability
Fair Value Assets Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Beginning Balance	803,484		1,730,044
Liability on issuance of debt and warrants	0		762,111
Change in estimated fair value	(36,710)	[1]	(1,688,671)
Elimination of liability on conversion	0
Ending Balance	766,774		803,484
Derivative Liability
Fair Value Assets Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Beginning Balance	300,939
Liability on issuance of debt and warrants	0
Change in estimated fair value	205,181	[1]
Elimination of liability on conversion	(190,337)
Ending Balance	$ 315,783

[1] Included in the Condensed Statements of Operation on the line “Change in fair value of derivative and warrant liabilities.”

XML

Liabilities - Additional Information (Detail) (USD $)	9 Months Ended		1 Months Ended	9 Months Ended
	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2013 Notes Payable to Affiliates	Sep. 30, 2014 Holders Warrants	Sep. 30, 2014 Agents Warrants	Sep. 30, 2014 Minimum	Sep. 30, 2014 Maximum
Debt Instrument [Line Items]
Debentures payment term						6 months	1 year
Accrued interest rate per year			18.40%			10.00%	20.00%
Original issue discount, percent						5.00%	10.00%
Conversion price at maturity						$ 0.045	$ 0.099
Convertible Debentures exercise price						$ 0.0745	$ 0.1287
Debt instrument, face amount	$ 72,515	$ 111,685	$ 45,000
Stock Issued During Period, Shares, Restricted Stock Award, Gross			500,000
Debt instrument exchange currency			54,325
Adjustments to Additional Paid in Capital, Other	897,712
Common stock, shares issued	173,701,088	166,712,054	500,000
Stock Issued During Period Shares For Debt Offering Costs			312,500
Stock Issued During Period Value For Debt Offering Costs	50,000		15,625
Stock Issued During Period Shares Issued For Cash			187,500
Stock Issued During Period Value Issued For Cash	$ 18,624		$ 9,375
Warrants Period				5 years	5 years

XML

Liabilities

9 Months Ended

Sep. 30, 2014

Liabilities [Abstract]

Liabilities

3. Liabilities

Note Payable to an Affiliate 

In September 2013, the Company issued a nine month unsecured note with a face value of $45,000 and 500,000 restricted shares of common stock to an affiliate of the Company in exchange for $54,325 in cash. The imputed annual rate of interest was calculated to be 18.4% and was repaid in nine equal monthly installments. Of the 500,000 shares issued, 312,500 shares were issued for debt issuance costs in an amount of $15,625 which was amortized as interest expense over the life of the note and 187,500 shares were issued for cash in an amount of $9,375.

Convertible Debentures

As of September 30, 2014, the Company has issued and outstanding Convertible Debentures (“Debentures”) with original terms of six months to one year, an interest rate ranging from 10-20% per year and an original issue discount ranging from 5% to 10% which, at the option of the holder, may convert into common stock at an initial conversion price ranging from $0.045 to$0.099 per share. The Debentures were issued with detachable five year cashless Holders Warrants that allow the holders to purchase one share of stock for each two shares available under the converted Debentures at an exercise price ranging from $0.0745 to $0.1287 per share. In addition, the Company issued five year cashless Agent Warrants equal to 10% of the total number of shares issuable under the Debentures and Holders Warrants at an exercise price ranging from $0.0745 to $0.1287 per share. For debentures issued through September 30, 2013, at the option of the Debenture holder, the terms of the Debentures and Holders Warrants are subject to an exchange feature in the event that the Company issues securities with terms more favorable than those of the then outstanding Debentures and Holders Warrants. Debentures issued subsequent to September 30, 2013 do not contain such an exchange clause.

As of September 30, 2014 and December 31, 2013, the balances of the Debentures are as follows:

	September 30,		December 31,
	2014		2013
Balance at beginning of period	$	2,951,629	$	1,129,473
Issuance of debentures for cash		1,856,376		2,122,000
Original issue discount		72,515		111,685
Debentures surrendered in exchange transactions		-		(564,213)
Debentures issued in exchange transactions		-		626,368
Debentures converted to common stock		(236,842)		(473,684)
Convertible debt		4,643,678		2,951,629
Less unamortized costs of financing		696,824		644,518
Convertible debt, net of unamortized costs	$	3,946,854	$	2,307,111
Convertible debt in default	$	1,624,211	$	1,324,212

Derivative Liability

Since the Company issued Convertible Debentures which included Holders Warrants, Agent Warrants and a conversion option that includes a possible exchange feature in the event of a future financing on terms more favorable than those of the existing warrants and debentures, this results in the warrants and conversion feature of the debentures being recorded as a liability and measured at fair value. The Company measures these warrants and conversion feature using a combination of Black-Scholes option valuation models and Binomial Lattice option valuation models using similar assumptions to those described under “Stock-Based Compensation.” The time period over which the Company will be required to evaluate the fair value of the warrants is approximately five years and the time period over which the Company will be required to evaluate the fair value of the conversion feature is the lesser of six to twelve months or conversion.

The assumptions used in determining fair value represent management’s best estimates, but these estimates involve inherent uncertainties and the application of management’s judgment. As a result, if factors change, including changes in the market value of the Company’s common stock, managements’ assessment of the probability of a more favorably priced future financing or significant fluctuations in the volatility of the trading market for the Company’s common stock, the Company’s fair value estimates could be materially different in the future.

The Company computes the fair value of the derivative liability at each reporting period and the change in the fair value is recorded as non-cash expense or non-cash income. The key component in the value of the derivative liability is the Company’s stock price, which is subject to significant fluctuation and is not under its control. The resulting effect on net loss is therefore subject to significant fluctuation and will continue to be so until the Company’s Debentures, which the convertible feature is associated with, are converted into common stock or paid in full with cash. Assuming all other fair value inputs remain constant, the Company will record non-cash expense when its stock price increases and non-cash income when its stock price decreases.

As of September 30, 2014 and December 31, 2013, the balances of the Derivative Liability are as follows:

			Conversion
	Warrants		Feature		Total
Balance at December 31, 2012	$	1,730,044	$	605,516	$	2,335,560
Liability on issuance of debt and warrants		762,111		929,156		1,691,267
Change in fair value at year end		(1,688,671)		(1,233,733)		(2,922,404)
Balance at December 31, 2013		803,484		300,939		1,104,423
Liability on issuance of debt and warrants		-		-		-
Elimination of liability on conversion		-		(190,337)		(190,337)
Change in fair value at period end		(36,710)		205,181		168,471
Balance at September 30, 2014	$	766,774	$	315,783	$	1,082,557

Debentures issued subsequent to September 30, 2013 did not contain an exchange provision and were accounted for using the equity method of valuing the note and warrant. For the nine months ended September 30, 2014, $897,712 was recorded as additional paid-in capital.

XML

Warrants Outstanding (Detail) (Warrant, USD $)	9 Months Ended
	Sep. 30, 2014
Warrant
Shares
Beginning Balance	87,929,794
Granted	22,012,675
Exchanged cancelled	0
Exchanged issued	0
Cancelled	0
Exercised	0
Ending Balance	109,942,469
Exercisable	109,942,469
Weighted Average Exercise Price
Beginning Balance	$ 0.15
Granted	$ 0.09
Exchanged cancelled	$ 0
Exchanged issued	$ 0
Cancelled	$ 0
Exercised	$ 0
Ending Balance	$ 0.13
Exercisable	$ 0.13

XML

Shareholders' Deficit - Additional Information (Detail) (USD $)	1 Months Ended	9 Months Ended	1 Months Ended		9 Months Ended	3 Months Ended	9 Months Ended		1 Months Ended
	Feb. 28, 2014	Sep. 30, 2014	Feb. 28, 2014 Stock Option	Jan. 31, 2014 Stock Option	Sep. 30, 2014 Stock Option	Sep. 30, 2014 Five Year Warrants	Sep. 30, 2014 Five Year Warrants	Sep. 30, 2014 Restricted Stock	Jun. 30, 2014 One Consultant Restricted Stock	Mar. 31, 2014 One Consultant Restricted Stock
Stockholders' Deficit Note [Line Items]
Common Stock issued for services (in shares)									690,000	310,000
Warrants Issued To Purchase Common Stock						4,222,530	22,012,675
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price			$ 0.02
Stock Issued During Period, Value, Stock Options Exercised	$ 18,624
Share Price									$ 0.05	$ 0.05
Closing Market Price Per Share		$ 0.02						$ 0.09
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options		538,067
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition		4 years
Share-Based Compensation Arrangement By Share-Based Payment Award, Options, Exercises In Period			931,200		931,200
Authorized Issuance of Stock Options Exercisable				35,550,000
Exercise Price				$ 0.02
Cancelation of Stock Options Exercisable				14,225,000
Average exercise price				$ 0.14
Debt Conversion, Original Debt, Amount								236,842
Debt Conversion, Converted Instrument, Shares Issued								4,133,369
Debt Instrument, Increase, Accrued Interest								$ 52,972
Stock Issued During Period, Shares, Restricted Stock Award, Gross								924,465

XML

Schedule of Stock Options Outstanding (Detail) (Stock Option, USD $)	9 Months Ended		12 Months Ended
	Sep. 30, 2014		Dec. 31, 2013
Stock Option
Shares
Beginning Balance	15,075,000
Granted	35,550,000
Cancelled	(14,525,000)
Exercised	(931,200)
Ending Balance	35,168,800		15,075,000
Exercisable	13,780,397
Weighted average fair value of options granted during the period	35,550,000
Weighted Average Exercise Price Per Share
Beginning Balance	$ 0.14
Granted	$ 0.02
Cancelled	$ 0.14
Exercised	$ 0.02
Ending Balance	$ 0.02		$ 0.14
Exercisable	$ 0.03
Weighted average fair value of options granted during the period	$ 0.02
Weighted Average Remaining Contractual Term (years)
Outstanding	9 years 2 months 16 days		6 years 11 months 8 days
Exercisable	9 years 1 month 10 days
Aggregate Intrinsic Value
Outstanding	$ 0	[1]
Exercisable	$ 0	[1]

[1] These amounts represent the excess, if any, between the exercise price and $0.02, the closing market price of the Company’s common stock on September 30, 2014 as quoted on the Over-the-Counter Bulletin Board under the symbol “SCIE”.

XML

Fair Value Measurements - Additional Information (Detail) (USD $)	9 Months Ended
	Sep. 30, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assumed stock prices	60.00%
Change in stock price	$ 0.036
Minimum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Probability of existing note holders	18.00%
Maximum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Probability of existing note holders	75.00%

XML

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2014

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2.     Summary of Significant Accounting Policies

Revenue recognition

 

The Company recognizes revenues when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable and collectability is reasonably assured. Revenue from the sale of the Company’s products is generally recognized when title and risk of loss transfers to the customer, the terms of which are generally free on board shipping point. The Company uses customer purchase orders to determine the existence of an arrangement. The Company uses shipping documents and third-party proof of delivery to verify that title has transferred. The Company assesses whether the price is fixed or determinable based upon the terms of the agreement associated with the transaction. To determine whether collection is probable, the Company assesses a number of factors, including past transaction history with the customer and the creditworthiness of the customer.

Consolidation

The accompanying consolidated financial statements include the accounts of SpectraScience, Inc. and its wholly-owned subsidiaries LUMA, International and Spectra UK. All significant intercompany balances and transactions have been eliminated in consolidation.

Risks and Uncertainties

The Company operates in an industry that is subject to intense competition, government regulation and rapid technological change. The Company's operations are subject to significant risk and uncertainties, including financial, operational, technological, regulatory and other risks associated with a short history of product sales, including the potential risk of business failure.

Use of Estimates

The Company prepares its consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, which requires management to make estimates and assumptions that affect the amounts reported in the financial statements and disclosures made in the accompanying notes to the financial statements. Significant estimates made by management include, among others, realization of long-lived assets including intangible assets, assumptions used to value stock options, assumptions used to value the common stock issued and assumptions related to the determination of the fair value of the derivative components associated with the Company’s Convertible Debentures. Actual results could differ from those estimates.

Inventory Valuation

The Company states its inventory at the lower of cost or market value, determined on a specific cost basis. The Company provides inventory allowances when conditions indicate that the selling price could be less than cost due to obsolescence and reductions in estimated future demand. The Company balances the need to maintain strategic inventory levels with the risk of obsolescence due to changing technology and customer demand levels. Unfavorable changes in market conditions may result in a need for additional inventory reserves that could adversely impact the Company’s gross margins. Conversely, favorable changes in demand could result in higher gross margins when the Company sells products.

Valuation of Long-lived Assets

The Company’s long-lived assets consist of property and equipment and intangible assets. Equipment is carried at cost and is depreciated over the estimated useful lives of the assets, which are generally two to three years, and leasehold improvements are amortized over the lesser of the lease term or the estimated useful lives of the improvements. The straight-line method is used for depreciation and amortization. Intangible assets consist of patents, which are amortized using the straight-line method over the estimated useful lives of the patents. The Company does not capitalize external legal costs and filing fees associated with obtaining patents on its new discoveries. Acquired intellectual property is recorded at cost and is amortized over its estimated useful life. The Company believes the useful lives assigned to these assets are reasonable. The Company assesses the recoverability of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. These computations utilize judgments and assumptions inherent in management’s estimate of future cash flows to determine recoverability of these assets. If management’s assumptions about these assets were to change as a result of events or circumstances, the Company may be required to record an impairment loss.

Stock-Based Compensation

The Company accounts for stock-based compensation under the provisions of FASB ASC Topic 718, Compensation—Stock Compensation (“ASC 718”), which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. The Company adopted ASC 718 on January 1, 2006. The Company estimates the fair value of stock-based awards on the date of grant using the Black-Scholes-Merton option-pricing model (the “Black-Scholes Model”). The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method. The Company estimates forfeitures at the time of grant and revises its estimate in subsequent periods if actual forfeitures differ from those estimates.

The Company accounts for stock-based compensation awards to non-employees in accordance with FASB ASC Topic 505-50, Equity-Based Payments to Non-Employees (“ASC 505-50”). Under ASC 505-50, the Company determines the fair value of the warrants or stock-based compensation awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.

All issuances of stock options or other equity instruments to employees and non-employees as the consideration for goods or services received by the Company are accounted for based on the fair value of the equity instruments issued. Any stock options issued to non-employees are recorded in expense and additional paid-in capital in shareholders’ equity over the applicable service periods using variable accounting through the vesting dates based on the fair value of the options at the end of each reporting period.

As of September 30, 2014, the Company had one stock-based employee compensation plan under which it makes grants, the 2011 Equity Incentive Plan (the “EIP”). The EIP provides for the grant of incentive stock options (“ISOs”), nonqualified stock options (“NQSOs”) and restricted stock awards to full-time employees (who may also be directors) and NQSOs and restricted stock awards to non-employee directors, consultants, customers, vendors or providers of services. The exercise price of any ISO may not be less than the fair market value of the common stock on the date of grant and the term shall not exceed ten years. The amount reserved under the 2011 EIP is 37,000,000 shares of common stock. At September 30, 2014, the Company had options outstanding exercisable into up to 35,168,800 shares of stock under the EIP and the Company’s prior Amended 2001 Stock Plan of which up to 13,780,397 shares were exercisable. Awards under the Company’s EIP generally vest over four years.

The fair value of options granted are estimated at the date of grant using a Black-Scholes Model which includes several variables including expected life, risk free interest rate, expected stock price volatility, stock option exercise patterns and expected dividend yield. The Company also must estimate forfeitures for employee stock options. Management used the following weighted average assumptions to value stock options granted during the three and nine month periods ended September 30, 2014 and 2013:

	Three months ended September 30,			Nine months ended September 30,
	2014	2013		2014		2013
Expected term of options	None	None		5 years		None
Exercise price	None	None	$	0.02		None
Expected volatility	None	None		187	%	None
Expected dividends	None	None		None		None
Risk-free interest rate	None	None		1.64	%	None
Forfeitures	None	None		None		None

Earnings (Loss) Per Share

Basic loss per share is computed by dividing loss available to common shareholders by the weighted-average number of common shares outstanding. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Common equivalent shares are excluded from the computation if their effect is anti-dilutive.

For the periods ended September 30, 2014 and 2013, the following common equivalent shares were excluded from the computation of loss per share since their effects are anti-dilutive.

	September 30,	September 30,
	2014	2013
Preferred Stock	3,085,000	3,085,000
Convertible debentures	94,767,062	39,111,869
Options	35,168,800	19,491,667
Warrants	109,942,469	77,127,289
Total	242,963,331	138,815,825

The following table sets forth the computation of basic and diluted loss per share for the three and nine month periods ended September 30, 2014 and 2013:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
Numerator:
Net income (loss) for basic earnings per share	$	958,488	$	177,366	$	(3,462,012)	$	(3,109,660)
Net income (loss) for diluted earnings per share	$	958,488	$	177,366	$	(3,462,012)	$	(3,109,660)
Denominator:
Weighted average basic shares outstanding		171,996,818		161,854,734		169,070,461		158,736,987
Denominator for diluted earnings per share-
Adjusted weighted average shares		186,965,778		161,854,734		169,070,461		158,736,987
Loss per share
Basic	$	0.01	$	0.00	$	(0.02)	$	(0.02)
Diluted	$	0.01	$	0.00	$	(0.02)	$	(0.02)

Inventory

Inventory consisted of the following at September 30, 2014 and December 31, 2013:

	September 30,		December 31,
	2014		2013
Raw materials	$	270,345	$	201,098
Finished goods		46,335		46,335
		316,680		247,433
Reserve for obsolescence		-		-
	$	316,680	$	247,433

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Balances of Liabilities Measured at Fair Value on Recurring Basis (Detail) (USD $)	Sep. 30, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability	$ 315,783
Warrant liability	766,774
Total	1,082,557
Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability	0
Warrant liability	0
Total	0
Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability	0
Warrant liability	0
Total	0
Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability	315,783
Warrant liability	766,774
Total	$ 1,082,557

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Condensed Consolidated Balance Sheets (USD $)	Sep. 30, 2014	Dec. 31, 2013
Current assets:
Cash	$ 43,641	$ 236,597
Accounts receivable, net	0	60,000
Inventory	316,680	247,433
Deferred debt issuance costs	109,849	82,227
Prepaid expenses and other current assets	201,819	174,852
Total current assets	671,989	801,109
Fixed assets, net	5,441	15,917
Patents, net	1,389,255	1,513,340
TOTAL ASSETS	2,066,685	2,330,366
Current liabilities:
Accounts payable	786,091	1,009,018
Note payable to an affiliate	0	30,000
Convertible debt, net of discounts of $696,824 as of September 30, 2014 and $644,518 as of December 31, 2013	3,946,854	2,307,111
Derivative liability	1,082,557	1,104,423
Accrued expenses	695,345	431,045
Total current liabilities	6,510,847	4,881,597
COMMITMENTS AND CONTINGENCIES
Stockholders' deficit
Common stock, $.01 par value; 746,415,000 shares authorized; 173,701,088 and 166,712,054 shares issued and outstanding as of September 30, 2014 and December 31, 2013	1,737,011	1,667,120
Additional paid in capital	38,625,792	37,126,602
Accumulated deficit	(44,837,815)	(41,375,803)
Total stockholders' deficit	(4,444,162)	(2,551,231)
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT)	2,066,685	2,330,366
Series A Convertible Preferred Stock
Stockholders' deficit
Convertible Preferred Stock, value	0	0
Series B Convertible Preferred Stock
Stockholders' deficit
Convertible Preferred Stock, value	25,850	25,850
Total stockholders' deficit	25,850	25,850
Series C Convertible Preferred Stock
Stockholders' deficit
Convertible Preferred Stock, value	5,000	5,000
Total stockholders' deficit	$ 5,000	$ 5,000

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Condensed Consolidated Statements of Cash Flows (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Operating activities:
Net loss	$ (3,462,012)	$ (3,109,660)
Adjustments to reconcile net loss to cash used in operating activities:
Provision for uncollectable accounts receivable	0	4,281
Amortization and depreciation	140,836	179,308
Non-cash issuance of stock options	349,143	287,338
Non-cash interest on issuance of warrant	710	0
Amortization of derivative and warrant liabilities discount	850,691	1,328,849
Amortization of deferred debt issuance costs and original issue discount	197,608	532,912
Change in fair value of derivative and warrant liabilities	168,471	(1,073,017)
(Gain) loss on extinguishment of debt	(227,259)	16,989
Fair market value of common stock issued for debt offering costs	50,000	244,500
Changes in assets and liabilities:
Accounts receivable	60,000	(34,281)
Inventory	(69,247)	81,435
Prepaid expenses and other current assets	(26,966)	(32,301)
Accounts payable	(222,927)	144,156
Accrued expenses	317,271	350,248
Net cash used in operating activities	(1,873,681)	(1,079,243)
Investing activities:
Purchases of fixed assets	(6,275)	(1,600)
Net cash used in investing activities	(6,275)	(1,600)
Financing activities:
Proceeds from issuance of convertible notes payable	1,856,376	1,372,000
Proceeds from issuance of note payable to affiliate	0	45,000
Payments against note payable to affiliate	(30,000)	0
Proceeds from exercise of stock options	18,624	9,375
Debt issuance costs	(158,000)	(197,239)
Net cash provided by financing activities	1,687,000	1,229,136
Net increase (decrease) in cash	(192,956)	148,293
Cash, beginning of year	236,597	90,192
Cash, end of period	43,641	238,485
Supplemental Disclosure of Cash Flow Information:
Interest	0	5,539
Income taxes	0	0
Non Cash Investing and Financing Activities:
Conversion of convertible notes to common stock	236,842	263,158
Conversion of interest due on convertible notes to common stock	52,972	33,988
Exchange of interest due on convertible notes to new notes	0	25,259
Conversion of preferred stock to common stock	0	5,000
Warrant valuation on isuance of convertible debentures	897,712	0
Elimination of derivative liabilities on conversion	$ 190,337	$ 0

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Subsequent Events - Additional Information (Detail) (USD $)	9 Months Ended				2 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Nov. 30, 2014	Dec. 31, 2013	Nov. 30, 2014 Subsequent Event Original Issue Discount Unsecured Convertible Debentures 5
Subsequent Event [Line Items]
Debt instrument, convertible, conversion price					$ 0.045
Debt Instrument, Interest Rate at Period End					10.00%
Common Stock Exercise Price			$ 0.090
Proceeds From Convertible Debt	$ 1,856,376	$ 1,372,000			$ 400,000
Long-term Debt, Gross	1,856,376			2,122,000	427,778
Debt Instrument, Convertible, Number of Equity Instruments					8,947,368
Proceeds From Conversion Of Convertible Debt					368,000
Payment Of Fees And Expenses					$ 32,000
Warrants Issued To Purchase Common Stock					4,473,684

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Antidilutive Securities Excluded from Computation of Loss Per Share (Detail)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	242,963,331	138,815,825
Options
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	35,168,800	19,491,667
Convertible Debentures
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	94,767,062	39,111,869
Preferred Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	3,085,000	3,085,000
Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	109,942,469	77,127,289

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Inventories (Detail) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Inventory Disclosure [Line Items]
Raw materials	$ 270,345	$ 201,098
Finished goods	46,335	46,335
Inventory, Gross, Total	316,680	247,433
Reserve for obsolescence	0	0
Inventories	$ 316,680	$ 247,433

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Nature of Business and Basis of Presentation

9 Months Ended

Sep. 30, 2014

Organization, Consolidation and Presentation Of Financial Statements [Abstract]

Nature of Business and Basis of Presentation

1.     Nature of Business and Basis of Presentation

Description of Business

SpectraScience, Inc. was incorporated in the State of Minnesota on May 4, 1983 as GV Medical, Inc. In October 1992, GV Medical discontinued its prior business, refocused its development efforts and changed its name to SpectraScience, Inc. The “Company,” hereinafter, refers to SpectraScience, Inc. and its wholly owned subsidiaries Luma Imaging Corporation (“LUMA”), Spectra Science International, Inc. (“International”) and SpectraScience (UK) Limited (“SpectraUK”). Since 1996, the Company has focused primarily on developing the WavSTAT Optical Biopsy System (the “WavSTAT System”).

 

The Company has developed and received the European CE mark approval to market a proprietary, minimally invasive technology that optically illuminates tissue in real-time to distinguish between normal, pre-cancerous or cancerous cells without the need to remove the subject cell tissue from the body to make such determinations. The WavSTAT System operates by using cool, safe laser light to optically illuminate and analyze tissue, enabling the physician to make an instant diagnosis during endoscopy when screening for cancer, and if warranted, to begin immediate treatment during the same procedure. Beginning in December 2011, the WavSTAT 4 version of the product began to be sold in the European Union for colon cancer detection. In June 2012, the Company entered into a distribution agreement with PENTAX Europe, GmbH, for the sale of its systems internationally.

On November 6, 2007, the Company acquired the assets of LUMA in an equity transaction accounted for as an acquisition of assets and now operates LUMA as a wholly-owned subsidiary of the Company. LUMA had acquired the assets from a predecessor company that had developed, and received FDA approval for, a non-invasive diagnostic imaging system that can detect cervical cancer precursors and which utilizes an underlying technology that is similar to that of the WavSTAT System. The addition of the LUMA technology to the Company’s existing WavSTAT System technology provides the Company with a broad suite of fluorescence-based intellectual property and know-how. During the fiscal year ended December 31, 2010, the Company wrote off the remaining fair value of the LUMA inventory in order to focus on the continued development and marketing of the WavSTAT System. The Company retained the intellectual property of LUMA for use in the development of future generations of the WavSTAT System.

The transaction was accounted for as an acquisition of assets that included intellectual property, inventory and equipment. The intellectual property consisted of a total of 34 issued U.S. patents and 28 additional patent applications.

Basis of Presentation

The accompanying unaudited financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q as they are prescribed for smaller reporting companies. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to make the financial statements not misleading have been included. Operating results for the three and nine month periods ended September 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014. These statements should be read in conjunction with the financial statements and related notes, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.

Going Concern

Historically, the Company’s sources of cash have come from the issuance and sales of equity securities and convertible debentures. The Company’s historical cash outflows have been primarily used for operating activities including research, development, administrative and sales activities. Fluctuations in the Company’s working capital due to timing differences of its cash receipts and cash disbursements also impact its cash flow. The Company expects to incur significant additional operating losses through at least the end of 2014, as it completes proof-of-concept trials, conducts outcome-based clinical studies and increases sales and marketing efforts to commercialize the WavSTAT4 Systems in Europe. If the Company does not receive sufficient funding, there is substantial doubt that the Company will be able to continue as a going concern. The Company may incur unknown expenses or may not be able to meet its revenue forecast, and one or more of these circumstances would require the Company to seek additional capital. The Company may not be able to obtain equity capital or debt funding on terms that are acceptable. Even if the Company receives additional funding, such proceeds may not be sufficient to allow the Company to sustain operations until it becomes profitable and begins to generate positive cash flows from operations.

As of September 30, 2014, the Company had a working capital deficit of $5,838,858 and cash of $43,641, compared to a working capital deficit of $4,080,488 and cash of $236,597 as of December 31, 2013. In December 2011, the Company entered into an Engagement Agreement with Laidlaw & Company (UK) Ltd., which Engagement Agreement was amended in July 2012. Under the Engagement Agreement, Laidlaw agreed to assist the Company in raising up to $20.0 million in capital over a two year period from the date of the Engagement Agreement. Subsequent to September 30, 2013, the Company has engaged other agents to assist the Company with raising capital and has commenced raising capital on its own. During the nine months ended September 30, 2014, The Company raised $1,856,376, net of transaction costs of $158,000, under these agreements. However, if the Company does not receive additional funds in a timely manner, the Company could be in jeopardy as a going concern. The Company may not be able to find alternative capital or raise capital or debt on terms that are acceptable. Management believes that if the events defined in the Engagement Agreements occur as expected, or if the Company is otherwise able to raise a similar level of funds, such proceeds will be sufficient to allow the Company to sustain operations until it attains profitability and positive cash flows from operations. However, the Company may incur unknown expenses or may not be able to meet its revenue expectations requiring it to seek additional capital. In such event, the Company may not be able to find capital or raise capital or debt on terms that are acceptable.

The holders of Convertible Debentures control the conversion of the Convertible Debentures and certain of the Convertible Debentures were not converted at their maturity constituting a potential default on the matured, but unconverted, Convertible Debentures. In the event of such default, principal, accrued interest and other related costs are immediately due and payable in cash. As of September 30, 2014, Convertible Debentures with a face value of $1,624,211 held by 32 individual investors are in default. None of these investors have served notice of default on the Convertible Debentures held by them.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustments relating to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Convertible debt, net of discounts	$ 696,824	$ 644,518
Common stock, par value	$ 0.01	$ 0.01
Common stock, authorized	746,415,000	746,415,000
Common stock, shares issued	173,701,088	166,712,054
Common stock, shares outstanding	173,701,088	166,712,054
Series A Convertible Preferred Stock
Convertible Preferred Stock, par value	$ 0.01	$ 0.01
Convertible Preferred Stock, authorized	0	0
Convertible Preferred Stock, shares issued	0	0
Convertible Preferred Stock, shares outstanding	0	0
Series B Convertible Preferred Stock
Convertible Preferred Stock, par value	$ 0.01	$ 0.01
Convertible Preferred Stock, authorized	2,585,000	2,585,000
Convertible Preferred Stock, shares issued	2,585,000	2,585,000
Convertible Preferred Stock, shares outstanding	2,585,000	2,585,000
Convertible Preferred Stock, liquidation value	517,000	517,000
Convertible Preferred Stock, accumulated and unpaid dividends	106,931	106,931
Series C Convertible Preferred Stock
Convertible Preferred Stock, par value	$ 0.01	$ 0.01
Convertible Preferred Stock, authorized	1,000,000	1,000,000
Convertible Preferred Stock, shares issued	500,000	500,000
Convertible Preferred Stock, shares outstanding	500,000	500,000
Convertible Preferred Stock, liquidation value	$ 100,000	$ 100,000

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Shareholders' Deficit (Tables)

9 Months Ended

Sep. 30, 2014

Stockholders Equity Note [Abstract]

Schedule of Balance of all Warrants Outstanding

The balance of all warrants outstanding as of September 30, 2014 is as follows:

			Weighted
			Average
			Exercise
Warrants	Shares		Price
Outstanding at January 1, 2014		87,929,794	$	0.15
Granted		22,012,675	$	0.09
Exchanged cancelled		-	$	-
Exchanged issued		-	$	-
Cancelled		-	$	-
Exercised		-	$	-
Outstanding at September 30, 2014		109,942,469	$	0.13
Exercisable at September 30, 2014		109,942,469	$	0.13

Schedule of stock options outstanding

Options outstanding as of September 30, 2014 are as follows:

	Outstanding Options
			Weighted Average		Weighted Average		Aggregate
			Exercise Price		Remaining Contractual		Intrinsic
	Shares		Per Share		Term (years)		Value (1)
Outstanding at January 1, 2014		15,075,000	$	0.14		6.94
Granted		35,550,000	$	0.02		-
Cancelled		(14,525,000)	$	0.14		-
Exercised		(931,200)	$	0.02		-
Outstanding at September 30, 2014		35,168,800	$	0.02		9.21	$	-
Exercisable at September 30, 2014		13,780,397	$	0.03		9.11	$	-
Weighted average fair value of options
granted during the period		35,550,000	$	0.02

(1) These amounts represent the excess, if any, between the exercise price and $0.02, the closing market price of the Company’s common stock on September 30, 2014 as quoted on the Over-the-Counter Bulletin Board under the symbol “SCIE”.

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Document And Entity Information	9 Months Ended
	Sep. 30, 2014	Nov. 12, 2014
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3
Entity Registrant Name	SPECTRASCIENCE INC
Entity Central Index Key	0000727672
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	SCIE
Entity Common Stock, Shares Outstanding		173,701,088

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2014

Fair Value Disclosures [Abstract]

Balances of Liabilities Measured at Fair Value on Recurring Basis

The following table presents the balances of liabilities measured at fair value on a recurring basis by level as of September 30, 2014:

	Fair Value Measurements Using
	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
As of September 30, 2014
Derivative liability	$	-	$	-	$	315,783	$	315,783
Warrant liability		-		-		766,774		766,774
Total	$	-	$	-	$	1,082,557	$	1,082,557

Changes in Liabilities with Significant Unobservable Inputs (Level 3)

The following table presents changes in the liabilities with significant unobservable inputs (Level 3) for the nine months ended September 30, 2014:

	Warrant		Derivative		Total
	Liability		Liability		Liability
Balance December 31, 2013	$	803,484	$	300,939	$	1,104,423
Liability on issuance of debt and warrants		-		-		-
Change in estimated fair value (1)		(36,710)		205,181		168,471
Elimination of liability on conversion		-		(190,337)		(190,337)
Balance September 30, 2014	$	766,774	$	315,783	$	1,082,557

(1) Included in the Condensed Statements of Operation on the line “Change in fair value of derivative and warrant liabilities.”

Derivative and Warrant Liabilities

Management used the following inputs to value the Derivative and Warrant Liabilities for the nine months ended September 30, 2014:

	Derivative Liability	Warrant Liability
Expected term	6 months - 1 year	5 years
Exercise price	$0.045 - $0.099	$0.075 - $0.1287
Expected volatility	232% to 242%	189% to 193%
Expected dividends	None	None
Risk-free interest rate	0.10% to 0.13%	1.62% to 1.78%
Forfeitures	None	None

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Condensed Consolidated Statements of Operation (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Revenue	$ 0	$ 60,000	$ 0	$ 180,000
Cost of revenue	0	36,756	(6,000)	110,269
Gross profit	0	23,244	6,000	69,731
Operating expenses:
Research and development	138,806	59,176	673,173	440,086
General and administrative	280,000	375,200	1,092,689	1,527,780
Sales and marketing	114,178	33,285	344,529	200,355
Total operating expenses	532,984	467,661	2,110,391	2,168,221
Loss from operations	(532,984)	(444,417)	(2,104,391)	(2,098,490)
Other income (expense)
Interest expense	(131,846)	(79,260)	(347,587)	(202,352)
Change in fair value of derivative and warrant liabilities	1,883,289	1,156,215	(168,471)	1,073,017
Amortization of derivative and warrant liabilities discount	(396,853)	(308,484)	(850,691)	(1,328,849)
Amortization of deferred debt issuance costs and original issue discount	(85,034)	(141,840)	(197,608)	(532,912)
Gain (loss) on extinguishment of debt	227,259	0	227,259	(16,989)
Other income (expense), net	(5,343)	(4,848)	(20,523)	(3,085)
Nonoperating Income (Expense)	1,491,472	621,783	(1,357,621)	(1,011,170)
Net income (loss) before income taxes	958,488	177,366	(3,462,012)	(3,109,660)
Provision for income taxes	0	0	0	0
Net income (loss)	$ 958,488	$ 177,366	$ (3,462,012)	$ (3,109,660)

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Contingencies

9 Months Ended

Sep. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

Contingencies

6. Contingencies

None

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Fair Value Measurements

9 Months Ended

Sep. 30, 2014

Fair Value Disclosures [Abstract]

Fair Value Measurements

5. Fair Value Measurements 

Accounting guidance on fair value measurements and disclosures defines fair value, establishes a framework for measuring the fair value of assets and liabilities using a hierarchy system, and defines required disclosures. It clarifies that fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity transacts business.

The Company's balance sheet contains derivative and warrant liabilities that are recorded at fair value on a recurring basis. The three-level valuation hierarchy for disclosure of fair value is as follows:

Level 1: uses quoted market prices in active markets for identical assets or liabilities.

Level 2: uses observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3: uses unobservable inputs that are not corroborated by market data.

The fair value of the Company’s recorded derivative and warrant liabilities is determined based on unobservable inputs that are not corroborated by market data, which require a Level 3 classification. A Binomial Lattice option valuation model was used to determine the fair value with similar assumptions to those described under “Stock-Based Compensation”. The Company records derivative and warrant liabilities on the condensed consolidated balance sheets at fair value with changes in fair value recorded in the condensed consolidated statements of operation.

The following table presents the balances of liabilities measured at fair value on a recurring basis by level as of September 30, 2014:

	Fair Value Measurements Using
	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
As of September 30, 2014
Derivative liability	$	-	$	-	$	315,783	$	315,783
Warrant liability		-		-		766,774		766,774
Total	$	-	$	-	$	1,082,557	$	1,082,557

The following table presents changes in the liabilities with significant unobservable inputs (Level 3) for the nine months ended September 30, 2014:

	Warrant		Derivative		Total
	Liability		Liability		Liability
Balance December 31, 2013	$	803,484	$	300,939	$	1,104,423
Liability on issuance of debt and warrants		-		-		-
Change in estimated fair value (1)		(36,710)		205,181		168,471
Elimination of liability on conversion		-		(190,337)		(190,337)
Balance September 30, 2014	$	766,774	$	315,783	$	1,082,557

(1) Included in the Condensed Statements of Operation on the line “Change in fair value of derivative and warrant liabilities.”

Management used the following inputs to value the Derivative and Warrant Liabilities for the nine months ended September 30, 2014:

	Derivative Liability	Warrant Liability
Expected term	6 months - 1 year	5 years
Exercise price	$0.045 - $0.099	$0.075 - $0.1287
Expected volatility	232% to 242%	189% to 193%
Expected dividends	None	None
Risk-free interest rate	0.10% to 0.13%	1.62% to 1.78%
Forfeitures	None	None

In computing the fair value of the derivative and warrant liability at September 30, 2014 for instruments under the Binomial Lattice option-pricing model, management estimated a 60% probability of a down round financing event at a price of $0.036 and a 18% to 75% probability that existing note holders with exchange privileges would exchange their existing debentures and warrants for new debentures and warrants.

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Summary of Basic and Diluted Loss Per Share and Incorporates Income and Expense (Detail) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Numerator:
Net income (loss) for basic earnings per share	$ 958,488	$ 177,366	$ (3,462,012)	$ (3,109,660)
Net income (loss) for diluted earnings per share	$ 958,488	$ 177,366	$ (3,462,012)	$ (3,109,660)
Denominator:
Weighted average basic shares outstanding	171,996,818	161,854,734	169,070,461	158,736,987
Denominator for diluted earnings per share- Adjusted weighted average shares	186,965,778	161,854,734	169,070,461	158,736,987
Loss per share
Basic	$ 0.01	$ 0.00	$ (0.02)	$ (0.02)
Diluted	$ 0.01	$ 0.00	$ (0.02)	$ (0.02)

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Nature of Business and Basis of Presentation - Additional Information (Detail) (USD $)	9 Months Ended					1 Months Ended
	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2013	Dec. 31, 2012	Dec. 31, 2011 Maximum	Dec. 31, 2011 Minimum
Disclosure Nature Of Business and Basis Of Presentation Additional Information [Line Items]
Working capital deficit	$ 5,838,858	$ 4,080,488
Cash	43,641	236,597	238,485	90,192
Capital to be raised					20,000,000
Working capital contribution period						2 years
Capital raised during period	1,856,376
Payments of transaction costs	158,000
Conversion of stock, amount issued	$ 1,624,211

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2014

Accounting Policies [Abstract]

Summary of Weighted Average Assumptions To Value Stock Options Granted

Management used the following weighted average assumptions to value stock options granted during the three and nine month periods ended September 30, 2014 and 2013:

	Three months ended September 30,			Nine months ended September 30,
	2014	2013		2014		2013
Expected term of options	None	None		5 years		None
Exercise price	None	None	$	0.02		None
Expected volatility	None	None		187	%	None
Expected dividends	None	None		None		None
Risk-free interest rate	None	None		1.64	%	None
Forfeitures	None	None		None		None

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

For the periods ended September 30, 2014 and 2013, the following common equivalent shares were excluded from the computation of loss per share since their effects are anti-dilutive.

	September 30,	September 30,
	2014	2013
Preferred Stock	3,085,000	3,085,000
Convertible debentures	94,767,062	39,111,869
Options	35,168,800	19,491,667
Warrants	109,942,469	77,127,289
Total	242,963,331	138,815,825

Schedule Of Earnings Per Share Basic And Diluted

The following table sets forth the computation of basic and diluted loss per share for the three and nine month periods ended September 30, 2014 and 2013:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
Numerator:
Net income (loss) for basic earnings per share	$	958,488	$	177,366	$	(3,462,012)	$	(3,109,660)
Net income (loss) for diluted earnings per share	$	958,488	$	177,366	$	(3,462,012)	$	(3,109,660)
Denominator:
Weighted average basic shares outstanding		171,996,818		161,854,734		169,070,461		158,736,987
Denominator for diluted earnings per share-
Adjusted weighted average shares		186,965,778		161,854,734		169,070,461		158,736,987
Loss per share
Basic	$	0.01	$	0.00	$	(0.02)	$	(0.02)
Diluted	$	0.01	$	0.00	$	(0.02)	$	(0.02)

Inventory

Inventory consisted of the following at September 30, 2014 and December 31, 2013:

	September 30,		December 31,
	2014		2013
Raw materials	$	270,345	$	201,098
Finished goods		46,335		46,335
		316,680		247,433
Reserve for obsolescence		-		-
	$	316,680	$	247,433

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Subsequent Events

9 Months Ended

Sep. 30, 2014

Subsequent Events [Abstract]

Subsequent Events

7. Subsequent Events

Convertible Debentures and Warrants

During October and November 2014, the Company sold $427,778 of Unsecured Convertible Debentures (the “Debentures”) to accredited investors for aggregate consideration of $400,000. The Debentures mature in twelve months, carry a fixed conversion price of $.045, an annual interest rate of 10% and are convertible into  8,947,368 shares of common stock at maturity. The Company received net cash proceeds of approximately $368,000 after payment of fees and expenses of $32,000. In addition, the Company issued the holders of the Debentures detachable five-year warrants to purchase  4,473,684 additional shares of common stock at an exercise price of $0.090 per share.

Subsequent events have been evaluated through the date financial statements are filed with the Securities and Exchange Commission.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2014

Accounting Policies [Abstract]

Revenue recognition

Revenue recognition

 

The Company recognizes revenues when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable and collectability is reasonably assured. Revenue from the sale of the Company’s products is generally recognized when title and risk of loss transfers to the customer, the terms of which are generally free on board shipping point. The Company uses customer purchase orders to determine the existence of an arrangement. The Company uses shipping documents and third-party proof of delivery to verify that title has transferred. The Company assesses whether the price is fixed or determinable based upon the terms of the agreement associated with the transaction. To determine whether collection is probable, the Company assesses a number of factors, including past transaction history with the customer and the creditworthiness of the customer.

Consolidation

Consolidation

The accompanying consolidated financial statements include the accounts of SpectraScience, Inc. and its wholly-owned subsidiaries LUMA, International and Spectra UK. All significant intercompany balances and transactions have been eliminated in consolidation.

Risks and Uncertainties

Risks and Uncertainties

The Company operates in an industry that is subject to intense competition, government regulation and rapid technological change. The Company's operations are subject to significant risk and uncertainties, including financial, operational, technological, regulatory and other risks associated with a short history of product sales, including the potential risk of business failure.

Use of Estimates

Use of Estimates

The Company prepares its consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, which requires management to make estimates and assumptions that affect the amounts reported in the financial statements and disclosures made in the accompanying notes to the financial statements. Significant estimates made by management include, among others, realization of long-lived assets including intangible assets, assumptions used to value stock options, assumptions used to value the common stock issued and assumptions related to the determination of the fair value of the derivative components associated with the Company’s Convertible Debentures. Actual results could differ from those estimates.

Inventory Valuation

Inventory Valuation

The Company states its inventory at the lower of cost or market value, determined on a specific cost basis. The Company provides inventory allowances when conditions indicate that the selling price could be less than cost due to obsolescence and reductions in estimated future demand. The Company balances the need to maintain strategic inventory levels with the risk of obsolescence due to changing technology and customer demand levels. Unfavorable changes in market conditions may result in a need for additional inventory reserves that could adversely impact the Company’s gross margins. Conversely, favorable changes in demand could result in higher gross margins when the Company sells products.

Valuation of Long-lived Assets

Valuation of Long-lived Assets

The Company’s long-lived assets consist of property and equipment and intangible assets. Equipment is carried at cost and is depreciated over the estimated useful lives of the assets, which are generally two to three years, and leasehold improvements are amortized over the lesser of the lease term or the estimated useful lives of the improvements. The straight-line method is used for depreciation and amortization. Intangible assets consist of patents, which are amortized using the straight-line method over the estimated useful lives of the patents. The Company does not capitalize external legal costs and filing fees associated with obtaining patents on its new discoveries. Acquired intellectual property is recorded at cost and is amortized over its estimated useful life. The Company believes the useful lives assigned to these assets are reasonable. The Company assesses the recoverability of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. These computations utilize judgments and assumptions inherent in management’s estimate of future cash flows to determine recoverability of these assets. If management’s assumptions about these assets were to change as a result of events or circumstances, the Company may be required to record an impairment loss.

Stock-Based Compensation

Stock-Based Compensation

The Company accounts for stock-based compensation under the provisions of FASB ASC Topic 718, Compensation—Stock Compensation (“ASC 718”), which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. The Company adopted ASC 718 on January 1, 2006. The Company estimates the fair value of stock-based awards on the date of grant using the Black-Scholes-Merton option-pricing model (the “Black-Scholes Model”). The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method. The Company estimates forfeitures at the time of grant and revises its estimate in subsequent periods if actual forfeitures differ from those estimates.

The Company accounts for stock-based compensation awards to non-employees in accordance with FASB ASC Topic 505-50, Equity-Based Payments to Non-Employees (“ASC 505-50”). Under ASC 505-50, the Company determines the fair value of the warrants or stock-based compensation awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.

All issuances of stock options or other equity instruments to employees and non-employees as the consideration for goods or services received by the Company are accounted for based on the fair value of the equity instruments issued. Any stock options issued to non-employees are recorded in expense and additional paid-in capital in shareholders’ equity over the applicable service periods using variable accounting through the vesting dates based on the fair value of the options at the end of each reporting period.

As of September 30, 2014, the Company had one stock-based employee compensation plan under which it makes grants, the 2011 Equity Incentive Plan (the “EIP”). The EIP provides for the grant of incentive stock options (“ISOs”), nonqualified stock options (“NQSOs”) and restricted stock awards to full-time employees (who may also be directors) and NQSOs and restricted stock awards to non-employee directors, consultants, customers, vendors or providers of services. The exercise price of any ISO may not be less than the fair market value of the common stock on the date of grant and the term shall not exceed ten years. The amount reserved under the 2011 EIP is 37,000,000 shares of common stock. At September 30, 2014, the Company had options outstanding exercisable into up to 35,168,800 shares of stock under the EIP and the Company’s prior Amended 2001 Stock Plan of which up to 13,780,397 shares were exercisable. Awards under the Company’s EIP generally vest over four years.

The fair value of options granted are estimated at the date of grant using a Black-Scholes Model which includes several variables including expected life, risk free interest rate, expected stock price volatility, stock option exercise patterns and expected dividend yield. The Company also must estimate forfeitures for employee stock options. Management used the following weighted average assumptions to value stock options granted during the three and nine month periods ended September 30, 2014 and 2013:

	Three months ended September 30,			Nine months ended September 30,
	2014	2013		2014		2013
Expected term of options	None	None		5 years		None
Exercise price	None	None	$	0.02		None
Expected volatility	None	None		187	%	None
Expected dividends	None	None		None		None
Risk-free interest rate	None	None		1.64	%	None
Forfeitures	None	None		None		None

Earnings (Loss) Per Share

Earnings (Loss) Per Share

Basic loss per share is computed by dividing loss available to common shareholders by the weighted-average number of common shares outstanding. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Common equivalent shares are excluded from the computation if their effect is anti-dilutive.

For the periods ended September 30, 2014 and 2013, the following common equivalent shares were excluded from the computation of loss per share since their effects are anti-dilutive.

	September 30,	September 30,
	2014	2013
Preferred Stock	3,085,000	3,085,000
Convertible debentures	94,767,062	39,111,869
Options	35,168,800	19,491,667
Warrants	109,942,469	77,127,289
Total	242,963,331	138,815,825

The following table sets forth the computation of basic and diluted loss per share for the three and nine month periods ended September 30, 2014 and 2013:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
Numerator:
Net income (loss) for basic earnings per share	$	958,488	$	177,366	$	(3,462,012)	$	(3,109,660)
Net income (loss) for diluted earnings per share	$	958,488	$	177,366	$	(3,462,012)	$	(3,109,660)
Denominator:
Weighted average basic shares outstanding		171,996,818		161,854,734		169,070,461		158,736,987
Denominator for diluted earnings per share-
Adjusted weighted average shares		186,965,778		161,854,734		169,070,461		158,736,987
Loss per share
Basic	$	0.01	$	0.00	$	(0.02)	$	(0.02)
Diluted	$	0.01	$	0.00	$	(0.02)	$	(0.02)

Inventory

Inventory

Inventory consisted of the following at September 30, 2014 and December 31, 2013:

	September 30,		December 31,
	2014		2013
Raw materials	$	270,345	$	201,098
Finished goods		46,335		46,335
		316,680		247,433
Reserve for obsolescence		-		-
	$	316,680	$	247,433

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Liabilities (Tables)

9 Months Ended

Sep. 30, 2014

Liabilities [Abstract]

Schedule of Balance of Debentures

As of September 30, 2014 and December 31, 2013, the balances of the Debentures are as follows:

	September 30,		December 31,
	2014		2013
Balance at beginning of period	$	2,951,629	$	1,129,473
Issuance of debentures for cash		1,856,376		2,122,000
Original issue discount		72,515		111,685
Debentures surrendered in exchange transactions		-		(564,213)
Debentures issued in exchange transactions		-		626,368
Debentures converted to common stock		(236,842)		(473,684)
Convertible debt		4,643,678		2,951,629
Less unamortized costs of financing		696,824		644,518
Convertible debt, net of unamortized costs	$	3,946,854	$	2,307,111
Convertible debt in default	$	1,624,211	$	1,324,212

Schedule of Balances of Derivative Liability

As of September 30, 2014 and December 31, 2013, the balances of the Derivative Liability are as follows:

			Conversion
	Warrants		Feature		Total
Balance at December 31, 2012	$	1,730,044	$	605,516	$	2,335,560
Liability on issuance of debt and warrants		762,111		929,156		1,691,267
Change in fair value at year end		(1,688,671)		(1,233,733)		(2,922,404)
Balance at December 31, 2013		803,484		300,939		1,104,423
Liability on issuance of debt and warrants		-		-		-
Elimination of liability on conversion		-		(190,337)		(190,337)
Change in fair value at period end		(36,710)		205,181		168,471
Balance at September 30, 2014	$	766,774	$	315,783	$	1,082,557

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Derivative and Warrant Liabilities (Detail) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Derivative and Warrant Liabilities Disclosure [Line Items]
Forfeitures	$ 0	$ 0	$ 0	$ 0
Derivative
Derivative and Warrant Liabilities Disclosure [Line Items]
Expected dividends			0.00%
Forfeitures			$ 0
Derivative | Maximum
Derivative and Warrant Liabilities Disclosure [Line Items]
Expected term			1 year
Exercise Price	$ 0.099		$ 0.099
Expected Volatility			242.00%
Risk-free interest rate			0.13%
Derivative | Minimum
Derivative and Warrant Liabilities Disclosure [Line Items]
Expected term			6 months
Exercise Price	$ 0.045		$ 0.045
Expected Volatility			232.00%
Risk-free interest rate			0.10%
Warrant
Derivative and Warrant Liabilities Disclosure [Line Items]
Expected term			5 years
Expected dividends			0.00%
Forfeitures			$ 0
Warrant | Maximum
Derivative and Warrant Liabilities Disclosure [Line Items]
Exercise Price	$ 0.1287		$ 0.1287
Expected Volatility			193.00%
Risk-free interest rate			1.78%
Warrant | Minimum
Derivative and Warrant Liabilities Disclosure [Line Items]
Exercise Price	$ 0.075		$ 0.075
Expected Volatility			189.00%
Risk-free interest rate			1.62%

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Summary of Weighted Average Assumptions to Value Stock Options Granted (Detail) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term of options	0 years	0 years	5 years	0 years
Exercise price	$ 0.02	$ 0	$ 0.02	$ 0
Expected volatility	0.00%	0.00%	187.00%	0.00%
Expected dividends	0.00%	0.00%	0.00%	0.00%
Risk-free interest rate	0.00%	0.00%	1.64%	0.00%
Forfeitures	$ 0	$ 0	$ 0	$ 0

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Balances of Debentures (Detail) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Debt Instrument [Line Items]
Balance at beginning of period	$ 2,951,629	$ 1,129,473
Issuance of debentures for cash	1,856,376	2,122,000
Original issue discount	72,515	111,685
Debentures surrendered in exchange transactions	0	(564,213)
Debentures issued in exchange transactions	0	626,368
Debentures converted to common stock	(236,842)	(473,684)
Convertible debt	4,643,678	2,951,629
Less unamortized costs of financing	696,824	644,518
Convertible debt, net of unamortized costs	3,946,854	2,307,111
Convertible debt in default	$ 1,624,211	$ 1,324,212

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Condensed Consolidated Statement of Shareholders' Deficit (USD $)	Total	Series B Preferred Stock	Series C Preferred Stock	Common Stock	Additional Paid-In Capital	Accumulated Deficit
Beginning Balance at Dec. 31, 2013	$ (2,551,231)	$ 25,850	$ 5,000	$ 1,667,120	$ 37,126,602	$ (41,375,803)
Beginning Balance (in shares) at Dec. 31, 2013		2,585,000	500,000	166,712,054
Non cash issuance of stock options	349,143	0	0	0	349,143	0
Common stock issued for cash on option exercise	18,624	0	0	9,312	9,312	0
Common stock issued for cash on option exercise (in shares)		0	0	931,200
Common stock issued for debt offering costs	50,000	0	0	10,000	40,000	0
Common stock issued for debt offering costs (in shares)		0	0	1,000,000
Conversion of convertible debt	252,892	0	0	50,579	202,313	0
Conversion of convertible debt (in shares)		0	0	5,057,834
Warrant valuation on issuance of convertible debt	897,712	0	0	0	897,712	0
Warrant valuation on issuance of short term debt	710				710
Net loss	(3,462,012)	0	0	0	0	(3,462,012)
Ending Balance at Sep. 30, 2014	$ (4,444,162)	$ 25,850	$ 5,000	$ 1,737,011	$ 38,625,792	$ (44,837,815)
Ending Balance (in shares) at Sep. 30, 2014		2,585,000	500,000	173,701,088

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Shareholders' Deficit

9 Months Ended

Sep. 30, 2014

Equity [Abstract]

Shareholders' Deficit

4. Shareholders’ Deficit

Common Stock 

In February 2014, an affiliate of the Company exercised a portion of his stock options into 931,200 shares of restricted common stock at an exercise price of $0.02 for proceeds to the Company of $18,624.

In March 2014, the Company issued 310,000 shares of restricted common stock to one consultant at a price of $0.05 per share related to the issuance of convertible debentures.

In June 2014, the Company issued 690,000 shares of restricted common stock to one consultant at a price of $0.05 per share related to the issuance of convertible debentures. 

During the nine months ended September 30, 2014, holders of Convertible Debentures with a face value of $236,842 converted their debentures into 4,133,369 shares of restricted common stock. In addition, associated with these debentures, the Company paid $52,972 in accrued interest by issuing 924,465 shares of restricted common stock

Warrants

During the three and nine months ended September 30, 2014, in conjunction with the sale of Convertible Debentures, the Company issued five year common stock purchase warrants to acquire up to 4,222,530 and 22,012,675 shares to holders of the Debentures and as compensation to Agents. These warrants have an exercise price of $0.09 per share.

The balance of all warrants outstanding as of September 30, 2014 is as follows:

			Weighted
			Average
			Exercise
Warrants	Shares		Price
Outstanding at January 1, 2014		87,929,794	$	0.15
Granted		22,012,675	$	0.09
Exchanged cancelled		-	$	-
Exchanged issued		-	$	-
Cancelled		-	$	-
Exercised		-	$	-
Outstanding at September 30, 2014		109,942,469	$	0.13
Exercisable at September 30, 2014		109,942,469	$	0.13

Stock Options

Options outstanding as of September 30, 2014 are as follows:

	Outstanding Options
			Weighted Average		Weighted Average		Aggregate
			Exercise Price		Remaining Contractual		Intrinsic
	Shares		Per Share		Term (years)		Value (1)
Outstanding at January 1, 2014		15,075,000	$	0.14		6.94
Granted		35,550,000	$	0.02		-
Cancelled		(14,525,000)	$	0.14		-
Exercised		(931,200)	$	0.02		-
Outstanding at September 30, 2014		35,168,800	$	0.02		9.21	$	-
Exercisable at September 30, 2014		13,780,397	$	0.03		9.11	$	-
Weighted average fair value of options
granted during the period		35,550,000	$	0.02

(1) These amounts represent the excess, if any, between the exercise price and $0.02, the closing market price of the Company’s common stock on September 30, 2014 as quoted on the Over-the-Counter Bulletin Board under the symbol “SCIE”.

In January 2014, the Company’s Board of Directors authorized the issuance of stock options exercisable into up to 35,550,000 shares of common stock at an exercise price of $0.02 per share to a group of employees, directors and consultants in exchange for the cancelation of stock options exercisable into up to 14,225,000 shares of common stock with average exercise prices of $0.14 per share held by the same group.

There was one option exercised for 931,200 shares during the nine month period ended September 30, 2014. At September 30, 2014, total unrecognized estimated employee compensation cost related to non-vested stock options granted prior to that date is $538,067, which we expect to be recognized over the next four years.

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Balances of Derivative Liability (Detail) (USD $)	9 Months Ended		12 Months Ended
	Sep. 30, 2014		Dec. 31, 2013
Debt Instrument [Line Items]
Beginning Balance	$ 1,104,423		$ 2,335,560
Liability on issuance of debt and warrants	0		1,691,267
Elimination of liability on conversion	(190,337)
Change in fair value at year end	168,471	[1]	(2,922,404)
Ending Balance	1,082,557		1,104,423
Warrants
Debt Instrument [Line Items]
Beginning Balance	803,484		1,730,044
Liability on issuance of debt and warrants	0		762,111
Elimination of liability on conversion	0
Change in fair value at year end	(36,710)	[1]	(1,688,671)
Ending Balance	766,774		803,484
Conversion Feature
Debt Instrument [Line Items]
Beginning Balance	300,939		605,516
Liability on issuance of debt and warrants	0		929,156
Elimination of liability on conversion	(190,337)
Change in fair value at year end	205,181		(1,233,733)
Ending Balance	$ 315,783		$ 300,939

[1] Included in the Condensed Statements of Operation on the line “Change in fair value of derivative and warrant liabilities.”

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Summary of Significant Accounting Policies - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2014
Equity Incentive Plan 2011
Significant Accounting Policies [Line Items]
Shares of common stock reserved under EIP	37,000,000
Options outstanding	35,168,800
Stock Plan 2001
Significant Accounting Policies [Line Items]
Number of shares exercisable	13,780,397